A key area that auditors will focus on is how you recognize your revenue. They review how initial franchise fees and royalties are recorded, as different methods can affect the financial statements. Getting this right from the beginning is crucial for accurate financial reporting and overall business health.
Auditors also pay close attention to the equity of the business to see if it has enough to keep going, a concept known as “going concern.” If your equity is in the negative, it’s a big warning sign about whether the business can survive. This is particularly important for new franchises that might face early losses and not have enough capital. In these cases, auditors might need to add a note in their report to point out the financial risks, which could cause concern for investors and lenders
But with franchising, it’s more complicated. The initial franchise fee might not be recognized until the franchise opens, because there are many steps involved, like finding a location and training staff. Some businesses simplify this by separating these steps so they can recognize revenue sooner. Royalties, on the other hand, are usually straightforward and are recognized weekly or monthly, depending on the type of franchise.
Getting revenue recognition right is important because it influences how your financial health looks to others, particularly to your investors, regulators, and other stakeholders.
Make sure no single person is responsible for too many financial tasks. For example, the person paying the bills should not be the person making the deposits. When you have the right amount of layers or have multiple people involved will reduce the risk of errors and protect your business from potential fraud. It will also help you avoid serious financial setbacks and make the audit process much smoother.
Once you have some names, interview them and get their fee proposals. Choose someone you trust and feel comfortable with, and who is responsive. Building a good relationship with your auditor is key to a smooth audit process.
Kathy (host):
Well, hello there, and welcome back to another episode of “Help! My Business Is Growing,” a podcast where we explore how to grow and build a business that is healthy and sustainable. I’m your host, Kathy Svetina, a fractional CFO and founder of a company called NewCastle Finance, a company where we believe that everything that you do in your business is eventually going to end up in your finances. And to get to healthy finances is, of course, to have a healthy business. But the question might be, how in the world do you get there? Well, this is where this podcast comes in to help, and today’s topic is going to be franchising, more specifically, auditing for franchising – the franchise audit. Because franchising can be a great way to propel your business forward, but you have to be prepared for it. And one way to prepare for that next step in your business, franchising, if you so choose to go down that path, is to have a franchise audit. So what exactly is a franchise audit? How does it work? And why is it so important for the financial health of your new franchise business? Well, this is what we’re going to be talking about in this episode. And as a reminder, all of the episodes on this podcast, each one has its own blog and comes with timestamps. And if you are interested in scanning through the episode before you listen to it, all of these resources are going to be in the show notes. So there’s going to be a link to the blog post, there’s going to be more detailed timestamps. So go ahead and use those resources – they’re there for you should you need to use them. So my guest today is Stacy Farber, and she brings over 25 years of experience in audit and financial leadership. She is the Connecticut Audit and Attest Practice Leader, and she has extensive experience completing financial statement audits, single audits and reviews and compilations from multiple industries including franchising entities. This is going to be a really insightful conversation should you want to go down the franchising route. So please join us.
Kathy (host):
Stacy, welcome to the podcast.
Stacy (guest):
Thank you. Nice to be here.
Kathy (host):
Thanks so much for being here. You are actually one of my first accountants that specializes in franchises, so I’m super excited about this because we’re going to be talking about franchise auditing. And one of the episodes that we’ve done in the podcast before, I think it was episode 32, is about how to turn a business into a franchise, and things that you should be aware of. So this is a great episode to tie into that, because we’re going to be talking about franchises from the financial side, and I want to talk about the audit specifically because this is such an important side of this business. Let’s start here. What is a franchise audit, exactly?
Stacy (guest):
So that’s a great question. So an audit in general, whether it’s a franchise or not, we’re going to come in and we’re going to look at the company’s numbers, and we’re going to corroborate and verify that those numbers are accurate. For a franchise business, there are certain states that actually require an audit. So if you’re a new franchise entity or an existing franchise entity, you may or may not need an audit, but if you’re looking to sell in certain states, they do require it, so that’s where we would come into play. And audits are the highest level of assurance that you can get. So there’s three different levels: compilation, review, and audit. So in this case, we’re talking about an audit, so you get an opinion from the accountant on your financial statements that says whether or not we basically agree or not with your records. And were there any major issues that we found that would possibly prevent us from giving an unmodified opinion, which is the highest level of opinion we could give?
