Introductory Lecture

Question 1

What is an audit?

Answer 1

An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organisation to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern.

Question 2

Who has to have a statutory audit of their financial statements?

Answer 2

Under the Companies Act 2006, all UK companies have to have a statutory audit unless they meet 2 out of the 3 following thresholds:

• Turnover does not exceed £10.2m
• Balance sheet total does not exceed £5.2m
• Number of employees does not exceed 50

Question 3

What are the responsibilities of a statutory auditor?

Answer 3

• Form an independent opinion on the truth and fairness of the financial statements.
• Confirm they have been properly prepared in accordance with the Companies Act 2006.
• Confirm the Director’s Report is consistent with the financial statements.

Question 4

Why is the audit report important?

Answer 4

• Investors, employees, the government, suppliers, customers & the general public need to able to use the financial statements.
• We need to be able to rely on the information contained within the financial statements.