The Small Company Regime – Companies (Accounting) Bill 2016

Once the small company definition is met, then that company can qualify for the small companies regime, which does not currently exist in Irish law. This will allow companies to adopt Section 1A of FRS 102, which cannot currently be adopted by Irish companies.

Section 1A of FRS 102 requires the financial statements to be prepared using the recognition and measurement requirements of FRS 102 but to use the disclosure requirements of the Companies Act small companies regime, as opposed to the more detailed disclosure requirements of each of the Sections within FRS 102.

However as the financial statements are still required to show a true and fair view, directors of companies will still have to consider whether additional disclosures on top of the Companies Act disclosures are required to show the true and fair view. Once Section 1A of FRS 102 can be claimed it will allow entities to claim exemption from the requirement to prepare a cash flow statement.

Although not required by company law, Section 1A encourages entities to include the below in order to ensure the financial statements show a true and fair view:

  • a statement of compliance with FRS 102;
  • a statement that it is a public benefit entity (if applicable);
  • the disclosures relating to going concern;
  • a transition note where it is the entities first time adopting FRS 102;
  • present a statement of comprehensive income (i.e. an OCI).

No business review is required to be included in the directors’ report for small companies applying the small companies regime.  Furthermore, it is to be noted that more judgments with regard to the notes will have to be included in the abridged financial statements of small companies: while current legislation provides specific guidance on what notes are to be included, the new section adds the requirement that any other notes should be included as deemed necessary in order to show a true and fair view.

The Bill also introduces new schedules dealing with the format requirements for companies applying the small entities regime. They are:

  • Schedule 3A for the small companies regime; and
  • Schedule 4A for small companies applying the small companies regime.