James Todd and Co expands statutory audit division

West Sussex-based accountancy firm James Todd and Co has expanded its audit team, providing “expert” guidance for companies and organisations that require professional assistance complying with statutory audit requirements.

In the UK, statutory audits are a legal requirement for certain companies and organisations and provide an independent overview of the accuracy of the organisation’s published financial statements, offering assurances and insights for stakeholders, investors and other parties.

According to the group, many companies and organisations assume that their only obligatory audit processes relate to those linked to companies of a particular size. Filing an audit report verified by an independent, appropriately qualified auditor is a necessity for registered companies or groups that exceed the thresholds by which a business is considered small:

Turnover over £10.2m per annum, gross assets of £5.1m and above, or a workforce of 50 or more employees.
Meeting any of the above criteria in the first year of trading or for two or more consecutive financial periods.

However, these requirements differ for charities and non-profit organisations, which must comply with statutory audit obligations where annual income is £1m or above each year, net profits meet or exceed £250,000, or where gross assets are more than £3.26m.

Other organisations may also be subject to a statutory audit due to the provisions and requirements in their governing documentation, or often because financiers, leadership or directors require a complete audit process to be conducted annually – irrespective of requirements enforced by the Companies Act.

Organisations that trade in specific sectors or industries, including businesses in financial services, banking, electronic money transactions or insurance must organise a statutory audit once per annum, alongside public companies and their subsidiaries.

Oliver Read, FCCA ACA, director at James Todd and Co, said: “While audit thresholds for limited companies were last updated in January 2016, a surprising number of organisations, including non-profit and charitable groups, need to be made aware of the requirements, or have been subject to ineffective audit processes.

“Well-publicised cases in 2023 linked to the audits of Carillion and Patisserie Valerie resulted in multi-million pound legal challenges, primarily due to negligence or insufficient audit testing that led to shareholders and investors making decisions based on incorrect information.”

He added: “As an independent specialist, we routinely speak with clients who are unclear about how, when or where to conduct an in-depth audit or how to ensure that audit outcomes and reports are well communicated and support the organisation’s scalability potential. Many entities view audits as a necessary task that is undertaken reluctantly.

“Still, we are committed to educating local, national and international business clients about the value, importance and key need for statutory, internal and regulatory audits. These collaborative processes can highlight areas for improvement and opportunities to create market-leading benchmarks to demonstrate best practices in the relevant trading space.”