Audit year end accounts

nicd1981

Hi All,

I have been asked by a friend to take over his accounts next year, His company is registered for VAT and is a limited company. His accounts are submitted through companies house.

He asked me what his current accountant does to Audit his accounts, But as he's way under the threshold I assume they don't.

My assumption is they do his bookkeeping, process his year end, and when they are happy all P & L , Balance sheets etc. balance, Create his year end accounts, and then send to him for authorisation and submit.

Am I correct? Or would they do a ''mini'' audit etc.

He knows I've no audit experience, so would only process his year end as normal, send to him for approval then submit to companies house.

Just wanted to ask for advice from you all to see if you have a different view on the matter.

His turnover is around 90k per annum

Thanks in advance

Nicola

phoenixd

This is a very small company in terms of turnover and (presumably) no of employees. Small companies do not need their accounts audited. In any case, a one-(wo)man accounting firm will not have adequate processes in place to do the financial accounts and the audit of the same client. My view is that your friend is that typical company owner who uses accountant and auditor interchangeably.

nicd1981

Yes I agree, He has no employees, is only director and his wife is company secretary.
Thanks for clarifying.
Nic

CeeJaySix

Although the accounts are ultimately the responsibility of the director(s), it is best practice to do a little work to satisfy yourself the numbers are reasonable. Simple examples - agree bank balances to statements and review large/old reconciling items, review old/large & unusual balances on sales/purchase ledgers, brief analytical review of P&L items compared to previous periods and knowledge of business, review of repairs and maintenance-type codes for capital expenditure, etc etc. This is far from an audit but should help ensure the accounts are materially accurate as, fairly often with small companies, despite the director(s) signing to say they are correct they haven't got a clue and rely on you to get them right from the core records.