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Audit exemption - UK subsidiary of a US company

Do we need to audit this client?

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Our client is a UK limited co, whose parent company is listed in the US . The client itself qualifies for small company exemption, and its accounts will be consolidated into parent's audited accounts (both have same year end). My question is that do we need to do an audit even though our client did not want one? Could somebody shed any light on this please or where to research? Any comments much appreciated.

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By daniel_
10th Jan 2019 17:15

Section 479A of Companies Act 2006.
The parent company needs to guarantee liabilities of sub as per s479c.
Parent company accounts need to be filed at CH along with sub.
Written resolution from members of sub seeking subsidiary audit exemption.
Include s479a statement on balance sheet of sub.

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By phoesal
to daniel_
11th Jan 2019 08:42

Thank you so much for the information Daniel!

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15th Jan 2019 11:07

Sorry, I have to disagree with Daniel.

If the parent company is listed then it's an "ineligible group" and so audit exemption under 479 isn't available.

Even if the parent wasn't listed, 479A exemption is only available if:
1) the (immediate) parent of your subsid is established under the law of an EEA member state; and
2) the ultimate parent undertaking prepares consolidated acocunts which comply either with IFRS, or the provisions of Directive 2013/34/ EU of the European Parliament and of the Council on the annual financial statements, consolidated statements and related reports of certain types of undertakings.

If your parent undertaking is listed in the US and (therefore) consolidates under US GAAP then neither condition will be satisfied & your UK company will have an audit requirement.

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By phoesal
to Mike Bath
15th Jan 2019 12:28

Much appreciated Mike. I had a very detailed read of the relevant sections and also spoke to ICAEW helpline. To contribute to your comment - exemption of audit applies to companies: a)it is a subsidiary AND b)its parent is established under the law of EEA states. US parent certainly doesn't meed the requirement. Therefore like you said, exemption is not available and our client needs an audit. Thanks very much!

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