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What is an Audit?

It is a verification, like examination or inspection, of a quality system or process to ensure compliance with the requirements.

It can be applied to functions of an entire organisation or be focused on specific functions, processes, or production steps. Some audits can have specific objectives, such as auditing documents, assessing risk, evaluating performance, or monitoring corrective actions, while others are more general.

What is an external audit?

A statutory or external audit involves examining a business's financial statements to provide an audit opinion on whether financial statements give a true and fair view of the state of affairs of an entity. It is one of the most commonly used types of audit.

Who appoints external auditors?

The shareholders typically appoint external or statutory auditors during the company's Annual General Meeting (AGM).

Who performs an external audit?

An auditing firm or an independent auditor performs the audit.

Does your company need an external audit?

An audit of a firm's financial statements is mandatory unless the firm is exempt from auditing.

By law, certain firms are required to conduct an audit:

• A non-profit making firm subject to a public sector audit.
• public company
• a subsidiary firm (unless it is exempt)
• an insurance firm or a firm carrying out insurance market activity
• banking businesses
• electronic money (e-money) issuer
• MiFID (Markets in Financial Instruments Directive) investment company
• UCITS management firm
• its shares traded on a regulated market
• funder of a master trust pensions scheme
• special register body
• pensions or labor relations body

To be exempt from an audit, a firm should either qualify as small or have qualified as small in the previous year.

For a firm to be considered small, two of the following financial criteria should be met:

• The group's turnover should not exceed £10.2 million
• The group's total assets should be less than £5.1 million
• The group should have less than 50 employees

The criteria mentioned above should be met by the firm's group if the firm is part of a group.

However, even if exempt, entities or individuals holding 10% or more of the firm's shares can request an audit.

Is an auditor only focused on a small business's annual accounts?

The short answer is yes!

It is possible to hire an auditor for additional purposes, like preparing tax returns or bookkeeping, provided your Auditor doesn't take part in the firm's management.

How long does it take to complete an external audit?

The time to complete an audit is based on various factors, including the size of the company and the efficiency of its internal record-keeping system.

Typically, from start to end, audits are scheduled for three months – four weeks of planning, four weeks of fieldwork, and four weeks of preparing the audit report and discussing its results.

However, a straightforward audit can be done within 4 to 6 weeks.

What happens after an external audit?

After an external audit completion, auditors issue an Auditor's report to the shareholders. In the report, auditors providean audit opinion on whether the firm's financial statements are free from material misstatements.

There are four types of audit reports, unqualified or clean, qualified, disclaimer or adverse.

Routinely, auditors also offer a separate report to the audit committee highlighting control weaknesses and other less important issues.

Is detecting and preventing fraud the responsibility of external auditors?

External auditors are not liable for detecting or preventing fraud.

Frequency of external audit?

Typically, an external audit is conducted once a year to meet the statutory requirements.

What should your small business do with the audited accounts?

A small business must submit its audited accounts to Companies House annually.

Companies House publishes audited accounts publicly so that the stakeholders of your firm, including other firms with which your company trades, can decide whether they wish to do business with you.

Can my accountant serve as my Auditor?

No, an individual cannot be an auditor for your firm if they are part of the management team. This includes officers, employees, partners, or anyone associated with the firm.

How to prepare for your first statutory audit?

• Plan a timeline for the audit process
• Create an audit plan
• Designate an audit coordinator
• Talk with your staff about the audit process
• Conduct regular meetings with the audit manager
• Draft your control and process documents
• Review all relevant records
• Prepare the audit working paper file.

How much does an external audit cost?

The cost of an audit is typically a combination of fixed fees and additional expenses incurred during the process. The fee for an audit is often influenced by the number of transactions, the complexity of the structure, any inventory valuation, location, and the requirement for engaging a subject matter expert (SME).

Many organisations find audit fees expensive as it is a regulatory need. However, the result of an audit can deteriorate or increase the company's reputation among stakeholders and investors.

Any opinion other than an unqualified audit is not typically perceived positively by the investors. Hence, it is important to find a reliable auditor.

How to prepare for a cost-effective external audit?

Various things can be done to ensure an audit runs as effectively as possible.

Firstly, ensure all accounting staff is present when the auditors are on-site with you. Additionally, having the following key documents mentioned below readily available before the audit can minimise the disruption to your staff members and ensure a smoother audit process:

• Draft financial records
• Draft Directors report
• Organisational chart
• Year-end bank reconciliation statements
• A detailed listing of all balance sheet amounts with supporting invoices for items like new fixed assets, and expenses.
• Aged listing of accounts payable and receivables
• P11D tax returns and employee wage records
• Inventory reports
• Hire purchase and leasing agreements
• VAT returns and workings
• Summary of any events that happened after the balance sheet date
• Internal audit reports (if applicable)
• Minutes from all meetings held throughout the year and data on any modifications in share ownership

What is an internal audit?

Simply put, the internal audit function is liable for monitoring the efficiency and effectiveness of the internal controls and related procedures that the management has established.

