Audit exemption for private limited companies
Generally a private limited company in the UK must have an annual audit. It is important to be aware that the owners of a private limited company may qualify for an audit exemption if it has at least two of the following statements are met:
1. the business has an annual turnover of no more than £10.2 million
2. company assets are worth no more than £5.1 million
3. they employ 50 or fewer employees on average.
You must include the following statement on the balance sheet of your accounts if you choose to use the audit exemption.
For the year ending [your company’s year end date], the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.
The members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476.
The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.
These accounts have been prepared in accordance with the provisions applicable to companies subject to the small companies’ regime.
Obviously there are significant savings to be had in terms of time and expenses with avoiding completing an audit.
What happens if a shareholder asks for an audit? In this case even if your company is usually exempt, then you must get your accounts audited if shareholders (individual or group) who own a minimum of 10% of shares (by number or value) ask for one.
There are some private limited companies that must still have audit regardless of the exemptions stated above. If you have any questions or would like to discuss this further please feel free to contact me for a free, no obligation meeting.