Understanding the Criteria for Audit Exemption for Small Companies

Cover Image for Understanding the Criteria for Audit Exemption for Small Companies

| Lindsay Webber

The audit exemption for small companies is a provision in the Company's Act that allows certain small businesses to be exempt from having their financial statements audited. This can save time and resources for small businesses, allowing them to focus on growth and development. However, not all small companies are eligible for this exemption, and it is essential to understand the criteria to ensure compliance with the law. In this blog, we will discuss the criteria for audit exemption for small companies and some common misconceptions about the process.

Criteria for Audit Exemption

According to Section 360 of the Company's Act, a small company must meet at least two of the following three criteria to qualify for audit exemption:

1. Balance Sheet Total: The total assets of the company (current assets and fixed assets) should not exceed €6 million.

2. Turnover: The company's turnover should not exceed €12 million.

3. The number of employees does not exceed 50

It is important to note that even if a company meets these criteria, there are certain types of businesses that cannot claim the small company audit exemption. These include Schedule 5 companies, such as those authorised by the Central Bank of Ireland, mortgage brokers, insurance brokers, and investment intermediaries. Even if these businesses are small and meet the other criteria, they are still required to have their financial statements audited.

Another consideration is whether the company has met their CRO filing requirements. If a small company is late filing their annual return they cannot avail of the audit exemption for the following two years.

Claiming Audit Exemption

When preparing a set of audit-exempt financial statements, it is crucial to include the correct wording and references to the relevant sections of the Company's Act. This demonstrates that the company is availing of the exemption and has met all the necessary conditions. Additionally, the directors of the company must acknowledge their responsibilities for the financial statements.

It is also essential to be aware of the consequences of claiming audit exemption incorrectly. If a company claims audit exemption but does not meet the criteria or is a Schedule 5 company, they may face penalties . 


The small company audit exemption can be a valuable resource for eligible businesses, saving time and resources that can be better spent on growth and development. However, it is crucial to understand the criteria and ensure compliance with the Company's Act. By being aware of the requirements and potential pitfalls, small companies can confidently claim audit exemption and focus on their core business activities.

If you require assistance or advice in relation to any of the above matters, please contact our team on 053 91 000 00 or email [email protected].

The contents of this article are meant as a guide only and are not a substitute for professional advice. The authors accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.

Image of Lindsay Webber

About the Author

As a member of our Practice Support team, Lindsay’s focus is on helping practices achieve on-going best practice compliance, providing in-house training, technical assistance, and file reviews. Lindsay is a member of the South African Institute of Chartered Accountants and Chartered Accountants Ireland. She trained with KPMG in Johannesburg and specialised in external audit of financial services companies. She then spent six years lecturing audit and financial reporting to under-grad and post-grad students at Rhodes University in South Africa before moving to Ireland and returning to practice in a small, and then a medium sized firm where she was an audit manager. Altogether, she has over six years external audit experience along with over six years academic experience specialising in Audit and Financial Accounting. She is passionate about combining her academic and practice backgrounds to provide technical information in a useful and practical way. Outside of her accounting qualifications Lindsay holds a PGDiploma in Higher Education from Rhodes University and graduated with distinction from the MBA course at Trinity College Dublin. She is currently working towards a Diploma in Forensic Accounting through Chartered Accountants Ireland.


Cover Image for Strengthen Your Audits: Addressing Risk Assessment and Fraud

Strengthen Your Audits: Addressing Risk Assessment and Fraud


While carrying out file reviews, some common areas for improvement have been identified th...

Cover Image for How to Prepare for Your Monitoring Visit

How to Prepare for Your Monitoring Visit


A monitoring visit can be a daunting prospect, but thorough preparation can make the proce...

Cover Image for Insights from IAASA’s 2023 Financial Statements Examinations

Insights from IAASA’s 2023 Financial Statements Examinations


Last month, the Irish Auditing and Accounting Supervisory Authority (IAASA) released repor...