The Economic Crime (Transparency and Enforcement) Act 2022 created the Register of Overseas Entities (ROE). It requires overseas entities owning UK property to reveal their beneficial owners and to register their entities on a publicly available register.   Information must be verified before an overseas entity makes an application for registration, complies with the updating duty or makes an application for removal. The Register of Overseas Entities (Verification and Provision of Information ) Regulations 2022 (SI 2022/725) set out the details of the verification system. The drafting of the Verification Regulations means that there is a strict liability in place and the accountancy professional body supervisors are concerned that any firm acting as a verifier will face significant challenges and expose itself to significant risk, including possible criminal prosecution, regulatory sanction, and reputational damage. Firms should carefully consider whether they should provide this verification work. The work required for verification under the ROE is not the same as the risk-based approach to client due diligence under Money Laundering Regulations 2017 and firms should familiarise themselves with the differences. The Government has produced further Guidance to assist. The Accountancy AML Supervisors Group (AASG) published an AML Alert highlighting key risks associated with this work. The Institute has previously shared this AASG AML Alert on ROE-Verification work with the MLCPs and MLROs but would highlight again the risks associated with this verification work.

This Alert is produced by the UK National Economic Crime Centre (NECC) to highlight the high-risk behaviours and typologies associated with the Trust and Company Service Provider (TCSP) sector. Although this Alert is produced in conjunction with law enforcement and financial sector partners in the UK, many of the risk indicators will also be relevant in Ireland. We would encourage regulated businesses to read this Alert. Professional Standards also published its TCSP Thematic Review earlier in the year. This document summarised the responses to a detailed Questionnaire issued to a sample of firms based in Northern Ireland. The majority of firms only provide TCSP services such as company formation / registered office and only provide such services to existing clients alongside other ancillary accountancy services (e.g. statutory audit, tax and accounts preparation).

The Professional Standards 36th edition of the Regulatory Bulletin has now been published.  Please click on the link provided to access this publication.

The Institute has issued revised Anti-Money Laundering (AML) Supervision Regulations, trust and company service providers (TCSPs) and bookkeepers, Ireland (AML Supervision Regulations) replacing and renaming the Money Laundering Supervision Regulations.  The revised AML Supervision Regulations are effective from 1 January 2024. To whom do the AML Supervision Regulations apply? The AML Supervision Regulations provide for the Institute’s AML supervision of entities which are within the Institute’s statutory remit as an AML supervisor in Ireland, but which are not subject to the Institute’s Public Practice Regulations.  In general terms, these entities are TCSPs and/or bookkeepers which count Institute members amongst the principals of the entity.  Whether a particular TCSP or bookkeeper is within the Institute’s AML supervisory remit or that of another competent authority is determined, in accordance with AML legislation and agreements between the competent authorities, with reference to the composition of the principals at the specific TCSP or bookkeeper entity.  The AML Supervision Regulations provide further information in this regard. What changes do the revised AML Supervision Regulations bring for Institute registered TCSPs and bookkeepers? Revisions to the AML Supervision Regulations include: A revised introduction and new guidance at Appendix 1 to enhance clarity as regards scope of the AML Supervision Regulations; New requirement for a registered TCSP and/or bookkeeper to ensure that every principal is either a member of the Institute or has been granted AML affiliate status by 1 January 2025.During 2024 the Institute will engage with the Money Laundering Compliance Principals at registered TCSPs and bookkeepers to facilitate compliance with this requirement; New requirement for a registered TCSP and/or bookkeeper to make a declaration, on behalf of the entity, acknowledging the entity’s obligations under Institute Bye-Laws and Regulations and AML legislation. A mechanism to ensure that the Institute can remove a persistently non-compliant entity from its supervisory remit.Where the Institute cannot continue to be responsible for AML supervision of a TCSP or bookkeeper by virtue of a decision of an Institute regulatory Committee or Disciplinary Body to de-register (or refuse registration to) the entity, it is not appropriate for a member of the Institute to remain as a principal at that entity.The revised AML Supervision Regulations provide that an Institute member ceases to be an Institute member where he/she continues to act as a principal at a registrable TCSP and/or bookkeeper within 90 days of that entity being refused registration or de-registered by a regulatory Committee or a Disciplinary Body of the Institute. Guidance: Revised AML Supervision Regulations Guidance is available on the Institute’s website. Previous editions: The revised AML Supervision Regulations replace the previous edition of the Money Laundering Supervision Regulations which remain available to read in the Institute’s online archive of Regulations.  

