Accounting and Auditing Services in USA: An Overview

Accounting and auditing are essential functions for every business entity operating in the USA as it helps to maintain a track record of all the previous financial transactions of a company and, at the same time, keep a check on the future transactions of a company. Outsourcing these functions to Enterslice allows senior management to determine the financial stability of the company and help them to take timely decisions.

Outsourcing the accounting and auditing functions of your American company helps to save huge overheads. Enterslice offers virtual accounting and auditing services in USA for your firm by precisely catering to the accounting and auditing needs of your USA-based entity.

Regulatory and Statuary requirements in USA

• Auditing

Unlike other major jurisdictions of the world, the USA, being a business-friendly jurisdiction, does make it mandatory for a company to conduct statutory audits except for foreign or domestic entities that are registered with the US Securities and Exchange Commission (SEC). However, a USA bank will make it mandatory for a company to conduct a statutory audit as part of its lending process. An audit is performed in a company by an independent Certified Public Accountant (CPA).

The audit for a public company is conducted in accordance with the standards laid down in the Public Company Oversight Board (PCAOB). The audit exercises for other organisations are performed in accordance with the Generally Accepted Auditing Standards (GAAS) that have been issued and supported by the American Institute of Certified Public Accountants (AICPA). 

The most important element of an audit exercise is the opinion of the auditor, which is based on the information furnished in the financial statements. The opinion of the auditor determines whether the information fairly represents all the material aspects of the business, including the financial position, results of operations and the cash flows of the organisation in accordance with the US generally accepted accounting principles (GAAP).

Apart from the annual audited financial statements, all the public companies in the USA are also required to submit a quarterly assertion along with an annual report on the effectiveness of the internal controls to the SEC as per the provisions of the Sarbanes-Oxley Act. The auditor is supposed to attach an attestation to the annual report on the accuracy of the management’s report. The Sarbanes Oxley Act focuses on a number of governance-related issues with an emphasis on preventing fraud and deception by public companies.  

• Accounting

The prevailing laws of the USA don’t make it mandatory for all private companies in the USA to prepare formal financial statements of their companies. Unless specific requests have been made from the owners’, lenders’ etc. end, it is not necessary for private companies in the USA to prepare formal financial statements of the company. However, those companies that are registered with the SEC are required to follow the appropriate accounting standard guidelines. These companies may also be required to maintain the accounts depending on the requirements of various government agencies.

The balance sheet of the company should reflect the status of the company’s liabilities, assets and retained earnings over a particular period of time. The income statement of the company reflects the result of the business operations over a specific period of time. The USA’s financial reporting standards also require the preparation of Cash Flow statements demonstrating the receipt and usage of cash during a specific reporting period. The formats adopted for the preparation of these financial statements are provided in the GAAP rules.

Financial reporting in the USA requires certain disclosures to be made about the company’s accounting policies. The standards that are adopted for the preparation of financial statements of companies in the USA are governed by the US GAAP. Apart from these, the Government Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) are also recognised by the SEC and accounting profession as the authorities for issuing rules and guidelines for accounting principles.

The guidance is issued by the AICPA to the companies to maintain their fair and accurate reporting results of business transactions. Over the years, AICPA has issued guidance on accounting matters which includes the Practice Bulletins and Statements of Position. The AICPA issues guidance on accounting matters, including the Statements of Position and Practice Bulletins. The AICPA is a member of the International Federation of Accountants, and it works to maintain compatibility among the US and various international standards and practices.

Disclosure of Financial Statements

Private companies in the USA are not required to publicly disclose their financial accounts. Further, there are no requirements for a private company to file any financial statements on a public register. Private companies in the USA are neither required to file any financial statements to a public register nor are they required to submit them for tax purposes to the tax authorities. However, public companies are required to present quarterly and annual financial statements in Form 10Q and Form 10K filings, respectively, to the shareholders and the public at larger in furtherance of complying with the provisions of the SEC that include the requirements of quarterly interim reviews and annual audits. The annual disclosures made in Form 10K also disclose the management discussion and analysis of the companies' operating and financial results.

Accounting and Auditing Services in USA offered by Enterslice

• Accounting and Bookkeeping Services -

Most companies establish themselves in specific states, and as a result, they are required to comply with the respective state regulations in order to establish and run their businesses. These companies are also required to follow the reporting rules and requirements related to maintaining proper records.

Another important source of guidance for maintaining the financial records of a company is the Foreign Corrupt Practices Act containing the rules related to anti-bribery, anti-fraud and anti-corruption for maintaining the books and records of the transactions reflecting all the business transactions. Depending on the type and size of the organisation, a US company can adopt the cash or accrual method of accounting.

