Home Knowledge Companies (Statutory Audits) Act 2018 is Commenced

Companies (Statutory Audits) Act 2018 is Commenced


The Companies (Statutory Audits) Act 2018 (the “2018 Act”) has, for the most part, been commenced as of 21 September 2018. While much of the 2018 Act will mainly be of interest to statutory auditors, there are certain provisions of the legislation that will impact on companies more generally. 


The modern law on statutory audits derives primarily from EU legislation, and was implemented in Ireland by the European Union (Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016 (the “2016 Audits Regulations”).

View our briefing on the 2016 Audits Regulations here

The 2018 Act reproduces the content of the 2016 Audits Regulations and revokes those Regulations in full. 

In addition to reproducing the 2016 Audits Regulations, the 2018 Act makes a number of changes to the Companies Act 2014.

Audit Exemption

Under the Companies Act 2014, certain companies are permitted to avail of an exemption from having their annual financial statements audited where specified thresholds are met. However, such companies will lose their entitlement to an audit exemption where they are late in filing their annual return. The exemption is lost for that financial year and the following financial year. The loss of exemption for the financial year to which the late filing relates means that a company must then arrange for an audit of a financial year that has already expired. This can be a more costly and time consuming process than a standard audit. 

To deal with this issue, the 2018 Act now provides that, where a company availing of the audit exemption is late in filing its annual return, the entitlement to the exemption will be lost for the two financial years following the one to which the late filing relates. This should reduce the costs for companies that are obliged to carry out an audit following the loss of the exemption, while still incentivising companies to file their annual returns in a timely manner. 

Streamlined Filing of Annual Return and Financial Statements

A company must file its annual return together with its annual financial statements with the Companies Registration Office (CRO) within 28 days of its annual return date. Where the annual return is filed electronically, section 344 of the Companies Act 2014 grants companies an extra 28 days to deliver the accompanying financial statements to the CRO. Given that all annual returns (Form B1) must now be filed electronically, this section has become redundant and will be deleted. In addition, corresponding sections of the Companies Act 2014 will be amended to grant companies 56 days after their annual return date to file both their annual return and financial statements. However, these changes have not yet been commenced as further amendments to the Companies Act 2014 are necessary to ensure this new filing process operates as intended. We expect these changes to be made in the coming year.  

New Powers for IAASA

The 2018 Act allows the Irish Auditing and Accounting Supervisory Authority (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. 

IAASA also now has new powers of sanction and delegation. Specifically, it will be required to publish on its website details of any sanctions it imposes. In addition, where there has been a contravention relating to the audit of a public-interest entity,  IAASA must inform the ODCE of that contravention and assist the ODCE with any investigation of a director arising from that contravention. 

Structure and Citation of Companies Act 2014

The 2018 Act introduces a new stand-alone Part 27 into the Companies Act 2014 (dealing with statutory audit matters). This will not affect the numbering of the existing provisions of the Act.

The introduction of the 2018 Act does not change the citation of the Companies Act 2014 (i.e. it is not correct to refer to “the Companies Acts 2014-2018”). Neither is it necessary to refer to “the Companies Act 2014 as amended”, simply “the Companies Act 2014” will suffice. 

Next Steps

Now the 2018 Act has been commenced (in the main), a consolidated version of the Companies Act 2014 will be available on Irish Statute Book (via the Law Reform Commission website).

Contributed by Aoife Kavanagh

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