Audit and Assurance Services - Welcome to Declan Monaghan
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Declan Monaghan

Monaghan & Company

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Accounting &
Book - keeping

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Audit & Assurance Services

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AUDIT AND ASSURANCE SERVICES

We work closely with our client providing Auditing services to Limited Companies, Charities, Not for profit organisations, Property Management Companies and Credit Unions. We will gladly conduct a statutory audit on your Financial Accounts. We not only carry out a statutory audit but we will also offer to make recommendations where improvements and savings can be made in your company. Why not avail of this opportunity and appoint us as your statutory auditors.

Auditing can be defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an organisation for a stated purpose. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report.The purpose of a statutory audit is then to give an opinion on the adequacy of controls (financial and otherwise) within an environment they audit, to evaluate and improve the effectiveness of risk management, control, and governance processes and to give an opinion on whether the Financial Statements give a true and fair view of the underlying records and documentation.

The alternative to having a statutory Audit is to avail of the Audit exemption. In order to avail of the audit exemption, the company must satisfy all of the following conditions, both in respect of the current financial year concerned and the preceding financial year, unless the year in respect of which the exemption is being claimed is the company’s first financial year:

  • The company must be a company to which the Companies (Amendment) Act 1986 applies i.e. a Private Limited Company;
  • The amount of turnover of the company must not exceed €8.8 million;
  • The balance sheet total of the company is less than €4.4 million at the end of its financial year;
  • The average number of employees must not exceed 50;
  • The company must not be a parent company or a subsidiary company;
  • The company must not come within one of 19 classes of companies listed in the Second Schedule to the 1999 Act; Please see Attorney Generals website for Second Schedule ;
  • The company’s annual return, to which the accounts for the financial year in question are attached, must be furnished to the CRO in compliance with section 127 Companies Act 1963. This means that the return must be delivered to the CRO not later than 28 days after the company’s Annual Return Date, or where the return has been made up to an earlier date, within 28 days of that earlier date. i.e.it must not be late in the current year;
  • Furthermore, where an annual return to which accounts for the immediately preceding financial year was delivered to the CRO, that return must also have been filed on time. i.e. it must not be late in the previous year;
  • The year in question must be the current year – section 32 provides that the directors must be of the opinion that the company “will satisfy” the conditions – use of the future tense precludes the decision being taken in respect of a year that has already ended.
  • A company which satisfies the revised exemption threshold levels in a current financial year, the year in respect of which the audit exemption is being claimed, must also have satisfied those revised threshold levels in the preceding financial year.

Even if a company meets each of the above four conditions in respect of its current financial year (and where the company had a previous financial year, the company also met those conditions in respect of that year), it will be unable to file unaudited accounts for the financial year concerned with its annual return unless it files that return on time with the CRO and the return to which the company’s accounts for its preceding financial year were attached was also filed on time with the CRO.

Filing on time: A company’s annual return is required to be made up to a date that is no later than the company’s ARD (Annual Return Date). The annual return filing deadline is 28 days after the ARD or the effective date of the return, if same pre-dates the company’s ARD, whichever is the earlier. Any annual return delivered to the CRO after this filing deadline is late. As a matter of law, a late return disqualifies the company from claiming the audit exemption in respect of the accounts attached to the particular return as well as the following year’s annual return, even if the company meets the other qualifying criteria for the audit exemption in respect of the financial years covered by the accounts attached to both returns.

Scenario A
Company is incorporated on 10/1/2008. Its first financial year runs from 10/1/2008 to 31/12/2008. The directors decide and record on 15/9/2008 that they are of opinion that the company will fulfil the conditions set out in section 32(3) of the Act in respect of its current financial year. As this is the company’s first financial year, there was no preceding financial year and section 32(1)(b) does not apply.
My company meets all of the above criteria. What next?

In order to avail of the exemption, the directors of the company must:

  • Be of the opinion that the company will satisfy the statutory conditions in respect of the current financial year or a future financial year;
  • decide that the company will avail of the exemption in respect of the financial year concerned; and
  • record that decision in the minutes of the meeting concerned. In deciding if they want to have the audit in respect of a financial year, they should consider the fact that third parties connected with the company (e.g. bankers or trade organisations) may still require an audit to be completed.
  • Furthermore, if a number of the company’s shareholders request that the company not avail itself of the exemption and serve notice in writing to this effect on the company in the financial year immediately preceding the financial year concerned or during the financial year concerned but not later than one month before the end of that year, the company must have an audit. The decision that the company will avail of the exemption from audit may be made during the financial year in which the exemption is to be availed of, or in respect of a future financial year.
  • The directors do not have to know that a company satisfies or will satisfy the statutory conditions. Rather they are required simply to be of the opinion that those conditions will be satisfied. It should also be noted that the statutory requirement to make and record the decision in respect of a financial year that has not yet come to an end, precludes the possibility of claiming the audit exemption retrospectively. Whilst the decision to avail of the exemption may be made in respect of a current or future financial year, it cannot be made in respect of a financial year that has already ended.
  • Where the exemption is being availed of, the following statements must be included in the company’s balance sheet by the directors of the company:
  • (a) “that the company is availing itself of the exemption provided for by Part III of the Companies (Amendment)(No. 2) Act 1999” (these specific words must be used)
  • (b) “that the company satisfies the conditions specified in section 32 of the 1999 Act (as amended by section 53 of the Companies (Auditing and Accounting) Act 2003 and amended by section 9 Investment Funds Companies and Miscellaneous Provisions Act 2006)”
  • (c) “that the shareholders of the company have not served a notice on the company under section 33(1) in accordance with section 33(2) of the 1999 Act”
  • (d) an acknowledgment by the directors “of the company’s obligations under the Companies Acts 1963-2006, to keep proper books of account and prepare accounts which give a true and fair view of the state of affairs of the company at the end of its financial year and of its profit or loss for such a year and to otherwise comply with the provisions of those Acts relating to accounts so far as they are applicable to the company”
  • The above statements must appear in the balance sheet immediately above the signatures of the directors. It is a criminal offence for any person to make a statement in any return, balance sheet or other document in relation to the audit exemption, which is false in any particular, knowing it to be false.

It is critically important to understand that to avail of the audit exemption each year the Annual return must be filed on time each year.

For further information please contact us for advice on the above and allow us to conduct your Statutory Audit on your Companies Financial statements.

Making the most of tax opportunities specific to your industry

For your free consultation call us on 091 788769