Should you have an audit?

With certain exceptions, companies which are “small” as defined in the Companies Act, do not need to have their annual financial statements audited.

The criteria for “small company” are any two of the following:-

• Turnover < £10.2m
• Gross assets (ie fixed + current assets) < £5.1m
• No. of employees < 50

The above notwithstanding, a significant number of companies which qualify as small choose to have their financial statements audited, and this article sets out below some of the reasons why an audit might be appropriate for your business:

• The audit process provides additional comfort on the accuracy and reliability of the company’s record-keeping, particularly if senior management and/or shareholders are remote from the day to day operations;

• Audited financial statements may be required to satisfy prospective lenders or to comply with lending covenants;

• Companies providing services to the public sector are often required to provide audited financial statements when tendering for contracts;

• Being able to provide audited financial statements may be beneficial if the business is likely to be sold at some stage in the future – prospective purchasers are likely to place greater reliance on audited financial statements when carrying out their due diligence.

We work with you during the audit process to help you understand any issues or business risks which may arise. We can also provide support and advice on possible options which could help you to mitigate those issues or risks.

To discuss this or anything else, please contact David Wilce on 01225 785520 or send him an email