By: John S. Morlu II, CPA
Introduction: The Silent Killer of Growth
Every 8(a) government contractor dreams of scaling — from winning that first $250,000 set-aside to securing multi-million-dollar IDIQs.
But many don’t realize that the roadblock to their growth often isn’t competition — it’s compliance with SBA’s financial reporting rules.
Failing to meet the SBA’s requirement for audited or independently reviewed financial statements is like stepping on a landmine you never saw coming. The explosion is slow — a letter from SBA, then delayed contract approvals, a nervous bonding agent, and suddenly your growth stalls.
Mistake #1: Waiting Until the Deadline
SBA requires annual financial statements prepared by an Independent CPA for 8(a) participants over certain revenue thresholds.
Too many firms wait until renewal time or after a contract award to start looking for a CPA.
By then:
- The CPA’s schedule is booked.
- Records are in disarray.
- Adjustments take weeks.
Result: Missed deadlines, higher fees for rush work, and sometimes ineligibility for new bids.
Pro Tip: Engage a CPA firm at least 3–4 months before your fiscal year-end.
Mistake #2: Confusing Bookkeeping with Compliance
Your in-house accountant or cousin with QuickBooks skills can keep daily books — but the SBA doesn’t accept in-house statements for required audits or reviews.
A proper Independent CPA Review or Audit:
- Evaluates internal controls.
- Tests transactions.
- Issues a report under professional standards (SSARS for reviews, GAAS for audits).
Skipping this step is like showing up to an airport with a handwritten boarding pass — the gate won’t open.
Mistake #3: Underestimating the SBA’s Scrutiny
Some firms assume SBA won’t notice late or inadequate reviews.
Wrong.
SBA’s compliance units routinely flag:
- Missing CPA signatures.
- Reports issued by unlicensed preparers.
- Statements that don’t follow GAAP.
These flags can lead to program suspension or loss of eligibility.
Mistake #4: Chasing the Cheapest CPA
Price matters, but so does experience.
Hiring a low-cost preparer who doesn’t know government contracting requirements often leads to:
- Reports rejected by SBA.
- Delays that cost you bid opportunities.
- Red flags for lenders and bonding companies.
The “cheapest” CPA can end up being the most expensive mistake.
Mistake #5: Treating Reviews as a Compliance Checkbox
An independent review is more than paperwork — it’s a window into your business health.
A skilled CPA can help you:
- Identify cash-flow issues early.
- Strengthen job-costing systems.
- Prepare for larger contracts and higher bonding capacity.
Ignoring these insights leaves you vulnerable to surprises when scaling.
The Bottom Line
Every year, strong 8(a) firms lose contracts or stall growth because of these mistakes. The tragedy is that it’s avoidable. A proactive, experienced CPA partner doesn’t just issue a report — they help you build a financial backbone that supports long-term growth.
If your revenues are nearing or exceeding SBA’s review thresholds, don’t wait for a compliance letter to arrive.
👉 Book a discovery call with JS Morlu today. We specialize in SBA 8(a) contractor audits and independent financial reviews — ensuring your compliance and strengthening your financial standing so you can focus on winning and delivering contracts.
Author: John S. Morlu II, CPA is the CEO and Chief Strategist of JS Morlu, leads a globally recognized public accounting and management consultancy firm. Under his visionary leadership, JS Morlu has become a pioneer in developing cutting-edge technologies across B2B, B2C, P2P, and B2G verticals. The firm’s groundbreaking innovations include AI-powered reconciliation software (ReckSoft.com) and advanced cloud accounting solutions (FinovatePro.com), setting new industry standards for efficiency, accuracy, and technological excellence.