Raising audit limit could harm small business
The government's decision to raise the audit threshold has been labelled as potentially damaging to the small business community it is designed to help.
From this week companies with a turnover of less than £1m will not be required to have a statutory audit. Previously the exemption limit was £350,000.
But Steve Kilmister of information solutions company Experian has warned that raising the limit may cause problems for businesses seeking credit.
‘An unintended but likely consequence is that it will limit the availability of credit to small companies,’ said Kilmister.
‘Every commercial lender and many businesses take credit references on their customers before agreeing loans, leasing arrangements or trade credit. The basis of the credit reference is the statutory financial statement filed at Companies House.
‘Some of this information is already limited. Further reduction in the quality of the information available could hit the very businesses the latest proposals are trying to help by hindering small companies’ ability to obtain the vital finance, goods or services required to carry on their business,’ he said.
The government, however, estimates the increase to £1m will allow an extra 150,000 companies to take advantage of exemption producing annual savings for business of about £180m.
Changes to audt limit brought forward