Q. How does a limited company qualify for an audit exemption?
A. As required by law, all Irish companies must have their financial statements audited, except where they meet the criteria for, and actually claim the audit exemption.
Exemption from audit removes the need for qualifying companies to engage an independent, external auditor to carry out the statutory audit of a company as well as relieving company directors and auditors from certain reporting obligations.
The advantage of not having an audit is that the companies have more time to focus on other parts of the business rather than spending time with the auditors and also significantly reducing the costs of ongoing compliance.
In order for the company to qualify for an audit exemption it must be a private limited company and must also not be a parent company or a subsidiary company. The annual turnover of the company must not exceed €8.8 million and the balance sheet total of the company less than €4.4 million at the end of its financial year. The average number of employees must not exceed 50.
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. Also please note that that the return must not be late in the previous year either.
Public companies, including companies limited by guarantee, cannot avail of audit exemption. This list is not exhaustive and I would recommend that you seek professional advice from RDA Accountants limited if you have any queries as to if the conditions apply to your company
The decision to avail of an audit exemption should be recorded by the Directors in a Minute, or Resolution, noting that the Directors are of the opinion that the Company can satisfy the specific conditions set out in Section 32 of the Companies (Amendment) (No. 2) Act 1999 (Order 2012) for a particular year end.
Next the directors must notify the auditors in writing that they wish to avail of the audit exemption. The auditors must then serve notice on the company advising whether there are any circumstances which the auditor believes should be brought to the attention of members or creditors all within 21 days.
A claim for audit exemption does not arise when a new company is filing its first annual return (required to be made up to the six-month anniversary of the date of incorporation) as no accounts are required to be attached to the first annual return.
Audit exemption may be claimed however at the time of the company's first annual return with accounts or when subsequent annual returns are being filed. If you have any queries as to whether your company will qualify for the audit exemption please contact Kevin O'Donnell firstname.lastname@example.org