Handling Inflation Impact on SMEs Hitting Audit Thresholds Earlier

Valuing Your Business

Author: Lindsay Glover, LHP Audit Manager

With inflation predicted to continue at least in the short term, many businesses will not only find their costs rising, but their turnover as well, as they raise the prices charged to their own customers. This is a necessary ‘evil’ that will tip some smaller businesses over the VAT threshold of £85,000 but at the higher end of the business spectrum, there will be more and more businesses breaching the £10.2m audit threshold for turnover this year and in future years. 

Does every company with over £10.2m need an audit? No, but it’s a good idea to be aware of the rules if you’re close on this threshold. In order to require an audit, companies must breach 2 of 3 of the following criteria for 2 years running:

  • £10.2m turnover
  • £5.1m gross assets (fixed assets plus current assets with no liabilities deducted)
  • 50 employees

If you’re close to the limit on at least 2 of these categories, it’s worth bearing in mind that you could need an audit soon. If you have an accountant, you can discuss your figures with them, but many local practices do not offer audit services in West Wales.  We work alongside many local accounting practices to offer audit services to their clients when they do not offer them in house themselves.

We look at an audit not just as a way to fulfill a legal requirement but also to help you to improve your business in the process. Throughout the audit, we look for ways to make recommendations on internal controls and systems to make your business stronger and less susceptible to fraud and errors. Many of our clients find that what they can gain from our audit in terms of the expertise and recommendations that we bring is an unexpected benefit to being audited. We work with you and your team to minimise disruption and maximise benefits. 

We are well placed to audit local businesses of all types from our head office in Carmarthen as well as our branches in Haverfordwest, Lampeter, Tenby and Cross Hands. We’re a long-standing practice providing a very local and personal service. Contact us now and let us know you’d like to know more about our audit services- we’d be pleased to speak to you on the phone, via Teams or in person. 

Let’s Talk

Get ahead of the game, talk to a member of our team about the effect of inflation and the possible need for an audit. LHP is happy to chat with you about your position and what an audit would look like for you with no obligation. Speaking to us and understanding the requirements and your own position can put your mind at rest and also allow you to plan for the future effectively. 

Request a callback on let’s talk.

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