How are a Startup's financials reviewed?

The SEC specifies the types of financial statements to be disclosed and the method of validation based on the amount of money the Startup wants to raise (see chart).

If this Reg CF (Title III) offering combined with any others the Startup has conducted within the last 12 months totals:

The Startup must provide:

$107,000 or less

The Startup’s total income, tax income and total tax as reported on the Startup’s federal tax return, certified by the principal executive officer of the Issuer; and financial statements of the Issuer, certified by the principal executive officer of the Issuer. If financial statements are available that have been reviewed or audited by a public accountant that is independent of Issuer, then those financial statements will be used instead.

More than $107,000
but less than $535,000

Financial statements that have been reviewed by a public accountant that is independent of the Issuer. If financial statements are available that have been audited by a public accountant that is independent of Issuer, then those financial statements will be used instead.

More than $535,000

If this is the Startup's first Title III offering, the Startup must provide financial statements that have been reviewed by a public accountant that is independent of the Startup. If this is not the Startup's first Title III offering, the Startup will need financial statements that have been audited by a public accountant that is independent of the Startup.