Tài liệu DIRECTORS’ VIEWS ON ACCOUNTING AND AUDITING REQUIREMENTS FOR SMES pptx

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DIRECTORS’ VIEWS ON

ACCOUNTING AND AUDITING

REQUIREMENTS FOR SMES

Dr Jill Collis

April 2008 (minor updates at November 2008)

In association with

Directors’ Views on Accounting and Auditing Requirements for SMEs

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Acknowledgements

I am greatly indebted to all those who participated in this study. Some gave up their

valuable time to be interviewed as part of the testing of the questionnaire and others

kindly completed and returned the questionnaire. Without your help, this updating of

our knowledge of the financial reporting needs and practices of SMEs in a changing

regulatory environment would not be possible. Thank you very much for contributing

to this survey.

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Directors’ Views on Accounting and Auditing Requirements for SMEs

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Contents

Page

List of tables 4

Executive summary 6

1. Background to the study 13

Introduction 13

Purpose 13

Structure of the report 14

2. Accounting and auditing requirements for SMEs 15

Introduction 15

Statutory accounts 16

Financial Reporting Standard for Smaller Entities 17

International Financial Reporting Standard for SMEs 17

Statutory audit 18

Proposed EU simplifications 19

3. Methodology 21

Introduction 21

Sample selection 21

Data collection 22

Data analysis 23

Generalisability 23

Comparison with the 2003 study 24

4. The sample companies 26

Introduction 26

Ownership, size and age 26

Key financial indicators 29

External sources of finance 30

Services from external accountant(s) 31

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Directors’ Views on Accounting and Auditing Requirements for SMEs

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Page

5. Accounting 33

Introduction 33

Filing decision 33

Users of the published accounts 34

Filing exemption for micro entities 36

Financial Reporting Standard for Smaller Entities 37

International Financial Reporting Standard for SMEs 37

Transition period for SMEs 38

6. Auditing 39

Introduction 39

Perceptions of the audit 39

Audit decision 39

Audit costs 41

Auditor independence 42

Predicted audit decision 43

Audit exemption for medium companies 43

Alternative form of assurance 44

7. Longitudinal analysis 45

Introduction 45

Companies in the analysis 45

Accounting 49

Auditing 51

8. Discussion and conclusions 53

Evaluation of the research design 53

Main accounting results 54

Main auditing results 55

Contribution of the study 57

References 58

Appendix 1 – UK accounts exemption thresholds from 2008 61

Appendix 2 – The questionnaire 64

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Directors’ Views on Accounting and Auditing Requirements for SMEs

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List of tables

Page

2.1 UK thresholds for small and medium entities from April 2008 16

2.2 UK thresholds for abbreviated accounts 1981 - 2008 17

2.3 UK thresholds for total audit exemption 1994 - 2008 18

3.1 Distribution by industry 22

3.2 Descriptive statistics for size variables 24

3.3 Comparison of the size selection criteria for the two studies 25

4.1 Turnover in 2006 27

4.2 Balance sheet total in 2006 27

4.3 Average employees in 2006 28

4.4 Age in 2006 28

4.5 Spearman’s correlation matrix for ownership, size and age 29

4.6 Key financial indicators in 2006 30

4.7 Spearman’s correlation matrix for age, size and financial

indicators

30

4.8 External sources of finance in 2006 31

4.9 Services from external accountant(s) in 2006 32

5.1 Filing decision in 2006 33

5.2 Factors affecting the filing decision in 2006 34

5.3 Recipients of the 2006 accounts 34

5.4 Users of the published accounts 35

5.5 Time lag from year-end to receipt of accounts in 2006 36

5.6 Filing exemption for micro entities 36

5.7 Use of the FRSSE by small companies for the 2006 accounts 37

5.8 Advantageous to use the IFRS for SMEs (Private Entities) 38

5.9 Increase the transition period to five years 38

6.1 Perceptions of the audit 39

6.2 Audit decision by small companies in 2006 40

6.3 Factors affecting the audit decision in 2006 40

6.4 Auditing and filing decisions by small companies in 2006 41

6.5 Audit fees in 2006 41

6.6 Effect on total accountancy fees on discontinuing the audit 42

6.7 Auditor independence in 2006 43

6.8 Predicted audit decision 43

6.9 Predicted audit decision by owner-managed medium companies 44

6.10 Interest in an alternative form of assurance 45

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Directors’ Views on Accounting and Auditing Requirements for SMEs

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Page

7.1 Distribution by industry 46

7.2 Turnover in 2002 and 2006 46

7.3 Balance sheet total in 2002 and 2006 47

7.4 Average employees in 2002 and 2006 47

7.5 Age in 2006 47

7.6 Key financial indicators in 2006 48

7.7 External sources of finance in 2006 48

7.8 Services from external accountant(s) in 2006 49

7.9 Filing decision in 2002 and 2006 49

7.10 Factors affecting the filing decision in 2006 50

7.11 Recipients of the 2006 accounts 50

7.12 Use of the FRSSE in 2002 and 2006 51

7.13 Audit decision in 2002 and 2006 51

7.14 Factors affecting the audit decision in 2006 52

7.15 Predicted audit decision in 2003 and 2007 52

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