What is an audit?
The form that an audit takes depends very much on the client that is being audited. The overall aim of the statutory audit is for the auditors to form an independent opinion regarding the completeness and accuracy of the financial statements for a given period. This involves the examination of the company’s financial and other records.
Why have an audit?
Some entities are required to have an audit by law or other reason. Others opt for an audit because they like the additional reassurance that an independent third party has checked their results and reviewed their accounting systems. At Richardsons, we use the annual audit not just as the time when we check the results, but also as an opportunity to add value and offer advice.
Who is obliged to have an audit?
There are a number of circumstances under which a business may need its financial statements to be audited. These are:
• Where a company does not qualify as small. A company is not small if it exceeds two or more of the following criteria:
- turnover above the statutory audit limit, currently £10.2 million excluding VAT
- gross assets of more than the small company limits, currently £5.1 million
- more than 50 employees on average
• Where a business is regulated. Examples of regulated businesses include financial services providers, charities, friendly societies and solicitors. There are often additional reporting requirements for these businesses, as the regulators often require assurance on procedural issues in addition to financial issues.
• Where a shareholder deposits a notice under Section 476 of the Companies Act 2006 requiring an audit be carried out.
• Where the bank or other lender requires that audited financial statements be prepared.
Can anyone carry out an audit?
No. The audit’s aim is the expression of an independent opinion on the financial statements of an entity. Therefore the auditor must be, and be seen to be, independent of the entity they are auditing.
In addition, auditors must be registered with one of the recognised bodies. In the UK these include the Institute in Chartered Accounts of England & Wales and the Association (ICAEW), of which Richardsons is a member.
How much will this cost?
Of course, that depends upon your particular requirements. However, we’re always happy to provide a free initial consultation. We then prefer to agree a fixed fee with clients in advance, so that you receive no unexpected bills. Our quotes always include the provision of ad-hoc advice on general and specific issues throughout the year. We are in a much better position to help your business grow if we know what you are doing, so we welcome your calls and don't charge you for listening! If we are required to undertake specific projects outside the bounds of our quote, we will always endeavour to quote a fixed fee for that work.
Who should I talk to about this?