• Current students
      • Student centre
        Enrol on a course/exam
        My enrolments
        Exam results
        Mock exams
      • Course information
        Students FAQs
        Student induction
        Course enrolment information
        F2f student events
        Key dates
        Book distribution
        Timetables
        FAE elective information
        CPA Ireland student
      • Exams
        CAP1 exam
        CAP2 exam
        FAE exam
        Access support/reasonable accommodation
        E-Assessment information
        Exam and appeals regulations/exam rules
        Timetables for exams & interim assessments
        Sample papers
        Practice papers
        Extenuating circumstances
        PEC/FAEC reports
        Information and appeals scheme
        Certified statements of results
        JIEB: NI Insolvency Qualification
      • CA Diary resources
        Mentors: Getting started on the CA Diary
        CA Diary for Flexible Route FAQs
      • Admission to membership
        Joining as a reciprocal member
        Admission to Membership Ceremonies
        Admissions FAQs
      • Support & services
        Recruitment to and transferring of training contracts
        CASSI
        Student supports and wellbeing
        Audit qualification
        Diversity and Inclusion Committee
    • Students

      View all the services available for students of the Institute

      Read More
  • Becoming a student
      • About Chartered Accountancy
        The Chartered difference
        Student benefits
        Study in Northern Ireland
        Events
        Hear from past students
        Become a Chartered Accountant podcast series
      • Entry routes
        College
        Working
        Accounting Technicians
        School leavers
        Member of another body
        CPA student
        International student
        Flexible Route
        Training Contract
      • Course description
        CAP1
        CAP2
        FAE
        Our education offering
      • Apply
        How to apply
        Exemptions guide
        Fees & payment options
        External students
      • Training vacancies
        Training vacancies search
        Training firms list
        Large training firms
        Milkround
        Recruitment to and transferring of training contract
      • Support & services
        Becoming a student FAQs
        School Bootcamp
        Register for a school visit
        Third Level Hub
        Who to contact for employers
    • Becoming a
      student

      Study with us

      Read More
  • Members
      • Members Hub
        My account
        Member subscriptions
        Newly admitted members
        Annual returns
        Application forms
        CPD/events
        Member services A-Z
        District societies
        Professional Standards
        ACA Professionals
        Careers development
        Recruitment service
        Diversity and Inclusion Committee
      • Members in practice
        Going into practice
        Managing your practice FAQs
        Practice compliance FAQs
        Toolkits and resources
        Audit FAQs
        Practice Consulting services
        Practice News/Practice Matters
        Practice Link
      • In business
        Networking and special interest groups
        Articles
      • Overseas members
        Home
        Key supports
        Tax for returning Irish members
        Networks and people
      • Public sector
        Public sector presentations
      • Member benefits
        Member benefits
      • Support & services
        Letters of good standing form
        Member FAQs
        AML confidential disclosure form
        Institute Technical content
        TaxSource Total
        The Educational Requirements for the Audit Qualification
        Pocket diaries
        Thrive Hub
    • Members

      View member services

      Read More
  • Employers
      • Training organisations
        Authorise to train
        Training in business
        Manage my students
        Incentive Scheme
        Recruitment to and transferring of training contracts
        Securing and retaining the best talent
        Tips on writing a job specification
      • Training
        In-house training
        Training tickets
      • Recruitment services
        Hire a qualified Chartered Accountant
        Hire a trainee student
      • Non executive directors recruitment service
      • Support & services
        Hire members: log a job vacancy
        Firm/employers FAQs
        Training ticket FAQs
        Authorisations
        Hire a room
        Who to contact for employers
    • Employers

      Services to support your business

      Read More
☰
  • Find a firm
  • Jobs
  • Login
☰
  • Home
  • Knowledge centre
  • Professional development
  • About us
  • Shop
  • News
Search
View Cart 0 Item

