Audit costs dodged

The government will not be tackling the thorny issue of annual costs when it issues its consultation paper on raising the audit threshold next month, civil servants have said.

The disclosure follows accusations that trade secretary Stephen Byers used exaggerated and inaccurate estimates of how much an annual audit typically costs a company when he announced the consultation in June.

Those opposed to raising the threshold fear his claim that exempting a £1m turnover company from the annual audit would save it £5,000 a year has contaminated debate on the issue.

Even the many members of the profession who support raising the threshold agree this figure is exaggerated.

But a DTI spokeswoman said last week: ‘The consultation document will look at the pros and cons of different audit thresholds. It will not be saying anything about compliance cost savings.’

But she added the DTI would be seeking views on compliance cost savings from interested parties as part of the consultation.

News that the consultation paper will not correct the impression created by Byers has caused further anger.

John Malthouse, chairman of the English ICA’s general practitioner’s board, said: ‘It might have been more intelligent for the government to find out what compliance costs were before the debate started. If they are relatively slight, then it could be that the whole debate is a waste of time.’

But others sympathised with the approach which has been taken by the government and expressed strong support of the move to raise the turnover threshold from its current £350,000 level.

Isobel Sharp, technical partner at Arthur Andersen, said: ‘I can understand them wanting to leave out absolute numbers.’ She argued there were many other issues to explore in the consultation rather than just the financial benefit for companies.

Raising the audit threshold would, she said, enable external advisers to offer a better service because they could concentrate on what small companies needed rather than merely make sure they complied with regulations.

Teresa Graham, of Baker Tilly, said: ‘This issue is not a cost-benefit analysis, it is a matter of principle.’

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