Red Tape Cut And Audit Threshold Raised

The number of businesses exempt from the requirement to hire external auditors to the maximum level permitted under EU law has been raised, a move that is expected to save Irish SMEs up to €5million per year.

The Minister for Jobs, Enterprise and Innovation Richard Bruton announced that he is increasing the figure and also announced that the Government at its last meeting approved his proposal to begin a process which will ensure that a reduction of 25% in the red tape imposed by Government on business can be achieved by the end of next year, resulting in savings of €500million to Irish businesses.

The increase in the audit exemption thresholds will mean that companies with a turnover of less than €8.8million and a balance sheet of less than €4.4million will be exempt from the statutory requirement to engage independent external auditors to examine their accounts, if they have 50 or fewer employees.

This represents a 20.5% increase from the current thresholds of €3.65 and €7.3million respectively. It is estimated that a minimum of 1000-2500 small and medium-sized businesses will benefit from the move every year.

"Government does not create jobs, people and businesses do, and the role of Government is to create the environment in which more businesses can establish, expand and create the jobs we so badly need.

"A crucial aspect of this is reducing costs faced by businesses, and I am determined that Government will act urgently to address the costs that are directly within its control," he said.

"The total cost of Government-imposed regulation on Irish business has been estimated at €2billion per year. The previous Government committed in March 2008 to reduce this by 25% by 2012.

"I was disappointed to learn when I came into Government a full three years later that very little progress had been made on achieving this important target: although my Department had made substantial progress, it was one of only two bodies across Government that had even measured the cost to business of their red tape.

"I am pleased to announce two important measures to reduce costs imposed by Government on business:

"Firstly, the thresholds for exempting businesses from the requirement to engage external auditors will be increased by over 20% to the maximum allowable under EU law: €8.8million in turnover and €4.4million in balance sheet. This will mean that a minimum of 1,000 extra businesses will not have to spend the money and time necessary to engage auditors, saving these SMEs a total of up to €5million per year.

"Secondly, Government has decided to take the next steps to ensure that we can achieve the targeted reduction of €500million by the end of next year.

"So far, only my Department and the CSO have even measured the cost of their red tape, and my Department is on course to achieve the 25% reduction by the end of 2011. The Government decision is that my Department will lead the process, and all other bodies involved in the process will devote the resources to measure the cost of their red tape by May 2012, so as to allow them to achieve the reductions by the end of that year.

"However, it is crucial that the process does not end there. If Ireland is truly to become the best small country in the world in which to do business, then Government must put continuously minimising and reducing red tape at the centre of our policymaking process.

"I am urgently examining ways of achieving the radical changes we need in this area so that we can get our people back to work," he concluded.

The increase in the audit exemption thresholds will take them from €7.3million for turnover and €3.65million for balance sheet to the maximum permitted under EU legislation, €8.8million and €4.4million respectively.

A company must also have 50 or fewer employees in order to qualify. This will be done by Ministerial Order.

It is estimated that a minimum of 1000-2500 companies will benefit from the move, although the numbers affected will depend on compliance with annual filing requirements, as companies automatically lose their audit exemption if they do not file on time.

(BMcC/GK)