Central Bank regulated entities – ‘Schedule 5’ companies and the audit framework
Updated: Mar 23
The list of Schedule 5 companies is enumerated in the Companies Act 2014: https://www.irishstatutebook.ie/eli/2014/act/38/schedule/5/enacted/en/html#sched5
The more common entity types referred to therein and which practitioners more often encounter in the SME sector are as follows:
Authorised as an Investment Business Firm under Section 10 & Section 31 of the Investment Intermediaries Act, 1995 (as amended),
(Investment Business brokers / Investment Product Intermediary firms)
Registered as an insurance, reinsurance or ancillary insurance intermediary under the European Union (Insurance Distribution) Regulations, 2018.
Mortgage Credit Intermediaries/Mortgage Intermediaries authorised pursuant to Section 31(10) of the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 and Section 151A (1) of the Consumer Credit Act 1995.
Each of these entities, as regulated by the Central Bank, have more onerous requirements in addition to the standard compliance requirements of a limited company.
2) Requirements for Schedule 5 companies:
All Central Bank regulated entities are by default deemed ‘large’ companies as per the Companies Acts, regardless of the actual turnover levels / Balance Sheet assets (Companies Act thresholds).
As a consequence of being deemed ‘Large’ companies as under the Act, the following applies for Schedule 5 companies:
- Cannot invoke Section 1 A of FRS 102 - practitioners must prepare full FRS 102 accounts (including a cash flow statement).
- Cannot file Abridged Accounts in the CRO – it is mandatory to file the full financial statements as a ‘large’ company.
- Cannot avail of PASE (Provision Available to Small Entities) – sole practitioners cannot both prepare the financial statements and carry out the audit due to independence issues (as per accountancy body Ethical codes).
- Cannot avail of Small Companies Audit Exemption – due to being deemed ‘large’ per the Companies Acts, these entities cannot avail of the audit exemption.
As well as Companies Registration Office filings, entities which are within the remit of Schedule 12 of the Act are required to make an annual return with financial information to the Central Bank / the Financial Regulator (and within 6 months of financial period end per Central Bank requirements).
3) Further Auditor Requirements:
The Central Bank And Financial Services of Ireland Act 2004 (CBSFAI), and as amended, imposed further duties on auditors in relation to Investment Business brokers:
Section 27B Auditor duty to file with Central Bank, within 1 month of the audit report, a statutory confirmation letter to indicate if there are any reportable matters in respect of the entity.
Section 27C Auditor duty to provide Central bank with copies of management reports to entity (in respect of adverse findings or legislative breaches).
Section 27D Auditor duty to disclose copies of any reports made to the Corporate Enforcement Authority (CEA) on matters.
4) Company Groups with a Schedule 5 entity:
‘Small’ groups as per the Companies Acts thresholds cannot avail of the small group company abridgement or audit exemption if any of the entities within the group is a Schedule 5 entity, as per the following legislative extract:
Section 280A (4) Companies Act 2014 now provides: (4) This section shall not apply to a company if it is—(a) a holding company, or (b) an ineligible company.
‘ineligible entities’ means undertakings that— (a) have transferable securities admitted to trading on a regulated market of any Member State, (b) are credit institutions, (c) are insurance undertakings, or (d) are—
(I) fall within any of the provisions of Schedule 5, or (II) are otherwise designated, by or under any other enactment, to be entities referred to in point (1)(d) of Article 2 of the Accounting Directive, or (ii) undertakings that are designated, by or under the law of any other Member State, to be entities referred to in point (1)(d) of Article 2 of the Accounting Directive and ‘ineligible company’ shall be read accordingly;
For further information regarding regulated entities and the prescribed filing requirements, please contact Company Auditor 4U Ltd for professional advice.