2024 King’s Speech: Audit Reform Announced by UK Government Government...
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A seasoned Chartered Accountant with over 30 years of experience, Umar specialises in audit oversight, tax mitigation, and financial due diligence at Jack Ross.
Latest posts by Umar Memon (see all)
- Government Announces Audit Reform in 2024 King’s Speech - 31/07/2024
- The Importance of Regular Audits for Businesses - 21/03/2024
- Understanding Innovate UK Grants - 09/01/2024
Introduction: Why Audit Requirements for UK Subsidiaries Matter
Finding out whether your UK subsidiary needs a statutory audit or is eligible for an audit exemption can be complex. With the regulatory landscape continuously evolving, especially post-Brexit, understanding your subsidiary’s audit obligations is crucial and challenging. Here at Jack Ross Audit, a brand division of Jack Ross Chartered Accountants, we guide you through these complexities.
What Determines If Your UK Subsidiary Requires an Audit?
Many UK subsidiaries, especially those with overseas or EEA parent companies, are legally mandated to have a statutory audit each financial year under the Companies Act 2006. However, some may be exempt if they meet specific criteria.
If any of the following applies to a UK subsidiary then a statutory audit is mandatory:
- Turnover: More than £10.2 million annually.
- Balance Sheet: Total exceeding £5.1 million.
- Employees: More than 50.
Additionally, certain types of companies are required to have an audit, such as large private companies, PLCs, and various types of investment and insurance firms. Non-compliance could result in penalties.
The Jack Ross Team has been an absolute delight. Professional, nice and fast during the Audit procedure. Thank you Jack Ross Team.
Very good service from the Jack Ross Team. They gave us good advice and completed a very efficient audit. They have a friendly and competent team. I would surely recommend them.
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Been using Jack Ross for a number of years. Good clear advice and nice people to do business with.
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Jack Ross has been my accountants since I set up my business in 2016. From the outset I was helped with advice, support and encouragement. I cannot commend them highly enough. Always on hand to answer any question and responsive to any changes in the economy which might concern their clients. I don’t have to worry about the financial side of my business as all of that is taken care of and dealt with by Umar and the brilliant team. If you are looking for a top class accountancy firm which maintains the personal touch they are for you!
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What Audit Exemptions Are There for UK Subsidiaries?
While most UK subsidiaries are required to undergo an audit, certain exemptions might apply. A popular one is available under section 479A of the Companies Act 2006. To be eligible, UK subsidiaries of EEA parent companies must:
- Be included in UK consolidated group accounts.
- Have those consolidated accounts audited.
- Obtain a guarantee for all undischarged liabilities from a UK parent company.
These exemptions reduce audit costs but require meticulous validation.
Brexit’s Impact on Audit Requirements
Brexit has significantly altered the audit landscape for UK subsidiaries. Key changes include:
- Only UK and EEA parent companies can avail of audit exemptions.
- Extra steps are now necessary for EEA parents to guarantee UK subsidiary liabilities.
- Adaptations are needed in audit and consolidation processes due to Brexit.
Factors That Influence Audit Requirements
Your UK subsidiary’s need for an audit hinges on several elements, including:
- Company Size: Subsidiaries exceeding certain financial thresholds are required to have an audit.
- Company Type: Specific categories, like large private companies, necessitate audits.
- Parent Company Location: Post-Brexit, only UK or EEA parent companies can avail of exemptions.
How to Claim an Audit Exemption
To claim an audit exemption under Section 479A, you’ll need:
- Agreement from all members of the corporation for the fiscal year in question.
- A UK parent company that guarantees all of the subsidiary’s outstanding liabilities.
- The subsidiary must be included in the UK parent’s consolidated, audited financials.
- Proper filings must be submitted to Companies House.
Pros and Cons of Audit Exemption
- Pros: Savings on audit fees, reduced administrative burden, and increased flexibility.
- Cons: Yearly validation of eligibility, lesser financial scrutiny, and the need for a parent guarantee.
What’s Involved in Auditing UK Subsidiaries?
Audits offer an independent evaluation of a subsidiary’s financial status, covering aspects from financial statement accuracy to compliance with regulations. A robust audit provides assurance, transparency, and actionable recommendations.
Duration of an Audit
An audit typically ranges from 8 to 12 weeks, depending on factors like the subsidiary’s size, complexity, and cooperation levels.
