As your company grows so do your responsibilities, and arranging an audit is no exception. Once you reach a certain threshold, you’ll have to organise one by law; hence, it’s important to understand your statutory obligations.
But while the process may seem daunting at first, there are a lot of benefits to understanding your finances a little better. In this article, we’ll explore those benefits as well as the audit requirements for different companies.
When does a company need an audit?
You may be legally required to have an audit depending on your company’s size and annual turnover. Most private companies will need a statutory audit if it has two of the following:
- more than £10.2 million in turnover
- assets in excess of £5.1 million
- more than 50 employees.
Smaller companies don’t usually need to worry about compulsory audits, but they’re not always exempt. If shareholders who own 10% or more of your business formally request an audit, you’ll have to do one by law regardless of whether you meet the above criteria or not.
An audit will also be necessary if your company’s articles of association require it – but you may be able to change this with shareholder approval.
Unless your company is exempt, you’ll need to carry out an audit every year. You’ll have up to nine months after the end of each financial year to complete your audit and submit it to both HMRC and Companies House.
Different types of companies need to follow different rules. For example, regular audits are compulsory for public companies, subsidiary companies and companies working in banking or insurance.
Meanwhile, if your company is a registered charity with an annual income of £25,000 or more, the Charity Commission will require you to undergo an independent examination of your accounts. Only larger charities with incomes greater than £1 million will need a full external audit.
While many business owners find audits daunting, your company may well benefit from having one even if it’s not a legal requirement.
For instance, a thorough financial review of your accounts may help you to plan ahead more effectively. Auditors will also be able to flag issues so you can tackle them early on.
A voluntary audit can also help ensure you stay compliant ahead of time before you meet the criteria for a statutory audit at a future date.
If you’re planning to sell your business, an audit could prove instrumental in gaining credibility with buyers and fetching the best sale price possible.
Finding the right auditor
It’s important to pick the right people to carry out your audit when the time comes. Working with professionals who have experience auditing businesses like yours can make the process run as smoothly as possible.
You can rely on us to provide an audit with purpose. Our audit services won’t just help you stay compliant – we’ll also use our expertise to highlight areas for improvement in your finances, giving you the opportunity to boost company performance.
We’re drawn to businesses that have a mission in mind, and are excited to be part of their journey. That’s why we’ve crafted our audit services to be about more than ticking the boxes; with our audit reports and advice, you’ll know exactly where to go next.
We also specialise in accounting and audits for charities, and have unique skills and expertise that could spell the difference between an acceptable audit to an illuminating one that will ensure your organisation can continue doing the most good for people.
Get in touch with us to find out more about our specialist audit services.