02/07/2015

02/07/2015

All You Need To Know About The Audit Exemption

all you need to know The Small Company Audit Exemption is well used by companies to keep their annual compliance costs down. If the Company meets the required thresholds and is current with its filing requirements with the Companies Registration Office, the Directors can avail of the exemption to have the company’s annual accounts audited. The Company’s external accountant would normally still prepare the company’s annual accounts to ensure they are compliant with tax and company law requirements, however, as an audit and all the associated work required to plan and carry out an audit is avoided, the compliance costs can be reduced.

Audit exemption now also for Groups of companies

Historically if a company was in a group, it was previously not allowed to avail of the small company audit exemption. In practice this has meant that small groups that should have been exempt still had to have annual audited accounts and to a degree this defeated the purpose of the original legislation that introduced the audit exemption. Thankfully this is being resolved with the new Companies Act 2014 which is extending the audit exemption to groups of companies. The Companies Act 2014 was signed into law in December 2014 and is expected to come into effect from 1 June 2015.

Requirements for groups of companies

Group will be allowed to avail of the small company audit exemption provided the directors are of the opinion that the parent company and all of the subsidiary companies will satisfy two of the three thresholds in the current and preceding financial year. The requirement that all annual returns are up to date still remains. The thresholds are: (i)balance sheet total does not exceed €4.4m; (ii)turnover does not exceed €8.8m; (iii)employees do not exceed 50

Change for remaining exempt companies

Another welcomed change is that for remaining exempt sized companies, the requirements are changed slightly, they will now only have to satisfy the requirements in the current financial year and they will only need to satisfy two of the three conditions. They will no longer have to consider the preceding financial year.

Thresholds for Medium Sized Companies

For the purpose of public disclosure of financial information, the thresholds for qualifying as a medium sized company have been increased to the levels set out below: (i)turnover does not exceed €20m; (ii)balance sheet does not exceed €10m; (iii)employees do not exceed 250 A company must satisfy at least two of the three conditions in both the current and preceding financial year in order to prepare medium accounts.

Changing the Financial Year End

For the first time, it will be necessary, when extending the financial year end of a company, to notify that extension to the Companies Registration Office. Either the current or the preceding year end can be extended, but the preceding year end cannot be extended where the deadline for submission of those financial statements has passed.

What questions do you have?

We are happy to help. Please post your comment below or call Paul Leonard, Partner at Cooney Carey, on 01 677 9000. Alternatively, send him an email: pleonard@cooneycarey.ie To keep in touch, connect with us on LinkedIn.

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