An audit is an independent review of your company’s accounts to ensure that the business has been maintaining proper financial records and completing financial reporting requirements. An audit gives you peace of mind but it can feel quite traumatic to have external experts reviewing your finances. As ICAEW registered auditors, we have audited many businesses, subsidiaries and charities. Following are our tips about how to prepare for an audit to ensure that everyone involved has a relaxed and profitable experience.
Which businesses need to be audited?
Most limited companies will need to complete an external audit once they meet any of the two following criteria:
- Turnover is more than £10.2 million (due to increase to £15 million in April 2025)
- Have total assets totally over £5.1 million (due to increase to £7.5 million in April 2025)
- More than 50 employees
Certain industries such as finance and insurance, are more strictly regulated so need to be audited too as do charities with donations above £1,000,000. Read more about independent examinations and audits for charities here.
In addition, shareholders who own at least 10% of shares (either in number or value) can request an audit in writing to the company’s registered address at least 1 month before the financial year end.
How to prepare for an audit – top tips from HB auditors
Think of an audit as adding credibility to your accounts. If a third party knows that you have been audited – no matter whether they are a lender, customer, supplier or potential shareholder – they are assured that your accounts are accurate and a true reflection of your business: really important if they are going to trade with you or lend you money. Every organisation, with a little bit of preparation, can make an audit a painless task and a very beneficial activity.
- Communication. Business leaders know the benefits of an audit, but your employees may not. This can lead to anxiety and distrust. Employees worry about what they should or should not tell the auditor
Top tip! Take the time to explain to your team how an audit will benefit the business and do this well in advance of the audit taking place. Reassure everyone that they should be open and honest with the auditors, providing all documents that are requested.
- Prepare! Prepare! Prepare! Yes, audits take time – both before and during the physical visit by the auditors but advanced preparationactually saves a lot of time – and reduces stress.
Top tip! Plan ahead and brief your team on what will be needed and what to expect when the
auditors are on site. Ensure that you and others know where records are located and what questions they could expect to be asked.However, don’t over prepare as this can make everything seem like a bigger deal than it is. Our advice is to treat the audit as a business-as-usual activity.
- We love meeting our clients face-to-face but it is an intense few days for everyone.
Top tip! Make it a comfortable experience by creating a space or finding a room where the auditors can work and for meetings to take place. Having water (and coffee!) available makes a big difference as does having a table on which to work. Simple things but these can often be overlooked.
- Auditors are people and we are here to help you and your business.
Top Tip! Take time to get to know your auditors and build an ongoing relationship. Yes, your auditor needs to be registered and have the right industry experience, but work with a firm that is willing to invest time into your business and be your audit partner into the future. The more they know about you and your business, the more efficient the audit.
“It’s great when our auditors from HB Accountants are on site. They are no bother at all! They know where our information is stored – we even provide them with access to our systems via their own logins and permission levels so they can access what they need directly. They have built up good working relationships with my team members and everyone always knows what to expect.”
Why an audit is important – a reminder
Remember, an audit reviews your financial controls and management systems to help you identify risks and determine how best to minimise them. By engaging in an open and honest conversation, we can collaborate together and help you achieve a positive result, even adding significant value to your business.
For specific audit advice, contact Karen Chase, karen@hbaccountants.co.uk in our audit department.
How to choose a great auditor
The best way to ensure a high quality audit is to engage a firm that already knows or will quickly get to know your company, and one which will continue to keep itself immersed in your business going forwards. The size of firm does not matter. It has been proven that it is not necessarily true that a larger firm provides a higher-quality audit and equally, the cheapest audit is not necessarily the best option.
What is important is that you can hold frank, ongoing conversations about your business and the auditing firm can keep you up-to-date about the latest financial matters relating to your industry.
How can we help?
HB Accountants is a registered auditor by ICAEW. always available to support your accountancy needs and discuss ways to boost your productivity.
If you would like to learn more about the services that we offer, discover how we can give you real confidence in the future of your business, or if you are a larger business that requires auditing, then contact us today. We’re accountants for business and we are here to help you grow efficiently.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above
