The Auditing Practices Board is asking the profession for its views on the ‘independent professional review’ which will replace the traditional audit for companies with a turnover of between #1m and #4.8m.
Its move follows an announcement last month by trade secretary Stephen Byers to raise the statutory annual audit threshold to #1m for financial periods ending after 31 July 2000.
Byers, however, said he would increase the threshold to #4.8m at an unspecified future date, with an independent professional review – some form of ‘lighter, less costly form of assurance’ – replacing the traditional audit.
The APB’s discussion document asks the profession a range of questions on how it thinks this new quasi-audit should work. It can be accessed on the APB website at www.apb.org.uk. Deadline for comments is 31 July 2000.
APB chairman Ian Plaistowe said: ‘The IPR is an important and far-reaching proposal which, if implemented, will change quite fundamentally the extent of assurance provided on the annual accounts of small businesses and the nature of the practices of those practitioners who presently audit the financial statements of small companies.’
Peter Mitchell, chairman of the Small Practitioners Association, condemned the concept of an IPR as ‘an unnecessary piece of work to be imposed on small companies’. Mitchell said: ‘An IPR will create a secondary tier of quasi-audit work. It won’t add anything to quality or comfort of audit.’
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