Financial Peace of Mind: Auditing Accounts and Financial Statements

Introduction

Auditing is an essential process for verifying the accuracy and veracity of a company’s financial statements. The audit of accounts ensures regulatory compliance and provides a clear and objective view on the financial health of the company. This article provides a comprehensive guide to the annual accounts, their content, the possibility of presenting abridged versions, and the purpose and process of auditing accounts.

What are the Annual Accounts?

The Annual Accounts are a set of documents, which form a single unit and give a true and fair view of a company’s net worth, financial position and results of operations for a financial year.

The annual accounts comprise a balance sheet, a profit and loss account, a statement of changes in equity for the year, a cash flow statement and notes to the financial statements.

The company’s directors are obliged to prepare, within three months of the end of the financial year, the annual accounts, the management report, including, where appropriate, the statement of non-financial information, and the proposal for the allocation of profits, as well as, where appropriate, the consolidated accounts and management report.

When can the annual accounts be presented in abridged form?

Companies that for two consecutive financial years meet at least two of the following conditions at the end of each financial year may prepare an abridged balance sheet and an abridged statement of changes in equity:

(a) The total of the asset items does not exceed EUR 4 million.

b) The net amount of its annual turnover does not exceed eight million euros.

(c) the average number of employees employed during the financial year does not exceed fifty.

Companies that for two consecutive financial years meet, at the closing date of each of them, at least two of the following circumstances may prepare an abridged profit and loss account:

a) That the total of the asset items does not exceed eleven million four hundred thousand euros.

b) That the net amount of its annual turnover does not exceed twenty-two million eight hundred thousand euros.

(c) the average number of employees employed during the financial year does not exceed 250.

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What is the purpose of auditing the Annual Accounts?

By auditing a company’s financial statements, an independent auditor assesses the company’s financial statements. The auditor’s impartiality ensures an objective and accurate review of the company’s financial statements. The purpose of this examination is to verify whether the annual accounts give a true and fair view of the company’s assets and liabilities, its financial position and, where appropriate, the consistency of the management report with the annual accounts for the financial year.

The auditors shall issue a detailed report on the results of their work. In order to issue this report, the auditor shall have at least one month from the date on which the accounts signed by the directors are delivered to him.

Which companies are not obliged to have their annual accounts audited?

The annual accounts and, where appropriate, the directors’ report, shall not be audited by the auditor in those companies which for two consecutive financial years have met, at the closing date of each of them, at least two of the following circumstances:

a) That the total of the asset items does not exceed two million eight hundred and fifty thousand euros.

b) That the net amount of its annual turnover does not exceed five million seven hundred thousand euros.

(c) the average number of employees employed during the financial year does not exceed fifty.

Who is competent to appoint the auditor?

The General Meeting shall appoint the person to carry out the audit before the end of the financial year to be audited. The initial period of appointment may not be less than three years or more than nine years from the date of commencement of the first financial year to be audited.

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