The below information is for UK-based members only.
Business accounts are subject to either an audit or an accountant’s report. The CIMA qualification does not include audit, but if a business meets the criteria for exemption from audit, a CIMA member may act as a reporting accountant (also known as independent accountant or independent examiner).
Since 2012 the criteria exemption are that a company must satisfy two out of these three conditions:
- An annual turnover of not more than GBP6.5 million.
- A balance sheet total of not more than GBP3.26 million.
- That the company qualifies as a small company in relation to a particular financial year (50 employees or less).
These criteria enable a company to make a commercial decision about whether or not to have a statutory audit. Individual company requirements will be set by its board, and some sectors have their own guidance on audit requirements (for example estate agencies and solicitors).
Find full guidance on the Department of Business, Education and Skills (BIS) website.
Signing off accounts as a MiP
Find information on four key areas:
Sector specific guidance around accounts and audit (UK)
References for business mortgage lenders
The current CIMA position is that if a company is exempt from needing an audit, then there is no reason why a CIMA member, acting as a reporting accountant should not provide a business mortgage reference.
Solicitors and client monies
If you are a CIMA MiP providing services for a solicitor that meets the criterion below you may wish to consider advising the solicitor make such an application.
The Solicitors Regulation Authority accounts rules state (under rule 34: qualifications for making a report) that the accountant must be a member of an accountancy body that does not include CIMA and must also be a registered auditor or a partner or employee of the registered auditor.
Under these rules it is therefore not normally possible for CIMA members to act as reporting accountants for solicitors holding client monies. Guidance note (ix) under rule 32.2 (pertaining to delivery of accountants' reports) states that: 'When only a small number of transactions is undertaken or a small volume of client money is handled in an accounting period, a waiver of the obligation to deliver a report may sometimes be granted. Applications should be made to the [SRA’s] information directorate'.
Reporting accountants to the ABTA
The Association of British Travel Agents (ABTA) requires its member travel agents to provide copies of their annual audited accounts (or equivalent). CIMA members may act as reporting accountants for ABTA members provided that they:
- Hold a current practising certificate
- Are independent of the member travel agent
Estate agent accounts involving clients' monies must be examined and reported on by a qualified auditor. This is under the provisions of:
This is the case even if the annual turnover of the business falls below the audit threshold. CIMA members are therefore unable to provide accountants' reports in such circumstances, even if they have been responsible for examining a client's accounts.
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Club and charity accounts
As a MiP, you can sign off club and charity accounts under GBP500,000, provided you use the term 'examiner' (do not represent yourself as the auditor).
Points to note:
- If the charity's rules state that an audit is required then it must be done by an auditor.
- If you receive no fee then you do not need to register as a member in practice. However, there are still risks in acting as an examiner, for which you could be held liable, so professional indemnity insurance may be wise.
Accounts for a charity with an income above GBP500,000
In the UK, the Charity Commission advice line explains that for charitable companies there are two sets of requirements - those of Companies House and those of the Charities Commission. These rules currently prevent MiPs examining the accounts of a charitable company with an income above GBP500,000.
However, tests of audit are not completely straightforward. Members are advised to refer to the Charity Commission guidelines, in particular publications CC31 and CC32.
Also read the Charity Commission guidance for CIMA members (January 2018 update)
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Can I become a registered auditor and regulated by another body without joining it?
As a MiP, you can become a member of another body, but all have exacting requirements of additional examinations and supervised training in an audit office for a number of years before audit recognition can be given.
CIMA members are allowed to signoff the accounts of companies with turnovers up to GBP5.6m as examiners (not auditors), but not beyond.
External audit is not covered by CIMA's qualification. Any member who wishes to move into this field can only do so by virtue of membership of another more appropriate body.
Please note that none of these bodies will simply reciprocate membership, and that qualification to perform audit usually involves several years' practical experience in an audit firm, as well as taking examinations.
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Client reference mortgage applications
MiPs cannot always sign client reference mortgage applications, as they are not registered auditors (as required by the Estate Agents Act 1979), and therefore some banks and building societies will not accept these applications.
The current procedure is to send a standard letter to the institution concerned, detailing why CIMA should be added to the list of recognised bodies that can sign these types of references to the bank/building society involved and attempt to make changes in this way.
If the request is rejected by the bank/building society, there is unfortunately nothing further CIMA can do immediately, but we may look into this area of regulation in the future.
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