Who does the internal Auditor report to?

As the name implies, internal auditors are employees of the company. The head of internal audit (commonly known as Chief Internal Auditor or CIA) reports to the audit committee. For administrative reasons, the CIA reports to the CEO of a company.

Frequency of internal audit?

An internal audit can be performed daily, weekly, monthly, or yearly based on the schedule and circumstances that best fit an organisation's needs. Regular internal auditing can determine gaps in compliance with business procedures and policies.

Why have an internal audit function?

The real question is, what is the reason for having an internal audit in the first place? It is because the entire responsibility of monitoring an efficient internal control system lies with the management.

For this, management requires a system to evaluate the effectiveness and performance of the internal controls.

What are the internal controls?

Internal Control is a set of procedures by a company's management to meet business goals while following rules and regulations, protecting assets, improving operational efficiency and accuracy, and ensuring the reliability of financial reports.

How does Experlu help you in an audit?

An audit plays an important role in any size of an organisation. Choosing the ideal Auditor as per your company's requirements can be difficult.

But it's simple with Experlu. We have a large network of auditors to assist your company in any size and industry.

Tell us your requirements, the number of businesses to be audited, budget, accounting framework and timeline. Select an Auditor from the three auditors who match your auditing requirements. All this is free.

Top 20 audit firms and auditors in London, UK

Audit plays a vital role for businesses in the UK due to increased corporate governance, financial transparency, and changing regulatory compliance. However, the process is daunting, and people search for audit firms near me to find the best solutions.

Fortunately, the top auditing firms in UK help their clients meet financial needs and ensure top auditing services.

One of the vital decisions for business owners is to choose the best auditor in the UK as they can save companies from future costly mistakes.

This blog post will list a few essential tips for choosing registered auditors London and compile the top 20 auditors in UK.

Why do you need an auditor?

You may qualify for an audit exemption if your business covers at least two of the following:

• An annual turnover of £10.2 million or less
• Your assets aren't worth more than £5.1 million
• You have 50 or fewer employees on average

However, if the shareholders owning at least 10% of your shares ask you to get audits, even when your company is usually exempt, you must get your accounts audited.

Besides, the following set of companies must have an audit:

• A public company
• A subsidiary company
• An authorised Insurance Company
• A company carrying out insurance market activity
• Businesses involved in banking
• An issuer of electronic money
• A MiFLD (Markets in Financial Instruments Directive) investment firm
• A UCITS (Undertakings for Collective Investment in Transferable Securities) management company
• A corporate business and its shares have been traded on the regulated market
• A funder of a master trust pensions scheme
• A special register body
• A pensions or labour relations body

Most established businesses require hiring professional auditors. Companies with good audit budgets prefer choosing the big 4 audit firms. However, you can also choose other auditors with good reputations and experience in London while not costing you a fortune.

A professional auditor provides audit reports based on their findings from your financial documents. They ensure compliance with various regulatory requirements in UK and help you avoid penalties and legal consequences. These reports can improve your shareholders and investors' trust in your present financial stability and if all your financial statements are free from misstatements.

How do we select the best auditor?

To select the best auditor uk, you must thoroughly evaluate and assess potential candidates. Here are a few things to consider

One of the most important considerations while hiring an auditor is the fees. It must be within your business or personal budget. However, remember the cheapest or the most expensive auditors must not be the best choice. You must request fee proposals and payment plans from the shortlisted audit firms.

The audit fees may vary from one organization to the next depending on multiple factors.

Sole traders, especially startups and small businesses, have different audit needs; therefore, they must choose an audit firm depending on their size and needs.

Additionally, they must check if the firm has previous experience working in a similar industry and business size.

Ask for referrals or recommendations from friends and business associates, and assess for the best choice. Additionally, you can differentiate between other audit firms and compare them efficiently. Conduct extensive research on potential auditors. Visit their websites, review their client testimonials, and evaluate their experience in your industry to make the right choice.

The number of clients handled by specialist auditing firms UK varies greatly, ranging from 100 to several thousand.

Each of these firms usually offers different kinds of services. You should evaluate which one suits you the best depending on your needs.

Top 20 audit firms and auditors in London UK

Granite Morgan Smith ranks among the big 3 audit firms based in Colchester and Maldon, offering personal and friendly service to sole traders, partnerships, and corporate clients across Essex. They help businesses with statutory audits, assurance services, financial management, bookkeeping, and taxes.

It ranks among the top 10 audit firms based in London and has an additional branch from Birmingham. They offer tailored services to fit the unique demands of individuals, residents, and businesses registered in the United Kingdom. Mushambi & Associates are authorised by ACCA to hold statutory audit appointments, including General accounting, taxation, and advisory assignments within the UK jurisdiction.

Kaiser Nouman Nathan LLP is a progressive and commercially focused firm based in London and works for clients nationwide. Since 2011, the firm has offered effective business and financial solutions to entrepreneurs and owner-managed businesses across multiple sectors, domestically or internationally. They offer extensive services, including accountancy, audit, and tax services, to businesses, individuals, and not-for-profit organisations.

