Availing of Audit Exemption


Maura Duffy - B. Comm. FCA Partner


The extension of audit exemption to small groups and companies limited by guarantee are to be welcomed. Up to now there was an unnecessary compliance burden placed on these companies.

In our opinion a statutory audit will now also have an enhanced value as companies can choose to have the greater level of assurance which an audit delivers rather than it being a compliance requirement.

It is a regrettable that the requirement to file on time with the companies office is still a condition to avail of audit exemption. The financial penalties for late filing should be a sufficient deterrent rather than the imposition of an audit.

The provisions of the Companies Act 2014 are effective from the 1st June, 2015. With limited exceptions, the accounting and audit related provisions commence for financial statements approved on or after the 1st June, 2015, regardless of the financial periods to which the financial statements relate.

The main provisions of audit exemption are as follows:

The following are the companies that can avail of audit exemption:

  • Small companies limited by shares (‘LTDs’)
  • A designated limited company (‘DACs’)
  • A company limited by guarantee (‘CLGs’)
  • Small groups
  • Dormant companies that have no significant accounting transactions or assets or liabilities
  • Private unlimited companies (‘ULCs')

The principal conditions for a standalone/ group companies to avail of audit exemption are that:

  • The company/group must qualify as small in respect of the financial year in question.
  • The company does not fall within other categories.
  • Notice has not been served on the company by members holding not less than one tenth of the voting rights in a company or from a member of a CLG objecting to availing of the audit exemption.
  • The company’s annual return is filed on time in respect of the financial year in question and the preceding financial year.

The qualifying conditions for small companies/groups are satisfied in relation to the financial year in which it fulfils two or more of the following criteria:

  • The amount of turnover for the company does not exceed €8.8m.
  • The gross balance sheet total of the company does not exceed €4.4m.
  • The average number of employees of the company does not exceed 50.

The company must also satisfy these conditions for two consecutive financial years.

Companies that cannot avail of the audit exemption are as follows:

  • Companies who are late filing their current or preceding annual return with the financial statements.
  • All companies who are late filing the first annual return for the company.
  • Where a notice is received before the end of the financial year by one or more members holding 10% of the voting rights of small companies or from a member of a company limited by guarantee objecting to the availing of the audit exemption.
  • Public Limited companies,
  • Certain unlimited companies,
  • Insurance undertakings, credit institutions etc.                     

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