APB launches search for assurance alternative
The audit watchdog is to kick off the new year by examining whether a new system of reviewing accounts can be introduced to replace the audit for smaller companies.
Link: APB says audit-lite will be tested again
The Auditing Practices Board is investigating the possibility of a new assurance service to replace audits, following complaints that the introduction of new ethical standards for auditors would place unnecessary cost burdens on smaller businesses, charities and pension funds.
Research into a new service is expected to get underway in the coming few months, once a plan has been agreed by the Financial Reporting Council, the APB’s umbrella body.
But it will be at least three years before any new standards come into force, and even then any such system is likely to only apply to companies that already fall under the £5.6m audit threshold.
The proposal was sounded out as a compromise, following the finalisation of an exemption standard for small entities, which many bodies felt did not go far enough or encompass enough people.
‘We had quite a lot of comment saying we should raise the threshold,’ said APB executive director Jon Grant. ‘But the relief offered by the exemptions would not be of enormous benefit to those entities beyond the £5.6m threshold.
‘There were also widely varied suggestions on what a new threshold should be, but in the end we think we have the right level.’
A new non-audit review would also allow accountants to continue working closely with clients falling under this threshold, in a way that would currently be prohibited by the ethical standards, Grant added.
ICAS offered a cautious welcome to the APB’s decisions, but president Ian Robertson said that, unless the right balance could be found, ‘we will stifle enterprise and commercial initiative just where we need it most in this country’.