The government has made plans to adopt the highest threshold allowed as part of a new EU accounting directive in order to minimise the burden of red tape.
However, this would mean that 98 per cent of Britain’s companies will not have to carry out a full audit. And Michael Izza, chief executive of the ICAEW, is of the belief that the decision would leave firms vulnerable to fraud, money-laundering and inaccurate tax bills.
According to The Telegraph, Izza is in talks with the Department for Business, Innovation and Skills about its fears.
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“We understand the government’s concern is to reduce the regulatory burden on business, and this is an aim we fully support,” said Izza. “We just believe the savings would be better made in less potentially damaging areas.
“We have outlined our concerns very strongly, particularly those regarding money-laundering, although there are other concerns. For example, trust in business is currently low, and this could help maintain public confidence at little additional cost to the private sector.”
It was further reported by The Telegraph that “bodies such as the Association of Chartered Certified Accountants have said raising the threshold to £10.2m would risk the livelihoods of many small and sole-practitioner auditors.”
The size of small businesses had grown from a yearly turnover of £1m in 1993 to £6.5m in 2009, the last time the audit threshold was raised.
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