Compliance Statement as part of Directors' Report

Directors of certain large companies must include a compliance statement within the directors' report (section 325) that accompanies financial statements submitted to CRO.

Technical Release

Chartered Accountants Ireland has produced Technical Release 02/2015 to assist members on various financial reporting issues under the Companies Act 2014.  Section 5 discusses the directors' complaince statement. 

A large company for this purpose is defined as one with a balance sheet total in excess of €12.5m and with a turnover in excess of €25m.

Section 225 requires directors of such companies to confirm they have done the following and, if not, explain why not:

  • Produce a compliance policy statement setting out the company's compliance policies;
  • Establish arrangements/structures sufficient to "secure material compliance" with the company's "relevant obligations"; and
  • Conduct a review during the financial year to review these structures.


A Compliance Policy Statement is a  statement setting out the company's policies which in the opinion of the directors, are appropriate regarding compliance by the company with its relevant obligations.  This does not appear in the directors' report, the requirement is to confirm that the statement has been produced or to explain the reasons for not producing it.

Relevant Obligations are defined in section 225 to mean the company's obligations under the Companies Act 2014 (where failure to comply would be a Catgory 1 or 2 offence, a serious market abuse or prospectus offence) and tax law.

 

 

Useful links: LK Shields article.

The CRO website lists the conditions that require a compliance statement. 

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