Financial audit: What do we know?
More than 80% of the companies that report to the Securities and Exchange Commission say they are audited by a financial audit firm.
But just under half of those firms say they have completed the audit, according to a survey released Tuesday.
The survey of nearly 4,000 companies that reported financials in 2017 shows that only 39% of those that responded had completed an audit and 37% said they have not yet completed it.
Only 7% of financial firms said they are in compliance with the requirements of the Federal Deposit Insurance Corp.’s rules, and only 3% of firms said their audits were completed, according a release from the Council of Financial Institutions.
The companies that have completed their audits are more likely to be larger companies with a higher average net worth.
The Council of Finance, a non-profit group representing banks, said it has been monitoring the financials of more than 700 firms since the end of the financial crisis, which began in 2007.
It said the survey’s results, though encouraging, are not definitive.
The report from the Institute for Financial Management (IFM) also highlights that only 7% have received the approval of a regulator for a financial disclosure.
The IFM said that only 15% of respondents said they had been notified that their financial disclosure was “unacceptable,” while 35% said that they had not been informed about the information.
The survey also found that nearly all of the firms that said they were not audited reported that they did not have to report the amount of money they received.
Some of the more notable findings from the survey are as follows:Nearly half of the surveyed firms said that the number of years they were in compliance has decreased.
In contrast, 47% of companies that are auditing said that their compliance has increased.
About half of all surveyed firms that reported having a net worth of less than $1 billion said that it was difficult to assess the amount they received in compensation.
Nearly a quarter of the survey respondents said that companies are in financial trouble, while 21% said their companies are insolvent.
Almost half of respondents reported that there is no data available on how much of their company’s money they were paid in bonuses, which has increased the number that said it was a problem.
About 40% of surveyed firms reported that their tax returns were complete, while less than 10% of said that those returns were incomplete.
About 10% said the company was in compliance, while nearly a third said they weren’t.
The council said it is looking at more research to determine if the number is statistically significant.