There are new small company reporting limits for periods commencing on or after 1 January 2015. The audit exemption thresholds are being aligned with these limits for periods commencing on or after 1 January 2016.
The thresholds have been updated per the table below. In order to qualify as exempt, a company has to meet two of these requirements for two consecutive years. Further details of determining whether a company is small can be found in ‘The Companies and Group (Accounts and Reports) Regulations 2015’.
Due to these threshold increases, fewer companies will require an audit by law. However, as there are numerous advantages of having an audit, even though it may not be required, many companies will opt to have an audit.
Advantages of an audit
These advantages include:
- Giving shareholders and directors peace of mind that the financial statements are free from material error and give a true and fair view
- Identifying internal accounting system weaknesses and recommend practical ways to improve
- Providing assurance to potential investors regarding the financial performance
- Assisting with complicated transactions and ensuring they are accounted for and disclosed correctly
- Highlighting upcoming changes in company law, accounting standards and tax legislation and ensuring our clients are prepared
- Providing greater credibility to banks, customers, suppliers and HMRC
- An audit can be a requirement for banks when applying for a loan and will improve the chance of raising finance
- For customers and suppliers an audit improves trust for both parties and provides greater assurance over business processes and working capital
- An audit reduces the chance of an HMRC inspection (although making claims still increases the probability of there being an inspection) and increases the reliability of corporation tax returns
- Improving the credit rating of the business.
At Buzzacott, audit work is tailored to the risks in the business. We will provide you with confidence that the financial statements are materially correct and reflect fairly on the business. We are the largest single office accountancy practice in the United Kingdom and have all the resources a business would ever need all in one place to ensure value is maximised.
If you think you need assistance, just get in touch.