The changes

Auditors and accounts

January 2004 saw the definition criteria for small and medium-sized companies and the audit exemption limit rise significantly, meaning that many more companies could benefit from the exemptions available. More recent changes mean that many small financial services companies that were previously prevented from doing so can also benefit from these exemptions.

One exemption that will be removed under the new Act will be the specific exemption for medium-sized groups from preparing group accounts.

In addition, the 2006 Act:

• will introduce a comprehensive ‘code’ of accounting and reporting requirements for small companies
  
  The Act makes distinctions between companies that are small and those that are not and those that are quoted companies and those that are not.
  
  
• reduces the time allowed to file accounts at Companies House
  
  

  Filing deadline:	Current	Proposed
  	months from the end of the accounting period
  Private limited company (Ltd)	10	9
  Public limited company (Plc)	7	6

  
  

  Comment The potential impact of this change has been somewhat lessened, as initial proposals intended to decrease the filing deadline for private limited companies to seven months. It is worth remembering that there are automatic penalties if your company’s accounts are filed late. These range from £100 to £1,000 for private companies and from £500 to £5,000 for public companies, dependent upon how late the accounts are filed.

  
  
• continues to help improve audit quality
  
  The Act introduces a new criminal offence for an auditor to knowingly or recklessly include anything that is materially misleading, false or deceptive in an audit report.
  
  Companies will be able to agree a limit on their auditors’ liability arising from an audit for a specified year, subject to shareholders approving the main terms of the agreement. The amount of the limit must be ‘fair and reasonable’ in order to be effective.
  
  Audit reports will be signed by the ‘senior statutory auditor’ in their own name, for and on behalf of the firm.
  
  
• retains the option to file abbreviated accounts at Companies House
  
  Small and medium-sized companies will continue to be able to file abbreviated accounts.