Opinion split on IPR
Accountancy bodies today gave a mixed reaction to the results of research into the benefits of the independent professional review.
The Auditing Practices Board this morning said that research into the IPR revealed significant cost savings for companies with a turnover between £1m and £4.8m.
The ICAEW, which in an unexpected u-turn earlier this year withdrew its support for the IPR, reserved judgement on the results.
Michael Groom, ICAEW president, said: ‘I believe that many small and medium-sized enterprises in the future will choose to be audited irrespective of the level of the audit exemption threshold.’
In contrast ACCA, which remains committed to a full mandatory audit for all companies with turnovers in excess of £1m, was more upbeat on the results.
Jonathan Beckerlegge, chairman of ACCA’s auditing committee, said: ‘The IPR work in the field trial was stronger than first proposed. Going concern was addressed and material errors were picked up in 40% of the IPRs. If further strengthening of IPR could be achieved without piling on costs it could be useful to shareholders and others.
‘If the government were to remove the requirement for audit for companies under £4.8m turnover entirely, it would be as dangerous as tackling road congestion by removing all the traffic lights.’
The government will consider the research to decide whether to mandate, or simply endorse, the IPR if it raises the audit exemption threshold to the European maximum of £4.8m.
Ian Plaistowe, APB chairman, and David Hatherly, APB board member, said concerns remained over how effective an IPR is at detecting financial misstatements.
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Audit threshold to rise to £4.8m
