Trade secretary Stephen Byers mooted the idea earlier this year when he announced the audit hike for companies with a turnover of £1m with the possibility of it being raised to the European maximum of £4.8m next year.
The idea to substitute the audit for small companies with an IPR is part of the wide-ranging Company Law Review process. In order to aid the profession in their submission on the topic to government, the Auditing Practices Board published a discussion document illustrating what an IPR might look like. The deadline for submissions was 31 July 2000.
ACCA’s Audit Committee chairman, Johnathan Beckerlegge, said: ‘In our view the new proposals will provide little more assurance than would normally be obtained from the simple involvement of a qualified accountant in the preparation of the accounts.
Despite claims of lacking in value, ACCA said the IPR would not reduce assurance costs either. Beckerlegge said: ‘The majority of costs associated with the small company audit derive from accounts preparation activities – these activities are not going to disappear if an IPR is substituted for an audit.’
The suggestion of an IPR has split the profession with many accountants viewing it as a positive seachange, while others see it as extra work which offers no real benefits to users of accounts.
Peter Mitchell, chairman of the Small Practitioners Association, criticised the concept of on its announcement as ‘an unnecessary piece of work to be imposed on small companies’.
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