A limited company has turnover £9m, assets £6m, and 40 employees. Is it exempt from needing an audit?

• A. Yes
• B. No
• C. Only if directors vote
• D. Only if it's a parent company

Answer: (A)

Audit exemption for small private companies depends on size thresholds. To be small, two of these three must be met: turnover not more than £10.2m, gross assets not more than £5.1m, and an average of no more than 50 employees. In this case, turnover is £9m (within the limit) and employees are 40 (within the limit), while assets are £6m (exceeding the limit). Since two thresholds are satisfied, the company qualifies as small and is exempt from the mandatory audit. The decision isn’t about directors’ votes or being a parent company; it’s about meeting the size criteria. So, it’s exempt.