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New audit proposals could save UK SMEs millions

New government proposals could save thousands of UK businesses in excess of £600 million in accountancy and administration costs, under new plans to reduce financial reporting requirements.

The Audit Exemptions and Change of Accounting Framework has set out plans to give small businesses and subsidiaries the option whether or not to have an audit.

Current legislation dictates that to be a ‘small’ company for accounting purposes, a business must company with two out of three criteria relation to turnover, balance sheet total and number of employees. To be exempt from an audit, a business must fulfil balance sheet and turnover criteria.

Under new plans, UK SMEs will be eligible for an exemption using any of the criteria, thus saving up to £206 million annually.

The government has also expressed plans to exempt subsidiary companies from mandatory audits, as long as their parent company is prepared ot guarantee debts. This would save a further £400 million per year.

Commenting on the plans, Ross Smith, Head of Policy and Research at the NECC said: “ Administration is costly and time consuming so any effort from the Government to reduce regulation and the legal burden on small businesses must be welcomed.

<span arial=““ class=“Apple-style-span” font-family:=”” font-size:=”” small=”” style=“font-size: 12px;??It is important that these reforms are brought in quickly to counter the slowdown in growth and help our businesses in their continued recovery from the recession.?<!—EndFragment—>

“Over time, both the volume and costs of reporting requirements for UK companies have increased, and businesses have stressed to us the need for more flexible and targeted rules. Tackling these problems now will save UK SMEs millions every year and give them more opportunities to expand and grow their business.

“The proposals we’ve published today are aimed at removing EU gold plating and freeing up enterprise, which ultimately benefits the whole UK economy and will help put us on the path to long-term, sustainable growth. “

Mr Davey is now encouraging businesses to read the consultation document and share their views, in order to further encourage UK growth.

This was posted in Bdaily's Members' News section by Ruth Mitchell .