Platypus Ltd is a family company with a turnover this year of £12 million, up from last year's figure of £9.8 million. It is wholly owned and run by two brothers who are the directors and it employs 20 people. The company's net assets total £6 m consisting mostly of machinery, land, agricultural buildings in which the equipment is stored and a small office and parts store. The directors are not sure about their status as regards an audit. Advice they have been given ranges from options a to d. Which of the statements is true?
A) As a small family company with no outside shareholders they do not need an audit, but they could choose to have one.
B) It is a good idea to have an audit in any case as it adds credibility to the figures when they are being looked at by the bank and the taxman.
C) They must have an audit by law.
D) As they are both involved in managing the business and they own all of it, an audit is pointless and will not benefit anyone.

Question

Quizplus · Accepted Answer

The Answer of Platypus Ltd is a family company with a turnover this year of £12 million, up from last year's figure of £9.8 million. It is wholly owned and run by two brothers who are the directors and it employs 20 people. The company's net assets total £6 m consisting mostly of machinery, land, agricultural buildings in which the equipment is stored and a small office and parts store. The directors are not sure about their status as regards an audit. Advice they have been given ranges from options a to d. Which of the statements is true?
A) As a small family company with no outside shareholders they do not need an audit, but they could choose to have one.
B) It is a good idea to have an audit in any case as it adds credibility to the figures when they are being looked at by the bank and the taxman.
C) They must have an audit by law.
D) As they are both involved in managing the business and they own all of it, an audit is pointless and will not benefit anyone.

Platypus Ltd Is a Family Company with a Turnover This