Small businesses require an ease in the audit requirement, experts and analysts commented on the recent regulatory measures. The entities that are insignificant should be allowed out of the audit net when a threshold for exemption is set
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The National Financial Reporting Authority (NFRA) published an analysis last week, showing that over 600,000 active companies that have filed annual financial statements for FY19 have net worth, gap between assets and liabilities—below ₹250 crore. A large section of them, then paid meagre sums to auditors for their audits to have some quality.
The relaxation was proposed by the regulator, citing examples of exemptions given in other markets such as the UK, US, Singapore and the EU, based on criteria such as turnover, balance sheet total and number of employees.
President of PHD Chamber of Commerce and Industry, Pradeep Multani said the overall regulatory framework should be proportional to the size of the entities. He recommended a different limit for audit exemption. According to him, businesses, whether big or small, have to develop their credentials before banks, investors, rating agencies, suppliers, and tax authorities. This can be done only through reliable financial statements that are audited and certified.
Keywords: SMEs, taxes and economy, business
Pic credits: pixabay
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