Kathy (host):
And what are some of the things that you’re looking at when you are looking at the financial statements? So for example, let’s say hypothetically that I’m starting a franchise that I want to start selling, what would I need in my financial statements to get to that highest approval of an accountant like yourself? What are some of the things that you would be looking at?
Stacy (guest):
So what we would do initially, we would get the trial balance, and then we would ask for supporting documentation. Most of our clients have us prepare their financial statements, so we would go through that. And if we’re starting from scratch, like I have for some of my clients, we need all the permanent file documents. We need, if it’s a limited liability company, we would need the organization documents. We would need their franchise FDD – it basically spells out what the franchise fees are and all of those sorts of things. So we would need all of those relevant documents to accumulate all the footnotes, and then from there, we’d be looking at the balances and making sure that they’re correct. One of the biggest areas for a franchise entity is revenue. So that initial franchise fee and the royalties, those are the two items that they collect from the franchisees when they sell. So for us, that initial conversation with the client is, “How are you recognizing your revenue?” Because there are various ways where you can recognize it and getting it right up front is what they want to do. And there is, you know, I don’t want to go into too many details, because it can get a little tricky and technical, but there’s something that we call a practical expedient, where they can account for certain pre-opening costs separate and distinct from that franchise fee, in which case they can recognize that initial franchise fee right up front, which makes their revenue higher, and it makes their financial statements look better. So in terms of revenue recognition, that’s the biggest piece of it, and if they make that election for that practical expedient, that will help their books look better initially. And one of the biggest issues for a new company is making sure that they have enough equity. So if their equity is negative because they didn’t put any money into it, and they just have expenses and they don’t have any revenue, then from our perspective, we would have to evaluate whether they’re a going concern. And what that means is, can they stay in business for a year and a day past the financial statement issuance date? And that’s a big concern for investors. It’s a big concern for any banks that have lent money, things like that. So on an initial franchise entity, that’s another area that we look very hard at. You know, I just had a client that went through this. We did have to put the emphasis of matter in, because they were at a loss. Their equity was negative, and then their operating entity that was supporting them wasn’t looking that great either. So we couldn’t hang our hat on “Well, the operating entity is doing really well. They’ve got the cash. They can support the franchise entity until they’re self-sufficient.” We didn’t have that, so we had to put that emphasis of matter in.
Kathy (host):
I want to pause this – what negative equity means? It just means, when you’re looking at your financial statements when you look at the balance sheet, you know, balance sheet equals assets. Assets equal liabilities plus equity. That’s how you should look at your balance sheet. If you look at your equity section, and it’s negative, that essentially tells you that you have taken more out of the business than what you should have. So for example, you have had more expenses than you have had revenue. So you have had losses over the years that have accumulated either throughout the years or maybe if you just started recently. So your retained earnings are actually negative, and if you haven’t put any money in, that means that you would have negative equity, correct?
Stacy (guest):
So in this case, with this new company that I was working with, they were telling me that they were going to put capital in, but it didn’t happen. As of the financial statement date, they did get an additional investor subsequently, but it just wasn’t enough to remove that doubt. So we had to leave that paragraph in.
Kathy (host):
That would be important. So for example, if I am, if I am buying a franchise like this, and I see financial statements like that, what would that tell me, as someone who’s buying, for example?
Stacy (guest):
So you’re talking about a franchisee, yep. So I don’t know that a franchisee would get a copy of the financial statements, but if they did, that would raise some concern, because I wouldn’t want to buy into a business that is struggling. If it’s a new concept and it’s, “Hey, listen, we just started this year. We’ve only sold one or two franchises. It’s not that we’re not doing well. We’re just new” – well, that’s a different story. But if you’re looking at a franchise that’s been in business for 10 years, and they’re showing losses and they’re showing negative equity, I as an investor might not want to invest in that company.
