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Auditors


1. What is an auditor?

An auditor is a person who makes an independent report to the LLP members on whether the LLP has prepared its annual accounts in accordance with the requirements of the Companies Act 2006 as applied to LLPs and the applicable financial reporting framework. The report must state whether the accounts give a true and fair view of the LLP’s state of affairs as at the end of the financial year and profit or loss for the year.

2. How do I appoint an auditor?

An auditor must be appointed for each financial year, unless the designated members reasonably determine otherwise on the grounds that audited accounts are unlikely to be required.

The designated members appoint the first auditor of the LLP. Thereafter the members may appoint or re-appoint an auditor each year within 28 days of the designated members’ sending the accounts to the members or the end of the time when they should have been sent. If they do not do so for a particular year, however, the appointed auditor remains in office until the members determine to reappoint him or to remove him as auditor unless the LLP agreement requires the actual re-appointment.

3. What does an auditor do?

The auditor will check the accounts and accounting records of the LLP and prepare a report for the members.

4. What will the auditor’s report include?

The auditors’ report must include:

an introduction identifying the accounts that are the subject of the audit;
a description of the scope of the audit identifying the auditing standards and the financial reporting framework that has been used in the preparation of the accounts;
a statement as to whether in the auditors’ opinion the accounts have been prepared in accordance with the Companies Act 2006, as applied to LLPs and, where appropriate, in accordance with Article 4 of the EU Regulation on International Standards (Regulation(EC) 1606/2002, the 'IAS Regulation');
a statement as to whether the accounts give a true and fair view of the LLP’s or (in the case of group accounts) the group’s financial affairs;
if the auditors are of the opinion that the LLP has not kept adequate accounting records, a statement to that effect; and
if the LLP has not provided the auditors with all the information they need to complete the report, a statement to that effect.
The auditors’ report must 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 auditor will qualify the report either where there has been a limitation on the scope of the auditor’s work or where there is a material disagreement between the LLP and the auditors about the accounts.

5. Who is responsible for signing the auditor’s report?

The auditors must sign and date the report they provide to LLP members upon completion of the audit.

Where the auditor is a firm, the senior statutory auditor must sign the original auditors’ report in his own name on behalf of the firm. He must also date the signature. The LLP must state the name of the senior statutory auditor in copies of the auditors’ report it publishes. Copies of the auditors’ reports delivered to Companies House must state the names of the audit firm and the senior statutory auditor, but need not be signed.

6. Are there any exemptions from stating the auditor’s name on the auditor’s report?

Yes. If the LLP considers that there is a risk that the auditor or any other person would be at risk of serious violence or intimidation if the auditor‘s name (or the name of the “senior statutory auditor” who signed the report on the audit firm’s behalf) appeared on filed or published copies of the report, it may determine to omit the name from those copies.

Do not send a copy of the determination to Companies House, but you should send notice of it to the following address,

The Secretary of State
PO Box 4082
Cardiff
CF14 3WE

The notice must state:

the name and registered number of the LLP;
the financial year of the LLP to which the report relates; and
the name of the auditor and (where the auditor is a firm) the name of the person who signed the report as senior statutory auditor.
The auditor’s report attached to the accounts would need to contain the following statement:

“The LLP has determined that the auditor’s name should not be stated in accordance with section 506 of the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit)(Application of Companies Act 2006) Regulations 2008).”

7. Can my accountant be my auditor?

An auditor must be independent of the LLP; therefore, you cannot appoint a person as an auditor if they are:

a member or employee of the LLP or an officer or employee of an associated undertaking;
a partner or employee of such a person, or a partnership of which such a person is a partner.
If your accountant does not fall into one of the above categories and if they are a registered auditor supervised by a recognised supervisory body, then they may act as the LLP's auditor.

Remember: Not all members of a recognised supervisory body are eligible to act as an auditor but the appropriate supervisory body will be able to tell you whether a particular individual or firm is a registered auditor.

8. What and who are recognised supervisory bodies?

These are bodies recognised by the Professional Oversight Board as having rules designed to ensure that auditors are of the appropriate professional competence. Each recognised body has strict regulations and a disciplinary code to govern the conduct of their registered auditors.

The four recognised bodies are:

The Institute of Chartered Accountants of Scotland
21 Haymarket Yards
Edinburgh EH2 5BH
Website: www.icas.org.uk

The Institute of Chartered Accountants in England and Wales
Level 1, Metropolitan House
321 Avebury Boulevard
Milton Keynes MK9 2FZ
Website: www.icaew.com

The Institute of Chartered Accountants in Ireland
The Linenhall
32-38 Linenhall Street
Belfast BT2 8BQ
Website: www.icai.ie

The Association of Chartered Certified Accountants
29 Lincoln’s Inn Fields
London
WC2A 3EE
Website: www.acca.org.uk

9. Is an auditor usually only concerned with annual accounts?

Subject to the Auditing Practices Board ethical standards, the auditors’ statutory duties are limited to checking that there are adequate books and records, and to reporting on the annual accounts. Subject again to those ethical standards, there is nothing to stop an LLP 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 LLP.

You should agree an engagement letter that sets out the scope of the auditor's engagement and the form of any reports that the auditor will make.

10. What must an auditor do when he ceases to hold office?

If an auditor ceases for any reason to hold office, he or she must deposit a statement at the LLP's registered office. The statement should set out any circumstances connected with ceasing to hold office that the auditor considers should be brought to the attention of the members and creditors of the LLP.

If there are any such circumstances, the LLP must send a copy of the statement to all the members of the LLP 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 LLP the auditor must send a copy of the statement to Companies House within a further 7 days.

If there are no such circumstances, the auditor must deposit a statement with the LLP to that effect. The LLP does not have to circulate this statement to the members but a copy of it must be delivered to Companies House.

Also where the auditor resigns or is removed from office, there are obligations on the auditor and the LLP to notify the 'appropriate audit authority'. There is more detailed guidance on these provisions on the website of the Financial Reporting Council.