Auditors
An auditor is a person who makes an independent report to a limited liability partnership's members as to whether its annual accounts have been
properly prepared in accordance with the Act. The report must also say if a limited liability partnership's accounts give a true and fair view of its
state of affairs and profit and loss for the year. Most limited liability partnerships are required to have their accounts audited.
If the LLP qualifies for exemption and wish to take advantage of it, most small limited liability partnerships and dormant limited liability partnerships do
not have to have their accounts audited.
To qualify for audit exemption as a small limited liability partnership:
-
Dormant limited liability partnership audit exemption may be claimed by a limited liability partnership that has not traded during a financial year, and provided
it meets certain other criteria. See section 3.5. Dormant limited liability partnerships do not need to appoint auditors and can deliver very basic accounts
to Companies House.
The designated members appoint the auditor of the limited liability partnership annually. The first auditor must be appointed before the end of the
financial year for which they were appointed. Thereafter, an auditor must be appointed or re-appointed within two months of the approval of the
accounts for the preceding financial year.
The auditor will check the accounts and accounting records of the limited liability partnership and prepare a report for the limited liability partnership's
members.
For financial years beginning on or after 1 January 2005, the auditors' report must include:
For financial years ending after 30 March 2004, the limited liability partnership's turnover must be £5.6 million or less with a balance sheet total of £2.8 million or less.
-For financial years ending on or before 30 March 2004 the limited liability partnership's turnover for a financial year must be £1 million or less with a balance sheet total of £1.4 million or less.
-
The auditors' report may be either unqualified or qualified and must include a reference to any matters to which the auditors' wish to draw attention by way
of emphasis without qualifying the report.
The auditors' report delivered to the registrar must be signed by the auditors. For financial years beginning on or after 1 January 2005, the auditor's report
must also be dated.
If, in the auditor's opinion, the accounts do not comply, the auditor will say so in the report.
An auditor must be independent of the limited liability partnership; therefore, a person cannot be appointed as an auditor if they are:
An introduction identifying the accounts that were the subject of the audit and the financial framework that has been applied in their preparation (i.e. whether UK GAPP or IAS as adopted for use in the EU).
-A description of the scope of the audit identifying the accounting standards used in the audit.
-A statement as to whether in the auditors' opinion the accounts have been properly prepared in accordance with the Companies Act (and, if appropriate, Article 4 of the IAS Regulation).
-A statement as to whether the accounts' in accordance with the relevant financial reporting framework, give a true and fair view of the limited liability partnership's financial affairs.
-
If your accountant does not fall into one of the above categories and if he or she is a Registered Auditor supervised by a recognised supervisory body,
then he or she may act as the limited liability partnership's auditor.
Not all members of an accountancy body are eligible to act as an auditor but the appropriate body will be able to tell you whether a particular individual
or firm is a Registered Auditor.
However, there is nothing to stop you employing an auditor for other purposes, such as keeping the books or compiling the tax return, provided he
or she does not take part in the management of the limited liability partnership. You should agree an engagement letter that sets out the auditor's
duties. For instance, the limited liability partnership may want the auditor to prepare a management report after an audit, listing all the faults that
were found even if they have been corrected.
The designated members of a limited liability partnership may remove an auditor from office at any time during his or her term of office or decide not to
re-appoint the auditor for a further term. They must give the auditor notice of their intention. The auditor then has the right to make a written response
and require that it be sent to the limited liability partnership's members.
Although a limited liability partnership may remove an auditor from office at any time, the auditor may be entitled to compensation or damages for
termination of appointment.
If an auditor ceases for any reason to hold office, he or she must deposit a statement at the limited liability partnership's registered office. The statement
should set out any circumstances connected with the ceasing to hold office that the auditor considers should be brought to the attention of the members
and creditors of the limited liability partnership.
If there are any such circumstances, the limited liability partnership must send a copy of the statement to all the members of the limited liability partnership
unless a successful application is made to the court to stop this. If the auditor does not receive notification of an application to the court within 21 days of
depositing the statement with the limited liability partnership, the auditor must within a further seven days send a copy of the statement to Companies House
for the limited liability partnership's public record.
If there are no such circumstances, the auditor must deposit a statement with the limited liability partnership to that effect. This statement need not be
circulated to the members.
A member or employee of the limited liability partnership or an associated undertaking;
-A partner or employee of such a person, or a partnership of which such a person is a partner.