The ins and outs of financial audits
Financial audit - what could be worse than having all your bookkeeping and payroll scrutinised by an external audit committee to check whether your money has been handled properly?
Although they sound appalling, if you use a good local accountant such as Palmers, and/or real-time bookkeeping, financial audits are nothing to be scared of. In fact, we find that a lot of people worry about them unnecessarily, because they don’t really understand how they work.
So, what is a financial audit?
A financial audit is carried out by an independent audit firm who reviews your company’s financial information and financial reporting to ensure the records are accurate.
What types of companies are subject to financial audits?
Publicly trading companies have a legal obligation to have an external audit carried out; however if you run a limited company, you may be exempt if your company qualifies as small and meets any two of the following:
- annual turnover must be no more than £10.2 million
- the balance sheet total must be no more than £5.1 million
- the average number of employees must be no more than 50
If you are in any doubt, please get in touch to check.
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What’s the difference between an internal and external audit?
With so many External audits provide an independent examination of your financial records and verifies that they are accurate and prepared in accordance with accounting standards. Their purpose is to provide shareholders with an audit report that reassures them that everything is in order.
Internal audits check that your company’s governance, risk management and internal control processes are operating as effectively and efficiently as possible. Although, not compulsory, they are useful for identifying key risk factors as well as pinpointing areas for improvement.
A lot of our clients find our business growth planning services act as an internal audit for their business, as we not only help them maximise growth potential but also identify ways to improve cash flow and inefficient processes.
Can my accountant carry out the audit process?
External audits have to be carried out by an independent auditor, as they will be responsible for reviewing the work of your accountant.
Internal audits should also be carried out by an independent advisor and not by someone in-house. This means that an independent accountant could do the work, if they have the necessary expertise. As accountants in Aylesbury, we are in the unique position of having expertise across a wide range of disciplines including sales, marketing, people management and business growth planning. This means we are well placed to provide your business with the independent, forward-thinking approach you need to realise your full business potential.
Need more information?
We understand that financial audits can be concerning, so if you’re still worried, please get in touch. As an experienced business accountancy firm, we’re happy to help you prepare for a financial audit or discuss how our business growth planning would benefit your business.