Ward Goodman offers a range of business and charity auditing services.
We work with small local business through to large corporates, groups and subsidiaries of global enterprises. Here are our most frequently asked questions about auditing.
Do you need an audit of your financial statements?
The audit requirement derives from the legislation “The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015” and “The Charities Act 2011”.
As the legislation has changed to bring the audit of companies in line with company size thresholds the regulations are easier to apply, but we recommend that directors review their audit requirements with a registered Independent Auditor.
What is an audit and who can perform one?
An audit is an examination of relevant evidence that supports the numbers and disclosures in financial statements. The auditor will also assess the significant judgements and estimates made by the directors of the company in preparing those financial statements. The auditing framework that auditors use are the International Standards on Auditing (UK & Ireland) and in order to carry out this work the auditor must be a member of any appropriate regulatory body such as the ICAEW or ACCA.
What are audit thresholds and is this relevant to my company’s financial statements?
For accounting periods that begin on or after 1 January 2016, effectively year ends 31 December 2016 year ends, a company needs to exceed 2 or more of the following thresholds to require a statutory audit:
- £10.2M turnover
- Gross assets of £5.1M
- 50 employees
What if my company is a subsidiary of a group or trades as a group?
It is possible for a subsidiary to claim exemption from audit if the subsidiary accounts form part of a group where the parent company is established in the EEA. There are specific conditions and requirements that will need to be reviewed by your auditor to ensure that your company is entitled to taking the exemption.
Can shareholders request a company audit even if it doesn’t breach the audit thresholds?
An audit can be required if a shareholder or a group of shareholders holding 10% or more of the shares in number or value, request it. They need to contact the registered office in writing at least a month before the financial year end for their request to be actioned by the company directors.
My company is also a charity so does that mean I need an audit?
Most charitable companies opt to have an audit under the Companies Act 2006. However if the company is considered to be a small company then it can elect to take the Companies Act exemption. In this case, the charity legislation becomes relevant and the lower audit threshold applicable to charities has to then be reviewed to ensure that exemption is still possible. At present, the income threshold for a charity to require an audit is £1M although an Independent Examination may still be required.
Please contact a member of our audit and charities team on 01202 875900 for more guidance.