ACCA Sceptical Over Governments Small Business Audit Proposal

Tue, 15 Mar 2011

The Association of Chartered Certified Accountants (ACCA) has expressed concern at the government’s decision to exempt small businesses from having their accounts independently audited.

Business Secretary Vince Cable recently announced that small firms will be excused from this requirement, in a bid to save the sector £40 million and to enable small firms "to concentrate on growing and taking on more people instead of paperwork".

However, John Davies, head of technical at ACCA, warned that the move could have a negative impact on such companies.

"Annual accounts are prepared and published as a quid pro quo for the privilege of adopting limited liability status, a status which the UK's nearly two million small companies freely choose to take on," he said.

"These accounts provide basic information about the financial health of companies to their shareholders and to any party contemplating doing business with them or lending money to them, while also serving as the basis for determination of their tax liability."

"Any business, whether incorporated or not, needs to maintain a basic standard of financial management otherwise it risks going out of business and its shareholders and customers risk losing their money."

He added: "We fully support the government's goals of encouraging entrepreneurship and achieving business growth."

"But we should not give the impression that new and existing businesses will be helped to prosper by viewing accounting and sound financial management as mere bureaucracy."
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