Financial Statement Changes Under Companies (Accounting) Act 2017
Companies (Accounting) Act 2017 – Commencement
The Companies (Accounting) Act 2017 which was published on the 17th of May 2017, is being commenced with a commencement order published on 6th of June 2017, which is effective of the 9th of June 2017.
Through the commencement order, Companies (Accounting) Act 2017 (CAA 2017) amends certain sections and elements of Companies Act 2014. The primary focus of the 2017 Act, which is driven by an EU Directive 2013/34, is on financial reporting so Part 6 of Companies Act 2014 has been substantially changed. The changes to the 2014 Act compulsorily, take effect for all periods commencing on or after 1st of January 2017, signed off after the commencement date of the 9th of June. However, the good news is that S.14 of the CAA 2017 does permit early adoption of elements of the legislation for periods commencing 1st of January 2015 onwards. These early adoption provisions facilitate the implementation of S.1A of FRS 102 for small entities and FRS 105 for micro entities.
Financial Statements Formats
While this legislation is long overdue, and very welcome on the basis that it enables Irish companies and their accountants produce size appropriate financial statements under S.1A FRS 102 and FRS 105, it is inevitably going to result in more change to financial statement formats. (Click here to download your sample financial statements under CAA 2017)
Can the Companies (Accounting) Act 2017 be early adopted, if so from when and do all sections have to be early adopted?
The Act can be early adopted for all periods commencing on or after 1 January 2015. Where the option to early adopt has been chosen all sections other than those stated in Section 14 of the Act must be applied. It is an all or nothing approach.
Where early adoption is availed of by companies, recognise that the following Sections in the Companies (Accounting) Act 2017 cannot be early adopted (everything else can be and must be if the adoption option is chosen):
- Section 27 & 28 inserting new Section 305A relating to requirements to disclose payments to directors who are third parties;
- Section 58 – amending the wording in Section 360 dealing with audit exemption – changing wording from ‘group’ to words ‘group company’
- Section 60 – amending the wording in Section 363 which deals with audit exemption in a non-group situation – change in wording has no significant relevance.
- Section 61 – amending the wording in Section 364 which deals with audit exemption in a group situation – change in wording has no significant relevance. In addition, a change clarifying where first annual return is late then this does not bring a company into audit.
- Sections 65 – change in wording to Section 393 which has no significant impact
- Section 66-73 – minor changes/insertions to S.412, S.634, S.865, S.914, S.916, S.919, S.934 & S.943 which will have no impact on the financial statements or audit exemption.
- Sections 74 – Changes to Section 1002 dealing with the disapplication of provisions of Part 1 to 14 of Companies Act 2014 for PLC’s to include the use of Small & Micro companies regime.
- Sections 75 & 77 – Changes in wording to definition of ineligible entities in the case of PLC’s; PUC’s & PULC’s.
- Sections 76 – insertion into Section 1230 not to permit PUC’s to apply and qualify for the small & micro entities regime.
- Section 78 – Replacement of existing Section 1274 with a new Section 1274 where the definition of a designated ULC is changed.
- Section 79 – Insertion of new Section 1274A which dis-applies Part 26 (concerns payments to governments) for ULC’s (other than designated ULC’s);
- Section 80 – Change to definition of EEA & Non-EEA company in Section 1300– Replacement of existing S.1274 with a new S.1274 where the definition of a designated ULC is changed & disapplication of Part 26 (concerns payments to governments) is included.
- Section 83 – insertion of Section 1384A dealing with Section 393 (reporting of category 1 & 2 offences) and its applicability to public offers of security – Replacement of existing Section 1274 with a new S.1274 where the definition of a designated ULC is changed & disapplication of Part 26 (concerns payments to governments) is included
- Sections 85-86 – insertion of S.1400A dealing with definition of ineligible entities for the purposes of Section 275 and financial statements with respect to its applicability to investment companies
- Section 87 – insertion of new Part 26 dealing with payment to governments;
- Sections 90-101 – Numerous inconsequential changes from a financial statement, audit exemption or consolidation perspective.
What Next for Financial Statements
Some companies will benefit from early adoption, whereas other companies will possibly benefit from delaying the implementation of the legislation as long as possible. We will look at the delaying options and who it may apply to in our Third Part of this Free Training Series so keep any eye out for that, but in the meantime, download our sample set of financial statements (Insert hyperlink here to sample set of financial statements) and see what the changes practically mean.