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How much should it cost to get audited financial statements

for a small apartment building...
How much should it cost to get audited financial statements for a small apartment building in nyc.
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Answered in 15 minutes by:
5/2/2013
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,855
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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NPVAdvisor :

Getting them for ANY small or mid-size private company might cost between $1,000 and $7,500, depending on the audit firm, geographic location and complexity of the subject business.

NPVAdvisor :

Here's a great article on the subject, for some perspective:

NPVAdvisor :

You ight even get a one person shop to do it for $500, if they're pretty simple, and you're willing to pull everything together for them

NPVAdvisor :

But in NYC, I'd bet you won't get it done for less that $750

NPVAdvisor :

"Regional area would be NYC and Washington DC area.

I have searched and only found an article from 1995 stating a range from $7,000 - $10,000. I would like to know how much it would cost now for a medium to small CPA firm to perform reviewed financial statements. Maybe around $10K-15K now? or is it the same $7-10K? Also how would a CPA firm price this out? Any ideas or good websites would be highly appreciated!! Thanks..."

NPVAdvisor :

He then goes on to say...

NPVAdvisor :

Reviewed financial statements provide limited assurance that no material modifications need to be made to the financial statements for them to be in conformity with GAAP or an other comprehensive basis of accounting (OCBOA), such as tax basis.

In our opinion on a review, we state exactly what a review is and that, "a review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion."

Depending on the nature of your business (service / products), your gross revenues and total assets, the comprehensiveness of your bookkeeping/record-keeping, in addition to your business location, the experience of the CPA, and whether they have expert knowledge in your particular industry will all factor into price.

Reviewed financials do differ from an audit, or compiled financials. Banks sometimes say they require audited financials (and a lot of people toss that word around), but the are very expensive. Most banks will settle on reviewed financials, or even monthly/quarterly financials, and reviewed financials on an annual basis. For a rough basis, if a compilation costs X, a review is generally 2-3X and an audit is usually 3-7X. The price variance (2-3 / 3-7) depends on how well the company keeps their records, and whether they need the "works" or not.

Sometimes companies need these statements for internal purposes, and do not want a Statement of Cash Flows and/or Notes to the Financial Statement, both of which are requirements by Generally Accepted Accounting Principles. They can be excluded at management's discretion, but it is noted in the accountant's letter. [In an audit, this will result in a QUALIFIED opinion, which can sometimes raise a red flag...]

I do not recommend getting compiled, reviewed, or audited financial statements if, other than you, there is no purpose.

NPVAdvisor :

.

Customer:

I have seen that article.. I too am curious on what the hourly rate is.I have a property management company and I need the audited statements to be submitted to board of directors of a housing community to get rembursed for my expenses and get paid

NPVAdvisor :

and here's a good article form e0how on the subject

NPVAdvisor :

IC, I really thin it's SO variable, based on the reason you need.... so in your cas a few phone calls to a smaller CPA shop with an axplanation of what you need might be efficient

Customer:

I have tried that however havent been able to get a clear answer or even a range.

NPVAdvisor :

I have a friend in Atl, that is an accounting teacher, that does this kind of thing on the side .... that might be a thought

NPVAdvisor :

THat's amazing

NPVAdvisor :

I can opt out and see if others might be able to help, but in your case, I think the 1000, to 7,000 (just gut here) - probably closer to the 100 will end up applying

NPVAdvisor :

Maybe you need to go to them will an offer

NPVAdvisor :

"with" an offer Here's what Id be willing to pay for X,Y,Z

NPVAdvisor :

sorry for the typos (closer to the 1000...)

Customer:

hmm.. ok .. based on what I am reading avg audit firm charges 350 - 400/ hr

NPVAdvisor :

that woud be correct for CPA in that region, certainly ...

NPVAdvisor :

Tax attorney, 500 - 750 +

Customer:

So this sounds like it could get pretty expensive

NPVAdvisor :

There's that 7000 8000 range

NPVAdvisor :

Yep, that is one of those where you're paying for the designation (CPA) and they're putting that designation at risk by certifying then numbers.... is what they will say

Customer:

ok .. thank you for your time.

NPVAdvisor :

Wish I could have given you more specificity, you're welcome ... maybe do as much leg work as possible and get a quote based on hours taken ...

Customer:

ok .. Sounds good. =)

NPVAdvisor :

You might lookm at any guidance give by AICPA

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Hi Gary,

Just checking back in.


Maybe stating the obvious, but you may want to the following:

(1) Ask the Board which statements they need (may not need a full set of cash flows (possibly just an income statement and bal. sheet?) ... and,

(2) Get a CPA simply to PREPARE, rather than full audit, those statements ...

Submit the statements to the community board with the CPAs cover letter.



