Any company who has had to go through an Audit will know that it is both extremely time consuming and costly.
Audits can only be undertaken by Registered Statutory Auditors. In recent years, audits have become 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.
Due to Central Bank regulation, most Financial Services Brokers are required to undertake a full Audit each year. However, not all Limited Companies are required to undergo an audit. Below is a list of conditions that must be met in order to avoid this additional cost to your client’s business.
Small Company Exemption
The qualifying conditions for a small company are satisfied by a company in relation to a financial year in which it fulfils two or more of the following requirements:
- Turnover of the company does not exceed €8.8 million;
- Total assets on the balance sheet does not exceed €4.4 million;
- Average number of employees does not exceed 50
The company must have filed its annual return on time with the CRO for the current and preceding year.
A company only loses ‘Small Company’ status if it does not satisfy the qualifying conditions above in respect of two consecutive years.
Group Company Exemption
Audit exemption is not available to a company that at any time during the financial year was a group company unless the group qualifies as a small group.
The qualifying conditions for a small group are satisfied by a group in relation to a financial year in which it fulfills two or more of the following requirements:
- Turnover of the holding company and member groups does not exceed €8.8 million;
- Total assets on the balance sheet of the holding company and member groups does not exceed €4.4 million;
- Average number of employees employed by the holding company and member groups does not exceed 50.
A group company only loses ‘Small Group’ status if it does not satisfy the qualifying conditions in respect of two consecutive years. All Irish companies in the group must have filed their annual return on time with the CRO for the current and preceding year.
Dormant Company Exemption
Dormant Company Exemption requires that the directors of the company are of the opinion that the company will satisfy the following conditions.
- It has no significant accounting transaction, i.e, a transaction that is required by to be entered in the company’s accounting records, and
- Its assets and liabilities comprise only permitted assets and liabilities. *
*Example of non “permitted assets” would be property, bank accounts, tax liabilities, other non-group liability or contingent asset or liability.
Companies Limited by Guarantee
Companies limited by guarantee may also avail of the audit exemption subject to similar criteria as private companies limited by shares (“LTDs”).
Examples of these would be Apartment Block Management Companies, Sports Clubs & Certain Not for Profit Organisations.
Rights of Shareholders and Members
Shareholders with more than 10% of the voting rights in a company have the right to inform the company that they do not want the company to avail of the audit exemption as long as that shareholder meets certain timing conditions.
Members of companies limited by guarantee have the right to inform the company that they do not wish the company to avail of the audit exemption, again as long as certain timing conditions are met.
Audit exemption is not available to the following types of company, irrespective of size:
- Public limited companies (“PLCs”)
- Public unlimited companies (“PUCs”)
- Public unlimited companies that have no share capital (“PULCs”)
- Investment companies
- Companies falling within any provision of Schedule 5
- Special purpose companies that manage and hold assets such as bonds, stocks, and commodities.
ITAS Accounting are Registered Statutory Auditors experienced in dealing with the Financial Services industry in meeting their Revenue, CRO and Central Bank requirements.
If you or your client require any assistance, please do get in touch with us.
Ph: 01 539 7999
Mobile: 087 2397782