Learn more about the external audit requirements for small personal investment firms or service companies and what you need to do.
Incorporated entities (limited liability company or limited liability partnership) regulated by the FCA
Accounts audit (Companies Act)
Under the Companies Act legislation you are required to appoint a statutory auditor who performs an annual external audit on the firm’s accounts.
However, for financial years ending on or after 31 December 2006, under the Companies Act legislation, you are not required to appoint a statutory auditor who performs an annual external audit on the firm's accounts so long as:
- you meet the Companies Act criteria for the small companies audit exemption, and
- you are not undertaking any activity within the scope of MiFID
The small companies audit exemption is available if at least two of the following criteria are met:
- the annual turnover is not more than £10.2m
- the balance sheet total for the year is not more than £5.1m
- the company has 50 or fewer employees on average
Capital calculation (FCA rules)
You can include unaudited profits and unverified interim profits within your capital resources, if your firm is not required to appoint an auditor.
Client assets report (FCA rules)
The FCA does not require a small personal investment firm or service company to appoint an external auditor to report on the firm's accounts or client assets.
A small personal investment firm is a personal investment firm that:
- is not a MiFID investment firm
- is not a network, and
- has fewer than 26 representatives
Unincorporated entities (sole traders or partnerships)
Accounts audit (Companies Act)
If you are an unincorporated entity (you are a sole trader or a partnership), you do not need to appoint an auditor under the Companies Act 1985.
Client assets report (FCA rules)
The FCA does not require a small personal investment firm or service company to appoint an external auditor to report on the firm's client assets.
