Whether your company needs an audit will depend on a number of factors. It’s size, what the articles of association say and if the shareholders ask for one.
For audit exemption a company must qualify as small, or have qualified as small in the previous year & therefore be in a year’s grace.
The criteria for assessing if a company is small are that two of the following conditions must be met:
- Turnover must be less than £10.2 million
- Gross assets must be less than £5.1 million
- Employees must be less than 50
Even if a company is exempt due to the above an audit may be required if members with 10% of a class of shares request an audit or if the articles of association state that an audit is required.
If your company size is small you are not required to have an audit, however you may choose to be audited as it adds extra credibility to your company. For example audited accounts may be required to raise finance from a bank.
Many potentially exempt companies choose to be audited as it can highlight areas for management to improve business processes and controls. Ultimately, this may improve the performance of the business.