Accountancy cost warning for small businesses

A small business pressure group is warning that SMEs are to be hit with significant new accountancy costs due to new auditing rules about to come into force.

Under new guidelines issued by the Auditing Practice Board accountants will be prevented from providing tax and general business advice to their audit clients. This will force businesses to employ two different accounting firms to satisfy their audit and business advisory needs.

The Forum of Private Business (FPB) Chief Executive Nick Goulding said the new rules will potentially cost small businesses thousands of pounds in new accountancy fees.

"One in three FPB members revealed that their accountants are one of the first people to whom they turn when seeking business advice,' he said. "The new rules will seriously undermine such, often long-established, relationships and force small businesses to employ separate firms for advice and audits.

"In practise many firms may just cease to go to accountants for advice. This will be damaging to both accountants and businesses. If they do approach a new partner time and money will be taken up explaining the business to an unfamiliar accountant."

Mr Goulding continued: "Once again small businesses will have to suffer the consequences of regulators failing to 'think small first' and take into account the contribution made by the sector to the UK economy, (see notes to editors). These guidelines are all well and good when applied to FTSE 100 and other large organisations, yet for small businesses they will just add more costs and stifle a source of business advice favoured by many in the sector."

The Association of Chartered Certified Accountants President John Brace has slammed the new guidelines.

"The issues of big firm auditor independence which dominated scandals such as Enron do not have the same relevance for small businesses - which are the backbone of the UK economy ,' he said. "The public interest in small businesses is to ensure that they are properly run. These proposals will just make it harder for small businesses to get professional advice at a reasonable cost. Their voice should be heard."