Business Irish

Wednesday 22 November 2017

Small firms will escape Appleby's reach under new audit changes

Richard Bruton exempts large number of firms from need for audit in drive to reduce unnecessary red tape

Emmet Oliver

Thousands of small firms around the country will no longer face the prospect of their auditors reporting them to the corporate watchdog even if they've broken company law.

Under current rules, auditors to even small firms have a duty to report suspected company law breaches to the Director of Corporate Enforcement.

But this week the Government changed the rules, removing entirely the need for auditors to vet the books of many small firms.

This means the traditional automatic duty of auditors to report suspected breaches will cease in many cases, although directors of the firm can order an audit of the company if they have concerns.

While the size of small firms means company law breaches are unlikely to involve large sums, minority shareholders, employees and suppliers could still end up more vulnerable due to the changes.

This week Enterprise Minister Richard Bruton exempted a large number of small firms from the need to have an annual audit, as part of a drive to reduce red tape and associated costs.

Mr Bruton increased the threshold for exempting businesses from the requirement to engage auditors by over 20pc. Firms with under €8.8m in turnover and €4.4m in balance sheet assets will be exempted.

Mr Bruton said this week: "This will mean that a minimum of 1,000 extra businesses will not have to spend the money and time necessary to engage auditors, saving these SMEs a total of up to €5m per year.''

It is estimated by accountancy bodies that a statutory audit adds a minimum of €1,000 annually to the costs for a "micro business'' and €3,000 plus for an SME. These bodies point out that Mr Appleby and his authority will still be able to investigate company law breaches if brought to their attention by the Revenue Commissioners or shareholders.

Rules relating to large firms are unchanged and Mr Appleby's office is currently trying to cope with a mountain of reports about firms that have gone bust.

Irish Independent

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