Financial Business Audits commonly referred to as ‘statutory audits’ are set to change from October 2024. The changes expected to come into effect in October will elevate audit thresholds. This will free up extra cash for thousands of small and medium-sized enterprises (SMEs).
With the bar being increased, it’s estimated that 132,000 SMEs will now be exempt from mandatory audits. The hope is that the change in thresholds will allow businesses to redirect financial resources previously allocated for auditing towards other critical areas of business growth and innovation.
How will this impact my business?
Although the requirement for a mandatory audit will no longer fall on thousands of SMEs, there may be other issues that arise from not undergoing a financial audit.
Audits allow businesses to have a clear view and analysis of their business’s financial standings and exemption may lead to reduced financial transparency and oversight, potentially impacting stakeholder trust and investment.
SMEs can still choose to have an audit and will need to weigh up the benefits of reduced audit costs against the value of voluntary audits in maintaining robust financial health and investor confidence.
As we navigate this change, SMES must stay informed and consult financial advisors and/or accountants to make strategic decisions aligning with their long-term business objectives.
What are the new audit thresholds?
| Threshold | Micro | Small | Medium |
| Turnover | £632k to £1m | £10.2m to £15m | £25m to £54m |
| Gross Assets | £316k to £500k | £5.1m to £7.5m | £18m to £27m |
| Employee Numbers | 10 (same) | 50 (same) | 250 (same) |
Please note: Anything above the medium thresholds in the table above is considered a large business.
Further Proposals
The changes are expected to continue with a meeting taking place later this year to discuss further changes, these include:
- increasing the average employee numbers threshold for medium-sized enterprises from 250 to 500.
- removing the requirement for medium-sized enterprises to prepare a strategic report.
- analysing technical issues with the audit framework
- finding ways in which it would be easier for companies to issue digital annual reports
- exempting smaller public interest entities from audit tender
Need Support?
If you need support or advice about your business audit, please don’t hesitate to contact one of our accountants. Our team has a wealth of experience in helping businesses make the best strategic decisions. Thanks to our partner-led approach, you have access to specialists across all avenues of business finance.
We can help advise you on the best audit options for your business and carry out your business audit if required.
If you need more information about business audits, you can read our article on financial auditing for businesses.
