Reducing Audit Requirements

Vince Cable Excerpts

Thursday 6th September 2012 Written Statements

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

In October 2011, the Department for Business, Innovation and Skills (BIS) launched a consultation on giving more small companies and subsidiaries the ability to make a commercial decision about whether or not to have an audit. It also proposed allowing companies more flexibility to change their accounting framework.

The response to the consultation has helped the Department to refine the proposals. In particular the proposals have been amended to make it easier for parent companies who want a subsidiary to be exempt from audit to provide the requisite guarantee of the subsidiaries’ liabilities.

These changes will allow 120,000 additional companies to be exempt from audit and 67,000 dormant companies to be exempt from the need to prepare and file annual accounts. There will also be increased flexibility for companies to change their accounting framework, which will enable them to take advantage of appropriately reduced disclosures.

We seek to achieve our ambition of making the UK one of the best places in Europe to start, finance and grow a business, in part through reducing the regulatory burden on UK businesses. Thus we welcome the broad support received for the overall principle of reducing audit requirements for unlisted companies and the support for proposals which promote flexibility and prevent UK businesses from being at a disadvantage to their European competitors.

BIS is today publishing a response to the consultation, which sets out the Government’s intention to introduce legislative changes to enable companies to take advantage of these changes. The proposals are deregulatory and reduce costs for business of at least £100 million per year, and possibly much more.

Legislation is expected to come into force from 1 October 2012, to be available for accounting years beginning on or after that date.

The consultation response, and the final stage impact assessments are available on the BIS website at: http://www.bis.gov.uk/consultations.