The Government Department for Business, Innovation and Skills (BIS) has announced that it intends to relax the audit rules for smaller companies. Whilst recognising the need for high standards in audit and accounting, the Government acknowledges the massive bureaucratic burden of producing accounts, in particular for small businesses. More specifically, it is proposing the following:
- to amend the Companies Act 2006 to bring the small company audit rules in line with the EU minimum requirements, meaning that certain small companies who are still required to have independently audited accounts will no longer have to do so, resulting in an estimated saving of up to £40 million in audit fees;
- to push for a relaxation of the EU rules so as to release medium-sized companies from the requirement to get their accounts independently audited;
- to push for exemptions in the EU rules to remove the requirement for even smaller businesses (those with less than 10 employees) to produce specific accounts for Companies House in addition to those for tax purposes;
- to consider relaxing the audit and account rules for subsidiaries so that dormant companies with parent company guarantees could be exempted from the requirement to prepare and publish annual accounts and wholly-owned non-financial subsidiaries with parent company guarantees could be exempted from audit.