Reduced financial reporting

Latest BIS proposals

Under the Companies Act businesses that qualify as being "small" generally do not have to submit full audited accounts. Currently, if companies employ 50 or fewer employees, recorded an annual turnover of ?6.5 million or less and have an annual balance sheet worth no more than ?3.26 million then they can generally produce unaudited "abbreviated" accounts. If companies satisfy two of those criteria then they can generally submit abbreviated accounts, but they must be audited.

To obtain the audit exemption in the UK, a small company must fulfil both the balance sheet and turnover criteria. Under new proposals set out here for consultation, a small company would be able to obtain the audit exemption if it met any two out of the three criteria above. This could release 36,000 small companies from the legal obligation to have an audit.

Under the proposals a subsidiary would not have to file and prepare accounts or be audited if its parent company is registered in the EU and the parent firm has guaranteed its debts in a declaration published at Companies House. To qualify for the exemption the subsidiaries' shareholders would also have to "unanimously" declare "to dispense with an audit" each year and make that announcement in a published declaration at Companies House.

The BIS said it hopes to implement the proposals from 1 October 2012.

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