US accounting / auditing for foreigners
with businesses in the USA

In the USA, audits have become expensive and are not perceived as useful business tools. They are required where entities are registered with the Securities and Exchange Commission “SEC”. This really relates to quoted companies and those with publicly issued debt and equity. For the vast majority of companies in the USA, there is no requirement to have an audit. In fact, banks often will not require audits when making loans. Given the "Enron" type situations in recent years, banks may be even less interested in requiring audits.

The USA, has 3 formats of reports prepared by Certified Public Accountants “CPA” . Audits, Reviews and Compilations. Audits comply with the US Generally Accepted Auditing Standards “GAAS” they essentially comply with International Accounting Standards "IAS" (however, the disclosure requirements are more complex). Reviews are essentially statements by the "Auditors", that the statements conform with US Generally Accepted Accounting Principals “GAAP” together with a limited amount of checking, the statements must include all disclosure notes. A compilation, is essentially a statement by the "auditors" that they take no responsibility for the statements and they can be issued without disclosure notes or cash flows. Auditors are not allowed to prepare any balance sheet, income statement or cash flow, which is not part of one of the above reports. Even projections require specialized forms of accountant's reports as described in GAAS.

It has become common for foreign owned businesses to request their "auditors" to undertake limited reviews. A limited review is usually used by parent companies to give some comfort that the financial statements are being prepared correctly. They are essentially a special purpose report prepared by the “auditors” for internal use.

All businesses in the US (and US incorporated entities) have to prepare annual tax returns for the Federal Government (through the Internal Revenue Service “IRS”) and usually for one or more states and perhaps a city. These returns have to comply with GAAP and are modified by the tax laws and are prepared on specific forms. In total there are over 13.000 tax forms in the USA!

For foreigners who are not conversant with the American regulations, a local advisor is essential to advise on the records required to be kept for tax purposes. Additionally, the USA is very “organized”. That is, to obtain credit, open bank accounts, obtain credit cards, obtain visas, import goods, deal with suppliers or just hire staff, one needs to know how it is done. It looks deceivingly simple! An accountant who is used to dealing with foreigners can be useful in all these cases, either directly or for referrals.

How can we best help foreign investors?

Think of us as your general business advisors, with specialized knowledge in certain areas.

Before venturing into the USA, we can provide general advice. It can be preparation of plans or examining the financial statements of potential partners / acquisitions. Once operating in the USA we can advise on accounting and tax matters and the practical issues relating to starting and running a business in the USA.

We are members of the American Institute of Certified Public Accountants “AICPA” and the New York State Society of Certified Public Accountants “NYSSCPA”.

E-mail us for a quotation. We will need a broad details of: your plans or what you wish to achieve.

If you just need guidance, assistance or technical advice with a specific issue, we can help you via e-mail. Our charge will be based on time.