The ODCE recently published its Annual Report for 2010. The Report contained details of the number of indictable offences reported to their office. 194 reports from Auditors and Accountancy Bodies of suspected breaches of the Companies Acts were received by the ODCE.

This represented a drop of 18% on 2009 figures of 237.  The main offence reported was unlawful directors’ transactions which represent 70% of the reports and failure to keep proper books of account represented 17% of the reports.

These reports indicated that in 2010 directors irregularly borrowed nearly €85 million from their companies which was a reduction on the 2009 figure of €162 million. 18 of these cases had borrowings in excess of €1 million. These figures just represent audited companies and do not reflect the full scale of the problem as all companies are not audited. 177 directors were cautioned as to their future conduct.

The ODCE expressed its disappointment in the Annual Report with the continuing dominance of the 2 main offences in auditor reports. There are more than 100 reportable indictable offences in the Companies Acts. The ODCE has occasionally found it necessary to challenge the adequacy of auditor reports in a minority of cases which it has had cause to examine.

THE ODCE highlighted their experience in a recent Green Paper in addressing the question of audit quality posed by the European Commission in its Green Paper on Audit Policy. These points included

  • The limited number of offences reported to them each year
  • Some audit firms appear to discharge their reporting obligations more frequent than others and that the “Big Four” firms submit relatively few reports. Only 10 reports were made by the “Big Four” in 2010
  • In reviewing liquidator reports, the most recent audit report on the company is unqualified notwithstanding what appears to be a lack of disclosure of or accounting for obvious business difficulties.

Reporting Company Law Offences

The ODCE, along with all the Accounting Institutes, published a guidance document for Auditors to assist them in understanding their reporting obligations under Section 194 Companies Act 1990. The guidance document highlights 13 company law offences that the ODCE want Auditors to report if they occur in a company they audit. These offences include:-

  1. Sec 60(15) CA, 1963 – Giving financial assistance by a Company for the Purchase of its own shares
  2. Sec 297 CA, 1963 – Fraudulent Trading
  3. Sec 40 C(A)A, 1983 – Not holding an EGM
  4. Sec 22(3) C(A) 1986 – Wilfully providing false information in any return, report, certificate, balance sheet or other document under this Act.
  5. Sec 40 CA, 1990 – Substantial property transactions/loans to directors or connected persons
  6. Sec 53 CA, 1990 – directors’ & secretary’s notification of interest in the company
  7. Sec 197(1),(3) CA, 1990 – False statements to auditors, delay in providing information
  8. Sec 202 CA, 1990 – Failure to keep proper books
  9. Sec 242(1),(1A) CA, 1990 – Furnishing false information under the Acts, including to electronic filing agent
  10. Sec 243(1) CA, 1990 – Destruction, mutilation, falsification of documents
  11. Sec 33(6) C(A)(No.2) A, 1999 – Omission from balance sheet of directors’ statement claiming audit exemption
  12. Sec 37(1) C(A)(No.2) A, 1999 – Wilfully false statements in accounts and returns
  13. Sec 43(13) C(A)(No.2) A, 1999 – Company to have a director resident in the State

Auditors that do not report these offences may be prosecuted by the ODCE or disciplined by their Accounting Institutes. If you are an Auditor you should review the Guidance Document and report any of these offences that occur in any company that you audit. Click on the following link to the Guidance Document.

Should you have any questions in relation to this article or should you have any Company Law or Company Secretarial queries please contact Kate Brennan on 059 9183888, This email address is being protected from spambots. You need JavaScript enabled to view it..

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Kate Brennan,
Head of Company Secretarial,
Unit 3, South Court,
Wexford Road Business Park,

059 9183888
This email address is being protected from spambots. You need JavaScript enabled to view it.