Accountant Audit Services

An audit of a company’s financial information is an independent examination of the relevant evidence that supports the numbers and disclosures in the statutory accounts and the significant judgements and estimates made by directors in preparing those financial statements. A statutory audit can only be carried out by a firm of Registered Auditors and aims to provide an independent opinion on the truth and fairness of your financial statements.

A company is legally required to have an audit if it exceeds 2 or more of the following thresholds:

• £10.2 million turnover 
• Gross assets of £5.1 million
• 50 employees 

Some companies must have an audit even if they do not meet these criteria, including if:

• it is a charity with turnover over £1 million
• it is a public company (unless it is dormant)
• it is a subsidiary (unless it qualifies for an exception
• it is an authorised insurance company
• it is involved in banking or issuing e-money
• it is regulated by the Financial Conduct Authority
• it is a corporate body and its shares have been traded on a regulated market in a European state
• the shareholders request and audit 

Even if you are not required to have an audit, you may choose to have one as it adds credibility to the company and provides comfort to the stakeholders that the financial statements show a true and fair view of the state of the company.

Yes, any business can have an audit even if it doesn’t need one as a statutory requirement. An audit will provide stakeholders with a level of comfort over the accuracy of the financial statements as they have been subject to an independent examination. An audit can also provide the company with valuable feedback on areas where you could improve processes or record keeping.

Each company is different and the exact work which will be undertaken will depend upon our risk assessment of your business. It is not possible to test every single transaction within the financial records as this would take too long. Instead we consider the materiality of a balance in order to select samples of transactions to test.

There are three key stages to an audit:

Planning

This includes the administration of the audit, undertaking a risk assessment and designing tests to address the key risks identified .

Gathering evidence

This is the actual testing stage where we gather evidence, which could involve some or all of the following:

• Discussions with directors and staff
• Calculating and investigating variances between the current and previous year and between budget and actual results
• Undertaking tests as designed at the planning stage
• Evaluating significant judgements and estimates made by the directors 
• Contacting a sample of your suppliers and customers to confirm the amounts that are owed 
• Reviewing the accounting policies and disclosures within the financial statements 

Any discrepancies which are found will be discussed with the directors to allow them a chance to adjust the financial statements before they are finalised .

Conclusion

This is where we assess the evidence we have gathered and conclude on whether the financial statements are free from material misstatement. Our opinion will hopefully be ‘unqualified’ which means that we are saying that the financial statements are true and fair.

Information is considered to be ‘material’ if its omission or distortion would impact the users understanding of the financial statements. We base our testing on a how material we consider individual balances to be. Materiality is based on the size of the balance, but also takes into account more qualitative considerations as well.

Our audit report states whether or not the financial statements show a true and fair view of the company’s financial position. If so, the audit report will be unqualified. If we cannot conclude that the financial statements show a true and fair view, possibly because you are unable to provide us with the evidence we need to see, then the report may have to be qualified.

Yes this is true, unless the parent company is established in the UK and prepares consolidated accounts, it will require an audit.

Yes, we could undertake an assurance review instead. An assurance review doesn’t provide the same level of assurance as an audit, however it is still an independent examination and can provide added credibility to the company’s financial information.

An assurance review provides an additional level of confidence to the users of the financial statements. Following the review, a report can be appended to the financial statements to highlight that a review has been undertaken and that nothing has come to our attention to suggest that the financial statements do not show a true and fair view.

An assurance review is more flexible than an audit and the exact work which we undertake can be tailored to your requirements in order to provide assurance over particular areas of the financial statements.

At the start of our work, we would work with the directors to identify the areas which are most important or highest risk and our work would be directed towards these areas.

The work we undertake is not as comprehensive as for an audit, and as such it will not provide the same level of assurance, however it will provide users of the financial statements with a level of confidence that the key areas reviewed.

This is a difficult question to answer without more information about your company, as the amount of work involved will vary for every company.

Our typical fees to undertake an assurance exercise start from £3,000 and an audit start from £6,000 for a small audit exempt company (or subsidiary of an overseas parent) and from £12,000 for a statutory audit for a company who exceeds the audit thresholds, however, the exact price depends on the size of the company and the number and complexity of transactions within the company’s financial records.

In the UK, it is a statutory requirement for all companies to have an audit unless they are exempt. This means that the company does not exceed the audit thresholds or has a parental guarantee in place. The audit thresholds are exceeded if two or more of the following apply:

• the company has an annual turnover of more than £10.2 million
• the company has assets of more than £5.1 million
• the company has more than 50 employees on average

If your company does not exceed the audit thresholds, an audit is not compulsory but you may still opt to have one.

As we complete our testing, we make a note whenever we cannot successfully complete our tests, or when we find any differences. It is normal to find differences, and in most cases these are small (trivial). Once we have completed all of our work, we will collate all of the differences and see if these are material in total. At the end of the audit, we will go through any issues with you, such as where we are unable to complete any of our tests or where the total of the differences is material, and discuss the options, which could include adjusting the financial statements or qualifying the audit report.