The increase in the audit exemption threshold came as a welcome relief to many small and medium-sized businesses when it was introduced during 2012.
In recent years, audits have become a more complex and the audit process itself has become far more rigorous. Auditing standards apply equally to small owner-managed companies right up to the largest of organisations who have vast resources. The result of this equal status means that owners of small companies can find the annual audit to be very time-consuming and expensive.
The difference in the cost of having or not having an annual audit can be significant and in the current economic environment keeping costs down is essential for any business. So, is your company eligible to claim exemption?
Companies who are audit exempt
Section 32 of Companies (Amendment) (No. 2) Act, 1999 sets out the requirements for a private limited company to avail of an exemption of an audit.
The directors must be satisfied the company meets the following criteria in respect of thecurrent year as well as the previous year.
- Turnover must not exceed €8.8m (this was previously €7.3m)
- Balance sheet total (total of gross assets) must not exceed €4.4m. (Previously €3.65m)
- Average no. of employees up to 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, management, investment or insurance company or a company limited by guarantee not having a share capital
- Cannot be a company listed in the second schedule of the Companies (Amendment) Act (No.2) 1999
CRO filing of accounts
Remember, availing of the audit exemption does not exempt a company from the requirement to file their accounts with the Companies Registration Office. A company must still file accounts as required under the Companies (Amendment) Act 1986.
Are there benefits to retaining an audit?
Claiming audit exemption will probably save you time, but there are also some benefits in retaining an audit.
Consider these advantages of an audit before you opt for an exemption:
- Enhanced credibility with the Revenue
- A rigorous audit can identify key areas of the business that need improvement
- An audit gives assurance that the company and its directors have complied with their obligations under company law
- Whether or not a company has had its accounts audited may be used by lenders in assessing loan applications for both the company and the directors.
Consequences of an Annual Return being late
Where an annual return is filed late, in the year in which an exemption is being claimed or in the preceding financial year, the company loses its entitlement to claim audit exemption not only for the year in question but for the following year also. It may only claim back the audit exemption in the third year if it files correctly and on time in the second year.
It is important to take all of the above matters into consideration and the requirements of the different users of the company’s accounts before deciding what is best for your company.
If you wish to discuss any of the above in greater detail please do not hesitate to contact us on 01-2804731 or use the contact form on the right.
Every care has been taken to ensure that the information as detailed above is correct. You must not rely on the information on this website as an alternative to advice from your Accountant, Tax Advisor or other professional services provider.