Audit describes the process in which the financial records of a business or individual are examined for accuracy.
A statutory audit is an independent assessment of the financial accounts of a company or institution.
The auditor’s role is to report on whether the organisations financial statements are ‘true and fair’ and meet all relevant guidelines or legal requirements. This will then allow companies to guard against risk and plan for the future.
A pre-audit audit with a reduced scope to a statutory audit is often the first part of the auditing process. It can help provide reassurance to stakeholders and reduce the time constraints on the finance team when the first-year statutory audit is completed.
What is a preliminary audit?
During a pre-audit, a company’s financial documents are examined to ensure that all information is correct before the company undergoes an official audit.
The pre-audit process may be undertaken by employees of the company being pre-audited, or the company may hire an auditor such as ourselves to examine its finances.
Pre-auditing may be used to describe both a single instance of review directly preceding an official audit as well as the continuous process of monitoring finances throughout the year.
Why conduct a preliminary audit?
A pre-audit may want to be considered in the following instances:
- If you are a new business or are considering a sale or flotation, an assurance exercise can help you certify you have your financial statements in order and/or be more appealing to investors.
- If you are an investment manager of a private fund you will get medium to long term benefits in an audit by building a track record towards being licensed in the future and being open to external investors.
- If you are a charity, you may be required to engage in a non-statutory audit as this can help satisfy the needs of donors or grantors by verifying the effectiveness of your financial activities.
How would it work?
We will discuss your results with you in depth and compare the information in the accounts with other relevant information to determine if it is consistent and coherent. We will also help you document your internal systems and controls (and provide recommendations & improvements) which will again reduce the time pressure on your finance team when the first statutory audit is completed.
Issues that we have become aware of during our analysis that might indicate a high risk of discrepancies in the financial statements are examined in close detail.
Furthermore, the work required is generally less extensive than the work involved in a full audit. However, it has the advantage of flexibility and preparing companies for any potential issues that could crop up in the official audit.
This level of assurance provides the basis for a negative form of conclusion on unaudited financial statements. For instance:
‘…nothing has come to our attention to refute the directors’ confirmation that…the financial statements give a true and fair view…’.
What are the advantages of a pre-audit assurance exercise?
There are several advantages to completing a non-compulsory audit, for example:
- Non-statutory audits will be tailored to the specific needs of your organisation
- We do not unnecessarily conduct analysis on works that are not required or useful to your organisation in a non-regulatory context
- It will be less in-depth so more cost-effective than a full statutory audit.
- The lite audit will provide an unbiased view of the organisation’s activities
- We can help identify any potential weaknesses within the company before the full audit takes place
Why Williamson & Croft?
We understand the pressures associated with audits, which is why our expert team are best placed to help your business complete this process. Our client-focused approach ensures our audit service will be bespoke and tailored to your business.
We utilise the latest cloud-based audit technology to ensure that your audit is completed in the most efficient possible way, whilst still maximising the benefits to the business, whether we are onsite meeting face-to-face, working remotely with video conferencing systems or most often a combination of both.
We aim to provide complete comfort to management that there are robust client money processes and controls in place, and that they meet all legal and regulatory requirements.
Contact us today if you believe a voluntary audit might be appropriate for your business.