Small UK company. Audit cost
Small UK company. Audit cost
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belfry

Original Poster:

1,010 posts

198 months

Sunday 20th November 2022
quotequote all
I own a small UK business which is exempt from the requirement to be audited due to the small business exemption.

We are entering into a joint venture in Saudi, and the Saudi requirements are for a copy of the "audited" accounts. We sent through a copy of the unaudited accounts but they were rejected as the requirements clearly state 'provide a copy of the audited full accounts'.

Our turnover is £1.7m, and we have 7 employees. What would we need to pay for an audit please?

Many thanks

Eric Mc

124,033 posts

281 months

Sunday 20th November 2022
quotequote all
What type of audit does your customer require? There are various types. The audit you are exempted from is the "statutory audit", which is an audit carried out in compliance with the UK Companies Act 2006.

Statutory Audits can only be carried out by "Registered Auditors". Your current accountant may not have that status (many smaller firms dropped their Registered Audit" status when they found that the vast bulk of their limited company clients no longer needed a statutory audit.

They might be satsfied with a "lesser" audit carried out just to suit them.

belfry

Original Poster:

1,010 posts

198 months

Sunday 20th November 2022
quotequote all
Thanks for replying. The requirement for audited full accounts is coming from the Saudi authorities, so potentially less flexible that a customer.

s2kjock

1,799 posts

163 months

Sunday 20th November 2022
quotequote all
In practical terms an "audit" is likely to mean a "statutory audit" though in these situations IME, unless you can persuade them to accept some form of accountant's report. Larger, corporate entity less likely to let you.

Can you say more about what sort of business it is, ie transaction volumes/types, and also who prepares/prepared the statutory accounts currently? Have you stock or an accounting function overseas? Are the FCA registered?

Audit fees are increasing significantly just now for a variety of factors, including wage cost inflation (staff difficult to get and retain) and increasing regulations (which are going to get worse next year). If you need it done in a hurry you may struggle to find someone to take it on.

MaxFromage

2,395 posts

147 months

Sunday 20th November 2022
quotequote all
What does the company do? For example, a service business with large one-off transactions/contracts is easier/quicker to audit than a complicated manufacturing one.

My minimum fee for an audit now would be £7K+VAT given the amount of work involved (mainly planning on a smaller business rather than the work on the balance sheet/P&L). For clarity, this would include the preparation of the accounts/corp tax returns to some degree, with these services performed separately from the audit (segregation of duties).

Edit: Just saw you have details on your profile. I'd imagine your audit would be average in terms of requirements, if one really exists.

Edited by MaxFromage on Sunday 20th November 11:25

belfry

Original Poster:

1,010 posts

198 months

Sunday 20th November 2022
quotequote all
The business runs 2 clinics in the UK. Our abbreviated accounts are prepared by a cheap and cheerful firm of accountants, but without the capacity to provide an audit. I founded the company in 2006.

All statutory tasks have been undertaken by them and the accounts have been submitted. We have a book keeper and we use Xero, and our books are fully up to date.


s2kjock

1,799 posts

163 months

Sunday 20th November 2022
quotequote all
MaxFromage's minimum sounds in line with what we would charge for a similar service, although if the stat accounts and corporation tax compliance work has already been done then it would reduce that.

I'm not sure about auditing accounts that have already been filed at Companies House though - I'm sure we have had this issue in the past but can't recall what the outcome was.

Often smaller non audit registered firms have arrangements with audit firms to do that element for them while they continue with the basic compliance work (accounts prep and corp tax). Have you discussed with them, or have they already said they don't know anyone?

The other consideration is whether a cheap and cheerful firm is the right adviser for the future if you are growing the company and entering into more complex transactions such as JVs with foreign entities.

Eric Mc

124,033 posts

281 months

Sunday 20th November 2022
quotequote all
belfry said:
The business runs 2 clinics in the UK. Our abbreviated accounts are prepared by a cheap and cheerful firm of accountants, but without the capacity to provide an audit. I founded the company in 2006.

All statutory tasks have been undertaken by them and the accounts have been submitted. We have a book keeper and we use Xero, and our books are fully up to date.

You will have to engage an accountant or a firm of accountants who is/are "Registered Auditors". You can still retain your "normal" accountants to prepare the statutory accounts and provide the usual services but you will need to get someone else involved and pay the extra fees. I would expect the
audit fee will be at least £1,000 on top of what you already pay your current accountants. It might be a lot more.

MaxFromage

2,395 posts

147 months

Sunday 20th November 2022
quotequote all
Eric Mc said:
You will have to engage an accountant or a firm of accountants who is/are "Registered Auditors". You can still retain your "normal" accountants to prepare the statutory accounts and provide the usual services but you will need to get someone else involved and pay the extra fees. I would expect the
audit fee will be at least £1,000 on top of what you already pay your current accountants. It might be a lot more.
No chance these days Eric. You are talking days of planning to start with. I can't see even the cheapest of auditors doing it for less than £3-4K. Also the OP is filing micro accounts (I'm not a fan of these for sizeable businesses for a number of reasons), so extra cost may need to be factored in for that.

skwdenyer

18,405 posts

256 months

Sunday 20th November 2022
quotequote all
MaxFromage said:
Eric Mc said:
You will have to engage an accountant or a firm of accountants who is/are "Registered Auditors". You can still retain your "normal" accountants to prepare the statutory accounts and provide the usual services but you will need to get someone else involved and pay the extra fees. I would expect the
audit fee will be at least £1,000 on top of what you already pay your current accountants. It might be a lot more.
No chance these days Eric. You are talking days of planning to start with. I can't see even the cheapest of auditors doing it for less than £3-4K. Also the OP is filing micro accounts (I'm not a fan of these for sizeable businesses for a number of reasons), so extra cost may need to be factored in for that.
On a turnover of £7m across 3 entities (holdco, non-trading, trading), the most recent audit I paid for cost £24k, FWIW. 2nd/3rd tier firm.

IJWS15

2,027 posts

101 months

Sunday 20th November 2022
quotequote all
You might want to check the rules for ownership of businesses in Saudi.

Last time I was involved Saudi law was amended so a specific Saudi Company could be owned by a specific UK company

MaxFromage

2,395 posts

147 months

Sunday 20th November 2022
quotequote all
skwdenyer said:
On a turnover of £7m across 3 entities (holdco, non-trading, trading), the most recent audit I paid for cost £24k, FWIW. 2nd/3rd tier firm.
Not unexpected for a 2nd/3rd tier. You could possibly halve it with a smaller firm, but it depends on the consolidation.

Sunday Drive

269 posts

36 months

Sunday 20th November 2022
quotequote all
Where are you based?

2 GKC

2,193 posts

121 months

Sunday 20th November 2022
quotequote all
£5k

skwdenyer

18,405 posts

256 months

Sunday 20th November 2022
quotequote all
MaxFromage said:
skwdenyer said:
On a turnover of £7m across 3 entities (holdco, non-trading, trading), the most recent audit I paid for cost £24k, FWIW. 2nd/3rd tier firm.
Not unexpected for a 2nd/3rd tier. You could possibly halve it with a smaller firm, but it depends on the consolidation.
Indeed. Re-tendering our audit is on the list smile