Accounting in Ireland: The Republic of Ireland accounting system and the major differences between Ireland and International Accounting Standards.
The regulatory body for the companies accounting in Ireland is the Irish Auditing and Accounting Supervisory Authority. The Irish companies are not required to use a company schedule, but it is important that company owners obtain approval for financial statements within nine months of the company’s inception. Companies with unlimited status will soon be approved and they won’t have to file their accounts.
Companies with limited liability status must file financial statements to the Companies Office. They are also available to the public.
Accounting in Ireland
Companies accounting in Ireland have to follow a tax calendar.
Ireland’s companies must follow a standard approach to information disclosure. The classification and presentation of information, as well as methods of evaluating it for annual accounts, should all be consistent. This includes balance sheets, profit- and loss accounts, and notes to the accounts.
Ireland doesn’t have a fixed tax year. Each Irish company has its own tax year. Each company has a different tax year period. This is because the tax year begins at the date the company was founded and ends at the date that is no more than 18 months after the date of its commencement. The default financial year is twelve months after the end of the first year. Directors are permitted to establish a grace period of seven days.
The major differences between The United States of America and Companies Accounting in Ireland.
Irish accountants should also be aware of the International Financial Reporting Standards, (IFRS), set forth by European Union (EU). These international financial reporting standards were created to simplify financial reports for both Irish and European companies.
International financial reporting accounting standards allow Irish companies to compare their financial statements with those of other countries for the purpose of determining industry standards and competition.
The Irish accounting system is slightly different than American accountancy. There are more regulations in Ireland for accounting than in America. Companies in America must adhere to the Generally Accepted Accounting Principles, (GAAP), set by the Financial Accounting Standards Board.
Americans should only agree to the generally accepted accounting principles, (GAAP), set down during the Financial Accounting Standards Board (FASB), Irish companies must agree also to the international financial relieving standards, (IFRS), set down during the European Union
Companies accounting in Ireland must comply with FRS102.
Businesses operating in the UK must adhere to the UK Companies Act 1986. This requires UK companies to file their accounts with the Registrar of Companies. The Registrar of Companies makes financial reports available to the UK public and the international public.
However, the European Union’s acquisition of financial standards is being incorporated into the UK’s laws regarding international trade, financial reporting, and other relevant matters.
The main differences entailing to the Republic of Ireland old GAAP and FRS102
Companies accounting in Ireland for goodwill.
FRS102 requires that intangibles like goodwill be amortized over their useful lives. However, entities should not exceed five years if they are unable to provide a reliable estimate of their useful life. This will affect entities with goodwill on their balance books and cause amortization acceleration, thereby depressing reported reserve.
Current Irish GAAP goodwill is treated under FRS 10 and intangibles purchased are amortized over their useful lives which cannot exceed 20 years. However, a rebuttable presumption includes the demonstrated durability of the business as well as the feasibility of an annual impairment assessment.
Accounting to manage financial instruments.
These financial instruments include cash, trade creditors, and trade debtors. Basic financial instruments must be accounted for at an amortized cost, while other financial instruments can be accounted for at fair value.
Accounting to deferred taxation.
The FRS 102 and FRS 19 Deferred taxes are very different in how property revaluations are treated. FRS 102 has reintroduced FRS 16 Current tax and FRS 19 deferred taxes as local standards. However, FRS 102 added additional requirements that may increase the amount reported on company books in certain cases.
This means that deferred taxes must be provided for if a company is planning to revalue its property. Similar rules apply to fair value exercises during a business combination. Deferred tax must also be provided.
Accounting to show cash flow statements.
Accounting in Ireland for the cash flow statement is very different because it only has three headings instead of nine (operating and investing, financing). This means that different companies will record cash flows under different headings, depending on their choices.
You can record interest payments, dividend receipts, and interest receipts under eight different headings depending on your choice. Refer to the standard for more information about the options. In FRS 1, the reconciliation refers to cash equivalents and cash increases/decreases, not cash.
Companies accounting in Ireland to invest in property.
FRS 102 costs investment properties at the initial cost. If a fair value is possible to measure without undue effort or cost, then it should be fair valued. Any gains and losses must be reported in the Income Statement. If the fair value can’t be determined reliably, it is treated as an ordinary item of property, equipment, or plant at cost and subject to depreciation.
Accounting for foreign currencies.
Current Irish GAAP, SAP 20 allows for the use of the contract rate, while FRS 102 prohibits the use of the contract rate.
Many private Irish companies will use the Euro as the functional currency. However, there are many subsidiaries of US multinationals that have to record transactions in foreign currencies because the dominant currency they use is the dollar. Similar to many UK-based entities, their functional currency is the Sterling.
Accounting for biological resources.
FRS102 addresses Accounting in Ireland for biological assets, which are defined as living animals and plants.
Companies accounting in Ireland for leasing.
Currently, leases are dealt with by SAP 21. The major difference between SSAP 21 (and FRS 102) regarding leasing is in disclosure requirements. The new FRS requires that operating leases be disclosed to include the total non-cancellable operating rents due at the contract’s end. This information must also be divided between the amounts due for specific periods. SAP 21 only covers annual commitments that expire within one year, two or five years, and all other periods. disclosure is required.
Accounting to provide employee benefits.
Current Irish GAAP does not recognize employees’ short-term entitlements, such as untaken holidays pay.
FRS 102 requires for companies accounting in Ireland that all employee benefits be recognized.
If you found this article helpful, please go to the rest of the website for more about accounting in the Republic of Ireland, the general accounting standards, some of the tax reliefs in Ireland, the Irish company audit requirements and audit exemptions, understanding the Irish tax system, or more accounting and financial topics in International Accounting, Audit, Taxation, Accounting Software, Cloud Accounting and Accounting Automation.