Technical Hub

☰
  • Home
  • Audit and assurance
  • Financial reporting
  • Anti-money laundering
  • Legislation
  • Home/
  • Knowledge centre/
  • Technical Hub/
  • Audit and assurance/
  • Other engagements/
  • Audit exemption
☰
  • Audit and assurance
  • Auditing standards
    • Other audit guidance
    • Ethics
    • Audit guidance
    • Audit of less complex entities
    • Quality management
      • Quality management key requirements
  • Other engagements
    • Non audit engagements
    • Sustainability assurance
    • Regulatory reporting
    • Other guidance
    • Audit exemption
  • Audit and assurance FAQs
  • Audit and Assurance news

Audit Exemption ROI

Introduction

The Companies Act 2014 (‘CA 2014’) allows companies that meet certain criteria to avail of an exemption from the requirement to have an audit.    
In order to avail of audit exemption, a company which is not a member of a group, must qualify as small in respect of the financial year in question in accordance with section 358.  The qualifying conditions for a small company are satisfied by a company in relation to a financial year in which it fulfils two or more of the following requirements, as set out in section 280 and include:
  • The amount of turnover of the company does not exceed €15 million;
  • The balance sheet total of the company does not exceed €7.5 million; or
  • The average number of employees of the company does not exceed 50. 

In order for a company which is a member of a group to avail of audit exemption, the group must qualify as a small group in relation to the financial year under section 359.  The qualifying conditions for a small group are satisfied in relation to a financial year in which it fulfils two or more of the following requirements.

  • The amount of turnover of the group does not exceed €15 million net (or €18 million gross);
  • The balance sheet total of the group does not exceed €7.5 million net (or €9 million gross); or
  • The average number of employees of the group does not exceed 50.

There are additional circumstances where the company or a group may NOT avail of audit exemption even where they meet the criteria above. Some of these are set out in the table below or addressed in the FAQs below. 

Additional background

The companies’ acts permit a wide variety of company types and not all are permitted to avail of audit exemption. This summary table sets out the basic categories and members should check the detailed legislation applying to their company.

 

Companies which may avail of audit exemption

Companies which may not avail of audit exemption

  • Companies limited by shares (‘LTDs’)
  • Designated activity companies (‘DACs’)
  • Companies limited by guarantee ('CLGs')
  • Private unlimited companies (‘ULCs’)

 

  • Public limited companies (‘PLCs’);
  • Public unlimited companies (‘PUCs’)
  • Public unlimited companies that have no share capital (‘PULCs’) see
  • Investment companies- see section 1401A;
  • Companies to which section 362 (and Schedule 5) applies
  • Relevant securitisation companies



Questions on Audit Exemption ROI
  1. My company is not part of a group. What are the criteria that need to be satisfied in order to claim audit exemption?
  2. My company is part of a group. What are the criteria that need to be satisfied in order to claim audit exemption?
  3. What is an ineligible entity under the Companies Act?
  4. The directors want to claim audit exemption- can they do so based on the company size?
  5. What is a “Schedule 5” Company?
  6. Can a Charity, operating as a limited company avail of audit exemption?
  7. Audit requirement where a group structure was in place at the start of the year but was not in place at the end of the year
  8. Group structure created during the year
  9. Group with a regulated company within the group structure
  10. My company is small and can avail of audit exemption. Can I choose to have an audit?
  11. Other entities not within the scope of CA 2014 (Industrial & Provident Societies, Credit Unions, unincorporated charity).
  12. Group of companies where one company in group has missed its ARD
  1. My company is not part of a group. What are the criteria that need to be satisfied in order to claim audit exemption?

    In order to avail of audit exemption, a company (which is not part of a group) must qualify as small in accordance with  European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024 (S.I. No. 301 of 2024),  signed into law on the 19 June and come into operation on the 1 July 2024 

    The qualifying conditions for a small company are satisfied by a company in a particular financial year if it fulfils 2 or more of the following requirements:

    (a) the amount of turnover of the company does not exceed € 15 million;

    (b) the balance sheet total of the company does not exceed € 7.5 million;

    (c) the average number of employees does not exceed 50.

    *Please note the year of use for the exemption as the limits have increased as of July 2024

    The qualifying conditions must be satisfied;

    (a) In respect of the relevant year and the financial year immediately preceding it.

    (b) In respect of the relevant year and the company qualified as a small company in the financial year immediately preceding it.

