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The following rules governing audit exemption came into force for accounting periods ending on or after 30 March 2004
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A company can claim exemption from the statutory audit provided that ALL the following conditions are met:
Turnover is less than £5.6 million
Gross assets are less than £2.8 million
The company is entitled to small company status as above
The company has not received a statement from holders of 10% or more nominal value of the company’s issued share capital or any class of it, requesting that there should be an audit.
Only the current period’s figures are relevant. Those of the previous year are not to be considered. A company cannot be exempt from audit until its second consecutive year of being ‘small’.
For groups, the limits apply to the group as a whole: if the totals are over the limit, none of the companies in the group can be exempt.
The audit exemption legislation for charities (including charitable companies) has not changed and remains at £250,000, though the Government is consulting on this.
An audit might be required by the company’s own articles or by a regulatory body. Exemption to audit is not allowed and the company could be advised to alter its articles by a special resolution.
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