Financial statements requirements

Financial Statements
Companies are required to keep proper books of account which give a true and fair view of the company's financial affairs. Companies are also required to disclose details of their financial statements at the Annual General Meeting (AGM) and to attach a copy of those financial statements to the annual return filed with the CRO. In addition, they are required to observe certain standards in the preparation of financial statements, following specimen formats and disclosing certain information by way of notes to the financial statements.

The Companies Act 2014 requires directors of all companies to lay the following financial statements and reports before the company members at the AGM:

  • a profit and loss account (or an income and expenditure account if the company is not trading for profit)
  • a balance sheet 
  • a directors' report 
  • a statutory auditor's report

The annual financial statements and directors' report must be signed on behalf of the directors by two directors. (Where the company is an LTD Company, a Private Company Limited by shares, registered under the Companies Act 2014 and has only one director, the documents should be signed by the sole director - does not apply to previously incorporated Private Limited by Shares companies unless they have converted under Part 2 of the Act to the new company model LTD).

The above-listed documents are required to be annexed to the annual return of a limited company on delivery to the CRO. (Small and Medium companies have certain exemptions). In addition, there must be a certificate, signed by both a director and the secretary, certifying that the financial statements and reports are true copies of those laid before or to be laid before the company's AGM.

Link to Account Certification and Filing Accounts Electronically

If a company fails to comply with the requirements, the annual return will be rejected by the CRO. In addition the company and every officer of the company who is in default will be liable to a category 3 offence - fine not exceeding €5000.

No financial statements are required to be annexed to the first annual return which is delivered by a company post-incorporation. This return is required to be made up to the date which is six months after the date of the company's incorporation.

Public limited companies and private limited companies prepare annual financial statements in accordance with Parts 6/17 of the Companies Act 2014.

Financial statements Requirements
The financial statements requirements for different company types and sizes are detailed in the following pages -
Small     • Medium     • Group     • Large     • Guarantee     • Unlimited

NEW OBLIGATIONS REGARDING FINANCIAL STATEMENTS IN THE 2014 COMPANIES ACT
Under the Commencement Order the following new obligations in Part 6 of the 2014 Act were commenced in respect of financial years beginning on or after 1 June 2015:

  • section 167: Audit committees
  • section 225: Director's compliance statement and related statement
  • section 305(1)b: Share options disclosure
  • section 306(1): Payments to connected persons
  • section 326(1)a: Director's names
  • section 330: Directors' report: statement on relevant audit information)

Company cannot file two annual returns with the same set of financial statements
 
Section 347(4), Companies Act 2014, states that every document annexed to an annual return shall cover the period since the end of the period covered by
the financial statements annexed to the preceding annual return and shall be made up to a date falling not more than 9 months before the date to which
the return is made up.

This means that each set of financial statements must start on the first day after the period covered by the last set of financial statements filed with
the CRO.

From 31 March 2016, CRO will require companies to file a separate set of financial statements with each annual return.

Companies are reminded that the 2014 Companies Act provides a number of methods for moving an ARD date and for aligning ARDs and financial year ends (FYE's).

These include the following:

  • under section 346(1), a company may file its annual return early and tick a box on the Form B1 to change its ARD to the date that the B1 is made up to, 
  • under section 346(2), a company may (once in every 5 years) move its ARD date forward by up to 6 months by filing a Form B73 with an on-time Form B1,
  • under section 356(5), a company that is a member of a group may align its ARD with its holding company or other subsidiaries by filing a Form B78A with the
    CRO, with no 5 year restriction,
  • under section 288(4), a company may, once in every 5 years, alter its financial year end by filing a Form B83 with the CRO, subject to the new
    financial year not exceeding 18 months. The 5 year rule does not apply where the company is a subsidiary or holding undertaking of another EEA
    undertaking. 

Please note that section 288(1), CA 2014, specifies that a company's first financial year begins upon incorporation and ends on a date no more than
18 months after that date. This gives a company the flexibility to use their first full annual return (required to be filed no later than 18 months after incorporation) to file financial statements for a period shorter than 18 months in order to achieve the desired ARD / FYE combination, bearing in mind that the ARD cannot be more than 9 months after the financial year end. 
 
Fixing of Length of Financial Periods
 
Under Section 288, Companies Act 2014, the Financial Statements attached to a company’s first full annual return (ie with Financial Statements) must cover the period from incorporation and must not be for a period longer than 18 months. Each subsequent financial year begins on the date immediately after the last financial year end date and must be for a period of no more than 7 days shorter or longer than 12 months.

A company may, by filing a Form B83 with the Registrar (filing fee: €15), 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.

From 31 March 2016, CRO will require companies to strictly adhere to the requirements of the Act that financial years must not exceed 18 months
for the first financial year and 12 months (give or take 7 days) for subsequent financial years (unless the company files a Form B83 to alter its financial year end).

For further information see Section 3 of CRO Information leaflet No.23

Limited companies:
Public limited companies and private limited companies are required to prepare and file annual financial statements in accordance with Parts 17 and Part 6 respectively of the Companies Act 2014.

Not-for-profit limited companies:
Companies Limited by Guarantee (a form of public company with limited liability which are not trading for the acquisition of gain by the members) are required to prepare and file financial statements in accordance with Parts 6 and 18 of the Companies Act 2014.

A Designated Activity Company limited by guarantee has to file financial statements with the CRO ( i.e a company limited by guarantee and having a share capital which is not trading for the acquisition of gain by the members) in accordance with Parts 6 and 16 of the Companies Act 2014.
In both cases they must file financial statements unless exempted by the Charities Regulatory Authority or the Commissioner of Charitable Donations and Bequests for Ireland.

Group Financial statements:
Group financial statements are prepared either under the Companies Act or IFRS financial reporting frameworks and are required under section 293 Companies Act 2014.

Banks and financial institutions:
Annual financial statements and consolidated financial statements of banks and other financial institutions must be prepared in accordance with the European Communities (Credit Institutions: Accounts) Regulations, 1992 (S.I. 294 of 1992). The Regulations apply to individual and group financial statements drawn up in respect of every financial year beginning on or after 1 January 1993. See also SI 266 of 2015.

Insurance undertakings:
Annual financial statements and consolidated financial statements of insurance undertakings must be prepared in accordance with the European Communities (Insurance Undertakings: Accounts) Regulations 1996 (S.I. No. 23 of 1996). The Regulations apply to individual and group financial statements of insurance undertakings drawn up in respect of every financial year beginning on or after 1 January 1996. See also SI 262 of 2015.

Unlimited companies and partnerships:
An unlimited company is not necessarily exempt from the requirement to file financial statements as certain unlimited companies and partnerships (including limited partnerships) are obliged to prepare financial statements and deliver them to the CRO. Financial statements are required from such entities by virtue of section 1274 of the Companies Act 2014. Effectively, an unlimited company or partnership where all the members thereof who do not have a limit on their liability are companies limited by shares or by guarantee is obliged to file financial statements.