Dawn McLaughlin knows first-hand that a problem shared is a problem halved. And that is why she is utterly convinced of the positive impact of peer-to-peer networking and collaboration in professional services. Sole practitioners are no different to any other business owner. Shoulders not big enough to carry the weight of the world, they are afraid to show weakness by sharing problems. They make decisions in isolation and hope they get it right each time. They are a jack of all trades, and fire-fighting is a crucial skill developed over the years. Time is limited, and the to-do list grows longer with each passing day. This will undoubtedly strike a familiar chord with many readers. Some years back, our Institute championed the idea of bringing us together by encouraging us to establish local network clusters throughout Ireland. Accountants getting together – well, that was a challenge! The only time we spoke to our competitors was possibly over a coffee at a training session, if at all. I went to a group session in Derry with anticipation, and it was the beginning of a long relationship between like-minded individuals. As a closed group, we learned to trust one another. We shared experiences, knowledge, how-to tips, and valuable connections. Sales leads were passed for services we did not provide ourselves. Those relationships have stood the test of time. There was comfort in knowing that others feel the same and share similar issues daily. Your problem had probably already been solved by another member, and we all benefited from these relationships. Even something as simple as a group moan where we put the world to rights was therapeutic. This cluster approach proved vital during the pandemic when so many found themselves isolated. In our Chamber of Commerce, members join a sector cluster and benefit in a similar fashion. Collaboration, alliances, knowledge transfer, innovation, and synergy abound. The benefits of clusters impact each and every one of us. As a Chamber board, we provide a lead director for each cluster, a direct link with benefits flowing both ways. Accurate, timely, and relevant data flows from each cluster on skills gaps, challenges, and opportunities. As an organisation, this gives us evidence-based data to lobby on their behalf. It provides the Chamber with a stronger voice and is vital in the drive to get relevant support to where it is needed most. The benefit of clusters was evidenced locally when one of our board members identified a significant skills gap in his cluster. Welders were in short supply, and the local engineering companies were suffering. Every effort went into determining the need, getting buy-in from the local companies, and lobbying the educational establishments to develop relevant courses. A course was then created, so we had a win-win for the local college, the employers, and – more importantly – for the young people who signed up and went on to get guaranteed jobs at the end of the course. Over the years, I have witnessed many successes emanating from clusters and shared working, and I am totally convinced of their positive impact. I would encourage organisations and networks of all kinds, shapes, and sizes to develop their own clusters for the benefit of their members. For those Chartered Accountants not already connected, why not start up your own network locally? The impact can be hugely significant, and we all benefit from collaboration and sharing our experiences and knowledge. Dawn McLaughlin is Founder of Dawn McLaughlin & Co. Chartered Accountants  and President of Londonderry Chamber of Commerce.

Four members in business review the challenges and opportunities of the past year, and explain how their organisations have successfully navigated the fall-out of the COVID-19 crisis thus far. John Graham  Managing Director, Andrew Ingredients The speed of the recovery in business after the first lockdown took us by surprise. As sales began to recover, I realised that we needed to start refocusing again on future growth and what we needed to do to support that. That made me reflect on my role, as covering the operational demands of the business was starting to limit my ability to focus on our long-term growth ambitions. As a result, we have just recruited a Head of Operations who started this month. This is a new role for the business and one we couldn’t have imagined creating this time last year. Now we are coming out of the worst of the pandemic, we are pushing ahead with our planned investments to give us the platform for future growth. This includes an extension to our warehouse (adding 50% more space) and the implementation of a new warehouse management system that should improve our efficiency and allow us to take advantage of future advances in technology. We also hope to get back to a full schedule in our WorkWith collaboration hub, where we work with our customers on new product development, trends, and market insights. However, there are still barriers in the way. Brexit and navigating the Northern Ireland Protocol has been a big challenge over the last six months, and that is unlikely to improve in the short-term. The bureaucracy it has created is sucking valuable management time from the business. Hopefully, the EU and UK can find some practical solutions to make the Protocol sustainable over the longer term. Despite Brexit, we believe there are great opportunities for the business, including the continued growth of Andrew Ingredients in Scotland, which is a new market for us, and bringing exciting, new ingredients to the Irish market. Wai Teng Leong Director of Finance – Financial Reporting, Tax & Treasury, Moy Park 2020 had been a truly unprecedented year, and no one anticipated the way the pandemic would change our lives