NAPEO: National Association of Professional Employer Organizations

What is a PEO?
What is a PEO?


As part of a long-term strategic planning process, NAPEO's members identified the adoption of voluntary professional performance practices as a key objective for the association and the industry. Among those best practices related to financial performance is the recommendation that a PEO should have audited financial statements.*

A number of state PEO licensing and registration laws currently require audited financial statements. In addition, independent audits are thought to enhance internal controls and accuracy of financial information. While independent audits cannot prevent fraud or financial failure, they provide management with an independent review of and opinion that the financial statements of the entity are accurate, complete and fairly presented according to generally accepted accounting principles (GAAP).

Similar to their business clients, most PEOs are private entities that do not have public financial statements. Nonetheless, clients are advised to check a PEO's references, reputation, and financial background. Ask if the PEO has audited financial statements, obtain credit references, and conduct due diligence. In states where required, make certain that the PEO is duly licensed or registered. Many PEOs provide clients an independent CPA's attestation regarding the PEO's audited financial statements and payment of taxes and benefit plans.

NAPEO members: For more information, please download the NAPEO Legal Review™ entitled "Audit Issues for PEOs" and the full text of NAPEO's Professional Performance Practices.

*Note: NAPEO's professional performance practices are part of NAPEO's broader mission of enhancing the professionalism of the industry. Adherence to such practices is voluntary and not required as a condition for membership.


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