Audit on company accounts are compulsory for large and medium size company. However, small company and micro entity may claim audit exemption. In other words, small company and micro entity do not need to audit their accounts.
However, some companies even if they are small companies and micro entities are not allowed to claim audit exemption. They must deliver audited company accounts to Companies House.
These companies are:
- A public limited company.
- A company is parent or a subsidiary of a group and the group turnover exceeds the audit threshold.
- An authorised insurance company or carrying out insurance market activity.
- A company involved in banking or issuing e-money.
- A Markets in Financial Instruments Directive (MiFID) investment firm or an Undertakings for Collective Investment in Transferable Securities (UCITS) management company.
- A corporate body and its shares have been traded on a regulated market in a European state.
|Large company||Medium size company|
|Sales less than||> £36 million||£36 million|
|Balance Sheet total||> £18 million||£18 million|
|Average no. of staff less than||> 250||250|
Large company must prepare and submit full audited accounts with Companies House.
Similarly, medium size company must have their accounts audited but may opt to prepare accounts giving less information for public record.
Audited accounts comes with an auditor report. Your auditor would express their opinions on your accounts whether it gives true and fair view. It is a good report if you get an unqualified audit report.
|Micro entity||Small company||Audit exemption|
|Sales less than||£632,000||£10.2 million||£10.2 million|
|Balance Sheet total||£316,000||£5.1 million||£5.1 million|
|Average no. of staff less than||10||50||50|
Small company and micro-entity company may choose not to audit their company accounts by claiming audit exemption.
Accounting and auditing are two different assignments. To put it simply, accounting is assembling transactions into profit and loss account and balance sheet and other financial statements. Whereas auditing is checking the accounting is accurate. For this reason, you must hire a qualified auditor to do the work. The auditing fee is on top of your accounting fee.
However, they may opt for voluntary audit if an audit would benefit them. For example, a company preparing for admission into stock exchange require minimum of three years audited accounts with unqualified audit report prior to admissions.
Generally, an audit includes verifying information in your accounts on a sample test basis and also your company documents such as the Confirmation Statement filed with Companies House if it is still valid. ‘in addition, the disclosure in the accounts are appropriate.
Where to send your company accounts
Where to send your signed company accounts is dependent on where your company’s registered office is situated. For instance, company with registered office in England and Wales may send their accounts to Companies House London office or Companies House Cardiff office.
As a matter of fact you may file your micro entity account using the webfiling service. In this instance, you would require your authentication code for this purpose. The authentication code is the electronic equivalent of your director’s signature. Therefore always Keep safe of your code.
In situation where you have misplaced your code, you can request it again from Companies House. It takes five working days to arrive at your registered office address. However, if your registered office is no longer valid, change it.