A common enquiry from our clients is whether an audit is necessary, and if so who can audit them. To address this issue, we have broken the requirements down by type of entity.
Who Requires an Audit?
Type of Entity: Company
Simply put, all companies require an audit by default; however in certain circumstances, as set out in the Companies Act 1993, the shareholders can vote unanimously not to appoint an auditor.
Before everyone can rejoice that an audit is not required, there are exceptions to which entities can pass this unanimous resolution. These are:
- Issuers – Any issuers, being listed or deemed issuers, cannot opt out of audit requirements. Deemed issuers are those companies which issue units/shares to the public, but are not listed on any stock market in essence
a. Large company having overseas ownership of >25% – A large company which is owned 25% or more by an overseas entity cannot opt out of audit requirements. A “large company” is defined as (any two criteria have to be met):
i. Company has turnover >$20 million
ii. Company has total assets >$10 million
iii. Company has employees >50.
2. Subsidiary of an overseas entity – Any New Zealand subsidiary of an overseas entity cannot opt out of audit requirements. An overseas subsidiary generally means an entity with 50% or more overseas ownership.Details