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Different World?
HMRC do not even understand what a set of GAAP compliant accounts are!
They cannot even spot the missing tax when it is right in their face.
Talk about accountants not understanding the issues.
In fact it is so bad that all you need to do is drop the word abbreviated and they will still accept those accounts even though no full accounts have been prepared.
Companies Act? a toothless tiger!!
Does this apply to shareholders who demand an audit?
If a major shareholder is concerned about the company's accounts, suspecting the Director has made various 'unusual' and related party transactions against the interests of the shareholder to hide assets, but who has only been provided with abbreviated accounts, I believe the shareholder with +10% of the shares can demand a full audit under S476(3) of the Companies Act 2006.
Do these new regulations put an end to this?
Associated quick questions please...
The shareholder can demand an audit at least one month before the end of the year in question. However, it is likely all that will be seen is zero cash with no explanation of where it has gone! Is the shareholder entitled under the Act to demand an audit of previous years e.g. the previous 2 years?
What are the implications for the Director if she refuses to comply with the demand?
ps Fraud is suspected in this instance, so this is very important.
Smell a rat
I smell a rat, in the shape of dwindling audit fees. Auditing is a complete and utter waste of time as currently conducted.
Number of European banks requiring major financial bailouts since 2007 = 180
Number of those banks with 100% clean audit reports = 180
Never in the history of human box-ticking have so many been so badly let down by so few.
Yes
I smell a rat, in the shape of dwindling audit fees. Auditing is a complete and utter waste of time as currently conducted.
Number of European banks requiring major financial bailouts since 2007 = 180
Number of those banks with 100% clean audit reports = 180
Never in the history of human box-ticking have so many been so badly let down by so few.
I have often wondered how auditing would stand up to a sample test and what the extrapolated error would be and would this be within the bounds of the materiality level for UK plc ?
Audit exemption.
Well said. One of my Clients was invited by RBS to attend a Seminar advising on how to deal with the recession and cash flow. I suppose it was a case of "just drive a truck to the treasury and have it loaded up with taxpayers (sorry - Punters) money!"
I regularly have company directors approach me asking to prepare accounts "at a reasonable fee" because their auditor is too expensive. I know compliance is costly - but not to the degree that astonishes me. I recently sat through a Company meeting in Aberdeen where the Accountant/Auditor sat silently through the whole meeting and admitted that he was charging £500 and hour. Oops! Did I just hear "So what?".
Earth-Shattering
advice from Baker Tilly.
Now that I know that non-audited accounts should be prepared using GAAP, I must stop using the back of an envelope to carry out these tasks.
Not really helping me with my questions though...
Small company, not a bank.
I'm not worried about HMRC not being able to read a set of accounts. The problem is actually getting the Director to provide the shareholder with detailed accounts.
The Companies Act may be a 'toothless tiger', but if I could tick all the boxes to prove a pattern intended to defraud or something very close, then the Director's sole employer, a very heavily bailed out UK bank, would be very unhappy employing such a dishonest contractor to assist with the Banks' Finance Transformation!
the sections you need are!
Small company, not a bank.
I'm not worried about HMRC not being able to read a set of accounts. The problem is actually getting the Director to provide the shareholder with detailed accounts.
The Companies Act may be a 'toothless tiger', but if I could tick all the boxes to prove a pattern intended to defraud or something very close, then the Director's sole employer, a very heavily bailed out UK bank, would be very unhappy employing such a dishonest contractor to assist with the Banks' Finance Transformation!
s.423 cos act 2006 annual accounts must be provided to every member within time limits in s.424 offences in s.425
s.393 requires accounts to show a true and fair view.
No you cannot backdate a demand for a statutory audit, but the shareholders could demand directors call a meeting where they are held to account.
does that help?
Louis
To answer your specific question - an audit may still be requested by any shareholder or shareholders holding at least 10% of the issued share capital.
A shareholder would be "out of time" as regards previous years but a properly audited balance sheet should pick up most errors on a cumulative basis.
The new regulations do not affect the Companies Act Section 476. The regulations will likely be brought into law by means of Statutory Instrument. The last Labour government liked this method of bringing in new legislation because it circumvented a lot of work in changing Acts of Parliament.
Sorry, didn't see Black Knight's post before.