Audits, where applicable, are not only good for investor confidence, but by law, your business may be required to have them. There are good reasons for having an audit as the process involves a detailed review of the company's accounting systems, Internal Controls and also thorough understanding of the company's business, therefore providing increased investor opportunities.
An unqualified audit report can improve the status of the accounts in the eyes of banks and commercial lenders, the taxman and suppliers who may be seeking credit references. The possibility of fraud can be further reduced as a result, as an audit can also act as a deterrent to any potential fraudster.
The main reasons you are required by law to have a statutory audit are...
- You are a PLC or a banking, insurance or finance company (or a subsidiary of one of these);
- You are required by your professional or trade organisation to have your accounts audited;
- Your shareholders do not agree to opting out of the audit.
Audit thresholds are aligned with Small Company qualification, meaning companies are exempt from having a statutory audit if they meet 2 of the 3 following conditions (correct as at 2016):
- Turnover below £10.2million
- assets below £5.1 million
- Less than 51 employees