Bookkeeping

Audit threshold

The size limits above which a company's annual accounts must be audited by a statutory auditor. Set nationally within EU size categories.

What Audit threshold means

The EU Accounting Directive requires a statutory audit for medium-sized and large companies and for public interest entities, while letting member states exempt small companies. A company is small when it stays below two of three limits at the balance sheet date: total assets, net turnover and average number of employees. The directive sets maximum values for these limits, adjusted in 2024 for inflation, and each country chooses its own within them.

As a result the audit threshold differs considerably: some countries audit almost every limited company, others only those with turnover in the tens of millions. Groups are assessed on a consolidated basis, and certain sectors are audited regardless of size. Crossing the limits in two consecutive years triggers the obligation. A voluntary audit is possible where banks or investors ask for it. Kontevia is aimed at businesses well below the audit thresholds, but its data can be handed to an auditor when needed.

Related terms

Annual accounts (financial statements)The yearly balance sheet, profit and loss account and notes that companies must prepare, approve and file with a public register.Micro entityThe smallest company category under EU accounting rules, entitled to very simplified annual accounts and reduced filing.Limited companyA separate legal entity whose owners are liable only up to their contribution. GmbH, SARL, s.r.o., BV, Sp. z o.o. and similar forms across the EU.Fiscal year (financial year)The twelve-month period for which a business prepares accounts and tax returns. Usually the calendar year, but many countries allow a different year end.

This entry is general information, not tax advice. Rules change; check the current position with your adviser or the tax authority of your country.

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