Financial reporting requirements of company law in Ireland

Company Law in Ireland requires that directors of companies incorporated in Ireland prepare financial statements for the company in respect of each financial year which give a “true and fair view”.  Such financial statements are either:

  • ‘Companies Act financial statements’, prepared in accordance with the accounting and disclosure requirements of company law and, principally but not exclusively*, with the Financial Reporting Standards (FRSs) published by the Financial Reporting Council (FRC) in the UK (‘Irish and UK GAAP’); or
  • ‘IFRS financial statements’, prepared in accordance with the International Financial Reporting Standards published by the International Accounting Standards Board (IASB), as adopted by the European Union.

By virtue of the IAS Regulation (Regulation (EC) No.1606/2002), the consolidated financial statements of companies with debt or equity securities listed on a regulated EU market, e.g. the main market of the Irish Stock Exchange, are required to be prepared in accordance with EU adopted IFRS.  For other financial statements, sections 290 and 293 of the Companies Act 2014 permit a choice, subject to certain exceptions, as to whether to prepare ‘Companies Act financial statements’ or ‘IFRS financial statements’.

*Certain entities are permitted under Irish company law to prepare their Companies Act financial statements under a financial reporting framework based on accounting standards other than those issued by the FRC.  Specifically, and subject to certain conditions:

  • Pursuant to section 279 of the Companies Act 2014, relevant holding companies are permitted to prepare ‘Companies Act entity financial statements’ and/or ‘Companies Act group financial statements’ in accordance with US GAAP, as modified to ensure consistency with Irish company law.
  • Investment companies subject to Part 24 of the Companies Act 2014 or the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 may adopt an alternative body of accounting standards, being standards which apply in the United States of America, Canada or Japan in preparing ‘Companies Act entity or group financial statements’ or ‘Companies Act entity financial statements’ respectively. 

 'Companies Act financial statements'

The principle company law financial reporting requirements are set out in Part 6 of the Companies Act 2014 and the following schedules to the Companies Act 2014:

  • Schedule 3 ('Accounting Principles, Form and Content of Entity Financial Statements');
  • Schedule 3A ('Accounting Principles, Form and Content of Entity Financial Statements of a company qualifying for the small companies regime’);
  • Schedule 3B ('Accounting Principles, Form and Content of Financial Statements of a company qualifying for the micro companies regime’);
  • Schedule 4 ('Accounting Principles, Form and Content of Group Financial Statements'); and
  • Schedule 4A ('Accounting Principles, Form and Content of Group Financial Statements for companies subject to the small companies regime’).

Note that the Schedules mentioned above do not apply to credit institutions and insurance undertakings. The relevant Regulations for those types of company are contained in:

  • European Union (Credit Institutions: Financial Statements) Regulations 2015 (S.I. No. 266 of 2015);
  • European Union (Insurance Undertakings: Financial Statements) Regulations 2015 (S.I. No. 262 of 2015), as amended by the European Union (Insurance Undertakings: Financial Statements) (Amendment) Regulations 2016 (S.I. No. 213 of 2016).

 'IFRS financial statements'

Companies required to, or opting to, prepare 'IFRS financial statements ' are not subject to the accounting requirements of Schedules 3, 3A, 3B, 4 and 4A of the Companies Act 2014, S.I. No. 262 of 2015 (as amended) or S.I. No. 266 of 2015 on the preparation of financial statements.  They are, however, subject to certain additional disclosure requirements in accordance with sections 292 and 295 of the Companies Act 2014.   

The Companies (Accounting) Act 2017

Primarily, the Companies (Accounting) Act 2017 (CA 2017) amends the Companies Act 2014 (CA 2014) to transpose the requirements of the 2013 EU Accounting Directive (Directive 2013/34/EU), although it also introduces certain other changes to Irish company law.

The 2013 Accounting Directive was completed in 2013 during the Irish Presidency of the EU. It replaced the 4th Directive (Directive 78/660/EEC) and the 7th Directive (Directive 83/349/EEC), which governed the preparation, by companies incorporated in the EU, of individual company financial statements and group financial statements respectively (other than those prepared by credit institutions and insurance undertakings).

As a recast of the 4th and 7th Directives, many of the provisions of those directives have been carried forward into the 2013 Accounting Directive.  There are, however, some very significant changes, including: ‘Small company maximum harmonisation’ (a restriction on the disclosures that a Member State can require small companies to provide in their financial statements), a Member State option to raise the small company thresholds, and the option to apply exemptions for micro-undertakings.

CA 2017 introduces a number of amendments to CA 2014. It simplifies the company law financial reporting requirements for small and micro companies (establishing the Small Companies Regime and Micro Companies Regime respectively), while also making a series of amendments to the company law accounting and disclosure requirements for other companies not adopting either regime.

It introduces a new requirement on certain large companies, large groups and public-interest companies involved in the mining, extractive or logging industries, to prepare and file an annual report on payments made to governments.

The law on filing requirements has also been amended - for example, by introducing new filing requirements for certain unlimited companies and investment companies.

Mark Kenny, Director of Representation and Technical Policy at the Institute has written two articles on CA 2017 (one while it was still a Bill) and these are available at the following links:

The Accounting Bill has landed – October 2016 issue of Accountancy Ireland

Companies (Accounting) Act 2017 – August 2017 issue of Accountancy Ireland

The Institute has produced a Technical Release (TR) 04/2018 ‘Companies Act 2014: Small and micro companies’ This TR is intended as a signpost to assist with the preparation of statutory financial statements of small and micro companies and it is available at the following link:

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