The Government has considered responses to questions posed on the audit exemption threshold in its discussion paper on the implementation of the Audit Directive (2014/56/EU) and the Audit Regulation (Regulation 537/2014) and raised the audit exemption threshold. This means that companies with a turnover up to £10.2 million, a balance sheet total of up to £5.1 million and up to 50 employees are exempt from requiring an audit for the financial years commencing on or after 1 January 2016.
In a written statement to the House of Commons, Baroness Neville-Rolfe said the government had “carefully considered” responses to questions raised by audit professionals. The statement noted that: “Removing the link between the thresholds for eligibility for the small company regime and those for the audit exemption would introduce unnecessary complexity into company law and cause confusion for users. Audit and auditors will continue to have an important role in supporting small businesses to achieve their ambitions and grow; and in providing assurance to owners and lenders about a company’s performance.”
There are advantages to having an audit conducted, even if a company is exempt and finds that one is not required. The importance of an audit is through its benefits; it will provide confidence to shareholders, it will also satisfy tender requirements and ensure reliable financial reporting.