Save SMEs from tide of new legislation

Recently I received an invitation from an accountancy institute to list the most pressing concerns for my SME business, and had little hesitation in answering – regulations, regulations, regulations.

We live in an increasingly ‘nanny’ state where the democratic concept of freedom with responsibility appears a distant memory.

It is hard to reconcile our government’s commitment to reduce red tape with the flood of new regulations and monstrous finance acts.

Beyond the widening compliance requirements of the Inland Revenue, our practising environment faces fundamental change plus further bureaucracy, namely:

  • Our relationship with clients in terms of confidentiality will disappear forever if the proposed money laundering regulations are approved this autumn by parliament, with massive obligation on us to report any suspicions to the National Criminal Intelligence Service.
  • The ICAEW is closing in on other accountancy institutes with a scheme of practice assurance. All professionally qualified accountants may soon make very similar public statements about the standards of all their client services.
  • The DTI is consulting on the acceptability of the EU audit threshold of £5.6m which, if adopted, would eliminate the requirement for compulsory audit of small client companies; voluntary audits and other regulated auditor work would remain.

Our professional involvement in the development of proposed changes has been patchy – and it shows.

The money laundering regulations, for example, appear badly drafted and without comment from those most affected: smaller accountancy practices and their clients.

Against the tide of added bureaucracy, we should applaud the DTI for steadfastly continuing with its programme to free small private companies from the burden of audit, undeterred by protests from those with vested interests or attempting to use the Enron factor to confuse matters; the quality of consultation has been high with very readable documents provided.

But, the probable elimination of almost all our statutory audits raises questions whether we need or can afford to retain our audit registrations, or can find an alternative way to manage residual work signed off as ‘registered auditors’.

A survey of opinions on these topics has been launched, with all professionally qualified accountants invited to indicate their preferences in the simple questionnaire (which can be found at – it will only take a few minutes to complete, but could have the potential to provide a better practising environment for years to come.

Waiting for others to change our future has little appeal or prospect, we must make the time and be involved if our needs or concerns are to be considered – your support and contribution to this process is welcomed.

  • Peter Mitchell is chairman of the Society of Professional Accountants

  • Send in your questions for our adviser panel of experts on matters relating to small practices by emailing

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