South Florida Arbitration & Litigation Lawyer Blog
CPA or Accountant Opinion and Its Significance:
This post is designed to provide the reader with general educational information concerning the significance of a Certified Public Accountant or Accountant Opinion generally and specifically when considering an investment. Please keep in mind that this information is being provided for informational purposes only and is not designed to be complete in all material respects. Thus, it should not be relied upon as providing legal or investment advice. If you have any questions concerning this post or its contents, you should seek the assistance of a qualified professional.
In order to assess the probability for the success or failure of a business, numbers usually tell the story. True and accurate numbers provide a synopsis of the operations of a business without the hype. Unaudited financial statements are not always accurate. Thus, the need for an accountant’s opinion preferably prepared by a certified public accountant as opposed to a public accountant.
An accountant’s opinion letter is signed by an independent accountant describing the scope of the examination of an organization’s books and records. Because financial reporting involves considerable discretion, the accountant’s opinion is an important assurance to an investor of the scope and accuracy of the numbers being provided. Depending on the scope of an audit and the auditor’s confidence in the veracity of the information provided by the company and verified by the auditor, the opinion can be unqualified or, to some extent, qualified. Qualified opinions, though not necessarily negative, warrant further investigation on your behalf.
Many times in start-up companies, investors will see opinion letters that put forth language to the effect that the auditor questions the ability of the company to continue as a “going” concern if certain assumptions are not attained. The question that you have to ask yourself is “are you prepared to loose your entire investment” if these required assumptions are not reached within the required time frame. It is for this reason, especially if you are being presented with an opportunity to invest in a start-up company, that you should seek qualified assistance in making your investment decision.