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Vince Cable to exempt many SMEs from audit filing

Vince Cable to exempt many SMEs from audit filing

Last Friday, Vince Cable announced that the audit system is to be overhauled; a move that could save SMEs and accountants for contractors £440 million each year.

The reforms will make it easier for new and expanding businesses to negotiate the auditing system, giving them more scope to concentrate on growth and expansion. The EU has less stringent auditing requirements and Cable’s reforms will bring the UK’s SMEs more into line with their European counterparts.

Furthermore, micro businesses and limited company contractors will only need to produce one simplified set of accounts. This amendment could benefit two million companies and save around £400 million annually.

After the announcement, Cable said small firms have to be allowed to grow and the audit reforms will ensure that small businesses can concentrate on growth and hiring, rather than paperwork.

Reaction from the major accountancy bodies was mixed. The assistant director of business policy at the ICAS, Paul Probin, said it was not in the public interest to remove the audit requirement from medium sized businesses.

The ACCA’s head of technical pointed out that the proposals were still at the consultation stage but clearly a lot of firms will be conducting fewer audits and he said he was disappointed that accounting and auditing rules had been labelled as red tape.

The ICAEW, on the other hand, broadly supports measures that ease the regulatory burden on small businesses. The audit threshold is currently £6.5 million turnover and he believes that if it is raised larger companies will carry on having audits voluntarily.

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Image: totally focused, no hocus pocus by kara allyson

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