 The demand for the audit in small companies in the UKJill Collis, Robin Jarvis and Len Skerratt Accounting and Business Research, 2004, vol. 34, issue 2, 87-100 Abstract: A recent development of the big GAAP/little GAAP debate in the UK was the proposal to raise the audit exemption thresholds for small companies to EC levels. This paper is based on a survey of the directors of 385 companies conforming to the EC definition of ‘small’. The study investigates whether the three size criteria in company legislation (turnover, balance sheet total and number of employees) are appropriate and sufficient proxies for the demand for the audit by developing and testing a number of theoretical models. The results found that 63% of companies would choose to have their accounts audited if they were exempt, which suggests that the majority of those affected by the proposed increase consider the benefits outweigh the costs. It was found that turnover alone could represent size, but that size was less important than the directors' perceptions of the value of the audit in terms of improving the quality of information and providing a check on internal records. Agency relationships with owners and lenders were also found to be significant influences on the demand for the audit in companies of the size studied. Date: 2004 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:acctbr:v:34:y:2004:i:2:p:87-100 Ordering information: This journal article can be ordered from DOI: 10.1080/00014788.2004.9729955 Access Statistics for this article Accounting and Business Research is currently edited by Vivien Beattie More articles in Accounting and Business Research from Taylor & Francis Journals |
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