Audit exemption

Audit exemption

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The audit exemption for small companies excludes banking companies, but what is the definition of a banking company? Would a small company with a Consumer Credit License, making loans to the general public, be covered by this exclusion?

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Euan's picture
By Euan MacLennan
17th Jul 2013 16:34

Banking company

... is defined in s.1164 CA 2006, so the question would appear to be "Does your client have permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to accept deposits?".

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David Winch
By David Winch
17th Jul 2013 18:44

Whose money are they lending?

My understanding of the position is that a company which lends out its own money to members of the public is not a "bank" even if it charges interest on those loans.  But if that company accepts deposits (i.e. it has money loaned to it) then it is a bank even if it pays no interest on those deposits.

Do be a bit careful if, for example, the company gets some extra money by 'borrowing' off directors' friends and family.  It may inadvertently cross the line by doing so and be then subject to banking regulations!

David

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By DMGbus
18th Jul 2013 08:49

(small co) Pawnbrokers exempt from audit

A small company (ordinarily audit exempt) is still audit exempt if it lends money as a pawnbroker.  But DOES require a CCL.

 

My expectation is that banking and audit requirement is aligned to the dangers posed to the public by companies being DEPOSIT TAKERS (ie. taking money off people / holding that money for them) as opposed to money lenders lending funds to them.

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