If you run a growing Scottish business, getting audit-ready can feel like another item on a long to-do list. Yet treating the audit as a once-a-year scramble is what makes it stressful, expensive and disruptive. With a bit of planning, you can turn it into a useful check on how your records, systems and cashflow are working.
From 6 April 2025, more companies will fall below the new small company thresholds, which are based on turnover of £15m, assets of £7.5m and 50 or fewer employees. Many of those businesses will no longer need a statutory audit. However, banks, investors and grant funders may still expect audited or independently reviewed accounts, especially where lending or public money is involved.
Scotland relies heavily on smaller firms. As of March 2024, an estimated 355,805 small and medium-sized enterprises (SMEs) were operating in Scotland, supporting around 1.2 million jobs. If you are one of them, being on the front foot with getting audit-ready can support loan renewals, tender opportunities and grant applications, as well as keeping you on the right side of regulators.
In this article, we set out what has changed for 2025/26, what records and controls to focus on, and how to build a practical timetable for a smoother year-end and audit process.
What has changed for audits from 2025/26?
The big change for 2025/26 is the uplift in company size and audit exemption thresholds for financial years starting on or after 6 April 2025. Your company may qualify as small and be exempt from a statutory audit if it meets at least two of the following:
- turnover of no more than £15m
- assets of no more than £7.5m
- an average of no more than 50 employees.
There is also a two-year rule. If you cross a threshold for the first time, that does not usually change your size category until it happens in two consecutive years. This gives some stability, but it also means you need to track growth carefully.
Even if you are exempt, you might still need an audit because of the following.
- Bank covenants: Lenders may insist on audited accounts as a condition of new or renewed facilities.
- Group reporting: Parent companies, especially overseas owners, may require audits for all subsidiaries.
- Grant conditions: Public or charitable funders often ask for audited or independently examined accounts over certain thresholds.
If you are unsure whether you still need an audit, we recommend reviewing your position and any funding agreements now, rather than waiting until you are closing the year’s books. Our auditing services can help you assess where you stand and plan ahead.
Getting audit-ready – records you should keep up to date
Getting audit-ready starts with clean, complete records. If your bookkeeping is current and supported, the audit will be faster and less disruptive.
Focus on these core areas.
- Sales and income: Ensure invoices are raised promptly, matched to bank receipts and supported by contracts or agreements where relevant.
- Purchases and expenses: Keep purchase orders, invoices and receipts filed and easy to retrieve, whether digitally or on paper.
- Bank and cash: Reconcile all bank accounts, credit cards and cash balances regularly, not just at year end.
- Fixed assets: Maintain an up-to-date fixed asset register, including additions, disposals and locations, and check depreciation policies are applied consistently.
- Stock and work in progress: Use regular counts and reconciliations to back up the figures in your accounts; plan a robust year-end stock count with clear instructions.
- Payroll: Keep payroll records aligned to HMRC submissions and pension contributions, and make sure director pay and dividends are properly documented.
- Grants and project income: File grant offer letters, claims, match-funding evidence and any monitoring reports together, so you can show how conditions have been met.
The more you can move towards real-time records, the easier getting audit-ready becomes. Modern cloud systems, used properly, help reduce errors and support better cashflow decisions, as you can see issues sooner.
Strengthening your controls before year end
Auditors do not just look at the numbers, they also look at how you produce and protect those numbers. Well-designed controls reduce the risk of error or fraud and can shorten the audit.
Here are some key areas to review.
- Authorisation limits: Make sure there are clear approval levels for purchases, expenses and journal entries, and that they are being followed.
- Segregation of duties: Where possible, avoid the same person raising, approving and paying invoices; if your team is small, use director review as a mitigating check.
- Reconciliations: Perform and document monthly reconciliations for bank, VAT, payroll, key debtors and creditors, rather than leaving them until year end.
- IT and access: Check user access to accounting and banking systems reflects current roles and that leavers have been removed promptly.
- Fraud awareness: Train staff to recognise phishing, invoice fraud and changes to supplier bank details, and ensure any incidents are logged and investigated.
Good controls are not just about passing an audit. They support more reliable forecasting, fewer surprises and better use of your team’s time.
How audits link to banking and grants for Scottish SMEs
For many Scottish SMEs, the audit is now as much about external relationships as regulation. Banks and funders want assurance that your figures are reliable and that you understand your risks.
Banks may ask for the following.
- Signed annual accounts: Preferably audited, with clear disclosure of loans, security and contingent liabilities.
- Management information: Regular management accounts, aged debtor and creditor reports and short-term cashflow forecasts – especially if you are close to covenant limits.
- Projections: Integrated profit and loss, balance sheet and cashflow forecasts showing the impact of growth, investment or higher costs.
Grant funders may require these details.
- Ring-fenced project records: Separate analysis of income and costs linked to each funded project, including timesheets where salaries are claimed.
- Evidence of spend: Invoices, contracts and bank proofs that match grant claims.
- Independent assurance: For larger awards, an audit or report by a registered auditor to confirm that funds have been used as agreed.
Against a backdrop of frozen tax allowances and more people being drawn into higher tax bands for 2025/26, cash and funding pressures remain real. Being well organised and getting audit-ready can help you secure and retain the facilities and grants you rely on.
Building a practical timetable for a smoother year end
A simple timetable can transform getting audit-ready from a last-minute panic into a steady, manageable process.
Three to six months before year end
- Audit scope: Confirm whether you need a full statutory audit, a voluntary audit or another assurance service, and agree this with us and your board.
- Systems review: Identify any known problem areas in your records or controls and plan how to fix them before year end.
- Bank and grant terms: Revisit loan agreements, covenants and grant conditions so you know exactly what information will be required.
One to two months before year end
- Year-end timetable: Agree dates for stock counts, system cut-offs and audit fieldwork; share them with your team so they can plan around busy periods.
- Housekeeping: Clear unreconciled items, old debtor and creditor balances and suspense accounts wherever possible.
- Technical queries: Raise any accounting or tax questions with us early, so we can advise on the correct treatment before the year closes.
Immediately after year end
- Close the ledgers: Lock prior periods once reconciliations are complete, so the figures do not move around.
- Prepare the files: Assemble digital audit folders with trial balance, reconciliations, key contracts, loan agreements and grant documents.
- Debrief: After the audit, agree a short action plan to address any recommendations; this makes next year’s getting audit-ready process simpler.
If you would like support building a timetable that fits your business cycle, we are happy to help.
How we can help you get audit-ready this year
Getting audit-ready is not just about staying on the right side of the rules. It is about presenting a clear, confident picture of your business to banks, investors, grant funders and stakeholders, at a time when conditions remain challenging for many SMEs across the UK.
For 2025/26, the combination of new audit thresholds, frozen personal allowances and continuing cost pressures means your accounts and cashflow forecasts will be under more scrutiny, not less. Taking a planned approach to records, controls and timetables reduces disruption, helps you meet funding requirements and gives you better information for decisions.
We have been supporting Scottish businesses with audit and assurance work for more than 50 years, and are registered auditors with the Institute of Chartered Accountants of Scotland (ICAS). We understand what local banks and funders expect to see, and we know how to tailor the getting audit-ready process for different sectors and sizes.
If you would like practical help with getting audit-ready – whether you need a statutory audit, a voluntary audit or another form of independent assurance – please get in touch via our team. We will work with you to agree a sensible plan, keep disruption to a minimum and help you achieve a smoother year end.