How much does a company audit cost in the UK?Published Thursday, 19th August 2021
Our team knows the value of a smooth and effective auditing process. Companies often have to undergo them, so finding the firm that is the right fit for you is an essential step. Not only should you consider compatibility with whom you work with, but the price, like with most things, plays an integral part in your decision.
Auditing is an intricate and time-consuming undertaking. Thus, it needs to be compensated as such. If a firm is deliberately lowballing you to get your business, it may, unfortunately, affect the quality of their work. Too high of a price means you may be paying for some unnecessary add on costs.
Caldwell Penn offers a range of accounting and auditing services at reasonable prices. Accounting and auditing is a £5.6 billion industry in the UK as of 2021. This is largely because company audits have many benefits, such as promoting financial compliance, fostering positive relationships with investors, and providing constructive feedback. In some cases, the audit is also required by law. But just because audits are necessary does not mean they should be an inconvenience.
What is the cost?
There is no menu for audit costs. This fact applies everywhere in the world as auditing is an activity tailored to each company. However, all statutory audits must be done in accordance with the International Standards on Auditing (ISA). Furthermore, under the Companies Act, all companies in the UK are required to have their annual accounts audited externally, unless exempt.
It's challenging to establish a set number that audits should be priced at. However, Audit Analytics came up with this handy table that shows a typical range of audit fees
|Client Revenue||Audit fees as a % of Revenue|
|£8m - £16.22m||0.19%|
|£16.22m - £37.69m||0.07%|
|£37.69m - £92.58m||0.05%|
Generally, the price for an audit is determined by the level of work required to complete the audit. This work will be tailored to meet the specific needs of the entity being audited however the general duties of an auditor include:
- Analysing the risk of material misstatement of financial statements and determining if it is present.
- Analysing internal controls relevant to the audit in order to develop audit procedures that are appropriate in the circumstances, but not in order to express an opinion about the effectiveness of internal control in the company.
- Ensuring that accounting policies are appropriate and that accounting estimates and disclosures are reasonable.
- Analysing the directors' use of going concern accounting and, based on the audit evidence obtained, determines whether there is a material uncertainty regarding events or conditions that may adversely affect the company's ability to continue as a going concern.
- Assessing the presentation, structure, and content of financial statements, including disclosures, to determine whether they portray the underlying transactions and events fairly.
- Communicating with the governance team regarding the planned scope and timing of the audit and any significant findings identified during the audit.
Taking these duties into account and having a rough understanding of the level of work required, together with your auditor's education and experience, ensures that you know if the price you are being charged is fair or not.
An audit does not need to be expensive
Our team is well equipped to deliver services promptly and efficiently. When it comes to audits, efficiency is key to keeping costs as low as possible. To achieve this, the auditing process needs to be seamless. Some ways to ensure this happens include:
- Plan ahead by scheduling a meeting with your firm to layout information about the year under review before you start.
- Changes made late in the audit often lead to higher costs, so it's a good idea to prepare a trial balance at the planning stage that's as accurate as possible.
- Effective communication between the client and firm is often hindered by all the jargon one encounters with such procedures. Our team will talk you through it so that there is no confusion!
- Plan for the following year by meeting with the relevant team soon after your current audit has been completed. You can discuss areas for improvement to ensure that next year is an even better experience.
Auditing can be complicated, which is why our experienced team is here to guide you through the process! While there is no set price for an audit as it depends on your needs, they can ensure that shareholders in your company have peace of mind that your financial records are reliable, which is definitely worth the cost.
If you'd like to find out more or explore our audit services further, please get in touch, and a member of our specialist team will be more than happy to help.
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