    (c) In the financial year immediately preceding the relevant year and the company qualified as small in the preceding year.

     

    Therefore, a situation may arise when a company exceeds 2 or more of the limits in the relevant financial year but still qualifies as small in that year.

    An ineligible company (including entities listed in schedule 5 of the Companies Act) cannot be classed as small even if they meet the above limits.

    If a company's annual return the the Companies Registration Office is filed late then the company loses the entitlement to claim audit exemption in the following two years under S.363 of the Companies Act 2014 (this does not apply if the annual return missed is the company's first annual return).

    Back to Top
  2. My company is part of a group. What are the criteria that need to be satisfied in order to claim audit exemption?

    Where a company is part of a group structure, audit exemption is determined by whether the group qualifies as a small group. If an entity (regardless of its individual company size) is part of a group that is not small then it cannot claim audit exemption.

    In order to qualify as a small group;

    - The group must meet the small group criteria below, and

    - No member of the group can be an ineligible entity

    Small Group criteria

    Aggregate turnover not more than:, €15 million net (or €18 m gross)

    Aggregate gross assets not more than:, €7.5 million net (or €9 m gross)

    Aggregate average number of employees not more than:, 50 employees

     

    In order to qualify as a small group, 2 of the above 3 conditions must;

    a. Be satisfied in the current and previous financial year

    b. Be satisfied in the current year and the group qualified as a small group in the previous financial year, or

    c. Be satisfied in the previous financial year and the group qualified as a small group in relation to that previous financial year.

    Back to Top
  3. What is an ineligible entity under the Companies Act?

    Ineligible entities are defined in section 275 of the Companies Act as undertakings that;

    “(a) have transferable securities admitted to trading on a regulated market of any Member State,

    (b) are credit institutions,

    (c) are insurance undertakings, or

    (d) are —

         (i) undertakings that —

              (I) fall within any of the provisions of Schedule 5 , or

              (II) are otherwise designated, by or under any other enactment, to be entities referred to in point (1)(d) of Article 2 of the Accounting Directive,

    or

         (ii) undertakings that are designated, by or under the law of any other Member State, to be entities referred to in point (1)(d) of Article 2 of the Accounting Directive and ‘ ineligible company ’ shall be read accordingly;”

    Back to Top
  4. The directors want to claim audit exemption- can they do so based on the company size?

    Year ended

    31.12.20X7

    31.12.20X8

    31.12.20X9

    Turnover

    16,253,007

    11,005,456

    14,008,619

    Balance sheet total

    5.107.555

    7,230,854

    5,204,973

    Employees

    54

    46

    42

     

     

     

     

    Are 2 out of criteria breached in year?

    Yes

    No

    No

     

    Although this company has breached the qualifying conditions in the current year, Section 280A (2) (c) allows a company to be classified as small if the qualifying conditions “were satisfied in the financial year immediately preceding the relevant year and the company qualified as a small company in relation to that preceding financial year”. This company was classified as small in the previous year and therefore can be classified as a small company in the year ended 31.12.20X9.

    Back to Top

  5. What is a “Schedule 5” Company?

    Schedule 5 of the Companies Act lists several company types for the purposes of the Act. These company types are “ineligible” companies (discussed above) for claiming audit exemption. The Companies listed in Schedule 5 are as follows;

    “1. A company that is an authorised investment firm within the meaning of the European Communities (Markets in Financial Instruments) Regulations 2007 ( S.I. No. 60 of 2007).

    2. A company that is an authorised market operator.

    3. A company that is an associated undertaking or a related undertaking, of an authorised investment firm or an authorised market operator, within the meaning of the European Communities (Markets in Financial Instruments) Regulations 2007 ( S.I. No. 60 of 2007).

    4. A company to which Chapter VII, VIII or IX of Part II of the Central Bank Act 1989 applies.

    5. A company or undertaking engaged in the business of accepting deposits or other repayable funds from the public and granting credit for its own account.

    6. A company that is an associated body of a building society within the meaning of the Building Societies Act 1989.

    7. A company that is an associated enterprise of a credit institution within the meaning of the European Communities (Credit Institutions) (Consolidated Supervision) Regulations 2009 ( S.I. No. 475 of 2009).

