Audits are an extremely important part of business accounting and provide a lot of benefits. There is also a range of different types, each conducted for different reasons and to gather different results. For example, a business can request an audit, which will be carried out by an auditor who will be looking for ways to benefit this business. This may include looking for ways in which the business could improve its methods of accounting or uncovering mistakes that have been made before they become more serious. At Williamson & Croft, we have a dedicated team of auditors who can help your business to ensure your accounts are airtight and operating efficiently.
The audits that we carry out are non-statutory, which are completely voluntary and requested by the business to simply review their accounts. Statutory audits, however, are legally required and must be carried out by law. The business must comply with the auditor, though, as the auditor will not be able to communicate with the business or offer advice, as they would be able to in a non-statutory audit situation. In some situations, this may cause confusion, but the process is straightforward.
As there are different audits carried out in different situations, it’s important to know exactly which is which. Two of the key audits are statutory audits and tax audits, but what exactly is the difference? Well, we’re going to shed some light on what each of the audit processes entails and highlight key details you should be aware of. If you need more information or would like to speak to one of our experts about auditing or have other questions which we may be able to help with, please get in touch with us by calling 0161 399 0121 or 0151 303 3112, or email us at info@williamsoncroft.co.uk. We currently have offices in Manchester and Liverpool allowing us to comfortably service customers in the local area, including cities nationwide such as London, Leeds and Birmingham.
Understanding statutory & tax audits
Statutory audits, which are required by law, consist of an auditor reviewing a company’s financial records to ensure that they are in order. Even though these audits are required by law, this isn’t necessarily a sign that the business has been suspected of any wrongdoing, instead, they are simply conducted to ensure that a company’s financial records reflect its claims. There are certain situations that will automatically trigger a statutory audit, such as if the company is of a certain size. There are criteria, however, that would render a business exempt from an audit. They must be a small company that meets the following criteria: turnover less than £10.2m, balance sheet total less than £5.1m, less than 50 employees.
Although these criteria would render a company exempt, there are scenarios where an audit would still be carried out, for example, if a shareholder were to request it. Often, if a business was looking to either reassure shareholders or the business is looking to loan or receive grant money, an audit would be carried out to ensure the business is eligible. An audit would provide proof that the business is financially stable enough to repay the money. If an investor was looking to buy into a company, they may also request an audit to ensure their venture is safe and that the company is being honest about their financial records.
As statutory audits are a general audit of the entire financial records, tax audits are solely related to tax records. Tax audits can be conducted by chartered accountants, whereas a statutory audit would be carried out by a registered external auditor. The tax audit will review your tax return records and ensure the records are correct. This can be requested by the HMRC every six years, to make sure all tax information they have relating to your company is relevant. There are instances where the HMRC may be more inclined to conduct a tax audit of your business, for example, if you’ve filed tax returns late or made errors in doing so. Also, if the records show a significant drop in costs or unusually large income for a business in your industry. Uncommon situations such as these can catch the eye of HMRC, leading to them investigating further.
How Williamson & Croft can help
If a tax audit is requested, this doesn’t necessarily mean your business has been accused of wrongdoing, it may simply imply that the HMRC suspects foul play. You shouldn’t be worried though, as there are steps you can take to ensure that a tax audit conducted by the government doesn’t reap any expected results or result in any consequences. One of these steps you can take is by having a voluntary audit, to ensure that all of your tax records are in order and that all data is correct. At Williamson & Croft, we’re specialists in carrying out thorough and effective audits. By contacting us and having one of our expert auditors review your company’s financial records before a tax audit is due, you can make sure that all of your accounts are in order. This will prevent any issues from being raised by the HMRC and therefore ensuring you don’t face any consequences.
To get in touch with us and begin planning your audit today, simply call us on 0161 399 0121 or 0151 303 3112, or email us at info@williamsoncroft.co.uk. Our specialist team is always on hand to help and will get back to you as soon as possible. We also have offices located in Manchester and Liverpool, which allows us to service the surrounding areas and clients from cities nationwide, such as Sheffield, Southampton and Norwich.