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Detail of outcome
The Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 came into force on 1 October 2012. They apply to accounts for financial years ending on or after that date.
The new Regulations allow more companies to make a commercial decision about whether or not to have a statutory audit. They remove unneccessary European Union requirements so that UK small and medium sized enterprises (SMEs) are not at a disadvantage compared to their European competitors.
Impact assessment - Audit exemptions
The final stage impact assessment on audit exemptions was superseded by a revised impact assessment on 29 August 2014.
Detail of feedback received
We received 60 responses. These responses raised several main points:
- clear support for the proposals from the companies who see themselves benefitting from the audit exemptions and ability to change accounting framework
- the need to protect users of accounts and creditors
- uncertainty about the level of take-up of the audit exemption for subsidiaries with a parent company guarantee, and the resulting cost savings
This consultation covers 2 separate proposals:
Seeks views on changing audit exemptions to reduce the number of UK small and medium-sized enterprises (SMEs) and subsidiaries required to undertake an audit. We intend to make UK audit requirements more flexible to companies in response to a market inequality relating to EU requirements.
Seeks views on changing the law to allow companies more flexibility to change their accounting framework from International Financial Reporting Standards (IFRS) to UK Generally Accepted Accounting Practice (GAAP). We aim to allow companies to select the accounting framework most appropriate for them, whilst continuing to insist on reporting that allows shareholders to hold directors to account.
Each proposal has its own impact assessments.