Business leaders urged to take action over rule changes

Somerset accountants Albert Goodman is urging business leaders across the region to get ready to take advantage of upcoming changes in auditing rules.

The UK Government has announced proposed increases to the company size thresholds, to provide more streamlined and simplified reporting obligations.

The proposals will see two of the three thresholds which companies need to be aware of when considering whether they are legally obliged to undergo a statutory audit increase by 50 per cent from 1 October 2024.

The turnover threshold is set to rise from £10.2m to £15m, while the gross assets threshold is set to rise from £5.1m to £7.5m. The number of employees threshold will remain at 50.

Albert Goodman partner Michael Cahill, who specialises in providing accounting, tax and commercial advice to incorporated and owner-managed businesses, said:  “The increase in company size limits and simpler reporting requirements will be welcomed by businesses across the region.

“Reporting requirements will be more proportionate to the size of the company, and business can benefit from an easing of the administrative and financial burdens being placed on them where an audit is not considered necessary.”

Around 13,000 businesses will be reclassified from “medium” to “small” and therefore be eligible to claim the audit exemption and benefit from the streamlined and simplified reporting.

Taunton-based Cahill, who works across a wide range of sectors including property development, manufacturing, engineering and wholesale, added:  “This is a welcome bid to reduce red tape and financial pressure, but it is vital that business leaders who could now benefit from the audit exemption carefully consider the best course of action for their organisation.

“For some businesses, continuing with a voluntary audit will be the right thing to do. This could be the case where audited accounts are required for lending covenants or contract tendering purposes, or where the shareholders are remote from the day-to-day running of the business and seek the confidence that an independent audit can provide.

“However, for those that feel they are able to take advantage of the audit exemption there is a real opportunity to re-invest the time and money saved in other areas.

“Where businesses are able to reduce their compliance cost, we often see that they want to explore working with us in other ways which add value to the business.

“These include the preparation of financial models and strategic plans, support with funding applications to improve cashflow and undertaking larger scale tax planning exercises.”