Reducing red tape or reducing something that adds value?
With the audit exemption raised for financial years beginning on or after 1 January 2016 to £10.2m providing either the balance sheet total is less than £5.1m or there are less than 50 employees many companies will no longer legally be required to have an audit.
The raising of the turnover threshold is not new, since 1993 the threshold has risen from £1m to £5.6m in 2004, and to its current threshold of £6.5m in 2009.
The main driver for this seems to be the government perceiving the audit as an administrative burden for smaller entities which is odd as the forthcoming year will see the phasing out of the Financial Reporting Standard for Smaller Entities to be replaced by a completely new accounting standard FRS102 section 1A. We have also seen many other administrative burdens placed on small companies such as RTI processing, and the forthcoming year will also see many smaller companies required to provide workplace pensions.
One can only think that additional financial reporting obligations will be placed on all companies in the future as technology changes and government resources are streamlined, so it is questionable how much of a unburdening this really is.Talk to Barnes Roffe today