# The Companies Act 1985 (Audit Exemption) Regulations 1994, Note: Explanatory note


(This note is not part of the Regulations)
These Regulations amend the provisions of Part VII of the Companies Act 1985 (accounts and audit) by inserting new sections 249A to 249E into that Part (regulation 2).
The new provisions exempt small companies which satisfy specified conditions from the obligation to have their annual accounts audited (section 249A). Slightly different criteria apply to small companies which are charities (section 249A(5)). Section 249B sets out the cases where the exemptions are not available.
In certain circumstances the audit report is to be replaced by a report to be made by a suitably qualified person (defined as a “reporting accountant”) (sections 249C and 249D).
Section 249E sets out the effect of the exemption from the audit requirement on other provisions of Part VII of the 1985 Act.
Regulation 3 substitutes a new section 388A which provides that a company exempt from the audit requirements is also exempt from the obligation to appoint auditors, and gives power to the directors to appoint auditors if that exemption ceases.
Regulation 4 and Schedule 1 make consequential amendments of the 1985 Act and the Charities Act 1993. Regulation 5 and Schedule 2 make consequential amendments of the Companies (Revision of efective Accounts and Report) Regulations 1990.
Regulation 6 determines the application of the regulations and contains transitional provisions.

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Source: https://www.legislation.gov.uk/uksi/1994/1935/note (the official version)
Page: https://openlegislation.uk/companies-act-1985-audit-exemption-regulations-1994/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.