Some UK companies are required to have their annual financial statement audited, and others are exempt from the statutory requirement due to their size or (in a few cases) their nature.
Organisations which fall below certain thresholds are usually exempt from audit, unless they are members of a group.
The thresholds determining company size for accounting purpose changed in the UK as of 1 January 2016,
Who is exempt from audit in the UK?
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.
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 threshold.
The definition of a small company: a company is small if both this year and last year it was not ineligible, and it met two out of three of the following criteria:
|For periods beginning before 1 January 2016||For periods beginning on or after 1 January 2016|
|Number of employers||<50||<50|
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.