IPR ditched, audit threshold stays at £1m
The government has announced it will keep the audit threshold at £1m and has shelved plans to replace the audit for smaller companies with a lighter-touch review.
In a White Paper unveiled today, competition minister Melanie Johnson said it would be better to assess the impact of raising the audit threshold in July 2000 from £350,000 to £1m before making a final decision to raise it to the European maximum of £4.8m.
A proposal to replace the annual audit with a lighter-touch review – the independent professional review, or IPR – for those companies exempt from a statutory audit has been abandoned. The ICAEW withdrew its support for the IPR last year after initially backing the idea.
‘The government has concluded that the balance of likely costs and benefits does not provide a strong enough basis for making [the IPR] a statutory replacement for audit,’ stated the White Paper.
Other key proposals include:
- Directors’ duties to be set out in statute, corporate directors to be prohibited, and no obligations for private companies to appoint company secretaries or hold agms.
- Private companies will have to file their accounts within seven months instead of ten and public companies six months instead of seven. Quoted companies will have to post reports online before this deadline.
- The UK’s 1,000 largest companies will have to publish an Operating and Financial Review outlining their performance and future direction. Companies and directors convicted of flouting company law could be named in a central register.
Johnson said: ‘The white paper is a blueprint for a new era in British corporate history. These proposals will help make Britain the best place in the world to start and grow a business, and create an environment that promotes confidence, opportunity and prosperity for all.’