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Legal Terms – Audit Exemption
Audit exemption refers to the exemption granted to some companies from the requirement to undergo an audit of their financial statements.
Every company is obligated to designate auditors, unless they are exempted (as stated in section 475 of the Companies Act 2006). Microscopic and quiescent enterprises are companies that are excluded (according to sections 477 and 480) if the directors provide a declaration on the company's balance sheet confirming this. Nevertheless, a firm that is exempt is obligated to conduct an audit if a member or members who possess a minimum of 10% of any class of shares request it (as stated in section 476). An exempt company is defined as a small company if it satisfies at least two of the following conditions: (1) the firm's annual turnover is £10.2 million or less; (2) the total assets of the company are £5.1 million or less; (3) the company employs 50 or fewer individuals. It is not mandatory for a firm to hire an auditor if the board determine that audited accounts are unlikely to be necessary (as per section 485 and section 489).
Audit exemption refers to the exemption granted to some companies from the requirement to undergo an audit of their financial statements.
Every company is obligated to designate auditors, unless they are exempted (as stated in section 475 of the Companies Act 2006). Microscopic and quiescent enterprises are companies that are excluded (according to sections 477 and 480) if the directors provide a declaration on the company's balance sheet confirming this. Nevertheless, a firm that is exempt is obligated to conduct an audit if a member or members who possess a minimum of 10% of any class of shares request it (as stated in section 476). An exempt company is defined as a small company if it satisfies at least two of the following conditions: (1) the firm's annual turnover is £10.2 million or less; (2) the total assets of the company are £5.1 million or less; (3) the company employs 50 or fewer individuals. It is not mandatory for a firm to hire an auditor if the board determine that audited accounts are unlikely to be necessary (as per section 485 and section 489).
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