audited accounts...and not needing it if shareholders dont want them...

building

can anyone help with this: "You are unlikely to need "audited" accounts which are only required if the shareholders want them".
thanks in advance.

ag359

building wrote:

can anyone help with this: "You are unlikely to need "audited" accounts which are only required if the shareholders want them".
thanks in advance.

Where does it say that, and what do you want to know? Is it not fairly self-explanatory?

edda

ag359 wrote:

Where does it say that, and what do you want to know? Is it not fairly self-explanatory?

This is from an answer to another question by building in the same forum

Building - suggest you get the booklet from Business Link that is a great introduction to starting a business (limited or sole trader). It is republished each year to give up to date info - and contains lots of detail in one place that can also help refresh more experienced business people.

barriejohn69

you will only need audited accounts if your turnover is more than £5.6million in 12 months or if you meet certain other criteria which generally relates to large businesses. A few years ago all ltd companies needed an audit but over the last few years this threshold has risen to encourage people to go into business. Accounts produced without an audit mean that the accountant does not express an opinion on the figures but confirms that they show a true and fair view of the business

NeilW

The vast majority of small and medium sized companies no longer need an audit. Neither do they need an accountant or any other third party to prepare their filed or tax accounts for them.

NeilW

jb478914

barriejohn69 wrote:

Accounts produced without an audit mean that the accountant does not express an opinion on the figures but confirms that they show a true and fair view of the business

confirming that they show a true and fair view is expressing an opinion!

Seamus

I always had my accounts audited as they were prepared as it only added about £150 to the accountancy costs. To get them audited after they have been produced can be very expensive.

building

by to get them audited after they have been produced...could you explain?? thanks!

Seamus wrote:

I always had my accounts audited as they were prepared as it only added about £150 to the accountancy costs. To get them audited after they have been produced can be very expensive.

Seamus

The way it was explained to me by my accountant was that to have the accounts audited at the same time as they were produced was simple and straightforward as all the info for the audit is to hand.

If a situation arose whereby you needed to audit accounts from a couple of years ago then it would be much more expensive as the auditor would have to start from scratch.

Whether you would need audited accounts is another matter. I work in the software consultancy arena and there are lots of issues regarding the operation of your company (e.g. IR35, Section 660 etc.). I felt that having audited accounts would help in any issues I had with the Inland Revenue. Also, I found having audited accounts helped me when I needed to get a new mortgage when my company was still young.

NeilW

I work in the software consultancy arena and there are lots of issues regarding the operation of your company (e.g. IR35, Section 660 etc.). I felt that having audited accounts would help in any issues I had with the Inland Revenue.

It doesn't. The audit is a complete waste of money for a small company.

The issues of IR35 and s660 are actually fairly straightforward. In fact the way you operate is probably the simplest form of Limited Company operation you could possibly design.

NeilW

WHA

I think there is a lot of confusion about the term "audited accounts". The way I see it, and explain it to my clients:-

Anyone can prepare a set of accounts - many small businesses prepare their own. These may or may not be correct so the tax authorities, banks, etc., may treat them with caution.

Most small businesses will have their accounts prepared by an accountant. The accountant prepares the accounts according to industry-standard guidelines and will do superficial checking that the accounts generally make sense and agree with the books and records kept by the business. The accountant will not go as far as actually checking that the books and records are completely accurate and correct - to a large extent, he is "trusting" the business to provide correct information. The accountant will not provide a report that the accounts are correct nor that they show a true and fair view, but merely that they have been prepared in accordance with information provided by the proprietor. Banks, tax authorities, etc are happier with accounts prepared by an accountant.

An audit is a more formal procedure where the auditor actually checks that the books and records are materially correct, that the accounts have been prepared in accordance with relevant standards and the Companies Act, and that the accounts show a true and fair view. Basically, the auditor has to do enough work to satisfy himself that the accounts are fundamentally correct, i.e. he can't simply take the proprietor's assurance that his books and records are right, he has to obtain independent evidence in the important areas. An audit provides the tax authorities and banks with a far greater degree of comfort.

For small owner-managed businesses (i.e. sole trader or husband & wife limited company) there is absolutely no point in having a formal audit nor would the banks or tax authorities usually expect one.