Which types of companies are generally required to carry out an annual audit?

The requirement for companies to carry out an annual audit is generally based on regulatory frameworks that vary by jurisdiction, but in many cases, the scope is broader than just large public companies or non-profit organizations.

Companies that fall under the requirement to undergo annual audits typically include publicly traded entities, which have a duty to provide transparency to shareholders and comply with specific regulations set by authorities like the SEC in the United States. However, many jurisdictions also mandate that private companies and small businesses undergo audits, particularly if they reach certain thresholds of revenue or number of employees. This helps ensure good governance, transparent financial reporting, and protection for stakeholders.

Exemptions do exist for smaller companies or those below certain asset thresholds, but the overarching principle is that a significant number of companies, regardless of their size, are subject to the requirement of an annual audit to maintain regulatory compliance and financial integrity. This broad application to companies, coupled with distinct exemptions, aligns with the selected answer.