Audit and Accounting

A recently published study shows that the UK's smaller companies want the option to be able to use their auditors for services other than audit. The study by economic analysts London Economics reveals that 91 per cent of SMEs surveyed want to be able to use their audit firms for more than just audit.

This finding is in direct contrast to the views being taken by the US Securities and Exchange Commission who believe that audit firms should be severely restricted in supplying audit clients with other services.

As Neil Lerner of KPMG explained, this issue is vital to smaller companies: " If accountancy firms are restricted from providing other services to their large multi-national audit clients, then they will not find it economical to provide these services to smaller clients."

The study, which surveyed 200 UK SMEs with a turnover greater than £1m, showed that 52 per cent of smaller companies considered their accountant to be their main business adviser ahead of bank managers at 18 per cent. Sixty-four per cent of the sample said that their costs would increase if they were restricted to using their audit firm for audit only.

There was a very high level of disagreement with the line being taken by the SEC. A massive 94 per cent of respondents disagreed with the statement that accountancy firms should only be permitted to carry out audit and not offer other services. Clearly SMEs in the UK did not agree with the SEC's fears on the compromising of auditor independence as 76 per cent disagreed with this assertion.

"Small companies rely on their accountancy firms for more than just audit," said Neil Lerner. "Busy proprietors and entrepreneurs want to be able to access a range of services from a trusted adviser; they clearly see no conflict between this and the independent role of the auditor. There would be a significant increase in costs for smaller companies if they were unable to use one supplier for a range of services.

"We shall be drawing the attention of the SEC to these findings as it is hard to believe that the situation would be very different in the US," added Neil Lerner.

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