Relaxing SME audit and reporting requirements is good news, says Longman
7 September 2012
Government plans to reduce auditing and reporting requirements for small businesses have been welcomed by the managing director of TEAM (The Employment Agents Movement), most of whose members are SMEs.
Fri, 7 Sep 2012
Government plans to reduce auditing and reporting requirements for small businesses have been welcomed by the managing director of TEAM (The Employment Agents Movement), most of whose members are SMEs.
Yesterday [6 September], the government announced its response to the consultation on ‘Audit Exemptions and Change of Accounting Framework’.Business secretary Vince Cable acknowledged that “reporting requirements have become increasingly demanding and costly over the years”.
Under the new regulations that are expected to come into force for accounting years ending on or after 1 October 2012, SMEs will be able to obtain an exemption from having to carry out a yearly audit by meeting two out of three criteria.
Currently companies must meet all three of the following criteria:
The government will also exempt most subsidiaries, as long as their parent company guarantees their liabilities. In addition some companies will be able to take advantage of reduced disclosures when preparing their accounts.
TEAM MD Liz Longman tells Recruiter: “At TEAM the majority of our members are SMEs, so we recognise that anything which helps lessen red tape for a small business can be helpful in saving both time and cost – two things businesses of all sizes are keen to do.
“There are obvious and welcome benefits that this change will offer to small businesses.” However, she adds: “Some businesses may continue to have an audit done on the company, due to the additional assurance that it offers to shareholders and the implied comfort that it gives to third parties such as banks, customers and suppliers.”
Government plans to reduce auditing and reporting requirements for small businesses have been welcomed by the managing director of TEAM (The Employment Agents Movement), most of whose members are SMEs.
Yesterday [6 September], the government announced its response to the consultation on ‘Audit Exemptions and Change of Accounting Framework’.Business secretary Vince Cable acknowledged that “reporting requirements have become increasingly demanding and costly over the years”.
Under the new regulations that are expected to come into force for accounting years ending on or after 1 October 2012, SMEs will be able to obtain an exemption from having to carry out a yearly audit by meeting two out of three criteria.
Currently companies must meet all three of the following criteria:
- no more than 50 employees
- no more than £3.26m on their balance sheet
- turnover of less than £6.5m
The government will also exempt most subsidiaries, as long as their parent company guarantees their liabilities. In addition some companies will be able to take advantage of reduced disclosures when preparing their accounts.
TEAM MD Liz Longman tells Recruiter: “At TEAM the majority of our members are SMEs, so we recognise that anything which helps lessen red tape for a small business can be helpful in saving both time and cost – two things businesses of all sizes are keen to do.
“There are obvious and welcome benefits that this change will offer to small businesses.” However, she adds: “Some businesses may continue to have an audit done on the company, due to the additional assurance that it offers to shareholders and the implied comfort that it gives to third parties such as banks, customers and suppliers.”
