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Under changes introduced by the Government in January, companies can now legally opt out of auditing their accounts if they fall below the £10.2 million statutory threshold, but they may risk their credit ratings by doing so.
Ratings agency Graydons recently told Accountancy Age that firms which opt out are lacking an important form of verification used by ratings agencies. In turn this could affect their ability to borrow and there is ultimately a risk to the entire economy if too many companies have difficulty accessing credit.
Colin Sanders, Graydons’ UK Head of Operations said: “It’s quite worrying, and I believe it’ll ultimately lead to restricting amount of credit that’s applied to companies.”
He added: “We are going to have to be more cautionary in respect of the amount of credit we give as a result of the minimal information we’ve got. It’s even holding back the economy because it’ll restrict the amount of growth companies will be able to undertake.
“Audits provide verification more than anything else,” he went on. “An independent body has audited these accounts and confirmed they show a true reflection of the figures that have been reported to them. Unaudited, I’m not saying they’d completely differ or people would be less than truthful with their trading figures, but it is open to possible abuse.”
January’s changes mean that to qualify for a statutory audit, companies must have at least £10.2 million in turnover, a balance sheet of up to £5.1 million and up to 50 employees.
Link: Graydons Article