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Sep 8, 2021

A Guide to Audits and Frequently Asked Questions

What is an audit? 

An audit is an objective examination of a company or organisation’s financial statements to make sure the financial records are a fair and accurate representation of the transactions which have taken place.

What is involved?

There are three stages to an audit:

  • Planning and designing the audit approach, identifying the significant risks
  • Testing and evaluating the company’s internal controls and systems for recording transactions 
  • Reviewing results of testing, reporting back to the organisation and producing the audit report

Do I need an audit? 

Not all companies are required to have an audit, however, some companies that are not legally required to be audited choose to undergo the process to ensure their accounts are accurate. 

A company must have an audit if at any time in the financial year it has been: 

  • A public company 
  • A subsidiary company within a group (which is not small) 
  • An authorised insurance company or carrying out insurance market activity 

A company that qualifies as a small company under the Companies Act 2006 are usually exempt from an audit. The definition of a small company is: 

Accounting periods beginning on or after 1 January 2016
Turnover Less than £10.2 million
Total assets Less than £5.1 million 
Number of employees 50 of fewer

Different limits apply to charitable companies and in order to be exempt from audit the following applies:

  • Income  – lower than £1million; or
  • Income – lower than £250,000 and gross assets less than £3.2 million

What can RPD offer? 

As registered auditors, we have extensive experience in auditing across a wide range of sectors and industries.

If you would like to discuss any aspects of our audit services with us further, please visit our website and contact us on 01293 521191. 

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