New rules mean that tens of thousands of UK business could be eligible for an audit exemption, says the Department for Business, Innovation and Skills. Currently to be eligible for an audit exemption in the UK, small companies must be less than a certain size in terms of balance sheet and turnover. The new regulations will align mandatory audit thresholds with accounting threshold, with the result that small and medium-sized enterprises will be able to obtain an exemption if they meet two of the following three criteria:
No more than 50 employees;
No more than £3.26 million on their balance sheet; and
Less than £6.5 million in turnover
This could affect some 36,000 companies. Furthermore, most subsidiary companies will be exempt from mandatory audit, as long as their parent company guarantees their liabilities. This will benefit a further 83,000 subsidiary companies. In addition, another 67,000 dormant subsidiaries will no longer need to prepare and file annual accounts, provided they receive a similar guarantee. The regulations will have effect for accounting years on or after 1st October 2012.