What to expect from an external audit

by | May 7, 2019 | Blog

The Competition and Markets Authority (CMA) recently endorsed calls from MPs for the Big Four accountancy firms to split their audit operations from other consultancy services.

“People’s livelihoods, savings and pensions all depend on the auditors’ job being done to a high standard, but too many fall short,” said CMA chairman Andrew Tyrie.

“More than a quarter of big company audits are considered sub-standard by the regulator. This cannot be allowed to continue.

“The UK afford to rely on only four firms to audit Britain’s biggest companies any longer.”

This ought to be a wake-up call for British businesses – could a mid-sized accountancy practice provide a better audit than you’ve been receiving from the big multinationals?

Audits need to be challenging by definition but that needn’t mean they have to be an ordeal.

Our audit service is well established, tried and tested. We provide statutory audits for all sorts of companies, charities, pension schemes and friendly societies.

What is an external audit?

Many commercial and non-profit organisations require an independent audit. 

Broadly speaking, this consists of reviewing your company’s financial statements to ensure they are a “true and fair” account of its current and previous financial performance. 

This is a legal obligation if your company turns over more than £10.2 million, has total assets worth more than £5.1m, and employs over 50 members of staff. 

The audit must adhere to generally accepted accounting rules, codes of practice, business ethics, internal guidelines and principles.

Our approach is to gain an in-depth understanding of your business by digging deep into your financial and management systems. 

Although it’s about challenge, our approach to audit also identifies ways you can improve your processes and systems, making your business stronger in the long run.

Who are the Big Four and why are they under pressure?

Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers make up the Big Four professional services networks, not just in the UK but around the world. 

The spotlight has been on KPMG in particular following the high-profile collapse of government contractor Carillion in 2018, which kicked off calls for reform. 

MPs led those recommending the Big Four split their services into audit and non-audit businesses, before the CMA adder further pressure. 

Then in May 2019, the Financial Reporting Council slapped KPMG with a £6m fine over the way it audited an insurance company. 

Why choose Dunkley’s as your external auditor?

There are various things to look for when selecting an external auditor, which our most-read blog of 2018 touched upon. 

Director Lisa White handles external audits, while Fiona Davey specialises in auditing charities. 

To find out more about our external audit service, call 01454 619900 or email us at advice@dunkleys.accountants 

What can we do for you?

If there’s anything you’d like to know about Dunkley’s, we’d love to hear from you.