Raising the audit threshold
The government is considering raising the audit threshold for small companies to the European maximum of £4.8m with a 'lighter touch' independent professional review for business with a turnover under this limit.
The publication of new research into the independent professional review, a light-touch form of assurance, is believed to have persuaded the government to raise the threshold from its current level of Pounds 1m much earlier than expected.
The IPR is designed to offer investors and lenders assurance for companies with a turnover of between Pounds 1m and Pounds 4.8m that will be exempt from the audit as recommended by the company law review steering group.
The final report of the company law review steering group said: ‘If the DTI determines that the [APB] trials demonstrate a sufficient saving over the costs of full audit’ the IPR should be used for companies in the £1m to £4.8m turnover range. If not, we recommend a total exemption for all small companies.’