    8. An investment company within the meaning of Part 24 .

    9. A company that is a management company, trustee or custodian within the meaning of Part 24 or of Part 2 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005.

    10. A company that is an undertaking for collective investment in transferable securities within the meaning of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 ( S.I. No. 352 of 2011).

    11. A company that is a management company or trustee of an undertaking for collective investment in transferable securities within the meaning of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 ( S.I. No. 352 of 2011).

    12. A company that is a management company or trustee of a unit trust scheme within the meaning of the Unit Trusts Act 1990.

    13. A company that is a general partner or custodian of an investment limited partnership within the meaning of the Investment Limited Partnerships Act 1994.

    14. A company that has close links (within the meaning of the European Union (Capital Requirements) Regulations 2014 ( S.I. No. 158 of 2014)) with an authorised investment firm referred to in paragraph 1 or a company referred to in paragraph 5.

    15. Any other company the carrying on of business by which is required, by virtue of any enactment or instrument thereunder, to be authorised by the Central Bank.

    16. A company that is the holder of an authorisation within the meaning of—

    (a) Regulation 2 of the European Communities (Non-Life Insurance) Regulations 1976 ( S.I. No. 115 of 1976);

    (b) Regulation 2 of the European Communities (Non-Life Insurance) Framework Regulations 1994 ( S.I. No. 359 of 1994);

    (c) Regulation 2 of the European Communities (Life Assurance) Regulations 1984 ( S.I. No. 57 of 1984); or

    (d) Regulation 2 of the European Communities (Life Assurance) Framework Regulations 1994 ( S.I. No. 360 of 1994).

    17. A company that is an insurance intermediary within the meaning of the Insurance Act 1989.

    18. A company that is an excepted body within the meaning of the Trade Union Acts 1871 to 1990.”

    Back to Top
  6. Can a Charity, operating as a limited company avail of audit exemption?

    A charity operating as a limited company is subject to the same Company Law provisions as other companies discussed in these FAQs. In addition to this, any charity with annual income in excess of €100,000 is required to carry out an audit as outlined on the Revenue website. 

    Back to Top
  7. Audit requirement where a group structure was in place at the start of the year but was not in place at the end of the year

    Question: A company (Company A) was part of a medium sized group in year ended 31 December 2XX1 and was required to have an audit that year. On 28 February 2XX2, the group restructured and company A left the group. From this date, Company A was a standalone company which was not part of any group structure. For both the current and prior year, Company A would have been classed as a small company had it been a standalone company.

    Can Company A claim audit exemption for year ended 31 December 2XX2?

    Answer: When looking at the audit exemption rules, section 358 of the Companies Act 2014 deals with situations where the company is not part of a group. Section 359 deals with group situations. Section 358(3) CA 2014, states that section 360 (Audit Exemption) does not apply to a company in respect of its statutory financial statements for a particular financial year during any part of which the company was a group company (within the meaning of section 359) unless the group qualifies, under section 359, as a small group in relation to that financial year.

    As this company was part of a group for part of the year (ie. From 1 January 2XX1 to 28 February 2XX2) and as the group it was part of was a medium size group, Section 358 (3) does not allow this company to claim audit exemption for the year ended 31 December 2XX2.

    Back to Top
  8. Group structure created during the year

    Question: Company X is a small company and has always claimed audit exemption up to its most recent financial year end of 31 December 20X0. 

    On 30 April 20X1, Company X was acquired by a larger group. The group is classified as large in accordance with Companies Act 2014. 

    Can this company avail of audit exemption for the year ended 31 December 20X1? 

    Answer: When looking at the audit exemption rules, section 358 of the Companies Act 2014 deals with situations where the company is not part of a group. Section 359 deals with group situations. 

    Section 358(3) CA 2014, states that section 360 (Audit Exemption) does not apply to a company in respect of its statutory financial statements for a particular financial year during any part of which the company was a group company (within the meaning of section 359) unless the group qualifies, under section 359, as a small group in relation to that financial year. 

