Which is NOT a criterion for audit exemption?

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Study for the AAT Level 4 Drafting and Interpreting Financial Statements exam. Utilize flashcards and multiple choice questions with detailed explanations and hints. Prepare to ace your exam!

Multiple Choice

Which is NOT a criterion for audit exemption?

Explanation:
Audit exemption for small companies is based on meeting two of three size thresholds: turnover not more than £10.2 million, assets (balance sheet total) not more than £5.1 million, and an average of no more than 50 employees. Being a subsidiary of a larger group is not one of these size criteria, so it isn’t a basis for exemption by itself. The group context can affect whether consolidated accounts are required, but the exemption itself hinges on those size limits. That’s why being a subsidiary is not a criterion for audit exemption.

Audit exemption for small companies is based on meeting two of three size thresholds: turnover not more than £10.2 million, assets (balance sheet total) not more than £5.1 million, and an average of no more than 50 employees. Being a subsidiary of a larger group is not one of these size criteria, so it isn’t a basis for exemption by itself. The group context can affect whether consolidated accounts are required, but the exemption itself hinges on those size limits. That’s why being a subsidiary is not a criterion for audit exemption.

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