News and insights from the Verallo team
Audit thresholds and criteria checklist
Almost ready for your first audit?
In the UK, businesses must undergo an audit if they meet certain criteria. Generally, companies are required to have their accounts audited if they exceed specified thresholds related to turnover, assets, and number of employees. To help determine whether your business requires an audit for its first accounting period, we’ve put together a checklist of the key criteria and thresholds.
For a first financial year, your company must have its accounts audited if it meets two or more of the following current* criteria:
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Turnover: The company has an annual turnover of more than £10.2 million.
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Total Assets: The company has total assets worth more than £5.1 million at the balance sheet date.
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Employees: The company has an average of more than 50 employees during the financial year.
These thresholds apply to most private limited companies, for longstanding businesses, the company would enter into the audit threshold if it exceeds the above criteria for the second consecutive year.
Exceptions and special cases:
- Public companies: Public limited companies (PLCs) are required to have an audit regardless of size.
- Companies in regulated industries: Certain companies, such as those in banking, insurance, and other regulated industries, must have their accounts audited regardless of their size.
- Parent and subsidiary companies: If the company is part of a group, the group as a whole must meet the thresholds to be exempt from an audit. Additionally, the parent company and subsidiaries must meet certain conditions to qualify for exemption.
- Charities: Charitable companies have different thresholds and requirements, often needing an audit if their income exceeds £1 million or if they meet certain asset and income condition.
Check if your business requires an audit in 4 steps:
- Review the company’s projected financials against the statutory audit thresholds.
- Consider any special industry regulations or requirements.
- Check for shareholder demands or internal policies that might necessitate an audit.
- Evaluate the benefits of a voluntary audit if not legally required.
Looking for support? We make the audit process clear and simple. Speak to one of our experts today by calling 0203 912 9933 or emailing info@verallo.com.*Thresholds likely to change from 1 October 2024, more detail to follow.