Audit Committee

(Section 167) 
The board of directors of a large company which meets the following conditions:
(a) a company that, in both the most recent financial year of the company and the immediately preceding financial year, meets the following criteria—
(i) the balance sheet total of that company exceeds for the year—

(I) subject to clause (II), €25,000,000; or
(II) if an amount is prescribed by the Minister under section 945(1)(k), the prescribed amount;
and

(ii) the amount of turnover of that company exceeds for the year—

(I) subject to clause (II), €50,000,000; or
(II) if an amount is prescribed by the Minister under section 945(1)(k), the prescribed amount;

or
(b) a company which has one or more subsidiary undertakings, if the company and all those subsidiary undertakings together, in both the most recent financial year of that company and the immediately preceding financial year, meet the criteria set out in paragraph (a).

shall either—
(a) establish an audit committee that—

(i) has at least the responsibilities set out below; and
(ii) otherwise meets the requirements of this section;
or

(b) decide not to establish such a committee. 
 
Statements in the Director’s Report:
The board of directors of a large company shall state in their Director’s report:

(a) whether the company has established an audit committee or decided not to do so;
(b) if the company has decided not to establish an audit committee, the reasons for that decision.

Membership of the Audit Committee:
The members of the audit committee shall include at least one independent director of the large company, that is to say, a person who—

(a) is a non-executive director of it (i.e. a non-executive director is a director who is not engaged in the daily management of the large company or body concerned);
and
(b) otherwise possesses the requisite degree of independence (particularly with regard to his or her satisfying the condition set out in the “Qualifications” paragraph below so as to be able to contribute effectively to the committee’s functions.

Qualifications of the Independent Director(s):
The independent director must meet the following conditions
He/she does not have, and at no time during the period of 3 years preceding his or her appointment to the committee, did have—

(a) a material business relationship with the large company, either directly, or as a partner, shareholder, director (other than as a non-executive director) or senior employee of a body that has such a relationship with the company; or
(b) a position of employment in the large company.

The independent director or where there is more than one director the independent directors shall be a person or persons who has/have competence in accounting or auditing.

Responsibilities of the Audit committee:
Without prejudice to the responsibility of the board of directors, the responsibilities of the audit committee shall include:

(a) the monitoring of the financial reporting process;
(b) the monitoring of the effectiveness of the large company’s systems of internal control, internal audit and risk management;
(c) the monitoring of the statutory audit of the large company’s statutory financial statements; and
(d) the review and monitoring of the independence of the statutory auditors and in particular the provision of additional services to the large company.

If an audit committee is established, any proposal of the board of directors of the large company with respect to the appointment of statutory auditors to the company shall be based on a recommendation made to the board by the audit committee. The statutory auditors shall report to the audit committee of the large company on key matters arising from the statutory audit of the company, and, in particular, on material weaknesses in internal control in relation to the financial reporting process.

Offences:
Where a director of a large company fails to take all reasonable steps to comply with the requirements of subsection (3), the director shall be guilty of a category 3 offence.  Definitions:  In section 167 — “amount of turnover” and “balance sheet total” have the same meanings as they have in section 350 - “Qualification of company as small or medium company”.
“(7) In this section “amount of the turnover”, in relation to a company, means the amount of the turnover shown in the company’s profit and loss account.”
“(9) In this section “balance sheet total”, in relation to a company, means the aggregate of the amounts shown as assets in the company’s balance sheet.”