Perhaps one of the most welcome additions to the new Companies Act 2014 (the “Act”) is the extension of audit exemption to groups of companies. In this article, we set out the thresholds for groups looking to avail of these new provisions. More standalone companies should be able to avail of audit exemption as they will only have to satisfy the conditions for the current financial year. The thresholds for a company to qualify as medium sized have been increased which may allow a greater number of companies make less detailed financial information publicly available.

The Act was signed into law in December 2014 and is expected to come into effect from 1 June 2015. It is divided into separate sections and Part 6 deals with matters relating to financial statements, the annual return and audit.  

Audit Exemption - Important Changes

Groups of Companies

The Act will allow certain groups of companies to prepare audit exempt accounts provided that the directors are of the opinion that the parent company and all of the subsidiary companies will satisfy two of the three thresholds in the current and preceding financial year, the decision is recorded in the minutes of a meeting of the directors of each company, all annual returns are up to date and none of the companies fall into a certain category including credit institutions and insurance companies.

The thresholds to be observed are:

(i)balance sheet total does not exceed €4.4m;

(ii)turnover does not exceed €8.8m

(iii)employees do not exceed 50

Dormant Group Companies

Companies classed as dormant that are members of a group will be able to avail of audit exemption. To be classed as dormant a company must not have had any significant accounting transactions for a particular financial year and must only have permitted assets and liabilities. The directors of the dormant company must agree to avail of the exemption and record that decision in the minutes of a board meeting before the financial year end of the company.

Small Companies

The requirements are changed slightly in relation to small companies seeking audit exemption. They will now only have to satisfy the requirements in the current financial year and they will only need to satisfy two of the three conditions. They will no longer have to consider the preceding financial year. The qualifying thresholds remain unchanged. 

Late Filing of Annual Returns

A significant change to the existing audit exemption legislation is that the late filing of the first 6 month annual return of a company will prevent a company, whether small, part of a group or dormant, from claiming audit exemption.

Medium Companies

For the purpose of public disclosure of financial information, the thresholds for qualifying as a medium sized company have been increased to the levels set out below:

(i)turnover does not exceed €20m

(ii)balance sheet does not exceed €10m

(iii)employees do not exceed 250

A company must satisfy at least two of the three conditions in both the current and preceding financial year in order to prepare medium accounts.

Changing the Financial Year End

For the first time, it will be necessary, when extending the financial year end of a company, to notify that extension to the Companies Registration Office. Either the current or the preceding year end can be extended, but the preceding year end cannot be extended where the deadline for submission of those financial statements has passed. 


The changes outlined above should serve to ease the red tape faced by Irish companies and should also serve to reduce administrative costs.  However directors should ensure that annual returns are filed on time as failure to do so will prove costly to a company or group of companies that would otherwise have been entitled to claim audit exemption. 

Whilst audit exemption is an attractive prospect, directors must also consider whether audited financial statements will still be a requirement for creditors, bankers, grant bodies or for public sector tendering processes before taking the decision to prepare audit exempt accounts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.