Did You Know...
………………that the rules relating to audit exemption and accounting framework for companies and LLPs have changed recently? On 1 October 2012, new regulations came into force under which:
- the audit exemption criteria were changed so that now, provided that a company (or group) qualifies as small for accounting purposes, it will also be exempt from audit;
- subsidiary companies (of whatever size) will not be required to have their annual accounts audited, provided they satisfy a number of conditions, including that: the subsidiary's shareholders unanimously consent; the subsidiary is included in the audited consolidated accounts of its parent undertaking; and the subsidiary's parent undertaking provides a statutory guarantee of that subsidiary's liabilities as at the end of the relevant financial year;
- dormant subsidiaries may be exempt from the requirement to prepare and file annual accounts, provided they have been dormant throughout the financial year in question and meet the same conditions mentioned above in relation to subsidiary audit exemption; and
- companies will find it easier to change between accounting under IFRS and UK GAAP.
The regulations apply to financial years ending on or after 1 October 2012 and form part of the Government's 'Plan for Growth' - a strategy to reduce the regulatory burden on UK businesses. How far this will be achieved remains to be seen, particularly in relation to the exemption from audit of non-dormant subsidiaries. The cost of the audit work required to be able to consolidate a subsidiary into the audited accounts of its parent, coupled with the mandatory parent company guarantee, may discourage businesses from taking advantage of this new exemption.
………………that the Office of Fair Trading has issued revised guidance on how it will set financial penalties in future competition law infringement cases? The most significant change is the increase in the maximum starting point for penalty calculations from 10 to 30 per cent of "relevant turnover". Somewhat counter-intuitively, the actual level of penalties imposed is unlikely to increase considerably as a result of this change. For more information, see the article from our competition team here.