Recent legislative changes to the Companies Act – “Small Company” Concept for Audit Exemption
March, April, May 2015
The Companies (Amendment) Act 2014 was passed by Parliament in October 2014, introducing the largest number of changes to the Companies Act since its enactment in 1967, including the introduction of new criteria for qualification as a “small company” for audit exemption. The “small company” criteria recognise a broader group of stakeholders (for example, creditors, employees, customers, etc) who may have an interest in the financial statements, other than just shareholders. While audits can be useful, they cost time and money. The new audit exemption is intended to help reduce regulatory costs for smaller companies that do not have wide market impact, and would result in a reduction in compliance costs for at least 25,000 small companies which currently do not qualify for audit exemption. The intended audiences of these materials are public accountants, and professional accountants in business interested in the practical application of the new “small company” concept for audit exemption.