and the way we work. Working from home presented enormous challenges initially, but I am incredibly proud of my team’s strength, resilience, and commitment during this time. As managers, we had to ensure that our teams performed at the high standards expected of a corporate function while finding innovative ways to motivate our people and keep up morale. We hold weekly social calls every Monday morning and arrange regular team-building events, which have ranged from baking cupcakes to book folding art craft. It is essential to take a light-hearted time out when working remotely to fit in social interactions. The rapid actions of our IT department enabled working remotely possible. For the first time in my career, we carried out quarterly and year-end audits remotely – virtual stock-takes were undoubtedly a novelty! Technology and innovative ways of working have enabled us to carry on with business as usual. Over the last year, we have held large virtual conferences (with goody bags delivered to delegates) and introduced e-learning modules to ensure that people development continues to be a priority.  The biggest challenges are inducting new team members and imparting knowledge, as these used to be carried out sitting side-by-side in an office environment. Project work such as ERP implementation also poses similar challenges. It is, therefore, important to be organised and keep a constant flow of communication. I believe that the events of the past year have made us all better managers. Looking ahead, flexible working will lead to a better work-life balance. Still, we also need to ensure that we do not lose sight of the importance of face-to-face interaction to support mentoring for career progression, creativity, and building relationships. As lockdown eases, I am optimistic that we will find a solution that combines the best of both worlds. Jason McIntosh EMEA Finance Manager, Seagate Technology It’s fair to say that how we work has changed significantly over the past year! As a key manufacturing site within our global supply chain, our work has always been very office-based. That shifted for a lot of us overnight. My whole team across the UK has now been working entirely remotely for over a year.  As we have continued to operate, we have maintained a significant on-site presence throughout the pandemic, too. One of the biggest challenges has been enabling continued collaboration between our factory and remote teams while maintaining a culture of innovation and development.  How we work together in finance has also changed considerably since last year. Whereas before we had face-to-face meetings and ample informal collaboration opportunities, now all our interaction is virtual. Having said that, I spend more one-on-one time with my team (via Teams) than before.  We have always worked as part of a global team, particularly in finance. My boss, although Irish, is based in Amsterdam, and I work closely with colleagues in locations like California and Thailand daily. We already knew how to work together virtually and while we had to adapt locally, we already had that experience. If anything, remote working is easier locally because you don’t have time zone challenges.  Making sure that everyone in our team invests in their wellbeing has been vital. I’m proud that our company has invested so much in employee wellness programmes, and I’m confident that they have helped us navigate challenging times for everyone. In the second half of 2021, I expect to see more of our team returning to the office (at least part-time), provided it is safe to do so. The most significant barrier ahead is undoubtedly the uncertainty that remains. Several countries around the world are still under some form of lockdown. When and how we emerge into some sort of ‘steady state’ will shape how we work in the coming years. Like all businesses, we have learned plenty of lessons during the pandemic that will create the opportunity to be more collaborative on a global scale going forward.  John Morgan Finance Director, BT Enterprise  Having just secured a role as Finance Director for a newly formed business unit in BT with a management team primarily based in London, I was geared up to spend a couple of days per week in London, commuting from Belfast. Little did I know that my last day in London would be my final interview in February 2020 and I would spend the next 15 months mainly working from home.   COVID-19 hit our business unit relatively hard for certain revenue streams. For example, mobile roaming revenue turned off overnight and call revenue reduced considerably as offices shut.  If anything, the pandemic has made us look to accelerate some of our existing medium-term plans instead of fundamentally changing our whole business strategy.  Within BT Finance, we had already adopted flexible working. We have found flexibility a key driver of engagement and a differentiator in the recruitment market. COVID-19 has taken this to another level, however. Trust is a massive enabler for this; if you trust and are trusted, it doesn’t matter where people choose to work. I sense that we will remain flexible. While individuals will have different preferences, I envisage the team working around two to three days a week from home. We are lucky in that we are about to embark on a significant property refurbishment in our prime site in Belfast and the team are pretty excited to be moving into leading-edge office space by early 2022.   There are still barriers in the way in our industry, however. The UK telco industry is one the most competitive in the world, and downward pricing pressures are significant. That said, we believe new strategic initiatives such as 5G allow us to differentiate ourselves and add value for our customers. 

