Trade secretary Stephen Byers said yesterday the new turnover threshold for statutory audits would be raised to £1m for all periods beginning after 31 July.
But he added the threshold would be raised to £4.8m at some point in the future, with some form of ‘light assurance’ required for companies with turnovers of between £1m and £4.8m.
He said the initial move to £1m would release 150,000 companies from the burden of statutory audit, saving them £180m.
Michael Groom, vice president of the institute, said in the wake of the announcement: ‘The Secretary of State’s announcement needs to be read together with the proposal for an Independent Professional Review for companies in the range £1 to 4.8 million, included in the consultation document Modern Company Law: Developing the Framework. Taken together they support the principles set out in our response to the DTI last December, namely:
the mandatory statutory audit is an unnecessary burden for smaller companies; but
for larger companies that are not subject to the statutory audit requirement, there is a need for a check on whether those accounts are free from material errors, either by mistake or deliberately.
‘We will be examining the proposals for an Independent Professional Review very carefully. It is important that the benefits, costs and limitations of such a Review are clearly understood. There must be no confusion between an audit and a review engagement; any lack of clarity could lead to problems in the future.’
For full details of yesterday’s announcement, and reactions, visit our special audit threshold news and discussion area.
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