Revised Accounts

Correction

The Companies Act, 2014 provides a new mechanism for the correction of financial statements and/ or the directors’ report.  The provisions apply if there is an error or deficiency in the accounts or in the directors’ report laid before the annual general meeting of the company or delivered to the Company Registration Office.

Where information has been excluded from a directors’ report or where it is incorrect or incomplete, then provided the excluded or incorrect information does not affect other information in the report, a supplementary note may be made and filed. Where the financial statements are revised, the fact of the revision and its effect and details, are to be included in a note to the subsequent financial statements.

Where the defect arises from a failure to provide the notes to the financial statements or complete notes or other required statements, the failure may be corrected by a supplementary note.  In other cases, it is necessary to prepare and file revised financial statements.


Revised Statements

The revised statements must give a true and fair view of the affairs of the company as at the date of the original financial statements. Revised statements or supplementary notes must be approved and signed by the directors.

Where the financial statements have already been laid before the general meeting, sent to the members or delivered to the CRO, the directors must cause certain statements to be set out prominently in the revised statements or in the notes, prior to approval of the revised statements.

Where the statements are replaced, there must be a statement clearly identifying the replacement statements as revised,

  • confirming that they replace the original statements for the relevant year and are now the statutory financial statements;
  • that they have been prepared as at the date of the original statements and not at the revised date;
  • that they do not deal with subsequent events;
  • the manner in which the original statements did not comply with the legislation or applicable accounting standards; and
  • particulars of any other amendment, consequential on rectification of the defects.

Where the revision takes effect by way of a supplementary notice, the statement must confirm

  • that the statement revises the original financial statements and is to be treated as part of the original statements;
  • that they have been revised as at the date of the original statements and not at a subsequent date; and
  • that they do not deal with transactions or events after that date.

Auditor’s Report

The company’s auditors must make a report or supplementary report to the members in a required format in relation to the revised statements. The auditors are to report on whether, in their opinion, the revised statements have been properly prepared in accordance with the requisite financial reporting framework, the Act and audit standards.

They must confirm whether the revised statements give a true and fair view of the financial position of the company, as at the date of approval of the original financial statements.  They must give an opinion as to whether the original financial statements failed to comply with the requirements in the manner set out by the directors.

The auditors must consider whether the revised directors’ report is consistent with the financial statements.

The auditors are to sign the revised report and to report on the financial statements, in place of their report on the original statements and the director’s report. The revised financial statements and reports are to take effect, in place of the original reports.

An audit report is not required where the audit exemption is available, even if this arises from the revision.  If as a consequence of the revision, the exemption is no longer available, revised statements must be prepared and audited.  An auditor’s report and the revised statements must be filed with the CRO within two months.


Publicity Requirements

Where revised statements and reports have been made, the directors within 28 days of the revision, must send them to persons to whom the original statements and reports have been sent. They must send to members, debenture holders and persons entitled to receive notice of the general meeting, a copy of the revised statements or supplemental note, together with the auditor’s report on the revised statements and/or report.

Where the original statements or reports have been laid before the general meeting, a copy of the revised statements, reports and auditors reports on them are to be laid before the next AGM after the date of revision, or the next general meeting at which any statutory financial statements are to be presented.

The directors are to file revised statements, director’s report and an audit report on them, within 28 days after revision.Where the revision causes the company to cease to qualify for small or medium company exemptions, the directors are to deliver revised statements and reports to the CRO within 28 days of the revision.


Types of Revision I

Where copies of the original statutory financial statements or original directors’ report have been laid before the company in general meeting or delivered to the CRO, the revisions shall be confined to the correction of those respects in which the original statutory financial statements or original directors’ report did not comply with the requirements of the Act or, where applicable, the IAS Regulation, and the making of any necessary consequential alterations.

Where there is a revision of the statutory financial statements, supplementary notes may be required where the revision impacts on the information included and the previous notes were incorrect or incomplete.

Where the reason for the revision of the statutory financial statements is that information that should have been included by way of note to the financial statements was not so included, or information provided in a note to the financial statements was incorrect or incomplete, then in a case where the amounts and presentation of the profit and loss account, balance sheet or other statements required by the financial reporting framework are not affected by reason thereof,  the revision may be effected by supplementary note. In all other cases, revised financial statements shall be prepared.


Types of Revision II

Where the reason for the revision of the directors’ report is that information that should have been included in the report was not so included, or information provided in the report was incorrect or incomplete, then in a case where the additional information to be provided by way of revision does not affect other information included in the report, the revision may be effected by supplementary note. In all other cases, a revised directors’ report shall be prepared.

Where revised statutory financial statements are prepared, the next financial statements prepared after the date shall refer to the fact that the previous set of financial statements have been revised. They shall provide particulars of the revision, its effect and the reasons for a revision in a note to the financial statements.

