Revised Audit Limits

Firm, Tax Comments Off on Revised Audit Limits

As you may have seen in the press, the government is pressing ahead with its plans to align the mandatory audit thresholds with the accounting thresholds for small companies from 1 October.  If they meet two out of the three qualifying criteria set out below for small company accounts, they won’t require an audit if they have:

  • Fewer than 50 employees
  • Total assets (i.e. fixed and current assets) no more than £3.26m
  • Turnover below £6.5m

If approved by Parliament, this will apply to accounts for financial years ending on or after 1 October 2012.

The view increasingly being formed is that the changes are more about government PR than substance.

Thus you should also ensure that an audit is not required for any other reason e.g. bank or debenture covenants, or shareholder agreements.

On this basis, you may not require an audit, but can still have one if you wish.  There is a halfway house, an assurance report, if you don’t feel a full audit is necessary or justified, but would still want some form of comfort re the accuracy and completeness of your accounts.

There are particular rules for groups and subsidiaries which are not detailed here but please do contact us for more details if required.

If you would like to discuss how any of this might affect you, please do contact us for more information.

Peter Taaffe, Managing Partner