MARIELA RUIZ, CPA, PLLC

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Tag: audit

When to Consider a Financial Audit for Your Startup

August 17, 2023 / / 0 Comments

Startups are a world of excitement, challenges, and opportunities. As the gears of innovation turn, there’s one wheel that entrepreneurs often overlook: the financial audit. While it may seem too formal or unnecessary during the early stages, a financial audit can provide numerous benefits to a young company. In this month’s blog, we’ll talk about when and why a startup should consider undergoing a financial audit.

What is a Financial Audit?

At its core, a financial audit is an examination of a company’s financial statements and related operations to ensure accuracy and compliance with accounting standards and regulations. An external auditor, often from a reputable accounting firm, conducts this examination and provides an opinion on the financial statements’ accuracy.

Key Indicators Your Startup Might Need an Audit

At the outset, startups often operate with lean margins and limited resources. Still, as they gather momentum and secure funding or begin to generate consistent revenue, the intricacies of their financial transactions multiply. This is where a financial audit becomes instrumental. Firstly, an audit provides a detailed and neutral view of the startup’s financial health. This is invaluable to stakeholders, investors, and lenders who bank on accurate financial statements to make informed decisions. Secondly, as a startup plans to scale, whether organically or via mergers and acquisitions, having audited financial statements can smoothen negotiations and due diligence processes. Additionally, certain regulatory and contractual conditions may necessitate an audit. For instance, if your startup is looking to raise a significant funding round or go public, potential investors or regulatory bodies might require audited financials.

Related: Learn more about the key considerations and accounting best practices for startups here.

Benefits of a Financial Audit

A financial audit can help founders and managers identify inefficiencies, uncover potential fraud, and streamline processes. The insights garnered can guide startups toward financial prudence, ensuring that resources are optimally utilized. Moreover, an audit fosters a culture of transparency and accountability within the organization. By regularly reviewing and validating financial transactions, startups build a strong foundation that can weather uncertainties and be well-prepared for future growth.

Related: Learn more about accounting mistakes that could harm your small business here.

Hire MARIELA RUIZ, CPA, PLLC For Your Financial Audit Needs!

We at MARIELA RUIZ, CPA, PLLC understand the unique challenges faced by startups. Our expertise is not just in conducting meticulous audits, but also in guiding young enterprises towards sustainable growth. Let’s embark on this journey together and ensure that your startup’s financial roadmap is both robust and transparent. Reach out to us at our Mission, TX office by calling (956) 997-0067 or visit our website at www.mruiz-cpa.com. Your startup’s future is bright; let us help you illuminate its path.

Ways to Help Your Clients Survive an Audit

June 24, 2022 / / 0 Comments

Audits can happen to anyone and at any time and can easily stress and petrify any client or tax professional. As a result, it is your responsibility to look after your client and ensure that they face the situation with caution. With your assistance, advice, and support, your clients can deal with audits professionally. Not only this, but with your necessary accounting and tax services, your clients can easily overcome late tax payments, fines, and other issues. To help you out, we have created a guide that will help you know what to do if your client ever goes through an audit.

You can be a representative.

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At times, tax rules can be complicated and can vary depending on the situations and clients. Therefore, it becomes necessary to have adequate counsel from a professional and well-experienced tax specialist. If you are a CPA or an enrolled agent, then you can easily be a volunteer and represent your client. This way, you can ease the stress of your client and seek out better solutions for audits.

Related: “How to Minimize Your Chance of an Audit”

Assist your client with their tax record.

Try to assist and work with your client to make sure all the valid records are arranged in the correct order and can easily be submitted to the IRS for a successful audit. You can also advise your clients to keep clear and transparent records throughout the year. This way, you have all the important information readily available if the IRS needs it.

Everything is written in black and white.

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Ask your client to demand their auditors capture their contacts on paper or with narrative explanations. Not only that, but you can also encourage your clients to keep records of all their formal and informal contacts with their auditor. This allows you to easily take care of the official requests and document exchanges that may likely appear in the future.

Related: “What is the Audit Process?”

Plan ahead of time.

Instead of rushing at the end, encourage your client to plan ahead of time. Ask them to arrange all the paperwork correctly and provide support for the position they have taken or plan to take. Though time extensions are frequently granted on legitimate requests, it is still better to take the proper time to plan ahead because you might not know what circumstances and challenges you might encounter in the future.

