Implications of early adoption of the Companies (Accounting) Act, 2017

Adopt new rules for accounting period commencing from 1 January 2016

Keep old rules for accounting period commencing 1 January 2016

Disclosure

·         As best practice, include a note saying that the provisions of the Companies (Accounting) Act, 2017 have been early adopted.

Disclosure

·         Notes to the financial statements would remain silent about the Companies (Accounting) Act, 2017.

Size thresholds

·         Avail of the new ‘micro’ and ‘small’ company thresholds for audit exemption, abridged financial statements filing at the CRO and group consolidation exemption.

·         The number of ‘small groups’ that don’t need to have an audit nor consolidate will grow under the new provisions.

Size thresholds

·         Cannot prepare ‘Micro’ company accounts and must follow the old thresholds for ‘small company’ abridged financial statements and the old consolidated financial statements exemption.

·         See below for other positive impacts on ‘small’ entities.

Adopt new rules for accounting period commencing from 1 January 2016

Keep old rules for accounting period commencing 1 January 2016

Micro company accounting

·         Because the provisions of the Companies (Accounting) Act, 2017 have been early adopted, the Micro Entities Regime under FRS 105 is available to the company (provided it fulfils the ‘micro company’ size criteria) for the YE 31/12/2016, along with the rules in Schedule 3B of the amended Companies Act, 2014 which include:

·         Exemption from disclosing in the shareholders’ and abridged financial statements the directors remuneration and directors’ debit and credit loans as set out in Sections 305-309 of the CA 2014.

·         Exemption from producing a Directors Report and Statement of Cash Flows in both the shareholders’ and abridged financial statements.

·         File an abridged balance sheet with the notes only being required if the company has borrowings or guarantees.

Micro company accounting

·         FRS 105 and Micro Companies Regime in Schedule 3B of the Companies (Accounting) Act, 2017 is not available for the YE 31/12/2016.

·         Must disclose in the shareholders’ and abridged financial statements the directors remuneration and debit and credit loans as set out in Sections 305-309 of the CA 2014.

·         Exempt from producing a Directors Report but must produce a Statement of Cash Flows in both the shareholders’ and abridged financial statements.

·         File the abridged financial statements under the unamended CA 2014 which requires more extensive notes than under FRS 105.

‘Small’ entity Abridged financial statements

·         Include all the notes from the Shareholders’ Accounts plus the ‘Statement of Changes in Equity’, and including P&L notes, even though the P&L itself does not get published.

‘Small’ entity Abridged financial statements

Retain the old rules for one last financial year so that you don’t have to include all the notes including the P&L notes in the abridged accounts.

Employee numbers

There is no longer any need to include the note about employee numbers broken into appropriate categories – this is a new exemption for ‘small’ entities introduced by the Companies (Accounting) Act, 2017.

Employee numbers

Need to include the note about employee numbers broken into appropriate categories.

Adopt new rules for accounting period commencing from 1 January 2016

Keep old rules for accounting period commencing 1 January 2016

Fixed assets and reserves

·         Drop the comparative expanded note for fixed assets and reserves and similar items in the shareholders’ and abridged accounts.

Statement of Cash Flows

·         May exclude the Statement of Cash Flows under Section 1A of FRS 102 due to early adopting the Companies (Accounting) Act, 2017 and use Section 1A of FRS 102.

Fixed assets and reserves

·         Repeat the comparative expanded note for fixed assets, reserves and similar items in the shareholders’ and abridged accounts.

Statement of Cash Flows

·         Include the Statement of Cash Flows under FRS 102 (excluding Section 1A) due to not early adopting the Companies (Accounting) Act, 2017.

Medium companies

·         Medium sized companies that early adopt the provisions of the Companies (Accounting) Act, 2017 will no longer be able to abridge their financial statements nor avail of audit exemption. They will also have to disclose their full profit and loss account with profit margins and turnover.

·         Medium companies will now also be required to prepare group accounts as the exemption from preparing consolidated financial statements on the basis of size for Irish parent companies has been restricted to the ‘small’ company threshold.

Medium companies

·         Medium companies will retain the old size thresholds.

·         Medium sized companies that do not early adopt the provisions of the Companies (Accounting) Act, 2017 will continue to abridge their financial statements and avail of audit exemption for the 2016 financial year.

·         This may be of little benefit as when they file their financial statements for the YE 31/12/2017, the 2016 comparative numbers will get disclosed under the new rules.