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Deloitte has launched a compliance risk software tool to help directors ensure they are compliant with the Companies Act 2003.

The impending implementation of what many regard as the onerous director’s compliance statement provisions of the Companies Act 2003 is generating demand for a practical workable solution to what could be a very complex task. Failure to comply with the Companies Act 2003 could result in directors being guilty of an offence and being subject to fines and penalties, as well as incurring potential reputational loss.

Deloitte has developed a risk-based methodology that takes a top down view of an organisation’s compliance framework as opposed to many of the checklist-based bottom-up approaches being used.

“Our approach allows organisations to achieve compliance with a focus on the most important risk areas, in a practical and cost effective way,” said Gerry Fitzpatrick, Partner, Enterprise Risk Services, Deloitte.

To support the methodology, Deloitte has developed with a technology partner a compliance risk tool, Abacus Risk, which allows the capture, analysis and reporting of compliance obligations, compliance risks and controls.

The methodology and tools have been developed by a Deloitte cross functional service team drawn from experienced professionals in Enterprise Risk Management, Tax, Audit, Company Law, Legal & Secretarial and Management Consulting.

ENDS

EDITOR’S NOTES

The Companies (Audit and Accounting) Act 2003 (The Act) – What is it?

Legislation drawn up by the Minister of Finance to encourage improved compliance and corporate governance in specifically defined Irish Companies. A summary of the relevant sections, subject to various thresholds, is as follows:

- Establishes a supervisory authority for auditing and accounting (IAASA) to review companies’ accounts and for reviewing and regulating of auditors and accounting bodies;

- Allows for a set of accounting standards to be recognised by regulation;
- Requires establishing an Audit Committee for large private companies;
- Requires disclosure of accounting policies in the notes to the annual accounts;
- Requires disclosure of remuneration for audit, audit-related and non-audit work;
- Requires the preparation of a directors’ compliance policy statement and an annual statement of compliance with that policy;
- Raises the threshold for exemption from requirement to have audited annual accounts.

How does this affect directors?

Failure to comply with the Companies Act 2003 could result in directors being guilty of an offence and being subject to fines and penalties, as well as incurring potential reputational loss. The Director of Corporate Enforcement has been very active in enforcement proceedings during 2004 relating to suspected breaches of the Companies Acts, with substantial penalties being imposed in a number of cases.
 
When does this start?

While some of the requirements the Act have already commenced, some of the more significant provisions of the Act still await commencement. There is still no firm indication of when these provisions will become effective; however, the expectation is that it would not be before 1 January 2006.  With the broadness of the requirement there will be a need for companies to ready themselves now for these obligations.

We regularly issue publications on guidance on corporate governance and regulatory matters, much of which is available at www.deloitte.com/ie.

About Deloitte

Deloitte, one of Ireland's leading professional services firms, provides audit, tax, consulting and financial advisory services through nearly 800 people in Dublin, Cork and Limerick.  Known as employer of choice for its innovative human resources programmes, the firm is dedicated to helping its clients and its people excel.

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