We have a group of companies with one of the companies in the group is regulated by the Central Bank. Can the rest of the group avail of audit exemption?
One of the most welcome provisions of the Companies Act 2014 was the introduction of group audit exemption. Sec 359 provides that a small group may avail of the audit exemption if the group in total satisfies the small group thresholds.
The thresholds for a small company and a small group are
- Turnover does not exceed €8.8 million
- Balance sheet does not exceed €4.4 million
- Average number of employees does not exceed 50
Two out of three conditions must be met for the current and preceding financial year to qualify as a small company and the entire group (holding and all the subsidiaries taken as a whole) must also satisfy two out of three conditions for the current and preceding financial year.
Category of Company that cannot avail of audit exemption
Sec 362 of the Act sets out the categories of companies that cannot avail of audit exemption. Sec 362(2) provides that even if the companies in the group satisfy the small group thresholds, the group cannot avail of the audit exemption if :
(a) the holding company is a company falling within any provision (in so far as applicable to a private company limited by shares) of Schedule 5, other than a company referred to in paragraph 5 or 16 of that Schedule, or if it is a relevant securitisation company, or
(b) any of those other members is—
(i) a credit institution,
(ii) an insurance undertaking,
(iii) a company falling within any provision of Schedule 5, other than a company referred to in paragraph 5 or 16 of that Schedule,
(iv) a relevant securitisation company, or
(v) a body any of the securities of which are admitted to trading on a regulated market.
So if any company falls into one of the above categories then the group cannot avail of the audit exemption.
Abridged Financial Statements
It is also important to note that a company that falls under the provisions of Schedule 5 will not be classed as small or medium company in accordance with Sec 350 of the Act and must prepare full financial statements and is not entitled to file abridged financial statements.
Please Note:
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