Section 10 of the Companies (Statutory Audits) Act 2018, commenced on the 21st of September 2018, has brought a welcome change to the obligations placed on a company if filing an annual return late. Prior to this, any company filing an annual return late was not only required to pay the late filing fees but could not avail of an audit exemption in respect of the financial year to which the annual return relates and the following year. This placed the additional burden of engaging with an auditor in order to commence an audit on a set of financial statements that were already late.
This obligation often further delayed the submission of the company’s annual return and financial statements and resulted in additional costs for the company. In accordance with Section 363 of the Companies Act 2014 as amended by section 10 of the Companies (Statutory Audits) Act 2018 a company will continue to be able to avail of the audit exemption in respect of the financial year relating to the late annual return.
However the audit exemption will be lost for the two years following the late submission of the annual return. In effect this means that where a company is late in filing its annual return it may continue submit the unaudited financial statements together with any late filing fees. The company will then be obliged to prepare and submit audited financial statements for the following two financial years. While companies are still required to prepare two sets of audited financial statements the changes in the timing of the preparation and submission of the audited financial statement introduced by the Companies (Statutory Audits) Act 2018 will allow companies to plan for and engage with auditors in a timely manner.