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SME IPO Readiness · Question
Short answer
Start by making the books tell one consistent story: reconcile accounts with tax and GST returns, record every liability and related-party dealing, remove personal spending from business ledgers, and apply accounting policies uniformly across years. Then let a qualified auditor test the result. Quiet, early corrections are far safer than explanations demanded during review.
Investors and reviewers will compare your accounts against returns, bank statements and each other. Differences that a lender might overlook become formal queries in an offer document, so the clean-up is about removing contradictions, not improving appearances.
A sensible order of work is as follows.
Cash-heavy or informally recorded income is the hardest item. Revenue that never entered the books cannot be shown as business strength later, and attempts to bring it in suddenly draw scrutiny. A candid discussion with the auditor on how much history can be corrected is better than hoping the question never arises.
A trading company's stock gap
A hypothetical distributor finds the stock in its books is far higher than what a physical count supports because old damaged goods were never written off. Writing them off lowers profit in the year of correction, but the restated numbers then stand on solid ground and later reviewers have nothing to challenge.
Expect restatement: the auditor may adjust past years for errors and policy changes, and each adjustment is explained in the offer document.
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