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Irish Accountants Welcome Audit Exemption Measure

by Jason Gorringe,, London

17 November 2006

The Institute of Chartered Accountants in Ireland (ICAI) has welcomed amendments to the Investment Funds, Companies and Miscellaneous Provisions Bill 2006 which will allow the new proposed audit exemption regime to commence for financial years ending in 2007.

The new thresholds, agreed at the Select Committee on Enterprise and Small Business this week, raise the audit exemption threshold to EUR7.3 million in terms of turnover and EUR3.65 million in terms of balance sheet - the maximum allowed under European law. The previous figures were EUR1.5 million and EUR1.9 million respectively.

Commenting ICAI Director of Technical Policy Aidan Lambe noted:

“At the time of Minister Ahern’s announcement that he was minded to increase the thresholds it was assumed that he would only be able to do so for financial years beginning after the passage of legislation through the Oireachtas. This is because the law currently allows minority shareholders the right to object to the company availing of audit exemption in advance of the financial period to which the audit exemption relates."

He continued that:

"However, last night the Government proposed and the Opposition agreed to further amendments to company law which facilitate any objection to audit exemption by minority shareholders being raised during the current financial period. Although we don’t know exactly when the legislation will be commenced, what this means in effect is that companies could now be able to avail of the increased thresholds for financial years ending rather than beginning in 2007. Indeed, given the Minister’s comments in the Oireachtas, there are strong indications that companies with financial years ending early in 2007 will be able to take advantage of the revised thresholds.

"ICAI very much welcomes this move. The purpose behind the increase in the thresholds was to liberate smaller companies from the burden of a statutory audit. In doing so it frees up chartered accountants to provide additional value added services to businesses. It makes sense therefore if this principle has been agreed to make it operable as soon as possible.

"Minister Ahern, and indeed Fine Gael and Labour, are to be congratulated for the pragmatic approach they have taken to this issue.”

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