That was the recommendation of the Department of Trade and Industry independent review panel into company law which yesterday published its latest consultation document.
Company Law Review project director Jonathan Rickford said: ‘We have suggested that the audit requirement should be relaxed. Companies with a turnover under £1m should have no audit requirement imposed. For those mid-sized companies – with a turnover of between £1m and £4.8m – we suggested an independent financial review which would be less in depth and cheaper than the full audit.’
The audit exemption is just one of several reforms tackled by the review group, which was briefed to ‘think small first’.
Other issues considered by the group include extending the right to sue auditors for negligence for future shareholders and creditors who rely on company accounts for investment decisions.
It also recommends an equally radical plan to allow auditors to agree a cap to their liability.
Call for auditors’ liability to be extended to non-shareholders, but damages payouts capped
Auditors’ liability cap proposals don’t go far enough, says instituteww.dti.gov.uk/cld/review.htm