Pocknells LLP was launched decades back and has grown to be one of the top 10 audit firms today. They are based in South Woodham Ferrers in mid-Essex and offer services to clients across multiple sectors. Pocknells LLP, recognised by the Association of Chartered Certified Accountants, provides first-class advice to clients in accounts, audit, taxation, and support services.

Michael Harwood & Co Chartered Accountants, launched for over 25 years, ranks among the most popular audit firms in the UK. This Warwick-based firm offers reliable, partner-led services, including statutory audits, management accounts, tax compliance, bookkeeping, and more to clients of any size and need. They help entrepreneurs start businesses and assist in choosing a structure, creating business plans, budgeting, forecasting, and more.

Nicholas Peters & Co is the leading accounting and audit firm based in London that offers a range of services to grow your business. They have been helping startups, property investors, charities, and Greek and Cypriot clients for years with the right tools and knowledge in almost every sector. Some of their services include audit, accounts preparation, management accounts, tax planning, business planning, bookkeeping, and more.

J Nelson & Co, working over 30 years, ranks among the top 10 UK audit firms offering full-service accounting and auditing services to clients from multiple industries. They use the latest audit, accountancy, and taxation software to provide audits, bookkeeping, management accounts, VAT advice, and tax services. The experienced team at J Nelson & Co offers tailored services to small and medium enterprises, law societies, self-employed, contractors, property owners, and workers in CIS (Construction Industry Scheme).

The London-based PMK & Associates LLP ranks among the biggest audit firms UK, helping small to medium-sized businesses. They offer audit, bookkeeping and accounting, tax planning, finance outsourcing, mergers and acquisitions, payroll, and more to businesses and individuals. The firm offers top-quality strategies and support for businesses to grow, scale, and diversify.

EHK Consulting Ltd works with accountants, tax consultants, and business advisers to help small and medium-sized enterprises in the UK. This auditor in London offers audit, bookkeeping, tax planning, business advice, and more services for sole traders and public companies from diverse sectors.

La'Dunni & Co. chartered certified accountants and registered auditors rank among the top 20 audit firms in the UK, helping businesses of all sizes. They are specialized in providing audit, accounting, taxation, and business and management services to help businesses build an excellent reputation.

Rouse Chartered Accountants are award-winning accountants and tax advisors in the UK that handle all business aspects from audit, tax, and assurance to advisory services. They have private clients, owner-managed businesses, corporate groups, charities, and not-for-profit businesses across multiple domains.

RPG Crouch Chapman ranks among the top 20 audit firms UK, offering audit and accounting, business planning, tax solutions and investigations, and advisory services to business owners and private plans. Their approach is to support different companies with best-in-class services across the business spectrum and challenge the mid-tier market.

Shipleys LLP ranks among the top London-based auditing firms offering accounting, audit, and tax services and a range of specialist services for individuals and businesses to keep their finances in order. They have a good track record of meeting clients' demands across multiple sectors.

MMBA Accountants ranks among the top auditing firms in London that also work as business advisors and accountants. They have offices at Preston, Cambridge, and Luton, offering audit, taxation, and advisory services to clients across multiple sectors. Established in 2009, MMBA Accountants have a trusted reputation for providing specialist and result-driven services to businesses of all sizes.

Arnold Hill & Co LLP is one of the top UK auditing firms that offer a wide range of audit and accounting services to businesses and personal needs. They are an established and proactive firm of experienced individuals that has served clients for over one hundred years.

M Zaidi & Co. ranks among the top 20 audit firms in London, offering cost-effective and high-value solutions to businesses and individual clients. With over 50 years of experience, the firm has worked with numerous companies across multiple sectors. They offer audit and assurance, accounts, taxation, and other services to meet your financial needs.

Focus Somar Accountants London offers businesses total bookkeeping, statutory audit, accounting, and taxation services and helps them achieve financial goals. Since 2013, besides serving clients in London and the UK, Focus Somar has served international businesses, too.

Mouktaris & Co. are the top UK auditing firms established in 1979 and have an excellent reputation for providing expert audit and accountancy, taxation, and advisory services. They advise entrepreneurs and owner-managed businesses on tax and other financial matters.

PKF is one of the top auditing firms in London, offering a full range of audit accountancy, tax, and advisory services to large, complex, high-profile businesses. They have a good track record of delivering the best auditing solutions and simplifying complexity for clients across diverse sectors.

Charterhouse is a Harrow based firm of auditors and accountants. The firm was established over 50 years ago and serves a diverse set of clients. The firm has an excellent track record of delivering quality services at an affordable prices.

Conclusion

A top-tier audit firm plays a critical role in every business, especially seeking trust from shareholders and investors. You require a knowledgeable and reliable firm ready to assist you with audit needs and handle all responsibilities professionally. Some of these firms also provide practical business advice, accounting services, and tax consultations.

Choosing an audit firm based on these guidelines will reduce your chance of making a poor decision for your business.