Technical resource centre

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Key Stakeholder Updates for both ROI and NI / UK in response to COVID-19.   The Accounting Committee recently responded to the IASB Exposure Draft ED/2020/1: Interest Rate Benchmark Reform - Phase 2 - Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16. The Exposure Draft is the second phase of the Board’s priority project on the effects of interest rate benchmark reform on an entity’s financial statements that arise when interest rate benchmarks are replaced with alternative benchmark rates. The first phase of the project culminated with Interest Rate Benchmark Reform, which was published in September 2019. The Committee’s response noted appreciation of the timely manner in which the Board is seeking to deal with the potential accounting issues arising from IBOR reform. While generally supportive of the proposals in the ED, the Committee highlighted some concerns in relation to aspects of the proposed changes. The response is available here.  The Audit and Assurance Committee recently responded to the FRC’s proposal to adopt the International Standard on Assurance Engagements: ISAE 3000, Assurance Engagements Other Than Audits Or Reviews Of Historical Financial Information for use in the UK.  This ISAE (UK) will apply to assurance engagements specified by the FRC, other than audits or review engagements. Chartered Accountants Ireland is generally supportive of the proposed adoption of ISAE 3000 by the FRC for appropriate reporting assignments.  We have however raised matters that in our opinion may require further consideration by the FRC as part of the adoption process of this Standard for use in the UK. The response is available here. ROI The Irish Auditing and Accounting Supervisory Authority (IAASA) will be hosting an audit committee breakfast briefing on 10 September 2020. Speakers on the day will cover a number of key areas relating to the expanded role of audit committees, current regulatory requirements as well as communications with regulators. The event is envisaged to be a physical meeting however depending on the status of public health restrictions, may be live streamed or a combination of both. Please click here to register. Central Bank has published Annual Report & Annual Performance Statement 2019. International   The IASB has released a podcast featuring IASB member Darrel Scott and technical staff member Vitalina Kobernik as they discuss the de­vel­op­ments at the May 2020 Board meeting related to the amend­ments to IFRS 17 'Insurance Contracts'. In February 2020, the International In­te­grated Reporting Council (IIRC) launched the revision of the International Framework and called for market feedback on specific themes to inform the nature and direction of the revision. A con­sul­ta­tion draft of the revised Framework has now been released for a 90-day comment period. The IASB proposed amending IFRS 16 Leases to make it easier for lessees to account for covid-19-related rent concessions such as rent holidays and temporary rent reductions, and, following a consultation process, has issued ‘Covid-19-Related Rent Concessions’, amending IFRS 16. EFRAG has commenced its work on drafting its endorsement advice in relation to the changes.  