Revised Public Practice Regulations – effective 1 January 2024 The Institute has issued revised Public Practice Regulations with effect from 1 January 2024.    Institute members engaged in public practice comply with the Public Practice Regulations.  Key revisions are summarised below: Anti-money laundering (AML) supervision: The revised Public Practice Regulations include explicit reference to the Institute’s role as AML supervisor for practising firms.    While firms are familiar with AML supervision and already engage with the Institute in this regard, the revised Public Practice Regulations introduce some new regulatory obligations in this regard.  In particular, the revised Public Practice Regulations: Include a new chapter addressing AML supervision; Define an ‘AML supervised firm’; Require an AML supervised firm to ensure that each of the firm’s principals is either a member of the Institute or has been granted AML affiliate status by 1 January 2025. During 2024 the Institute will engage with the Money Laundering Compliance Principals at AML supervised firms to facilitate compliance with this requirement; Require all AML supervised firms to make a declaration, on behalf of the firm, acknowledging the firm’s obligations under Institute Bye-Laws and Regulations and AML legislation.This declaration will be sought as part of the firm annual return process going forward; Include explicit ongoing fit and proper requirements for beneficial owners, principals and relevant managers at AML supervised firms. Professional indemnity insurance (PII) requirements for authorised investment business firms, Ireland Regulation 7.18A of the Public Practice Regulations reflects a new Central Bank of Ireland requirement for firms authorised by the Institute for investment business (IB) to have specific minimum professional indemnity insurance (PII) which is ringfenced for IB claims.   The Institute has written directly to the IB compliance principals outlining the revised PII requirements.    This topic is covered in more detail in the August edition of the Professional Standards Regulatory Bulletin. Simplified regime for potential ‘dual- PC’ holders Chapter 5 of the revised Public Practice Regulations provides that an Institute member engaged in public practice is exempt from the requirement to hold an Institute practising certificate (PC) where that individual is a member of, and holds a PC from, another specified accountancy body.    While these dual-membership cases are infrequent, the revised approach streamlines regulatory processes between the accountancy bodies, simplifies compliance for individuals and minimises the risk of regulatory gaps or duplication.  Institute PC regime applies only to Ireland and the UK The definition of practising certificate has been revised to state that the Institute’s PC regime applies only to public practice in Ireland and the UK.  This is a clarification and not a change to the Institute’s PC regime.  Where members engage in public practice in jurisdictions other than Ireland or the UK the member complies with any local requirements regarding public practice in that jurisdiction.  Guidance: Revised Public Practice Regulations Guidance is available on the Institute’s website. Previous editions: The revised Public Practice Regulations replace the previous edition of the Public Practice Regulations which remain available to read in the Institute’s online archive of Regulations.  

This report provides information on how the various UK bodies have met their regulatory obligations, including those relating to education. Click here to read the report.

The Economic Crime (Transparency and Enforcement) Act 2022 created the Register of Overseas Entities (ROE). It requires overseas entities owning UK property to reveal their beneficial owners and to register their entities on a publicly available register.  Information must be verified before an overseas entity makes an application for registration, complies with the updating duty or makes an application for removal. The Register of Overseas Entities (Verification and Provision of Information ) Regulations 2022 (SI 2022/725) set out the details of the verification system. The drafting of the Verification Regulations means that there is a strict liability in place and the accountancy professional body supervisors are concerned that any firm acting as a verifier will face significant challenges and expose itself to significant risk, including possible criminal prosecution, regulatory sanction, and reputational damage. Firms should carefully consider whether they should provide this verification work. The work required for verification under the ROE is not the same as the risk-based approach to client due diligence under Money Laundering Regulations 2017 and firms should familiarise themselves with the differences. The Government has produced further Guidance to assist. The Accountancy AML Supervisors Group (AASG) published an AML Alert highlighting key risks associated with this work. The Institute has previously shared this AASG AML Alert on ROE-Verification work with the MLCPs and MLROs but would highlight again the risks associated with this verification work.

