Auditors And Accounts Flashcards
How to appoint an auditor?
- Appointed by ordinary resolution but directors appoint the 1st one
- Company must inform the Secretary of State if it has failed to appoint an auditor
Qualifications auditors need?
- Member of recognised supervisory body (ACCA, ICAS, ICAW)
2. Not an employee of company
What are auditors duties?
Statutory duty to audit and report to members whether:
- Proper books of accounting records are being kept
- Proper returns revived from branches not visited
- Accounts are in agreement with the books and returns
- > required by law
What are auditors powers?
- Receive notice of, attend, and speak at general meetings
- Access to books, accounts and vouchers
- Requires information/explanation from employees (failure is criminal offence unless not practicable)
Auditors removal/resignation
- By ordinary resolution with special notice (28 days) at general meeting
- Cannot be removed by written resolution
- Can resign by written notice to company
- Auditor may require directors to call a meeting within 28 days
What is an audit report?
The audit report is usually one page of the year end financial statements which:
1. Identifies the accounts audited and the financial framework applied
2. Describes the scope of the audit
3. States that accounts give a true and fair view (auditors opinion)
4. States directors report is consistent with the accounts
END GOAL= unqualified/unmodified audit (pure view)
-whole purpose of doing the audit, to produce a report for the members
Annual accounts are made up of?
- Balance sheet and profit + loss
- Consolidated group accounts where the company is a parent company (>50% holdings)
- True and fair view of financial position and profit for financial year
- Must be approved by and signed on behalf of board of directors
- Directors report
- Directors remuneration report
- Audit report
Annual confirmation statement
- state company has provided all info required in last 12 months and confirm changes to it:
1. Address of registered offices
2. Type of company and business activities
3. Address registers are kept
4. Statement of capital - must be filed within 14 days of expiry date of previous 12 month period
- failure to deliver is a criminal offence by company/secretary/directors
A company may qualify as a small company for an audit exemption if it has at least 2 of the following…
- Annual turnover of no more than £10.2 m
- Assets worth no more than £5.1 m
- 50 or fewer employees
Exemptions small companies get…
- Send abridged accounts to companies house. Send simpler balance sheet signed by a director that won’t be publicly available
- Company’s accounts don’t need to be awaited
- Choose to send copy of directors report and profit + loss or not
Will be a micro entity if it has any 2 of…
- Turnover of £632000 or less
- £316000 or less on balance sheet
- 10 or less employees
If your company is a micro entity you can…
- Prepare simpler accounts that meet statutory minimum requirements. Send only balance sheet with less info to companies house.
- Same exemptions as small companies
Company secretary
- Public company must have one, private don’t
- Principe administrative officer
- Responsibility for running registered office
- Appointed by directors
- Annual confirmation statement updates
- Authority to act as companies agent
Qualifications needed for a secretary?
- private no qualifications needed
- public must satisfy one of the following:
1. Secretary of plc for 3 of last 5 years
2. A barrister, solicitor, or advocate in the uk
3. Member of approved organisational body (ACCA, ICAS)
4. Appear to be capable of acting as company secretary through experience gained in another capacity
What companies need an audit?
Companies with over
- an annual turnover of £10.2 m
- assets worth more than £5.1 m
- 50 or more employees
ALL PUBLIC COMPANIES EVEN IF UNDER THIS LIMIT
Exempt:
- dormant= if it’s not doing business and does not have any other income
- under the above thresholds
