Audit firms retreat from higher thresholds

UK accountancy firms are turning their backs on audit work after official figures registered a fall in registrations for the fifth successive year. Small firms are set for more pain after the relaxation of audit requirements for small businesses, a finance company predicted.

The number of registered audit firms in the UK was 7,239 on 31 December 2012, 10.6% lower than the end of 2008 figure, according to figures from the Financial Reporting Council (FRC) published in June.

However the decline in registered audit firms in 2012 (1.8%) was less sharp than in 2008 (3.2%).

But firms with lots of small business clients are likely to face a further drop in income.

Since October last year, small businesses don’t need to get their accounts audited if they have comply with two out of three criteria: fewer than 50 employees; a turnover of less than £6.5m and a balance sheet total of under £3.26m. FRC figures show that the proportion of companies that are exempt from audit increased from 69.1% of all companies in 2007-08 to 71.4% in 2011-12.

Philip White, chief executive of Syscap, commented: "The relaxation of audit thresholds means...

Continued...

» Register now

The full article is available to registered AccountingWEB members only. To read the rest of this article you’ll need to login or register.

Registration is FREE and allows you to view all content, ask questions, comment and much more.

Comments

Audit firms retreat

ver1tate | | Permalink

Partially agree. More interesting if figures were given for accountants fined or struck off.

jon_griffey's picture

Can't get an auditing certificate    3 thanks

jon_griffey | | Permalink

Far from 'turning their backs' on audit work the issue is that smaller firms may typically only have a handful of audit clients and so cannot give staff the experience they need to qualify for an auditing certificate.  Consequently as the older partners retire there are no new auditors coming through.  So over time most small audit firms will disappear.

 

I agree with Jon and I'm

MJ Green Accountancy | | Permalink

I agree with Jon and I'm hoping that in the future I am able to pick up some audit work as a result of less competition. As I am only 39 and hold an auditing certificate I should be around long enough to capitalise on this.