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Audit threshold raised to 5.6m [pounds sterling]: the change is expected to save SMEs 94 million [pounds sterling], while an increased turnover threshold should help more to gain from tax incentives.

Document Cited in Related
Vincent
AuthorBerens, Camilla
PositionAudit Exemption

The new regulation increasing the audit exemption threshold for small and medium-sized businesses is set to be approved by Parliament as FM goes to press. Barring any last-minute hitches, the change is expected to ease the burden on an estimated 69,000 British firms, which will no longer need to have their accounts audited.

The DTI claims that increasing the threshold from 1 million [pounds sterling] turnover to 5.6 million [pounds sterling] turnover is expected to save businesses at least 94 million [pounds sterling]. However, it looks as though auditing firms may not lose out because of the changes. Stephen Alambritis, spokesman for the Federation of Small Businesses, believes that much of the savings will be ploughed back into other auditing services. "We foresee that a lot of companies will still keep on auditors for more specific functions such as cash flow, loan applications, financial forecasting and management," he said.

Once the regulation has been ratified, the government plans to defer the start period to the financial year ending on or after 30 March 2004 to give shareholders the time to decide whether they want an audit to be obtained.

Alambritis believes that the move to cut red tape will give small businesses a welcome boost. "It sets the right...

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