Fraud
Fraud and going concern have both come into sharp focus following the recent Wirecard case and are addressed in a recent International Auditing and Assurance Standards Board (IAASB) report. The report identifies the impact of technology on fraud perpetration and detection, and the expectation gap between public perceptions and the auditor’s responsibilities for fraud and going concern. IAASB also looked at fraud and going concern in audits of less complex entities.
IAASB is currently inviting responses to its related discussion paper on fraud and going concern in an audit of financial statements. The paper is open for comment until 1 February 2021.
Tax debt warehousing
Revenue has sent out some 100,000 letters on the tax debt warehousing scheme, confirming it is open to taxpayers whose tax filings are up to date. While the filings are necessary for both Revenue and the taxpayer (as they confirm the actual amount of tax being warehoused), two of them – the annual VAT return of trading details (RTD) and Form 46G (payments made to third parties) – are statistical in nature rather than declarations of a quantum of liability.
Following representations from the Consultative Committee of Accountancy Bodies (CCABI), Revenue has confirmed that the 28-day deadline for these two returns ‘will not be a determining factor in tax debt not being warehoused’. However, it adds that ‘efforts should be made to file these returns within a reasonable timeframe, in order, for example, to ensure that tax clearance is retained to avail of… EWSS and CRSS‘.
Audit standards
ISA 570 and ISA 540, which come into effect for the audit of financial statements for periods commencing on or after 15 December 2019, have been amended.
In summary, the changes to ISA 570, Going Concern, will require a more proactive and extensive approach to the audit of going concern and a change to the wording of audit reports. The changes to ISA 540, Auditing Accounting Estimates and Related Disclosures, will require the exercise of more professional scepticism and more detailed analysis of the risks attaching to the use of estimates. The changes will require auditors to do two things:
- update audit programmes for the new changes
- adopt the revised wording for audit reports as set out in the Irish Auditing and Accounting Supervisory Authority (IAASA) compendium of example audit reports.
IAASA has issued a guidance document on the audit of estimates. The guidance outlines the findings of audit regulators at international, European and domestic levels, and notes that improvements are needed in the quality of auditors’ work on accounting estimates. It is particularly relevant in light of the amendments to ISA 540.
The Financial Reporting Council (FRC) has also released a paper on the audit of going concern, highlighting its greater profile in the light of Covid-19.
CPD resources
ACCA requires members to undertake at least 21 hours of verifiable CPD and 19 hours of non-verifiable CPD (full details are set out on our employere pages). Auditors are also required to comply with IES 8, Professional Competence (download the IES 8 guidance).
All the ACCA CPD modules listed below are core accounting skills and should therefore count as verifiable CPD. To verify attendance at any of them, simply complete a CPD evidence form, or log the CPD in your account at myACCA, providing sufficient detail of the matters learned and how you plan to use that knowledge. That detail in itself is verification. Certificates of attendance are not required.
You can visit the ACCA CPD resources homepage. Among the free CPD resources available are the following:
- Ethics module, seven hours of CPD (some of which will qualify as audit CPD for the purposes of IES 8), which can be accessed by logging into myACCA at accaglobal.com
- Accounting under FRS 102 refresher, one hour of CPD
- IFRS Standards accounting refresher, two hours of CPD
- Basic from scratch tax refresher, three hours of CPD
- Digital skills including Excel, Power BI, Power Pivot and Power Query, three hours of CPD
Beneficial ownership
The Central Bank is now maintaining a register of beneficial owners for certain financial vehicles. These include Irish collective asset management vehicles (ICAVs), unit trusts and credit unions. The legislation requires these entities to submit their beneficial ownership information by 25 December 2020.
Audit committees
Although what audit committees should do is set out in company law and other legislation, there are no real standards on how they should operate. Research in the UK by the FRC has shown a lot of support for the development of such standards. Click here for more details.
Chief operating officer
The determination of the identity of an organisation’s chief operating decision-maker in turn determines the identification of operating segments and the reporting of the performance of those separate segments under IFRS 8, Operating Segments. IAASA has published a paper to assist companies in making the identification.
