Most small companies claim exemption from audit, and their accounts carry an accountant’s report and the section 477 statement on the balance sheet. When a company’s accounts are audited instead, the auditor’s report takes the place of both. Tax Optimiser can now prepare audited accounts under FRS 102 Section 1A or full FRS 102.
When accounts need an audit
- Medium-sized and large companies must be audited. The audit exemption in section 477 is for small companies only, so Tax Optimiser blocks filing a medium or large company’s accounts as audit exempt.
- Small companies can choose an audit, or have one because their members or articles require it.
- Subsidiaries can be exempt under section 479A when their parent guarantees their liabilities (section 479C) and includes them in its consolidated accounts. Choose the s479A status for these (see below).
The company’s size is shown on the Period Overview; see choosing your accounts framework.
Setting the audit status
Open the period’s accounts and choose Audit in the left-hand menu. It appears for FRS 102 Section 1A and full FRS 102 periods (micro-entity accounts cannot be audited in Tax Optimiser). Pick one of:
- Audit exempt (small company, s477) — the default. Nothing changes.
- Audited — the auditor’s report is added and the audit exemption statements are removed.
- Audit exempt subsidiary (s479A) — enter the parent’s name and registered number.
The auditor’s details
- Auditor’s name and address, as they should appear under the signature. They are the same fields as the auditor on the Addresses screen.
- The auditor is a firm — tick it when a firm signs through a senior statutory auditor, and enter that person’s name. Untick it for a sole practitioner, who signs in their own name.
- Signed at — the town where the report was signed.
- Date of the report — on or after the date the directors approve the accounts.
If your firm is a registered auditor, tick Registered Auditor in your firm settings and add your recognised supervisory body and default senior statutory auditor. The Audit screen then offers Use our firm’s details, which fills in the name, address and senior statutory auditor for you.
The opinion
| Opinion | When the auditor gives it | What you enter |
|---|---|---|
| Unmodified | The accounts give a true and fair view | Nothing more |
| Qualified | True and fair apart from the effects of a specific matter | The basis for the qualification |
| Adverse | The accounts do not give a true and fair view | The basis for the adverse opinion |
| Disclaimer | The auditor could not get enough evidence to form an opinion | The basis for the disclaimer |
You can also add a material uncertainty related to going concern, an emphasis of matter and an other matter paragraph. Every audited report needs the auditor’s paragraph on how far the audit was capable of detecting irregularities, including fraud; this is specific to each audit, so there is no standard wording for it.
The rest of the report is standard wording for a small private company, covering what International Standards on Auditing (UK) require. The auditor is responsible for the report they sign, so check the wording with them before filing.
What changes in the accounts
- An independent auditor’s report is added after the directors’ report, in place of the accountant’s report. It usually runs to two pages.
- The balance sheet no longer carries the section 477 audit exemption statements.
- The directors’ report adds the statement on disclosure of information to the auditor and a paragraph on the auditor’s reappointment.
- The operating profit note shows the auditor’s remuneration (from the audit fee nominal) and any fees for non-audit services you enter. Large companies also break the non-audit fees down by category.
- The iXBRL is tagged as audited, with the opinion, the senior statutory auditor and the report date.
Filleted accounts. A small company that files filleted accounts does not deliver the auditor’s report. Instead, the filed accounts carry a short statement under section 444(5B): whether the opinion was unqualified, the basis of any modification, any emphasis of matter, and who signed and when. Medium and large companies cannot file filleted accounts.
Subsidiaries exempt under section 479A
The balance sheet states that the company was entitled to the exemption, that the members have not required an audit, and that the named parent has guaranteed its liabilities at the year end. The parent’s guarantee and consolidated accounts must also be filed at Companies House; Tax Optimiser does not file those for you.
Checks before filing
The accounts cannot be filed until these are in place. Each shows on the period’s validation list:
- the auditor’s name, and the senior statutory auditor when the auditor is a firm;
- a report date on or after the directors’ approval date;
- the irregularities paragraph;
- the basis for a modified opinion;
- the parent’s name for a section 479A subsidiary.
See also: The strategic report and Full FRS 102 accounts (beta).