If your company accounts are subject to audit as required by the Companies Act, you must appoint a registered auditor. The auditor will audit your company accounts and express their opinions on whether your company accounts give a true and fair view.
Your auditor will gather information of your company at the initial stage of appointment for their permanent file for your company. They will ask you for the information, since you have to prepare, gather and provide the information to your auditor, why not you also create a permanent file for your own record. Then pass the file to your auditor to make a copy of it. This can save both yours and your auditor time.
The Permanent File
The permanent file usually contains documents and matters of continuing importance of your company which will be required for more than one audit.
Below are some of the documents and records auditors would keep in your permanent file.
Documents governing the conduct, accounts, and audit of your company.For example, a copy of the Financial Services Act if your company is regulated by the Financial Services Authority (FSA) and other legislation applicable to your business.
The rules and regulations of your company
For limited company, this means the Memorandum and Articles of Association.
For partnerships, it means the partnership agreement.
For sports clubs, the club rules, and so on.
Copies of documents of continuing importance and relevance to your auditor
- Letter of engagement and minutes of appointment of the auditor. This is particularly important in non-statutory audits as it embodies the auditor’s instructions.
- Trade, license, and royalty agreements; entered into by your company.
- Debenture deeds.
- Guarantees and indemnities entered into.
- Copies of Confirmation Statement. The Confirmation statement replaces the annual return.
Addresses of the official office and business
Your company’s registered office address and all other offices and premises, with a short description of the work carried on at each branch.
An organization chart
Detailed of the principal departments and sub-divisions thereof with a note of the numbers of people involved.
The names of responsible officials and staff within the organization structure. Extra details should be given for accounting departments.
List of books and records
The place where they were kept. Names, positions, specimens of signatures and initials of persons responsible for books and document should also be included. Account codes and classifications should also be held.
An outline history of the organization
Special mention must be made of the history of Reserves, Provisions, Share Capital, Prospectuses, and acquisition of subsidiaries and businesses. There should also be a record of important accounting ratios.
List of accounting matters of importance
Accounting policies used for material areas such as stock, work in progress, depreciation, research and development expenditure in your company accounts.
Notes of interviews and correspondence regarding internal control matters and all past letters of weakness.
The business structure within a group and associated companies
A note of the position of your company in the Group and of all subsidiaries and associated companies with holdings therein.
Clients’ Internal Audit and Accounting Instructions
Details of shareholders and directors
A list of your directors, your shareholdings, and service contracts. This information contained in your Confirmation Statement which can be downloaded from Companies House website.
A list of the company’s properties and investments with notes on verification.
A list of the company’s advisors such as bankers, merchant bankers, stockbrokers, solicitors, valuers, insurance brokers etc.
A list of company’s insurance
The permanent file is updated on annually and usually during the audit. Your company shall provide the information listed above to enable your auditor to complete their audit assignments.
Remember that the information in the permanent file is handled with strict confidence.