Our service approach
Since the audit exemption for certain private limited companies was introduced in 1993, the thresholds have continued to increase to their current levels. Most companies which meet at least two of the following criteria are exempt from statutory audit:
- Annual turnover of less than £10.2 million
- Asset worth less than £5.1 million
- Fewer than 50 employees
This means that vast majority of companies in the UK are not required to have a statutory audit, some of which are sizeable entities, employing tens of people.
A statutory audit provides the stakeholders of a company reasonable assurance that their financial statements show a true and fair view of the performance in a period and the position at the end of it. Whilst auditors do not check every transaction, nor form an opinion on the organisation’s activities and strategy, a clean, unqualified audit report provides confidence that the financial statements are free from material misstatement.
Companies that are not required to have a statutory audit can still opt to have one, but if they choose not to, then they will prepare and file unaudited financial statements. These accounts are not checked further than agreeing year end balances to supporting schedules and performing high level review of the figures analytically.
The gap in assurance between audited and unaudited financial statements is where an assurance review can be particularly useful.
Our services
An assurance review is a flexible service which can be tailored to the specific needs of directors of a company, providing assurance over particular areas of financial statements.
An accountant will work with the directors of a business to identify the areas that are most important or highest risk. The accountant will then examine those areas of the financial statements and perform tests on them accordingly. This work enables assurance to be gained, issues to be highlighted and recommendations to be made to the directors, allowing them to act accordingly.
Assurance reviews may include but are not limited to:
- Review of all material areas.
- Review of internal controls.
- Review of the Statement of Financial Position and/or Statement of Profit and Loss.
- Review of specifically targeted areas within the above.
- An analytical review of the year on year figures.
The accountant can also make enquiries with management about factors which may lead to the increased risk that the financial statements may contain material misstatements or be non-compliant with accounting standards.
These factors include instances of fraud, going concern issues, accounting estimates, accounting policies, non-compliance of laws and regulations and post balance sheet events.
Unlike an audit report, an assurance review will not be included within unaudited financial statements. Instead a separate report is issued, in similar format to a management report which is provided at the conclusion of an audit.