Recent changes announced by the previous Government have adjusted the thresholds for company size classification, potentially exempting approximately 132,000 businesses from mandatory audits.
These new thresholds will apply to financial years beginning on or after 1 October 2024.
Impact on your business
The revised audit thresholds mean that many small and medium-sized enterprises (SMEs) may no longer be legally required to conduct statutory audits.
This regulatory change could have a real impact on minimising audit costs for these businesses.
However, it’s important to weigh these savings against the potential drawbacks, such as decreased financial clarity and potentially diminished investor confidence.
Audits often provide insights into a business’s financial health that stakeholders value.
Details of the new thresholds
The turnover limit for micro businesses has been raised to £1 million from £632,000, and the gross asset limit has been increased to £500,000 from £316,000.
The turnover cap for small businesses has been increased to £15 million from £10.2 million, and the gross asset limit is now £7.5 million, up from £5.1 million.
Medium businesses now have a turnover limit of £54 million, elevated from £36 million, with a new gross asset threshold of £27 million compared to the previous £18 million.
Entities surpassing these figures will be classified as large companies. The thresholds for employee numbers remain unchanged at 10, 50, and 250 for micro, small, and medium enterprises, respectively, with potential future increases under consideration.
What to plan for
Businesses benefiting from these changes should continue to prioritise strong financial management practices and maintain excellent governance and reporting standards to manage risks effectively.
For businesses that are dealing with these changes or considering voluntary audits, professional advice can provide clarity on best practices and compliance.
Our team is available to assist with audits and provide tailored advice based on the specific needs and circumstances of your business. Contact us for more information.
