Financial Statements

CRO Leaflet

Information Leaflet No. 23

Annual Return and Financial Statement

Requirements including Audit Exemption

 INFORMATION LEAFLET NO. 23 / MAY 2016

3. Financial Statements

3.1 What period should the Financial Statements cover (S.288 CA 2014)?

The Financial Statements attached to a company’s first annual return that requires Financial

Statements must cover the period from the date of incorporation and must not be for a period longer

than 18 months. Each subsequent financial year begins on the date after the last financial year

ended and should be for a 12 month period or within 7 days either side of the 12 month period. A

company cannot file Financial Statements with an annual return where the financial year end is more

than nine months before the “Return made up to” date on the B1. The company may have to alter

either their financial period or ARD to ensure the company meets this requirement.

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3.2 What format can the Company use for its Financial Statements?

A company can prepare their Financial Statements in accordance with International Financial

Reporting Standards (IFRS) or Companies Act Financial Statements (CAFS) which are prepared in

accordance to Schedule 3 and 4 of CA 2014. Once a company prepares its Financial Statements as

IFRS Financial Statements it must continue to use this format.

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3.3 How does a company change its Financial Year end?

Under s.288(4) Companies Act 2014, a company may, by filing a form B83 with the Registrar, 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. Such an application may only be made once in

every five years unless the company is exempted by section 288(10) Companies Act 2014. The filing

of a B83 form must not result in a financial year in excess of 18 months.

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3.4 What financial documents are my company required to file with the CRO?

Companies Act 2014 requires Directors of companies to lay full Financial Statements before the

members at their AGM (unless exempt from audit).

The documents required to be filed with the CRO are the following (unless exemptions are claimed):

•  The Financial Statements (containing a Balance Sheet, Profit and Loss/Income and Expenditure

account, Notes to the Financial Statements and any statements required by the financial

framework adopted);

•  A Directors’ Report on the Financial Statements, and

•  An Auditor’s Report on the Financial Statements.

3.4.1 Directors’ Report:

Sections 325 to 331 of the Companies Act 2014 (CA 2014), require that certain specified information

be disclosed in the Directors’ report to the company’s statutory Financial Statements for each financial

year (see Appendix 2).

Section 225(2) CA 2014 requires the Directors of a company which meets certain conditions to

include a Compliance Statement in the Directors’ Report (see Appendix 3).

3.4.2 Notes to the Financial Statements:

Sections 314 to 323, CA 2014, require a company to disclose in the Notes to its statutory Financial

Statements certain information including the following: (see further details in Appendix 4)

•  Directors’ remuneration and transactions;

•  Related undertakings ;

•  Particulars of staff;

•  Authorised share capital, allotted or issued share capital and movements in share capital;

•  Financial assistance provided by the company in relation to the purchase of own shares;

•  The holding of own shares or shares in a holding undertaking;

•  Accounting policies ;

•  Remuneration for audit, audit related and non-audit work; and,

•  Arrangements not included in the companies or groups balance sheet.

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3.5 Exemptions available in relation to Financial Statements

Although the company must lay full Financial Statements before an AGM, depending on the type and

size of the company it may be able to claim an exemption from filing full, or any, Financial Statements

with the CRO. Companies meeting specific criteria could possibly claim one or more of the following

exemptions:

•  Small Company Audit Exemption

•  Dormant Company Audit Exemption

•  Size /abridgement Exemption

•  Exemption from filing Financial Statements

The following companies are not entitled to either exemption:

(a) Public Limited Companies, Public Unlimited Companies and Investment Companies

(b) A credit institution or insurance undertaking

(c) A company referred to in the Fifth Schedule, CA 2014 (see Appendix 5).

The exemptions available to different types and sizes of company, and conditions applying, are

detailed in the following sections:

3.5.1 Small Companies

A small company that satisfies certain conditions can claim three types of exemption:

•  3.5.1.1. Exemption from filing full Financial Statements (“abridged Financial Statements”) (s.352)

•  3.5.1.2. Exemption from filing an auditor’s report (the “audit exemption”)(s.360)

•  3.5.1.3. Dormant company exemption (available to all sized companies) (s.365)

3.5.1.1. Exemption from filing full Financial Statements (the “size/abridgement exemption”)

(s.352)

To qualify as a small company and avail of this exemption, a company must satisfy TWO or more of

the following conditions in the current financial year and in the preceding financial year (unless it is its

first financial year)(s.350(2), (3) & (5) Companies Act 2014):

•  Balance sheet total does not exceed €4.4m

•  Turnover does not exceed €8.8m

•  Number of employees does not exceed 50

(Exemption is not available to public companies except CLGs (Companies Limited by Guarantee)).

