Changes are afoot for smaller audit firms, if the proposed increase in the audit exemption threshold from $5 million to $10 million is implemented by regulators. The proposed change is part of a recent review of the Companies Act aimed at reducing the regulatory costs for smaller companies, said the Accounting and Corporate Regulatory Authority (ACRA). One option for the small and medium professional accounting practices (SMPs), facing the prospect of a significant shrink in revenue from statutory audit work, is M&A. SMU Professor of Accounting (Practice) Sum Yee Loong sees practical problems with mergers. ?Many owners and partners of these smaller auditing firms have, over the years, formed strong relationships with their clients. As such, they do not see much synergy in merging their practices. In addition, if smaller firms merge, then decisions will have to be made by consensus and having been used to making decisions themselves, they may find such decision-making process difficult to adapt to.?
The Business Times