Kathy (host):
Yeah, or at least it should give you red flags of, hey, you have to have more conversations about this, like, what’s going on, right? So you as an auditor, when you come in, obviously, you look at the negative equity, if there’s something going on there. But let’s talk about this concept of revenue recognition, what exactly that is, and how does it really impact the financial statements when you are auditing them?
Stacy (guest):
So revenue recognition is basically in terms of if you’re selling something, once you’ve earned that sale, it becomes revenue. So if you think about a manufacturer, you know, once they ship the product, that’s considered earned revenue, and then they can book it, whether they’ve received the cash for it or not. So that’s recognized revenue. In the case of a franchise, it can be tricky, right? Because you’ve got your initial franchise fee and then you have your royalties, and there are some schools of thought that you shouldn’t recognize the initial franchise fee until the franchise opens. There’s separate and distinct factors like finding location, building the building, there’s training costs, there’s so many factors that go into it that can be considered part of recognizing the revenue. But if you elect this practical expedient, you can separate all of those different components, and you can recognize the initial franchise fee without having to deal with the building costs and the training costs and things like that. So that’s where, you know, when it’s a new one, that’s a nice option to have and to take because you don’t have to deal with all the nonsense of carving out all these different milestones. So I think it’s a little bit easier. And then on the royalties, that’s easy, because most of them do it weekly. I think it depends on the type of franchise. It’s interesting to think about that it’s not just restaurants – it can be gyms, it can be daycares. So some may do it weekly, some may do it monthly. Because think about a daycare, they might charge the families monthly rather than weekly. So you know, they want to coordinate that so that they’re not requesting money before the franchisee has it. So those are easy. That’s easy revenue recognition, because if you think about a restaurant, you know they’re serving meals every day, so it’s daily recognized revenue and then weekly. So you know it can vary based on each type of business.
Kathy (host):
Yep, it really depends on what business you have. And if you need to get this audit done, how long does that take and what should you need to have in place to be prepared for this type of audit?
Stacy (guest):
So the timeline of an audit can depend on the size of the company and the responsiveness of the client contact. So if a client is very responsive and they’re on top of things, and maybe they have an outside accountant that does their bookkeeping for them, it can be as short as one to two weeks or up to a month, depending on how much we need to do. So if it’s an existing entity that has multiple new franchises, you know, we’re going to want to get all those contracts, and we’re going to want to look at the revenue in detail. And obviously, there’s going to be more than just cash and revenue on those, but the more there is, the more there is to audit. So those can take, you know, I would say anywhere from one to two weeks, up to three to four weeks, and again, based on the responsiveness. But you know, these new companies, they want to make sure they have good teams in place. So they want to have good accountants, tax folks, and lawyers, and then they just want to make sure that they’re housing all of their documents in a place that is easily accessible because it doesn’t matter if we audited it last year, we’re going to request copies of new contracts and potentially things we didn’t test in the prior year and the following year. So just making sure they have good records, they know where everything is, and they have a good team in place to help them.
Kathy (host):
And when you do this, how many years do you test? Do you have, like, a specific number of years that you go, like, two, three years? Do you go back a couple of years? So especially if a company has been around for, let’s say, 10 years, and now they’re starting to, you know, sell these franchises, like, how far back do you go?
Stacy (guest):
So typically, an audit is a one-year only. But if, let’s just say, hypothetically, it’s a newly audited entity, where they’ve never been audited in the past, we may want to look at some prior year information, or if we find issues. So a lot of these companies, they’ll have revenue. They’ll also have deferred revenue if they haven’t elected the practical expedient. So for a long-term company, they’re going to have deferred revenue. If we start looking at those schedules, and it’s not making sense, it’s not calculating properly, we may need to request prior year information. If it’s a company that, let’s say, I come in as the new auditor, and they’ve been audited in the past – we come in as it’s called, the successor auditor and we’ll request access to the predecessor auditor’s files, and we’ll look through their files and make sure that their work papers are sufficient for us to rely upon, and in which case, if it is, then we don’t need to go back to a prior year and audit prior year balances.
