When do businesses need to be audited?
We often get asked by business owners if they need to be audited or not and what benefits an audit can provide. Here’s both a straightforward answer and a more nuanced response.
First and foremost, if your business checks two or more of the following criteria, then it is a legal requirement, and your company must be audited:
- Turnover in excess of £10.2m
- Assets over £5.1m
- More than 50 employees
However, whilst it is a requirement for businesses of this scale to be audited, it’s not the case that only companies that have to be audited should consider getting an audit done.
What are the benefits of auditing a business?
There are actually many benefits of the auditing process that extend to companies of all sizes, making it worth looking into even if it’s not a requirement. You might find that the value an audit can bring to your business over time far outweighs the upfront cost.
Audits help to build trust
The first benefit of having your business audited is that it will make it easier to obtain increased credit limits, bank loans or other sources of external finance because you gain confidence from potential shareholders, banks and customers due to your company being more financially secure.
Think of it this way: you’re more likely to trust a food truck that has a 5* hygiene rating than one that hasn’t been assessed. It’s no different when it comes to businesses- audits provide a level of assurance to external players that guarantee the quality of a company.
Auditors provide assistance detecting weaknesses
It’s also the case that when a firm is audited you get outside assistance in detecting any weaknesses in internal controls. This is something that is much less likely to be detected without having an external eye overlooking your processes and can provide useful recommendations for improving any deficiencies identified.
Support detecting fraud
Lastly, being audited means there is a much higher likelihood of uncovering instances of fraud or error within financial statements which may otherwise go unnoticed. This could significantly pay off further down the road as errors can be incredibly costly for your business and lead to a lot of administrative hassle that will negatively impact your business.
So, you want to learn more about Audit?
If you’d like some more information, Lorraine Curtis, Director and Head of Audit at Nordens talks all things audit in a helpful video for Nordens TV.
How we can help
Understanding the world of audit can be complicated, but you don’t have to navigate it alone! At Nordens Chartered Accountants, we offer expert advice and assistance with audits. Our dedicated team of accountants and advisors is here to help you in every way possible.
If you need assistance with auditing or any other accounting services, look no further than Nordens Chartered Accountants. Contact us today at 0208 530 0720 or fill out our contact form to schedule a consultation.
