The Government has announced changes to reporting and auditing requirements that will allow more small companies and subsidiaries to decide whether or not to have an audit. Current UK rules state SMEs must both have a maximum balance sheet total of £3.26m and less than £6.5m turnover to qualify for an exemption. The new regulations mean SMEs will be able to obtain an exemption if they meet two out of three criteria relating to balance sheet total, turnover and employing no more than 50 staff.
The Government will also exempt most subsidiary companies from mandatory audit, as long as their parent company guarantees their liabilities. These regulations are expected to come into force for accounting years ending on or after 1 October 2012.