Small firms seek audit clarification

Small firms are facing unnecessary costs because of Government dithering on the implementation of new audit rules, Ireland's largest accountancy body claims.

Under an amendment to the Companies (Auditing and Accounting) Bill, announced last December, companies with turnover of less than €1.5 million will be exempt from having their annual accounts subject to a statutory audit.

Previously, all companies with annual sales of more than €317,000 had to pay for such an audit each year.

While the legislation has since passed into law, however,the Government has yet to announce a date from which the new rules will apply.

The Institute of Chartered Accountants in Ireland (ICAI) says the Government should avoid "further unnecessary and confusing" delay by immediately announcing the date.

"Companies are waiting to find out whether they need to carry out such an audit and are keen not to incur additional business costs unnecessarily," said a spokesman for the ICAI.

While circumstances vary from company to company, the measure could save a company that is just under the new ceiling around €7,500 a year.

"We urgently require clarification from the Government as to how and when the new threshold is to apply," said ICAI chief executive Mr Brian Walsh.

"We are already two months into the new year and audit work is now surrounded by confusion and uncertainty. Indeed, audit work may be delayed as the Government announcement is awaited."

Companies start organising their accounts well ahead of their year end and, with about a third of Irish companies still operating on a March 31st year end, this is a live issue for many Irish businesses, the ICAI said.

"We welcomed the increase in the exemption threshold because it puts Irish business on a more competitive basis with its British and Northern Irish counterparts, although the exemption level in Britain has been increased substantially in the meantime," said Mr Walsh.

Small Firms Association chief executive Mr Pat Delaney said the new threshold would bring 68 per cent of Irish firms under the new ceiling.

"We would concur with the ICAI and urge the Government to stop dragging their feet on this issue," he said. "We would have expected that it would have been a simple matter to announce the implementation date once the legislation was passed."

"Government often states that it wants to make life easier on business," Mr Walsh said.

"Here is one simple example where that can be done without any significant cost to the Exchequer."

PricewaterhouseCoopers has published a guide to best practice for audit committees, which all public limited companies must now have under the new Companies (Auditing and Accounting) Act.

Some large private companies also face additional responsibilities in relation to audit oversight.