In January 2016 it was announced that the audit exemption thresholds would be aligned to match those that determine company size. The new thresholds come into force for periods commencing 1 January 2016 (effectively 31 December 2016 year ends).
It is estimated that the increase in the audit limits is likely to make around 10,000 limited companies fall out of audit in the UK. For many smaller businesses the removal of the need for a compulsory audit will be welcome as it will save precious time and money. However the new audit thresholds will also make some substantial companies fall out of audit. For these companies, the benefit of having an audit may still outweigh the burden of having one and these companies can still opt to have a voluntary audit.
The increase in audit thresholds further cements thinking in the accountancy profession that the statutory audit, now more than ever, is becoming a very specialised area.
The current regulatory burdens placed on auditors and hoops that firms need to jump through to maintain their audit licence will mean that a large number of smaller firms are likely to stop offering auditing services when their clients fall out of the audit regime. It may no longer be beneficial for these firms to renew their audit licence and the number of accounting firms able to perform company audits will reduce.
In 2014 (the last year where figures are available) the number of UK registered audit firms was 6,605, down from 6,923 in 2013. This figure is widely expected to fall further in 2015 and beyond.
At Dafferns we pride ourselves in being audit specialists and we are bucking the industry trend. Our audit team is actually expanding and the level of experience of our staff means that we hold a large proportion of audit clients, many opting for voluntary audits. For clients falling out of audit, we can offer tailored assurance services which can focus on particular areas of concern.
The audit market is irrevocably changing shape and with auditing increasingly becoming a specialist area it is important that your auditor is knowledgeable, experienced and someone who you can place your trust in.
At Dafferns we can offer all of this, for more information please contact us.