Capital allocation and investment appraisal is a senior management team’s most fundamental responsibility, but it is easy to overstate prospective rates of return. Cormac Lucey explains. The goal of corporate investment should be to convert inputs – including money, things, ideas, and people – into something more valuable than they would otherwise be. After ten years in the position, a CEO whose company invests 10% of its existing capital stock each year will have been responsible for deploying more than half of all the capital at work in the business. This makes capital allocation and investment appraisal a senior management team’s most fundamental responsibility. In financial terms, that means that investments should generate an after-tax rate of return greater than the company’s cost of capital. Management will generally use Discounted Cash Flow (DCF) analysis to test whether a project is likely to achieve this goal. Two specific DCF measures can be estimated. If a company’s cost of capital is 7%, its investments need to generate a rate of return of at least 7% to adequately compensate investors for the risk they are exposing themselves to by investing in a company of that particular size, operating in that particular country, and in that particular sector. If the investment generates an 8% return, value is created. If the investment generates a 6% return, value is destroyed. By discounting projected future cash flows into their equivalent present values using the corporate cost of capital, net present value (NPV) quantifies the boost to shareholder value that an investment should generate. The other key DCF measure is the Internal Rate of Return (IRR). For any given set of project cash flows, IRR quantifies the cost of capital that would generate a nil NPV. The IRR measures the average annual rate of return that the project expects to generate over its life. If a project’s IRR exceeds the cost of capital, it will be expected to boost shareholder value. But there is an assumption implicit in DCF mathematics, which can lead to IRR significantly overstating a project’s prospective rate of return. The IRR approach assumes that intermediate project cash flows generated by the project (i.e. those generated after the initial investment period and before the project’s end) are themselves reinvested to generate a rate of return equal to the project’s IRR. If a company’s cost of capital is 7% and the project’s rate of return is 14%, this assumption means that surplus cash flows generated mid-project are themselves expected to be reinvested and to generate a 14% rate of return. This assumption is questionable: why should returns on surplus cash be higher just because they were generated by a high-return project? Modified Internal Rate of Return (MIRR) applies exactly the same approach to evaluating a project as IRR, except it assumes that intermediate project cash flows generate a rate of return equal to the cost of capital (rather than the project’s IRR) when reinvested. This will generally be a more realistic assumption than that underpinning IRR. Having already calculated IRR, it is a simple matter to estimate a project’s MIRR using Excel’s ‘=MIRR’ function. The difference in the measured rate of return between IRR and MIRR can be significant. Consider a simple example. Suppose we invest €1,000 today, and it is expected to generate annual after-tax cash flows of €140 for each of the next ten years, after which the project ends and we get our €1,000 investment back. The IRR of this project is 14%. But, if our cost of capital is 7%, the MIRR of the same projected cash flows would only be 11.4%. Bottom line: IRR can systematically overstate prospective project returns with its unrealistic reinvestment rate return assumption. MIRR corrects this. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.

