There are two types of Audits
Non Statutory Audit
Many businesses don’t need to have an audit by law, but many Companies still choose to have one, as there are numerous benefits in doing so
A few benefits to having a Non Statutory Audit is that if and when you decide to sell your business, it ensures you get the best price. It also keeps the banks and lenders happy when you may need additional finance. It also provides your creditors with peace of mind, as well as your suppliers.
A Statutory Audit is a legal requirement by Law to determine whether your business is providing a fair and accurate representation of its financial positioning by examining information, such as bank balances, bookkeeping records and financial transactions.
The turnover limit for a statutory audit has been increased for those companies with a turnover of £6.5 million or more.
A Statutory Audit enhances the trustworthiness of published financial statements. It also ensures the management they have performed their duties appropriately but most importantly if gives the view on the efficacy of internal controls, so if internal controls are weak, the Auditor will provide recommendations for improvement. This inevitably helps management in reducing the risk and improving the performance of the company
Overall, the benefit to having an audit can be extremely beneficial for a business as they can provide a wealth of information that can be used to fine tune business efficiency and increase profitability.