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Auditors are required to issue such statements when there is no line of sight to the company being solvent (and no one can guarantee that the company can close
by taylorwc 11y ago
Auditors are required to issue such statements when there is no line of sight to the company being solvent (and no one can guarantee that the company can close a financing round.) I'd venture a guess that almost every startup at a similar stage to SoundCloud would have the same issue if they are audited.
- TheLogothete 11y agoSoundcloud is almost 10 years old. At what point a company stops being a startup? At what point it stops being feasible for a company to operate at a loss?
- taylorwc 11y agoAre these meant to be rhetorical? You decide when you're going to stop calling it a startup. They are venture-backed and founded within the past decade. I'm going to call them a startup. As for question number two, I'll let you count how many publicly-traded companies aren't profitable that have been around for decades. I didn't register an opinion on whether SoundCloud should or shouldn't be profitable, I merely said what GAAS[0] requires an auditor to do. [0] http://pcaobus.org/Standards/Auditing/Pages/AU341.aspx http://pcaobus.org/Standards/Auditing/Pages/AU341.aspx
- sosborn 11y agoThere is operating at a loss because you are reinvesting (see: Amazon) and there is operating at a loss because your business isn't viable. Soundcloud is somewhere in between those two extremes.
- taylorwc 11y agoVery true--Amazon would never have a going concern statement issued in its audit, because it voluntarily reinvests what would otherwise be operating profit. I was thinking more along the lines of a company like Sprint, where they are only solvent through issuance of debt and outside investment.