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.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended) require firms to take the appropriate steps to identify and assess the risk that they could be used for money laundering, including terrorist financing. The Accountancy AML Supervisors Group (AASG) in the UK has identified those circumstances where there might be a high risk of money laundering or terrorist financing in the accountancy sector. This Guidance also reflects the key risks and threats highlighted within the UK’s National Risk Assessment 2020.

The Institute is currently considering amendments to the Audit Regulations UK.  The proposed amendments would align the Audit Regulations UK more closely with the Institute’s Audit Regulations, Ireland.    The key changes proposed can be summarised as follows: A new requirement for audit-registered sole practices (both individual sole practitioners and single-director corporate practices) to put in place alternate arrangements which would take effect in the event of the death or incapacity of the sole practitioner. Additional material to clarify the obligations of audit firms and responsible individuals (RIs) in relation to continuing professional development requirements (CPD). The ability for the Quality Assurance Committee to impose regulatory penalties on RIs. It is anticipated that the revised Audit Regulations UK would become effective from 1 January 2024 (pending necessary approvals) with a proposed transition period of six months thereafter for compliance with the requirement for audit-registered sole practices (to put in place alternate arrangements). The Audit Regulations UK set out the Institute’s rules for the authorisation and supervision of statutory audit firms and RIs in the UK.  The Audit Regulations UK are issued jointly by Chartered Accountants Ireland (the Institute), the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Scotland (ICAS).  A public consultation is ongoing in relation to the draft revised Audit Regulations UK.  The details of this consultation and the draft revised Audit Regulations UK are available to read here.   Audit firms and RIs registered for audit in the UK by Chartered Accountants Ireland and who wish to provide comments in relation to the draft revised Audit Regulations UK can email those comments to professionalstandards@charteredaccountants.ie

Your Individual Annual Return 2023 is now available for completion online.  Please ensure it is submitted by 31 October 2023. Click here for your Individual Annual Return. Please note, timely completion will ensure that all members in practice are invoiced correctly for 2024 Regulatory Fees.

The UK Government has announced its decision in relation to the reform of the regulation of insolvency practitioners. Originally the government had identified a single regulator as its preferred option but the latest announcement rejects this option and instead details plans to retain the existing four Recognised Professional Bodies and also introduce a package of additional measures. These additional measures include firm regulation, a public register of IPs, granting the Insolvency Service responsibility for standard setting and a compensation scheme. The detailed government response is available here, The future of insolvency regulation: Government Response.

This summary AML Alert Russia Sanctions – Trade Sanctions Circumvention has been produced by the Accountancy AML Supervisors’ Group (AASG) from an extract from the Department of Business and Trade Notice NTE 2023/08: Russian sanctions – Trade sanctions circumvention. The Department of Business and Trade issued notice NTE 2023/08 to prevent the undermining of trade sanctions, export controls, and other restrictive measures designed and implemented in response to Russia’s invasion of Ukraine. Awareness of the risk and obligations in relation to sanctioned goods is an important first step for those working in the accountancy profession so that they don’t become party to the trade sanctions circumvention. Direct trade between the UK to Russia has fallen significantly since sanctions were introduced. However, Russia will seek to procure restricted goods via other routes. As such, there are risks around displacement of trade and diversion of goods to Russia. Businesses, and their accountants, should ensure that they consider these risks as part of their due diligence. This summary AML Alert highlights the key risk indicators. For more information click here. 

HM Treasury (HMT) has issued a consultation on the Reform of the Anti-Money Laundering and Counter-Terrorism Financing Supervisory Regime Consultation. This consultation offers stakeholders the opportunity to provide their views on the future of AML regulation and supervision, and, in particular, which of the four options proposed would most improve the regime. The consultation closes on 30 September 2023. Chartered Accountants Ireland will be submitting a response. Model 1: OPBAS+ The first potential model would involve no structural change to the regime. The Office for Professional Body AML Supervision (OPBAS), the oversight body, would be given enhanced powers to increase the effectiveness of the AML supervision undertaken by the Professional Body Supervisors (PBSs). Model 2: PBS Consolidation Model 2 would likely see either two or six PBSs retain responsibility for AML/CTF supervision. There could be either one accountancy sector supervisor and one legal sector supervisor, both with UK-wide remits, or one accountancy sector supervisor and one legal sector supervisor within each jurisdiction: England and Wales, Scotland, and Northern Ireland. Model 3: Single Professional Services Supervisor (SPSS) The third model would see a single body supervise all legal and accountancy sector firms for AML/CTF. It may also supervise some or all of the wider sectors currently supervised by HMRC. This body would most likely be a public body, unlike the PBSs. Model 4: Single Anti-Money Laundering Supervisor (SAS) Under this model, all AML/CTF supervision in the UK would be undertaken by a single public body. The major difference between this and previous options is that the Financial Conduct Authority and Gambling Commission would also stop supervising firms for AML/CTF compliance. HMT has organised two roundtables for accountancy firms and practitioners regarding HMT’s consultation on the future of the supervisory system and are inviting as many firms as possible to attend the roundtables to discuss the supervision reform consultation. There will be roundtables on two dates. Firms who would like to attend should sign up for one of the two roundtables using the following links below: 31st August, 11 am - 12:30: https://www.eventbrite.co.uk/e/700132925427?aff=oddtdtcreator. 6th September, 14:00 - 15:30: https://www.eventbrite.co.uk/e/700229012827?aff=oddtdtcreator. If you have any questions about the roundtables, or problems signing up, please contact HMT directly at Anti-MoneyLaunderingBranch@hmtreasury.gov.uk.

ICAEW has shared a recording of a recent webinar titled ‘Bounce Back Loan SARs: what good looks like’ This is free of charge but requires registration via the link below. Bounce back loan SARs: what good looks like (icaew.com)

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. 

On 23 February 2023 the Council of the European adopted its tenth package of sanctions against Russia. You can read more details on the tenth package on the European Commission website here a press release on the tenth package here and  Questions and Answers: tenth package of restrictive measures against Russia here.

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.