(up-to-date to 2 June 2020) Introduction  Over recent weeks, much has been issued in terms of advice from regulators, and commentary, regarding various auditing considerations related to the spread of coronavirus.  We have assembled below some information that we have come across that may be of assistance to members. Commentary should not be taken as advice or as a comprehensive analysis of all aspects. This is a rapidly evolving situation. When reading information at the links below, due care should be taken of the date of issue and any developments in the interim that may not be reflected in the material published, such as updated statements from regulators etc. There is a need to be cognisant of the relevant Auditing Standards (IAASA and FRC) as well as the accounting framework being applied by an entity (e.g. FRS 102, IFRS etc.), and the jurisdiction, in considering the relevance of any of the information below. This webpage will be periodically amended as further clarification is provided and additional queries are received. Guidance from regulators A number of regulatory bodies have issued guidance. Auditors and their clients should monitor the relevant websites for up to date information. IAASA IAASA has created a Covid hub on its website. The hub includes statements and publications from various regulatory bodies in the context of Covid-19. It also includes a statement from IAASA on the challenges for audit arising from Covid-19.  The IAASA Covid hub can be accessed here. UK - Financial reporting Council (FRC) The UK oversight body and standard setter the FRC has issued a Bulletin Guidance for Auditors and Matters to consider where engagements are affected by Coronavirus (Covid 19).  The issues covered include Acceptance of new engagements Materiality Audit evidence Compliance with laws and regulations Going Concern Group audits Reporting Previously the FRC issued guidance (16 March 2020) and this covered: risk assessments;  how the auditor gathers sufficient, appropriate audit evidence; matters relevant to Group audits; going concern, disclosures and the need to reassess key aspects of the audit planning.  The FRC have also issued advice for companies and auditors on disclosure of risks and other reporting consequences arising from the emergence and spread of COVID-19 (18 February 2020) and guidance for companies on Corporate Governance and Reporting Further guidance on modified auditors’ opinions and reports during Covid 19 crisis. Issued 21 April The FRC has issued guidance (14 May) on corporate governance and reporting including interim reports.  Read the full guidance here: Company Guidance (Updated May 2020) (COVID-19) Podcasts from the FRC  Mark Babington, the FRC's Acting Executive Director of Regulatory Standards discusses new guidance issued by the FRC to assist auditors during the coronavirus pandemic. You can download or listen to the podcast here.  Jen Sisson, the FRC's Deputy Director of Investor and Stakeholder Engagement, speaks with Will Boyack to discuss how the FRC's engagement is influencing its guidance for companies, investors and auditors during the Covid-19 pandemic.  AGMs and audit reports are among the auditing issues discussed on this short podcast which you can download or listen to the podcast here. UK - The Financial Conduct Authority (FCA) The Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA) have announced a series of actions to ensure that information continues to flow to investors and to support the continued functioning of the UK’s capital markets including permission for a delay in the publication of audited annual financial reports for listed companies from 4 to 6 months from the end of the financial year. The FCA has now (22 April) extended the submission deadlines for certain regulatory returns. The extension applies for submissions that are due up to and including 30 June 2020. They had previously requested that all listed companies observe a moratorium on the publication of preliminary financial statements for at least two weeks. EU- The Committee of European Auditing Oversight Bodies In a recent paper CEAOB emphasises the areas of high importance on audits of financial statements with particular emphasis on the following areas that are of high importance for the performance of ongoing audits:   Obtaining Sufficient appropriate audit evidence Going concern Subsequent events Reporting and Communication  Relevant Auditing Standards The auditing standards listed below are of particular relevance in the current situation.  Ireland ISA (Ireland) 570 Going Concern (Revised October 2019) ISA (Ireland) 501 Audit Evidence – Specific Considerations for Selected Items ISA (Ireland) 560 Subsequent Events ISA (Ireland) 600 Special Considerations – Audits of Group Financial Statements (including the Work of Component Auditors) All Irish auditing standards are available on the IAASA website    UK  ISA (UK) 570 (Revised September 2019) Going Concern ISA (UK) 501 Audit Evidence – Specific Considerations for Selected Items ISA (UK) 560 Subsequent Events ISA (UK) 600 Special Considerations – Audits of Group Financial Statements (including the Work of Component Auditors) All UK auditing standards are available on CHARIOT and on the FRC website COVID-19 - Regulated Firms Updates - The Central Bank of Ireland (Last updated on 21 April 2020) The Central Bank of Ireland has intensified its engagement across the financial services system to ensure that firms are taking the necessary actions to be able to continue to serve their customers through the unprecedented challenges COVID-19 is causing and will continue to review its approach to regulatory flexibility throughout the duration of the COVID-19 pandemic and may provide further updates as required. Additional Guidance material   Accountancy Europe  unites 51 professional organisations from 35 countries that represent 1 million qualified accountants, auditors and advisors.  Analysis of guidance for European auditors This publication focuses on how COVID 19 impacts businesses and the people that audit them. It aims to support European auditors in adapting their work to new circumstances in ongoing audits with 2019 year-ends and beyond. It highlights the following main matters for auditors to consider: obtaining audit evidence auditor’s assessment of going concern auditor’s reporting Most of the matters in this publication apply also to audits with closing dates after 2019 an additional overview with main matters for consideration specifically for audits with 2020 closing dates is being developed. European Securities and Markets Authority (ESMA) ESMA, the EU’s securities markets regulator, has issued a Public Statement on some accounting implications of the economic support and relief measures adopted by EU Member States in response to the COVID-19 outbreak ESMA statement ESMA Guidelines on APM   Alternative Performance Measures ESMA issued Guidelines on Alternative Performance Measures (Guidelines on APMs) aimed at promoting the usefulness and transparency of APMs included in prospectuses and/or regulated information. ESMA have now (17 April) published some Q&A to help users in the context of COVID-19.   The Q&A:  highlights the main principles of the ESMA Guidelines on Alternative Performance Measures;  encourages issuers to use caution when adjusting APMs and when including new APMs to address the impact of COVID-19; and  recommends issuers provide narrative information regarding the modifications made, the assumptions used and the impact of COVID-19 in APMs used.  The Q&A document may be accessed here. On 20 May the FRC updated this guidance for companies on corporate reporting to explain how they should report exceptional items and alternative performance measures (APMs) in their reports and accounts, in the context of the Covid-19 crisis. Investors expect to see balanced, transparent and clearly explained disclosures of material items arising from the crisis. A link to the guidance can be viewed here.  European Banking Authority Statement on the application of the prudential framework regarding Default, Forbearance and IFRS9 in light of COVID19 measures EBA statement UK Company Filings, AGMs and other general meetings.  BEIS have published some Q&A to provide companies and their advisers with additional information upon which to plan activities over the coming months.  International  International Auditing and Assurance Standards Board (IAASB ) - Guidance for auditors during the coronavirus pandemic  IAASB has issued a guidance for auditors highlighting areas of focus in an evolving audit environment due to the impact of covid-19.  The guidance lists the relevant International Standards for Auditing (ISAs) and specific matters for each of these which auditors have to consider in the context of the pandemic.  On 22 May the IAASB released -Staff Audit Practice Alert with COVID-19 Pandemic related guidance for auditors to consider when issuing an auditor’s report on the completion of the audit of financial statements. This highlights the potential implications for auditor and interim review reports arising from the current environments including: Auditor’s opinion Material uncertainty KAM and EOM paragraphs Interim reviews The document can be found HERE. Guidance on auditor considerations relating to GOING CONCERN in light of changing environment due to the COVID-19 pandemic On April 29, IAASB issued their official guidance on auditor considerations relating to going concern in light of changing environment due to the COVID-19 pandemic. Click HERE to read more. The International Ethics Standards Board for Accountant (IESBA) A Questions and Answers (Q&A) publication was developed by the staff of the IESBA to highlight aspects of the International Code of Ethics for Professional Accountants (including International Independence Standards) that might be relevant in navigating ethics and independence challenges and risks as a result of the COVID-19 pandemic. The Q&A can be read here Guidance from professional bodies:   Chartered Accountants Ireland Practice Consulting have published guidance for auditors on attendance at stocktakes by auditors of small and medium sized entities.  We have also published a series of auditing FAQs which provide examples to prompt evaluation and challenge.    The Institute Advocacy and Voice Team’s article ‘Going Concern considerations published COVID19 2020’ (23 April 2020), may assist members that are preparing and auditing financial statements and serve as a reminder of some of the requirements around going concern from an accounting and auditing perspective. ICAEW The ICAEW have a dedicated audit webpage for the current crisis.   The ICAEW have produced a guide dealing with the particular issues facing group audits, it is designed for UK group auditors with component auditors based in jurisdictions impacted by Coronavirus (COVID-19). It offers practical considerations in relation to the work of component auditors to address the requirements in ISAs (UK). It may also be relevant for group auditors in other jurisdictions with similar requirements. The ICAEW Audit and Assurance Faculty have produced a two part guide for auditors, covering COVID-19 considerations for auditing going concern, and how to report when a material uncertainty relating to going concern exists. The potential impact of coronavirus on going concern and the auditor’s report is discussed here on the ICAEW webpage. ICAS The institute in Scotland have a website providing guidance for members and have also published guidance on stocktakes   Updated 25 May 2020    

