Auditor Appointment
The Companies Act 1963 mandated annual audits for all companies, but exemptions were introduced for smaller-scale companies in 1999, based on turnover, balance sheet size, and employee count.
The thresholds were revised in the 2014 Act. Directors must certify their eligibility for exemption and acknowledge their statutory duties. Members holding voting rights can oppose the exemption. Terminating an auditor’s appointment requires notification.
The 2014 Act introduced audit exemptions for small companies meeting specific criteria regarding turnover, balance sheet size, and employee count. The exemption is contingent on timely filing of annual returns. Similar conditions apply to group companies. Financial services companies and securitisation vehicles are excluded from the exemption.
Dormant companies may qualify for exemption if they meet specific criteria, including dormancy and limited transactions. The exemption continues until circumstances change. Annual returns must be timely filed.
The audit exemption negates certain audit-related obligations and provisions. Directors must include a statement on the balance sheet confirming exemption eligibility and compliance. Failure to comply results in penalties.
Companies are ineligible for the audit exemption if annual returns are not filed on time or if they fall under specified financial services categories. Group companies are also ineligible if any member is a credit institution, insurance undertaking, or falls under specified categories.
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