Do know why you need an audit or why you should have one?
The main reasons why you will be required by law to have a statutory audit are...
1. You are a bank, insurance company, finance lease company, pension fund or other financial organizations
2. Based on the latest submitted financial statements, you are classified as large and/or middle size legal entity
3. Your owner and/or shareholders do not agree to opting out of the audit.
In contrast, all entities meeting any two of the following three criteria are exempt from having a statutory audit (“small entities”):
• Operating income below Euro 8.8 million
• Value of total assets below Euro 4.4 million
• Less than 50 employees
However, all entities (regardless of size) with total operating income exceeding Euro 4.4 million are required to have their financial statements audited.
K&C can advise you if you need an audit and if not, you can save on accountancy fees!
Even so, we believe there are good reasons for having an audit even if you are not required by law to have one since:
- An audit involves a detailed review of the company's accounting systems and systems of control – requiting a detailed understanding of the company's business which can provide a new perspective on opportunities for improvement
- An unqualified audit report (“a clean opinion”) can improve the status of the company’s accounts in the eyes of suppliers, banks and creditors, who may be seeking credit references;
- A history of accounts with clean audit reports can also be a factor if you ever wish to sell the company or, perhaps, take it to the trade market
- The possibility of fraud can be reduced as an audit can act as a deterrent to any potential fraudulent activities.