Kathy (host):
And for those who are not familiar with the term of deferred revenue, that is an item on the balance sheet that sits on the balance sheet until you are recognizing that revenue. This is where the revenue recognition comes in, that you have actually earned that revenue, then it moves into your profit and loss statement, and then it becomes your income, correct?
Stacy (guest):
And that can be short term or long term. So if these franchise agreements are, say, 20 years, you could have deferred revenue up to 20 years, because typically it coincides with the term of the contract.
Kathy (host):
Yep, and when you are starting to do a cadence of audits, would you be doing them every year? Would you be doing every couple of years? Or is it based on, for example, if you going into a new state, like, what’s the cadence of these audits that you should be thinking of when you’re starting to do audits?
Stacy (guest):
So typically, they’re every year. So if you’re working with states that require an audit, those states will require it every year. If you’re a franchise company that you’re considering going into a state that requires an audit, you may want to have that audit done beforehand, just to sort of weed out any issues and talk through these items like revenue recognition and going concern before you send those financial statements to a state that requires it, because the last thing you want to do is send them a financial statement that has going concern in it and is reflecting poor financial results, because they may deny your request to sell in that state.
Kathy (host):
And if they, if you get into a situation where they deny your request to sell in that state, what are your options there? What can you do? If anything?
Stacy (guest):
Well, if that were to happen, you would probably want to figure out how you can make your financial statements look better. And, you know, you might have to sell in states that don’t have the audit requirement. In order to do that, I’ve had clients where, just because of how they were originally set up, they had significant losses, and they had negative equity because they had bought out a prior owner, and that went through there. So it made it look like they weren’t doing well, but there were these other factors. So what they ended up doing was they actually set up different entities and transferred all of those balances that didn’t really relate to the franchise business out, and then that way, their financial statements looked much better.
Kathy (host):
And this is an interesting topic, like, what do you do in these scenarios? Because I think this is where another accounting term that’s so important really comes to the forefront here is cash versus accrual accounting because if you have done that switch very recently too, it can significantly impact your financial statements. So let’s talk also about if you have seen franchises that have actually been on the cash accounting, and it made it look better, or sometimes even worse, than it would on accrual, and then they couldn’t get through this process because their financials were denied, because it just didn’t look good for the state.
Stacy (guest):
So that was actually the case for a new client of mine this year. They had an accounting firm that was more tax-oriented than audit-oriented, so they were booking everything cash basis. And so when we came in to do the audit, they had sold the franchise, but they hadn’t received the cash yet, so it wasn’t booked. So I had the conversation with the owner, with the accountants on the phone, and I said, “I’m a little confused, because you said you sold the franchise, and I don’t see the amount on the financial statements.” And so the bookkeepers said, “Well, we didn’t book it because they didn’t receive the cash.” And I said, “Well, this has got to be an accrual basis financial statement, so we need you to go ahead and go through everything and make sure you’re booking all of the accrual basis entries.” So they had to book the revenue. They had expenses incurred but not paid yet, so those had to get recorded. So from a P&L standpoint, it actually helped, because they only had expenses reported. They had no revenue. So it did help, but it didn’t completely eliminate the loss that they had. It made it so it was small, but in conjunction with very little capital infused, the loss – you know, it just didn’t present a good financial statement.
Kathy (host):
Yep. And I want to pause here for a second to explain the difference between the cash and accrual accounting, which is what we’ve gone through here, is that in cash accounting, essentially no transaction has happened until it actually hits your bank account. So if the cash hasn’t appeared yet, it essentially doesn’t exist on your financial statements. And that becomes such a problem, because obviously things are happening like, for example, if I were to send a bill today and you were to pay me 30 days later, I’m obviously expecting a payment, I would record that on my financial statements in the accrual system, but on the cash system, that transaction did not happen until you have actually paid me 30 days, correct?
