audit exemption

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The exemption from statutory audit by a registered auditor that can be claimed by certain small companies. Companies with a turnover of not more than £1 million and a balance-sheet total of not more than £1.4 million may be totally exempt from audit. Companies with a turnover in the range £1 million to £5.6 million (and a balance-sheet total of not more than £2.8 million) may claim exemption from the audit requirement but still need a reporting accountant’s report. The audit exemption report must state that the accounts are, in the opinion of the accountant, in agreement with the accounting records kept by the company and that the accounts have been drawn up in a manner consistent with the provisions of the Companies Act. Also, the accountant must report that, on the basis of the information contained in the accounting records, the company is entitled to the exemption on the basis of size. The audit exemption report was formerly known as a compilation report.

Subjects: Accounting.

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