The Companies (Accounting) Act, 2017 (the “Act”) commenced on 9 June 2017. It makes a large number of changes to the Companies Act 2014 (the “2014 Act”) to give effect to the latest EU Accounting Directive (Directive 2013/34/EU) (the “Directive”) in Irish law and to clarify certain issues which had arisen with the operation of the 2014 Act in practice.
A summary of the key changes include:
- The introduction of new rules for financial disclosures by a wide range of unlimited companies;
- The introduction of the concept of a new micro-company, which is subject to more relaxed financial reporting and disclosure requirements;
- Proposed new obligations for auditors in relation to reporting of offences and providing opinions in the Auditors’ Report regarding a company’s corporate governance;
- Payments to third parties for the services of a director or other people providing management services must be publicly disclosed; and
- Required public disclosure of payments by large companies and public interest entities involved in oil and gas exploration or extraction and forestry logging.
These changes will be of particular significance as for many companies it may increase the level of accounting and financial reporting required, while for others, such as those who fall under the definition of the new micro-company, it will reduce their compliance burden.
For example, companies which were structured as unlimited companies with a shareholder structure involving certain non EU entities and which up to now were not obliged to file financial information will now need to prepare and file statements for 2017 which will also show 2016 comparison financial information. While as a result of the significant increase in thresholds for the audit exemption many companies which currently need an audit will now no longer require an audit.
Click here to read our detailed FAQ Guide in relation to:
- The new financial disclosure rules unlimited companies
- Introduction of the concept of a new micro-company
- Other proposed changes to regarding audits and financial statements
Next Steps for Directors?
Directors of companies affected by the new financial reporting and disclosure rules should ensure they are fully informed about the proposed changes, review corporate structures, be aware of the impact on financial statements and on eligibility for exemptions, and liaise with auditors and legal advisers.