Companies are required to lay their full financial statements before the members at an AGM and to have their financial statements audited but where they meet specific criteria in terms of type and size, they may be able to claim an exemption from filing full, or any, financial statements with the Companies Registration Office.

What is disclosed in the financial statements varies depending upon the size of the company. The Companies (Accounting) Act 2017 introduced some important changes for smaller companies as it introduced the new “micro” category of company. The exemptions for this type of company apply to financial years beginning on 1st January 2015.

A micro company is defined as a company which satisfies at least two of the following criteria in respect of that year and the financial year immediately preceding that year:

  • Turnover not exceeding €700,000;
  • Balance Sheet total not exceeding €350,000;
  • The average number of employees not to exceed 10.

Micro and small-sized companies may be exempted from the full extent of the requirements relating to annual Financial Statements. They may claim an audit exemption provided that they meet the following criteria and were small/micro-sized companies in both the financial year in question and in the previous financial year:

no objection has been received from more than 10% of the shareholders with voting rights;
it does not come within one of the 18 classes of companies listed in Schedule 5 of the Companies Act 2014 (e.g. companies such as insurance companies, banks etc);
and it has filed its last annual return within the required period.

It may be possible for companies that are part of a small group to avail of the audit exemption. The qualifying conditions for a small group are satisfied by a group in relation to a financial year in which it fulfils two or more of the following requirements:-

  • The aggregate amount of turnover of the group does not exceed exceeds €12 million;
  • The aggregate balance sheet total of the group taken as a whole does not exceed €6 million;
  • The aggregate average number of employees of the group taken as a whole does not exceed 50.

The fact that a company is entitled to an exemption on the basis of its size must be certified by its auditors.

Large companies are ones which exceed 2 of the 3 thresholds for medium companies and Medium and large-sized companies do not have an exemption from filing full financial statements.

A Company Limited by Guarantee (CLG) or a Designated Activity Company limited by Guarantee (DAC) are obliged to meet the same obligations as regards keeping accounting records as every other type of company but they can avail of the audit exemption/dormant company audit exemption and the exemptions available to small/medium-sized companies. Such a company can qualify for audit exemption, however, a member can object to this under section 1218 Companies Act 2014. CLG’s that qualify are not required to file any financial statements but are limited to those which are formed for charitable purposes and stand exempted by an order made by the relevant authority (Charities Regulatory Authority/ Commissioner of Charitable Donations and Bequests in Ireland). Instead, they file a special statutory auditors report unless they are audit exempt. They do of course have to submit an Annual Report to the Charities Regulator.

A dormant company may claim an audit exemption based on the fact that it is dormant.

Losing an Audit Exemption

The provisions of the Companies (Statutory Audits) Act 2018 were commenced in September 2018 and amend the Companies Act 2014. The Act provides that companies that file their annual returns late will lose the entitlement to an audit exemption in respect of the following two financial years and not the financial year to which the annual return relates, as was previously the case. This should assist companies that are obliged to carry out an audit following the loss of the exemption and it still gives an incentive to file their annual returns in a timely manner.

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