PracticeConsultingAccountancy Age: £1m audit threshold set – £4.8m threshold to follow

Accountancy Age: £1m audit threshold set - £4.8m threshold to follow

Government plans to raise the audit threshold to £4.8m for small companies have met with a positive reaction from the accountancy profession, Accountancy Age reported today.

On Tuesday, trade secretary Stephen Byers’ told the British Chambers of Commerce conference he would raise the threshold to £1m – for now – but added: ‘I have decided to remove the present statutory requirement for a full audit for all companies with a turnover of up to £4.8m – the maximum level allowed under EU law.’

But Peter Mitchell, chairman of the Small Practitioners Association whose members will be hit hardest by the rise, said the move was the biggest single change since the late 1960s and would dramatic restructure audit work.

Byers said for financial periods ending after 31 July 2000, the threshold would be raised to £1m. But once the Company Law Review reports next year, Byers it will rise to £4.8m.

Gerry Acher, chairman of the English ICA audit faculty, said: ‘I am 100% supportive of this approach.’

Small Business Service spokesman David Hands said: ‘When the government is feeling under pressure it makes an announcement to show it is cutting through red tape. But it is good to see the issue back on the agenda.’

The government 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.

A rise to £4.8m would benefit an additional 75,000 companies.The Company Law Review steering group, which is due to publish final recommendations next year, has suggested that for companies in the range of £1m to £4.8m turnover, audit should be replaced by a less costly form of assurance.

Martyn Jones, Deloitte & Touche national audit technical partner, said: ‘If there is to be a form of independent professional review, it needs to be unshackled from registered auditor regulation so the reviewers can focus on straightforward procedures and client issues rather than documentation for regulations’ sake.’

AccountancyAge.com feature: audit threshold

Text of audit threshold announcement by Stephen Byers

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer