Section 359 of CA 2014 states that a group qualifies for audit exemption if it meets the requirements of the small companies regime for holding companies as stated in Section 280B 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 holding company all of its subsidiaries fulfils at least two of the three qualifying conditions, listed below (but also subject to notes 1 to 6 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 holding company in the preceding financial year
Small Group
Net* |
Small Group
Gross* |
|
Turnover of the group taken as a whole | ≤€12 million | ≤€14.4 million |
Balance Sheet Total (i.e. fixed assets plus current assets) of the group taken as a whole | ≤€6 million | ≤€7.2 million |
Employees of the group taken as a whole | ≤50 | ≤50 |
* Gross = amounts before group transactions are eliminated
** Net = amounts after group transactions are eliminated
The gross and net figures provided for groups will make it easier for companies to ascertain if the conditions are met as if the gross thresholds are met there is no requirement to do a calculation to determine the net figures. The group can use either the gross or the net figures when ascertaining whether the group can avail of audit exemption (obviously when making the assessment the gross figures calculated must be compared to the gross thresholds and the net figures calculated must be compared to the net thresholds).
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; 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 group. A subsidiary who is also a parent can object to audit exemption being availed of if it owns 10% of that subsidiary company even where all the other group companies are availing of the audit exemption.
Note 2: The financial statements and annual return for the current financial year and the preceding financial year of all of the companies within the group 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 on line 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.364 Companies Act 2014. If any of the company’s within the group miss the annual return date then no group company can claim audit exemption. Section 61 of Companies (Accounting) Act 2017 inserted Section 364(4) which states where the first annual return following incorporation is filed late for any group company (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.
Note 4: Although a group may meet any two of the three thresholds mentioned above the following exclusions apply as stated in S.280B(5) CA 2014 as amended by Companies (Accounting) Act 2017:
-where the holding company of the group or any other members/subsidiaries in the group 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) or is or a relevant securitisation company, such a group (includes all companies within the group) 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); OR
– any other member within the group is:
– a credit institution
– an insurance undertaking
– a body any of the securities of which are admitted to trading on a regulated market
– a body designated by Member States as public-interest entities;
then the group as a whole is excluded from claiming audit exemption.
Note 5: When looking at the entities to be included when comparing to the thresholds, it is all of the holding companies subsidiaries but in addition where the holding company has an ultimate or intermediate parent company, all of the results for the ultimate/intermediate parent and all of its ultimate/intermediate parent subsidiaries must be included (i.e. the full group must be included).
Note 6: Where audit exemption is claimed the following disclosure should be included at the bottom of the balance sheet above the directors’ signature.
We, the directors of (company name) state that –
(a) “that the company is availing itself of the exemption provided for by Chapter 15 of Part 6 of the Companies Act 2014” (these specific words must be used),
(b) the company is availing itself of the exemption on the grounds that Section 359 is complied with
(c) “no notice under subsection (1) of Section 334 has, in accordance with subsection (2) of that section, been served on the company” (objection of members), and
(d) the directors acknowledge the obligations of the company under the Companies Act 2014 to –
(i) keep adequate accounting records and prepare Financial Statements which give a true and fair view of assets, liabilities and financial position of the company at the end of the financial year and of its profit or loss for such a year, and
(ii) otherwise comply with the provisions of the 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).