Welcome to Williamson & Croft’s latest guide on all things accounting. As specialist audit accountants, we know just how overwhelming your first audit can feel. That’s why we’re breaking down exactly what you need to know, in plain English. 

After all, understanding your audit requirements correctly the first time saves your business both time and money – and that’s exactly what we’re here to help you achieve.

What is an audit and why does my company need one?

Simply put, an audit is when an independent expert examines your company’s financial records and practices to ensure everything’s above board. They’ll check your accounts are accurate and that you’re following proper business practices. Think of it as a complete assessment of your company’s finances.

When will I need an audit?

The UK’s audit thresholds have recently changed. Your company now needs an audit if it exceeds two of these criteria for two consecutive years:

  • Turnover above £15 million
  • Assets worth more than £7.5 million
  • More than 50 employees

However, some businesses always need auditing, regardless of the above audit thresholds, such as banks, insurance companies and public companies. 

If you’ve established from that criteria that you do need an audit, here are our top tips on how to get audit-ready. 

10 tips for a successful audit

1. Start preparing early

Give yourself several months of preparation time – don’t wait until you’re approaching the time of the audit. You want to be able to be fully prepared well ahead of time to reduce stress.

2. Go digital

Move away from paper records if you’re still using them. Cloud-based accounting tools and digital documentation make the audit process far smoother.

3. Organise your documents

Keep all financial statements, bank reconciliations, loan documents and shareholder records readily available.

4. Establish strong controls

Set up reliable systems for managing finances, from supplier invoices to expense tracking. Clear processes for approving transactions and tracking expenses are essential.

5. Review your group structure

If you’re part of a group, remember that being acquired by a medium or large company can trigger mandatory audits. Also, if your parent company needs auditing, you might too – even if you’re under the thresholds.

6. Automate where you can 

Use tools for automatic reconciliations and data entry to minimise human error from manually inputting your data.

7. Link your systems

Connect your finance tools to avoid any inconsistencies between different systems. It pays to ensure everything is streamlined and there are no discrepancies. 

8. Ready your team

Your finance team needs to be prepared to explain processes and provide documentation. Department heads should understand their roles and what they might need to contribute.

9. Set up clear lines of communication

Establish how your team will work with auditors before the process begins. Create clear channels between your staff and the audit team when you’ve selected your auditors.

10. Consider growth plans

If you’re planning a sale or seeking investment, you might need an audit even if you’re currently exempt. Factor this into your timeline.

Remember: whilst your first audit might seem daunting, it’s an opportunity to strengthen your business practices and demonstrate credibility to stakeholders. There are actually some surprising benefits to being audited and with proper preparation and the right support, you can navigate the whole process smoothly.

Need help getting audit-ready?

Let’s be honest – preparing for your first audit isn’t always straightforward. 

Whether you’re approaching audit thresholds or simply planning ahead, our expert team at Williamson & Croft can help make the process smoother and more manageable. From establishing proper controls to ensuring full compliance, we’ll guide you through every step.Ready to talk about your audit needs? Get in touch with our team today – we’re here to help you navigate this milestone with confidence.