In response to requests from charities and their lead bodies, Benefacts produced a special report on Irish charities last May. Patricia Quinn explains the findings. In Ireland’s charity sector, just as across the rest of the economy, the COVID-19 pandemic cast a long shadow. A sector of predominantly small and micro entities, charities experienced the full gamut of disruption to their not-for-profit businesses in 2020, ranging from temporary closure to rapid adaptation to digital working and developing new solutions to meet the needs of vulnerable people in local communities. For some – especially providers of hospital, hospice, residential care, and homelessness charities – the impact for their staff and served communities was a matter of life and death. Other charities – especially in emergency relief, mental health, local development, and social care – experienced increased demand for their services. In some sectors such as the arts, heritage, and museums, charities without the capacity to move to digital working methods could not operate, or only to a minimal degree. They report staff cutbacks and other cost-saving measures, but most have limited reserves and cannot avoid fixed costs. Fundraised income, which is a significant proportion of the revenues of some Irish charities, was expected to take a severe hit. In some sectors that rely predominantly on traditional fundraising, including door-to-door or church gate collections, charity shops, fun runs and other event-based approaches, this has been the case. Where charities were already geared up to appeal to donors and collect gifts digitally, or transitioned successfully to online giving, some reported an increase in income from this source. What do we know about charities? Charities form a subset of all non-profits in Ireland, which number more than 32,000 if you drill down to the level of local clubs, societies, and associations. The 11,405 charities on the Register of Charities today include just under 3,600 primary and secondary schools. For practical purposes, they are regulated elsewhere. The Register also includes about 2,700 unincorporated associations, trusts, and non-incorporated bodies that file accounts to the Charities Regulator which – for various reasons – are not published on the Regulator’s website. Anybody wanting to study the financial and governance profile of the charity sector therefore relies mainly on the CRO (Companies Registration Office) filings of incorporated charities, of which there are about 5,000. These form the basis for a new benchmark report on the charity sector in Ireland released by Benefacts last month. Benchmarking the state of the sector There has never been a time when current, reliable data was more relevant to charities. In boardrooms around the country, trustee directors have been grappling with tough choices. Even the best risk register was unlikely to include a worldwide pandemic involving the near-total shut-down of whole sectors of the economy. And most charities are particularly ill-equipped to cope with financial adversity; by definition, they have no equity, no investors, and limited capacity to trade their way out of financial trouble. Few charities entered 2020 with significant financial reserves. Although the aggregate reported value of reserves in the sectors under review in the Benefacts report was €3.73 billion based on available data for 3,628 incorporated charities, most of these reserves (€2.5 billion) are held by just 80 larger charities – in particular, voluntary hospitals and social housing providers. The remaining €1.2 billion in reserves is distributed across smaller charities, primarily in local development, social housing, health, and services for people with a disability. Moreover, charities’ assets – unlike most commercial organisations – typically cannot readily be liquidated as they are essential for delivering services or may be of a heritage or highly specialised nature. When reserves are converted to the number of weeks of average weekly expenditure (using data from full accounts), our analysis found that more than one-third of charities have fewer than ten weeks’ reserves, with arts charities particularly heavily exposed. Not all bleak In preparing its report, Benefacts reviewed more than a dozen surveys and other reports prepared by sector lead bodies, policy-makers, and regulators. Many positive effects have been reported. These include heightened public awareness of the value of charities’ work, better engagement across geographic divides, cost and time savings, a better quality of life for staff, and the adoption of more diversified fundraising solutions – especially digital ones. In fact, it appears that a small percentage of charities that were already well-geared for digital fundraising will be reporting 2020 as a better year than usual. Philanthropists stepped up in response, especially to pandemic-related causes, and social enterprises were encouraged to bid for new additional funding. The State permitted some charity employees to avail of pandemic unemployment benefits and