← Lessons 05-Financial Management Techniques
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1. Introduction 2. Definitions of Key Financial Terms 3. Sources of Funds 4. Uses of Funds 5. Trading and Profit & Loss Accounts 6. Balance Sheet 7. Legal Requirements 8. Balance Sheet Terms and Ratios 9. Budgeting 10. Cash Flow 11. Cash Budgeting 12. Stock Control 13. Conclusion 14. Final Memory Checklist

7. Legal Requirements

  • Companies must produce annual accounts under company legislation.
  • The material states that accounts should include the trading and profit & loss account, balance sheet and directors' report.
  • The material states an audit requirement at a turnover level of £10.2 million.
  • Where the audit requirement applies, suitably qualified and registered independent auditors report on the company's financial situation and accounting records.
  • The auditors are paid by the company but their primary duty is to shareholders.
  • Companies below the stated turnover threshold still need accounts prepared by a qualified accountant but, according to the material, do not require an independent audit.