This article is for Irish company directors and founders who need to know whether their business requires a statutory audit.
If you're unsure whether you qualify for audit exemption, worried about accidentally losing it, or want to understand the size thresholds and filing mistakes that trigger mandatory audits, this guide covers the exemption rules, common ways companies lose their exempt status, and what happens if you get it wrong.
Key Takeaways
• Small companies qualify for audit exemption if they meet two of three thresholds: €12m turnover, €6m balance sheet, or 50 employees. • Filing your annual return late strips audit exemption for the following two years, costing €4,000-€6,000 in unnecessary audits. • Shareholders holding 10% of voting shares can force a statutory audit by serving notice one month before year-end. • You lose exemption only after exceeding size thresholds in two consecutive years, not just one bad year. • Claiming audit exemption incorrectly results in defective filings that must be redone with a retrospective audit at full cost.
Laura Ryan is a practising Barrister at the Bar of Ireland. She graduated from the Honourable Society of King’s Inns in 2024, having previously qualified and practised as a Chartered Accountant in a big four accounting firm.
Most private limited companies in Ireland do not need a statutory audit if they qualify as a small company. To qualify, you must meet at least two of three thresholds: turnover of €12 million or less, balance sheet total of €6 million or less, and 50 or fewer employees. However, you can lose this exemption through late filing or other procedural mistakes.
What's the difference between having an accountant prepare my accounts and getting a statutory audit?
A statutory audit is a separate, independent examination by a registered auditor who reviews your accounts and issues a formal opinion on whether they give a true and fair view of your financial position. This is completely different from having an accountant prepare your accounts—the auditor cannot be involved in preparing the figures they're reviewing.
How much does a statutory audit cost?
A statutory audit typically costs €2,000 to €3,000 for a small company, and the price rises steeply with complexity. This is why audit exemption is so valuable for small companies—the cost and administrative burden often outweigh the benefit when shareholders and directors are the same people.
Can I lose my audit exemption by filing my annual return late?
Yes, and this is the most common way companies accidentally lose their exemption. If you file your annual return late, you lose audit exemption for the following two financial years. A company with €500,000 turnover can end up paying €4,000-€6,000 in audit fees simply because it missed filing deadlines.
What happens if I exceed the size thresholds in one year?
A single year above the thresholds doesn't automatically trigger a mandatory audit. You only lose the exemption if you exceed two or more thresholds in two consecutive years. So one unusually good year won't necessarily push you into needing an audit.
Can my shareholders force me to get an audit even if I'm exempt?
Yes, shareholders holding at least 10% of voting shares can require a statutory audit for a given financial year, regardless of your exemption status. They must serve notice no later than one month before the end of the financial year. This is rarely used in owner-managed companies but protects minority investors who want independent verification.
What qualifies as a micro company and why does it matter?
A micro company must meet two of these conditions: turnover of €900,000 or less, balance sheet total of €450,000 or less, and 10 or fewer employees. Micro companies get audit exemption plus significantly reduced financial reporting requirements compared to larger small companies.
What happens if I claim audit exemption when I'm not entitled to it?
Filing accounts without a required audit is a defective filing that the CRO can reject. Directors are in breach of the Companies Act 2014, and the company may face prosecution. You'll likely need to redo the filing with a proper audit report, incurring the audit cost retrospectively—plus the issue will surface during any Revenue audit, investment due diligence, or dispute.
Does my dormant company need an audit?
Dormant companies with no significant accounting transactions may qualify for audit exemption if their balance sheet total is under €1.27 million. You can still qualify as dormant even if you've received share capital, paid filing fees, or made a small number of non-significant transactions. If the company becomes active during the year, you lose the exemption and standard size thresholds apply going forward.