Should be MUCH less expensive than what the CPA would call an audit, (NOT including the Statement of Cash Flows and/or Notes to the Financial Statement, both of which are requirements by Generally Accepted Accounting Principles) ... but still satisfy the board that the statements weren't just thrown together by you.


Hope this helps

Lane

Positive feedback, or an accept, would be appreciated. (That's the only way they'll pay me for my time). BUT came back here with any additional questions.
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BK-CPA
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience: Owner of a CPA firm
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Hello and thank you for your question.

.

I believe Lane has done a good job with your question. I am posting an answer to give you some insight, as I am a CPA, owner of a firm, and someone with experience auditing.

.

Your initial statement indicating that this is for the Board of Directors tells me right away an audit is not what you need. Good thing.

.

First of all, you should have procedures in place, aka internal controls, that deter your ability to commit any sort of fraud. For example, if you have the authority to write checks, then someone else such as a bookkeeper that reports to the Board should do the actual bookkeeping. The Board should approve of your accounting system, including your controls over assets, financial reporting, and compliance with regulations. The main point here is that a well designed accounting system is a far better, cheaper, and realistic alternative to obtaining an audit.

.

Your audit appears to be so you can be reimbursed. Assuming you really did want a CPA to help you substantiate your expenses, an "agreed-upon procedures engagement," and not an audit, would be more appropriate. With such an engagement, the CPA performs agreed upon procedures and prepares a report showing any findings. In your case, the procedures should be designed to substantiate your expenses, so perhaps things like matching payments to third party evidence like bank statements and bills received.

.

When a CPA performs an audit or an agreed upon procedures engagement, they are subject to professional standards and peer review. It is the red tape and any staff supervision that initially results in high fees. A bookkeeping or consulting engagement, on the other hand, is not going to be subject to peer review and the red tape. Your best bet when it comes to keeping the fees down is to make sure your CPA knows that a bookkeeping / consulting engagement is suitable (perhaps, or as far as I can tell) for your needs.

.

I hope this is helpful. Thank you again for your question.

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Customer reply replied 4 years ago

After talking to the board, they have requested audited financial statements for 3 properties that I am managing for them.


One is 23 units, Another is 5 units and last one is 20 units. They have specifically requested audited financial statements. I have a book keeper that is presently doing the book keeping for these properties. What should i be getting as a quote? .. I just asked a CPA and he quoted me 30k for 3 properties. Is this too high?

Most states (mine anyways) have laws that require housing associations to get an audit annually, however, this need not be a certified audit conducted by a public accountant. To be honest, I really do not know how to interpret the meaning of the word audit as it appears in my State's law, other than to suggest that there be some sort of third party, not necessarily an independent party by the way, that reviews the financial records of the Association.

.

A lot of well meaning Boards will mistakenly ask for this kind of stuff when they do not need it. Make sure they know what they are asking for and why, quite frankly.

.

While GAAP deviates from its traditional presentation for a housing association, these should still be very easy audits to conduct. You are only talking 48 units. My first job as an intern was to audit subsidized housing communities with hundreds of units, and while we did a lot of them often times for the same management company, we almost always kept the cost to well under $1,000 per complex. This was in Lansing, Michigan.

.

Currently, I work in a small town and bill my time at a third of what my employers in Detroit did, back when I used to work for someone else. My bid for that many units, give or take a little for specifics, would be between $1,000 and $1,500. The first year an audit is done, there is a bit more leg work, so perhaps as high as $2,500 initially. In future years, some of the work actually disappears, so the price should go down.

.

Again, I hope this is helpful.

BK-CPA
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience: Owner of a CPA firm
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BK-CPA and 87 other Tax Specialists are ready to help you
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Hi there,

Original expert here.

Quite honestly, ash the intervening expert has ended up about where we started, I'm not sure what value was added.

I DO know that this intervention, without adding anything essentially different from what has already has been posed is not only against the terms of service here, but only adds to the confusion around the fairly nebulous answer to this question.

Being a small town CPA, and/or having worked in Detroit no more qualifies this answer than this expert's 30 years experience working with attorneys, CPA's tax attorneys and having a graduate degree specializing in tax and finance as well as a CFP license.

I would appreciate your providing positive feedback or accepting the answer to pay me for my time as, JA will not pay us unless you do so.

As both my answer and the superfluous answer above have said, the range is 1000 to 7000, and this CPA is overpricing his/her services.

Lane

Your positive feedback is appreciated ... by NOT doing so, you only leave the $ with JustAnswer. and NO ONE's efforts are rewarded.
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Ask BK-CPA Your Own Question
BK-CPA
BK-CPA
BK-CPA, Certified Public Accountant (CPA)
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Satisfied Customers: 933
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