Home Knowledge Companies (Accounting) Bill 2016 – Major Changes to Companies Accounting Law on the Way

Companies (Accounting) Bill 2016 – Major Changes to Companies Accounting Law on the Way

September 9, 2016

The Companies (Accounting) Bill 2016 (the”Bill”) was published on 5 August 2016. Once enacted, the Bill will amend andsupplement the Companies Act 2014 in a number of aspects.


The main purpose of the Bill is to transposethe Accounting Directive 2013 (the “Directive”), which provides significantsimplifications and reductions of administrative burdens with regard to thepreparation of financial statements for enterprises, in particular SMEs. It alsointroduces mandatory requirements for large companies, large groups and “publicinterest entities” that are active in the mining and extractive industries orthe logging of primary forests to prepare and file annual reports on paymentsmade to governments.

In addition, the Bill makes a number ofmiscellaneous amendments to the Companies Act 2014 not related to thetransposition of the Directive.

Non-filing structures

One of the most significant aspects of the Billis that, when enacted, it will require a much broader scope of corporatestructures to file financial statements than is the case at present. Inparticular, certain non-filing structures currently in use in Ireland usingunlimited companies are unlikely to be effective once this section is commenced.

General accountingprovisions


The Bill sets out new criteria for companies toqualify as “small”, “medium” or “large” and introduces a new “micro” category ofcompany. The current thresholds are indicated in brackets.





Net turnover


€12m (€8.8m)

€40m (€20m)

Balance sheet total


€6m (€4.4m)

€20m (€10m)

Average no. of employees





To qualify, a company must not exceed 2 of the3 thresholds. Large companies are ones which exceed 2 of the 3 thresholds formedium companies.

A simplified regime for micro companies withregard to the preparation and filing of financial statements is proposed.Amongst other things, micro companies will be exempt from disclosing directors’remuneration in the financial statements and exempt from preparing a directors’report.

Change in financial reportingframework

At present, a company may only change financialreporting framework (i.e. from IFRS to Companies Act requirements and viceversa) if there is a “relevant change of circumstances”. The Bill proposes that,in the absence of a relevant change of circumstances, a company should bepermitted to change its financial reporting framework once every 5 years.

A new requirement to explain in the financialstatements the reason for, and any impact of, a change in accounting policy, isintroduced.

Exemption from obligation toprepare group financial statements

More companies will be required to preparegroup financial statements as the exemption on grounds of size will only applyto small and micro companies. Such companies may still elect to prepare groupfinancial statements if they wish.

Abridged financial statements

Only small and micro companies will bepermitted to file abridged financial statements with the CRO. Medium sizedcompanies will be required to file full financial statements.


It is not possible to say when the Bill will beenacted, although it is likely that it will be dealt with as quickly as possiblein the Oireachtas given that Ireland is over a year late in transposing theprovisions of the Directive. In any event, there will be no progress on the Billuntil the Dáil and Seanad resume in late September.

The timing for when the new provisions willtake effect and whether any transitional arrangements will be permitted remainsto be seen and will be dealt with in the commencement order once the Bill isenacted. The Directive states that the new rules must apply for financial yearscommencing on or after 1 January 2016. There is discussion as to whether thiscould be extended to 1 January 2017 given the delay in transposing theDirective, but there is no clarity on this point yet.

With regard to unlimited companies filingfinancial statements for the first time following the introduction of the newrules, it is important to bear in mind that these financial statements mustinclude comparisons to financial information for the previous financial year.

What should I do?

Companies concerned about the possible impactof the proposed changes, particularly in relation to non-filing structures,should contact us. We can assist in examining your existing corporate structureto determine whether it will come within scope of the expanded filing rules andto offer advice on how best to deal with the consequences for your business of arequirement to disclose sensitive financial information in future.

We will keep you updated on the progress ofthis Bill and the timing of enactment over the coming months.

Contributed by Aoife Kavanagh

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