Audit Exempt

[asdfg]

If a company is audit exempt, can a bookkeeper/owner/director do the accounts, make all statutory returns i.e. to CRO etc without the need for an accountant/auditor.

Could most start up companies elect to be audit exempt and if so why don't they. This could save most start up companies money especially at srart up stage when money is short.

 

[johnnybegood]

http://www.accountancyireland.ie/dsp_articles.cfm/goto/1052/page/Audit_Exemption_:_A_Cost_Saving_for_Small_Companies.htm

An extract from the above article

"To the Future
For many small companies availing of audit exemption, assistance in the accounts preparation from a firm of accountants continues to be a requirement in practical terms. The accountancy firm usually includes an accountants' report with the financial statements prepared. "

This is a good article in relation to the topic you have just brought up. You are right there is no obligation to have an accountant to do the accounts etc.

However from a practical point of view it may be worthwhile as there as still guidelines and rules a company with audit exempt status must follow.

Furthermore it can be beneficial to a company to sometimes have an accountants report. Banks like to see them etc.

In saying that if you believe you have the expertise and time to run both the business and look after the accounting records including all filing obligations then certaintly it will save you money (but it will take up alot of your time)

The fee for audit exempt companies should be reasonable. The large fees occur with companies that require an audit due to the new "Procedures for Quality Control"

Hope that clears things up a little

 

[ubiquitous]

Banks will be very reluctant to accept accounts for loan or mortgage applications unless they are prepared independently and to a certain standard - see this thread for an example: http://www.askaboutmoney.com/showthread.php?t=24195

It is absolute madness for any company to forego its entitlement to audit exemption either voluntarily or through neglect. Unfortunately many companies end up in this position because they are badly advised (or more commonly, do not bother seeking appropriate advice) at the outset.

The advent of the new "Procedures for Quality Control" standards will mean that many of these companies will find it impossible to have an audit done at all due to their complexity and their deep unsuitability to small companies.

 

[asdfg]

"Procedures for Quality Control" standards

Where can I get details of this. Is it a legal requirement/procedure or an accountancy body requirement/procedure.

 

[johnnybegood]

it is issued by the Chartered Accountants of Ireland in order to satisfy the requirements of new financial standards, corporate goverance etc. it is basically a list of procedures which you must to do in order to be fully compliant with all relevant legislation and standards.

it is quite a complex area and places a massive increase of work in the hands of auditors thus an equally large increase in audit fees.

You might find some information regarding the PQA's on the chartered accoutants website www.icai.ie

if you really ant to see a copy of the PQA i can photocopy a set for you and post them to you. Just send me a PM.

 

[ubiquitous]

if you really want to see a copy of the PQA i can photocopy a set for you and post them to you.

They would make lovely bedtime reading - 106 pages long and couched throughout in technical and often obscure language.

eg Extract from page 38

Confirm that the following are adequately documented:
(i) The discussion among the engagement team regarding the
susceptibility of the entity’s financial statements to material
misstatement due to error or fraud, and the significant decisions
reached; ISA(UK&I)315(122)ISA(UK&I)240(107)
(ii) Key elements of the understanding obtained regarding each of the
aspects of the entity and its environment identified in paragraph
20, including each of the internal control components identified in
paragraph 43, to assess the risks of material misstatement of the
financial statements; the sources of information from which the
understanding was obtained; and the risk assessment procedures;
ISA(UK&I)315(122) ISA(UK&I)240(107)
(iii) The identified and assessed risks of material misstatement at the
financial statement level and at the assertion level;
ISA(UK&I)240(107)
(iv) If we have concluded that the presumption that there is a risk of
material misstatement due to fraud related to revenue recognition
is not applicable in the circumstances of the engagement, we must
document the reasons for that conclusion. ISA(UK&I)240(110)
(v) The risks identified and related controls evaluated.
ISA(UK&I)315(122) and
(vi) Our overall responses to the assessed risks of material
misstatements due to fraud at the financial statement level and the
nature, timing and extent of audit procedures, and the linkage of
those procedures with the assessed risks of material misstatement
due to fraud at the assertion level; and the results of the audit
procedures, including those designed to address the risk of
management override of controls. ISA(UK&I)330(73)
ISA(UK&I)240(108)

 

[asdfg]

No thanks, I just wanted to get rough idea of what it entailed.

Basically, I was wondering if a bookkeeper with no qualifications only experience could apply for a small company to be audit exempt. Then do the books of that company and make the necessary returns without the need for an auditor. If the company is service related ie IT contractor then the banks would not need to get involved as there are no bank borrowings.

 

[johnnybegood]

As stated before PQA are for audited companies only.

In your situation your company would be audit exempt therefore you can prepare accounts and do all returns yourself provided you have the necesary skills. YOU DO NOT REQUIRE AN AUDIT!!

There is no obligation to get an accountants report some people just prefer them.

so all in all its straight forward you can forget about PQA'S !!

 

[ubiquitous]

Basically, I was wondering if a bookkeeper with no qualifications only experience could apply for a small company to be audit exempt.

There is no formal application process as such. In legal terms the directors are obliged to pass a resolution to avail of audit exemption but afaik this is straightforward.

If the company is service related ie IT contractor then the banks would not need to get involved as there are no bank borrowings.

Indeed, but if the owner/director(s) of the company are applying for a mortgage or personal finance facilities, the lender may request unaudited, independently-prepared company accounts to support their application.