AI in audits
The Financial Reporting Council in the UK has published guidance on the use of artificial intelligence (AI) in audit. It has also published a review of the six largest firms’ processes to certify new technology used in audits. The guide deals with an example where an audit firm uses AI to test journals and how that process would be documented on the audit file.
Private equity
Accountancy Europe has published a research report on Private equity investments in accountancy firms. Read this AB article for more on acquisition trends.
SASP
There is less than six months left for members to obtain automatic grandfathering rights to being licensed as a sustainability assurance service provider (SASP). Grandfathering is available for any member who has obtained responsible individual status by the end of 2025. An auditor who wishes to avail of grandfathering can do so at any time, including after December 2025. Read more detail about the role in this AB article.
The IFRS Foundation’s new e-learning modules support sustainability reporting
ISSB Standards
The IFRS Foundation has launched new e-learning modules to support sustainability reporting under the S1 and S2 standards.
Code of Ethics and Conduct
The ACCA code of ethics has been amended and now includes guidance in the area of tax planning services.
Kingspan Group
The Irish Auditing and Accounting Supervisory Authority (IAASA) has published decisions about accounting treatments applied by Kingspan Group in its 31 December 2023 annual financial statements. The Irish energy conservation specialist was the subject of negative media reports in connection with the Grenfell fire in a London towerblock, as manufacturer of the cladding that was implicated in the rapid spread of the fire.
In its commentary on the company’s financial statements, IAASA noted that the issues ‘were not discussed or addressed in the 2023 management report as part of the risks and uncertainties facing the business’.
Kingspan contended that ‘the media reports in 2023 dealt with the same substantive issues and events reported in prior years and had been addressed by the issuer in its annual reports for those earlier years’.
EU legislation requires certain companies to address board gender equality
The commentary noted that in its 2024 annual report, Kingspan stated that ‘the Kingspan group had no role in the design of the cladding system on Grenfell Tower and that its product was misused on the exterior of the building, and (ii) the final report from the Grenfell Inquiry which explained that the principal reason for the fire spread was material neither made nor provided by the Kingspan group’.
Kingspan provided a voluntary undertaking that if the matter becomes ‘a material financial or reputational impact on [Kingspan] or should they represent a principal risk and uncertainty’ that disclosures will be made in future reports. Read the full financial reporting decision.
Separately, IAASA has provided an infographic of its significant financial reporting enforcement activities for public interest entity financial statements for 2023 and 2024.
Engagement letters
ACCA has published updates for its suite of example engagement letters, which are relevant to the UK and Northern Ireland.
EU gender balance regulations
The European Union (Gender Balance on Boards of Certain Companies) Regulations implements Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022, and requires certain companies to address gender equality on their boards.
In summary, boards should be aiming for at least 40% of each gender and the legislation is applicable from 2026. The rules only apply to an ‘applicable listed company’; micro, small and medium-sized enterprises are excluded, although slightly different size criteria to the definitions in the Companies Act are used to define micro, small and medium.
The legislation states that at least 40% of a company’s non-executive directors should be members of the underrepresented sex, and companies must publish the steps taken to achieve compliance. The penalty for non-compliance is to be ‘named and shamed’ on a website list published by the Minister for Children, Disability and Equality.
