Amendment to audit exemption criteria

On September 11th, 2012

An announcement has been made by the Department for Business, Innovation and Skills regarding amendments to audit exemption criteria. Their press release states that, “the new regulations are expected to come into force for accounting periods ending on or after 1 October 2012”. The precise detail and timing of the changes will not be known until the Statutory Instrument has been laid before Parliament, but it appears as though the following will be enacted:

• Eligibility for exemption from an audit under the Companies Act 2006 will replicate eligibility for small company exemptions. Note that this means that a company which is currently ineligible for small company exemptions (because, for example, it is a public company or MiFID investment firm) will still not be able to take advantage of audit exemption, despite their size ~ note that this has not been actively reported either in the BIS press release, or in the “accountancy press”;

• There are no amendments to audit exemption criteria for charities. However, technicalities are that a very small number of incorporated charities will now be eligible for independent examination rather than an audit;

• Companies which have a parent undertaking established under the law of an EEA state may, if all of the company’s liabilities are guaranteed by that parent, (and a number of conditions are complied with) take advantage of audit exemption;

• There will be the ability, subject to conditions, for companies and groups to switch from IFRS to UK GAAP; and

• Audit/financial reporting requirements for limited liability partnerships will replicate those for companies as above.