From 1 October 2012, subsidiary companies will no longer need to
have their annual accounts audited provided that, among other
things, their parent company agrees to guarantee all liabilities of
the subsidiary that are outstanding at the end of that financial
year. In addition, companies that qualify as "small" for
the purposes of preparing and filing accounts will automatically
qualify for exemption from audit. And dormant subsidiaries will not
even have to prepare and file accounts if, again, their parent
company agrees to guarantee all their outstanding liabilities and
certain other conditions are met. It will also be easier for
companies to switch between UK GAAP and IFRS when preparing their
The relaxations will be introduced through amendments to the
Companies Act 2006 that will take effect on 1 October 2012 and
apply to financial years ending on or after that date. They are
part of the Government's stated commitment to reduce the
regulatory burden on UK businesses, and will be achieved partly by
taking advantage of certain options afforded to Member States under
the Fourth Company Law Directive (78/660/EEC) that the Government
has not previously taken up.
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It is true that accountants are well ahead of most other professions when it comes to risk management and certainly, the "big four" have had in place risk management processes and dedicated resources far earlier than solicitors.
On 6 September 2012 the Government published its response to the Department for Business Innovation and Skills’ consultation paper "Audit exemptions and change of accounting framework" which detailed the Government’s decision to reform the rules on accounts and audit for companies and LLPs.
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