Of the more than 4,300 social enterprises in Ireland, the majority are regulated by the Companies Registration Office (CRO) requiring them to file annual returns and financial statements to maintain their active legal status. Many social enterprises are also registered with the Charities Regulatory Authority (CRA) meaning they are dually regulated and are legally required to submit returns and financial statements to the CRA annually to retain charitable status.
Certain qualifying small-sized companies, including social enterprises, may be exempted from the full extent of the provision of Annual Financial Statements to the Companies Registration Office (CRO).
Work is ongoing to provide similar exemptions to charities. The CRA has drafted financial regulations to be introduced for the charitable sector. These financial regulations aim to standardise the format of financial statements for all charities which will increase transparency and allow finances to be directly comparable between charities and improve the data available on the Register of Charities.
The level of detail required in financial statements will be proportionate to the size of the charity and I will set the relevant thresholds as part of the introduction of the financial regulations.
However, ‘agencies, companies, committees, advisory groups, charities or individuals’ that are in receipt of exchequer funding are required, in line with Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation (DPEIPSRD) Circular 13 of 2014, to provide audited financial accounts to their funding bodies. I am aware of the additional cost being incurred by organisations in fulfilling this requirement and I understand that this cost has increased in recent years.
The detailed financial information contained in audited annual financial statements enables funders to monitor the financial performance of supported organisations, to review the notes to the audited accounts and to rely on the independent audit assurances provided. The abridged accounts acceptable under the CRO exemption, or under the proposed exemption for charities, would not contain this detailed information.
The issue raised is not unique to social enterprises, and it affects Small and Medium sized enterprises (SMEs) across the wider economy. My Department, along with a representative from the social enterprise sector, has recently been invited to become a member of the SME Advisory Group led by the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation. My officials will input into the work of the SME Advisory Group, as appropriate, to represent the interests of social enterprises in this matter, and other matters that affect them.
Furthermore, I have asked my officials to consider whether there are other options available to support small-sized organisations, including social enterprises, in this regard.