The general provisions of the Acts apply in relation to the matters to be included in the revised financial statements.  In particular, they must provide a true and fair view of the matters as at the date of the original financial statements.  Equivalent provisions apply to be directors’ report.


Requirements

The provisions for the approval and signature of the statutory financial statements apply to the revised statutory financial statements. In the case of a revision effected by a supplementary note, it shall apply as if it required a signature or signatures on the supplementary note instead of on the balance sheet.

Where copies of the original statutory financial statements have been sent to members, laid before the general meeting or delivered to the CRO, the directors shall, before preparing the revised financial statements, cause statements to be made in a prominent position in the revised accounts, noting the effect of the revision showing the replacement financial statements to be the revised financial statements and further specific statements regarding the substitution and replacement and other matters.

Where the revision is by way of a supplementary note, the note must make certain specific statements as to the following matters:

  • that the note revises in certain respects the original statutory financial statements of the company and is to be treated as forming part of those original statutory financial statements; and
  • that the statutory financial statements have been revised as at the date of the original statutory financial statements and not as at the date of the revision and, accordingly, do not deal with events and transactions between those dates.

The company shall when approving the revised financial statements, cause the date on which the approval is given to be stated in them (or, in the case of revision effected by supplementary note), in that note.


Directors’ Report

Equivalent provisions apply to revisions of the directors’ report.  Where copies of the original directors’ report have been sent to members, laid before the members in general meeting or delivered to the CRO, the directors shall, before approving the revised directors’ report, cause statements as to the following matters to be made in a prominent position in the revised directors’ report or, in the case of a revision effected by supplementary note, in that note in the case of a revision effected by replacement—

  • that the revised directors’ report replaces the original directors’ report for the financial year, specifying it;
  • that it has been prepared as at the date of the original directors’ report and not as at the date of the revision and, accordingly, does not deal with events and transactions between those dates;
  • the respects in which the original directors’ report did not comply with the requirements of the Act or, where applicable, of the IAS Regulation; and
  • any significant amendments made consequential upon the remedying of those defects.

In the case of a revision effected by supplementary note—

  • that the note revises in certain respects the original directors’ report of the company and is to be treated as forming part of that original directors’ report, and
  • that the directors’ report has been revised as at the date of the original directors’ report and not as at the date of the revision and accordingly does not deal with events and transactions between those dates.

The directors shall, when approving the revised directors’ report, cause the date on which the approval is given to be stated in it (or, in the case of revision effected by supplementary note, in that note).


Auditor’s Confirmations I

The company’s statutory auditors must report on the revised financial statements.  Their obligations in respect of the assessment of the accountings, records and the reporting of offences continue to apply. The statutory auditor’s report shall state whether in his opinion, the revised financial statements have been properly prepared in accordance with the relevant financial reporting framework and whether a true and fair view as at the date of the original statutory financial statements is given.

The report shall also state whether, in the auditor’s opinion, the original financial statements failed to comply with the requirements of the Act in respects identified by the directors.  The statutory auditors shall consider whether the information in the directors’ report is consistent with the financial statements.  They are to state their opinion in that regard.   The revised statutory auditor’s report must be signed in the same manner as the original report.

Where companies have availed of audit exemption, the requirements for a new statutory auditor’s opinion and the revised statement does not apply, provided that the revision is not such that the company is no longer entitled to the audit exemption. If it no longer applies, the company must cause a report by the statutory auditors to be prepared within two months.

Where the statutory auditors’ report on the original statutory financial statements was not made by the company’s current statutory auditors, the directors of the company may resolve that the report is to be made by the person or persons who made the first-mentioned report, provided that that person or those persons agree to do so and the person or persons would be qualified for appointment as statutory auditors of the company.

The report shall state that the statutory auditors have considered whether the information given in the revised report is consistent with the original statutory financial statements for the relevant year (specifying it) and if they are of the opinion that it is, or if they are of the opinion that it is not, they shall state that fact in their report.


Revised Statement

Upon the directors approving revised financial statements, the revised financial statements apply in lieu of the original financial statements. The revised financial statements shall thereupon be the company’s statutory financial statements for the relevant financial year for the purposes of—

  • the right to demand copies of financial statements and reports;
  • requirements in relation to the publication of financial statements, and

each of the following (but only, in each case, if the requirements have not been complied with prior to the date of revision)

  • the circulation of statutory financial statements;
  • the requirements that financial statements and reports be laid before the members in general meeting), and
  • that documents be annexed to annual return: in all cases.

Upon the directors approving a revised directors’ report, the provisions in relation to the financial statements apply to the revised directors’ reports.


Circulation and Filing

Where revised financial statements or a revised directors’ report have been prepared, copies are to be sent to the persons entitled in the same manner as the original report or statement.  The revised financial statements and revised directors’ reports together with the statutory audit report, where applicable, are to be sent within 28 days of the revision, to members of the company, debenture holders and persons entitled to notice of general meeting.  Failure to do so is an offence on the part of the company and any person, director and any officer in default.

