Many people in these pages have discussed the proposal by Stephen Byers to hike the audit threshold to £1m per annum turnover - a figure less than many people wanted, but better than no hike at all. But not many seem to be talking about the opportunities this offers, once companies are relieved of the need for this ancient ritual. This is far more important than, for instance, bickering over cost savings. Many companies will want to do something. There may be some that won't want to bother with anything, and others that will stick to the old way. But those that think hard are likely to want to produce a new kind of report for the benefit of interested stakeholders, including shareholders, management, workforces, creditors, bankers, the public and so on. Byers' proposal opens up room for some fresh thinking, untrammelled by tradition. Companies might want to go for something along the lines of a 'performance report'. This would be up to date and cover such things as accounts in simple form; assurances about internal controls; comments on whether planned performance had or had not been achieved; what the company's future plans and expectations were; and the social aspects of the company's performance like equal opportunities, environmental behaviour and safety. Such a document would be the responsibility of the directors to produce, but they might find it useful to submit it to light-handed scrutiny by independent outsiders, who might or might not be auditors as we now know them. Now people might say this is audit creeping by the back door, but it wouldn't be. To start with it would be voluntary. Second, it would look forward as well as backward. And third, it would be flexible and tailored to the needs and circumstances of the particular company and to changes over time. The idea would be to restore the real value of company reporting. Individual accountancy firms or bodies on their behalf, such as the UK 200 Group or the professional institutes, should welcome this opportunity and look to grasp it. So should companies that are going to be freed. The clean sheet that is offered gives room for solid and worthwhile ideas for modernisation, anticipating the pressures towards relevance, openness and clarity that the next century is going to bring. And it might catch on with larger companies too; they are going to have to do it sooner or later, anyway. - Sir Peter Kemp is chief executive of the Foundation for Accountancy and Financial Management.
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