Stacy (guest):
And there is a tax strategy to that, because on the tax side, I actually had them file cash basis for tax purposes to delay the amount they were going to owe the IRS, because cash basis, you’re only going to pay taxes on what you earn. So in their case, they had a loss. But, you know, for tax purposes, you don’t pay taxes when you have a loss. Sometimes there’s state minimums, but that’s separate. But for them, this way, they delayed their tax payments into this year, so hopefully they have the cash coming in so that they can pay those taxes. And then, of course, you know, it’ll catch up. But it’s just a one-year delay, hopefully, but at least you know, from a tax standpoint, a lot of businesses will file cash basis because there’s drastic differences between their cash and accrual basis numbers.
Kathy (host):
Yep, and what are some of the other things that you have seen that become issues when you’re doing these audits? So the cash versus accrual and the revenue recognition, anything else that you have seen that are like common problems on these financial statements?
Stacy (guest):
Well, just in general, we see a lot of issues when it comes to controls. So as a business owner, you want to make sure you have good controls in place, basically over all of your financial records, but especially cash and then journal entries, because if you put somebody in charge who doesn’t really know what they’re doing, then when we come in to do the audit, we may have entries, you may end up getting a control deficiency letter, which means your controls were not good, and that can raise more issues down the line. So when you’re starting these businesses, you kind of want to think about who you want to have their hands in things, and who’s reviewing and approving certain things, just to make sure that there’s a segregation of duties, so not one person is doing everything. And you know, whoever’s paying the bills can’t also make deposits and things like that, where you want to make sure that everything is kind of on the up and up, and that there’s two sets of eyes on things, because the last thing you want to do is, as the business owner, go to look at your bank account and there’s nothing there, because whoever’s in charge of it is stealing from you. Obviously, that’s, you know, I don’t want to scare anybody. That’s worst-case scenario, but these are things you want to think about when you’re starting a business and moving forward with an audit.
Kathy (host):
And this is such an uncomfortable topic as a business owner, thinking that someone might be stealing from you, but it’s an unfortunate reality in small businesses, because in a small business, there’s not that many internal controls for two reasons. One is because small businesses are generally not aware of how important that is and what to actually do about it. And two is that you might not have enough people to do that internal control, so you as an owner, are essentially kind of a watchdog and making sure that things are done the appropriate way. And also you have to make sure that the people who are your bookkeepers and accountants are actually educated in accounting, in proper accounting, because I have seen a lot of times that the bookkeeping is done by the office manager because they just know how to do QuickBooks.
Stacy (guest):
Exactly. And I have seen that too. And in those cases, you’re setting yourself up for failure, because, to your point, you need to know what you’re doing, and if you’re just booking stuff because it came in, but you don’t really know where you’re booking it or how to book it properly, then when we come in to do the audit, we’re going to have entries, and it’s going to be a mess, and then we’re going to have to bill extra because it’s out of scope. So definitely setting things up the right way from the beginning is going to save a headache down the line.
Kathy (host):
Exactly. And if anyone is booking any entries into your accounting system, this should always have support. Like, why are we doing this? How do we come to this conclusion that we need to do it? Like, there has to be a reason for it and attached to it. This is something that got basically hammered into my brain from my corporate days when I started in accounting for the first two years. It’s like every entry needed to have support, because when the auditors came in, that’s the first thing that they would pull. And I will tell you, you know, as a business owner, or even as an accountant, if you’re doing the books now, you’re not going to remember what you did two-three months ago, maybe even two years ago, why did that entry happen? So it’s so important to have that support attached to it.
