Do you need an audit?

The turnover threshold which currently exempts most companies and limited liability partnerships (LLPs) from a statutory audit is £6.5 million.

In the past, audits were seen as the 'cost' companies had to pay for the privilege of limited liability. Audits provide reassurance to shareholders, lenders and creditors that the annual accounts are reliable. Companies House confirms that 93% of the complaints it receives are about the credibility of filed accounts from audit-exempt companies.

However, small companies still have to produce full statutory accounts, so there remains scope for cutting more 'red tape'.

Not all companies with turnover under £6.5 million come within the audit exemption provisions, because there are criteria other than turnover. In particular, companies not classed as small or whose total assets exceed £3.26 million must have an audit. Public companies and those carrying on particular types of business, such as insurance broking and financial services are also subject to an audit.

Shareholders can require that an audit is carried out, for example if they are not involved in the day-to-day running of the business and require reassurance that their investment is being properly looked after.

For further up-to-date information visit: http://www.jeffreyshenry.com/business/limited-companies/companies-act-2006/do-you-need-audit

Registered auditors in London, Jeffreys Henry LLP is one of the UK's top 100 firms of Chartered Accountants in London.