Companies are required to keep proper books of account which give a true and fair view of the company’s financial affairs.

Companies are also required to disclose details of their financial statements at the Annual General Meeting (AGM) and to attach a copy of those financial statements to the annual return filed with the CRO.

In addition, they are required to observe certain standards in the preparation of financial statements, following specimen formats and disclosing certain information by way of notes to the financial statements.

The Companies Act 2014 requires directors of all companies to lay the following financial statements and reports before the company members at the AGM:

  • a profit and loss account (or an income and expenditure account if the company is not trading for profit)
  • a balance sheet
  • a directors’ report
  • a statutory auditor’s report

 
The annual financial statements and directors’ report must be signed on behalf of the directors by two directors. (Where the company is an LTD Company, a Private Company Limited by shares, registered under the Companies Act 2014 and has only one director, the documents should be signed by the sole director).

The above-listed documents are required to be annexed to the annual return of a limited company on delivery to the CRO. (Small and Micro companies have certain exemptions). In addition, there must be a certificate, signed by both a director and the secretary, certifying that the financial statements and reports are true copies of those laid before or to be laid before the company’s AGM.

Part 6 of the Companies Act 2014 was updated by the Companies (Accounting) Act 2017. The 2017 Act was commenced for 9th June 2017. However, the introduction of the 2017 Companies Accounting Act did not change the citation of the Companies Act 2014. The Act of 2017 is separate from that of the 2014 Act and the two acts are not to be read together as one. The citation would only change where there is a specific mention in the Act itself to this effect.

Link: Account Certification and Filing Accounts Electronically

Link: Resignation of an Auditor.

If a company fails to comply with the requirements, the annual return will be rejected by the CRO. In addition the company and every officer of the company who is in default will be liable to a category 3 offence – fine not exceeding €5,000.

No financial statements are required to be annexed to the first annual return which is delivered by a company post-incorporation. This return is required to be made up to the date which is six months after the date of the company’s incorporation.

Public limited companies and private limited companies prepare annual financial statements in accordance with Parts 6/17 of the Companies Act 2014.

Financial statements Requirements
The financial statements requirements for different company types and sizes are detailed in the following pages:

 
Financial Statements in accordance with CA 2014
All financial statements filed with the CRO must be prepared in accordance with the Companies Act 2014.

Obligations regarding Financial Statements in the 2014 Companies Act
Under Part 6 of the Companies Act Act and in respect of financial years beginning on or after 1 June 2015, there are certain obligations under:

  • Section 167: Audit committees
  • Section 225: Director’s compliance statement and related statement
  • Section 305(1)b: Share options disclosure
  • Section 306(1): Payments to connected persons
  • Section 326(1)a: Director’s names
  • Section 330: Directors’ report: statement on relevant audit information)

 
Company cannot file two annual returns with the same set of financial statements
Section 347(4), Companies Act 2014, states that every document annexed to an annual return shall cover the period since the end of the period covered by the financial statements annexed to the preceding annual return and shall be made up to a date falling not more than 9 months before the date to which the return is made up. This means that each set of financial statements must start on the first day after the period covered by the last set of financial statements filed with the CRO.

Since 31 March 2016, the CRO requires companies to file a separate set of financial statements with each annual return.

Companies are reminded that the 2014 Companies Act provides a number of methods for moving an ARD date and for aligning ARDs and financial year ends (FYE’s).

These include the following:

  • under section 346(1), a company may file its annual return early and indicate on the Form B1 to change its ARD to the date that the B1 is made up to,
  • under section 346(2), a company may (once in every 5 years) move its ARD date forward by up to 6 months by filing a Form B73 with an on-time Form B1,
  • under section 346(5), a company that is a member of a group may align its ARD with its holding company or other subsidiaries by filing a Form B78A with the CRO, with no 5 year restriction,
  • under section 288(4), a company may, once in every 5 years, alter its financial year end by filing a Form B83 with the CRO, subject to the new financial year not exceeding 18 months. The 5 year rule does not apply where the company is a subsidiary or holding undertaking of another EEA undertaking.

 
Please note that section 288(1) of the Companies Act 2014, specifies that a company’s first financial year begins upon incorporation and ends on a date no more than 18 months after that date. This gives a company the flexibility to use their first full annual return (required to be filed no later than 18 months after incorporation) to file financial statements for a period shorter than 18 months in order to achieve the desired ARD / FYE combination, bearing in mind that the ARD cannot be more than 9 months after the financial year end.

Fixing of Length of Financial Periods
Under Section 288, Companies Act 2014, the Financial Statements attached to a company’s first full annual return (ie with Financial Statements) must cover the period from incorporation and must not be for a period longer than 18 months. Each subsequent financial year begins on the date immediately after the last financial year end date and must be for a period of no more than 7 days shorter or longer than 12 months.

A company may, by filing a Form B83 with the Registrar (filing fee: €15), apply to alter (ie shorten or lengthen) its current or its previous financial year end date which will then become its financial year end date for the future.

