Appreciate that under SI 2008/393 a company does not jump from small to medium definition unless thresholds are exceeded for 2 consequtive years, but are there any specific SI's out there re audit/ audit exemption
e.g.
company yr 1 - defined as small co - no audit required as under all 3 audit thresholds
company yr 2 - defined as small but audit required as turnover threshold exceeded
company yr 3 - defined as small - under all three thresholds.
Because the yr 2 accounts were required to be audited, is there an special rulling that means yr 3 will have to be audited or is it a simple case of examing each year as distinct and separate.
Thanks in advance for assistance
FP
Replies (4)
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Caveat
The new thresholds apply to the previous year when considering smallness.
The way I understood my auditing standards update on Monday was that if the co was small last year (y2) because it was under the old thresholds in y1, but over in y2, it may be over the new thresholds in y3, but y2 may be under the new thresholds, in which case it will still be small - if you see what I mean!
EG - the following company would be small in year 3
Y1 y/e 30.04.07
T/o 5m
BST 2.6m
y2 y/e 30.04.08
t/o 6m
bst 3m
y3 y/e 30.04.09
t/o 7m
bst 3.5m
Now I've got my head round it, I think in a nut shell, when looking to see if a company is small you use the current thresholds to assess both years each time.
Euan
i am out of the loop on audits - if a company requires an audit one year does it not require one for the following year willy nilly
Each year on its own
You consider each year's accounts on their own to determine entitlement to exemption from audit. It is only the definition of a small company which requires two successive years to be considered.
Incidentally, SI 2008/393 only increases the thresholds set out in the Companies Act 2006 for accounting periods starting on or after 6 April 2008. Until then, it is s.249A CA 1985, with its lower thresholds, which applies.