Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

I move amendment No. 7:

In page 8, between lines 20 and 21, to insert the following:“Amendment of Principal Act - substitution of sections 363 and 364

12.The Principal Act is amended by the substitution of the following sections for sections 363 and 364:

“Audit exemption (non-group situation) not available in certain cases

363.(1) Subject to subsection (2) and notwithstanding that section 358 is complied with, a company is not entitled to the audit exemption referred to in that section in respect of its statutory financial statements for the 2 financial years immediately succeeding a financial year (in this section referred to as the ‘relevant financial year’) where the company failed to deliver to the Registrar, in compliance with section 343, the company’s annual return to which the statutory financial statements or (as appropriate) abridged financial statements for the relevant financial year are annexed.

(2) Subsection (1) shall not apply in the case of an annual return of a company which is the company’s first annual return referred to in section 349.

Audit exemption (group situation) not available in certain cases

364.(1) Subject to subsection (3), in this section a reference to a relevant body is a reference to the holding company or any other member of the group.

(2) Subject to subsection (4) and notwithstanding that section 359 is complied with, a holding company and the other members of the group are not entitled to the audit exemption referred to in that section in respect of their statutory financial statements for the 2 financial years immediately succeeding a financial year (in this section referred to as the ‘relevant financial year’) where any relevant body failed to deliver to the Registrar, in compliance with section 343, the annual return of that relevant body to which such body’s statutory financial statements or (as appropriate) abridged financial statements for the relevant financial year are annexed.

(3) There shall not be reckoned as another member of the group for the purposes of this section (other than for the purposes of the expression ‘other members of the group’ in subsection (2)) a subsidiary undertaking that is not a company registered under this Act or an existing company and the construction provided for by subsection (1) (of references to each of the relevant bodies) shall be read accordingly.

(4) Subsection (2) shall not apply in the case of an annual return which is a relevant body’s first annual return referred to in section 349.”.”.

I signalled this amendment on Committee Stage with a view to reducing the impact of losing the audit exemption where a company has filed an annual return late. Since 2003 it has been the policy of successive Governments that where a company files its annual return late, any entitlement to the audit exemption shall be lost for two consecutive years. As things stand, this applies to a past financial year and the current financial year. However, this look-back to a past financial year that may be long finished can be particularly costly and time-consuming. Therefore, my amendments to sections 363 and 364 of the Companies Act 2014 remove the requirement to audit the current financial year as, in practice, this is the past year, as well as the following year, which is typically the year in train. We have replaced that requirement with an obligation to audit the financial year in train and then the following year. These amendments will be of practical benefit for those few companies which find that they are unable to meet their filing deadlines. There no longer will be a need to look back in time to conduct the audit. This should reduce the cost and impact of the audit for companies. I understand that two of the larger professional accountancy bodies have supported this move as a practical improvement.

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