Audit or not?

Gill Gittings
Gill Gittings Registered Posts: 121 Dedicated contributor 🦉
in General accounting discussion
We have a client that uses PLC after its name but is not listed on any stock exchange. Is it right that it is required to have an audit even though it is below the threshold for such?? I don't think it does need an audit but our technical team says it does.

Also if a client has a revaluation on its building that takes it over the 3.2 million fixed assets will an audit be required or can we wait until next year to see if the two year test is still above the limits?

Thanks in advance.

Comments

  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
    Hi,

    Your technical team are right - no PLC can take advantage of audit exemption - listed or not and even if they would be otherwise eligible for audit exemption. An audit will be required. This is the price to pay for appearing "posh" (they are sometimes known as Posh-L-Cs!)

    Your client who has revalued their building that takes them over the £3.26m gross assets test will also require an audit - don't mix the criteria up with the test for small company status. Only 1 out of the 3 criteria needs to be breached to take it into an audit. I see a number of companies who use the revaluation model loose their entitlement to audit exemption because the balance sheet total now exceeds the threshold when it did not before.

    Kind regards
    Steve
  • beverly hudson
    beverly hudson Registered Posts: 95 Regular contributor ⭐
    Hello Gill, just to correct Steve, the balance sheet test is £2.8 million (see DTI website) not 3.2 as stated by Steve.
  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
    beverly hudson wrote: »
    Hello Gill, just to correct Steve, the balance sheet test is £2.8 million (see DTI website) not 3.2 as stated by Steve.

    Hi Beverly,

    You are citing the balance sheet total threshold for periods beginning pre 6 April 2008. Directive 2006/46/EC was implemented for periods beginning on or after 6 April 2008 which uplifted the audit thresholds.

    Regards
    Steve
  • beverly hudson
    beverly hudson Registered Posts: 95 Regular contributor ⭐
    Oh right. When did that happen Steve?
  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
    beverly hudson wrote: »
    Oh right. When did that happen Steve?

    It's been around for a couple of years because the new thresholds come in for accounting periods commencing on or after 6 April 2008. It was brought in to coincide with the implementation of the Companies Act 2006. The thresholds are usually revised approximately every 5 years.

    You might find one of my articles on the Companies Act 2006 helpful, particularly if you're in a client advisory role.

    Kind regards
    Steve
  • Gill Gittings
    Gill Gittings Registered Posts: 121 Dedicated contributor 🦉
    Thanks Steve for your help. I have had a very blonde day today:)

    I knew the limits had gone up Beverley as I had read an article he published in one of the magazines which our technical team circulated. It has been in for a long time now.

    Gill
  • beverly hudson
    beverly hudson Registered Posts: 95 Regular contributor ⭐
    Steve this has caused a headache! A colleague of mine says that the new limits did not get revised as planned and she agrees with me the limits are all still the same?? My colleague is a subject coordinator in audit.
  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
    Hi Beverly

    With all due respect, your colleague needs to go on an audit update - I would have thought every tuition provider and every tutor who teaches anything to do with audit should know these limits. The revised limits have come in and are in legislation. I specifically refer you to paragraph 5.(1) (b) of the link.

    As I have mentioned, the changes to these limits have been well publicised. I trust that your colleague is aware that new auditing standards have also been issued following the 'Clarity Project'?

    Regards.

    Steve
  • JaffasGirl
    JaffasGirl Registered Posts: 387 Dedicated contributor 🦉
    Beverley,

    Seriously, can you just accept that Steve knows what he's talking about? he hasn't just stated 'facts' and left it at that, he provided proof. and I'm sure if you did a bit of searching you would be able to see it yourself.

    I've seen on a few threads, that you have taken it upon yourself to correct Steve, and invariably end up finding that you are wrong. Your 'know it all' attitude is infuriating.

    Steve is a great help to many on this forum, and doesn't need to waste his time defending his posts from someone, who in your current position, should know better.
  • beverly hudson
    beverly hudson Registered Posts: 95 Regular contributor ⭐
    As I don't actually work in audit anymore, sometimes its quite hard to keep up to speed on the number of changes that occur. Tutors always find this a struggle, especially when teaching continuously for weeks on end.

    I am aware Steve is right on this issue and we will be updating our material accordingly.
  • JaffasGirl
    JaffasGirl Registered Posts: 387 Dedicated contributor 🦉
    What company do you tutor for?

    Because this is a huge failing in their training, and your own CPD. This change in legislation has been around for TWO years. So you 'its hard to keep up to speed' excuse is worthless.

    I feel sorry for the students that you have been teaching incorrectly, they may have failed their exams because of that information.

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