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Companies or groups of companies
with sales of more than £1 million per annum or gross assets of more
than £1.4 million and companies in the financial services sector are
required by law to have an audit. These limits may be increased to £4.8
million in the future. There are many benefits and other
reasons why companies of all sizes may invest in an audit, including
the following: · provides
further comfort to shareholders, customers, suppliers, investors and
financial institutions · enables
advice to be given on accounting systems, structure and other business
issues · facilitates
agreement of figures with the Inland Revenue thereby reducing the risk
of penalties and interest · enables
the company to comply with banking covenants · helps
to detect and deter material fraud and error As well as relying on the usual accounting
procedures the audit will involve the following: - obtaining proof of ownership and valuation of
assets - reviewing post year end transactions to substantiate
balances - obtaining third party confirmation of balances - reviewing the companies system of accounting
and internal controls - sample testing transactions for validity - reviewing future budgets A company can assist the audit process
by the following means: · maintaining
comprehensive and reliable systems of bookkeeping, accounting and internal
control · ensuring
the accounts and other financial statements have been competently prepared · maintaining
adequate filing systems which facilitate easy reference · preparing
detailed schedules of assets, liabilities, income and expenditure · dealing
with queries and arranging to make available the necessary confirmation
and representations Payne Sherlock can advise on the benefits of
an audit and has an audit department with experience of audits of varying
sizes and business types. |
