Advice on audited/unaudited accounts please

[Welsh Translator]

A contract which my Ltd company has held for the last 4 years is out to tender at the moment. Unlike the last tender process, this time they are asking for "audited, published accounts" as a mandatory requirement. Our latest accounts (up to 31/08/10) were unaudited. Can someone please give an idea of the difference in price between unaudited and audited accounts so that we can consider our options? We paid £1,000 +VAT for our unaudited accounts which included submission to Companies House and submission of the Corporation Tax return to HMRC. As a supplementary, would we be required to use a different accountant if we wished to have audited accounts prepared? Thanks very much in advance!

 

[David Griffiths]

People who ask for audited accounts usually don't know the meaning of the word, and I'd just send them the accounts that you have got. They usually mean your annual accounts prepared by an accountant rather than DIY. Don't even mention the fact that they aren't audited - it's odds on a box ticking exercise. If this is something connected with the WAG, then they don't have a clue.

If you really have to have an audit you are going to have to find a firm who are registered auditors. Given that a company audit is only required (normally) for companies turning over more that £6.5 million, many small firms have given up audit registration in the last few years. (I did, and gladly, two years ago) If your current accountant doesn't have registered auditor status, you'd have to change.

I'd guess that a formal audit could easily add £2,000 or more on top of what you are paying.

 

[Arch Stanton]

The audit of your company's accounts will need to be carried out by a registered auditor. If your current accountant is not a registered auditor you may have to change accountant or find an auditor who is happy to audit accounts prepared by another accountant.

Difficult to say what the additional audit cost will be as this will depend on the size, nature and complexity of your business affairs and likely audit risks. I guess it could easily be an extra £500 to £1,000.

I suggest you confirm that "audited, published accounts" really does mean audited. Often organisations will ask for audited accounts when they will be prepared to accept "accounts prepared by a reputable accountant".

 

[elaine@cheapaccounting]

In my experience many ask for this but have no idea what they are asking for nor do they look for an audit report in the financial statements when they actually receive them!

How well do you know the company and person in charge o f the tender process?
Maybe a chat with them can clarify if they really do understand the size of company that requires an audit and do they really require this information. Approach this in a conciliatory way of course!


Worth a try before spending out several thousand to get a piece of paper that is frankly of no use to anyone.


However if of course they are insistent and it's the only way of potentially keeping the contract then that's the price to pay.

 

[Welsh Translator]

Thank you very much for the replies. I have emailed the person in charge of the tender process to ask what they mean by audited accounts - to see whether they do actually understand the real meaning of the term. I just hope I get the answer I'm looking for - but either way, if it sounds as though the person still doesn't really understand what audited means, I think I will just submit the accounts that we have already had prepared by our accountant.

 

[elaine@cheapaccounting]

Good luck with it - let us know how it goes

 

[Welsh Translator]

Thanks, Elaine.

I didn't think I would be reporting back so soon, but I have received a favourable response from the procurement officer to say that the accounts can be prepared and certified by either a registered auditor or a reputable accountant.

Thanks very much once again for all your help and suggestions.

 

[elaine@cheapaccounting]

Well blimey that was quick and the response that saves thousands - great news. Seems that many do not know what audited accounts really mean

 

[David A]

I think it boils down to the word 'audit' gaining a particular tightly defined meaning in legal and accounting terms in recent years.

We block manage flats, and a number of limited companies have rules that include the term 'audit' when dealing with annual accounts. Over the last couple of years we have included resolutions at the AGM for members to remove the word 'audit' and replace it with 'prepared by an appropriately qualified accountant', or something similar.

It can lead to a lively AGM where occasionally a member or two think that it is a means for us to plunder the account, and thus want to oppose the resolution!!!

Shame there's not another single word for audit that means what it used to mean in the past, if you get my drift.

 

[elaine@cheapaccounting]

approved financial statements

 

[David A]

approved financial statements

As a layman, that's three words not one - but then I'm not an accountant.

 

[elaine@cheapaccounting]

Audited financial statements becomes approved financial statements

looks like one word to me