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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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When a private company based in UK always has turnover way

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When a private company based in UK always has turnover way below the level that would require the annual accounts to be audited and no member has ever requested an audit, is it up to the directors to decide each year whether to appoint an auditor or issue unaudited accounts year?
Or does Companies Act 2006 require auditors to be appointed at AGM regardless of whether there is a requirement to appoint an auditor at all?
If an auditor has been appointed year by the directors, does Companies Act 2006 deem any reappointment subject to AGM approval (even if at time of AGM there is no requirement auditor to be appointed at all, and directors have not yet decided whether since the previous audit they intend to issue unaudited accounts or reappoint the previous auditor or appoint a new auditor?
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A company is exempt from an audit if it is a Small Company under S.477 of the Companies Act 2006. A small company is defined under S.382. i.e having :
- Employees of less than 50:
- Turnover of less than £6.5million;
- Assets of less than £3.26million.
If the company is exempt then it is exempt, the directors will only need to them appoint a director if:
- They are required to do so by the articles;
- They are required to do so by the shareholders voting in a majority;
- other statutory reason - to approve a buy back of shares out of capital reserves.
The directors are the managers of the company and (save above) if they have a good reason to rely on the S.477 exemption then they are entitled to do so.
Auditors are also expensive - so the directors would have to have a justification the company's money like this - one of the reasons listed above.
Kind regards
Alex J., Solicitor
Category: Law
Satisfied Customers: 3844
Experience: Solicitors 2 years plus PQE
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