Failing to be audited when you should have been can result in legal action. Therefore, getting it right at the outset is essential.
The following companies always need to be audited:
Non-dormant subsidiaries of public companies
Subsidiaries, where the parent company needs to be audited
Any company involved in insurance, banking or e-money
Where the shareholders require an audit
Where the directors require an audit
Where the grant provider requires it
Where the regulator requires an audit
Where the constitution requires it
The following situations usually require an audit:
Ahead of the sale of a business or an IPO
When PE or VC money has been raised
When the company has external investors
To add credibility to the financial statements
To add discipline and process to the company
To highlight areas of weakness
For all other private limited companies that are not part of a group they will require an audit if the following thresholds are breached:
For financial years that begin after 1 January 2016 you may be exempt from being audited if the company breaches two or more of the following in two consecutive years:
Annual turnover of more that £10.2m
Assets more than £5.1m
Average of 50 staff or more
Group thresholds are 20% greater than the turnover and asset thresholds of stand alone companies.
Charities have lower thresholds
Annual turnover of more than £1m
Assets more than £3.26m and their income exceed £250k