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...