Report Audit Threshold 2003

RAISING THE THRESHOLDSSUBMISSION TOTHE DEPARTMENT OF TRADE & INDUSTRYOCTOBER 2003BYTHE SOCIETY OF PROFESSIONAL ACCOUNTANTSPeter J D Mitchell FCA FCCA ChairmanRAISING THE THRESHOLDSI N D E XSection Page1 Executive Summary 32 Background to SPA 63 Commentaries3.1 Benefits Obtained from Raising the Audit Threshold to £1 million 73.2 Adopting the European Audit Threshold of £5.6 million 83.3 Benefits of Appointing a Professionally Qualified Accountant 93.4 Impact on Money Laundering and Proceeds of Crime 103.5 Impact on Registered Auditor Population 114 Methodology 132RAISING THE THRESHOLDS1. EXECUTIVE SUMMARY1.1. Benefits Obtained from Raising the Audit Threshold to £1 million1.1.1. Our research and analysis has determined that the increase to £1 million hasbeen well received by small practitioners and their small corporate clients, withalmost no evidence of detriment to third party users of those accounts. Itappears that savings in annual accountancy charges approaching £70 millionmay have been achieved. The proposal to increase the threshold further wasalso welcomed.1.2. Adopting the European Audit Threshold of £5.6 million (the EAT )1.2.1. The EAT is set higher than the anticipated level in 1999 of £4.2 million,nevertheless, given the successful outcome of raising the audit threshold to £1million, SPA suggest there are few persuasive commercial, professional orstatutory arguments why the EAT should not be introduced, ...