What is the difference between accountants and auditors?
We are often asked by clients what is the difference between accountants and auditors. The two are very similar and an auditors qualifications are likely to be the same as an accountants. Michael Chadwick, founding director at Chadwick & Company, explains the differences and gives an insight into how audits can be helpful for your business.
The role of an auditor vs an accountant
An accountant aims to give the client a financial picture of their trading year and highlight any areas of opportunity or weakness in the business whilst complying with company legislation and calculating a tax liability for the period.
Whereas an external auditor’s role is to add value and confidence to a set of accounts by testing areas of financial risk and uncertainty. They will review the financial statements and test their accuracy, searching for errors that would fundamentally alter a user’s perception of the accounts.
Audit risks may have been highlighted to us by clients themselves or may be apparent when we review the draft accounts for the period. As financial auditors, we aim to eliminate risk and give as much confidence in a set of accounts as possible.
Many businesses will meet the audit exemption for small companies and as a result, an external audit is not required. However, all companies are required to file a set of accounts with HMRC.
Legally a statutory audit is required when two of the following company audit thresholds have been met:
- an annual turnover of more than £10.2 million
- assets worth more than £5.1 million
- 50 or more employees on average.
Alternatively, an audit can be requested by a company’s shareholders. This is an avenue that lots of our clients are pursuing due to the added value an audit can give to a business.
The benefits of audits
External audits give an impartial review of your business. Often internal audit and accounts staff have the opportunity to present information favorably and paint their own department and targets in a positive light. In our role as independent auditors, we can test assumptions made and give confidence to areas of uncertainty and sensitivity. We are fully independent of any bias within your organisation and aim to find any material error that could be detrimental to your business. This is the difference between internal and external audit.
You will have peace of mind of knowing your accounts are in full compliance with statutory requirements. This will be across the broad range of tax legislation for PAYE, VAT, and Corporation Tax. There may also be stipulations in the company’s Articles of Association that state the company must be audited every year.
Not only will you have an accurate account of your true financial position, but an audit report can also give you a professionally documented statement. This can be the basis for future finance applications, reports, mortgage applications, finance options and expansion opportunities.
Finally, the image and reputation of your business are greatly enhanced by being able to present a professionally prepared set of accounts that have been reviewed by an independent auditor. Your business is seen to be more reliable and bigger to potential suppliers and customers if your accounts have been audited.
Find out more about audits
We offer a free, no-obligation, initial meeting where we provide information on:
- The audit of a limited company accounts
- A breakdown of our statutory audit program
- The role of internal audit in a statutory audit
- A detailed breakdown of statutory audit fees
- Our audit history and experience that we can bring to your organisation.
We are an experienced auditor and cover a wide range of industries including charities, professional practices, group companies and many more. Read more about our audit service here.
All new clients are assigned a qualified audit manager who provides one-to-one contact throughout the year. We meet regularly to discuss your accounts, any relevant changes to your industry sector and future plans for your business. We take great pride in delivering a high-quality audit to give you a better understanding of your financial position and provide meaningful recommendations to help drive your business forward.
To find out more or to get an audit quote, email or call us on 0161 370 9600.