The steps involved are:
- Assess whether the company meets the definition of a dormant company. If these requirements are met move onto step 2.
- Ensure that the election is made for audit exemption in the financial year the exemption is being claimed (i.e. the dormant company cannot apply audit exemption retrospectively).
- Although the requirements in point 1 & 2 above are met is there a specific reason why the company can still not claim audit exemption (e.g. other company specific laws which require the company to be audited – banking requirements etc.). If there are none of these reasons move onto step 4 below.
- Hold a meeting of directors during the financial year in which the election is to be made where it is agreed that the company avail of audit exemption on the basis that it meets the requirements of S.365. At this meeting also agree to get the secretary to inform the auditor of the fact that the company is claiming exemption for that year if applicable.
- Members cannot object to the directors availing of audit exemption where all of the conditions for audit exemption have been met as stated in S.334(5) Companies Act 2014.
- Directors to write to the auditor informing the auditor of the fact:
- that the company intends to claim audit exemption for that particular year as they meet the requirements in S.365 as a dormant company and as a result the appointment of the auditor be terminated in accordance with S.399(1)(b) Companies Act 2014 (if applicable); and
- requesting that the Auditor serve notice on the Company in accordance with Section 399(1)(b)(2) of the Companies Act 2014 within 21 days and deliver a copy of this notice to the Registrar of Companies pursuant to Section 399(3) of Companies Act 2014 (if applicable).
- The auditor within 21 days of receiving the letter from the company in step 6, then writes up a letter addressed to the company to meet the requirements of S.399 Companies Act 2014. S.399(1) specifically requires the auditor to issue a notice on the company that there are or there are not circumstances which need to be brought to the attention of the members or creditors as a result of the termination of auditor. This notice should refer to the directors believing they are entitled to claim audit exemption. S.399 (1)(a)(ii) specifically states that unless and until the auditors serve notice that any purported termination of their appointment shall not take effect. Note this is only applicable where in the previous year the Financial Statements were audited.
- Within 14 days of serving the notice on the company in step 7, send a copy of the notice to the CRO (and if the notice states that there are circumstances which need to be brought to the attention of the members or creditors then ensure this notice is also sent to all members entitled to receive a copy of the Financial Statements unless the court states otherwise). Note this is only applicable where in the previous year the Financial Statements were audited.
- Under S.335 of the Act the Director of Corporate Enforcement can request and be given access to the books and documents of the company to ensure that the company complied with the audit exemption provisions. Therefore it is important that all the steps above have been complied with and documented.