I have been asked by a friend to take over his accounts next year, His company is registered for VAT and is a limited company. His accounts are submitted through companies house.
He asked me what his current accountant does to Audit his accounts, But as he's way under the threshold I assume they don't.
They just process his year end, and when they are happy all P & L , Balance sheets etc. balance they send to him for authorisation and submit.
Am I correct? Or would they do a ''mini'' audit etc.
He knows I've no audit experience, so would only process his year end as normal, send to him for approval then submit to companies house.
Just wanted to ask for advice from you all to see if you have a different view on the matter.
Assuming that your friend has turnover less than 6.5 million, assets less than 3.26 million and less than 50 employees (actually 2 out of the three is sufficient) then he doesn't need an audit (there are exceptions though see bottom of https://www.gov.uk/audit-exemptions-for-private-limited-companies )
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Yes his turnover is only around 90k per annum so way under the threshold, think he's worried about coming away from the large accountancy practice he is at in case he's not audited properly. I've tried to explain to him that I doubt he is getting audited with his turnover just wanted to make sure they wouldn't do anything id do.
A compilation engagement (putting together a set of accounts) can in some ways be regarded as an audit in that the skills, processes and procedures used for auditing are used in preparing the financial statements (confirm figures back to original documentation, prepare trial balance, prepare accounts, confirm ratio's in line with prior periods and where not investigate). However, no opinion will be expressed by the practitioner so its not an audit in the true sense of the word.
What your client is possibly concerned about is that they may have been told previously by a provider of finance that they want a set of audited accounts.
Front office staff oblivious to what they are really asking for often confuse audited accounts with accounts prepared by one of the members of the professional bodies on their approved list. The lists vary from one provider to another so it's difficult to give a definitive list.
So, getting back to the point, when they are asking for audited accounts what they are really asking for are accounts prepared (generally) by a practicing member of one of the bodies that are allowed to do audits who may, or may not, in themselved be permitted to perform audits (simply because someone is a practicing member of the ACCA does not mean that they are permitted to (or want to) work as an auditor).
Unless your client is looking to raise finance it is unlikely that they will be put in the situation of having to explain to anyone that they really don't want audited accounts and what they really want is to make sure that their accountants qualification is on their list of acceptable ones.
kindest regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
