The importance of Auditing


What is the purpose and difference between internal and external auditing? Why do I need financial audit services?

Why are Audit's important?

An audit is important as it provides credibility to a set of financial statements and gives the shareholders confidence that the accounts are true and fair. It can also help to improve a company's internal controls and systems.

How are audit fees determined?

Audit fees are normally determined by the time spent completing the audit which depends on the size of the company and the risks attached.

What is an Audit report?

An audit report is a report to the shareholders of a company by an independent auditor of their assessment of whether the financial statements show a true and fair view.

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When is an Audit required?

An audit is a statutory requirement if two of the following apply:

  • the company has an annual turnover of more than £10.2m
  • the company has assets of more than £5.1m
  • The company has more than 50 employees on average

However some companies must have an audit and these include:

  • A public company
  • An authorised insurance company
  • A company involved in banking
    • Credit Union
    • Coorpoerative
    • Payment providers
  • A company whose shares are traded in a European state

In addition, if more than 10% of the shareholders request an audit then this must be undertaken.

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