Changes made in the Threshold of the Audit Market
Once again, the audit Market is likely to change. The threshold for audit exemption will once again rise thereby making many large companies to be freed from compulsory audit. This latest development raises significant questions for organizations that derive a major proportion of their income from audit. Questions are now being raised as to whether audits will continue voluntarily. Additionally, there is more concern on how the audit firms can work smarter in a bid to protect rates recovery when there is a possibility of reduced clients.
CareWare in a recent survey of 50 middle sized accounting firms established that more than half believed that the latest threshold will affect the revenue. On the other hand, 10 % of them were of the view that their recruitment plans in future would be changed. Most accountants expect a huge client proportion not to be audited when given the opportunity. 22 % stated that only half of the clients would recommend the continuation of an audit. 26 % expected about a quarter or even less to have it continued.
As a matter of fact, since the year 2009, the number of registered audit practices has been decreasing. Between 2009 and 2013, the FRC found out that the number of audit firms has dwindled by 11.2%.
Specialism of sectors
Obviously, it is not an option to do nothing especially for those firms wishing to have their businesses grow or even have their position retained. The operations and relationships of these companies will require to be reviewed. Additionally, they will also play a big part in influencing the audit perceptions and the value it impacts on corporations.
The first step is in becoming a sector specialist. Some of the companies have already made implementations on major changes internally. Sectors have also been identified where there is great focus and demand on the audit skill set. Berg Kaprow Lewis, a North London firm has already separated its assurance team from the support team of the company. In an explanation, David Landau who is the principle at the Firm said that they have restructured themselves internally and made a separation of their assurance team from the team of support.
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