Auditors and Company Accounts – notes for accounting and law students

Mar 3, 2015

Auditor = an external independent person appointed by a company to prepare an independent report on the financial affairs of the company and to present it to members at the A.G.M. (also useful for creditors and investors) – [also set out objectives/reasons for an audit].


Qualifications = must hold correct accounting qualification, be a member of recognised body and have valid practising certificate.


Excluded = officers or servants of company, relatives of officer, officers partner or that partners employee, corporate body (company), disqualified by Court, unsound mind, bankrupt.


Appointment of Auditors: –

  • First Appointment = first directors appoint auditors until 1st A.G.M.
  • Second & Subsequent = auditors re-appointed at subsequent A.G.M.’s unless (a) lose qualification; (b) resolution (ordinary) is passed appointing another or preventing re-appointment; (c) auditors do not wish to be re-appointed.



Companies exempt from Company Audit if: (known as an “audit exemption”)

  • Turnover < €8.8 million; (2) Assets < €4.4 million; (3) ≤ 50 employees ; (4) Company must not be a subsidiary or bank. BUT REMEMBER company still has to make an annual return to C.R.O.


Rights of Auditors: –

  1. Access at reasonable times to company books and accounts;
  2. Right to ask questions of relevant persons and receive explanations;
  3. Right to attend all general meetings of the company and to receive all relevant notices;
  4. Right to speak to general meetings on audit matters;
  5. Right to call an E.G.M.


Duties of Auditors: –

  • Principal Duty = carry out an audit, provide a report and present it to shareholders at general meeting. In so doing, they examine the P&L and balance sheet and give a report that (a) adequate information received; (b) proper books kept by company;(c) that the company’s books correspond with the P&L and BS;  (d) annual accounts give true and fair view of the state of the company; (e) confirm accounts in compliance with Company Law;
  • Duty to act with professional integrity;
  • Duty to act with reasonable care and still = “an auditor is not bound to be a detective… he is a watchdog not a bloodhound”. Failure to act with skill → could be liable for losses suffered (see and learn Thomas Gerrard case);
  • Duty to report indictable offences under Company Law to O.D.C.E.;
  • Duty to report money laundering offences to Gardai and Revenue;
  • Duty to report failure of company to maintain proper books of accounts to CRO who tells O.D.C.E.’
  • Duty of care both in Contract and in Tort.


Removal as Auditor: –

  • At A.G.M.;
  • During the year by following – similar to Director removal procedure (= EGM etc);
  • Resignation during office tenure (during the year) by notice to Company and C.R.O. setting out reasons why. If there are circumstances that should be brought to shareholders attention then auditor must say so.  Every member must receive a copy of the notice if there are reasons that members should know of.



Company Accounts

 Accounting Records: –

~ Company under duty to keep up to date accounting records, which allow for reasonable accuracy of financial state of company to be ascertained and enabling directors to prepare accounts in compliance with Company Law;

~ Kept at registered office or other suitable location;

~ Preserved for 6 years.


  • Annual Accounts: –

~ Directors under a duty to prepare each financial year a set of accounts that give a true and fair view of the financial state of the Company;

~ Accounts to be approved by Board of Directors;

~ To include P&L; Balance Sheet; Directors Report; Auditors Report;

~ Annual accounts must be filed with C.R.O.


Annual Return: –

~ All companies with share capital must file annual return with C.R.O. with information on =

  • details of registered office; •total liability details; •share capital details; •members details; •members shareholdings; •directors and company secretary details;

~ Annual return is separate document to the accounts.   Must be filed with C.R.O.  Accounts are attached to it with auditors and directors reports.


A.R.D. – annual return date = the date allocated to a company; 28 days after which date the annual return must be filed in C.R.O.

Failure = fine & penalty

Continuous failure = company struck off register → no longer a company → limbo.


Discuss role of IAASA



Company Secretary =  important office holder of a company; generally, one of the directors holds it but not in public companies; role is to ensure company complies with legal matters, and in particular complies with Company Law.

  • C.A. requires every company to have one;
  • Not defined by accepted that he is the principal administrative office of company;
  • Must ensure that company complies with its statutory obligations;
  • Responsible for signing share certs; annual returns; maintaining the company’s registers; resolution;
  • A director could also be the company secretary;
  • Officer of company like director and has similar duties (fiduciary etc.)


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