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The Department of Business, Inovation and Skills has released a consultation on modifying the audit thresholds for small companies.

At present an audit is required if:

~ Turnover exceeds £6.5m OR

~ Assets are more than £3.26m*1 OR

~ Employees are more than 50

*1  Assets in this context are the total of fixed assets and current assets per the balance sheet, not, as would be thought, the balance sheet total.

If the changes proposed become law, then although the thresholds remain the same, two criteria, rather than one, need to be breached before the audit requirement is triggered.  This is good news for asset rich companies, eg property investment, and aligns the audit rules with the small company reporting rules which are 2 of 3.

Additionally there is a proposal the remove the audit requirment in most circumstances for unquoted subsidiaries in groups where the parent is subject to audit.

If agreed the changes apply for year ends ending after 1 October 2013.

The detail is here:

http://www.bis.gov.uk/assets/biscore/business-law/docs/c/11-1193-consultation-audit-exemptions-and-accounting-framework.pdf