Business welcomes audit exemption plan

Annual balance sheet of a State-owned farm, dr...

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Ministers will on Thursday unveil plans to save more than 100,000 businesses at least £600m a year in accountancy and administration costs by relaxing the requirement to conduct a financial audit.

The Department for Business, Innovation and Skills will launch a consultation on proposals to allow more small companies and subsidiaries to decide for themselves whether or not to have an audit.

Business groups welcomed the move, but warned ministers needed to deliver such steps regularly for companies to gain confidence in the government’s deregulation drive.

At present, European Union rules mean that to classify as “small” for accounting purposes, a company must comply with two out of three criteria: having no more than 50 employees, a balance sheet of no more than £3.26m and turnover of no more than £6.5m.

However, to obtain an audit exemption in the UK, small companies must fulfil both the balance sheet and turnover criteria. Under the new proposals, UK SMEs would be eligible for audit exemption by meeting any two of the three criteria, saving an estimated £206m a year. An average audit for a small company costs £9,500.

via Business welcomes audit exemption plan

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