The latest increase — starting January 2004 — in the audit threshold to £5.6 million annual turnover will exempt another 69,000 companies, saving them an estimated £94 million a year. The reduction in the regulatory burden will enable accountants to concentrate more on providing business services tailored to each client's needs and adding value to the client's business.

But there are drawbacks. In some cases customers, lenders and shareholders may not feel that they can rely on the quality of financial information provided by some companies without an audit, and it could become more difficult to detect fraud and other financial irregularities.