Vince Cable announces new plans for business auditing requirements

The government has announced that they are going to change the way they report requirements that could help reduce the costs of administration and accountancy costs. Vince Cable, the Business Secretary, stated that over 100,000 UK businesses will benefit from the new cost effective reporting and auditing requirements.

The changes will also help SMEs since it will make them exempt from many mandatory audits and will additionally help make it simpler for companies to move over to IRFS from the UK GAAP.

According to the Government, the new changes mean that about 36,000 additional companies will be able to choose to forgo having an audit conducted which should help minimise accounting costs. In addition, Cable also stated that the Government will also make a large amount of subsidiary companies exempt from mandatory audits so long as their parent company is willing to guarantee any liabilities on their part.

This would allow another 83,000 companies to skip an audit. In addition, about 67,000 more dormant subsidiaries would be able to opt out of an audit if they can offer a similar parent company guarantee.

In addition, as part of the new legislation expected to come out of the consultation run by the Financial Reporting Council Framework many companies are going to be able to prepare their accounts using the listing of IFRS which will allow SME’s in the UK to be on the same financial standing as other EU companies. This is expected to help SME’s in the UK get ahead or at least on par with competing SMEs in Europe that may be offering the same type of services.