The increase of the audit threshold to £6.5 million meant that for many
medium-sized businesses formal audit reports were no longer necessary.
However, several organisations still require an independent assessment
of their affairs as a tool for effective management, to assess risk or
provide reassurance to key stakeholders.
In the main, such reports entail making enquiries of management and the directors, applying analytical accounting procedures to the financial statements and assessing whether the applicable accounting policies are appropriate to the circumstances and adequately disclosed.
includes some examination of evidence relevant to certain balances and
disclosures in the financial statements where, after performing the
above work, we have become aware of matters that might indicate a risk
of material misstatement in the financial statements.
Assurance reports see accountants report in a negative form to the directors, rather than the positive verification seen in formal audit reports. A report may for example use wording like “nothing has come to our attention to refute the directors’ confirmation that the financial statements provide a true and fair view”.