Financial directors have backed government proposals to increase the threshold that requires companies to undertake an audit, claiming it would provide a boost to UK business.
This week’s Accountancy Age/Reed Accountancy Big Question found 52% of those asked thought that raising the audit bar to £5.6m would prove a benefit to business compared with 33% who said it would make no difference or prove detrimental.
‘Smaller companies can sometimes be used as a training ground for new recruits and so the cost of auditing can be high,’ said John Davies, FD at Moore & Blatch. He added there was ‘no real reason’ why smaller companies needed, but such in-depth investigation.
‘It gets rid of a lot of cost for companies that get very little benefit from it,’ agreed Kevin Cole, FD at Searle Manufacturing.
Others thought that, while there were significant cost benefits for the businesses that would be eligible, different concerns might arise from the proposed threshold rise.
‘The audit process does instill disciplines and procedures that may slip if there was no longer a requirement,’ said one respondent. ‘It is always good to have an external relevant perspective.’
Another commented: ‘It will benefit business if they don’t have anyone to report to, but banks and investors may not put their name to anything until they see something signed by an auditor.’
But some are against a move that would mean thousands more companies avoiding the audit process.
‘I feel an audit threshold of £5.6m is too high,’ said Nick Watkins, financial director at Contisteel Limited. ‘The lack of audited accounts would inevitably create the necessity of additional due diligence work.’
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