The Scottish institute’s conclusion that the plan to raise the threshold from £1m to £5.6m was not in the public interest, and could damage the quality of accounting in the country, had already been voiced by ACCA, with former president Jonathan Beckerlegge claiming the proposals were ‘hard to comprehend’.
Even the ICAEW, which is normally quite reserved in its pronouncements on government activity, pointed to the ‘possible drawbacks’ of raising the exemption bar.
This level of opposition could prove quite tough for the government if it is truly listening to influential institutions.
Certainly many of the issues raised are genuine concerns – why is the government looking to reduce the number of companies needing audits at the same time as introducing new legislation to improve reporting standards?
But in the end the government may take the words of the three institutes with a pinch of salt.
ACCA, ICAS and the ICAEW are, like all institutes, bodies that exist to represent the interests of their members.
A great number of their members will be heavily involved in audit work.
It doesn’t take a genius to work out that if these proposals are passed then the amount of audit work available to their members will take a significant nose-dive.
With an estimated 66,000 extra companies no longer requiring the services of an auditor it could even, potentially, lead to a reduction in the number of members for the institutes and consequently their finances.
Now, while this may not have influenced the institutes when they made their statements on these proposals, it’s unlikely to have slipped the government’s attention when receiving comments.
It won’t look good for the institutes if they alone are opposed to the rise of the audit threshold, and only if their words are backed by similar concerns from other bodies with less to lose will they once again start to take on any significance.