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Audit exemption check: do you need an auditor?

A private company does not need an auditor if it is a "small private company" under the Companies Act. That depends on three things, not on turnover alone. Answer four questions and get a clear yes or no with the reason.

Listed companies, banks, insurers, and large companies with turnover or assets above Rs 500 million for two years. Tap the law tag to see the list.
Sales for the whole period, before expenses.
Usually 12. A shorter first or changed year reduces the turnover limit in proportion.

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How we worked it out

  1. A small private company is a private company whose turnover for the last accounting period is under Rs 100 million, that holds no Global Business Licence, and that is not a Financial Reporting Act First Schedule entity (Companies Act s.2(5)).
  2. If the accounting period is not a full year, the Rs 100 million limit is scaled to its length (s.2(6)(a)). A company qualifies for its first accounting period whatever its turnover (s.2(7)).
  3. A small private company need not appoint an auditor (s.209(1)), unless a 5% shareholder asks for one (s.209(5)).

The law behind this

Before you rely on this

  • This check is about the Companies Act audit duty only. A bank, an insurer or a licensed business may have audit duties under its own licence.
  • Turnover means the company's own turnover, not the group's.