Audit exemption to save firms money
SMALLER IRISH companies can expect to save up to €5 million a year following an increase in the audit exemption limit.
Companies with a turnover of less than € 8.8 million, a balance sheet of less than € 4.4 million and 50 or fewer employees will no longer have to have their annual accounts prepared by an external auditor.
Previously, the audit exemption applied only to companies with turnover of less than €7.3 million and a balance sheet of below € 3.65 million.
The new limits, which have increased the qualifying thresholds by 20.5 per cent, are now in line with the EU maximum.
Aidan Clifford, advisory services manager for ACCA in Ireland, said the move will save companies that were previously non-exempt between € 1,000 to € 3,000 annually, rising to as much as € 10,000 for some companies.
“The cost of a small company audit often exceeds the benefit that an audit can bring. Removing this additional cost is welcome.”
The hike, which was signalled last year, is the latest in a line of increases since July 2004, when the exemption level was just €317,434.
The new exemption will not apply to all companies, however. Those filing their annual accounts late are not entitled to an exemption for two years thereafter, while those operating in financial services must have an audit, as must those that form part of a group of companies.
However, the ACCA notes there is “broad agreement” with the Department of Jobs, Enterprise and Innovation to allow small groups to claim audit exemption.
For those companies moving to exempt status, formal resolutions will need to be passed prior to the company year-end in order to claim audit exemption.
In some cases, this might mean calling an EGM to amend company formation documents.