allocated additional funding to address areas of acute need. Using financial reporting data shared with us in advance of the publication of their own financial statements by the nine State bodies that are the principal funders of charities, we were able to identify a 10.7% year-on-year uplift in funding for charities – mainly in health, social care, arts, and culture. But in 2020, there were nearly ten pandemic-free weeks at the start of the year and lockdowns were partially lifted mid-year. Additional State support will undoubtedly have sustained some charities that might otherwise have gone under. But there’s already a recognition that 2021 – with the exit from full lockdowns only starting in the middle of the second quarter – will be a tougher year, and 2022 probably tougher again. Planning for better The last 30 years have seen considerable professionalisation in the charity sector. The 5,000 charities whose financial statements form the basis for this new report employ more than 101,000 people. Fundraising, a critical discipline in the 273 charities that rely on this as their principal source of income, has become highly specialised. The larger charities now have professional staff to manage their volunteer supporters. Even the voluntary directors of charities themselves are increasingly recruited using the kind of competency framework approach that would have been unheard of in this sector 20 years ago. And perhaps it’s as well, since understanding the drivers of charity business success is a crucial function of charity boards. Contingency planning will surely come to the fore, as well as a searching review of some of the fundamental assumptions about funding. Benefacts has already received queries from charities trying to understand their position relative to their peer organisations in a given sub-sector, anticipating perhaps an even more competitive environment in the future. Audited financial statements are a hugely valuable source of granular data that makes up the picture of any sector and its component entities. Like analysts in commercial sectors, Benefacts relies on charity company disclosures as the bedrock on which we build a profile of the charity sector and its sub-sectors. Common financial reporting standards bring consistency and reliability to the data that can be used to create a picture of the whole sector and track changes year-on-year at the level of individual charities and sectors such as hospice care, addiction support, or animal welfare. Thanks to its database, augmented each year with more than three million new data items harvested from non-profit company disclosures, Benefacts has been able to provide charities, funders, policy-makers and other stakeholders with a powerful knowledge asset to help them navigate uncertain times. The impact of regulation The range of data underpinning our analysis of this multi-billion euro sector suffered a setback with the new Companies Act reform in 2014. For the first time, small non-profit (limited by guarantee) companies could avail of the same exemptions from filing full accounts as commercial companies. While this is only fair and equitable on the face of it, it has diminished the public disclosures of thousands of charities that rely on public donations, state funding, or both to support their operations. Unfortunately, the Charities Act 2009 did not foresee this change and exempts charity companies from filing their accounts to the Charities Regulator to avoid the burden of double regulation. Again, fair and equitable – except for the unintended side effect of making the financial disclosures of thousands of charities less transparent to the very people on whom they rely for income and something more precious – trust. Here are the numbers: of the 3,628 charities that have already filed their 2019 accounts, 36% have filed abridged accounts and 26% have filed unaudited accounts. 106 of these charities receive funding from the State. This means that their unaudited accounts breach the reporting standards for any body receiving State funding set by the Department of Public Expenditure & Reform (Circular 13, 2014). Rules are there to be obeyed, and over time, the compliance authorities will surely iron out these wrinkles in the provisions of the various legal and regulatory frameworks. But charities are not like other small businesses. The principle rather than the letter of the legislation regulating them is one of transparency. To that, I would add informed self-interest. Sector lead bodies preparing a brief for their board or a presentation for an Oireachtas Committee hearing are often disappointed to discover that Benefacts analysis of their members is missing some critical dimension – especially an analysis of their income. That is because so many of the source documents lack an important few pages: the income and expenditure account. This is all the more galling as funders require the full accounts to be provided to them. We therefore experience a double standard – full accounts to go in the State filing cabinet, abridged ones for the rest of us.