The Bottom Line

If you need professional auditing advice, rely on MARIELA RUIZ, CPA, PLLC. We are here to make the process easy and stress-free for our valued clients. Just let us know your requirements and we will ensure all your audit needs are successfully met. Learn more about our services by visiting our website or by calling us at (956) 997-0067.

How the Landscape of Internal Auditing Will Change in Coming Years

May 27, 2022 / / 0 Comments
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COVID-19, undoubtedly, affected the entire work dynamics and environment on a global level. Every field had to adapt to new circumstances. Internal auditing faced a number of unprecedented challenges. It brought a number of opportunities and challenges alike. It has, in fact, become a race against time to be prepared for the inevitable. The following are the key risks we believe that internal auditors will need to focus on.

Cybersecurity

Cybersecurity is an elephant in the room and we need to address it fast. With COVID-19, we saw an increased dependance on technology among all organizations, no matter what field you choose to review. Cybersecurity has become one of the greatest concerns among corporations and businesses. Data security should be the first concern of internal auditors in 2022.

Other Risk Factors That Require Auditing Efforts

Apart from cybersecurity, the following are growing key risk factors that all internal auditors must be prepared for by 2030:

  • Continental drifts in the global economy
  • Diversity of the workforce
  • Efficacy of management from the top hierarchy
  • Inevitable climate change
  • Rising artificial intelligence and its implementation

Strategies and Resources to Overcome the Upcoming Challenges

There is always a silver lining to a dark cloud. Amidst the crisis, resources have grown considerably in favor of internal auditors to tackle the aforementioned risks of the future. Here are some tactic driven approaches to take out the problem in a constructive manner:

  1. Proactively prepare for the key risks by considering their solutions right now rather than later.
  2. Figure out the necessary skills required for the future and train your staff, so everyone is equipped with an adequate skill set for a relevant job market.
  3. Develop a communication link between the workers and stakeholders in the organization for a better understanding of the company’s future goals.
  4. Introduce and adopt technology and the latest methods and practices of the trade to maximize results and stay up to date with the market.
  5. Gather all the experience and data retrieved through remote working and test possibilities with a hybrid-working environment.
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Conclusion

Internal audit requires many qualifications and years of experience to develop an insight on how finances run through the market and corporations. Are you looking for a public accountant to take care of your financial affairs? Let a professional do it for you. MARIELA RUIZ, CPA, PLLC offers professional accounting, bookkeeping, and tax preparation services at affordable rates in Mission, TX. Visit our website to learn more about our services or simply give us a call at (956) 997-0067 for further assistance.     

3 Signs That Your Business Needs Accounting Services

January 19, 2022 / / 0 Comments
An accountant sitting at a desk with a computer doing taxes

For startups, it is easy to get by without the services of an accountant in the beginning as there is barely any need of it. If you own a business and have access to an accounting software with the know-how of accounting for small business owners, you will do just fine. But as you continue to expand, there will be tell-tale signs that it is time to hand over the task to a professional accountant.

1. Your business has experienced a major growth spurt.

With great power, comes great responsibility. Every business owner dreams of such progress and if you are experiencing such a shift in paradigm, you will need to expand. More staff, inventory, work processes, and internal system only leads to more paperwork and calculations. It is wise to have a person dedicated to this task and responsible for keeping all the finances in order.

2. You find yourself in need of professional financial reporting.

If your business is in search of investors or loans, it is better to have your company’s financial state and history in order. It is one of the most integral parts of a loan application or a proposal to investors. You will need a professional who knows the trade inside out. An accountant understands the relevant information that needs to be included with financial reports to score investors and loans. An accounting specialist will also produce financial forecasting for your business. This will provide insights for what direction your business is heading to.

3. An audit hangs over your head.

An audit due can be a stressful experience. If it is your first time being audited, you should know what the audit process is. If you don’t have a professional accountant by now, it’s high time you get one. An accountant will work through your paperwork and help you organize and identify the information that the IRS will inquire about in the audit. Your hired accountant can also directly liaise with the IRS on your behalf. This will free up your time to work towards more productive and constructive goals. 

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Conclusion

MARIELA RUIZ, CPA, PLLC offers professional accounting and bookkeeping services in Mission, TX. We guarantee you success through our highly experienced team of accountants, tax experts, and bookkeepers. We don’t ask for your vote of confidence – we will earn it through our services. Get yourself an accountant at MARIELA RUIZ, CPA, PLLC or call us at (956) 997-0067 to book an appointment.

What is the Audit Process?

