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Discover the power of audits—more than just rules, they’re your ticket to financial integrity. Explore UK audit requirements with us. We’re here to simplify the process and offer actionable advice for SMEs. Let’s unravel audits together, paving your path to financial stability and success.

What is an audit?

An audit is a powerful tool for ensuring financial integrity and transparency. Conducted by an independent auditor, it examines a company’s financial records, transactions, and operations. Auditors will give their opinion that financial records are true and fair, providing confidence to management and shareholders about the company’s financial position and performance.

Should a company have a financial audit?

Meeting thresholds: An audit becomes mandatory when a company can no longer take advantage of an exemption. One main reason is that a company no longer meets small company thresholds (see below).

Providing assurance: Even if thresholds are unmet, an audit offers external assurance, boosting confidence for stakeholders like lenders, suppliers and customers. It can also enhance the company’s credit rating.

Internal improvement: The audit has many benefits, such as identifying errors and weaknesses within your system and offering practical solutions for improvement. This will potentially reduce the risk of fraud and act as a deterrent.

Shareholder request: Shareholders may request an audit for transparency and confidence in financial reporting, as discussed below.

Audits: UK thresholds

A company is deemed ‘not small’ and required to have its financial statements audited if it exceeds two of the following thresholds for two consecutive years:

New thresholds for defining company size have been proposed, increasing turnover and total assets by 50%. This change aims to reduce complexity and lighten the burden of legislative reporting requirements. Read more at www.icaew.com.

Even a small company meeting these criteria must audit its accounts if requested by:

The www.gov.uk website includes helpful information and resources on all accounts, including audit thresholds, exemptions and requirements.

At Grenfell James Audit LLP, we specialise in guiding businesses through the complexities of audit thresholds and obligations. In addition, we provide auditing services for charities.

Audits: Requirements for charities and CICs

Audit requirements differ for charities and Community Interest Companies (CICs). Charities with a gross income of £1m or less (or £500,000 or less for earlier periods) typically don’t require a full audit unless their gross assets exceed £3.26m and gross income exceeds £250,000. Instead, they usually undergo an independent examination. Meanwhile, CICs follow the exact accounting and filing rules as other companies. Still, they must attach a CIC report to their accounts when filing. This report, called CIC34, must be submitted to Companies House and match the accounts’ date.

Do UK subsidiaries need to be audited?

In the UK, subsidiary companies typically need an audit when the group exceeds the thresholds similar to the above, but the thresholds are higher when internal transactions are included.

What does an audit involve?

An independent auditor examines your business processes and tests your accounting records to ensure the financial statements are materially correct. Many people believe this process is complex and lengthy, but it doesn’t have to be that way!

At Grenfell James Audit, we understand the demands of running a business. Our goal during an audit, beyond delivering a compliant and high-quality service, is to minimise disruption for our clients. We work flexibly around their schedules, leveraging technology to streamline processes and ensure efficiency and user-friendliness.

Ready to get started? Contact us today to discuss your audit needs.

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Grenfell James Technology Adoption Index

How does your business perform against others adopting financial tech? Find out with our interactive diagnostic:


How does your business receive invoices?


Invoices are mainly received in paper form


Invoices are mainly received by email


Invoices are emailed then automatically forwarded to a designated mailbox


How are purchase invoices processed?


Invoices are entered manually


Invoices are attached to manually raised invoices


Automated software (e.g. ReceiptBank, 1Tap, HubDoc etc) collates invoices


How are accounts processed?


Using Excel/paper-based


Using Computer-based, offline software


Using cloud-based accountancy software


How often is business data revised?


Data is updated annually


Data is updated quarterly


Data is updated monthly or more often


How is banking updated for your business?


Banking is updated manually


Banking is updated by imports


Banking is updated via a live feed


How are bank payments made?


Bank payments are manual


Bank payments are made using bulk imports


Bank payments are made directly via accounting software


How are bank receipts reconciled?


Receipts are chased and reconciled manually


Receipts are chased and reconciled automatically


A third-party platform is used to chase debts and collect fees


How often are management reports produced?


No reports are provided


Reports are provided but often too late to be valuable


Reports are automated with real-time information

Score 8-12:

Curious Exploration

Your financial technology phase is Curious Exploration

% of respondent businesses are in this phase too.

Switching accountancy systems may seem like an upheaval, but can be much more straightforward than most businesses imagine. From talking to our clients, they have found moving from paper invoicing and desktop-based accounting software to the cloud and apps quickly makes the transition process a worthwhile investment of time. Digital accounting solutions bring in streamlined processes, up-to-date business data and greater confidence in the accuracy of information when making financial decisions.

Grenfell James works with your team to fully assess the needs of your business and minimise the impact of any transitions for solutions we recommend.

Find out more about App Advisory


Score 13-19:

Measured Discovery

Your financial technology phase is Measured Discovery

% of respondent businesses are in this phase too.

Once cloud accountancy software is in place, there’s still plenty of scope to improve your accountancy processes and make sure your business is maximising the benefits of adopting a digital accounting solution. Grenfell James assesses each business to understand how any implemented solutions are being used, identify areas for improvement and the needs of the business overall to support your business goals and achieve success.

Our team of experts can discuss a range of time-saving automation and get different apps and cloud-based solutions talking to create and manage a digital accountancy eco-system to help your business grow.

Find out more about App Advisory


Score 20-24:

Bold Innovation

Your financial technology phase is Bold Innovation

% of respondent businesses are in this phase too.

You know the benefits of accounting technology and the impact it can have on your business goals. If you want to take it a step further, our team can conduct a systematic review of your processes, apps and business goals to ensure your digital accountancy ecosystem is keeping pace with the changing needs of a growing business.