Trade secretary Stephen Byers has just officially announced that the statutory audit threshold will be raised to £1m for all periods ending after July 31, 2000 - and raised again to £4.8m at some point in the future.
He said 150,000 small businesses would ‘escape from the burden of the statutory audit’ as a result of the increase to £1m from the current £350,000 turnover threshold. He added that a further 75,000 companies would escape compulsary audits by raising the level to £4.8m, although he did not specify when or how this further increase would take place.
However, he suggested that there may be a ‘lighter, less costly form of assurance’ for companies with a turnover of between £1m and £4.8m, depending on what the Company Law Review came up with.
He explained: ‘The independent Company Law Review is considering whether, for companies with a turnover of between £1m and £4.8m, the audit should be replaced by a lighter less costly form of assurance. I shall take their final recommendations into account before proposing what, if any, statutory requirement should replace the full audit for companies in that size range.’
The announcements were made in a speech at the British Chambers of Commerce, and were billed by government spin doctors as ‘red tape reform saving small companies millions.’
Government estimates suggest the new £1m threshold will save small companies ‘up to £180m a year’.
He said: ‘It is vital that we reduce the bureaucratic burden on businesses so they can invest in the future’.
His announcement follows comments outlining his intentions on this morning’s Today programme on Radio 4.
To read the text of Byer’s announcement click here.
To visit our special AccountancyAge.com audit threshold area with reaction and comment, click here.