Audit Fees

This Overheads code records the cost of audit fees incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).

Real-world examples

Small or micro company

Most small companies qualify for the small companies audit exemption, so this code often sits completely empty year to year — there's no statutory audit fee at all unless shareholders specifically request one, or a lender or investor requires it as a condition of finance.

Group with subsidiaries

A company that's part of a group, or otherwise required to have a full statutory audit, sees the fee scale heavily with complexity — particularly where several subsidiaries each need a separate audit opinion before consolidation. A £14,400 invoice (£12,000 net of VAT) is a debit of £12,000 to 7601 (Audit Fees), a debit of £2,400 to 2201 (Purchase Tax Control Account), and a credit of £14,400 to 2100 (Creditors Control Account). Fees like this are often agreed well in advance and billed in interim and final stages across the year rather than as one invoice.

Regulated professional practice

A solicitors' firm holding client money, or a charity above its audit threshold, faces an audit requirement driven by its regulator rather than the Companies Act size thresholds that apply to most companies — a distinct reason to see a fee here even for an otherwise small business.

Commonly confused with

Because code 7600 (Legal Fees) sits right next to this one in Overheads, it's a common mis-posting target. Code 7601 is specifically for audit fees, while 7600 covers legal fees — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Audit Fees won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.

Other codes in Overheads