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AIA

Firms expect slump when audit threshold rises

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21st Jul 2014
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One in five medium-sized accounting firms reckon that about half of their clients will decide not to have an annual audit after the turnover threshold for having an audit is increased in 2015, research suggests.

Currently, businesses with gross assets of less than £3.26m, or turnover less than £6.5m are not required to get an annual audit, according to accountancy software company Caseware, which did the research.

When an EU accounting directive is introduced in the UK, probably in late 2014 or early 2015, these thresholds are expected to increase to £5m-plus and £10m respectively.

Once the audit threshold is raised, most accountants surveyed expected that their practice will lose significant revenue. 

About half (53%) of respondents believed that their revenues will fall, compared to 37% who felt their revenues would not be affected.

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By JSJ54
21st Jul 2014 11:36

Actual date of implementation

Does anybody know which accounting periods will be affected when it is introduced (late 2014/early 2015).

Will it be periods ending after a certain date in the future (say 31/03/15) or will it apply immediately.

I'm thinking of clients with a 31/12/14 year end.

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By jon_griffey
22nd Jul 2014 09:29

end of auditing

Many of the remaining audits are for small ineligible companies, typically small UK companies that are part of a large group or containing a plc.  As such we need to continue with audits for companies with some very small turnovers indeed.   Its more important to properly address that issue at this point than raise the thresholds, which will benefit fairly few companies.

I don't know why we have this piecemeal approach - constantly raising the thresholds every few years.  Ultimately where its going to end up is with audit being required for listed companies and banks, insurers etc and everyone else exempt, so they should get on and introduce this change and be done with it.

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By Trethi Teg
22nd Jul 2014 11:56

Auditing - A waste of time and money

The "audits" of the banks in 2008 demonstrated that audit's are a waste of time. Recent visit by ICAEW confirmed that audits are more about ticking the right boxes and covering one's posterior, whilst picking up fees.

When I look at company accounts to determine credit worthiness etc I ignore the fact that they have been audited.

There is some merit for listed companies, but as far as private companies are concerned, get rid of them.

Doubtless PWC, KPMG et al will have a different view.

Once we have sorted that out we can then start to look at the Insolvency industry in this country, which is a far bigger problem.

Again opposition from PWC etc (at £150 per hour for filing clerks).

Rant over, feeling better now.

 

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By mikhael
22nd Jul 2014 13:38

audit limits

Article is a little misleading , audit thresholds have been aligned with small company limits , its now a 2/3 test since the 2012 regs

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