| Sec 42 of Companies (Auditing & Accounting) Act | | | | (ii)Or |
| 2003 & Article 41 of 8th EU Directive sets out | | | | - an unlimited company or partnership of the type |
| the requirements for certain company types to | | | | described in paragraph (c ) if the company or |
| establish an audit committee. These provisions | | | | partnership and all of its subsidiary undertakings |
| have not yet been signed into law, however the | | | | together meet the above balance sheet and |
| Department of Enterprise Trade & Employment | | | | turnover criteria.Article 2.13 of the Directive |
| have indicated that draft regulations adopting the | | | | defines 'public interest entities' as including: |
| provisions of both the 2003 Act and 8th | | | | - Entities which have issued transferable securities |
| Directive, with some amendments, will be | | | | admitted to trading on a regulated market |
| published by the end of July 2009 and signed into | | | | governed by a Member State (4), |
| law before the end of 2009. | | | | - Credit institutions (5) (i.e. banks and building |
| What companies are required to establish an Audit | | | | societies) and |
| Committee? | | | | - Insurance undertakings (6).What companies are |
| The requirement to establish an audit committee | | | | not required to have an Audit Committee? |
| applies to all public limited companies, qualifying | | | | Every private company limited by shares whose |
| large private companies, relevant undertakings and | | | | balance sheet and turnover totals are below the |
| public interest entities. | | | | aforementioned limits |
| Section 42 requires that all public limited | | | | Every unlimited company or partnership of the |
| companies whether listed or not, establish and | | | | type described above whose balance sheet and |
| adequately resource an Audit Committee with | | | | turnover totals are less than the aforementioned |
| certain responsibilities as defined in the Act unless | | | | limits. |
| it is a wholly owned subsidiary undertaking of | | | | All other forms of corporate body not included i.e. |
| another public limited company. | | | | companies limited by guarantee and non-EU |
| In addition, qualifying large private limited | | | | Member State and branches. |
| companies and relevant undertakings must either | | | | Audit Committee Requirements |
| establish an Audit Committee with all or some of | | | | The Audit Committee must consist of at least 2 |
| the defined responsibilities, or decide not to do so. | | | | members. |
| A "qualifying large private company" is defined as | | | | The 8th Directive requires that at least one |
| either: | | | | member of the Audit Committee must be |
| - A private company limited by shares whose | | | | independent and must be qualified in accounting or |
| balance sheet total exceeds 25 million and | | | | auditing. |
| whose amount of turnover exceeds 50 million | | | | A Director qualifies for appointment to the |
| in both the most recent financial year and the | | | | committee if he or she: |
| immediately preceding financial year,or | | | | - Is or has not been an employee of the |
| - A private company limited by shares if the | | | | company or subsidiary in the last 3 years |
| company and all of its subsidiary undertakings | | | | - Is not the chairperson of the Board of |
| together meet the above balance sheet and | | | | Directors.The Audit Committee requires |
| turnover criteria.A "qualifying relevant undertaking" | | | | appropriate term of reference that |
| is defined as either: | | | | - Have been prepared and approved by the |
| - An unlimited company or partnership whose | | | | Board of Directors |
| balance sheet total exceeds 25 million and | | | | - Are submitted to the shareholders at the AGM |
| whose amount of turnover exceeds 50 million | | | | - Are reviewed annually by the board |
| in both the most recent financial year and the | | | | - Specify how the committee will discharge its |
| immediately preceding financial year, where all the | | | | duties & responsibilities |
| members who do not have a limit on their liability | | | | - Provide for the a programme of meetings with |
| are: | | | | the management, auditor and internal |
| - Companies limited by shares or by guarantee, or | | | | auditorFunctions & Responsibilities of the Audit |
| equivalent bodies not governed by Irish Law or a | | | | Committee |
| combination of both there categories of body or | | | | The main functions of an Audit Committee include: |
| - Bodies of a type referred to in subparagraph (i) | | | | - Overseeing financial reporting |
| that are governed by the laws of an EU Member | | | | - Overseeing the process related to the |
| State or are equivalent bodies with a comparable | | | | company's financial risks and internal control & |
| legal form that are governed by the laws of a | | | | audit |
| Member State or | | | | - Overseeing the internal and external audit |
| - A combination of the categories of body | | | | processes. |
| mentioned in the preceding subparagraphs (i) and | | | | |