Moves to raise the £350,000 threshold for exempting small companies from a statutory audit could scupper plans for a new reporting formula for SMEs, accountants warned this week.
Representatives of the profession participating in the company law review reacted angrily after the Department of Trade and Industry refused to rule out an increase.
A review of the audit threshold was dismissed in a DTI consultation document published in March. But following recent press speculation, a DTI spokeswoman said: ‘All regulation on business is kept under review and the current threshold is no different. However, we recognise the wide variety of interest in the matter and would consult widely on any proposal for change.’
The departmental statement signalled a significant shift and came as a shock to Warender Stewart partner Danielle Stewart, who is helping the company law review panel on small business reporting to create a new model set of accounts.
‘We are basing our work on the assumption that the audit was remaining,’ said Stewart. ‘We would be rather frustrated if the goalposts were moved, because it would scupper the work we have done.’
The English and Scots ICAs are collaborating on a joint submission to the panel, proposing a new approach to small company reports, based around a narrative financial commentary. ‘The main focus of the project is how small companies report,’ said Arthur Andersen professional standards partner Isobel Sharp, who chairs the joint working party.
A new threshold would force the institutes to think again about the small company reporting format, she added.
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