Risks of Non-Compliance
Failure to comply with UK audit regulations can lead to statutory fines, damaged reputation, and even legal repercussions.
Why Choose Us?
At Jack Ross Chartered Accountants, we offer expert guidance in determining your audit requirements, assessing exemption eligibility, and navigating the complexities introduced by Brexit. Our comprehensive audit services ensure you remain compliant while making informed financial decisions.
In Summary
Understanding the audit requirements for your UK subsidiary is a multifaceted process. With our expertise at Jack Ross Chartered Accountants, you can navigate this complex landscape with ease and confidence.
Please get in touch with us today using the contact form below for a tailored consultation on how we can assist your UK subsidiary in meeting its audit obligations.
A seasoned Chartered Accountant with over 30 years of experience, Umar specialises in audit oversight, tax mitigation, and financial due diligence at Jack Ross.
Latest posts by Umar Memon (see all)
- Government Announces Audit Reform in 2024 King’s Speech - 31/07/2024
- The Importance of Regular Audits for Businesses - 21/03/2024
- Understanding Innovate UK Grants - 09/01/2024
Your UK subsidiary is generally required to undergo a statutory audit if it has:
- Turnover of more than £10.2 million annually.
- Balance sheet total exceeding £5.1 million.
- More than 50 employees.
Yes, large private companies, PLCs, and various types of investment and insurance firms must have an audit.
We offer expert guidance in determining your audit requirements, assessing exemption eligibility, and navigating the complexities introduced by Brexit.
Client Testimonials
Explore the success stories of audit clients we have helped achieve great things.
The Jack Ross Team has been an absolute delight. Professional, nice and fast during the Audit procedure. Thank you Jack Ross Team. Engaging with the Jack Ross Team for our audit was one of the best decisions we have made this fiscal year. I was particularly impressed with their swift and streamlined audit process. Unlike other firms that drag on for weeks, Jack Ross was able to conclude our audit in record time without cutting corners.
Their professionalism is unparalleled; from initial consultation to final report, every interaction was marked by courtesy, respect, and a deep understanding of our unique business needs.
But what surprised me most was their warmth and friendliness; they made a typically stressful process feel almost enjoyable. It is refreshing to work with a team that combines speed and efficiency with such high levels of customer service.
If you are looking for an audit service that respects your time without compromising on quality, then look no further than Jack Ross Audit.
Their professionalism is unparalleled; from initial consultation to final report, every interaction was marked by courtesy, respect, and a deep understanding of our unique business needs.
But what surprised me most was their warmth and friendliness; they made a typically stressful process feel almost enjoyable. It is refreshing to work with a team that combines speed and efficiency with such high levels of customer service.
If you are looking for an audit service that respects your time without compromising on quality, then look no further than Jack Ross Audit.
Sofia Carlini
Financial Controller
Excellent service from the Jack Ross Audit Team. They gave us good advice and completed a very efficient audit. They have a friendly and competent team. I would surely recommend them.
I have always considered auditing a cumbersome process, but my experience with the Jack Ross Audit Team has completely changed my perspective. Their service was impeccable from start to finish. The team not only offered us invaluable advice to streamline our financial systems, but they also executed an extremely efficient audit that was far less intrusive than I've experienced in the past.
What truly sets Jack Ross Audit apart, however, is their team. Each member we interacted with was incredibly competent and genuinely friendly and approachable. They made us feel like a valued client rather than just another case file.
If you are unsure which accounting firm to choose for your audit, I cannot recommend Jack Ross Audit highly enough. Their blend of professionalism, efficiency, and genuine care for their clients is rare in the financial world.
I have always considered auditing a cumbersome process, but my experience with the Jack Ross Audit Team has completely changed my perspective. Their service was impeccable from start to finish. The team not only offered us invaluable advice to streamline our financial systems, but they also executed an extremely efficient audit that was far less intrusive than I've experienced in the past.
What truly sets Jack Ross Audit apart, however, is their team. Each member we interacted with was incredibly competent and genuinely friendly and approachable. They made us feel like a valued client rather than just another case file.
If you are unsure which accounting firm to choose for your audit, I cannot recommend Jack Ross Audit highly enough. Their blend of professionalism, efficiency, and genuine care for their clients is rare in the financial world.
Katrien Vanassche
Financial Director
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