Are your Audit fees rising?
The Big Four accountancy firms and the other larger nationals clearly realise that it’s a seller’s market when it comes to audit services – their audit fees have jumped by over 10% over the last year.
If you want to cut your audit fees, it’s time to start looking beyond the big-name accountancy firms for a better deal.
Despite the increase in the audit threshold both small and larger companies rely on us for a better deal. We offer first-rate audit services, but with a more client focused approach.
Your company may qualify for an audit exemption if it has at least 2 of the following:
- an annual turnover of no more than £10.2 million
- assets worth no more than £5.1 million
- 50 or fewer employees on average
Benefits of an audit
Provides validity of the accounting process
An external audit provides an objective overview of a business’ accounting process. By giving business owners insight on the accuracy and validity of their company’s accounting information, business owners who do not have an in-depth understanding of accounting principles are able to better grasp the financial situation of their business.
Furthermore, an external audit provides business owners with the opportunity to work closely with external auditors to look at their accounting process with a critical eye and work on making improvements.
Errors in the accounting process may prohibit business owners from making the best decisions. Audit procedures are designed to detect errors in the system and fraudulent activity. External audits also ensure that the recording of the financial transactions is according to generally accepted accounting principles (GAAP). This essentially helps business owners cover their back when it comes to following the many rules and regulations that come with accounting within a registered entity.
Identifies weaknesses internally (and suggests improvements)
Having weaknesses within your internal structure is inevitable – what matters is how you tackle them. Some companies prefer to sweep their weaknesses under the rug and continue to operate with blinders on. However, business owners always have the option of taking an assertive approach by giving underperforming areas within their company the attention they’re due.
An audit assures company directors who are not involved in the accounting functions on a day-to-day basis that the business is running in accordance with the information they are receiving and helps reduce the scope for fraud and poor accounting.
So, not only does an audit enhance the credibility and reliability of the figures being submitted to various stakeholders (shareholders, employees, customers, suppliers, investors and tax authorities), but it also provides assurance to shareholders that the financial figures show a true and fair view.
The management letter
A management letter is addressed to the management of the company to bring attention to any control deficiencies that could result in the inappropriate collection of data for financial reporting or compliance purposes. This means that the management of a company is given a value-added service where the weaknesses within the business have been identified and can be addressed moving forward.
A management letter can be viewed as a formal communication intended to help improve the organisation.
Why are audits useful in the long term?
- If owners are planning to sell their business in the foreseeable future, potential buyers will refer to audited financial statements as part of their decision-making process.
- Credit ratings may be affected if an audit has not taken place.
- Suppliers and banks may not be prepared to give the required credit limits without an audit.
If you are required or see the value of a statutory audit, why not get in touch to find out how we can help you by contacting Martin Garrity ([email protected]) or Stephen Hinchcliffe ([email protected]).