Corporate financial reporting: new audit exemptions

The Government has published regulations which introduce new exemptions in relation to the requirement for companies to prepare, audit and file accounts.  In particular:

  • A company classified as a small company under the Companies Act 2006 will be eligible for exemption from audit.  It will no longer be necessary for that company to meet the additional turnover and balance sheet thresholds which currently apply.
  • Certain subsidiaries of EEA companies will be exempted from the requirement to obtain an audit.  This is subject to certain conditions which include the provision of a parent company guarantee of the subsidiary’s liabilities.
  • Certain dormant subsidiaries of EEA companies will be exempted from the obligation to prepare and file individual accounts.  The qualifying conditions for this exemption are similar to those applying to subsidiaries wishing to obtain an audit exemption (see above), and will include the requirement for a parent company guarantee.
  • Companies which currently prepare their accounts under International Financial Reporting Standards will have greater flexibility to change their accounting framework to UK GAAP.

Similar changes will apply to limited liability partnerships.  The new regulations come into force on 1 October 2012 and will apply to accounting years ending on or after that date.

Further information on these changes can be found here.

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