Stacy (guest):
It really is. And even in the accounting profession as a whole, journal entries are under great scrutiny. And even within our firm, we’re in the process of revamping our testing procedures, because when we get inspected, that’s something that they’re looking at as well. So why did we test these entries? Are we testing entries where the risks are, what are the risks, and really dialing into it? And I’ll be honest, there’s a lot of clients where we’ll ask for entry support. To your point, you should have support for it, and it’s common they don’t really have support. And in some cases, that’s okay if it’s, “Well, we booked it to the wrong account.” Okay, well, that makes sense. If it’s interest income for the month, okay, well, where’s the bank statement that you got the number from? Things like that. I mean, it can be such a little piece of documentation. It doesn’t have to be anything elaborate, but there should be support for it.
Kathy (host):
Yeah, exactly. So I want to move a little bit out of the whole audit realm here. And because you work with franchises so much, I do want to ask you, like, what are some of the best practices in the franchise world that you have seen when you’re actually establishing a franchise and when you’re running it. Have you seen any good things that you can share with us?
Stacy (guest):
Sure. So I would say in the initial setup, the biggest thing is to make sure you have a good team in place. And by team, I mean lawyer, accountant, and then tax advisor. So your accountant could be the person that’s doing your books on a daily basis. They could also be your tax advisor, so that could be the same person. And then, if you need an audit, making sure you have a good auditor. And you know, if you’re working with a bigger firm, your auditor and your tax person could be the same, but then your bookkeeper would need to be somebody separate from that firm because of independence issues. And you know, just to explain what independence is, you basically can’t audit your own work. So that’s what that means. So that’s kind of the initial – you want to have that good team in place, because your lawyer is going to help you with all of your documentation and your setup, making sure that you’re set up in the right state and kind of like domiciled in the right state that’s going to be tax advantageous. You want to make sure that they’re helping you with your incorporation documents and your franchise documents, and helping you draft those contracts and making sure they’re ironclad, and they get you what you want with the franchise fees and the royalty fees, so that when you’re ready to sell, you’ve got that boilerplate contract in place that you can change the name, and it makes it easier going forward. And then if you need to make any small revisions, you can kind of do that yourself. So that would be the key initial team setup. And you know, who you want to kind of have your back to make sure you’re doing things the right way. And then, depending on how big you anticipate getting, software is another key area that you want to think about ahead of time. So if you think it’s going to be a simple concept, and you’re not going to actually own any stores, because I’ve had franchises where an owner wants to get out, they want to retire, or they just don’t want to do it anymore, well then the franchisor ends up buying it back, and then that’s in their business. And so it can get complicated because there’s a lot more transactions in a store than just the franchisor entity. So you really want to think all of that through to make sure you have the right software, because I see a lot of people start out on QuickBooks, which is perfectly fine, but if you end up really developing and having multiple stores and multiple states, and then maybe if you decide to branch out into some other concept, you may want to have a little more of a better software, like a NetSuite, or Sage Intacct, you know, something like that, that can handle more robust transactions, more complicated entity structures. Because if you’re going to start doing some due-tos and due-froms, QuickBooks can be good if you have two, but once you get into three, four or five, it’s just not easy, and it just can be more trouble than it’s worth.
Kathy (host):
And if you’re looking into that, we actually have a great episode on ERP implementations, which NetSuite is one of them. So what you should be looking at from a perspective of data and people, so that’s a good episode to go back to and listen to that as well, if you’re thinking on those terms. Hey, I gotta move from QuickBooks into something else, and we’re gonna put that into the show notes as well.
Stacy (guest):
Yeah. So for an already in existence franchise entity, you know, just kind of like revisiting things frequently to make sure that your contracts are ironclad and that everything – like we talked about the controls, and we talked about the record-keeping, just making sure that things look good before your audit. You know, it’s always a good practice to do monthly reconciliation of your balance sheet accounts. That’s where you’re going to find issues. If things are misclassified, misposted, missing. So I recommend that for all clients, do a month-end close process. If you’re too small and a month-end close is just too much work, at a minimum, do quarterly, because that’s the best way you’re gonna know in advance how your year is going. If you wait until the end of the year, it’s all going to be a surprise, and it’s going to be so much work to get that all done before your auditor comes in, you’re gonna be scrambling. You’re gonna make mistakes. So definitely, routine reviews of your records is a really good best practice.
