Section 475 of the Companies Act 2006 requires Companies (such companies which qualify the definition of Companies under UK’s Companies Act 2006 only) are required to have their annual accounts audited unless it is exempted in accordance with the provisions of Companies Act 2006.
In simple words the following companies are not required to have their financial statements of their to be audited:
- Small companies that qualify the exemption criteria as mentioned under section 477 of Companies Act 2006.
- Dormant companies as discussed under section 480 of Companies Act 2006.
- Non-profit-making company that fulfills certain conditions as detailed under section 482 of Companies Act 2006.
In addition to that there are certain other conditions that must be fulfilled before a company can completely exempts itself from annual audit of its accounting books from the auditor. One of such condition is that a director’s statement must accompany the balance sheet (statement of financial position) which states that:
- members have not asked to have the annual accounts of the entity to be audited by exercising their right as given to them by section 476 of this act i.e. Companies Act 2006.
- Directors fully understand their responsibility in accordance with this act concerning the accounting records and preparation of accounts.
- Director’s statement must appear before the board’s approval signature i.e. signature approving the financial statements by director on behalf of the board.