Should you have an Audit of your Financial Statements?

The objective of an Audit of your financial statements is to receive an independent opinion as to whether they show a true and fair view.

There are many advantages of engaging us to undertake a full statutory audit including:

• Providing reassurance to your external shareholders over the reported results and financial position.
• Promoting the transparency of senior management.
• Being a sign of quality assurance for the company’s financial statements.
• Helping to reduce the likelihood of fraud
• Maintaining the company’s credit rating.
• Adding value to your business for a potential purchaser as they will be putting reliance on the Company’s past results.
• Being compliant with lenders covenants and the vested interests of venture capitalists.
• Fast growing businesses may not be far away from breaching the audit thresholds and so engaging Lambert Chapman LLP now will help cement the systems in place for the growth ahead. Our clients have thanked us for the way we conduct the Audit and the questions that we ask whilst reviewing their systems can lead to improvements for the future.

Lambert Chapman LLP are a firm of Chartered Accountants and Statutory Auditors. We are committed to retain our Audit status which allows us to provide the full range of services to our clients including some services which can only be provided by a Statutory Auditor. Other specialist services includes client money audits for solicitors and FCA regulated clients, grant claims and Co-operative and Community Benefit Society companies.

We have increased our Responsible Individuals (RI) that are able to sign an Audit Report and other regulated work to five with the promotion of Graham McNeil to an Audit Partner.

The requirement to have an audit within the UK is mainly linked to the small company thresholds which are:

• Turnover <£10.2m
• Gross Assets <£5.1m
• Employees <50

To qualify as a small company and be entitled to audit exemption you must satisfy two out of the above three criteria and you must not have been a medium or large company for the previous accounting period.

If your company is part of a group it is important to fully understand the group structure as even small companies are required to have an audit in the circumstances below:

• Being part of a medium or large group of companies even if the other companies within the group are not based within the UK.
• Part of an ineligible group such as those with a listed plc or where another group company is ineligible due to its FCA regulated activity. While a non listed plc requires an audit itself, if it is a member of a group it no longer means that the whole group automatically needs an audit provided the group meets the small group size criteria.

If you are a member of a large group and the parent company is in the EEA then it is possible to claim an exemption from statutory audit if the parent company gives a guarantee concerning the debts of the subsidiary and all members of the subsidiary agree. However, when will consolidated financial statements be available and will they meet the UK filing deadline? The parent company’s consolidated financial statements and guarantee must be filed at Companies House along with the Company’s own financial statements. If there is doubt that the deadline will be met then a full audit in the UK should be considered to avoid potential late filing penalties and legal action being taken by Companies House against the UK directors.

In addition to the advantages above through our positive audit experience we review the systems that are in place which can help identify areas of weakness and areas that may have a higher risk of fraud or error. At the end of the audit management then have an opportunity to review our findings and make improvements to the systems so that they are more robust.
We recognise that our clients are busy running their business and so where our clients are subject to the Audit regime we work with them to ensure that the whole process is carried out as smoothly as possible with minimal disruption.

Smaller businesses do have a choice as it does mean you have further flexibility to opt for a focussed assurance assignment rather than an audit if you choose to. This allows the Company to request a more detailed look at areas that they consider to be of higher risk. For example the Board may be completely happy with all areas of the business and have good controls but they may consider that stock is a higher risk area that they would like to receive additional comfort over. With an assurance assignment Lambert chapman LLP are able to focus testing solely on specific areas to provide an Assurance Report specifically on that area.

In circumstances where additional Scrutiny over your Accounts is required whether that be a full Statutory Audit or an Assurance Assignment then we will offer you the advice for the most appropriate level of work for your circumstances.

If you would like to discuss the requirements for a Company Audit or Assurance Report then please contact Sean Wiegand for a no obligation initial meeting and quotation.