Stage 1 · Understand the investor’s decision · Lesson 4 of 4
Your accounts are not audited: what to do this year
Starting from scratch, audited accounts take four to six months. In the meantime there is an accurate answer to give in your dossier, and documents you can produce within the next three months.
The document list
The document list a lender sends you
A funding request often starts with a list like this one. The lines about the accounts come first. Open them: each says what is expected, and sometimes what is accepted instead.
Click a line to open it.
Audited financial statements for the last two financial yearsWith the auditor’s report
The balance sheet, the profit and loss and the notes, with a report signed by an auditor. It is the strongest document and the slowest to get: four to six months when you start from scratch.
Declaring audited accounts without that report: the question comes up at the first exchange, and the whole file is then read with suspicion.
Failing that: accounts for the last closed year, with the accountant’s statement
Some lenders accept this level while they review the file, especially for an SME. It depends on each lender: ask at the first exchange.
Management accounts for the current year, month by month
Last month’s figures, prepared in-house. They show the business is being followed today, not only last year.
Bank statements for the last twelve months
They are used to check your revenue. Any gap between sales booked and money received must be explainable.
Tax and social security clearance certificates
They say whether you are up to date with the tax administration and the social security body. The “Tax and social” card comes back to them.
Typical list, no lender named. The order and the requirements vary from one lender to another.
The second line matters: between “nothing” and “audited” there is an intermediate level. The next card shows all three.
Three levels of accounts
There are three levels of accounts, and an audit is the highest
“Audited accounts” does not mean “well-kept accounts”. It is a precise level, with two others below it. Say which one is yours, in those words.
- Balance sheet and profit and loss drawn up by the company
- No outside professional gives a view
- Indispensable, but unverified
- An outside professional examines the accounts and signs a statement
- Less work than an audit: cheaper and faster
- They also tell you what would not get through an audit
- Checks to professional standards, with sampling and confirmations
- A report with an opinion, and its qualifications if any
- Two to three years, often asked for by lenders
In Madagascar, the companies law requires a statutory auditor for certain company forms and above certain thresholds. Ask your accountant whether this applies to you: the answer changes your timetable.
A word on qualifications (audit qualifications). An auditor issues one when they could not verify an item, or disagree with a figure. A report with two explained qualifications is worth far more than no report. What worries a committee is the absence of any outside eye, or two sets of figures that do not agree.
- The route to the report
- What fits in three months
- Yes, in progress or not yet
- The monthly pack
- Tax and social
- The mistake that costs most
- The other fields
- What you write
The rest of the lesson
Keep reading with your free account
8 more parts, with the calculations on your own numbers and what to write in your file. The account is free, no commitment.
The words of this lesson
Each word links to its full definition in the glossary.
- Accountant
- The professional who keeps or prepares your accounts. They do not certify them.
- Statutory auditor
- The independent professional who checks your accounts and signs off on them.
- Audited accounts
- Accounts an independent professional has checked and signed an opinion on.
- Management accounts
- Simple accounts made every month to steer the company: sales, spending, cash. They are not audited.
- Bank reconciliation
- Checking that what your accounts say matches, line by line, what the bank statement shows.
- Financial year
- Your accounting year: twelve months ending on a fixed date, usually 31 December.
- Qualification (audit)
- The auditor’s written remark on a point in the accounts they could not check or disagree with. The rest is approved.
- Tax and social clearance
- The official document saying you are up to date on tax and contributions, or have a payment plan.
- Financial model
- A sheet projecting your revenue, costs and cash over three to five years.
From the lesson to your file
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