Audit exemption thresholds
In October 1999 the Department issued
a consultation document on raising the threshold below
which small companies (subject to some exemptions) are
able to opt to dispense with having their accounts audited.
The announcement made on 4 April 2000 proposed raising
this threshold to £1,000,000 this year and considering
a further move to £4.8 million in the light of
the proposals of the Company Law Review.
The immediate change to increase the
audit threshold to £1,000,000 will apply to annual
accounts and reports for financial periods ending on
or after 26 July 2000.
Exemption from audit for individual
companies
The regulations implementing the increase - The Companies
Act 1985 (Audit Exemption) (Amendment) Regulations 2000
- amend section 249A of the Companies Act 1985 so that
a small company, subject to certain other exclusions,
need not have its annual accounts audited if it meets
the following criteria:
- It qualifies as a small company in relation to that
year in accordance with section 246 of the Companies
Act 1985 - see below for SME company thresholds;
- Its turnover in that year is not more than £1
million; and,
- Its balance sheet total for that year is not more
than £1.4 million.
Individual companies
Currently companies, which meet the criteria for small
and medium-sized status, may take advantage of the ability
to prepare less detailed accounts for their shareholders
and to and file abbreviated accounts. The Department
also consulted on this in 1999. The current conditions
are that a company should meet two out of the following
three requirements:
Small company
| Turnover |
Not more than £2.8 million |
| Balance sheet total |
Not more than £1.4 million |
| Number of employees |
Not more than 50 |
Medium sized company
| Turnover |
Not more than £11.2 million |
| Balance sheet total |
Not more than £5.6 million |
| Number of employees |
Not more than 250 |
For more information, consult the DTI website:
http://www.dti.gov.uk/ |
