He said: ‘In our modern economy small companies will increasingly be the engine for economic growth and job creation. It is vital that we reduce the bureaucratic burden on businesses so they can invest in the future.
‘At present all companies with a turnover of more than £350 000 a year are required by law to have a full audit of their accounts. After discussing this issue with the new Chief Executive of the Small Business Service, David Irwin, I have decided to remove the present statutory requirement for a full audit for all companies with a turnover of up to £4.8m – the maximum level allowed under EU law. This will be achieved in two stages.
‘Subject to Parliamentary approval for financial periods ending after 31 July 2000 I will raise the threshold to £1 million. This will bring the benefits to the majority of small companies as soon as possible this year.
‘Relieving up to 150 000 small companies from the burden of the statutory audit will have potential savings to small companies of up to £180m a year – money that can now be invested to take full advantage of Britain’s stable economy and culture of enterprise.
‘Following this, I intend to raise the threshold to £4.8m bringing benefits to an additional 75 000 companies. The independent Company Law Review is considering whether, for companies with a turnover of between £1m and £4.8m, the audit should be replaced by a lighter, less costly form of assurance. I shall take their final recommendations into account before proposing what, if any, statutory requirement should replace the full audit for companies in that size range.
‘The government is committed to creating the right regulatory environment and Britain is now one of the best places for companies to start, to invest, to grow and expand.
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