Ireland · Financial statements, the annual return and audit

Preparing entity financial statements, group financial statements and the exemptions

the Companies Act 2014 · sections 289 to 296, 299, 300, 303 and 304

The true and fair test is a condition on approval, not a description of the outcome. The directors may not approve financial statements unless they are satisfied that those statements give a true and fair view of the assets, liabilities and financial position, and otherwise comply with the Part (section 289(1)). Directors who approve on the auditor's word have not met the section, because the section places the state of satisfaction on them.

The group exemptions carry a deadline that is easy to miss because it falls in the previous year. Where the exemption depends on a notice served by members, that notice must be served on the lower holding company not later than 6 months after the end of the financial year before the one to which it relates (section 299(3)), and the same period applies to the notice under section 300 (section 300(3)). A notice served in the year the exemption is claimed is too late.

The directors of a company must prepare entity financial statements for each financial year (section 290(1)). Where at the end of its financial year a company is a holding company, the directors must, as well as preparing entity financial statements, prepare group financial statements, subject to the exceptions section 293(1) and its subsections allow. A company required or electing to prepare group financial statements must prepare them as either Companies Act financial statements or IFRS financial statements, subject to sections 293(5) to (9) (section 293(3)).

Sections 294 to 296 govern the consistency of the financial statements, the treatment of a change from one basis of preparation to the other and the position where a group contains different kinds of undertaking. Sections 299 and 300 carry the exemptions for a subsidiary of a higher EEA holding undertaking and of a higher non-EEA holding undertaking, each with the 6-month notice period. Sections 303 and 304 carry the further exemptions and the exclusions from consolidation.

Files 44, 45 and 46 of the IE-COMPANY package cover this situation. File 44 works through the true and fair view and the obligation to prepare entity financial statements. File 45 works through group financial statements, the basis of preparation chosen and the consistency requirements. File 46 works through each exemption from the obligation to prepare group financial statements, the conditions attached to it and, where a notice is relied on, the date it was served.

This situation is covered by these files from the pack IE-COMPANY

• File 44 · The true and fair view and the obligation to prepare entity financial statements
• File 45 · Group financial statements and consistency of financial statements
• File 46 · Exemptions from the obligation to prepare group financial statements

ComplianceSME tracks the Companies Act 2014 and issues update files through the membership, so that you are never working from a superseded version. Membership

Back to the Irish library →