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A 5 Minute Survey to establish how much this will actually impact on the accountancy profession and their clients.

 

The Background

When the Companies Act 2014 was being enacted, it was always indicated during the early stages of commencement of the legislation, that Irish companies would have a choice as to whether they prepared their financial statements under Companies Act 1963 to 2013 or under the Companies Act 2014. When the commencement order was issued, to the disappointment of the accountancy profession, the option of legislative frameworks was not provided for. All financial statements approved after the 1st of June 2015 were required to be prepared in accordance with the Companies Act 2014. This has cost Irish Accountants a significant amount of irrecoverable time in the months since June 2015. The Companies Act 2014 was always going to represent a learning curve and require an investment of time by the accountancy profession in order to provide the high standard their clients are accustomed to. However, the manner in which the accountancy profession was exposed to the last minute enforced change, with less than a month’s notice and limited support, was unnecessary.

Now we are about to do it again less than 7 months later!!!

In July 2015, amendments were made to FRS 102. These amendments were made to this FRS by the FRC to incorporate the new small entities regime and make other amendments necessary to maintain consistency with company law in the UK. The aim was to create a simplified reporting regime for smaller entities that was more appropriate to the size of their operations. The revised version of FRS 102, published in September 2015, provided for the reduced small entity options within the standard to be applicable for accounting periods beginning on or after 1st of January 2016. Early application of the Small Entity Provisions is permitted for accounting periods beginning on or after 1 January 2015, provided that The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980) are applied from the same date. Small entities are small entities as defined by company law. The statutory instrument referred to above is a UK statutory instrument and the Irish equivalent has not yet been drafted or enacted.

Some of the key provisions that Irish accountants and their companies will not be able to avail of until the equivalent legislation is enacted in Ireland:

  • Exemption from the preparation of cashflow statements under S.7 of FRS 102
  • Exemption from the preparation of statement of changes in equity
  • Exemption from the disclosure of key management personnel compensation.

However, that is not the only disadvantage to which Irish accountants and companies will face.

In July 2015 FRS 105 was published. This is the Financial Reporting Standard applicable to the Micro Entities Regime. Micro entities are defined in the Directive 2013/34/EU of the European Parliament as entities meeting 2 out of 3 of the following criteria:

  • Balance Sheet Total – €350,000
  • Turnover – €700,000
  • Employees – 10

While this may sound small there are huge numbers of Irish companies and Irish entities that could apply this massively simplified accounting standard. If the legislation was in place, instead of moving to FRS 102 in January 2016, small companies could move to FRS 105. The micro entity standard, like the small entity provisions within FRS 102, may be applied for periods commencing after 1st of January 2016 but early application is permitted for entities commencing from 1st of January 2015. Obviously, if Irish Accountants and their clients could avail of FRS 105 for periods ending 31st of December 2015 being prepared from 1st of January 2016, many of them would.

Irish companies cannot use FRS 105 until the muted Companies (Accounting) Bill 2015 is enacted.

The Department of Jobs Enterprise and Innovation, which is responsible for enacting this legislation, has been aware of the implications of not enacting the legislation since early in 2015. The Companies (Accounting) Bill, which will introduce the options to implement these provisions into Irish law will encompass the provisions of Directive 2013/34/EU of the European Parliament. This EU Directive should have been transposed into Irish Law no later than July 2015.

Until such time as the Companies (Accounting) Bill 2015 is enacted, Irish accountants and their company clients are at a significant disadvantage to their English, Scottish, Welsh and Northern Irish neighbors and counterparts.

The purpose of this survey is to establish whether the Irish accountancy profession feels that this delay is equitable and fair and to also estimate the cost to the accountancy profession.

Please take 5 minutes to complete our survey below:-