A guide to financial audits for startups Purpose, timings & partners

Since 2016, we’ve provided hundreds of growing companies a dedicated team of experienced startup accountants and CFOs who serve as their complete or supporting in-house accounting & finance department. We are your one-stop-shop for all things outsourced accounting, finance and tax. Our award-winning boutique Los Angeles Startup accounting firm understands the needs of both Entrepreneurs, and the Angel Investors, Venture Capital Funds, Private Equity Funds, Investment Bankers and other investors who provide capital to their ventures.

Tech Stack Setup

Most startups only do an audit only when their investors demand it, which is usually in tandem with a financing round. These prices are for SF and NYC based startups that are between Seed to Series C stage. Our accountants, fractional CFOs, and tax specialists are dedicated to building a strong finance foundation for your business. At BC, we focus in Emerging growth companies (EGCs) play a vital role in promoting innovation and growth throughout the broader economy. These companies are often characterized by their ability to quickly adapt to changing market conditions, take risks, and develop new ideas and products. By doing so, they not only create new jobs and opportunities for workers, but also drive competition and spur economic growth.

Financial Services

Unlike public companies, private companies aren’t required by the IRS to perform an annual audit, and your startup’s audit requirements will instead be determined by investors. We’ve build specific knowledge around the most important accounting issues facing VC-backed startups. Not all accounting firms understand technology, professional boards, the need to regularly raise venture capital funding, and the pressures felt by founders at high-growth companies. Founders need an accounting partner who’s done it before for technology startups.

Rotterdam’s audit automation software startup Engyon bags €1M to support international expansion

We’ve had the opportunity to work with a number of the best accounting firms serving startups – let’s list out some of the best in the business. With hundreds of VC-backed startups in NYC and beyond, the Kruze team of CPAs and accounting professionals has the knowledge to help funded startups. As the venture capital ecosystem in New York has grown, so has Kruze’s NYC client base. Per PitchBook data, New York City startups continue to raise ever-bigger amounts of VC funding at ever higher and higher valuations. A qualified tax CPA like Kruze can likely help these companies save millions per year in payroll taxes through tax credit advice.

This can be particularly true for younger startups that might have grown rapidly and had a lot of changes in a relatively short period of time. So that’s where you end up catching a lot of errors and needing to issue a restatement to remedy the inaccuracies. Audits do require a material amount of time, work, and coordination so be mindful to weigh whether it makes sense for your company and its trajectory. Even if you outsource accounting, you can still complete an audit but expect to take on a lot more work yourself given your outsourced accountants are primarily focused on closing the books. Get the peace of mind to focus on running your business, thanks to our triple-checked financial statements. We work with thousands of startups and small businesses, ranging from two founders in a garage to hundred-person teams.

What can I do to prepare for a startup audit?

Recording transactions on an accrual basis in accordance with US GAAP is critical as cutoff errors are one of the most common audit startup auditing firms adjustments. A cutoff error is when a transaction is recorded in the wrong period which often happens if the cash activity was in a period after the service was performed. Remember, while a material misstatement is challenging, how you handle it can demonstrate your company’s integrity and financial management capabilities to your venture capital investors and other stakeholders. It’s an opportunity to show that your business can navigate financial hurdles responsibly. By partnering with BC, startup companies can have peace of mind knowing that their operations are compliant and that they are minimizing any potential risks or penalties.

• At the same time, it also creates an expectation among the company’s senior management, advisers, lenders, and investors that the audit process will repeat year after year.
• We look to partner with our clients, going beyond the typical outsourced accounting relationship and seeking to provide a higher level advisory role.
• It’s important to note that auditors will usually – actually pretty much always – want to dig into supporting records.
• We also monitor the overall activities and operations of organizations through data collection and analysis and make necessary recommendations to them.
• They are looking to prove that the finances are as you say that they are, so make sure you are organized.
• This is why we are consistently recommended as the best accounting firm for Startups.

-Joshua V. Azran CPA/ABV/CFF, CMA, CGMA, CFE Founder

The financial statement auditing process is wrought with complexity and requires adequate planning to ensure success. Alongside this step, conduct analyses of financial statements by comparing them to previous periods and industry benchmarks to provide an additional opportunity to correct issues before this information makes its way into an auditor’s hands. This document outlines accounting standards and regulatory requirements the company must comply with, the auditor’s roles and responsibilities, a timeline for the auditing process, and any auditing fees. As a rule of thumb, companies in the earlier stages can typically be fine working with a regional or small local firm.

Top qualities to look for in a tax accounting service for startups

• This can be particularly true for younger startups that might have grown rapidly and had a lot of changes in a relatively short period of time.
• If you’re a SaaS company, look at a firm closely to make sure that they’ve worked with other SaaS companies in the past.
• Azran Financial’s Certified Public Accountants and business consultants can advise you during the entity selection and structuring process.
• After an engagement letter is signed, the audit team will ask for key contracts, the organization chart, company policies, and process flow documentation to better understand the business.
• There are steps companies can take to help their first audit go as smoothly as possible.
• In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates.

With over 50,000 companies in the EU required to report under CSRD starting in 2026 and a shortage of auditors, the demand for audit software is increasing. Engyon aims to become the standard in the EU within three years for case management and AI-driven workflow automation in audits. In 2024, Engyon developed its CSRD audit product from concept to beta, working with five accounting firms for market validation.

Either way, an accurate and transparent first-time audit of the company’s financial statements, representing the company’s official adoption of US generally accepted accounting principles (GAAP), is imperative. There are steps companies can take to help their first audit go as smoothly as possible. Eventually, many companies will reach an inflection point when an audit is called for. Often that happens when they take on outside investment—be it a bank loan, venture capital equity, or some other private investment vehicle—and an audit is part of the terms.