Audit

What Is An Audit and How Is It Performed?

06/10/2025

By Wisteria Accountants

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If you run a business, particularly a limited company, you may have heard about audits and wondered what they involve. Whether it’s a legal requirement or a voluntary financial review, an audit provides independent assurance over your company’s accounts and financial processes.

At Wisteria, we help businesses navigate the audit process with clarity and confidence, offering insight that goes beyond compliance. 

But What Is An Audit? 

An audit is an independent examination of a company’s financial statements and supporting records, carried out by a registered auditor. 

The purpose is to confirm that the financial statements present a true and fair view of the company’s financial position and that they comply with relevant accounting standards and legal requirements.

In the UK, certain companies are legally required to have a statutory audit. Others, particularly Small and Medium-sized Enterprises (SMEs) and growing enterprises, may choose to undertake a voluntary audit for additional reassurance or in preparation for gaining investment, funding, or restructuring the business.

Audits are not just about ticking a legal box. They provide valuable insights into the health of your businesses finances, helping identify risks, and strengthen financial controls and reporting processes.

Who Needs an Audit?

A statutory audit is legally required for UK companies that meet two or more of the following conditions:

  • An annual turnover exceeding £10.2 million

  • Assets worth more than £5.1 million

  • More than 50 employees on average

Many businesses outside these thresholds still choose to commission a voluntary accounting audit as a way of preparing for future growth, attracting investors, or improving financial transparency.

How Exactly Is An Audit Performed?

At Wisteria, our approach to financial auditing services is thorough and efficient. While every audit is tailored to the business involved, the process typically follows these 6 key stages:

1. Planning the Audit
The first initial stage involves a detailed planning meeting with the business. This helps the auditor understand the company’s structure, operations, risks, and financial reporting systems.

We will agree on a timetable, scope, and any areas of particular concern or focus. 

This ensures the audit is appropriately targeted and minimises disruption to the day-to-day running of your business.

2. Reviewing Systems and Controls
Before testing the numbers, auditors review the internal systems and financial controls in place within the business. 

This involves examining how transactions are recorded, authorised, and monitored.

Assessing these controls helps auditors identify potential areas of risk or weakness, and determines the level of testing needed on financial records.

3. Testing Financial Records
The core of any accounting audit involves testing a sample of transactions and balances from the company’s accounts. 

This might include:

  • Reviewing sales and purchase invoices

  • Reviewing bank statements and reconciliations

  • Verifying payroll records

  • Confirming balances with third parties, such as customers and suppliers

The aim is to confirm that the accounts are supported by reliable evidence and that no material errors exist.

4. Reviewing Key Judgements and Estimates
Financial statements often include estimates and judgements, such as stock valuations, depreciation, or provisions for doubtful debts.

Auditors carefully assess these areas to ensure they are reasonable, consistent, and in line with accounting standards.

5. Reporting Findings and Recommendations
Once testing is complete, the auditor prepares a report outlining their opinion on whether the financial statements present a true and fair view of the business’s financial position.

At Wisteria, we also provide a management letter containing practical recommendations for improving financial processes, internal controls, or risk management. This adds value beyond compliance, helping business owners strengthen their operations.

6. Filing the Audit Report
For companies requiring a statutory audit, the audit report is submitted alongside the statutory accounts to Companies House. This ensures transparency for shareholders, creditors, and other stakeholders.

Why Should You Work With Wisteria? 

A professional audit is more than just a statutory obligation. It offers reassurance that your financial records are accurate, reliable, and compliant.

At Wisteria, we tailor our financial auditing services to each client, providing commercially focused advice that helps improve systems, controls, and overall business resilience.

If you’d like to learn more about our accounting audit services or discuss whether your company might benefit from a financial review, contact our audit specialists today.

We’re here to provide practical, expert support tailored to your business.

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