Company law requires any company with a turnover greater than £1,000,000
per annum to conduct an independent audit of their financial situation once a
year. This audit must be carried out by a firm of Chartered Accountants who are
members of their professional body in England; Scotland; Wales or Ireland.
There are strict rules and guidelines that must be adhered to in audit work
called Financial Reporting Standards.
These rules cover everything from the way in which company accounts are investigated,
to the way in which the audit is presented on paper in the final Audited Accounts.
The rules were first drawn up by the Accounting Standards Committee and were
called Statements of Standard Accounting Practise (S.S.A.P's). Accounting Standards
Board (A.S.B.), whose pronouncements are termed Financial Reporting Standards
(F.R.S's), has now succeeded this committee. Together, S.S.A.P 's and F.R.S
' s are known as the accounting standards.
If an auditor was to deviate from these rules, when carrying out their audit,
they may well find that they will have to justify their decisions to the "Review
Panel" of the A.S.B
After the audit of the company accounts has been completed, the Auditors are
required to include their own Auditor Report to verify that the accounts are
Our Company Credit Report will ideally include the sentence "True &
fair view..." which means the auditors are satisfied with the accuracy
of the Accounts.
Other sentences may include "Reliable Assurances have been obtained from
the directors..." meaning that certain documentation has not been seen
(such as invoices) and assurances have been given by the directors. "Going
concern, dependent upon..." indicates that in the auditors view, the company
has to rely on outside support (say from bankers or parent company) in order
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