ODCE guidance
The Office of the Director of Corporate Enforcement (ODCE) has issued updated company law guidance including a list of offences. This includes a consolidated version of the Companies Act 2014 (prepared by the Law Reform Commission).
Credit union year ends
Ahead of the 30 September year-end, the regulator wrote to all credit unions and their auditors identifying issues to be addressed during the year-end process.
The building-up of reserves was the core issue identified, and this year any credit union planning to pay a dividend or loan interest rebate needs to seek permission in advance.
Other matters identified are that:
- Covid-19 is a triggering event for the purposes of requiring an impairment review on the carrying value of buildings, and the regulator pointed out that ‘value-in-use’ calculations need to reflect the new business environment that credit unions face.
- The incurred but not reported (IBNR) bad debt reserve needs to reflect Covid-19 and Brexit. Some credit unions are arguing that Brexit is not an ‘incurred loss’ yet, and that it is still an ‘expected loss’ and therefore under FRS 102 should not be provided against. In any event, if Brexit provisioning was not required to be included in the IBNR, it would then be required in the operational risk reserve; either way, Brexit will be reflected in the financial statements.
PRISM supervision
The Central Bank of Ireland has published the fourth edition of the Credit Union PRISM Supervisory Commentary Report. This covers its risk-based framework for the supervision of regulated firms.
The regulator identified frequent ‘basic fundamental weaknesses in credit frameworks and underwriting practices in many credit unions’. Lending and the matching of a board-approved risk appetite to the actual lending undertaken across the counter should be a key control in a credit union.
The report also highlighted ‘deficiencies…in IT frameworks, the management of IT risk and the management and oversight of outsourced providers in a number of larger credit unions that were inspected’. IT systems have become central to how larger credit unions work and most accounting estimates must be supported with empirical evidence. These calculations can usually only be done using complex IT systems.
The report identified that 90 credit unions had risk mitigation programmes issued during the period.
Local government audit
Sir Tony Redmond’s independent review into the effectiveness of external audit and transparency of financial reporting in UK local authorities was set up last June and has now published its final report. This recommends the creation of a new UK regulatory body to oversee local authority audit.
Micro-Enterprise Assistance Fund
This fund will help businesses with fewer than 10 employees, which are ineligible for existing grants, with a grant of up to €1,000 to help them adapt and invest to rebuild their business in the wake of Covid-19. The local Enterprise Offices will administer the scheme and around 2,000 businesses nationwide will benefit.
Budget day
Minister for Finance Paschal Donohoe and Michael McGrath, Minister for Public Expenditure and Reform, will present their 2021 Budget 2021 to the Dáil on Tuesday 13 October.
TALC update
The Tax Administration Liaison Committee enables the Revenue to meet with the profession. At the last meeting, Revenue confirmed that it was prioritising the processing of tax clearance applications.
Revenue also confirmed that it will not be completing a bulk-rate review for the relevant contracts tax (RCT) in September and noted that taxpayers should self-review to apply for an RCT rate change.
In addition, Revenue confirmed that 20,000 Temporary Covid-19 Wage Subsidy Scheme (TWSS) compliance checks have been conducted to date, with more than 10,000 cases closed.
A number of employers have decided that they did not qualify for TWSS. Revenue is allowing such employers to repay wage subsidy claims and account for payroll taxes before 15 October.
If the TWSS is repaid and tax is settled by 15 October, employers will not be published as having used the scheme. However, the employer will have to address all the resulting tax and pay-related social insurance liabilities for both the employee and employer in their settlement. There is more on this issue at para 1.5 of Revenue’s frequently asked questions pdf.