Form B83 cannot be accepted by the Registrar of Companies:

      (i) if the effect of the notice would result in a financial year in excess of 18 months or
      (ii)where the period for delivering financial statements to the Registrar for that previous financial year has expired.
      (iii) if the alteration would result in a gap in the periods covered by the company’s financial statements
      (iv) if the alteration would result in a company not filing an annual return in a given year
      (v) if the new B83 notice is made less than 5 years after a previous B83 notice.

     
    With regards to point (v), there is an exemption to the 5 year rule under section 288(10) Companies Act 2014 for a subsidiary undertaking or holding undertaking of another EEA undertaking if the new financial year end date specified coincides with that of the other EEA undertaking or where it is being wound up.

    The CRO requires companies to strictly adhere to the requirements of the Act that financial years must not exceed 18 months for the first financial year and 12 months (give or take 7 days) for subsequent financial years (unless the company files a Form B83 to alter its financial year end).

    Limited companies
    Public limited companies and private limited companies are required to prepare and file annual financial statements in accordance with Parts 17 and Part 6 respectively of the Companies Act 2014.

    Not-for-profit limited companies
    Companies Limited by Guarantee (a form of public company with limited liability which are not trading for the acquisition of gain by the members) are required to prepare and file financial statements in accordance with Parts 6 and 18 of the Companies Act 2014.

    A Designated Activity Company limited by guarantee has to file financial statements with the CRO ( i.e a company limited by guarantee and having a share capital which is not trading for the acquisition of gain by the members) in accordance with Parts 6 and 16 of the Companies Act 2014.

    In both cases they must file financial statements unless exempted by the Charities Regulatory Authority.

    Group Financial statements
    Group financial statements are prepared either under the Companies Act or IFRS financial reporting frameworks and are required under section 293 Companies Act 2014.

    Banks and financial institutions
    Annual financial statements and consolidated financial statements of banks and other financial institutions must be prepared in accordance with the European Communities (Credit Institutions: Financial Statements) Regulations, 2015 (S.I. 266 of 2015).

    Insurance undertakings
    Annual financial statements and consolidated financial statements of insurance undertakings must be prepared in accordance with the European Communities (Insurance Undertakings: Financial Statements) Regulations 2015 (S.I. No. 262 of 2015). Please see Insurance Brokers and the Audit exemption.

    Unlimited companies and partnerships
    An unlimited company is not necessarily exempt from the requirement to file financial statements as certain unlimited companies and partnerships (including limited partnerships) are obliged to prepare financial statements and deliver them to the CRO. Financial statements are required from such entities by virtue of section 1274 of the Companies Act 2014. Effectively, an unlimited company or partnership where all the members thereof who do not have a limit on their liability are companies limited by shares or by guarantee is obliged to file financial statements.

Small Company Abridged Notes Requirements

  • Companies Act Entity Financial Statements: Small Companies must disclose the notes required by Chapter 6 Part 6 of the Companies Act 2014. Small companies are exempt from Sections 314, 317, 318, 319, 322, 323 and 325of the Companies Act 2014
  • IFRS Financial Statements: Small Companies must disclose the notes required by Chapter 6 Part 6 of the Companies Act 2014. Small companies are exempt from Sections 314, 317, 318, 319, 322, 323 and 325of the Companies Act 2014
  • Section 353 of the Companies Act 2014, as amended by Section 52 of the Companies (Accounting) Act 2017 requires the inclusion of any other notes, including the notes relating to profit and loss account items applicable to the small or micro company concerned and in particular the information required by paragraph 53 of Schedule 3A
  • Section 353 of the Companies Act 2014 also requires the information needed from paragraph 48 of Schedule 3A even where the company has elected to include it in the profit and loss account.

 
Micro Company Abridged Notes Requirements

  • Entity Financial Statements – Micro companies are exempt from the provisions of Sections 305, 309, 314, 317, 318, 319, 322 and 323 of the Companies Act 2014
  • Section 353 of the Companies Act 2014 as amended by Section 52 of the Companies (Accounting) Act 2017 requires the inclusion of any other notes, including the notes relating to profit and loss account items applicable to the micro company concerned
  • Section 353 of the Companies Act 2014 also requires the information needed from paragraph 33 of Schedule 3B even where the company has elected to include it in the profit and loss account

 
The following are a list of the notes required in the Financial Statements, it should be noted that if a company is filing abridged Financial Statements they are not required to include all the notes, as detailed below.

Notes to the Financial Statements
A company is required to disclose certain specific information as follows:

    1. Director’s Remuneration and Transactions

The remuneration of person(s) who, at any time during the financial year, were directors both for the current and preceding financial year. It shall be the duty of the statutory auditors where this requirement is not complied with to include in the report on those statements a statement giving the required details where the directors do not comply with these requirements.

