Under new Companies Act 2006 legislation, companies with an annual turnover over £6.5m will be required to undertake an annual audit. There will also be instances where firms with lower levels of turnover may also require an audit. For example where providers of finance require an audit as part of their lending conditions or where shareholders not involved in the running of the business require an independent review of a companies financial affairs (those holding at least 10% of the voting share capital). This process needs to be undertaken by a registered audit firm.
An audit is a review of the accounting books and records of a company and its financial statements, in order for an opinion to be formed by the auditor as to whether the financial statements give a true and fair view of the results of the company and have been prepared in accordance to the requirements of the Companies Act and United Kingdom Generally Accepted Accounting Practice.