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Audit for a dormant company

Does a medium sized dormant need an audit?

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I suspect the answer to this questions is yes, but I've never quite been sure.

Company A owns Company B owns Company C.

Company C trades and is medium sized. Company A has some loan notes, is medium by virtue of the group, prepares consolidated accounts. A and C have audits.

Company B is dormant and has no transactions at all, nor has it for several years. C doesn't issue dividends to B (at least not for a good few years now).

In my mind, B is dormant, albeit a medium sized dormant so I prepare FRS102 (full) accounts.
Does B need an audit?

What I've read suggests so, but its a bit perverse? We've been slapping one on, but the audit is comedy as no balances move, and the cost of investment isn't impaired.

Any thoughts?

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By Duggimon
20th Jul 2021 11:28

Just to nitpick, I don't think you can be a medium sized dormant, you'd have to have either enough employees or enough turnover to be medium, both of which would render you non-dormant.

There is a process however whereby for a group requiring an audit, subsidiaries can be exempted. There's a form, AA06, from Companies House, that you can use to state the parent takes on all the liabilities and responsibilities of the subsidiary.

You'd need to look into whether it's appropriate in your case, the relevant legislation would be CA2006 479C https://www.legislation.gov.uk/ukpga/2006/46/section/479C

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By paul.benny
20th Jul 2021 13:27

What Duggimon said.

But how can you audit A and group accounts without auditing B? - if only to confirm that B actually does own C and any interco balances.

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By thevaliant
20th Jul 2021 16:49

Very true I suppose.
Having said that, you could audit A, and C and consolidated A without auditing B. Audit the intercompanies in A, agree to the accounts (unaudited) of B.
Any other tests for C (shareholders) could be audited without auditing B.

I'm sticking one on, but I don't think the audits of A or C would be impossible without auditing B. Else you wouldn't be able to audit anyone.

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