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 accurate.

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 to survive.

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Types of Company Profit & Loss
Sole Traders & Partnerships Balance Sheets
Limited Companies The Meaning of Ratios
Company Accounts Credit Limits
Filing Requirements Detrimental Information
Audits Glossary of Terms