Discussion:Audited P&L for personal loan
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| Also, please let me know the name of the bank these people finally get a loan from IF they find one that doesn't require the audit, I might need one (in the past, I was always able to get my financing from a naive lottery winner, but he went bust in the market).}} | Also, please let me know the name of the bank these people finally get a loan from IF they find one that doesn't require the audit, I might need one (in the past, I was always able to get my financing from a naive lottery winner, but he went bust in the market).}} | ||
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| + | {{ForumReplyPost|UserID=Natalie|Date=November 6, 2009|Text=First I would clarify that an audit is required. Sometimes clients hear one thing when something else is actually intended. The firm I worked for did do audits of self employed people -- they aren't that unusual. | ||
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| + | If an audit is required, your client should be prepared to have the beginning balances audited as well. That means having supporting documents for property and equipment, accounts receivable, inventory, etc. The first audit is like going through two audits because the beginning balances need to be verified. This may mean a larger fee, especially if an audit for 2009 will not be needed. | ||
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| + | You/your client might want to see if reviewed or even compiled financial statements would be acceptable. Sometimes all the bank is looking for is that an independent CPA looked at the statements and that full disclosure is given, i.e., statements prepared on a GAAP basis.}} | ||
Revision as of 19:33, 6 November 2009
Discussion Forum Index --> General Chat --> Audited P&L for personal loan
| November 4, 2009 | |
| OK, need some opinions on this scenario.
My client is trying to refinance his primary residence (to consolidate a construction loan and a previous second). The loan will be approximately $ 900,000 and the loan to value ratio isn't an issue. My client is self-employed, and his business increased substantially in 2008 vs 2007 (net profit more than tripled - I know, hard to believe in this economy). And his income does support the payments on a $ 900,000 loan. The lender is requiring AUDITED financials for the loan (supposedly because of the large increase in net profit on the Schedule C.) Issue 1 - My client is very honest - but his bookkeeping isn't the most precise. I'm not sure he can even find a CPA who could/would do an audit, given his record keeping in prior years. For 2008, he did have a bookkeeper - that does help the situation a bit. Issue 2 - I don't do audits. But the real question, have any of you had this request yet with clients? Is it a new trend; the next logical progression after the lender comfort letters? I told my client that you don't always have to give the banks what they request. But he's not interested in switching to a different lender, and I can't really advise him that the next lender wouldn't request the same thing. I'm not concerned about losing the client - even if he has to go elsewhere for an audit, I think he'll be back to me for taxes. And if he isn't, oh well. I just need some confirmation that this is the new reality for loans, or is the lender being unreasonable? Thanks for sharing any of your experiences. | |
Death&Taxes (talk|edits) said: | 4 November 2009 |
| In the past I always said that when a bank wants an audited statement, it is code for 'we don't want to lend you the money.'
Have not heard of this for mortgage financing. | |
| November 4, 2009 | |
| Hmmmm - that's a good way of looking at it.
Still waiting on the call back from the lender to see if "audited F/S" as filtered 3rd hand through my client means what I think it means. | |
| 6 November 2009 | |
| I had the same experience within the last 3 months. Client is employee of her S-corp. She was trying to get a loan modification on her home and the bank wanted audited financials. Told her I do not do audits and it was going to cost some significant dollars to get it done. Did not hear anything subsequently. | |
| 6 November 2009 | |
| This is actually good.
This is what should have been required in the first place. Look at this as a money making opportunity, and start doing audited personal financial statements. Sounds like easy street for some of you CPAs that get into it full time, forget the headache of doing taxes. Also, please let me know the name of the bank these people finally get a loan from IF they find one that doesn't require the audit, I might need one (in the past, I was always able to get my financing from a naive lottery winner, but he went bust in the market). | |
| November 6, 2009 | |
| First I would clarify that an audit is required. Sometimes clients hear one thing when something else is actually intended. The firm I worked for did do audits of self employed people -- they aren't that unusual.
If an audit is required, your client should be prepared to have the beginning balances audited as well. That means having supporting documents for property and equipment, accounts receivable, inventory, etc. The first audit is like going through two audits because the beginning balances need to be verified. This may mean a larger fee, especially if an audit for 2009 will not be needed. You/your client might want to see if reviewed or even compiled financial statements would be acceptable. Sometimes all the bank is looking for is that an independent CPA looked at the statements and that full disclosure is given, i.e., statements prepared on a GAAP basis. | |
