The new audit threshold will be £1m from the end of July, the government has announced, but it also said there will be another increase to £4.8m at an unannounced point in the future.
to read the details of his announcement, click here to read the full text of his speech, and scroll down to read reaction from the profession and the rest of the business community.
Peter Mitchell, chairman, Small Practitioners’ Association:
‘This measure was the basis of all our arguments to the DTI. We are extremely pleased to hear the DTI has taken action on this issue.
‘It will result in dramatic restructuring for the need for audit work. Small private businesses will be able to drop out of the auditing net as they will no longer be required to undergo annual audits. It was imposed on small businesses as a bureaucratic exercise causing cost rather than benefit.
‘It is good news as long as this announcement will be a two-tier process andwon’t have to be reviewed again. This is probably the biggest single change since the late 1960s.Because it is a dramatic change there will be a need for reorganisation within the profession.’
David Franklin, David Franklin Limited, air freshener manfacturer:
‘We welcome the announcement being an SME. It will reduce our accountancy billsand any reduction in cost to our business is welcomed. We also welcome any measures of future reduction. I think with this measure ourbusiness will just make the exemption threshold from the annual audit.’
Federation of Small Business spokesman:
‘This isn’t new – Byers was talking last June about whether to go for 1m or 4.8m. When the government feels that it is under pressure, it makes an announcement to show that it is cutting through red tape.
‘ Hopefully by July we will see some decision. Further delay will mean members will again be facing uncertainty over whether they should take on extra staff and invest in new areas or comply with new regulations. But, it is good to know that the issue is back on the agenda.’
Chamber of Commerce spokesman:
‘This is a step in the right direction. We would like to see the Government to go full hilt and the level raised at least to the EU threshold of £4.2m.
‘This is something that Byers announced last year in Glasgow and since then we have been happy to give input into the consultation process.’
Martyn Jones, audit technical partner, Deloitte & Touche:
‘It is a very useful step. We were seeking the lifting of burdens. Generallythere needs to be more simplification for small businesses. There is stillscope to eliminate further burdens and complexities. In particular thecomplexities associated with abbreviated accounts should be abolished.
‘Lots of companies will be affected by this measure, but we still don’t know whateffect it will have on the economy. Our audit department has always been keento see the burdens lifted.
Gerry Acher, chairman of the English ICA audit faculty:
‘I am 100% supportive of this approach as will be the audit faculty. At the time the review was announced we were perplexed that this was taken off-line and not part of the Company Law Review. This is precisely what we said he should do.
‘But while I welcome this as a first move, I am worried that there are so many other areas of red tape that need tackling and audit is the most minor of them.’