When Do You Need a Financial Statement Audit?
Financial statement audits provide independent verification that your books are accurate. They're a key part of compliance for growing companies. Here's when you need one and how to prepare.
Last Updated: January 2026|10 min read
When You Need an Audit
Common Triggers
Series B+ fundraising: Many growth-stage investors require audited financials
Bank debt or credit lines: Lenders often require annual audits
M&A preparation: Acquirers expect audited financials in due diligence
IPO track: Public companies require audited statements (start 2-3 years early)
Large enterprise customers: Some require vendor audits
Planning Ahead
First audits take longer and cost more because auditors need to verify opening balances. Start the process 6-12 months before you need audited statements.
Audit vs. Review vs. Compilation
| Type | Assurance | Procedures | Cost |
|---|---|---|---|
| Audit | Reasonable (highest) | Full testing, confirmation, observation | $30K-100K+ |
| Review | Limited | Inquiry and analytical procedures | $15K-40K |
| Compilation | None | Assembles management's data | $5K-15K |
Which Do You Need?
- Series B+ investors: Usually require audit
- Some lenders: May accept review
- Internal use only: Compilation may suffice
- When in doubt: Ask the stakeholder what they need
How to Prepare
Audit Readiness Checklist
Monthly close completed within 15 business days
All bank accounts reconciled
Revenue recognition policy documented
Fixed asset schedule maintained
Equity transactions documented (409A, options, etc.)
Related party transactions identified
All material contracts accessible
First Audit Premium
Expect your first audit to cost 50-100% more than subsequent years. Auditors must verify opening balances and understand your business from scratch.
Need Audit Preparation Help?
Eagle Rock CFO helps companies prepare for their first financial audit.
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