Content of Auditors’ Reports

The most common breach reported by auditors has been instances where the value of loans to directors has exceeded 10% of companies’ relevant assets.

Where auditors are required to make a report to the Office of the Director of Corporate Enforcement (ODCE), they are required to provide details which will facilitate appropriate action by the director.

The auditor will be expected to provide the following information to the ODCE:

  • Where practicable the date(s) on which the loan was advanced
  • The identity of each individual to whom the loan was given
  • The value of the loan
  • Whether the company’s relevant assets were calculated by reference to the company’s net assets as shown in the last preceding financial statements laid before an AGM or by reference to the company’s called up share capital, and the extent to which 10% of the company’s relevant assets was exceeded by the loan
  • The period covered by the financial statements in relation to each person concerned and in relation to arrangements referred to in the preceding bullet, details of any amendment to the terms of those arrangements by virtue of the directors having become aware during the period that the limit of 10% of relevant assets had been exceeded

Companies are also required to include in the notes to their financial statements a statement of the amounts outstanding at the end of the period covered by the financial statements in relation to transactions, arrangements and agreements made by the company for persons whom at any time during the period covered by the financial statements were officers of the company (but not directors) and the number of officers for whom such arrangements etc. were made. This requirement does not extend to cases where the amount outstanding from the officer at the period end does not exceed €3,175.

As the non disclosure of any material unlawful transaction or arrangement to which a company has been a party could potentially impair the true and fair view, details of any material breaches of section 31 should be disclosed by the directors in the notes to the financial statements. In deciding whether an unlawful transaction or arrangement is material in the context of the financial statements, directors should have regard to the Accounting Standards Board’s ‘Statement of Principles’, which states:

An item of information is material to the financial statements if its misstatement or omission might reasonably be expected to influence the economic decisions of users of those financial statements, including their assessment of management’s stewardship. Whether information is material will depend on the size and nature of the item in question judged in the particular circumstances of the case.

Statement of Auditing Standards (SAS)

Directors should also be aware that the company’s auditors will, pursuant to their professional obligations as set out in Statement of Auditing Standards (SAS) 120, consider the adequacy of the disclosures contained in the financial statements when considering the implications of any unlawful transactions or arrangements for their audit report. In that context, SAS 120 states:

When determining whether a suspected or actual instance of non compliance with law or regulations requires disclosure in the financial statements, auditors have regard to whether shareholders require the information to enable them to assess the performance of the company and any potential implications for its future operations or standing. Where a suspected or actual instance of non-compliance needs to be reflected in the financial statements, a true and fair view will require that sufficient particulars are provided to enable users of the financial statements to appreciate the significance of the information disclosed. This would usually require the full potential consequences to be disclosed and, in some cases, it may be necessary for this purpose that the financial statements indicate that non-compliance with law or regulations is or may be involved.

Irish Company Order Irish Company Namecheck
Ireland Key Points
  • Only 2 to 3 days to incorporate.
  • Directors can be of any EU nationality.
  • Only 1 shareholder required.
  • 100% overseas shareholders allowed.
  • Equal treatment for domestic and foreign shareholders.
  • No obligation requiring Irish participation in the management of your company.
  • Share Capital requirement is only €100.
  • Exemption for 3 years from Corporation Tax if your taxable profits are less than €320,000.
  • Low Corporation Tax of 12.5%.
  • We are members of the Irish Companies Registration Office electronic filing scheme.
  • We provide you with full expert assistance throughout every step of the company formation process.