Proposed changes to audit exemption

The Companies (Statutory Audits) Bill 2017 has now been passed by the Dail and will now be considered by the Seanad.  While most of the Bill deals with regulations of auditor firms there was a proposal in the original Bill to abolish the ability of a company to apply to the District Court to extend its filing deadline and to avoid the loss of audit audit exemption for late filing.  This proposal has now been dropped from the Bill passed by the Dail which is good news for small companies.

Audit exemption and filing deadline

A small company or a small group can claim an exemption from the requirement to have their annual accounts subject to a financial audit if it meets certain qualifying conditions.  One of these is that the company must have filed its accounts with the Companies Registration Office (CRO) on time.

If the company misses this deadline it is required to have its financial statements audited.  Currently this applies to the current accounts to be filed and the next set of accounts must be audited.  The Companies (Statutory Audits) Bill 2017 has proposed that the accounts to be audited after passing of this Bill will be the next set of accounts and the accounts after this.  So two years will still need to be audited but they will be not be historic years so should reduce the problems of trying to audit historical information (e.g. lack of information etc.).

Court applications

An application can currently be made to the District Court to retain the audit exemption where there were valid reasons as to why the company missed their deadline.  This was introduced in the Companies Act 2014.  Prior to this, a company would have had to apply to the High Court for an extension which is significantly more costly and time consuming.

The original Companies (Statutory Audits) Bill 2017 as published abolished this right of application to the District Court and an application to the High Court would have been required to retain the audit exemption.  The government has dropped this proposal from the Bill passed by the Dail so the right of application to the District Court is being retained.

If you have any queries on your company’s filing obligations or would like to discuss the audit requirements for your company please contact us for a free consultation.