I have so much work to do to grow my practice, but I keep getting sucked into day-to-day stuff. I have employed some good people, but the problem hasn’t gone away. Time management gets a bad rap because people think it’s all about to-do lists and tasks. In fact, it’s about strategic decision-making: there is never enough time to do everything, so we need to choose. Urgency creates a compelling gravitational pull, and you need to create an alternative centre of gravity by focusing on added-value work. The next time you find yourself sucked into operational issues, reflect on what is missing (for you or your team). Is it: Something about relationships? Think about patterns, trust, introductions, network. Something about infrastructure? Think about technology, systems, processes, templates, supplies, check-lists. Something about development? Think about information, knowledge, skills. Something about approach? Think about attitude, planning, reflection, focus. Spending time in these four areas allows you to build capacity. But we work on them one at a time, so choose one ‘fix’ that is achievable but would make a big difference, such as training your staff or creating a database. When that’s done, choose the next one. Above all, plan the week ahead on Friday afternoon and look at your week with your ‘capacity building’ glasses on. What opportunities arise? Overall, I’m happy with my team. They are good performers and we get on well. I have one particularly good person on my team; he’s clever, hard-working, and great with clients. The problem is his relationship with the rest of the team. He seems to look down on them. At team meetings, he is obviously multitasking. He never says anything offensive, but his eye-rolls and head-shakes speak loud and clear. I don’t want to lose him, but he is having an impact on morale. This is a familiar story: the high performer with poor behaviour, the rest of the team feeling undermined, nobody talking about it. Hoping the behaviour will go away is not going to work. Anybody could walk. Actually, this guy is clearly communicating with you – just not in words. You need to get curious about why this is happening; it’s great feedback for you. Find a good time to play his behaviour back to him (use “I notice” to describe behaviour and be careful not to judge). Invite him into a conversation with open, solution-focused questions like: What might be a more useful response? What might be useful for the team to hear? What would you like from the team? Such questions will help him explore the impact of his behaviour and take responsibility for changing it. As time passes, if you notice more supportive behaviour from him, quietly acknowledge it. If the poor behaviour continues, you may need to be more direct and ask him to behave differently. Julia Rowan is Principal Consultant at Performance Matters, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie. 

Daniel O’Donovan and Siobhan Orsi summarise the main changes in the Ethical Standard (Ireland) for Auditors, the International Standards on Auditing (Ireland), and the International Standard on Quality Control (Ireland) 1. In November 2020, the Irish Auditing and Accounting Supervisory Authority (IAASA) issued revised ethical and auditing standards in a bid to support the delivery of high-quality audit and strengthen confidence in audit in Ireland. The revisions build on changes made to the standards in 2017, which implemented the requirements of the EU Audit Regulation and Directive. These new amendments, which were the subject of a formal consultation earlier in 2020, are effective for audits of financial statements for periods beginning on or after 15 July 2021, with early adoption permitted. This article summarises the main changes in the Ethical Standard (Ireland) for Auditors, the International Standards on Auditing (Ireland), and the International Standard on Quality Control (Ireland) 1. Revisions to the ethical standard IAASA’s aim in amending the ethical standard was to simplify and restructure the standard to ensure a better understanding of the ethical requirements. It also introduces more prohibitive requirements, including removing the exemption for SME-listed entities that were not subject to many of the prohibitions applied to listed entities. These concessions, offered in the 2017 IAASA Ethical Standard to entities of this nature, have been removed. Other key changes to the ethical standards include, but are not limited to, the following: Third-party test: the new standard sets out a clearer and stronger definition of the “objective reasonable and informed third-party test”, which is a core element of the ethical standard. It requires audit firms to consider whether a proposed action would affect their independence from the perspective of public interest stakeholders rather than another auditor. Additional guidance has been inserted to assist in application. Internal audit services: firms will no longer be able to provide internal audit services to audited entities or their significant affiliates. IAASA’s view was that the provision of internal audit services to audit clients created a risk, both real and perceived, to independence that needed to be addressed. Recruitment and remuneration services: the standard incorporates amendments that now prohibit auditors from providing recruitment and remuneration services or playing any part in management decision-making. Gifts and hospitality: the requirement to establish policies on the nature and value of gifts, favours, and hospitality that may be accepted from and offered to other entities