THE Government's plans to raise the audit exemption threshold received a cool response from the region's business advisors.

Chartered accountants warn that the move, included in Chancellor Gordon Brown's Pre-Budget Report, could lead to an increase in economic crime.

Keith Proudfoot, the Institute of Chartered Accountants' regional manager, said: "We are dismayed that the Government is pressing ahead with its proposals to raise the threshold without a realistic assessment of all the potential costs and consequences for business.

"While we support the general aim of reducing regulatory costs for smaller businesses, we remain concerned about the significant impact of this measure on the level of economic crime, standards of business behaviour and the quality of information on the public record."

The Government said its proposals would mean a further 69,000 companies would not be audited, saving businesses at least £94m a year.

Catherine Young, partner at UNW chartered accountants, in Newcastle, said: "It is clear that not having to submit audited accounts will be time and cost-effective for small companies. Many complain of the bureaucracy constraining them.

"However, the large rise in threshold means that significantly-sized companies, with a turnover of £4m to £5m and over, are now audit exempt. Larger companies can run the risk of diluting economic confidence from banks and insurers, on which many rely, and increasing the risk of company fraud, without properly audited accounts by external auditors."