CPA audits: The benefits may outweigh the cost

There are some very compelling reasons to have a CPA look over your firm’s books.

For one thing, it can give companies the comfort of knowing their financial statements are in order and that they’re in compliance with all federal and state regs.

But here’s something many firms don’t think of when it comes to an audit: Research suggests companies that have their books audited by certified public accountants improve their chances of securing loans at better terms than firms that go unaudited.

Example: A University of Chicago study of more than 10,000 companies found that audited firms save an average of $6,900 for every $1 million in outstanding debt each year — because of lower interest rates on their loans.

A separate study by the Michigan State University and Indiana University found small firms that had their financials audited were “significantly less likely” to be denied credit by banks.

It makes sense. According to financial experts, banks love when companies have their finances audited because it offers them another form of insurance.

If you do decide to go this route, it’ll cost you. An audit for small businesses normally costs between $5,000 to $75,000 — depending on company size, data complexity and other factors.

Readers, has your company ever paid an outside vendor to audit your financials? Tell us about it in the Comments section.