New Audit Exemption Rules

In what many commentators view as an isolated gesture to reduce the burden of red tape faced by SME limited companies, the Government has raised the financial thresholds at which an audit is required by law:

Separate criteria exist to determine the eligibilty of group companies.

These new rules take affect for financial years ending after 30 March 2004. In certain circumstances, it is possible to extend an accounting period, which previously ended before 31 March 2004, to take advantage of this new regime.

Although some companies may be attracted by the prospect of reduced professional fees, through dispensing with an audit, consideration should first be given to various other factors:

• The confidence an audit gives directors as to the accuracy of the reported financial figures,
• The credibility an audit report gives to the financial statements (to shareholders, lenders, the Inland Revenue, prospective purchasers, etc),
• The business and financial advice that auditors are able to give as a result of the detailed examination of systems, etc, which audit testing requires.
• The affect an audit has on deterring and detecting fraud.
• The possible requirements for an audit under babk lending covenants or the company's Articles of association.

If an audit is not required by law, or other reasons, statutory financial statements disclosing a true and fair view still need to be prepared and submitted to Companies House and the Inland Revenue. We can provide this service, in isolation from an audit, at 2 different levels:

• Accounts Preparation only,
• Independent Professional Review, providing a level of assurance and opinion, on specifically targetted aspects of the accounts, at a level of assurance lower than that given from a full audit.

Our specialist teams are flexible with regard to timing and location for providing these services. We would aim to discuss these issues with clients prior to the year-end, in order to determine an appropriate reporting timetable.

Whiting & Partners are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.