Companies which meet specific criteria, may, under the terms of Chapter 15 Part 6 Companies Act 2014, avail of an exemption from the requirement to have the financial statements which are appended to its annual return audited. A company must qualify as a small company (or company). 

This means companies are not required to have their financial statements examined and reported on by a statutory auditor.

Types of exemptions available in relation to financial statements:

1. i. Small Company Audit Exemption
2. ii. Dormant Company Audit Exemption 
3. iii. Size/abridgement Exemption
4. iv. Exemption from filing financial statements.

We have looked at the above in detail in previous blogs and want to highlight the exemption for Small Group Companies this time: 

Audit Exemption can apply to any group company if the group as a whole qualifies as a Small Group.

The Companies Act 2014 introduced the audit exemption for group companies. Section 358(3) states that audit exemption is not available to a company that at any time during the financial year was a group company unless the group qualifies under section 359 as a small group in relation to that financial year.

The following is required to meet the small group qualification:

1. The entire group and all its subsidiary undertakings must, taken as a whole, satisfy two of the following 3 conditions in order to claim a Group Company Audit Exemption:

Small Group Requirements:

Turnover is not more than 

€12 million net (or €14.4 million gross)

Gross assets are not more than

€6 million net (or €7.2 million gross)

Average number of employees are not more than

1. employees

The above conditions must be met in the financial year and the conditions must also be met in the preceding financial year unless it is the holding company’s first financial year

1. The company’s annual return, to which Financial Statements are attached, must be filed correctly and on time for the year in question and the previous year

1. As well as the above, one or more members of the group should not be an ineligible entity. Audit exemption not available where a holding company or subsidiary undertaking falls within a certain category (s.362 CA 2014) Examples of ineligible entities are entities that have transferable securities admitted to trading on a regulated market of any EU Member state, a company carrying out a business which needs to be authorised by central bank (investment banking activity), insurance undertakings and credit institutions.