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Proper Books

Company accounts and the euro

The requirement that a company keep proper books of account is contained in section 202 of the Companies Act 1990. Section 202(1) provides that:

  1. every company shall cause to be kept proper books of account, whether in the form of documents or otherwise that -      
  • correctly record and explain the transactions of the company,    
  • will at any time enable the financial position of the company to be determined with reasonable accuracy,     
  • will enable the directors to ensure that any balance sheet, profit and  loss account or income and expenditure account of the company complies with the requirements of the Companies Acts, and      
  • will enable the accounts of the company to be readily and properly audited.

Section 202(3) requires the books of account to contain-

  • entries from day to day of all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place,
  • a record of the assets and liabilities of the company,
  • if the companys business involves dealing in goods - (i) a record of all goods purchased, and of all goods sold (except those sold for cash by way of ordinary retail trade), showing the goods and the sellers and buyers in sufficient detail to enable the goods and the sellers and buyers to be identified and a record of all the invoices relating to such purchases and sales, (ii) if the companys business involves the provision of services, a record of the service provided and of all the invoices relating thereto.

Proper books of account are those which give a true and fair view of the state of affairs of the company and explain its transactions (section 202(4)).

In any case where there has been a breach of section 202 of the Companies Act 1990, the auditor is, in addition to complying with section 194(1) Companies Act 1990, required to consider whether the breach is required to be reported by him/her to the Office of the Director of Corporate Enforcement pursuant to section 194(5) Companies Act 1990.

Currency in which internal bookkeeping records ought to be maintained.

In order to comply with section 202, internal books of account should be maintained in a currency which will enable the financial position of the company to be determined with reasonable accuracy, and an audit to be carried out without difficulty.

Currency in which formal company accounts ought to be maintained.

Formal company accounts which are prepared in a currency which has legal effect as at the date on which the financial year ends are accepted for filing by the CRO.

Formal company accounts

Formal company accounts include the following:

Annual accounts: The requirement to prepare annual accounts is contained in section 148 Companies Act 1963. A balance sheet and a profit and loss account, or in the case of a company not trading for profit, an income and expenditure account, are required to be prepared once at least in every calendar year. The format of the balance sheet and profit and loss account is laid down in the Companies (Amendment) Act 1986. Section 7-12 of the 1986 Act prescribe the accounts which are required to be annexed by a company to its annual return. In relation to a company to which the 1986 Act does not apply, an obligation to file accounts with the annual return may arise pursuant to section 128 of the Companies Act 1963.

Group accounts are permitted to be annexed to a company's annual return pursuant to Regulation 39 of S.I. 201 of 1992 (EC (Companies: Group Accounts) Regulations 1992).

Annual accounts and consolidated accounts of banks and other financial institutions must be prepared pursuant to Regulations 5 and 7 of S.I. 294 of 1992 (EC (Credit Institutions: Accounts) Regulations 1992).

Annual accounts and consolidated accounts of insurance undertakings must be prepared pursuant to Regulations 5 and 10 of S.I. No.23 of 1996 (EC (Insurance Undertakings: Accounts) Regulations 1996).

Certain partnerships are required by Regulation 12 of S.I. 396 of 1993 (EC (Accounts) Regulations 1993) to prepare annual accounts, being a profit and loss account and a balance sheet.

In addition to the above types of accounts, summary accounts are permitted by section 156(4) Companies Act 1963. Abridged accounts pursuant to sections 10-12 Companies (Amendment) Act 1986, may be filed with an annual return by a small or medium sized company. Section 19 of the 1986 Act governs the publication of full or abbreviated accounts.

Formal company accounts and the euro

Euro accounts have been accepted for filing by the CRO since January 1999. With effect from 1 January 1999, the currency of the State is the euro, and the Irish pound unit is a subdivision of the euro.

Accounts in respect of a financial period ending on or after 1 January 2002 are rejected by CRO unless completed in a currency which is legally effective at the date on which the financial year ends.

The latest date therefore to which IR (or other Eurozone national currency) accounts can be made up is 31 December 2001.