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New exemption from audit for subsidiaries

A company we act for is a subsidiary of a Swedish parent company, and has previously therefore been required to be audited, although on its own it would not need an audit.

The new legislation that would potentially exempt the subsidiary from audit requires the company to be included in the consolidated accounts drawn up by the parent, in accordance with either international accounting standards, or the provisions of the Seventh Directive.

The parent does not use IFRS, but applies Swedish GAAP.  I believe this would fall within the provisions of the Seventh Directive, but could anyone confirm or advise otherwise? 

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Sorry - digressing...

 

Don't forget that the prescribed wording needs to be included on the parent company's audited accounts and these must be filed at Companies House along with the subsidiary's accounts.  It is far too easy for the parent company/group auditors to omit this in which case you won't be eligible for audit exemption.  Not much fun, especially if the stocktake has come and gone without you attending etc.  For me this is too big a trip wire to make the exemption worthwhile.

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Also digressing a bit

I am just looking at this for one of my clients. As far as I can ascertain, the holding company's auditors still have to report on the group results. Therefore, they will have to carry out additional audit procedures if the subsidiary has not been audited. If my understanding is correct, the exemption is only worthwhile if the subsidiary is immaterial to the overall group accounts.

Is that how you read it?

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