For many tech businesses, the word ‘audit’ can feel like an unavoidable hurdle; something that takes up time, adds pressure, and pulls focus away from innovation and growth. But what if there were other ways to gain financial assurance that better suits your company’s needs?
If you’re running a growing tech business, it’s important to understand your options. A full statutory audit isn’t always necessary, and there are alternative ways to provide confidence to investors, lenders, and stakeholders without the added complexity and cost. In this blog, we’ll explore assurance options for tech businesses.
The Rising Cost of Audits
Audit costs have been climbing for years, and all indications suggest this trend will continue. As regulations become more demanding and audit firms are required to perform increasingly detailed work, the cost of compliance has risen accordingly.
While many companies qualify for an exemption from a statutory audit—such as those below the small company thresholds or those covered by a parent guarantee—some have still chosen to undergo an audit voluntarily. Typically, this is because:
- Directors want additional confidence in their financials.
- Investors or lenders require an independent review, particularly in private equity-backed businesses.
- A full audit is seen as a way to maximise deal value in preparation for a sale or investment.
However, with audit costs rising, tech businesses need to consider where they allocate their financial resources and management time. The key question is: how can you gain the financial assurance you need without a full statutory audit?
Alternative Assurance Options for Tech Businesses
The good news is that there are other ways to obtain independent financial assurance that is tailored, efficient, and cost-effective. Two common options are Agreed-Upon Procedures (AUPs) and Limited Assurance Reviews (LARs).
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Agreed-Upon Procedures (AUPs)
An AUP engagement is designed to focus only on the specific areas where you need assurance, rather than reviewing your entire financial statements. We work with you to determine which financial metrics or controls require scrutiny—whether that’s revenue recognition, intangible capitalisation, R&D tax credit claims, or compliance with investor requirements. From there, we perform targeted procedures and provide a factual report of our findings.
For tech businesses, AUPs can be particularly useful in situations such as:
- Investor due diligence, where stakeholders want verification of specific financial metrics.
- SaaS businesses needing independent assurance over their revenue recognition policies.
- Companies preparing for a funding round require validation of financial data.
Key benefits of an AUP:
- A bespoke, focused approach that ensures assurance is provided where it’s most valuable.
- Lower cost than a statutory audit, as the scope is determined by your business rather than a one-size-fits-all regulatory requirement.
- A private report that’s shared only with relevant stakeholders, not made publicly available.
While AUPs adhere to International Standards for Agreed-Upon Procedures, they are significantly more flexible than full audits, making them a great option for tech companies looking for a tailored approach.
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Limited Assurance Reviews (LARs)
A LAR is a step up from an AUP but still a lighter alternative to a statutory audit. It involves more structured procedures and results in an independent private opinion, rather than simply reporting factual findings.
Unlike a statutory audit, which provides positive assurance (where extensive evidence is gathered to confirm the accuracy of financial statements), a LAR provides limited assurance through analytical procedures and inquiries. This means less intrusive testing, reduced costs, and a quicker turnaround.
For tech businesses, a LAR can be particularly beneficial when:
- Investors or lenders require independent validation of financial statements, but a full audit isn’t necessary.
- The company is preparing for an acquisition or funding round and wants to strengthen its financial credibility.
- Management wants external assurance to support decision-making and financial transparency.
Key benefits of a LAR:
- A structured but less intrusive approach compared to a statutory audit.
- Lower cost due to reduced testing requirements.
- A private report that’s issued for internal and stakeholder use only.
What’s the Best Option for Your Tech Business?
If your company isn’t legally required to undergo a statutory audit, it’s worth exploring other options with your stakeholders. A more targeted, flexible, and cost-effective approach could provide exactly the level of assurance you need, without the time and expense of a full audit.
At BHP, we work with businesses of all sizes to provide independent assurance that fits their needs. Whether you’re raising investment, preparing for a transaction, or simply looking for financial confidence, we can help you find the right solution.
Get in touch with our team today to explore your options.
