Nigel Whittle explains the current Audit Exemptions

Nigel Whittle Accountant EssexPosted by NIgel Whittle:

In January 2017, the Government Department for Business (BEIS) published a research paper on the impact of exempting small companies from statutory audit.

The estimated savings for the total population of small companies in the UK was 4.6 billion in 2015.  A considerable sum.

However, there is still a significant number of small companies who qualify for audit exemption but still have an audit carried out.  The reasons stated were as follows:

 

     %

Not aware that they were eligible for exemption.

17

 

There was a requirement from funders eg Banks.

14

 

It was felt that having the accounts audited adds credibility to the businesses’ reputation.

8

 

The audits were carried out as they were part of a group.

8

 

The audit was required by a regulatory authority.

8

 

The audit was required by Trustees/Shareholders/ Directors.

5

 

Considered good practise.

4

 

Were in receipt of public grants.

1

 

Other reasons.

35

 

Certainly, it is worthwhile for the directors and shareholders to review regularly whether an audit should or should not be carried out in respect of small company’s accounts.

As a reminder, the current size limits which apply for periods commencing on or after 1 January 2016 are as follows:

Turnover

£10.2m

Balance sheet total (Gross Assets)

£5.1m

Average number of employees

50

Generally, a company requires an audit if two out of three of the above thresholds are exceeded.

If you would like to discuss whether an audit should or should not be carried out in respect of your small company accounts, please speak to one of the four responsible individuals (RI’s) at Lambert Chapman LLP.

May 2017

Disclaimer

The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

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