More than box-ticking: why savvy SMEs choose a voluntary audit

When the year-end figures show your business is still within at least two of the small company thresholds – £15 million turnover, £7.5 million in balance sheet assets, and 50 or fewer employees on average – most directors take it as good news. For financial years or accounting periods beginning on or after 6th April 2025, that may mean a statutory audit is off the table, although established companies moving into or out of the small companies regime also need to consider the two-year rule.

For many SME directors, being exempt does not necessarily mean being better off. Commissioned by choice rather than legal requirement, a voluntary audit is less a compliance burden than a strategic tool. Think of it as a health certificate for your business: not compulsory, but hard to argue against when it matters.

Why choose a voluntary audit?

1. Credibility with lenders and better borrowing terms

Banks and commercial lenders price risk. A business that presents audited accounts removes a measure of uncertainty from that calculation – the figures have been independently audited, the controls considered as part of the audit process, and the financial statements tested for material misstatement. Audited accounts carry a level of assurance that can help strengthen lending discussions and give providers greater confidence in the figures.

For owner-managed businesses looking for growth finance, asset-backed lending or invoice discounting facilities, audited accounts can give lenders confidence that goes well beyond the figures on the page.

2. The sale-ready business

If you’re planning to sell in the next three to five years, a voluntary audit is one of the most cost-effective things you can do to protect your asking price. Buyers and their advisers will stress-test your financials during due diligence. Without audited accounts, that process is longer, more disruptive, and more likely to surface concerns – real or perceived – that give buyers leverage to chip at the valuation.

Building a clean audit trail for several years before sale is a sign of a well-run business. It leaves less room for negotiation and helps to build buyer confidence from the outset.

3. Shareholder and investor confidence

If your business has arm’s-length investors, minority shareholders or multiple partners with different levels of day-to-day involvement, an audit provides independent assurance that the figures are accurate, complete and fairly presented.

That independent verification matters – not because anyone necessarily doubts anyone else, but because it removes the need for doubt in the first place. It’s the difference between “trust me” and “have a look at the report.”

Beyond the numbers – what an audit actually finds

1. Fraud prevention and internal controls

Fraud is a significant and underestimated risk for smaller businesses. Research by Visa in 2024 found that over two-fifths of UK small and medium businesses had been victims of fraud in the previous year, with average losses of £3,808.

The problem is structural – smaller businesses are often more exposed because internal controls are thinner. The fewer the people responsible for authorising payments, reconciling accounts and handling supplier relationships, the more vulnerable the business is.

As part of the audit process, auditors develop an understanding of the controls relevant to the preparation of your financial statements. Where they identify significant weaknesses – a lack of segregation of duties, inadequate authorisation processes, or gaps that leave the business open to error or exploitation – those findings are communicated to management. Insights of this kind have value well beyond the audit report itself.

2. Identifying operational weaknesses

Auditors spend concentrated time on your financial processes. That often means they see things your team – using those processes every day – no longer notices.

Bottlenecks in accounting workflows, reconciliation processes that take longer than they should, reporting that doesn’t give directors the information they actually need – these are the kinds of findings that can emerge as a by-product of audit work, and that clients can act on well after the audit report has been filed.

Is a voluntary audit right for your business?

A voluntary audit is worth serious consideration if any of the following applies to your business:

• You are pitching for large government or corporate contracts, where audited accounts are expected as standard.
• You are preparing for a private equity investment round or seeking significant external funding.
• Complex stock-holding is a factor. For example, a manufacturer managing raw materials, work-in-progress and finished goods simultaneously.
• You process a high volume of transactions that require systematic reconciliation. A good example would be a wholesale distributor managing hundreds of supplier invoices monthly.
• Minority shareholders not involved in the business day-to-day need unambiguous transparency. Independent verification removes the need for doubt.
• You are planning to sell the business and want to begin building a clean audit history now.

Equally, it’s worth remembering that even companies which fall below the threshold can have an audit requested by shareholders holding 10% or more of share capital. Knowing your position – and getting ahead of it – is always preferable to being caught unprepared.

Talk to our audit team

The right time to commission a voluntary audit isn’t when you cross the threshold. It’s when the business matters enough to protect.

THP has been delivering audit and assurance services since the 1980s. If you’d like to discuss whether a voluntary audit makes sense for your business, contact our audit team today. You can also get an instant audit fee estimate using our online calculator.

See also: Understanding the purpose of an audit.