The Companies (Statutory Audits) Act 2018 (the “2018 Act”) was signed into law on 25 July 2018 and commenced, in the most part, on 21 September 2018. The 2018 Act amends the Companies Act 2014 in a number of areas of including audit exemption.
The key change for company directors introduced by the 2018 Act relating to audit exemptions is outlined below.
Late filing of annual returns and loss of audit exemption
Every company must submit an annual return to the Companies Registration Office each year, whether it is trading or not, and in most cases the statutory financial statements of the company are submitted with that annual return.
At present, if a company does not submit its annual return within the prescribed filing deadline, it is deemed to be late. This results in an immediate late filing penalty of €100 with a daily penalty amount of €3 accruing thereafter until the return is filed. It also results in the automatic loss of audit exemption for both the financial year to which the annual return relates and for the next financial year. If this happens, the directors must arrange for the financial statements to be audited before they can be submitted to the Companies Office with the overdue annual return.
The 2018 Act amends The Companies Act 2014 so that when an annual return is late, the company will not lose audit exemption for the financial year to which the annual return relates. Instead audit exemption will be lost for the next two financial years. This is a welcome change as it means directors will not have to incur the cost of an audit for a financial year that has already ended and should also help to minimise the amount of late filing penalties incurred as the directors do not have to wait to have the audited accounts completed whilst the late filing penalty is accruing by €3 daily on the overdue annual return.
If you have any queries in relation to this or any other aspect of your corporate compliance requirements, please do not hesitate to contact our Company Secretarial Department or any of your normal contacts in the firm.