Audit Exemption Threshold For Irish Firms To Be Raised 'Significantly'

by Jason Gorringe, Tax-News.com, London

17 May 2006

Responding to competitiveness concerns from groups representing SMEs, Irish Trade and Commerce Minister Michael Ahern has announced that the audit exemption threshold is to be increased "significantly".

Under the minister's plans, the turnover exemption limit will be raised to EUR7.3 million - the maximum turnover exemption threshold permitted under EU law.

The audit exemption threshold is the level below which companies are relieved of the obligation to engage an independent external auditor. Currently, the exemption threshold in Ireland is set at EUR1.5 million - a level which accounting groups such as the Institute of Chartered Accountants in Ireland (ICAI) have argued is far too low.

By comparison, the audit exemption threshold for UK companies is GBP5.6 million, and the ICAI has warned that this puts Irish SMEs at a competitive disadvantage.

“The bottom line is that a company based in Dundalk is now facing a different and more costly audit regime than its counterpart north of the border. This is a competitiveness issue for our SME sector," the ICAI stated in a position paper published in March.

Ahern's announcement last week that the audit exemption threshold is to be increased has seemingly recognised these concerns.

"The debate on the appropriate level at which to pitch the exemption has been in progress for some time now," the Minister noted, "and I have been listening to the various lines of reasoning put forward."

"There is need for balance between regulatory prudence and responsiveness to the interests and concerns of small businesses," he added.

Ahern is aiming to set the new audit exemption regime in legislation some time during his Departmental remit.

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