Partner Article

Audit requirements change could save millions for SMEs

Changes to accountancy and administration regulations could save millions of pounds in costs for small businesses.

Balance sheets and turnover must currently be below a certain level to qualify for an audit exemption, however new rules will allow SMEs to gain an exemption if they meet two out of three criteria.

The standards relate to balance sheets, turnover and number of employees, and the number of eligible companies will rise by 36,000 when the change is implemented.

Business secretary Vince Cable commented: “Reporting requirements have become increasingly demanding and costly over the years.

“We listened to business, who made a strong case for reform, and I am delighted that we are now taking this opportunity to make audit more flexible and targeted.

“Tackling these problems will help save UK companies £millions every year and free them up to expand and grow their business, which ultimately benefits the entire British economy.”

The Government plans to give more firms greater commercial decision over statutory audits came in response to the Audit Exemption and Change of Accounting Framework consultation.

83,000 subsidiary organisations will benefit from audit exemption with parent company permission, while 67, 000 dormant subsidiaries will also qualify.

The changes will aim to ensure SMEs in the UK can compete with European businesses by removing unnecessary cost burdens.

Companies will be able to complete accounts under International Financial Reporting Standards (IFRS) to move to UK GAAP and gain from reduced disclosures.

Regulations are expected to change from 1st October this year, with hopes to create a nurturing climate for start-ups in the UK.

This was posted in Bdaily's Members' News section by Miranda Dobson .