FINANCE Risks of audit exemption Wasting time in the office


Office workers paid to browse the web


An average British office worker wastes 12.5 hours a week according to a recent study. Nearly 2,000 workers aged over


21 were asked about their working week. They revealed they worked on average 37.5 hours a week. They were asked to consider how


they spent the 7.5 hours a day they were in the office and the average answer was that they spent about five hours doing the job they were contracted to do and 2.5 hours either on the internet, social media or chatting. The research was carried out on


behalf of VoucherCodesPro. Spokesman George Charles said:


“Office workers are being paid to do a job that should have their full attention for the hours a contract demands, and if they won’t, someone else will probably happily take the job.”


Chartered accountant Newby Castleman is warning small and medium-sized businesses to be mindful of the changes and the complexities they are likely to face following the Government’s announcement to increase the audit threshold to its maximum level. The audit exemption threshold has been raised to


match a small company size threshold, meaning for financial years beginning on or after 1 January 2016, companies will no longer be required to have an audit if, at the balance sheet date, two out of the following three criteria can be met for two consecutive years - turnover up to £10.2m, balance sheet total (fixed assets plus current assets) up to £5.1m and up to 50 employees.


‘Audits are extremely important as they promote thorough financial practice and protect against mismanagement and fraud’


To take advantage of the increased thresholds, a


company must not be excluded from audit exemption due to the nature of their business. It is estimated that about 7,400 companies will be


removed from the mandatory audit requirement. However, Government has estimated that some


4,400 companies will choose to continue to have an external audit. Concerns have been expressed, however, that the


increase in the thresholds could reduce the credibility of financial statements.


Andy Cowperthwaite


Andy Cowperthwaite, Director of Audit at


Leicester-based Newby Castleman, said: “Whether you’re a limited company, legal entity or charity, audits are extremely important as they promote thorough financial practice and protect against mismanagement and fraud. “It isn’t just good practice – the audit process can


have a considerable positive impact on the perceptions of investors, customers and potential finance sources and can greatly improve future business prospects. “Raising the audit exemption


threshold could pose a risk to the quality of financial information and economic credibility for many businesses, which is why we are urging Leicestershire businesses to be aware of the changes and to discuss any queries they may have.”


Recovering losses through civil courts


Crime can drive a business out of profit and lead to its demise, according to Nermina Webster, Managing Director of Business Loss Prevention. “A business is not a business if it


does not make a profit – it may survive for a short while until all investment capital has been exhausted but then it becomes just one of the many businesses that fail each year,” she said.


‘A surprisingly small number of low-level crimes actually get to court’


Retail businesses, she said, tend


to be victim of fairly obvious crimes such as shoplifting, theft of goods by staff, thefts from the till or refund fraud. “You can install CCTV to


constantly monitor the shop environment and the cash desk, you can security tag high-value items or employ full-time security guards, but all of those measures


44 business network May 2016


have a cost implication and affect potential profit margins,” said Nermina. A surprisingly small number of


low-level crimes actually get to court. When they do, the criminal courts deal only with the criminal element of the case and don’t have the power to compensate a business for the consequential losses of the crime, such as the cost of investigation, apprehension of the culprit and disruption to the business. For that reason, more and more


firms are turning to civil law, and particularly civil recovery, to recoup their losses and offset the costs of steps taken to protect their assets. Nermina said: “A smart business


uses civil recovery to, legally, offset the costs of the protection, such as CCTV, the security tags and the security staff, over time. “This protects their profit and


keeps shareholders happy and can be secured on a no win, no fee basis.”


Business Loss Prevention works


in partnership with the Chamber’s Shopwatch scheme.


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