Kathy (host):
And if you looking into that, we actually have a great episode on ERP implementations, which is NetSuite is one of them. So what you should be looking at from a perspective of data and people, so that’s a that’s a good episode to go back to and listen to that as well, if you’re thinking on those terms. Hey, I gotta move from QuickBooks into something else, and we’re gonna put that into the show notes as well.
Stacy (guest):
Yeah. So for, you know, for an already in existence franchise, entity you know, just, just kind of like revisiting things frequently to make sure that your contracts are ironclad and that you know just everything you know. Like we talked about the controls, and we talked about the record-keeping, just making sure that things look good before your audit. You know, it’s always a good practice to do monthly reconciliation of your balance sheet accounts. That’s where you’re going to find issues. If things are misclassified, mis posted, or missing. So I recommend that for all clients, do a month-end close process, if you’re too small and a month-end close is just too much work, at a minimum, due quarterly, because that’s the best way you’re gonna, you’re gonna you’re gonna know in advance how your year is going by doing that, if you wait until the end of the year, it’s all going to be a surprise, and it’s going to be so much work To get that all done before your auditor comes in, you’re gonna be scrambling. You’re gonna make mistakes. So definitely, routine reviews of your records is a really good best practice.
Kathy (host):
Yep. And I always say, you know, as a fractional CFO, I see things generally go to die in the balance sheet, and no one really looks at it. So it’s where all the skeletons hide – they’re in the balance sheet.
Stacy (guest):
Yeah, I’ve had clients, not necessarily franchise entities, where they’ll have just this reserve account. And I’d ask every year, “So what is that actually for?” “Well, just in case the IRS ever comes back and makes us pay extra taxes.” But you’re an S corp, so you’re not really paying taxes to the IRS. You’re paying state and local taxes. “Yeah, but just in case, just in case.” So I agree it can be the place for random things to hide.
Kathy (host):
Oh, yeah. Stacy, you know, we are about 33 minutes into this conversation, and if someone is listening to this and they’re saying, “Okay, I get it. I need to get my franchise financials audited, but I have no idea where to start.” Like, what would be your best advice that you can give them – something actionable they can do in the next week or two?
Stacy (guest):
So really, the best thing you can do is, you know, depending on your location – I mean, most of us do these audits remotely now – but you could do an internet search. Ask some trusted advisors who might be a good auditor. Reach out to your franchise attorneys – usually, they are really good resources for that, where they’ll make some recommendations on accountants that they currently work with. So that would be step one, get a list of accountants that you can interview and talk to them and get fee proposals and just – for me, the biggest thing would be, you know, do you like the person? Do you think that you can have a relationship with them? Do you think you can trust them? Do you think they’re going to give you a good product? Do you think they’re going to be responsive? That’s really the first step that they would want to do, and you can do that pretty quickly.
Kathy (host):
Yeah. Stacy, please tell us where can our listeners find you?
Stacy (guest):
They can find me on LinkedIn. I have a profile on LinkedIn. I’m active on there and responsive. Or they could send me an email.
Kathy (host):
Awesome. Stacy, we’re going to put all of those in the episode show notes, so if you want to contact Stacy and you want to see her LinkedIn or email, it’s actually going to be in the episode show notes. So I encourage you to use that if you need it. And thank you so much, Stacy, it’s been an absolute pleasure to talk to you today.
Stacy (guest):
Thank you so much for having me.
Stacy Farber brings over 25 years of experience in audit and financial leadership experience to her engagements and is the Connecticut Audit and Attest Practice Leader. She has extensive experience completing financial statement audits, single audits, and reviews and compilations for multiple industries, including franchising entities. She will be responsible for overseeing the audit engagement and communicating with management regularly to ensure service quality.