Cable on audit: 'naivety that verges on madness'

VINCE Cable’s proposals for small company audits have been described as being “naivety that verges on madness,” by the chief executive of the Institute of Credit Management.

In a letter to the Guardian Philip King writes that Cable’s proposal to remove audits for 42,000 small companies in a bid to save them £40m is a move that could damage a company’s access to credit.

“Far from helping small businesses, the move is more likely to damage a company’s access to credit, therefore restricting growth and in fact adding to their costs.

“The government needs to get away from this idea that reducing red tape will always mean reducing costs to small businesses.

“Businesses extend credit to one another based on the trust that comes from knowing that the company is financially viable, and one of the essential proof points is a set of audited accounts,” King said.

There has been a strong reaction to Cable’s proposals but much of it relies upon EU approval.