    As this company was part of a group for part of the year (ie. From 30 April 2XX1 to 31 December 2XX1) and as the group it was part of was a large group, Section 358 (3) does not allow this company to claim audit exemption for the year ended 31 December 20X1.

    Back to Top
  9. Group with a regulated company within the group structure

    Question: An Irish group of companies meet company size criteria set out in S.280B (4) and appears to be small when looking at this section of the Companies Act. However, one of the companies in the group structure is a Central Bank regulated insurance intermediary (Schedule 5 company). The regulated company must be audited as it is a schedule 5 company. Can all of the other companies in the group claim audit exemption?

    Answer: Subject to the other provisions in Chapter 15 of CA 2014, section 359 states that audit exemption applies to a company if the group it is a part of qualifies as small under S.280B. Section 280B (5) states that a company will not qualify as small if “..... any member of the group is an ineligible entity”. As a regulated entity is a schedule 5 company which is in turn an ineligible entity, the presence of this company in a group structure means that the group is no longer classified as small and therefore all members of the group are unable to avail of audit exemption.
    Back to Top
  10. My company is small and can avail of audit exemption. Can I choose to have an audit?

    Yes- one or more members, representing at least 10% of the voting rights (or one member in the case of a CLG) can insist on the company’s financial statements being audited. Notice must be served in writing to the company in accordance with section 334 of the Companies Act 2014. Notice must be served either;

    During the financial year immediately preceding the financial year to which the notice relates, or

    During the financial year to which the notice relates (but not later than 1 month before the end of the year).

    Back to Top
  11. Other entities not within the scope of CA 2014 (Industrial & Provident Societies, Credit Unions, unincorporated charity).

    Question: Can the following companies avail of audit exemption

    a. An Industrial & Provident Society

    b. A Credit Union

    c. An unincorporated Charity

    Answers:

    a. An Industrial and Provident Society is required to have an annual audit in accordance with section 13 of the Industrial and Provident Societies Act, 1893.

    b. A Credit Union's financial statements must be audited in accordance with the Credit Union Act 1997.

    c. An unincorporated Charity with charitable status must have its financial statements audited if its annual turnover is greater than €100,000.

    Back to Top
  12. Group of companies where one company in group has missed its ARD

    Question: ABC group is a group of companies. A is the holding company and B & C are 100% subsidiaries of A.

    The companies form part of a small group and have availed of audit exemption for many years up to their most recent year ends of 31 December 2XX0. C is late in filing its annual return with the Companies Registration Office which was due in September 2XX1.

    Can C claim audit exemption in year ended 31 December 2XX1 (and future years)?

    Can A & B claim audit exemption in year ended 31 December 2xx1 (and future years)?

    Answer: Under Section 364 of CA 2014, where a holding company or any member of a group misses it’s annual return date then all members of that group cannot avail of audit exemption for the two financial years immediately succeeding the financial year where the return was due.

    In the above example, companies A, B & C cannot claim audit exemption in years ending 31 December 20X2 and 31 December 20X3.

    The one exception to this is where the annual return missed is the first annual return.

    Back to Top

These pages are provided as resources and information only and nothing in these pages purports to provide professional or legal advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.

 

The latest news to your inbox

Please enter a valid email address You have entered an invalid email address.

Useful links

  • Current students
  • Becoming a student
  • Knowledge centre
  • Shop
  • District societies

Get in touch

Dublin HQ

Chartered Accountants
House, 47-49 Pearse St,
Dublin 2, D02 YN40, Ireland

TEL: +353 1 637 7200
Belfast HQ

The Linenhall
32-38 Linenhall Street, Belfast,
Antrim, BT2 8BG, United Kingdom

TEL: +44 28 9043 5840

Connect with us

Something wrong?

Is the website not looking right/working right for you?
Browser support
CAW Footer Logo-min
GAA Footer Logo-min
CCAB-I Footer Logo-min
ABN_Logo-min

© Copyright Chartered Accountants Ireland 2020. All Rights Reserved.

☰
  • Terms & conditions
  • Privacy statement
  • Event privacy notice
  • Sitemap
LOADING...

Please wait while the page loads.