S.358, Companies Act 2014 sets out that a company qualifies for audit exemption if it meets the requirements of the small companies regime as stated in Section 280A to 280C of Companies Act 2014 as inserted by Section 15 of Companies (Accounting) Act 2017. These thresholds mandatorily apply for all periods beginning on or after 1 January 2017 but can be early adopted for all periods beginning on or after 1 January 2015. Once the company fulfils at least two of the three qualifying conditions, listed below, as a small company under S.280A of the Act (but also subject to notes 1 to 5 below):
- In relation to its first financial year; or
- In relation to its current financial year and the preceding financial year; or
- In relation to its current financial year and it qualified as a small company in the preceding financial year; or
- In relation to the preceding financial year and it qualified as a small company in the preceding financial year
| Small Co | |
| Turnover | ≤€12 million |
| Balance Sheet Total | ≤€6 million |
| Employees | ≤50 |
Note 1) Even if the conditions specified above are met, in accordance with S.334 Companies Act 2014, if a member or members if taken together:
– own 10% or more of the total voting shares at the AGM of that company or where the company is a CLG where 1 members objects; and
– any such member/members notify their objection in writing to the company wishing to avail of audit exemption and this objection is lodged:
- in the year prior to the year in which audit exemption is proposed to be claimed; or
- one month before the end of the year in which the audit exemption is proposed to be claimed
then audit exemption cannot be claimed by the company.
Note 2: The company’s financial statements and annual return for the current financial year and the preceding financial year must be/have been submitted to the CRO by the annual return date for that year (e.g. no later than 28 days after the annual return date or where the annual return is filed online within the aforementioned 28 days, the financial statements and certification is received in the CRO within 28 days from the date it was filed on CORE). This requirement is set out in S.363 CA 2014. Section 61 of Companies (Accounting) Act 2017 inserted Section 364(4) which states where the first annual return following incorporation is filed late (i.e. first annual return date is 6 months from the date of incorporation) audit exemption can continue to be availed of.
Note 3: The requirements of S.335, which details the statements to be included at the bottom of the balance sheet to allow the reader of the financial statements to know that audit exemption has been claimed, must be met. See note 5 below.
Note 4: Although a company may meet any two of the three thresholds mentioned above where such a company comes within the list of companies listed in Schedule 5 of Companies Act 2014 (this list includes all companies required to be authorised by the Central Bank of Ireland among others), credit institutions, insurance undertakings and those having transferable securities admitted to trading on a regulated market of a member state and designated by Member States as public-interest entities; it is not permitted to avail of audit exemption as stated in S.362. This exclusion does not apply to a company that is engaged in the business of accepting deposits or other repayable funds or granting credit for its own account or a company detailed in Section 16 of Schedule 5 (certain non-life and life assurance companies).
Note 5: Where audit exemption is claimed the following disclosure should be included at the bottom of the balance sheet above the directors’ signature.
I/We, as director(s) of (company name), state that:
(a) the company is availing itself of the exemption provided for by Chapter 15 of Part 6 of the Companies Act 2014,
(b) the company is availing itself of the exemption on the grounds that the conditions specified in S.358 are satisfied,
(c) the shareholders of the company have not served a notice on the company under S.334(1) in accordance with S.334(2),
(d) we acknowledge the company’s obligations under the Companies Act 2014, to keep adequate accounting records and prepare Financial Statements which give a true and fair view of the assets, liabilities and financial position of the company at the end of its financial year and of its profit or loss for such a year and to otherwise comply with the provisions of Companies Act 2014 relating to Financial Statements so far as they are applicable to the company,
*(e) the company has relied on the specified exemption contained in S.352 Companies Act 2014; has done so on the grounds that the company is entitled to the benefit of that exemption as a small company and the abridged Financial Statements have been properly prepared in accordance with S.353 Companies Act 2014.
On behalf of the board:
TYPED Name of Signatory: TYPED Name of Signatory:
Director Director
Date: Date:
(*In the above statement, use sections (a) – (d) if claiming audit exemption and add section (e) if claiming the small company/abridgement exemption. A small company can claim either or both exemptions in their Financial Statements if they qualify.)