Glossary
Audited financial statements
What audited financial statements are, when Reg CF and Reg A+ Tier 2 require them, and what an audit means for a raise's cost and calendar.
Audited financial statements are statements an independent accountant has tested against evidence and given an opinion on. An audit gives reasonable assurance, the highest level, and costs and takes considerably more than a review.
When the rules require them
- Reg CF. Above $618,000, counting Reg CF sales in the prior 12 months and using the maximum the offering will accept, except that a first-time issuer may use reviewed statements up to $1,235,000 (17 CFR 227.201(t)). The audit opinion may not be qualified, adverse, or a disclaimer. Available audited statements must always be provided in place of a lower tier.
- Reg A+. Tier 2 offerings require audited statements; Tier 1 does not unless they are available. See Reg A tiers.
- Rule 506(b). Offerings over $20 million that include non-accredited purchasers require audited statements of the Tier 2 kind. See Rule 506(b).
Why it matters
An audit is a budget line and often a month or more on the raise calendar, so the size of a raise decides it months before launch. Audited statements are also reusable for a later raise and in annual reports.
Further reading
- Choosing an exemption by how much you need to raise
- Corporate housekeeping to finish before you file a raise
This page is general information about securities rules, not legal advice. Which statements a particular offering needs is a question for counsel and the company's accountant.