The Minister for Jobs, Enterprise and Innovation Richard Burton recently announced that the audit exemption thresholds will be increased to the maximum level permitted under EU Law. The increase in thresholds is part of the government’s target of a reduction of 25% in the red tape imposed by the Government on business.
The increase in the audit exemption thresholds will mean that Private Companies with:
- Turnover of less than €8.8 million
- Balance Sheet total of less than €4.4 million
- Average number of employees of 50
will be exempt from the requirement to appoint a statutory auditor and have the financial statements audited each year. The increase represents a 20.5% increase from the existing thresholds.
The increase will be done by Ministerial Order. I contacted the Department last week and they could not give a timeframe for when the Order will be signed though it is hoped to be signed before then end of the year.
Other Audit Exemption Issues
The Company Law Review Group (“CLRG”) has recently examined the following 2 issues and made the following recommendations:-
- Consider the extension of the audit exemption regime to small companies limited by guarantee
Public companies limited by guarantee (CLGs) must have their accounts audited and cannot avail of the audit exemption for private companies which satisfy certain conditions. The Review Group recommended that audit exemptions should extend to CLGs, subject to conditions.
- Further consider the extension of the audit exemption regime to dormant subsidiaries.
The Review Group recommended that companies classified as dormant that are members of a group should be entitled to avail of the audit exemption and that the term “dormant company” be defined as a company that had no significant accounting transactions which were required to be entered in the company’s records during the period (as defined in UK legislation) and whose assets and liabilities consist solely of investment in or amounts owed to and due from other companies within the group.
The CLRG are currently looking at the imposition of late-filing penalties, and, in particular, the loss of exemption from the need to conduct a statutory audit in their current work programme and are awaiting their recommendations.
Head of Company Secretarial,
Unit 3, South Court,
Wexford Road Business Park,