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Chapter EM2785

Document Cited in Related
Vincent
Published date12 April 2016
Record NumberEM2785
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

A satisfactory audit report does not mean that accounts are necessarily correct. However, the audit process normally provides us with additional reassurance.

Exemption due

The absence of an audit report where none is required by law is not a valid reason for enquiring into a company’s accounts or return.

Exemption not due

You may come across situations in which accounts which, on first consideration, ought to carry an audit report or a reporting accountant’s report carry neither, or carry a reporting accountant’s report from a seemingly unauthorised accountant. In these circumstances you should establish with the company and its accountants whether or not there has been a breach of the Companies Act and, if there has been, what the reasons are.

Although the fact that the accounts do not (incorrectly) carry an audit report is not in itself grounds for starting an enquiry the reasons for any breach may well constitute grounds for increasing any risk scores.

Modified audit reports

Companies which qualify for exemption in one year may lose entitlement in a subsequent year, for example where their turnover has increased. When this happens the audit report for the later year will necessarily be modified, reflecting the fact that the auditors will have been able to make only limited checks of certain opening balance sheet entries. Again, an audit report modified for this reason is not grounds for opening an enquiry.

Reporting accountant’s report (Charities only)

The reporting accountant’s report provides a significantly lower level of assurance than an...

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