    2. Director’s benefits

The entity Financial Statements of a company and the group Financial Statements of a holding company are required to disclose, both for the current and the preceding financial years, information in relation to director’s benefits – loans, quasi-loans, credit transactions and guarantees. The requirements of Section 307 of the Companies Act 2014 to an individual director and persons connected with him or her need not be disclosed if the aggregate value of all agreements transactions and arrangements did not, at any time during the financial, exceed €7,500 for that director and those persons.

    3. Other arrangements and transactions in which the directors and other officers have a material interest

Any other arrangements and transactions in which the directors and/or other officers of the company have a material interest.

    4. Credit Institutions: exceptions to disclosure by a holding company in the case of connected persons and certain officers

The holding company of a Credit Institution is exempt from providing in the case of connected persons and certain officers specified information in regard to the requirements at 2 and 3 above.

    5. Credit Institutions: disclosure of aggregate amounts in respect of connected persons by a holding company

The Group Financial Statements of a holding company of a credit institution must disclose the aggregated amounts in relation to transactions, arrangements or agreements made by the credit institution with connected persons.

    6. Related undertakings

Where at the end of a company’s financial year that company has a subsidiary undertaking or an undertaking of substantial interest (i.e. an undertaking that is not a subsidiary undertaking but in which the company holds a 20% or more interest in any class of equity shares) the company is required to disclose specified information on these related undertakings.

    7. Related undertakings: Circumstances in which certain information may be annexed to the annual return

In circumstances where the directors form an opinion that compliance with the disclosure requirement in Section 314 of the Companies Act 2014 would result in a note of excessive length, information need only be given in the notes on undertakings whose assets, liabilities, financial position or profit or loss, which in the opinion of the directors, principally affected the amounts shown in the company’s statutory Financial Statements or are exclude from consolidation under Section 303 of the Companies Act 2014 but the company shall annex to the statutory Financial Statements of the relevant annual return a separate document giving the full information required of the company.

    8. Particulars of staff

In relation to staff the Companies Act 2014 require that the company provide a note on the average number of persons employed by the company in the financial year and the average number of persons employed within each category of person employed by the company in that year. The company shall also provide information on:

  • The wages and salaries paid or payable in respect of that year to those persons
  • Social insurance costs incurred on their behalf by the company
  • Other retirement benefit cost incurred, and
  • Other compensation costs (to be specified by type) incurred by the company in respect of those persons in the financial year.

 

    9. Details of authorised share capital, allotted/issued share capital and of movements

Details of authorised share capital, allotted/issued share capital and movements in respect of these shares.

    10. Financial assistance provided for the purchase of the company’s own shares

Information in relation to the aggregate amount of financial assistance provided by the company in relation to the purchase of its own shares – to be provided in entity and group Financial Statements.

    11. The holding of own shares or shares in a holding undertaking

The notes to the company’s entity Financial Statements and, as the case may be, the group Financial Statements of the company or its holding company shall set out separately details in respect of the holding of own shares or shares in its holding company.

    12. Accounting policies

A company shall disclose in the entity Financial Statements and group Financial Statements the accounting policies adopted by it in determining the items and amounts to be included in its balance sheet or as the case maybe its consolidated balance sheet and profit and loss account or consolidated profit and loss account.

    13. Remuneration for audit work, audit related work and non-audit work

In the case of entity and group Financial Statements a company shall disclose the remuneration (i.e. including benefits in kind, reimbursement of expenses and other payments in cash) for audit work, audited related work and non-audit work by the company. A small or micro sized company or a company which is a subsidiary undertaking whose holding company is required and does prepare group financial statement in which it is included and the information is disclosed in the notes to the group financial statement ,stands exempt from having to disclose this information.

    14. Arrangements not included in balance sheet

Where the risks and benefits arising from such arrangements are material and in so far as the disclosure of such risks and benefits are necessary for assessing the financial position of the company, the nature and business purpose of any arrangements of a company that are not included in its balance sheet and the financial impact on the company of those arrangements shall be disclosed in the notes to entity Financial Statements and group Financial Statements. However, the notes to the entity Financial Statements of the holding company shall not be required to provide information that is provided in the notes to its group financial statement.

    15. Disclosures required by Part IV of Schedule 3, 3a (Small), 3b (Micro) & Schedule 4 of the 2014 Act

Part IV of Schedule 3, 3a, and 3b of of the Companies Act 2014 requires that certain information required by the provisions of Part IV which is not given in the company’s Financial Statements shall be given by way of a note to those Financial Statements, including appropriation of profit and loss account, details of indebtedness, guarantees and other financial commitments.

    16. Notes to Group Financial Statements

Part IV of Schedule 4 of the Companies Act 2014 sets out the information, additional to that required by Schedules 3, 3a or 3b of the 2014 Act, which is required to be included in the notes to group Financial Statements. The information concerned relates to use of currencies, creditors, and the nature of the joint management arrangement of any joint ventures included in the consolidation, acquisitions, and related part transactions.