Audit thresholds must be addressed, ICAI

The exemption threshold for audits in Irish companies must be addressed if smaller firms are to remain competitive, the Institute of Chartered Accountants in Ireland (ICAI) has warned.

In a submission to the Government's Small Business Forum, the ICAI argues that the current audit exemption threshold will be too low when new international auditing standards are introduced over coming months.

Current rules dictate that a company with a turnover of €1.5 million is exempt from a requirement to be audited. The comparable turnover threshold in the UK is €7.3 million.

ICAI president John Greely says the new auditing standards have the potential to "add significantly" to the external audit costs of small companies.

"This is mainly due to the more onerous documentation and procedural requirements of the new standards, which are geared primarily towards the audits of large, listed entities," Mr Greely said.

He pointed out that smaller companies in the UK would be exempted from the new rules because of the higher threshold that applies there.

The ICAI has proposed other forms of "external assurance" that would allow smaller Irish companies to escape the burden of external audits.

The accountancy body also argues that new businesses in the Republic are disadvantaged by the limited number of incorporation options open to them.

"Many are forced down the costly road of company registration whereas options like limited liability partnerships are available in the UK," Mr Greely said.