Radical plans to raise the audit threshold to £4.2m are like ‘trying to solve all our social problems by abolishing the motorway speed limit,’ General Practitioners Board chairman John Malthouse said last week.
Speaking at an English ICA debate on the proposal, he said the plan was ‘cosmetic, irrelevant and dangerous’ and argued it would be the ‘outlaws’ that opted out of compulsory audits. He also questioned how accountants could advise clients without knowing they were using correct figures.
The DTI has delayed the publication of its consultation paper until September.
The debate showed that the proposal has divided the profession. Many agreed the government was using the issue as a ‘cheap shot’ to counter criticism about over-regulation.
But Baker Tilly’s Teresa Graham, of the Better Regulation Task Force, spoke in favour of the move. ‘We should not succumb to the tyranny of the status quo,’ she said.
She said entrepreneurs were ‘not stupid’. They could be convinced of the value of audit and would undertake them voluntarily to prove their viability to third parties, particularly finance providers, she argued.
The 120 delegates were also split. As debate opened up to the floor, sole practitioner John Harris described compulsory audit as a ‘protection racket’.
He added: ‘Let’s focus on selling something we can do well.’
But Eddie Weiss, of the 100 Group of FDs, said: ‘Most users of accounts feel reassured by audited accounts.’
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