When financial statements of a company are being prepared, it is important to comply with the requirements stating if and when the financial statements of the company need to be certified by a licensed auditor.
The requirements for certification of the financial statement by an auditor differ across various countries. As an example:
- In Cyprus all financial statements must be audited regardless of the annual turnover or other financial criteria of the company.
- In the United Kingdom, certification of the financial statements by the auditor is mandatory if the particular criteria of the company exceed the threshold values. The threshold values are exceeded if the company meets at least two of the following three criteria:
- The company has more than fifty employees.
- The annual turnover of the company exceeds GBP 6.5 mln.
- The net asset value as at the reporting date exceeds GBP 3.26 mln
- In Ireland there is also a system of criteria in effect in that the company may be exempt from audit provided that:
- The turnover of the company for the financial period does not exceed EUR 8.8 mln
- The net asset value as at the reporting date does not exceed EUR 4.4 mln
- The company has less than fifty employees
- The company is not listed in any of the 20 categories mentioned in the Second Schedule to the Amended Companies Act 1999
Even where all of the above conditions are met, if a report is not filed with the Irish Companies Registration Office within the 28 day deadline after the Annual Return Date, it needs to be audited. The Annual Return Date is the date to which an Irish company must file confirmation that its existence is continuing for the following year.
Unless the report is filed on time it needs to be certified by an auditor also in the following year. Provided that both the previous and the current reports are filed within the deadline an Irish company may be exempt from the requirement for certification of its financial statements by an auditor.
The standards of the laws that regulate operations of an auditor vary between jurisdictions. As an example, in certain countries a company with particular financial criteria will be treated as large. In such cases the auditor’s standards may provide for his obligation to visit the company offices in person to have the audit works approved and to carry them on.
Lexon Incorporations will ensure the appointment of the auditor and certification of accounting reports in accordance with the procedure under the law of the country where the company is registered.