When preparing the Annual Financial Statement, an unquoted company should prepare an auditor’s report on the annual financial statement and the director’s report unless the company is exempt from audit. Similarly a quoted company should prepare an auditor’s report on the Financial Statement, the director’s report and the directors’ remuneration report unless the company is exempt from audit. This makes it necessary to understand what qualifies a company to be exempt from audit.
A company is exempt from audit if;
- It qualifies as a small company in relation to that year. The small companies regime in relation to Financial Statement applies to a company for a financial year in relation to which the company qualifies as small, and the company is not excluded from the small companies regime.
- Its turnover for that year is not more that 50 million Kenyan shillings.
- The value of its net assets specified in the balance sheet in that year is not more than 20 million Kenyan shillings.
- It has been dormant since its formation.
- It has been dormant since the end of the previous financial year.
- Its non-profit making and its financial statements are subject to audit by the Attorney General.