CONCERNS over the quality of financial reports have gone unheeded as the government pressed ahead with raising the audit exemption threshold to its maximum level.
ICAEW chief executive Michael Izza (pictured) expressed his disappointment with the decision, which sees companies with £10.2m in turnover, a balance sheet total of up to £5.1m and up to 50 employees exempt from requiring an audit.
In a written statement to the House of Commons, Baroness Neville-Rolfe said the government had “carefully considered” responses to questions raised by audit professionals.
“Removing the link between the thresholds for eligibility for the small company regime and those for the audit exemption would introduce unnecessary complexity into company law and cause confusion for users,” the statement read.
“Audit and auditors will continue to have an important role in supporting small businesses to achieve their ambitions and grow; and in providing assurance to owners and lenders about a company’s performance.”
Although it is estimated that raising the audit exemption thresholds will bring a further 7,400 companies, Baroness Neville-Rolfe’s statement reveals the government anticipates that 4,400 will choose to continue to have an external audit.
Responding to the ruling, Izza said: “We have consistently said over the last four years that audit promotes sound financial practice and protects against mismanagement, fraud and tax evasion.
“There are many reasons why companies have an audit – to give shareholders confidence, satisfy tender requirements, and ensure reliable financial reporting. Even though a number of businesses are now potentially exempt we expect many will continue to choose to have an audit.”
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Fiona Wilkinson to take up the position in June 2017
Craig Maxwell joins the audit and assurance team in Scotland
Stephen Grayson to join the audit department in Manchester