August 21, 2014
To Whom It May Concern:
As someone with extensive experience in audits and accounting, I can assure you that my company, CrowdfundCPA, and others like it, will solve for the challenges facing the proposed rules of Title III. The negative media attention have focused on specific issues with Title III rather than recognizing that with each burgeoning industry, market solutions will appear. As an entrepreneur, I saw this need for more affordable audits, especially for young companies that are looking for financing in alternate ways and formed CrowdfundCPA to service this need. CrowdfundCPA is a network of small CPA firms whom specialize in audits of small businesses, allowing potential issuers to subject the financial details to us and receive proposals from the firms in our network.
Having worked in both a small CPA firm and the largest CPA firm, Deloitte & Touche, I know firsthand the difference between auditing multinational publicly traded companies and auditing small start-up businesses. The media attention and SEC estimates contained in the proposed rules are focused on the audit fees typically charged on long established, complex entities with many business units, audited by the largest of firms, whom have very large overhead and inherent inefficiencies. A high quality audit can be performed on a start-up business by a small firm that does not have this overhead and so many layers of approvals at a fraction of the costs being quoted.
For instance, a brand new start-up entity in the pre-revenue stages will have a very simple set of financial statements - we could perform a high quality audit on in a matter of days, due to the simplicity of the testing. Most firms benchmark towards a $150/hour billing rate, so the fee for such an audit would be in the range of $2k-$4k, rather than the $15k-$20k typically quoted in negative news reports.
My numbers are not just estimates; CrowdfundCPA is set up and ready to perform audits today. We have already provided proposals to dozens of companies that are currently awaiting release of the final rules, with the fees in the range discussed above.
Title III will allow our company to grow, acquire new customers and create jobs. We expect our business will be an integral solution to companies raising money on Title III platforms. Most early stage companies have limited resources and it is nearly impossible to gain access to capital through traditional means, especially without robust connections. Title III is the change we need to put our economy back together, and I will make it my mission to help assist and solve for audit requirements when these rules are finalized.
With the audit requirement providing confidence in the market, we are certain this industry will be a success. I urge you to issue the final rules as soon as possible to allow this industry to reach its potential. I’d be happy to work with your staff in any helpful capacity.
Sincerely,
Craig Denlinger, CPA