Professional Standards Department is pleased to publish its AML Supervision Report 2022/2023. This is the first Report to cover our AML supervisory activities in both jurisdictions, ROI and UK.

A recent consultation launched by the Institute of Chartered Accountants in England and Wales (ICAEW) on proposed changes to their professional indemnity insurance (PII) arrangements will be of interest to Chartered Accountants Ireland members and firms. PII arrangements are developed jointly by the three bodies, Chartered Accountants Ireland (the Institute), ICAEW and the Institute of Chartered Accountants of Scotland, and any resulting changes may impact Institute firms.  Although amendments have taken place periodically, a wide-ranging review of all the PII arrangements has not taken place for some time and the current limits of insurance have not changed since 2008. Several issues have necessitated the need for review of PII arrangements including: The changing nature of the structure of firms and their insurance arrangements; financial capacity of members and entities to retain (self-insure) risk; pressure to manage the cost of insurance; and an increase in firms unable to source qualifying insurance. ICAEW have conducted a review of the requirements with the aim of ensuring they remain fit for purpose and provide adequate protection to the public and to firms while being mindful of the cost and availability of insurance to the profession and are consulting on proposed changes to same. This consultation follows a call for evidence launched earlier in the year to gain a better understanding of issues faced in the insurance market. A summary of the proposed changes and the consultation document are available here. The principles have the support of the Institute’s Professional Standards Board. We encourage members to read the consultation document prepared by ICAEW in full. Institute firms can respond to the consultation as set out at the link above (and need not complete any questions which are specific to ICAEW members/firms only), or alternatively, can provide comments on any aspects of the consultation or on the Institute’s PII requirements generally, by email to Professionalstandards@charteredaccountants.ie.  The consultation period will run until 14 December 2023. The Institute’s PII requirements are set out in Chapter 7 of the Public Practice Regulations.

Regulatory Fee Invoices  The Regulatory fee invoices for 2023 are available online at the Myaccount portal of the website to view, print and pay.  Remittance should be made by 31 March 2023.  If you prefer a copy invoice to be emailed, please email Sandra.smiley@charteredaccountants.ie quoting your individual/firm ID.   Need assistance?   Please email Sandra.smiley@charteredaccountants.ie with your name and member/firm ID along with the query or changes required.   We will issue a revised invoice if this is appropriate. 

Please be advised that Regulatory Fees for the year 2020 will be issued during the month of January 2020.  Notification will be sent from Professional Standards when these are available for payment.

