Could you be saving money on your group audit?


In an environment where audit fees are becoming more expensive, companies may be looking at ways to make cost savings. When it comes to the audit of a group of companies in the UK, the UK parent company can make a statutory guarantee, to its subsidiary or subsidiaries to reduce the overall audit scope. This is achieved under a section 479C exemption.


What is a section 479C exemption from a full audit in a subsidiary company?

The exemption, under s479A-479C of the Companies Act 2006, applies to companies formed and registered under the Act. It is available to groups whereby the parent company provides a guarantee for a subsidiary to avoid it needing an audit report.

Where a parent company provides a statutory guarantee for a subsidiary under the exemption, this can help to minimise onsite disruption within the business and reduce costs. However, both the benefits and risks of taking the exemption need careful consideration.

What are the benefits?

  • Cost savings – the auditor can audit to a group materiality level which is higher, resulting in a decrease in work required to meet a reduced audit scope.
  • Resource benefits – a reduced audit scope means less testing, fewer audit requests for the finance team and minimised onsite disruption.

What are the risks?

  • Less assurance – a reduced audit scope and testing means less assurance for the shareholders over these subsidiaries taking the exemption. Having no audit report could mean the subsidiary is less likely to attract potential investors as there is less transparency that the subsidiary's financial statements are accurate and reliable.
  • Parent Guarantee liability – the parent company’s guarantee means that it is liable for the debts in existence at the balance sheet date in the subsidiary. If the subsidiary defaults on this debt, the parent company may need to cover those debts.
  • Shareholder requirements – if the bank or an external shareholder requires audited accounts as part of an agreement, this guarantee wouldn’t be appropriate.

Conditions for taking the exemption

To qualify, the subsidiary must meet specific conditions. The subsidiary must have a parent guarantee in place:

  • The parent company provides a guarantee for the subsidiary and prepares consolidated accounts
  • This guarantee ensures that the subsidiary’s outstanding liabilities in existence at that year are covered.
  • The guarantee is given in accordance with the provisions of s479C.
  • The subsidiary and its members must agree to use the exemption.

What has to be actioned to take the exemption?

  • A written notice of agreement is filed.
  • The subsidiary’s accounts still need to be prepared and filed at Companies House alongside the audited consolidated parent accounts.
  • The guarantee’s effect and scope are also defined in the subsidiary accounts.

It is important to be aware of both the benefits and risks of statutory guarantees, balancing efficiency and transparency. Through careful planning with an adviser, this will help you assess the associated risks of the s479c exemption and could potentially save you thousands of pounds in audit fees.

For more information and support about your group audit, please get in touch. Call 0808 144 5575 or email  

Contact us

Related news

What do proposed audit reforms mean for your business?

  • 29th May 2024

4 reasons an audit is valuable for business

  • 8th August 2023
signing a contract

FRS 102 – what are the proposed changes?

  • 30th March 2024