The institute said the cost benefits gained by small companies that will avoid mandatory audits under the proposals would be far outweighed by the risks and disadvantages to the company and society.
Among the problems that ICAS highlighted are the increased risk of accounting errors, the drop in quality of accounts on the public record, an increase in the number of complaints about filed accounts and the removal of a major deterrent against fraud, money laundering and other illegal financial activities.
‘The consultation document (released by the government) fails to justify any significant increase in the exemption thresholds,’ said David Wood, deputy director of accounting and auditing at ICAS. ‘If any increase is to be made at the present time, it should be of modest amount and undertaken only with extreme caution.’
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