On the 3rdof August 2012 the European Union (Accounts) Regulations 2012, Statutory Instrument No 304 was enacted. The new regulations had increased the size criteria for small companies. The balance sheet total was increased to €4.4 million and the turnover figure was increased to €8.8 million.
The new legislation now means that for a company to be defined as a small company it must meet 2 of the follow 3 conditions in that financial year and in the previous financial year:
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- Balance sheet total does not exceed €4.4 million
- Turnover does not exceed €8.8 million
- Average number of employees do not exceed 50
The new limits have the benefit for an increased number of companies falling within the small company size limits having to produce small company abridged accounts as opposed to the onus of having to prepare medium sized accounts.
Commencement Date
When the Statutory Instrument was first enacted it caused some confusion as to what financial years the new criteria could be applied to. It has since been clarified that the new criteria relates only to financial year ends on or after the 3rd August 2012. Therefore if you have a company with a financial year end 31 December 2011, the new criteria does not apply. However if you have a financial year end September 2012, the new criteria can be applied in that case.
Audit Exemption Changes
On the 7th of August 2012 the Companies (Amendment)(No.2) Act 1999 (Section 32) Order 2012-Statutory Instrument No. 308 of 2012 brought about the much anticipated increase in the current audit exemption limits. The effect of these changes means that a company can now avail of audit exemption if it has satisfied the required criteria and its turnover figure does not exceed €8.8 million and the balance sheet total does not exceed €4.4 million.
Companies hoping to avail of the exemption must satisfy the all criteria as set out under Section 32 of Companies (Amendment)(No.2) Act 1999 in order to avail of audit exemption:
- Is a company to which the Companies (Amendment) Act 1986 applies;
- The turnover of the Company does not exceed €8.8 million
- The balance sheet total does not exceed €4.4 million
- Average employees does not exceed 50
- The company is not one of the following
- A company limited by guarantee
- A public limited company
- Bank or Insurance Company
- A group company (i.e. parent, holding or subsidiary company)
- An investment, stock broking, building society, credit institution, management or trustee company.
- The company must be up to date both this year and last year with its filing requirements at the Companies Registration Office.
- The company should satisfy all the conditions in respect of the financial year in which the company is to avail of the exemption and the previous financial year.
The increase to the audit exemption limits has been welcomed by many, in particular by small and medium sized businesses that should benefit greatly from the removal of the burden and expense in preparing for and filing audited accounts
Commencement Date
The new audit exemption limits will relate to financial year ends on or after the 7th August 2012. When applying for audit exemption, the company must be satisfied that the company in question does not exceed the revised limits for the current financial year and also the revised limits for the preceding financial year.
Should you have any questions in relation to this article or should you have any Company Law or Company Secretarial queries please contact John Murphy on 053 910 0000, [email protected]