Small companies who claim the “size/ abridgment exemption” are required to file:

•  The Balance Sheet of the company (with the “small company exemption statement” – see below)

•  An extract from the director’s report stating the directors interest in shares and debentures

•  An auditor’s report (with the section of the auditor’s report required when claiming the small

company exemption) (S.356(1) Companies Act 2014)(see paragraph 5.4 of this Leaflet)

•  Notes to the Financial Statements (s.314 to s.323 Companies Act 2014) (see Appendix 2)

Small company “size/ abridgement exemption” statements:

A company claiming the “size/ abridgement exemption” must file the Auditor’s Report to the directors

and must state the following on their Balance Sheet:

I/We, as director(s) of (company name), state that –

The company has relied on the specified exemption contained in section 352 Companies Act 2014;

the company has done so on the grounds that it is entitled to the benefit of that exemption as a

small company and confirm that the abridged Financial Statements have been properly prepared in

accordance with section 353 Companies Act 2014.

On behalf of the board:

TYPED Name of Signatory: TYPED Name of Signatory:

Director Director

Date Date

3.5.1.2. Exemption from filing an auditor’s report (the “audit exemption”)(s.360 CA 2014)

Small Company Audit Exemption (Please also see Section 4)

In order for a company to qualify for the small company audit exemption the company must meet 

the following criteria in respect of the financial year concerned and the preceding year – s.350(3) CA

2014.

•  The company must qualify as a “small company” (see paragraph 3.5.1.1. above).

•  The company’s annual return, to which Financial Statements are attached, must be filed on time

for the year in question and the previous year. (s.363 CA 2014)

•  A company cannot be a subsidiary or a holding company within a group (See small group

company audit exemption in Section 9.3 of this Leaflet).

Small companies who claim both the audit and abridgement exemptions are required to file:

•  The Balance Sheet of the company (with (a) to (e) of the “audit exemption statement” included at

the bottom of the Balance Sheet)

•  An extract from the Directors’ Report stating the Directors interest in shares and debentures

•  Notes to the Financial Statements (see Appendix 4)

Sample Statement to be included on Balance Sheet when claiming BOTH audit exemption and

the small company (abridgement) exemption:

I/We, as director(s) of (company name), state that:

(a) the company is availing itself of the exemption provided for by Chapter 15 of Part 6 of the

Companies Act 2014,

(b) the company is availing itself of the exemption on the grounds that the conditions specified in

s.358 are satisfied,

(c) the shareholders of the company have not served a notice on the company under s.334(1) in

accordance with s.334(2),

(d) we acknowledge the company’s obligations under the Companies Act 2014, to keep adequate

accounting records and prepare Financial Statements which give a true and fair view of the assets,

liabilities and financial position of the company at the end of its financial year and of its profit or

loss for such a year and to otherwise comply with the provisions of Companies Act 2014 relating to

Financial Statements so far as they are applicable to the company,

*(e) the company has relied on the specified exemption contained in s.352 Companies Act 2014;

has done so on the grounds that the company is entitled to the benefit of that exemption as a small

company and the abridged Financial Statements have been properly prepared in accordance with

s.353 Companies Act 2014.

On behalf of the board:

TYPED Name of Signatory: TYPED Name of Signatory:

Director Director

Date: Date:

(*In the above statement, use sections (a) – (d) if claiming audit exemption and add section (e)

if claiming the small company/abridgement exemption. A small company can claim either or both

exemptions in their Financial Statements if they qualify.)

3.5.2. Dormant Company

Dormant Company Audit Exemption (s.365, CA2014)

The Dormant Company Audit Exemption is NOT specific to company size.

