The regulator refuted claims the April redundancy programme – which saw 470 staff leave – has left the body struggling to cope with director investigations.
Statistics have revealed corporate insolvencies rose by 6.5 per cent in England and Wales for the quarter compared to the same period last year.
But the IS claimed the cuts were made to the Official Receiver side of the business which deals mainly with personal insolvencies.
It insisted the jobs cut from the investigations team were mainly freelance and the majority have since been filled by in-house staff.
In a statement issued to Insolvency Today, the IS said: "There were very few posts (less than five per cent) cut from the enforcement and investigations team - that is tasked with investigating alleged misconduct by company directors and is funded by BIS - that have not been subsequently filled."
It comes after Robert Burns, head of investigations at the IS, was quoted in a national newspaper saying that staff cuts had taken their toll.
He reportedly said there had been a number of cases in which the body had run out of resources and time.
However, today's statement from the IS added: "Investigations remain a priority, the powers and determination of the IS remain robust, and the consequences for companies and individuals who are found to have acted improperly or against the public interest continue to be serious."
But Julie Palmer, partner at Begbies Traynor, believes the IS’ funding cuts have come at the "worst possible time".
Palmer, who is also an R3 council member, fears director conduct is not being effectively regulated, just when the IS’ services are needed most.
She said: "The natural consequence of these recent difficult times is directors are going to take more risks to stay afloat just when the IS is being strangled – directors should be held to account.
"If anything we feel the ability of the IS should be helped not hindered. We do sympathise with the IS and the difficult job they do but we feel more of a robust would go some way to help.
"We believe the IS is not meeting these challenges at the moment – at the worst possible time."
By Andy Pearce