A quarter of the top accountancy firms do not know what proportion of their clients will be affected by changes to the audit threshold, nor how many could stop their external audit.
New research has shown that 28% of audit firms do not know the extent to which changes to the audit threshold, which could be imposed as early as this autumn, will affect their client base.
However, of the top 100 accountancy firms, surveyed by software provider Caseware, 46% of said their firm was well prepared for the reforms. A further 48% said they had made a “moderate” amount of preparations.
The reforms, which will see the gross assets UK audit exemption threshold increase from £3.26m to around £5m or more, could see firms lose significant revenue, the survey says. Of the firm’s surveyed, 58% said they expect their revenues to fall.
Many expect a large proportion of their clients to choose not to have an annual audit when given the option, with 26% saying only a quarter of such clients would continue with an audit.
Simon Warren, managing director at Caseware, said that if firms do decide against continuing with audits then accountants would need to find ways of “clawing back” lost revenue from other sources and start offering “alternative services”.
However, the vast majority of accountants, he thought, would cope with the increase in the threshold, and that “anecdotally”, many accountants expect that an organisation’s stakeholders would continue to demand an audit, even when it is no longer a statutory requirement.
He said, “The positive findings from our survey are that accountancy practices have been preparing for the impending increase in audit thresholds and the vast majority expect to take it in their stride.”