April 12, 2012
The whole purpose of Crowd Funding is to have access to capital once a founder has exhausted friends and family. The requirement for audited financial statements on fundings over $100,000 just does not make sense. Audits are much more expensive after the Enron because of the liability the CPA firm is exposed to. Most small CPA firms (the ones startup can afford) will not even take on that risk and it is my assumption that most have even removed audits from their insurances policies. I agree that a review should be required for any offering to assure investors that the company is following GAP rules. In reality, an audit of a company seeking under $5000,000 and even up to $1,000,000 will not achieve any more security for the investor. The company's accounting system is just not that complicated in the early stages. A review will provide the same information with the same risk of fraud to the company officers without asking the audit/accounting firm to secure that risk at a very high price to the business.
I guess audit requirements are a part of the Congressional bill but it is just an unnecessary expense.