But ACCA (the Association of Chartered Certified Accountants) warns that cost and administrative burdens will still go up, leading to higher fees for clients.
In the face of strong criticism from ACCA and leading small business organisations, the Auditing Practices Board (APB) has backed down on its original audit independence plans - which were inspired by the Enron scandal. But, according to ACCA, the remaining proposals will still prove a needless burden on small and medium sized companies.
John Brace, ACCA President, said: "We are pleased that accounting firms will now be able to go on acting as a one-stop source of business advice to their small business clients. This is a victory for common sense. But the new standards will still limit the ability of auditors to act for clients: in particular, they will no longer be able to represent their clients in front of tax tribunals."
The new rules on auditor independence will apply regardless of whether there is a public interest dimension. Only the very smallest companies will receive a temporary exemption, and this is of limited value. Most companies which qualify for exemption - those below £5.6m turnover - have already opted not to have an audit. And even where there is an audit, the APB wants any exemption from its independence rules to be disclosed in the audit report. ACCA believes this will devalue the audit and make it harder for small companies to raise finance.
John Brace added: "The new standards go well beyond the international consensus which is developing in this area. The problem is that they treat small business as an afterthought - designing rules for Stock Exchange companies and imposing them on the High Street. The APB needs to think small first."
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
Susie Hughes © Shout99.com 2004