The Professional Standards Department (PSD) Quality Assurance Team has recently compiled a list of common matters arising on audit and investment business inspection visits, which are set out below. Please note that, where PSD returns to firms that have had a relatively recent visit, it conducts follow-up procedures to ensure that the firm has taken action to address matters raised at the previous visit. Audit Inspections Financial  Reporting Firms need to perform audit procedures to evaluate whether the overall presentation of the financial statements, including the related disclosures, is in accordance with the applicable financial reporting framework which, in recent years, has been substantially changed by the introduction of FRS 100-105 and amendments to company law. PSD found that, for the most part, firms had adequately addressed the requirements of FRS 102 and, in RoI, the Companies Act 2014 (‘CA 2014’) through the use of checklists. However, non-application of FRS 102 by audit clients was sometimes not identified. Firms should ensure that their audit procedures to assess the appropriateness and completeness of disclosures are up to date for the relevant financial reporting regimes. Certain common omissions were identified: Statement of Changes in Equity or Statement of Cash Flows, where relevant; Significant judgements and key sources of estimation uncertainty in relation to amounts recognised in the financial statements (FRS 102 s8.6-8.7); Where relevant, material uncertainties related to events or conditions that cast significant doubt upon the entity’s ability to continue as a going concern (FRS 102 s3.8-3.9); The measurement basis (or bases) used for financial instruments and the other accounting policies used for financial instruments that are relevant to an understanding of the financial statements (FRS 102 s11.40); Disclosures relating to creditors required by CA 2014 Schedule 3, such as terms of payment/repayment and the rate of any interest payable on debts. (N.B.The specific FRS 102-related matters noted above relate to financial statements prepared in accordance with the full requirements of FRS 102 and may not be relevant to financial statements where the small/micro companies regime is applied.) International Education Standard (IES) 8 (Revised) IES 8 Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Revised) was issued by the International Accounting Education Standards Board (IAESB) in December 2014 and is effective from 1 July 2016. Its objective is to establish the professional competence that professional accountants develop and maintain when performing the role of an Engagement Partner. During an audit monitoring visit, the inspector will make enquiries to assess whether a firm is familiar with IES 8 (Revised), including consideration of the learning outcomes which are listed in Table A to the Standard. Firms can obtain a copy of IES 8 (Revised) at: http://www.ifac.org/system/files/publications/files/IAESB-IES-8.pdf Investment Business inspections Investment Business (IB) inspections carried out by PSD over the last few years had focused on firms holding IB1/IB2 authorisation. However, PSD is now conducting an increased number of IB inspections to firms holding all levels of IB authorisation, including a sample of firms holding IA1/IA2 authorisation. Firms should be mindful of, and ensure they address, the following  matters Investment business procedures (IBR 2.56) All authorised firms are required to establish and maintain adequate written investment business procedures. These should include managing conflicts of interest, maintaining ‘Chinese Walls’ and the consequences of breaching them, along with the handling of errors and complaints. A firm must adequately train its principals carrying on investment business and its employees using these procedures. Training (IBR 2.60) Authorised firms must make arrangements to ensure that principals and employees involved in investment business maintain an appropriate level of competence and comply with Institute CPD requirements. Firms authorised in Category IA2 and above must make arrangements to ensure compliance with the Central Bank Minimum Competency Code, which has recently been updated. A copy of the Code can be obtained on the Central Bank of Ireland’s website. Investment Business Compliance Review (IBR 2.58) An authorised firm must carry out an Investment Business Compliance Review (IBCR) at least annually. PSD found that, for some firms, an annual IBCR had not been carried out, or did not include a whole firm review, a review of accounting records and a sample of client files. Some IBCRs did not identify different types of IB advice provided by the firm or non-compliance with the IBRs. Corrective action was not always taken in a timely manner. Engagement letters (IBR 3.19-3.20) PSD found that some firms did not have an engagement letter in place, or the letter had not been agreed with the client prior to investment business advice being provided, as required by IBR 3.19 or did not include the minimum details required by IBR 3.20. Commission consent and disclosure (IBR 3.30-3.32) If a firm receives commission it must account to the client for that commission, and both the terms (%) of the commission and the amount (€/£) must be disclosed. In cases where the firm retains the commission, it must have the client’s written consent to do so. Consent to retain commission can be obtained in the client engagement letter. The Quality Assurance Committee views non-compliance with commission consent and disclosure requirements very seriously. Section 30 receipts (IBR 4.44-4.46) Firms must issue receipts when they receive client premiums or investment business clients’ money. Details of what must be included on the receipt are specified in IBR 4.45. Other matters Firms should ensure that they are aware of their category of IB authorisation and the limits of that category. Category IA2 is required to hold client premiums; Category IB2 is required to hold investment business clients’ money; and If handling or holding client premiums or investment business clients’ money, the firm must appoint an independent accountant and submit an independent accountant’s report to the Institute. Carrying on investment business, when not authorised to do so, is an offence under the Act. Firms may wish to review their category of investment business authorisation and assess whether it is suitable for their needs. Firms should refer to Schedule 1 to Chapter 1 of the IBRs for activities which may be undertaken under the various categories. For further details on the above matters, please look out for PSD’s forthcoming Regulatory Bulletin. For advice or support on the above matters, firms may contact, in strict confidence, the Practice Consulting Team, which is independent of the Professional Standards Department.