PracticeAuditInstitutes come out against new audit threshold

Institutes come out against new audit threshold

Two of the UK's most influential accounting institutes have severely criticised the government's plans to raise the audit threshold to £5.6m in January.

Link: New audit threshold confirmed for January

The Institute of Chartered Accountants of Scotland called the decision to raise the threshold ‘short-sighted’ referring to comments it made earlier in the year that ‘any cost benefits gained by small companies would be small compared to the significant risks and disadvantages – for the company and for society generally’.

Furthermore it warned that an increase to £5.6m ‘would bring some quite significant and complex companies into the scope of audit exemption’.

David Wood, deputy director of accounting and auditing, said there was likely to be ‘a major deterioration in the quality and reliability of company accounts on the public record, and in economic confidence, at the small company end of the market’.

The ICAEW said the decision was of concern ‘based on the limited evidence available’.

David Illingworth, institute president commented said the decision had been made ‘without sufficient evidence to demonstrate the benefits’.

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