Ireland's largest accountancy body has called on the Government to raise the sales threshold at which small companies have to produce a formal annual audit.
The Institute of Chartered Accountants in Ireland (ICAI) says increasing the threshold - which currently stands at €1.5 million - to the European maximum of €7.3 million would only restore parity with the UK.
The current threshold was established by the Companies (Auditing and Accounting) Act 2003. Previously, all companies with turnover of more than €317,000 required an annual audit.
However, shortly after the new threshold was introduced, the UK raised the threshold for companies in that jurisdiction to £5.6 million (€8.11 million).
"At present, on this island, we have a situation where small companies in Northern Ireland with a turnover of less than £5.6 million, many of which carry on business in the Republic, are not subject to the mandatory regime of having a statutory audit," said ICAI president John Greely.
"On the other hand, a company in the Republic can only avail of audit exemption if it has turnover of less than €1.5 million.
"The bottom line is that a company based in Dundalk faces a different and more costly audit regime than its counterpart north of the Border," said Mr Greely. "This is a competitiveness issue for our small and medium-sized enterprise [ SME] sector."
Marie Daly, head of legal and regulatory affairs at the Irish Business and Employers' Federation (Ibec), said: "The current small business audit exemption threshold is too low and means small companies have bureaucratic requirements designed for bigger companies imposed on them. This means small businesses are paying unnecessarily costly audit fees."
The ICAI says the situation for small companies has been exacerbated by the introduction of new accounting standards, which have imposed further costs. Ibec has called on the Company Law Review Group to consider raising the threshold.
Fine Gael enterprise, trade and employment spokesman Phil Hogan said the ICAI proposal was a "common sense suggestion".