has been extended to apply to those entities that are likely to subsequently become audit clients. Enhancements to the ethics partner’s authority: new provisions incorporated into Section 1 of the ethical standard highlight the increased importance placed on the ethics partner. Enhancements include a requirement for reporting to those charged with governance where an audit firm does not follow the ethics partner’s advice. Partner rotation: the cooling-off period for engagement partners on public interest entity audits has been relaxed and amended from five years to three years, as was the requirement in the EU Audit Regulation in 2014. The change has also been applied to listed entities. Clarification has been added that when the engagement partners rotate off an audit, they cannot have significant or frequent interaction with senior management or those charged with governance during the cooling-off period. A new requirement has been introduced so that, where audits and those providing audits move from one firm to another, any rotation “on periods” for partners and staff include any time before they and the audit changed audit firms. Reporting breaches of the ethical standard The extant Ethical Standard for Auditors (Ireland) 2017 requires auditors to respond to all possible or actual breaches of the standard and keep records of any contraventions. A requirement has been introduced in the new ethical standard for auditors to report breaches of the ethical standard on an annual basis to IAASA, the relevant recognised accountancy body for auditors of public interest entities, and the relevant recognised accountancy body for non-public interest entity auditors. Such reports are to be submitted at least annually. IAASA indicated in its feedback paper on the consultation that it will issue guidance to auditors regarding the format of reports to be submitted. It also stated that any action taken by IAASA or the relevant recognised accountancy body in response to such reports will vary on a case-by-case basis depending on factors such as the nature of the breach, the appropriateness of the firm’s response, and the firm’s regulatory history. The new ethical standard permits firms to complete non-audit service engagements that were previously permissible provided they were entered into before 15 July 2021 and for which the firm has commenced work, while applying appropriate safeguards. IAASA did not introduce prohibitions on contingent fees for non-audit services, loan staff assignments, and tax advocacy services – all of which were proposed in the consultation paper. In addition, IAASA made changes to specific auditing standards: ISQC (Ireland) 1 and ISAs (Ireland) 210, 220, 250, 260, 600, 620, 700, 701 and 720. Hereafter, we will briefly discuss the most significant changes auditors and entities should be aware of for audits of financial statements with periods beginning on or after 15 July 2021. Revisions to ISAs IAASA has revised ISA (Ireland) 700, Forming an Opinion and Reporting on Financial Statements to extend the requirement for auditors of public interest entities to explain the extent to which the audit is capable of detecting irregularities and fraud to audits of listed entities also. There has been a significant expansion of the application guidance to the standard in relation to this requirement, which guides auditors to provide more detailed and granular explanations tailored to the entity being audited. IAASA acknowledged in the feedback statement that, in some situations, legislation (e.g. ‘tipping-off legislation’) would prohibit auditors from disclosing certain information in the audit report. ISA (Ireland) 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) has been revised to clarify that the work of component auditors used for the purpose of a group audit must be evaluated and reviewed by the group engagement team. Application guidance has been added to the standard to assist group engagement teams in determining whether the nature and extent of such evaluations and reviews of component auditor work are appropriate in their professional judgement. ISA (Ireland) 220, Quality Control for an Audit of Financial Statements now requires the engagement quality control reviewer (EQCR) for audits of group financial statements of public interest entities to perform their quality control review over each component for which work has been performed for the purpose of the group audit, and to discuss the results of the review with the relevant key audit partner. This is a significant enhancement of the quality control review required for such entities. ISA (Ireland) 701, Communicating Key Audit Matters in the Independent Auditor’s Report has been revised to require that the auditor’s report specify the threshold for performance materiality and explain the judgements made in determining performance materiality tailored to the circumstances of the audit.  This package of revisions to the standards is designed to enhance audit quality and public confidence in audit in Ireland. However, for group audits of public interest entities in particular, there is likely to be significant incremental associated effort and cost in complying with the new requirements. Chartered Accountants should familiarise themselves with all changes to the standards, which are available on IAASA’s website. Daniel O’Donovan is Principal in the Department of Professional Practice at KPMG Ireland and Chair of the Institute’s Audit & Assurance Committee. Siobhan Orsi is Associate Partner at EY Ireland and a member of the Institute’s Audit & Assurance Committee.