Brexit: The end of UK audits?

20th June 2017

Audit thresholds are linked to the small company limits, which are currently set by the EU. The UK can choose to impose a lower threshold than the small company limits, but not a higher one. As a result of Brexit, power will return to the UK, and as a result the cap on audit thresholds set by Brussels could disappear.

Current audit thresholds (Periods beginning on/after 1 Jan 2016):

A company must not exceed 2 of 3 criteria below to claim exemption from audit:

  • Annual turnover of more than £10.2 million
  • Gross assets worth more than £5.1 million
  • More than 50 employees on average

The UK has one of the highest audit exemption limits in Europe, as we have aligned our audit limits with the small companies’ threshold. Therefore, post Brexit it may choose to alter the audit limits if it deems it appropriate. The option to remove the requirement for a statutory audit for private small companies may even be available!

However there are many benefits to having an audit, such as:

  • Improving efficiency and profitability
  • Understanding the financial records
  • Assessment of risks
  • Strengthening internal control
  • Enhancing credibility of financial records
  • Assurance provided to external shareholders

Some organisations may require a company to have an audit even if an audit is not required by law, such as banks and lenders.



 
Other items in Audit
 
Jaimie Lane
20th June 2017 Brexit: The end of UK audits?

Audit thresholds are linked to the small company limits, which are currently set by the EU. The UK can choose to impose a lower threshold than the small company limits, but not a higher one. As a result of Brexit, power will return to the UK, and as a result the cap on audit thresholds…

Read More »

Richard Meadows
1st November 2016 Client Money

Solicitors: New rules for handling client money. The consultation period has now closed on the proposed new rules for how solicitors handle their client money: Proposed Draft Solicitors Accounts Rules

Read More »

Keith Day
28th January 2016 Audit De-regulation

Audit Exemption Turnover Threshold: Raised to £10.2m. The Government is to raise the audit exemption threshold to the maximum allowed under EU law. In a statement read out in parliament, Anna Soubry, minister for small business, industry and enterprise, said the decision had been made after considering responses to its discussion paper. Companies will not be required to…

Read More »

Stephen Malkin
14th September 2015 Financial Controls

Pay Suppliers Electronically: Beware fraudsters. Do you hold your suppliers bank details on file – one tactic recently used by fraudsters is to advise businesses of changes to a supplier’s bank details, they then wait until a genuine purchase invoice is paid. Unfortunately because the supplier’s bank details are compromised, the payment goes to the…

Read More »

Stephen Malkin
14th September 2015 Financial Controls

Pay Suppliers Electronically: Beware fraudsters. Do you hold your suppliers bank details on file – one tactic recently used by fraudsters is to advise businesses of changes to a supplier’s bank details, they then wait until a genuine purchase invoice is paid. Unfortunately because the supplier’s bank details are compromised, the payment goes to the…

Read More »

Richard Meadows
26th November 2014 Solicitor Audits

Solicitors: Further consultation on proposed changes to Accountants’ Reports on client monies. Following a furore over plans to water down the rules for accountants’ reports on law firms’ financial accounts and safeguards for client monies, the Solicitors Regulation Authority (SRA) has launched a second consultation on accountants’ reports, which will be open until 28 January 2015.…

Read More »