The underlying principle of maintaining the books of accounts in the US is that the company should maintain the books in accordance with the respective laws of the applicable jurisdiction keeping in mind that the accounts prepared by the company accurately and fairly reflect the transactions to which they relate, the assets and liabilities, the revenues and expenses. All the other transactions of the company should be supported by accurate Paper works, and the company should have an appropriate system of internal controls for accounting purposes.  

Lately, SEC has started contemplating the idea of adopting International Financial Reporting Standards (IFRS) in the USA, and this has become a topic of debate. Previously, a report was taken out by the SEC, and the report expressed concerns about the outright and immediate adoption of IFRS. However, lately, efforts are being made to converge US GAAP with the IFRS as new standards are being released by the International Accounting Standards Board (IASB) and the FASB. The SEC has suggested that one way of adopting IFRS is to gradually converge the IFRS into the US GAAP.

The task of bookkeeping and accounting involves the reconciliation of bank statements, reconciliation of credit cards, accounts payable, accounts receivables, payroll management and sales gross-up.

Following are the accounting and bookkeeping services offered by Enterslice:

1. Weekly/ Monthly job progress reports
2. Profit and Loss account
3. General ledger
4. Open item/ Query report
5. Balance sheet

• Maintaining Year-end Accounts -

Maintaining year-end accounts for the company is a laborious and highly intensive task and generally takes the time of the senior managers in their preparation. Outsourcing the task of maintaining the year-end accounts to Enterslice will allow you to reassign your human resources to business development tasks instead of keeping them occupied with unproductive formalities. Maintaining year–end records include preparation of working papers, lead schedules and control accounts, analysis of expenses and income, preparation of extended trial balance, reconciliation of control accounts with the statement balances, two-level review process etc.

The following reports shall be prepared by Enterslice:

• A full set of necessary papers, excel working papers having hyperlinks, indices, control accounts and lead schedules
• Software backup
• Full set of accounts
• Abbreviated accounts

• Ledger review -

Ledger review is an important element of accounting services offered by Enterslice for its clients. A ledger is necessary for the preparation of balance sheets, trial balances, and income statements of a company. Maintenance of the ledger for a company requires plenty of effort from the end of the management, which is why most companies are outsourcing this work to external support. Ledger review involves preparation and posting of adjustments, year-end adjustments, resolving posting of errors, and reviewing sub-ledger entries.

Enterslice, as part of its ledger review services, offer the following services to its clients:

1. Adjusted journal entries
2. Weekly and monthly job progress reports
3. Reviewing of the Profit and Loss report
4. Adjusting trial balance
5. Reporting on journal entries
6. Variance analysis
7. Software backup
8. Provisions or payables report

• Payroll Management -

Payroll Management of a company is no mean feat in the domain of management of the company. Payroll management involves intensive paperwork and following the latest payroll regulations. Every aspect of payroll management is a labour-intensive and time-consuming task. The typical tasks in payroll management involve entering the employees’ information in the software, making payroll checks, transferring the salary to the accounts of employees, setting up a payroll schedule for every client while meeting the policy requirements, payment of applicable income taxes, employment taxes, federal withholding taxes, insurances; generation of weekly, bi-weekly and monthly payroll based on the company’s needs and many small tasks.

Enterslice saves your company with your valuable time and permits you with the time to grow your business. Enterslice further helps you in bringing down the cost of payroll management by 50%. The following reports shall be prepared by Enterslice as part of payroll management services:

1. Weekly, bi-weekly and monthly reports based on the needs of the company
2. Electronic or manual filing of Form 941; NYS-45 returns
3. Checking pay stubs of the client
4. Email confirmation of payroll returns from clients
5. Issue of Form W-2 and 1099 after completion of the year

Auditing Services in USA   

• Audit Support Services -

Audit Support Services involve a variety of tasks which include interacting with the audit clients for auditing queries, rolling forward e-audit filed on Audit Software, transferring data from a normal excel sheet to an electronic file, undertaking casting procedures while maintaining mathematical accuracy, internal accuracy and preparing lead schedules with final accounts, reviewing the financial statements of companies, trusts and charities, checking accounts for their compliance with the relevant accounting standards. For undertaking these services, a checklist is prepared to report the errors to the onshore audit team and accordingly make changes in the future accounts and financial statements of the company.   

• Investigations, Advisory and Consulting Engagements -

Enterslice also offers investigations into the inappropriate activity or behaviour involving accounts and operations where fraud, waste or abuse of funds is taking place. Enterslice provides advisory and consulting engagements, reviews the existing business processes and strategies and advises on the procedures, policies and any management requests for reviews of areas considered mutually critical.

• Special Audits -

Apart from conducting statutory audits, Enterslice also conducts special types of audits such as compliance audits, construction audits, financial audits, investigative audits, tax audits, operational audits, information security audits etc.