Fraud standard
The Irish Auditing and Accounting Supervisory Authority (IAASA) has revised ISA (Ireland) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. The revised standard enhances and clarifies the auditor’s responsibilities for fraud detection. It is effective for audits of financial statements for periods commencing on or after 15 December 2021.
Contingent liabilities and assets
Provisions are recognised when probable and contingent assets are recognised when virtually certain, even if one is costs and the other the insurance proceeds arising from the same event. The area has become even more problematic given the uncertainty over how much is required for climate change provisioning.
The Financial Reporting Council (FRC) in the UK reviewed the financial statements of several UK companies and made recommendations for improvement in the disclosures. The recommendations include explaining how estimates had been made, the phasing of the actual outflows, and a description of the underlying costs.
Audit supervision
The FRC regulates how the profession monitors ACCA members holding UK audit registration. In its report for 2020/21, the FRC noted that Covid-19 had prevented most of the professional bodies it regulates from completing their audit monitoring within the timescale agreed but that they were otherwise ‘complying sufficiently with the terms and conditions of the delegation agreements’.
The report identified improvements for each of the professional bodies. The recommendation for ACCA was that its ‘robust registration process’ be ‘streamlined’. A simplification to the application process for ACCA’s practising certificate will go live on 1 January 2022.
Recognised bodies
Both ICAS and ICAEW have surrendered their recognised accountancy body status in Ireland.
As of 31 December 2020, ICAS had 73 members and 12 statutory auditors with Irish audit registration, although none of those auditors was resident in Ireland. ICAEW had 473 members and 254 statutory auditors with Irish audit registration, with three of those auditors resident in Ireland.
There is a requirement for Irish audit firms to be controlled by Irish auditors. If that control was achieved by means of an Irish audit registration held by an ICAEW or ICAS member, then the firm may lose its Irish audit registration.
ICAEW or ICAS members can join an Irish recognised accountancy body such as ACCA to regain Irish audit registration. Alternatively they can cease to undertake Irish audits.
Public performance
Local government audit is a regulated activity in the UK. The FRC’s annual report on the quality of the performance of major local audits in the UK is now available.
Review engagements
IAASA has published a consultation paper on its proposals to adopt ISRE (Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. The proposed effective date of the international standard on review engagements will apply to reviews of interim financial information for periods commencing on or after 15 December 2021. The deadline for comment is 3 December.
Social media
The European Securities and Markets Authority (ESMA) has warned that some investment recommendations made on social media may breach the EU’s market abuse regulation. ESMA highlights a lack of understanding by social media influencers about the difference between recommendation and personal opinion.
The Irish rules reflect the EU rules, and include the disclosure of identity, the presentation of recommendations in an objective way, and disclosure of all relationships or circumstances that would impair objectivity. There are additional rules for ‘experts’, which will include social media influencers who frequently post about investment options.
