The increase in audit exemption threshold will come as a welcome relief to many small and medium-sized businesses. On the 7th of August 2012 Statutory Instrument 308 of 2012 increased the current audit exemption thresholds.
Under the terms of section 32 of the Companies (Amendment)(No.2) Act 1999 as amended by section 53 of the Companies (Auditing and Accounting Act 2003) companies that meet specific criteria are allowed to avail of an exemption from the requirement to have their accounts audited.
Now under Section 32 of Companies (Amendment) (No. 2) Act, 1999 a private limited company may avail of an exemption from a requirement to have financial statements audited if it meets the following criteria in both the current financial year and the preceding financial year.
- Turnover is less than €8.8m. (previously €7.3m)
- Balance sheet total (total of gross assets) is less than €4.4m. (previously €3.65m)
- Average employee level is a maximum of 50 people.
- Annual return is filed on time.
- Must be a private limited company.
- Cannot be part of a group of companies.
- Cannot be a bank or insurance company.
- Cannot be a company listed in the second schedule of the Companies (Amendment) Act (No.2) 1999
It is estimated that a minimum of 1,000-2,500 SMEs will benefit from the move every year.
The main advantage for a company not having an audit is that the time required by a director dealing with the audit process can be applied to other areas of the business.
It is worthwhile noting that while audit exemption has its advantages often lenders to – or investors in – the business may require audited accounts as part of their terms and conditions. Also, assurance can be derived from knowing that a professional auditor has reviewed the business, the company’s systems and internal controls.
A company is still required to prepare financial statements, which give a true and fair view, to be laid before the AGM and submitted to the Registrar of Companies.
To find out more about how the increase in the Audit Exemption threshold affects you and your business then please give us a call on 061 414 455 and ask to speak with one of our Audit team.