The Institute of Chartered Accountants in Ireland has called for a further increase in the audit exemption threshold for statutory audits. Its president, Mr Terence O'Rourke, said the current threshold puts Irish small and medium-sized companies at a disadvantage against their European, UK and Northern Ireland competitors.
"The audit exemption threshold in the Republic of Ireland is €1.5 million as against an EU average of around €7 million. In the UK the figure is £5.6 million (€8 million)," he said yesterday.
Mr O'Rourke said it was increasingly worrying that European and domestic auditing rules were being set with larger and public interest companies in mind. The ICAI agreed that these stricter and more rigorous rules and standards, like international auditing standards, were an appropriate response to the need of the capital markets for renewed confidence in financial reporting, he said.
"Our concern is that these new standards may be applied in Ireland to companies for whom they were neither designed nor are appropriate, the reason being of course that our statutory audit threshold is so much lower here than in the rest of Europe."
Mr O'Rourke said that some politicians and regulators would query the need for another increase in the audit exemption threshold so soon after the changes in the last Companies Act but stressed that the logic in favour of a further increase, possibly to bring us into line with the rest of Europe, was compelling. "This is a debate we must have."
Mr O'Rourke said the profession also had some thinking to do. "I am wholly convinced that audit is a useful and worthwhile experience for companies, even small companies. We need to consider how companies with turnover or balance sheet figures that in the future will not require a full statutory audit can benefit from the rigours an audit imposes, an audit exempt from the statutory whistleblowing and procedural requirements appropriate to larger public interest companies," he said.
The ICAI is Ireland's largest and oldest professional body of accountants and has 14,000 members.
