Audit exemption
Conditions to be satisfied
The conditions to be satisfied (revised) before a company will be able to claim the exemption from the requirement to have its accounts audited are set out in section 32(3) of the 1999 Act (as amended by the Companies (Auditing and Accounting) Act 2003, the Investment Funds Companies and Miscellaneous Provisions Act 2006 and the Companies (Amendment)(No.2) Act 1999 (Section 32) Order 2012) and are as follows:
In respect of the financial year concerned:
- The company must be a company to which the Companies (Amendment) Act 1986 applies i.e. a Private Limited Company;
- The amount of turnover of the company must not exceed €8.8 million;
- The balance sheet total of the company is less than €4.4 million at the end of its financial year;
- The average number of employees must not exceed 50;
- The company must not be a parent company or a subsidiary company;
- The company must not come within one of 19 classes of companies listed in the Second Schedule to the 1999 Act;
- The company’s annual return, to which the accounts for the financial year in question are attached, must be furnished to the CRO in compliance with section 127 Companies Act 1963. This means that the return must be delivered to the CRO not later than 28 days after the company’s Annual Return Date, or where the return has been made up to an earlier date, within 28 days of that earlier date. i.e.it must not be late in the current year;
- Furthermore, where an annual return to which accounts for the immediately preceding financial year was delivered to the CRO, that return must also have been filed on time. i.e. it must not be late in the previous year;
- the year in question must be the current year – section 32 provides that the directors must be of the opinion that the company “will satisfy” the conditions – use of the future tense precludes the decision being taken in respect of a year that has already ended.
- A company which satisfies the revised exemption threshold levels in a current financial year, the year in respect of which the audit exemption is being claimed, must also have satisfied those revised threshold levels in the preceding financial year.
Unless the financial year in respect of which the audit exemption is being claimed is the first financial year of the company, the company must also have satisfied all the conditions set out in section 32(3) in respect of the preceding financial year. For instance, if the most recent company’s annual return with accounts was delivered late to the CRO or if the current years return is being delivered late, the company is not entitled to the audit exemption, notwithstanding that it may satisfy all the remaining conditions.
Contact McDonald Walsh & Co to talk to a member of our audit team on 093-24693