What is an audit?
An audit is an inspection of a company from someone outside of your business. An auditor will examine your financial statements and accounts, as well as ensuring any controls and processes are fit for purpose.
Do I need an audit?
Not all businesses require an external audit for regulatory purposes. Some small businesses are exempt, depending on their turnover and other factors.
In order to qualify for exemption, for accounting periods starting on or after 1st January 2016, the company must meet at least two of the following:
- The company should have an annual turnover of no more than £10.2m
- The company should have assets worth no more than £5.1m
- The company should have 50 or fewer employees on average
Regardless of size, some companies such as those which are public or state-owned, and those in regulated sectors such as banking and insurance, must always be audited.
Remember, even if the above thresholds determine that you’re exempt, if your shareholders (who own at least 10% of shares) request an audit, then you must comply.
If you are not sure whether your company is exempt or not, it’s always worth checking with your accountant.
Should I have an audit even if I’m exempt?
There are plenty of reasons why you might choose to instruct an auditor even if you are exempt. Having your accounts independently reviewed ensures transparency for your clients, shareholders, and potential investors. What’s more, some banks will only lend to companies who have been audited.
What to expect from the audit process
Any audit process should begin with a period of familiarisation. Your auditors need to get to know you and your business, and you need to meet them. At Champion, our audit team will meet with your key staff, so that we can fully understand your company and your objectives.
Following the initial meeting, a planning meeting will usually be scheduled as an opportunity to discuss key business and agree the approach to be taken. This should highlight any known audit risks and any concerns you may have. We’ll provide a list of everything we need from your team in order to undertake the audit, as well as confirm the timeframe and key dates.
The next stage usually involves fieldwork including thorough analysis and testing from your audit team. Although on-site fieldwork will form part of an audit, do not expect auditors to be looking over your shoulder. They may pop in and out if there is an issue you need to be made aware of, but with good planning in place, the audit process should not cause too much disruption to your day to day activities.
Once complete, an audit clearance meeting will be conducted to discuss audit findings. The audit team will present their observations, including any identified risks. They may suggest improvements are made to processes in order to tighten controls. At Champion, we ensure that a follow-up process is in place to help implement any changes needed.
Should I be nervous of auditors?
The A word may leave many a business owners feeling nervous, but an auditor’s role is not to pick holes and tell you off. As explained above, it is to check standards are met and processes followed, in order to ensure transparency and efficiency.
A good auditor will ensure there are no costly mistakes being made in your business. They will make improvements and streamline processes. You should get on with your audit team and be able to ask them for advice.
Why choose Champion?
With Champion you can expect a proactive, hands-on approach, even at partner level. Our partner led approach means that throughout the entire audit process, you will have a highly experienced team of business experts at your disposal.
We know that the key to a successful audit is good communication. Our clients stay with us because they feel able to ask us anything – plus, we don’t believe in jargon!
Established in 1971, we have more than 45 years’ experience across a range of sectors, including property, professional services, manufacturing, charity and retail.
Rather than treat an audit as a compliance exercise, we like to ensure maximum value by delivering a complete overview of your business. As a business owner, you may have little time to reflect on the bigger picture, so we’re able to provide that insight, spotting opportunities and suggesting improvements.