September 29, 2021 / / 0 Comments

Usually referred to as a financial statement audit, an audit is an unbiased examination and evaluation of the financial records of an organization. This process ensures that all records, statements, and transactions are fair and accurate to what the organization reports. Audits can be conducted internally by the organization’s employees or conducted externally by an outside CPA firm. In this month’s blog, we examine the four main phases of the audit process and how it is conducted.

Planning and Preparation

During the planning phase, the auditor will notify the client and discuss the scope and objectives of the evaluation in a formal meeting with the organization’s management. The auditor will also request a copy of the previous audit report, original bank statements, receipts, ledgers, and other necessary files. After gathering background information and meeting with key personnel, the auditor will begin preparing a draft of the audit plan and how it will be executed.

Fieldwork

The fieldwork phase, also known as the execution phase, involves the auditor speaking with staff members and reviewing procedures and processes. There will be tests conducted for compliance with policies and procedures as well as evaluating internal controls. The auditor will also identify and discuss any problems that arise.

Audit Report

After conducting all of the necessary interviews and tests, the auditor will then finalize their audit report draft for review. This report outlines the objective and scope of the audit, relevant background information, the findings, any errors, and recommendations for improvement or correction. During this time, the draft will also be sent to management for their review and will give them a chance to respond to the report. Their responses should include their plans for improvement or correction and what steps they plan to take.

Closing Meeting and Follow-up

Finally, a closing meeting is scheduled with management and the entire report, responses, and any revisions will be reviewed and discussed. If there any issues, they will be resolved in this meeting and once all parties have come to an agreement, the audit report will be finalized. The final audit report including the management responses will then be distributed to all department personnel involved in the audit as well as to the CPA firm if an external auditor was enlisted.

After approximately six months to a year, a follow-up review will be performed to ensure the corrective measures were implemented. The effectiveness and timeliness of actions taken by management since the start of the audit will be evaluated.

Learn More

When you need an audit conducted, call on the reputable services of MARIELA RUIZ, CPA, PLLC. We have many years of experience executing audits and strive to help companies improve their operations and internal workings. We are here to help you accomplish your objectives and improve the effectiveness of management and other procedures. Learn more by visiting our website or by calling (956) 997-0067 for any questions.

How to Minimize Your Chance of an Audit

March 2, 2020 / / 0 Comments

Tax season is upon us. Whether you intend on getting money back from the government or paying in, every citizen is at risk of being audited if the IRS is tipped off by discrepancies or other suspect information on your tax return. Read the following tips to learn how to avoid an audit this tax season.

Inaccurate Donated Amounts

The IRS encourages individuals to donate clothes, food and even used cars to charities. It does this by offering a deduction in return for a donation. The problem is that it is up to the individual owner to determine the value of the item. As a general rule, the IRS likes to see individuals value the items they donate anywhere between 1% and 30% of the original price. Unfortunately, many taxpayers ignore this guideline or simply aren’t aware of it.

There are several other ways that the taxpayer can ensure that they are valuing donated goods at an equitable price.  One of the ways is hiring an appraiser to write a letter, naming their opinion on the worth of the item.

Simple and Avoidable Math Errors

Many returns are selected for audit due to basic mathematical mistakes. When filling out your tax return (or double-checking your accountant’s work) make sure that the numbers add up. Also, make sure that the total dollar value of and/or losses are properly calculated. Even the smallest errors can alarm the IRS.

Failure to Sign

A surprisingly large number of people simply forget to sign their tax returns. Don’t be a part of this group. Failure to sign the return will almost guarantee additional examination because the IRS will wonder what else you might have forgotten to include in your records.

Under-Reported Income

It is vitally important that you report all income that you received throughout the year from work and/or from the sale of an asset. If you fail to report income and get caught, you will be forced to pay back-taxes plus penalties. While it may be tempting to not report some income, it’s better to be safe than sorry.

Home Office Deductions

Be careful with home office deductions. Deductions that are too large in proportion to your income can raise a huge red flag. For example, if you earned money as an accountant working from home, extravagant home-office related deductions will raise the ire of the IRS.  Deduct only items that were used in the course of your business.

Conclusion

When it’s time to file your annual taxes, make sure you cover all your bases to avoid scrutiny from the government. While there is less than a 1% chance you will be chosen for an audit, there’s no reason to not take every precaution just to be safe. For exemplary accounting services and tax services you can trust, contact the experts at Mariela Ruiz, CPA, PLLC.

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