Firms hit as business saves #445m.
UK businesses will save – and accountancy firms lose – up to #445m in audit fees following the rise in the audit threshold from #350,000 to #1m, according to new research. And the figure will double to #880m if the threshold rises to #4.8m. Small and medium-sized accountancy firms are likely to be the biggest losers, according to the research by online business information provider ICC Information. It said the new #1m turnover threshold, introduced last week by trade secretary Stephen Byers, will ‘spell doom’ for regional accountancy firms which have many smaller businesses on their books. But, according to the research, the biggest financial loser at the current #1m level will be PwC with an estimated #11m shortfall – with the Big Five as a whole set to lose #35m. A spokesman for ICC, said: ‘While the level of fees at risk to the Big Five is considerable, the loss can be offset by their earning power as large, global enterprises with other strong income streams. However, audit fees account for a far larger proportion of smaller firms’ income. ‘To counter this we might witness a greater degree of consolidation in the sector as many smaller firms are unlikely to be able to survive losing a potential 40% of their business.’ The additional rise to #4.8m is being considered by the Company Law Review and could be introduced in 2002 in a bid to further reduce red tape. www.icc.co.uk.