More companies to be exempt from audit
From 1 October 2012, subsidiary companies will no longerneed to have their annual accounts audited provided that, among other things,their parent company agrees to guarantee all liabilities of the subsidiary thatare outstanding at the end of that financial year. In addition, companies thatqualify as “small” for the purposes of preparing and filing accounts willautomatically qualify for exemption from audit.
Dormant subsidiaries will not even have to prepare and fileaccounts if, again, their parent company agrees to guarantee all theiroutstanding liabilities and certain other conditions are met. It will also beeasier for companies to switch between UK GAAP and IFRS when preparing theiraccounts.
The relaxations will be introduced through amendments to theCompanies Act 2006 that will take effect on 1 October 2012 and apply tofinancial years ending on or after that date. They are part of the Government’sstated commitment to reduce the regulatory burden on UK businesses, and will beachieved partly by taking advantage of certain options afforded to MemberStates under the Fourth Company Law Directive (78/660/EEC) that the Governmenthas not previously taken up.
This article first appeared in Law-Now, CMS CameronMcKenna's free online information service, and has been reproduced with theirpermission. For more information about Law-Now, click here.