FSA Announces Ending Of Audit Requirement For Small Firms

by Robin Pilgrim, LawAndTax-News.com, London

31 July 2006

The UK's Financial Services Authority on Friday announced that there has been a positive response from the industry to its proposal to remove audit requirements from regulated small firms and Appointed Representatives (ARs).

The Department of Trade and Industry (DTI) has agreed with the FSA's proposal, and will make regulations under the Companies Act 1985 to implement the proposal as soon as possible.

The aim is that these will apply to financial years ending on or after 31 December 2006, so that affected companies will not be required to have their accounts audited for that or subsequent financial years.

The FSA estimates that this change will save 3,200 small firms and 1,490 ARs GBP12.9m each year. Most of the firms that will benefit are likely to be financial advisers.

Stephen Bland, Director of Small Firms at the FSA, explained that:

"The FSA is committed to providing a level playing field for all regulated small firms which should promote competition and benefit consumers. We are challenging regulations whose costs outweigh the benefits they bring, and our work with the DTI to extend the audit exemption will bring firms that are limited companies in line with partnerships and sole traders."

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