Small companies audit exemption meaning

Another provision of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (the 2024 Act) came into force last week, on 16 July 2025. Section 22 introduces revised wording into section 363 of the Companies Act 2014 (the 2014 Act). Previously, a company automatically forfeited its audit exemption after its first failure to file an annual return. The amended section 363 now affords these small companies a second chance...

The Companies Act 2006 (CA 2006) provides comprehensive rules governing how a company prepares its annual accounts. Through the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008, SI 2008/1911 (the 2008 Regulations), selected elements are extended to limited liability partnerships (LLPs), with suitable adaptations. The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016, SI 2016/575 (the 2016 Regulations) introduced a range of amendments to the accounting framework for LLPs and qualifying partnerships. Further alterations affecting LLPs and other bodies were made by the Statutory Auditors Regulations 2017, SI 2017/1164. In most cases, the changes take effect for LLPs with financial years commencing on or after 17 June 2016; however, the stricter conditions on the small LLPs’ exemption from preparing group accounts apply to periods starting on or after 1 January 2017. This Practice Note, read alongside Practice Note: LLP Accounts—an outline of the statutory framework, distils the key obligations contained within these statutory provisions...

Where a company or LLP prepares annual accounts for a financial year, an audit is required unless an exemption applies... Audit exemption for micro-entities A company or LLP that meets the micro-entity criteria may rely on the audit exemption in sections 477–479 of the Companies Act 2006 (CA 2006), provided the relevant conditions are satisfied. For details of how a company or LLP qualifies as a micro-entity, see Practice Notes: The micro-entities regime and The micro-entities regime for LLPs... Audit exemption for small companies or LLPs A company or LLP that meets specified conditions may be exempt from auditing its individual accounts for a financial year. The relevant conditions are that: it qualifies as a small company or LLP in relation to that financial year (for details of how a company or LLP qualifies as small, see Practice Notes: The small companies regime and The small LLPs regime) its balance...

The Companies Act 2006 (CA 2006) sets detailed rules for preparing a company’s annual accounts. The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008, SI 2008/1911 (2008 Regulations) apply selected provisions to limited liability partnerships (LLPs), with appropriate adjustments. The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016, SI 2016/575 (2016 Regulations) introduced a series of changes to the accounting framework for LLPs and qualifying partnerships. The Statutory Auditors Regulations 2017, SI 2017/1164 made further amendments affecting LLPs and other entities. Most changes take effect for LLPs with financial years starting on or after 17 June 2016, while the stricter exemption from preparing group accounts for small LLPs applies to financial years beginning on or after 1 January 2017. This Practice Note, alongside Practice Note: LLP Accounts—individual and group accounts, sets out the requirements contained in those statutory measures. Application of the statutory provisions All LLPs must prepare accounts; however, the statutory obligations to be met in respect of those...