Are you ready for the new audit threshold?

9th February 2016

Government plans to increase the audit threshold for accounting periods starting on or after 1 January 2016 have continued despite the ICAEW raising concerns that these thresholds are too high and will impact on the quality of financial reporting.

The old and new thresholds are as follows (a company will require an audit if it exceeds two of the three thresholds):

 

Old Threshold

New Threshold

Turnover

£6.5m

£10.2m

Gross Assets

£3.26m

£5.1m

Employees

50

50

 

Some companies must have an audit even if they are under the thresholds. These include banking, insurance and public companies. It is worth noting that, private companies in a group with a public company can now, from the date of the changes, claim the small company audit exemption which is something that was not possible before.

An audit of a company will continue to bring greater shareholder confidence as well as promoting sound financial practice and controls. An independent view can act as a deterrent to fraud, tax evasion and company mismanagement and auditors have an important role in supporting small business and helping them grow. 

It remains to be seen whether many companies, although exempt, will continue to choose to have an audit in order to receive the benefits that an audit will bring.

Chris Morey, Manager | Plus Accounting | Brighton

Author: Chris Morey, Manager @ Plus Accounting

 

Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.

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