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Key Stakeholder Updates for both ROI and NI / UK in response to COVID-19.  UK The Financial Reporting Council (FRC) has updated its guidance for companies on corporate reporting to explain how they should report exceptional items and alternative performance measures (APMs) in their reports and accounts, in the context of the Covid-19 crisis. The UK Government has now introduced the Corporate and Insolvency Bill to put in place a series of measures to amend insolvency and company law to support businesses impacted by COVID-19. To provide companies with additional information upon which to plan activities over the coming months. in respect of Company filings, AGMs and other general meetings during Covid-19 a further Q&A has been jointly produced by BEIS and the FRC.  The quality of corporate governance and stewardship activity by companies and investors is inevitably of heightened importance during the Covid-19 crisis detailed in a recently issued Corporate Governance Update by the FRC. Europe The European Financial Reporting Advisory Group (EFRAG) has published its 2019 annual review. International The International Auditing and Assurance Board (IAASB) has released their Revised Work Plan Table for 2020-2021. The International Accounting Standards Board (IASB) has issued the second in a series of webcasts related to the Request for In­for­ma­tion: Com­pre­hen­sive Review of the IFRS for SMEs Standard issued on 28 January 2020. On 14 May 2020, a web-based outreach event on primary financial state­ments co-hosted by FSR – Danish Auditors and the Con­fed­er­a­tion of Danish Industry (DI) with par­tic­i­pa­tion of IASB and EFRAG rep­re­sen­ta­tives drew a wide international audience. A recording of the event is now available. The International Ethics Standards Board for Accountants (IESBA) Staff have released COVID-19 Q&As Highlighting Ethics & Independence Considerations.

ICAS and ICAEW have today jointly published free-to-access guidance for owners and directors of SMEs to assess the prospects of their business in the wake of COVID-19. The guidance has been written by experts at ICAS and ICAEW to aid the many small and medium-sized businesses that have been affected by the coronavirus crisis as they prepare their accounts. Company directors are required each year to assess whether the business is a going concern when drawing up their annual accounts, and this should cover at least the 12 months from the date the accounts are to be approved by the directors. But coronavirus has had a dramatic change on the performance and prospects of many businesses, leaving some under threat, and accounts will have to reflect its impact. The publication explains to business owners and directors the importance of forecasting cash flow and how to reflect the impact of COVID-19. Additionally, it provides suggestions on how to work with auditors and accountants during the pandemic, including the need to provide evidence which shows that conclusions reached regarding going concern are reasonable. The guide is available here.

