Changes to the Audit Exemption

OverviewThe Companies (Statutory Audits) Act 2018 (the “2018 Act”) has, for the most part, commenced as of 21 September 2018. Key changes While there are a number of changes contained in the 2018 Act, they are very technical, and largely relate to auditors obligations and the internal workings of the Irish Auditing and Accounting Supervisory Authority (“IAASA”). The key changes which are of more general interest include: Annual Returns and Audit Exemption Every com... Overview The Companies (Statutory Audits) Act 2018 (the “2018 Act”) has, for the most part, commenced as of 21 September 2018. Key changes While there are a number of changes contained in the 2018 Act, they are very technical, and largely relate to auditors obligations and the internal workings of the Irish Auditing and Accounting Supervisory Authority (“IAASA”). The key changes which are of more general interest include: Annual Returns and Audit Exemption Every company is required to file an annual return with the Companies Registration Office in each year, setting out specified information (including details of its directors, secretary and shareholders, and of its registered office), and in most cases appending financial statements. Under the previous statutory audit regime, a company would lose any entitlement which it might have had to avail of an exemption from audit in respect of that financial year if it was late in filing its annual return. The 2018 Act provides that where a company's audit exemption is lost due to late filing, the two financial years following the financial year in which the company failed to file on time will need to be audited. This change removes the need for a company which is already late in making its annual return to commence an audit of an already-completed financial year. IAASA Powers The 2018 Act permits the IAASA to prescribe additional requirements in relation to the content of the statutory auditors' report. However, IAASA may only set out these additional requirements where they are necessary to give effect to legal requirements in Ireland in relation to the scope of statutory audits or if they are necessary to add to the credibility and quality of the audit report. In addition, IAASA now has new powers of sanction and delegation. Specifically, it will be required to publish on its website details of any sanctions it imposes (following the exhaustion of all rights of appeal). Information so published on IAASA’s website would then remain there for at least 5 years. Additionally, where there has been a contravention relating to the audit of a public-interest entity, IAASA must inform the Director of Corporate Enforcement (“ODCE”) of that contravention and assist the ODCE with any investigation of a director arising from that contravention. Key changes not yet commenced Streamlined Filing of Annual Returns The existing deadline for filing an annual return and an application to extend the Annual Return Date (“ARD”) is to be extended from 28 days to 56 days from the ARD. The filing process itself is to be streamlined so as to require only one step.