Recetly saw this query posted on the ICAEW TechnicalEnquiries Service. It is something that we encounter from time to time, but you will note it is very specific.
Query: A UK company is a subsidiary of a holding company incorporated overseas. The UK company has turnover and assets below the audit exemption threshold, can the UK company take advantage of the audit exemption?
Solution: The company cannot be assessed for audit exemption on a standalone basis, it must also be assessed as part of the group it belongs to. Group companies can take advantage of audit exemption provided that the group qualifies as a small group and was not, at any time of the year, an inelegible group. In addition, the group must not exceed the group audit thresholds:
- Aggregate turnover not more than £6.5m (or £7.8m gross), and
- Aggregate balance sheet total not more than £3.26m (or 3.9m gross). The balance sheet total is the aggregate amount of assets in the balance sheet; liabilities are not taken into considerating when arriving at the balance sheet total.
These thresholds must be met in respect of the whole group including overseas companies. For this purpose it is also necessary to look at size of any group containing the company, not just the group headed by the company.