When your bank mentions the dreaded words "Financial Statements", refrain from fainting dead away on the bank floor. They usually take this as a bad sign. Instead, enquire as to what "type" of financial statements they want. There are four levels:
These are the financial statements you run off yourself out of QuickBooks and present to the bank. Often, if you are incorporated or a partnership, you can simply present the company tax return to the bank, since there is a balance sheet and an income statement built right into the tax return. This costs you nothing, and 80% of the time is all the bank wants anyway.
Suddenly the bank wants your CPA's John Hancock on the financial statements. What does this involve? Basically, you forward your QuickBooks data to me, I make a few adjustments, and provide you with a set of compiled financial statements.
My bank wants financial statements? What is he talking about?
My accompanying letter points out that I only compiled the numbers from data you gave me, and that I am giving no assurance whatsoever as to their accuracy. Nevertheless, the bank knows that in fact I did take a look at the numbers, and feels greater confidence about their accuracy than if you had done the work yourself. My fee: $500 to $1,000 depending upon the condition of your accounting records.
The bank now wants a greater degree of assurance. This is rare, but if you are borrowing a large amount of money, the bank will sometimes request this. The CPA (me) is now stating that they've "reviewed" the numbers and didn't notice anything wrong, but certainly aren't guaranteeing they're perfect either. My fee: $1,000 to $2,000 depending upon the condition of your accounting records.
Now you're talking big bucks. Even worse, I won't even do audits because I don't like the adversarial situation it puts me into versus my clients. Plus, I don't enjoy doing them. I will find you another CPA firm that likes doing audits. Chances are they will charge you between $5,000 and $10,000 for this service.