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Key Stakeholder Updates for both ROI and NI / UK in response to COVID-19.  Ireland The Charities Regulator has just published Guidance on Charity Reserves to encourage and facilitate the better administration and management of charities. UK The Financial Reporting Council (FRC) has updated its guidance for companies in relation to interim results. The FRC has this week issued an editorial change to Appendix II and Appendix III of the 2018 Guidance on the Strategic Report.   Europe The Consultative Committee of Accountancy Bodies have issued a document Phishing and Insider Fraud. Accountancy Europe is supportive of new EU action against money laundering and has endorsed the ‘Action Plan’ issued on 7 May 2020. International The International Accounting Standards Board (IASB) has issued several small amendments to IFRS Standards. IFRS Foundation Trustee Teresa Ko provided the prepared remarks at the inaugural meeting of the Green and Sustainable Finance Cross-Agency Steering Group earlier in May.  

Many companies are facing unprecedented uncertainty about their immediate prospects in an environment which may challenge or disrupt their usual management and governance processes. The FRC have issued guidance highlighting some key areas of focus for boards in maintaining strong corporate governance and provide high-level guidance on some of the most pervasive issues when preparing annual report and other corporate reporting including Interim Reports. Interim reports Directors will need to exercise judgment about the nature and extent of the procedures that they apply to assess the going concern assumption at the half‐yearly date.  This might include disclosures of: any material uncertainties to going concern; assumptions made about the future path of COVID-19 and the public health responses; the projected impact on business activities; use of government support measures; and access to bank and other financing.  It is a matter for a company to decide whether to engage their auditors to perform an interim review engagement– it is not a legal or regulatory requirement.  However, feedback the FRC has received from investors indicates that such a review provides valuable assurance, and this may be particularly so in the current environment.   Read the full guidance here.    

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Key Stakeholder Updates or both ROI and NI / UK in response to COVID-19.   UK The Financial Reporting Council continues to make progress on its journey towards becoming the Audit Reporting and Governance Authority (ARGA) by taking forwards work on the recommendations of the Independent Review of the FRC. The FRC welcomes the release of the International Auditing and Assurance Standards Board’s (IAASB), exposure draft of proposed International Standard on Auditing (ISA) 600 (Revised), Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors).   Tools for flagging signs of poor quality audits should be used more effectively so timely corrective action can be taken, according to a major review of their use by the FRC.  Europe Accountancy Europe have recently published a summary document on their work so far on the future of audit and assurance. The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2020/2 'Covid-19-Re­lated Rent Con­ces­sions (Proposed amendment to IFRS 16)'. International The IFRS April News Summary has just been issued. The International Federation of Accountants (IFAC) has published a ‘Practice Transformation Action Plan – A Roadmap to the Future’ which covers four key focus areas for small- and medium-sized practices (SMPs). The International Accounting Standards Board (IASB) has published an exposure draft 'Clas­si­fi­ca­tion of Li­a­bil­i­ties as Current or Non-cur­rent — Deferral of Effective Date (Proposed amendment to IAS 1)' proposing to defer the effective date of the January 2020 amend­ments to IAS 1 by one year. Comments are requested by 3 June 2020.        

Analysis of guidance for European auditor published by Accountancy Europe Measures taken to contain the coronavirus affect us all. This publication focuses on how this impacts businesses and the people that audit them. It aims to support European auditors in adapting their work to new circumstances in ongoing audits with 2019 year-ends and beyond. The factsheet highlights the following main matters for auditors to consider: ·obtaining audit evidence auditor’s assessment of going concern auditor’s reporting For more updates see Accountancy Europe’s Coronavirus resources for European accountants. Most of the matters in this publication apply also to audits with closing dates after 2019 and there is an additional overview with main matters for consideration specifically for audits with 2020 closing dates in development. Download the factsheet here

The  IAASB iave issued their official guidance on auditor considerations relating to going concern in light of changing environment due to the COVID-19 pandemic. During the COVID-19 pandemic, audits should continue to comply with the required standards, which may necessitate different and enhanced considerations by auditors in the current circumstances. Auditors may need to consider developing alternative procedures to gather sufficient appropriate audit evidence to support their audit opinion, or to modify the audit opinion. Resources have been assembled by the IAASB staff to help their stakeholders, and the larger accounting community, navigate some of the challenges ahead.  You can access these resources here.