A company can qualify to claim audit exemption based on the fact that it is dormant. A holding or

subsidiary company within a group can claim the dormant company exemption. However,

•  the company’s annual return, to which Financial Statements are attached, must be filed on time

for the year in question and the previous year (s.363 CA 2014) and

•  A PLC, PUC or PUC cannot claim the dormant company audit exemption because they are public

companies.

The directors of the company must

(i) be of the opinion that in respect of the financial year concerned, the company is dormant and will 

satisfy the conditions specified at (a) and (b) below, and

(ii) decide that the company should avail of the exemption in that year (and record that decision in the

minutes of the meeting concerned):

(a) it has no significant accounting transaction (ie. a transaction that is required by s.281 and

s.282 Companies Act 2014, to be entered in the company’s accounting records); and

(b) its assets and liabilities comprise only permitted assets and liabilities (ie. investments in

shares of, and amounts due to or from, other group undertakings).

In determining whether or when a company is dormant for the purposes of s.365, the following shall

be disregarded:

(a) any transaction arising from the taking of shares in the company by a subscriber to the

constitution as a result of an undertaking of his or her in connection with the formation of the

company;

(b) any transaction consisting of the payment of—

(i) a fee to the Registrar on a change of the company’s name;

(ii) a fee to the Registrar on the re-registration of the company; or

(iii) a fee to the Registrar for the registration of an annual return (including any fee of an increased

amount by virtue of regulations under section 889(6)).

The right of members to dissent to the audit exemption does not apply to a dormant company

(s.334(5)CA2014).

Dormant company audit exemption – statements to be included on balance sheet (s.365):

Where the dormant company exemption is being availed of, the following statements must be

included on the company’s balance sheet by the directors of the company:

I/We, as director(s) of (company name) state that:

(a) the company is availing itself of the audit exemption provided for by Chapter 16 of Part 6 of the

Companies Act 2014;

(b) the company is availing itself of the exemption on the grounds that the conditions specified in

s.365(2) are satisfied;

(c) we acknowledge the company’s obligations under Companies Act 2014, to keep adequate

accounting records and to prepare Financial Statements which give a true and fair view of the assets,

liabilities and financial position of the company at the end of its financial year and of its profit or

loss for such a year and to otherwise comply with the provisions of Companies Act 2014 relating to

Financial Statements so far as they are applicable to the company;

(d) we hereby certify that we have relied on the specific exemption contained in s.365 Companies

Act 2014 on the grounds that the company is entitled to the benefits of that exemption as a dormant

company.

*(e) the company has relied on the specified exemption contained in s.352 Companies Act 2014;

has done so on the grounds that the company is entitled to the benefit of that exemption as a small

company and the abridged Financial Statements have been properly prepared in accordance with

s.353 Companies Act 2014.

On behalf of the board:

TYPED Name of Signatory: TYPED Name of Signatory:

Director Director

Date: Date:

(*In the above statement, use sections (a) – (d) if claiming audit exemption and add section (e)

if claiming the small company/abridgement exemption. A small company can claim either or both

exemptions in their Financial Statements if they qualify.)

3.5.3 Medium Companies

To qualify as a medium company a company must satisfy TWO or more of the following conditions in 

the current financial year and in the preceding financial year (unless it is its first financial year)

(s.350 (2), (4) & (6) Companies Act 2014:

•  Balance sheet total does not exceed €10m

•  Turnover does not exceed €20m

•  Number of employees do not exceed 250

A medium company can claim exemption from filing full Financial Statements and instead file

abridged Financial Statements (the “abridgement” exemption) (s.352).

Medium sized companies who claim the “abridgement” exemption are required to file:

•  The Balance Sheet of the company (with the medium company exemption statement),

•  An abridged Profit and Loss account,

•  A Directors’ Report prepared in accordance with section 325 CA 2014

•  Any additional statements and information required by the financial reporting standard adopted by

the company.

•  An Auditor’s Report (with the section of the auditor’s report required when claiming the medium

company exemption)(see paragraph 5.4 of this Leaflet).

•  On the Profit and Loss account some items can be combined into one figure e.g. cost of sales.

•  Notes that relate to the items combined on the Profit and Loss account can be combined in the

notes to the Financial Statements (see s.354 of CA2014).

