Unaudited accounts filed instead of audited
A client has recently moved to a new firm of accountants (no qualifications on headed paper) citing that our fee was too high (we are ICAEW firm).
The company has £10million net assets (only £500k t/o) and so we prepared audited accounts in previous years.
We have not been approached by any new auditors and the new accountants did not make mention of the audit in their letter (although we did in our reply) and we have not been asked to resign as auditors.
The new firm have recently filed small unaudited accounts with Companies House for this company.
What should we do? Write to Companies House?
Money laundering report?
I suppose one could make a technical argument to the effect that the company has saved a fee (or obtained a reduction in fee) by not having an audit and (assuming that an audit was legally required) has gained a benefit.
However you also must suspect that the company (through its directors) was aware that an audit was required and knew or suspected that it had gained a benefit from a criminal offence. The company's possession or use etc of that benefit would then constitute money laundering. Knowledge or suspicion (of the company's money laundering) by the former accountant would trigger an obligation upon him to report under MLR 2007 / s330 Proceeds of Crime Act 2002.
That all sounds a bit 'thin' / academic to me. I wouldn't see myself making a Suspicious Activity Report to SOCA on that basis alone.
On a totally different point, I believe it is the case that a company which qualifies as 'small' for the purpose of abbreviated accounts may nevertheless be obliged to have its accounts audited*. Different criteria apply. If this company has net assets of £10 million then its 'balance sheet total' (as defined) must be at least that (and is almost certainly greater) and so an audit would appear to be obligatory.
David
*However a company which is neither dormant nor qualifies as a 'small' company will always be required to have its accounts audited.
Small and audit criteria are slightly different
To qualify as small a company must meet at least 2 of the following 3 criteria
- annual turnover must be not more than £6.5 million;
- the balance sheet total must be not more than £3.26 million;
- the average number of employees must be not more than 50
To qualify as audit exempt a company must meet all of the following 3 criteria
- qualify as small
- have a turnover of not more than £6.5 million; and
- have a balance sheet total of not more than £3.26 million.
So a company can qualify as small (meeting turnover and employee criteria) but still require an audit (assets over limit)
Move on
You sound rather like a spurned lover. Unless there is some great public interest to you reporting this to Companies House - what's the point (apart from revenge)?