Pension regulations
On 22 April, the Irish government enacted the European Communities (Occupational Pension Schemes) Regulations 2021. These transpose Directive 2016/2341 (IORP II) into Irish law.
Covid-19 AGM rules
The government has extended the interim period of the Companies (Miscellaneous Provisions) (Covid-19) Act 2020 until 31 December 2021. This means that AGMs for companies and industrial and provident societies can continue to be virtual up to that date.
The regulation also continues the limits for putting a company into creditors liquidation at €50,000, while examinership periods remain at 150 days. The Companies (Small Company Administrative Rescue Process and Miscellaneous Provisions) Bill 2021 contains a provision to make permanent provision for virtual meetings.
Cashflow statements
The Financial Reporting Council (FRC) in the UK has undertaken a review of the audit of cashflow statements, following observation of recurring errors in their preparation. The review found that 9% of cases in 2019/20 and 17% in 2020/21 identified issues with the cashflow statement.
The FRC notes that the majority of misstatements resulted in overstatement of operating cashflow, which is a key number for investors and analysts. The review found basic inconsistency and misclassification errors, a lack of challenge to management’s calculations, insufficient guidance, inadequate review processes and the use of manual cashflow workings increasing the complexity of the audit process.
A review of the audit of cashflow statements found basic inconsistency and misclassification errors
FRS 101 amendments
FRS 101 is used by subsidiaries of companies that use IFRS Standards accounting but with greatly reduced disclosures. The standard has just been amended, with one disclosure requirement in IAS 16 removed, of ‘the existence and amounts of restrictions on title, and property, plant and equipment pledged as security for liabilities’.
The amendment also removed a reference to IAS 1 that referred to paragraphs that had been removed from IAS 1.
New clients
Prior to entering into a business relationship with a new client, a practice must do a search of the Register of Beneficial Owners (RBO) and confirm that the details are consistent with their understanding. Short videos on how to search the RBO details for a new client are available.
If the new client is not on the register, then the practice should report them using a non-compliance notification form. If the beneficial ownership details are wrong, then a discrepancy notice is filed.
A DN2 form is filed for a discrepancy; this is available to the practice’s RBO liaison officer (who will probably also be the anti-money laundering reporting officer) by contacting discrepancies@rbo.gov.ie. Read the full filing procedure.
The rules were brought in for corporate clients by the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 and for trust clients by the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021. Trusts have six months from 24 April 2021 to upload their details for the first time to the RBO. Corporate entities had until 22 November 2019 to upload their details.
Intangible assets
FRS 102 requires that purchased intangible assets and goodwill be valued at cost and amortised over their useful life. Where that life cannot be measured, a default 10 years (previously five years) is applied. If a business creates its own intangible asset and incurs costs in that creation, such as a patent registration fee, it may capitalise those direct costs.
Internally generated intangible assets where there is no directly measurable cost incurred – for example, the good name of the business – is not capitalised unless it meets very strict criteria.
Frequently, businesses object to the requirement to amortise goodwill while its underlying value is still the same or greater than it was on the date of its acquisition. This is especially egregious since generating a good name is itself expensive, so the profit and loss is being hit with a double charge: of the goodwill at date of purchase being amortised as it wears out over time; and the cost of maintaining the underlying goodwill.
IFRS GAAP allows goodwill to be tested for impairment and not amortised, and conversion to IFRS Standards is always an option for a business. FRS 102 continues to require amortisation of goodwill.
Insolvency guidance
There has been a recent update to Statement of Insolvency Practice 9B, Remuneration of Insolvency Office Holders – Republic of Ireland. The guidance deals with the requirements of the legislation, disclosure of fees and agreement of the basis for charging a fee.
Sustainable checklist
Accountancy Europe has published a sustainability checklist for SMEs, which should help them to build a more durable business model.
