Robert Troy (Longford-Westmeath, Fianna Fail)
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107. To ask the Minister for Jobs, Enterprise and Innovation her views on a matter (details supplied); and the reason for the change. [48381/17]

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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The loss of audit exemption is a long-standing rule that dates back to the Companies (Auditing and Accounting) Act 2003 and is central to creating a culture of compliance and supporting good corporate governance practices.  Before that time compliance with filing deadlines was only 13% while today the compliance level is at 90%, a dramatic increase that is associated with the introduction of the audit exemption rule.  Compliance is not posing a difficulty for the vast majority of companies. 

Prior to the enactment of the Companies Act 2014, a company could apply to the Registrar of Companies to waive the late filing fee.  If the Registrar granted such a waiver, the audit exemption would be lost.  Section 343(7) of the Companies Act 2014 replaced this system with an application to the District Court for an extension to the annual return date.  As the application is for an extension of time, rather than a waiving of late filing fees, there is no loss of the audit exemption. 

The Companies Act 2014 was commenced on 1 June 2015.  The number of Orders granted by the District Court in the course of 2016 was more than double the number of waivers granted by the Registrar in 2014 under the previous scheme.  This is a matter for concern as the timely filing of financial statements by companies is an important transparency measure and safeguard for third parties such as suppliers, employees and other creditors.  Companies have up to 10 months to prepare and file their financial statements.  Any further delay risks making that information less meaningful to those third parties. 

The Companies (Statutory Audits) Bill 2017 was published on 6 November last. 

Section 9 of the Bill provides for an amendment to section 343 of the Companies Act 2014, deleting subsection (7), whereby it is proposed that the application to the District Court for an extension of time to file an annual return and retain the audit exemption will no longer apply. 

Instead, in section 10 of the Bill, a further section (section 343A) is included after section 343 relating to the District Court whereby, it may “if it is satisfied that there are exceptional circumstances for it to do so, make an order waiving, in that particular case, the fee required by the Registrar for the delivery of an annual return later than such period.”  In that case, the audit exemption will be lost.  This is similar to the position that obtained before the 2014 Act whereby a company could apply to the Registrar for fees to be waived.