In the Company Law Review Steering Group’s progress report last week, group director Kate Harre’s mantra was ‘think small first’ emphasising the difficulties SMEs face when tackling company law.
Roger Davis, chairman of the institute’s company law steering group, said: ‘We believe these changes will lighten the regulatory burden on SMEs, improving the ability of directors to understand their reporting obligations whilst ensuring that relevant information about companies is publicly available.’
The institute also gave tepid support to the proposed audit threshold hike and the possibility of replacing the audit with a lighter-touch assurance.
Michael Groom, new deputy president, said: ‘We believe an increase in the threshold to include companies with turnover of up to $4.8 million should be considered.
‘If a properly structured independent review were developed, this, coupled with the relaxation of the audit requirement, could help strike an appropriate balance between reducing regulatory burdens and ensuring proper accountability.’
Debate continues to rage over whether a cost-saving, publicly valuable financial report can be developed. Many accountants have voiced concerns following the chancellor’s pledge to raise the audit threshold to the European maximum of £4.8m next year.
Danielle Stewart, small practitioner and member of Company Law Review Group, said: ‘£4.8m is not small. The company would have around 100 employees and generate millions in VAT.’
But, others are more sceptical. ‘Is the world interested in the subtleties?’ asked Robert Hodkinson, audit partner at Arthur Andersen. ‘It’s going to be difficult finding a balance that is cheaper but not so skimpy that it’ll fall into disrepute.’
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