The Companies (Non-financial Reporting) (Amendment) Regulations 2024 are likely to be laid before the UK parliament this summer, with the threshold changes expected to take effect for accounting periods beginning on or after 1 October 2024.
The thresholds, as they stand, are that an audit is required when 2 of the 3 conditions are breached in consecutive accounting periods:
| Net | Gross | |
| Annual turnover | £10.2m | £12.2m |
| Balance sheet total | £5.1m | £6.1m |
| Average number of employees | 50 | 50 |
However, the proposed changes being put forward will mean that an audit will be required for small companies based on the following sizes:
| Net | Gross | |
| Annual turnover | £15m | £18m |
| Balance sheet total | 7.5m | £9m |
| Average number of employees | 50 | 50 |
This could result, according to the government, in potentially as many as 132,000 businesses no longer needing to have a statutory audit along with benefitting from simplified financial reporting requirements.
Whilst the above is designed for companies to drop out of the audit threshold and remove the need for additional financial and time costs required during an audit, there are still many benefits to having an audit. These include, but are not limited to, the peace of mind received as a result of the additional scrutiny, control recommendations, increased transparency, and general advisory received during an audit.
Whilst your company may no longer need an audit as a result of the above proposed size changes, it is important to ensure that there are no other requirements such as lender covenants, group requirements, or being a listed entity. If in doubt it is always important to obtain professional advice.
If you have any questions, please do get in touch with our Audit and Assurance team at Ryecroft Glenton.