Business News

Cable Plans Shake-Up of Audit Rules

Business Secretary Vince Cable says the government will remove audit requirements from thousands of smaller businesses.

Announcing the measures last month, Mr Cable said the small company audit and account rules in the UK were stricter than required by European Union (EU) law and that the government would amend the Companies Act to bring UK rules in line with the EU minimum in 2012.

This would mean that certain small companies who still have to have independently audited accounts would no longer need to do so, helping 42,000 businesses.

For even smaller businesses, with less than ten employees, the government would press for exemptions in European rules to remove the requirement to produce specific accounts for Companies House as well as a set for tax purposes.

The government says those changes will allow small companies to produce just one simplified set of accounts and affect around two million of the smallest businesses in the country.

Currently medium sized businesses have to have their accounts independently audited but the government is to press the EU to release them from this requirement. This change could free over 32,000 businesses from audit obligations.

Mr Cable said:  “It’s important that we free small firms up so they can grow and drive the economy. The changes I have announced mean that small firms will be able to concentrate on growing and taking on more people instead of paperwork.”

Following Mr Cable’s announcement, Clive Lewis, head of SME issues for the Institute of Chartered Accountants in England and Wales, was reported as saying that businesses likely to be caught in any increase in the exemption limit were “significant businesses often with complex transactions and often with multiple shareholding, which will mean many of them will continue to opt for a voluntary audit.”

He said: “The government is seen to be doing its bit by reducing the apparent regulatory burden but it is a burden that many businesses will opt to have,” adding SMEs who chose to not have an audit would probably opt for another type of assurance.

LINK: Press release