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What is the value of an audit to an OMB

How do I explain to an owner manager of a business that has no borrowings, why he should require an audit (other than by law).

What are the benefits to his business? Could the fees not be better used on providing business advice?

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By Luke
08th Aug 2011 20:04

Not a lot

is the value of an audit to an OMB without borrowings.

The money would be far better spent on focused tasks, or not at all, rather than an audit.

I no longer do audits, and to be honest can't see much value in them for smaller OMBs.

 

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11th Aug 2011 18:12

Not an audit but...

Given HMRC's new BRC regime, I would be tempted to propose a review of record keeping upfront to identify any problems before HMRC do.

Agree the point about the audit being of little meaningful use to an owner managed business.

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09th Aug 2011 14:03

audited accounts

I find it rather disappointing that a large number of the public think "audited accounts" are the accounts prepared by your accountant. The same applies to financial institutions when granting a borrowing facility. For most people & financial institutions audited accounts are accounts signed by a qualified CCAB accountant(and also AAT I believe)(who are entitled to sign accountants reports and conduct an independent examination for charities).

 

The value of an audit was lost when exemptions were offered and the audit threshold was first lifted in the early eighties.....

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09th Aug 2011 09:54

Er ...

I am not clear about the question.

If this is a client whose accounts do not meet the conditions for audit exemption, the accounts must be audited in accordance with the Companies Act and (clarified) ISAs.  End of discussion.  You say that it has no borrowings, but it must have substantial assets and turnover and do a lot of business on credit - its suppliers and the credit rating agencies depend on the reassurance of an audit.

If you are trying to sell an audit to an audit-exempt company, I would not bother.  I agree with the other posters that it adds no benefit to an OMB and should only be undertaken if absolutely required by a lender.

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09th Aug 2011 10:33

Also not sure about the question

There is no realistic benefit to an owner managed SME of an audit. I would actually argue that there is no benefit to any business of an audit however that may be for another thread.

The client just has to accept that an audit is the cost of doing business when their turnover/assets exceed a certain level.

I have taken this question to mean that the client is disputing the need for him to incur the cost of a full audit and you are looking at a way of sugar coating the pill.

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