Audit threshold to rise to £4.8m
The government could raise the audit threshold for small companies to the European maximum of £4.8m as early as Monday, Accountancy Age has learned.
The publication of new research into the independent professional review, a light-touch form of assurance, is believed to have persuaded the government to raise the threshold from its current level of Pounds 1m much earlier than expected.
The IPR is designed to offer investors and lenders assurance for companies with a turnover of between Pounds 1m and Pounds 4.8m that will be exempt from the audit as recommended by the company law review steering group.
The final report of the company law review steering group said: ‘If the DTI determines that the [APB] trials demonstrate a sufficient saving over the costs of full audit’ the IPR should be used for companies in the Pounds 1m to Pounds 4.8m turnover range. If not, we recommend a total exemption for all small companies.’
Insiders say that if ministers do not move to Pounds 4.8m next week, which would exempt a further 75,000 companies from the annual audit, an announcement is likely before the end of month.
There had been indications the government would take an intermediate step to Pounds 2.8m – the reporting requirement for small companies – given the economic slowdown and the ongoing parliamentary debate on updating UK company law.
Last year Stephen Byers, minister for transport and the regions and former trade minister, pledged a hike to Pounds 4.8m in the audit level when he raised it to Pounds 1m.
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