John Selwood's Q&As
Changes to the Companies Act 2006 and a recent article in Audit & Beyond presented John with some interesting questions – and readers with some interesting answers.
Q) Following the publication of the draft amendments to the Companies Act 2006 in January 2015, and the apparent abandonment of the decoupling of the small company thresholds and the audit exemption thresholds, when do the new small company audit exemption thresholds apply?
A) We were told in the earlier consultation that the small company audit exemption thresholds were not expected to increase in line with the new small company accounting regime in the Companies Act. As you have correctly identified, the draft published in January shows that the current position has been maintained, and the thresholds have not been decoupled. So if you qualify as small under s382 of the Act, then, pretty much, you qualify for small company audit exemption.
The new thresholds for small company purposes will be:
- Turnover £10.2m
- Balance Sheet £5.1m
- Employees 50
But watch out! The Department for Business, Innovation and Skills (BIS) might not increase them for the purposes of small company audit exemption.
The increase in the audit exemption thresholds in line with the small companies regime is still being consulted upon. So keep an eye out for the possibility of further changes later this year.
Questions about these threshold changes have been on the minds of many auditors for some time now and I previously addressed this matter in the December 2014/January 2015 issue of Audit and Beyond. Those who still have related questions may find that this earlier Q&A answers some of them.
Only time will reveal the outcome of the BIS consultation. However, if the small company audit exemption thresholds do go up, it will be from periods commencing 1 January 2016. Although early adoption will be available from periods commencing 1 January 2015 for the small company accounting regime, from the draft legislation it appears unlikely that audit exemption will follow that approach. But take care and play close attention to the final legislation - and any future coverage in Audit & Beyond.
This is an extract from an article in the May 2015 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.
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