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The short answer
A UK parent company with a Nigerian subsidiary must prepare group accounts unless an exemption in the Companies Act 2006 applies, such as being subject to the small companies regime (section 399). If the group accounts are audited, the group auditor must get enough evidence about the Nigerian subsidiary, usually by relying on and directing the work of its Nigerian auditor. Naira figures are translated under FRS 102, and the subsidiary still has its own Nigerian filing duties.
Setting up a Nigerian subsidiary is a common step for a UK company with staff or customers in Nigeria. A year later, the first set of year-end questions arrives: does the UK company now have to produce group accounts, does anyone have to audit them, and how will a UK auditor get comfortable with books kept in naira in Lagos?
Do you have to prepare group accounts?
Section 399 of the Companies Act 2006 says that if, at the end of a financial year, a company is a parent company, its directors must prepare group accounts as well as individual accounts unless the company is exempt. The exemptions include:
- being subject to the small companies regime (or would be, but for being a public company), provided the group does not include certain undertakings such as one with securities traded on a UK regulated market (section 399(2A) and (2B))
- being included in the accounts of a larger group (sections 400 and 401)
- having no subsidiary that needs to be included in the consolidation (section 402)
A small parent can still prepare group accounts voluntarily (section 399(4)), and lenders or investors sometimes ask for them.
Do the accounts have to be audited?
GOV.UK's audit exemption page, updated 14 October 2026, says a private company can usually be exempt if it meets two of three conditions; for financial years starting on or after 6 April 2025 these are turnover of up to £15 million, assets of up to £7.5 million and 50 or fewer employees. The page lists companies that must be audited regardless, including subsidiaries unless they qualify for an exemption, and sets separate conditions for companies that are part of a group; check those before assuming the parent is exempt. Shareholders holding 10% or more can also demand an audit by writing to the registered office at least one month before the year end. For the single-company rules, see the UK small company audit exemption.
Section 479A does not help the Nigerian company
UK subsidiaries can sometimes skip their own audit under section 479A if the parent guarantees their liabilities. The section applies to UK companies whose parent is established under UK law. It is a UK Companies Act exemption; it does not change what Nigerian law requires of a Nigerian company. Whether the Nigerian subsidiary needs its own audit is a question of Nigerian law; see the Nigerian audit requirement for small companies.
What the group auditor will scope
Where the group accounts are audited, the UK auditor signs one opinion on the whole group and is responsible for it. Under the auditing standard for group audits, ISA (UK) 600, the group auditor decides how much work is needed on each component based on risk and size. For a Nigerian subsidiary, expect:
- A request for the subsidiary's trial balance, ledgers and bank statements, in a format that maps to the group chart of accounts.
- Questions about the Nigerian auditor, if there is one: independence, competence and the work they did.
- Instructions to the Nigerian auditor on materiality, areas of focus and reporting deadlines, and a review of their working papers or a call to go through them.
- Specific procedures on higher-risk areas: naira cash balances, intercompany balances and management fees, revenue, and any tax provisions.
- Evidence that intercompany balances agree in both sets of books before they are eliminated.
Translating the naira figures
HMRC's Business Income Manual, at BIM39510, summarises the FRS 102 section 30 approach: transactions are recorded at the spot rate on the transaction date, an average rate may be used if rates do not fluctuate significantly, and monetary items are retranslated at the closing rate. The naira has moved sharply in recent years, so an average rate may not be appropriate for every period; agree the approach with the auditor before year end. More detail is in FX gains and losses for a UK company holding naira.
Worked example (illustrative)
Example: the subsidiary reports net assets of ₦150,000,000. At an assumed closing rate of ₦2,000 to £1, that is £75,000 in the group balance sheet (150,000,000 ÷ 2,000). If the rate a year earlier was an assumed ₦1,500, the same net assets would have been £100,000 (150,000,000 ÷ 1,500), so £25,000 of the change is currency movement, not trading. These rates are invented for the arithmetic; use the actual rates for your dates.
The Nigerian side of the timetable
The subsidiary has its own deadlines. The Nigeria Tax Administration Act 2025 requires every company to file a self-assessment return each year whether or not it owes tax (section 11) and to keep records in English for at least six years (section 31). CAC annual returns are separate; the Nigeria library explains CAC annual returns. Build one calendar that covers both countries so the Nigerian audit finishes in time for the group audit.
Where Pryme fits
A Pryme Business Account can hold the subsidiary's naira and the parent's pounds in one place, and every payment carries a receipt that can be made verifiable through VerifyDoc.ai, which gives an auditor an independent way to confirm a document has not been altered. The Finance agent prepares reconciliations for a person to approve. See the Finance agent and receipts.
Questions people ask
Does a UK company with a Nigerian subsidiary need group accounts?
Yes, unless an exemption applies. Section 399 of the Companies Act 2006 exempts parents subject to the small companies regime, subject to conditions, among other exemptions.
Can my UK auditor rely on the Nigerian auditor?
The group auditor may use the Nigerian auditor's work, but must assess their competence and independence, direct the work and review it, and remains responsible for the group opinion.
Which exchange rate is used for a Nigerian subsidiary?
Under FRS 102 section 30, as HMRC summarises it, transactions use the spot rate or an average if rates are stable, and monetary items use the closing rate. Agree the approach with the auditor.
Does section 479A exempt my Nigerian subsidiary from audit?
No. Section 479A is a UK exemption for UK subsidiaries. Whether the Nigerian company needs an audit is decided by Nigerian law.
Sources
- legislation.gov.uk: Companies Act 2006, section 399 (duty to prepare group accounts) · accessed Oct 2026
- GOV.UK: Audit exemptions for private limited companies (updated 14 Oct 2026) · accessed Oct 2026
- legislation.gov.uk: Companies Act 2006, section 479A (subsidiary audit exemption) · accessed Oct 2026
- HMRC Business Income Manual BIM39510: foreign exchange, FRS 102 (updated 4 Aug 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.