Where, the original statutory financial statements or directors’ report have been laid before the general meeting, a copy of the revised financial statements, revised directors’ report and statutory auditor’s report, where applicable, shall be laid before the next general meeting of the company, held after the date of the revision at which the statutory financial statements for a financial year are laid, unless they have been laid before an earlier general meeting.

Where the original statutory financial statements have been annexed, or directors’ report have been annexed to the company’s annual return, which has been delivered, the directors shall, within 28 days of the revision, deliver to the CRO, the revised or replaced financial statements or revised or replaced directors’ report, together with the statutory auditors’ opinion on them.  Failure to do so is a category 3 offence.


Abridged Accounts I

In the case of small and medium companies which have taken advantage of the option to deliver abridged financial statements, where the revision either affects the entitlement to file abridged accounts or affects the contents of the financial statements, the directors are to deliver a copy of the revised financial statements together with a directors’ report and statutory auditor’s report on the revised statements, or if it is entitled to prepare abridged financial statements, prepare revised abridged accounts together with statement of the effect of the revisions.

Where the abridged financial statements so delivered to the CRO would, if they had been prepared by reference to the matters taken account of in the revised financial statements, not comply with the provisions of the Act or, where applicable, the IAS Regulation, whether because  the company would not have qualified as a small or (as the case may be) medium company in the light of the revised financial statements, or the financial statements have been revised in a manner which affects the content of the abridged financial statements, then the directors of the company have the duty is to cause the company either

  • to deliver to the CRO, within 28 days after the date of revision, a copy of the revised financial statements, together with a copy of the directors’ report and the statutory auditors’ report on the revised financial statements, or
  • if, on the basis of the revised financial statements, the company would be entitled to prepare revised abridged financial statements and deliver them to the Registrar, together with a statement as to the effect of the revisions made,

Abridged Accounts II

Where the abridged financial statements would, if they had been prepared by reference to the matters taken account of in the revised financial statements, comply with the requirements of the or IAS Regulation, the directors of the company shall cause the company to deliver to the CRO

  • a note stating that the statutory financial statements of the company for the relevant financial year (specifying it) have been revised in a respect which has no bearing on the abridged financial statements delivered for that year, and
  • a copy of the statutory auditors’ report on the revised financial statements.

Revised abridged financial statements where required or a note where applicable, shall be delivered to the CRO within 28 days after the date of revision.

If a director fails to comply with his above duty, he shall be guilty of a category 3 offence. The above obligations also apply to a person who is a shadow director or de facto director of a company so that they also shall ensure that the requirements are complied with in relation to the company.


Interim Changes

Where based on previous financial statements, a company is entitled to avail of the audit exemption in respect of the year concerned and would have been entitled, but for the time taken to prepare the revised accounts (being thereby late) the exemption will continue to apply.

Where the provisions of the Companies Act as to the matters to be included in the statutory financial statements of a company or (as the case may be) in a directors’ report have been amended after the date of the original statutory financial statements or (as the case may be) directors’ report but prior to the date of revision, the provisions in force at the date of approval of the original statutory financial statements or (as the case may be) directors’ report shall apply.

Where the provisions as to the matters to be included in abridged financial statements have been amended after the date of delivery of the original abridged financial statements but prior to the date of revision of the revised financial statements or report, the requirements are those in force at the date of approval of the original abridged financial statements.


References and Sources

Primary References

Companies Act 2014 (Irish Statute Book)

Companies Act 2014: An Annotation (2015) Conroy

Law of Companies 4th Ed.  (2016)     Courtney

Keane on Company Law 5th Ed. (2016) Hutchinson

Other Irish Sources

Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury

Introduction to Irish Company Law    4th Ed. (2015) Callanan

Bloomsbury’s Guide to the Companies Act 2015      Courtney & Ors

Company Law in Ireland 2nd Ed. (2015) Thuillier

Pre-2014 Legislation Editions

Modern Irish Company Law   2nd Ed. (2001) Ellis

Cases & Materials Company Law 2nd Ed. (1998) Forde

Company Law 4th Ed. (2008)  Forde & Kennedy

Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy

Companies Acts 1963-2012   (2012)  MacCann & Courtney

Constitutional Rights of Companies   (2007)  O’Neill

Court Applications Under the Companies Act (2013) Samad

Shorter Guides

Company Law – Nutshell 3rd Ed. (2013) McConville

Questions & Answers on Company Law (2008)        McGrath, N & Murphy

Make That Grade Irish Company Law 5th Ed. (2015) Murphy

Company Law BELR Series (2015)   O’Mahony

UK Sources

Companies Act 2006 (UK) (Legilsation.gov.uk)

Statute books Blackstone’s statutes on company law (OUP)

Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington

Company Law in Context 2nd Ed. (2012) D Kershaw

Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam

Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington

 

UK Practitioners Services

Tolley’s Company Law Handbook

Gore-Browne on Companies

Palmer’s Company Law