An audit is an official examination of Company Accounts by independent registered Accountants. They then issue a report known as an ‘Audit Report’ offering their opinion on the business’ financial position and future.
An auditor confirms:
- That income and expenses are recorded accurately;
- All legal conditions and disclosures have been met;
- That the financial statements show a fair representation of the financial position of the business at the accounting date and the foreseeable future.
Small and micro businesses are generally exempt from requiring an audit due to the onerous and costly nature of auditing. Although there are some scenarios where an audit is still required to assess the validity of the accounts for example
Businesses are legally required to be audited when their turnover, assets and employees reach a certain threshold.
The current UK audit thresholds are:
|For financial years that begin on or after 1 January 2016||over £10.2 million||over £5.1 million||over 50|
|For financial years beginning between 1 October 2012 and 31 December 2015||over £6.5 million||over £3.26 million||over50|
|For financial years beginning before 1 October 2012||over £6.5 million||over £3.26 million||n/a|