Medium Company Exemption statements

A medium company claiming the “abridgement” exemption must also file the auditor’s report to the

directors and must state the following on their balance sheet:

I/We, the director(s) of (company name) state that –

The company has relied on the specified exemption contained in section 352 Companies Act 2014;

the company has done so on the ground that it is entitled to the benefit of that exemption as a

medium company; and confirm that the abridged Financial Statements have been properly prepared

in accordance with s.354 Companies Act 2014.

On behalf of the board

Typed Name of Signatory: Typed Name of Signatory:

Director Director

Date: Date:

3.5.4. Exemption from Filing Financial Statements with the CRO

The following companies may claim an exemption from filing Financial Statements with their annual

return (a B1 Form will still be required to be filed with the CRO);

•  Designated Activity Companies (DACs) formed for charitable purposes who stand exempt from

filing Financial Statements with the CRO by an order made by the relevant authority.

 (The Charities Regulatory Authority (CRA)).

•  Companies Limited by Guarantee (CLGs) formed for charitable purposes and stand exempt from

filing Financial Statements by an order made by the relevant authority (CRA).

•  Non-designated Unlimited Companies (ULCs) can claim an exemption from filing Financial

Statements. Please see Unlimited Company (ULC) requirements for more information regarding

what types of ULC are designated or non-designated (see paragraph 3.6.2 of this Leaflet).

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3.6. Specific Requirements of Different Types of Companies

3.6.1 Companies Limited by Guarantee (CLGs) and Designated Activity Companies (DACs)

Sections 325(1)(c & d), 328 and 329 of CA, 2014, do not apply to CLGs as these companies have no

share capital they are not required to include in their directors report details in relation to acquisition

or disposal of their own shares or interest in share and debentures, please see the relevant section of

the Act for more information.

Certain CLGs and DACs that have been formed for charitable purposes, and who are exempted by

the relevant authority, can avail of an exemption from filing Financial Statements with the CRO.

3.6.2 Unlimited Company (ULC) requirements

The following Unlimited Companies are subject to the requirements to the preparation and filing of

Financial Statements:

(A) ULC where all the members are

•  (1) Companies under the Companies Act 2014 which are limited by shares or guarantee.

•  (2) Bodies not governed by the law of the state but are equivalent to those referred to in (1).

•  (3) Any combination of the types of bodies referred to in 1 & 2 above.

(B) ULC where the members are

•  (1) Unlimited Companies where the membership of each is comprised of bodies falling within

(A) 1, 2 or 3 and are governed by the laws of one or more Member States.

•  (2) Partnerships, all of the partners of which are bodies who fall within (A) 1, 2, or 3 and are

governed by the laws of one or more Member States.

•  (3) Any combinations of (A) 1 & 2 or (B) 1 & 2.

Unlimited company, which are not covered by (A) & (B) above, are non-designated Private Unlimited

Companies and can claim an exemption from filing Financial Statements.

3.6.3 Private Unlimited Companies (ULCs) can claim audit exemption once they qualify.

3.6.4 Public Limited Companies (PLCs), Public Unlimited Companies (PUCs) or Public

Unlimited Companies with no share capital (PULCs) cannot claim any exemptions and must

file full Financial Statements.

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3.7 Are there new obligations for Financial Statements to be filed under the Companies Act

2014?

The financial statements must be prepared and filed under the 2014 Companies Act

Under the Commencement Order, the following new obligations in Part 6 of the 2014 Act will be

commenced in respect of financial years BEGINNING on or after 1 June 2015.

•  section 167: Audit committees

•  section 225: Directors’ compliance statement and related statement

•  section: 305(1)(b): Share option disclosure

•  section: 306(1): Payments to connected persons

•  section 326(1)(a): Directors’ names

•  section 330: Directors’ Report: statement on relevant audit information.

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3.8 Certification of Financial Statements

Where the company is filing Financial Statements with their annual return, the certification of the

Form B1 also serves to certify the Financial Statements (see paragraphs 2.4 and 2.5 of this Leaflet

regarding signing of the Form B1).

Companies will be required to tick the following box on the B1 form to certify the Financial

Statements.

 WE HEREBY CERTIFY that all documents which are required under Part 6 of the Companies Act

2014 to be annexed to this annual return, have been so annexed, and that they are true copies of the

originals laid or to be laid before the relevant general meeting, or presented to the member(s).