Understanding Reg CF: even “certified” financial statements need to be in GAAP

With one week to go we are hearing that a number of companies are realizing their financial statements are not going to be reviewed in time by their accountants. But they really want to launch on May 16!

So they are planning to file on Form C for amounts less than $100,000 and “certifying” the financials, with a view to filing an amendment later.

Think about this carefully before you do it. The financial statements (for any level of raise) are required to be prepared in accordance with Generally Accepted Accounting Principles (GAAP), reflecting all the requirements of GAAP with respect to revenue recognition, capitalization or expensing, and all that other stuff (GAAP guidelines are about a bazillion pages long) and set out in approved formats. QuickBooks financial statements are not GAAP. The officer signing the certification has to certify that the financial statements are “true and complete.” You want to be very sure that they are before you sign that certification!

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