Independent Auditing Of Accounts Could Be Scrapped For SMEs

The coalition Government has pledged that small firms will no longer have to have independently audited accounts, in plans which are hoped to save 42,000 businesses £40 million per year.

The Government will also push for EU restrictions to be lifted so that medium-sized businesses no longer need their accounts independently audited, in addition to removing the requirement for businesses with less than 10 employees to produce two sets of accounts. Accountancy auditing fees for BWF members frequently run into thousands of pounds per year, even before taking into account the time spent on the requirements by clerical staff within the company.

Business Secretary Vince Cable said, "It's important that we free small firms up so they can grow and drive the economy. The changes I have announced today mean that small firms will be able to concentrate on growing and taking on more people instead of paperwork."

The areas where the government is intending to take action are as follows:

• The Companies Act will be amended to bring small company audit rules in line with the EU minimum in 2012. This means certain small companies who still have to have independently audited accounts will no longer have to do so, helping 42,000 businesses. The Government will also push for EU restrictions to be lifted so that medium sized businesses no longer need their accounts independently audited.
• For businesses with less than 10 employees, Government will push for exemptions in European rules to remove the requirement to produce specific accounts for Companies House in addition to those for tax purposes. The changes would mean small companies would produce just one simplified set of accounts and the government hope that it will save £400m for some of the smallest businesses in the country, allowing roughly 2 million of them to concentrate on growing, expanding and creating jobs.
• Government will also look at relaxing the audit and account rules for subsidiaries, meaning that dormant subsidiaries with parent company guarantees could be exempted from the requirement to prepare and publish annual accounts. This would benefit up to 23,000 dormant companies, including those set up to hold assets or intellectual property, or in preparation for transactions at a future date.
  Wholly owned non-financial subsidiaries with parent company guarantees could be exempted from audit. This would benefit around 139,000 companies set up within groups, including for transactions, property, brand or asset management, as part of organisational structures and restructuring or for internal financial arrangements.

The Association of Chartered Certified Accountants (ACCA) expressed concern that necessary accounting procedures were being dismissed by Government as no more than 'paperwork