Generally, small businesses don’t need to be audited as long as they have a turnover of less than £10.2million. If so, they are classed as a small company and are therefore exempt from audit.
Yet, despite the current financial crisis in the UK, some sectors have seen a business boom and that could mean certain businesses which have previously been exempt, now need an audit.
One of the sectors to have seen an increase in demand over recent years is logistics. This has been due to demand for certain products during the pandemic as well as changes to customs clearance regulations as a result of Brexit.
As the pressure on shipping, transporting and moving goods quickly and effectively has grown, so too has the workload for such companies with businesses working incredibly hard to meet demand and grow their companies to do so.
While this may ultimately mean an increased turnover and bottom line, it may also mean that an audit could be due.
Here, head of Audit compliance at BG Audit, Nick Marshall, gives an overview of when a company might need its financial statements audited.
When is an audit needed?
It’s important to seek specific advice in relation to your business but in broad terms a company may require an audit if for two consecutive years it exceeds two of the following:
- An annual turnover of no more than £10.2million
- Gross Assets (fixed assets + Current assets) worth no more than £5.1million
- 50 or fewer employees on average
Be aware – shareholders can request an audit
You must get your accounts audited if shareholders who own at least 10% of shares (by number or value) ask you to. This can be an individual shareholder or a group of shareholders.
The shareholders must make the request in writing and send it to the company’s registered office address and the request must arrive at least one month before the end of the financial year that the audit is being asked for.
Other Companies that must have an audit
Certain companies must have an audit regardless of size. These include the companies where at any time in the financial year it has been for example:
- A public company (unless it’s dormant)
- A subsidiary company (unless it qualifies for an exemption)
Subsidiaries and groups
Although on the face of it a UK subsidiary company may meet the size criteria above to qualify as a small company, in order to qualify for audit exemption, the worldwide group of which it is a member must qualify as a small group in order for the UK subsidiary to remain exempt from audit.
The above gives a general overview of when a business may need to be audited. However, there is more detail to be considered when it comes to, groups of companies, ineligible groups and available exemptions.
Please contact us if you think your business may now need an audit – or for any other audit related advice - 01473 659777 / email@example.com