ICAEW.com works better with JavaScript enabled.

Audit exemption eligibility

Learn whether your organisation qualified for audit exemption for reporting periods beginning on or after 1 January 2016, under the Companies Act 2006 as amended by SI 2015/980. ICAEW's Technical Advisory Service provides guidance covering: group eligibility; eligibility of UK subsidiaries; and audit exemption conditions.

Who is exempt from audit in the UK?

This section provides a high level summary of the audit exemption thresholds in the UK. Detailed guidance can be found at the links provided.

Charities

Any charity that falls below a gross income of £1,000,000 or less for accounting periods ending on or after 31 March 2015 (£500,000 or less for prior accounting periods), unless both their gross assets exceed £3.26m and their gross income exceeds £250,000), can choose to opt out of a full audit. Most are required to obtain an alternative assurance service, independent examination.

Join the ICAEW Charity and Voluntary Sector Interest Group to access specialist helpsheets including further detail on Charity Financial Reporting and Scrutiny.

Companies

Companies that qualify as small companies under Companies Act 2006 are usually exempt from audit, unless they are members of a group or are charities and required to follow the charity audit thresholds.

The definition of a small company: a company is small if for both this year and last year it was not ineligible, and it met two out of three of the following criteria:

For periods beginning on or after 1 January 2016:
Turnover <£10.2m
Total assets <£5.1m
Number of employees <50

Subsidiaries

Subsidiary companies within a group can also be exempt from audit, if they meet certain criteria and if the parent company provides a guarantee of all outstanding liabilities at the end of the financial year. Detailed guidance on the use of the parent guarantee is provided in technical release TECH 07/13BL.

To find out more about audit exemption for companies and subsidiary companies, take a look at our webcast:

Have the audit exemption thresholds increased?

The UK audit exemption thresholds have increased for accounting periods starting on or after 1 January 2016

The Department for Business, Innovation and Skills confirmed the changes in a written response to Parliament on 26 January 2016, which can be found here.

Further information

 

Audit exemption beginning on or after 2016

This is exclusive item - please log in or subscribe to view this item.

Stacey Tapp, ICAEW Technical Advisor, explains the criteria for determining whether an audit is required and answers commonly asked questions about audit exemption for periods commencing on or after 1 January 2016.

Is a company or group small?

This is exclusive item - please log in or subscribe to view this item.

Technical helpsheet issued to help members make their assessment as to whether a company or group qualifies as small under the Companies Act 2006.

Ineligible companies and groups

This is exclusive item - please log in or subscribe to view this item.

This helpsheet has been issued by ICAEW’s Technical Advisory Service to help members understand when a company or a group is ineligible for the small companies regime. The helpsheet identifies the legislative requirements of the Companies Act 2006, highlights key definitions and offers practical examples to help understand the interpretation of the requirements.

Is an audit required for a company?

This is exclusive item - please log in or subscribe to view this item.

Technical helpsheet issued to help ICAEW members understand when a company requires an audit under the Companies Act 2006 and potential routes to audit exemption.