Micro Company

Micro sized companies may be exempted from the full extent of the requirements relating to annual Financial Statements in respect of any financial year if in respect of that year and the financial year immediately preceding that year the company satisfies two of the three following conditions:

 
Please Note:

• The fact that a company is entitled to an exemption on the basis of its size must be certified by its auditors
• The size exemption does not apply to Public Limited or Public Unlimited companies

The company must not come within any of the 18 classes of companies listed in the Fifth Schedule of the Companies Act 2014

• It will not apply to a company if it is:
  (a) an investment undertaking
  (b) a financial holding undertaking
  (c) a holding company that prepares group financial statements, or
  (d) a subsidiary that is included in the consolidated financial statements of a higher holding undertaking.

 
A company claiming the “size / abridgement exemption” must file the Auditor’s Report to the directors and must state the following on their Balance Sheet:

I/We, as director(s) of (company name), state that –
The company has relied on the specified exemption contained in Section 352 of the Companies Act 2014;
the company has done so on the grounds that it is entitled to the benefit of that exemption as a micro company and confirm that the abridged Financial Statements have been properly prepared in accordance with section 353 Companies Act 2014.

On behalf of the board:
TYPED Name of Signatory:
Director
Date

TYPED Name of Signatory:
Director
Date

A Micro Company may also be entitled to claim audit exemption, in which case additional certification is required.

In order to qualify for the micro company audit exemption, a company must meet the following criteria in respect of the financial year concerned and the preceding year:

• The company must qualify as a “micro company”
• The company’s annual return, to which Financial Statements are attached, must be filed on time. Under Section 22 of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024, a company will only lose its audit exemption if it files its annual return late more than once within a five-year period.

 
Please Note: If the company, although micro in size, does not meet all of the conditions to qualify for the exemption from audit, its financial statements must be audited.

Micro companies who claim both the audit and abridgement exemptions are required to file:

• The Balance Sheet of the company, with (a) to (e) of the “audit exemption statement” included at the bottom of the Balance Sheet
• Notes to the Financial Statements

 
It should be noted that micro companies are exempted from most provisions relating to the Notes to the Financial Statements.

• Micro Companies are exempt from the requirements of Sections 314, 317, 318, 319, 322, and 323(1) of the Companies Act 2014.
• Micro companies, under the terms of Section 325 of the Companies Act 2014 as amended by Section 41 of the Companies (Accounting) Act 2017, are not required to prepare a directors report provided that the information required under Section 328 of the Companies Act 2014 (which refers to acquisition or disposal of own shares) is included as a note or a footnote to the balance sheet.
• Micro companies are exempt from the requirements of Sections 326(3) and 327(1) of the Companies Act 2014, which respectfully relate to Financial Instruments and Business Review.
• The financial statements of micro companies are presumed to give a true and fair view.
• Financial Statements must now state name and legal form of company, the number, registered office, place of registration and if it is being wound up.

 
Statements that Financial Statements have been prepared micro/small company Financial Statements shall be stated just above the signatures on the FS.

Sample Statement
Sample Statement to be included on Balance Sheet when claiming both audit exemption and the micro company (abridgement) exemption:

I/We, as director(s) of (company name), state that:

(a) the company is availing itself of the exemption provided for by Chapter 15 of Part 6 of the Companies Act 2014,
(b) the company is availing itself of the exemption on the grounds that the conditions specified in s.358 are satisfied,
(c) the shareholders of the company have not served a notice on the company under s.334(1) in accordance with s.334(2),
(d) we acknowledge the company’s obligations under the Companies Act 2014, to keep adequate accounting records and prepare Financial Statements which give a true and fair view of the assets, liabilities and financial position of the company at the end of its financial year and of its profit or loss for such a year and to otherwise comply with the provisions of Companies Act 2014 relating to Financial Statements so far as they are applicable to the company,
*(e) the company has relied on the specified exemption contained in s.352 Companies Act 2014 (as a micro company); has done so on the grounds that the company is entitled to the benefit of that exemption as a small company and the abridged Financial Statements have been properly prepared in accordance with s.353 Companies Act 2014.

On behalf of the board:
TYPED Name of Signatory:
Director
Date

TYPED Name of Signatory:
Director
Date

 
*In the above statement, use sections (a) – (d) if claiming audit exemption and add section (e) if claiming the micro company/abridgement exemption. A micro company can claim either or both exemptions in their Financial Statements if they qualify.)

Typeset Form Signatures
Section 347 of the Companies Act 2014 states that “a copy of a document is a reference to a copy that satisfies the following conditions:

(a) it is a true copy of the original save for the difference that the signature or signatures on the original, and any date or dates thereon, shall appear in typeset form on the copy; and
(b) it is accompanied by a certificate of a director and the secretary of the company, that bears the signature of the director and the secretary in electronic or written form, stating that the copy is a true copy of the original (and one such certificate relating to all of the documents mentioned in subsection (1) suffices and the foregoing statement need not be qualified on account of the difference permitted by paragraph (a) as to the form of a signature or of a date).
Form B1 includes the certification for the financial statements attached to the document as well as the form itself.

