SHIFTING MORE companies away form requiring an audit will damage their ability to gain credit, rather than save them money, warns the Institute of Credit Management.
The institute has reacted angrily to plans announced by Vince Cable to remove the need for small business to have audited annual accounts, concerned that a lack of financial data will hinder SMEs’ ability to operate.
“The government needs to get away from this idea that reducing red tape will always mean reducing costs to small businesses,” said institute chief executive King.
“Businesses extend credit to one another based on the trust that comes from knowing that the company is financially viable, and one of the essential proof points is a set of audited accounts. Banks too look to lend on the basis of sound financial data, so limiting the amount of financial information available will do more harm than good.”
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