The importance of a company audit and who needs one?

As a business owner, its likely that you are juggling a million and one things on your plate and occasionally, the odd thing may go amiss or get wrapped up in a heap of confusion. However, don’t let it be your company audit. With multiple benefits on your business’ security, efficiency and productivity, should this be something your company should consider?

What is a company audit?

Simply put, a company audit is an official documented evaluation of a business’ accounts and financial activities, ensuring they follow the correct standards. This audit can be carried out internally or externally, and once annually at minimum.

What is the difference between an internal and external audit?

An internal audit can be carried out by an employee within your business hired purely for this role. With their holistic knowledge on your company’s processes and financial activities, the audit could be carried out regularly with a deep internal knowledge. An external audit, however, can be conducted once annually with every route, move and action taken over the 365-day period assessed deeply with no bias judgement and therefore, arguably, a more reliable audit result.

Who needs a company audit?

Whilst some small businesses remain exempt from annual audit inspections, the majority of limited companies will be required to undergo an audit if they exceed two out of the three following requirements:

  • There are over 50 employees within the business
  • They have a turnover higher than £10.2m
  • They withhold gross assets of more than £5.1m

If the above do not apply to your business, and you are not a registered LLP or limited company, you remain exempt from audit requirements.

What is the importance of a company audit?

As well as the legal requirements and guidelines for businesses of a certain size or turnover to complete at least one annual audit assessment, there are valuable benefits to be obtained, from security and awareness to reliable insights into your business’ future.

If your business consists of a handful of shareholders, it is likely they have little involvement in the day to day running of the company itself. However, a verified, regular audit can provide them with the confidence that everything is operating as it should, as well as the ability to have issues or fraudulent activity highlighted and resolved.

A trained auditor will know not to solely focus on the figures, but to gain an internal understanding of your business’ actions. From this, any acts of potential fraud could also be highlighted, whether they occurred internally or externally. Acting on this can provide you with the knowledge and security to adjust the way in which you conduct your services in the future.

Owning a business can be a life-long dream, but you may not have the heart or passion to stick with it for the next 40 years and the time may come where you decide to move on. Verified audits can simplify this process for you, providing your company with the credibility that others may not have. From this comes a level of financial trust and security that can be passed on through the generations of your business with pride.

Here at Hammonds Chartered Accountants, our audit service ensures that you tick all of the boxes. We will cross the T’s, dot the I’s and complete everything in the middle to a standard that provides your business with further opportunities to expand, both financially and professionally. To get in touch with one of our qualified accountants to find out more, give us a call on 0203 007 4990 today.