 
Format of certification which is acceptable
– (i) Report of the auditors under Section 356(1) of the Companies Act 2014

To the directors of Example Limited
The following are copies of our report dated 31 March 20** under section 356(2) Companies Act 2014 to the directors of Example Limited and our report dated 26 February 20** under section 391 Companies Act 2014 to the members of that company for its financial year ended 31 December 20**.

 
– (ii) Report of the auditors under Section 356(2) of the Companies Act 2014
Auditor’s Report to the directors of Example Limited pursuant to Section 356(2) of the Companies Act 2014.

We have examined:

the abridged financial statements for the year ended 31 December 20** on pages …… to …… which the directors of Example Limited propose to annex to the annual return of the company; and
the financial statements to be laid before the Annual General Meeting which form the basis for those abridged financial statements.
The scope of our work for the purpose of this report was limited to confirming that the directors are entitled to annex abridged financial statements to the annual return and that those abridged financial statements have been properly prepared, pursuant to section 353 Companies Act 2014, from the financial statements to be laid before the Annual General Meeting.
In our opinion the directors are entitled under Section 352 of the Companies Act 2014 to annex to the annual return of the company abridged financial statements and those abridged financial statements have been properly prepared pursuant to the provisions of Section 353 of the 2014 Act (exemptions available to micro-sized companies).

Auditors: ABC & Company
Date: 31 March 20**<'ol>

 
– (iii) Report of the auditors under Section 336 of the Companies Act 2014
The auditor’s report to the members is required to state:

• whether they have obtained all the information and explanations which, to the best of their knowledge and belief, are necessary for the purpose of their audit,
• whether, in their opinion, the accounting records of the company were sufficient to permit the financial statements to be readily and properly audited,
• whether, in their opinion, information and returns adequate for their audit have been received from branches of the company not visited by them, in the case of entity financial statements, whether the company’s balance sheet and except where the exemption under section 304 is availed of, the profit and loss account are in agreement with the accounting records and returns,
• whether, in their opinion, give a true and fair view – in the case of an entity balance sheet, of the assets, liabilities and financial position of the company as at the end of the financial year – in the case of an entity profit and loss account, of the profit or loss of the company for the financial year – in the case of group financial statements, of the assets, the liabilities, and financial position as at the end of the financial year and of the profit or loss for the financial year of the undertakings included in the consolidation as a whole, so far as concerns the members of the company,
• whether the statutory financial statements have been properly prepared in accordance with the relevant financial reporting framework and, in particular, with the requirements of the Companies Act 2014 (and where applicable, Article 4 of the IAS Regulation)
• The statutory auditors report will also state whether, in their opinion, the information given in the director’s report for the financial year is consistent with the statutory financial statements.

 
Also the report shall in relation to each matter referred to in the points above contain a statement or opinion, as the case may be, which shall be either – unqualified or qualified and include a reference to any matters to which the statutory auditors wish to draw attention without qualifying the report.

A statement of opinion may be qualified, including to the extent of an adverse opinion or a disclaimer of opinion, where there is a disagreement or limitation in scope of work.

Under Section 336(3a) of the Companies Act 2014, in the case of a micro company, compliance with the minimum requirements of the Companies Act 2014 is presumed to give a true and fair view.

Also under Section 336(8) of the Companies Act 2014, if in the case of any statutory financial statements, the requirements of Sections 305 to 312, which deal with directors remuneration/interests/benefits disclosure and with licensed banks disclosures, have not been complied with, the statutory auditors must include in their report, so far as they are reasonably able to do so, a statement giving the required particulars. This does not apply to micro companies which are exempt from certain sections.

Under Section 336(2) of the Companies Act 2014, the report should have an introduction that identifies the entity financial statements, and where appropriate, the group financial statements, that are the subject of the audit and the financial reporting framework that has been applied in their preparation and also a description of the scope of the audit identifying the auditing standards in accordance with which the audit was conducted.

“Balance sheet total”, in relation to any financial year of a company, means- the aggregate of the amounts shown as assets in the company’s balance sheet.

We would recommend that you seek professional advice, or contact your professional association / accountancy body, if you have any queries on the format of financial statements.

The ‘Signature Block’ at the bottom of the copy of the statutory auditors’ report delivered to the Registrar should look like the following:

Where the auditor is an individual:

TYPED name of individual as it appears on the Public Register of Auditors
Address (optional)
Date signed

 
Or

Where the auditor is an audit firm:

TYPED name(s) of individual or, where more than one, each statutory auditor for and on behalf of
Typed name of Statutory Audit Firm as it appears on the Public Register of Auditors
Address (optional)
Date signed