Audit and Assurance news

Pursuant to its powers under section 931(4) of the Companies Act 2014 (‘the Act’), the Irish Auditing and Accounting Supervisory Authority (‘the Authority’) has decided to revoke the recognition of the Institute of Chartered Accountants of Scotland (‘ICAS’) granted under S.930 of the Act with effect from 22 December 2021. This means that ICAS may no longer authorise individuals or firms as statutory auditors in Ireland or undertake any audit related regulatory functions. This decision follows the application by the ICAS to the Authority for revocation of its recognition. By virtue of the revocation of its recognition, ICAS is no longer a prescribed accountancy body under the Act and therefore, no longer comes under the remit of the Authority.  

Following public consultation, IAASA has today (21 December) issued: International Standard on Quality Management (‘ISQM’) (Ireland) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements; International Standard on Quality Management (Ireland) 2, Engagement Quality Reviews; and International Standard on Auditing (‘ISA’) (Ireland) 220 (Revised December 2021), Quality Management for an Audit of Financial Statements. They will replace International Standard on Quality Control (Ireland) 1 (Revised November 2020) and ISA (Ireland) 220 (Revised November 2020). These standards introduce a new quality management approach that is focused on proactively identifying and responding to risks to quality. The new approach requires a firm to customise the design, implementation and operation of its system of quality management based on the nature and circumstances of the firm and the engagements it performs. It also requires firms to transition to an integrated approach that reflects upon the system of quality management as a whole, rather than individual elements. The benefits of this new approach include: A system that is tailored to the nature and circumstances of the firm and the engagements it performs; A proactive response by the firm to changing circumstances and proactively managing or mitigating risks, and promoting continual improvement and responsiveness; Increased emphasis on monitoring the system as a whole and timely and effective remediation; and Improved integration of the components of the system of quality management. The new standards are effective as of 15 December 2022 and apply as follows: ISQM (Ireland)1 must be designed and implemented by 15 December 2022. The evaluation of the system of quality management required by paragraphs 53-54 must be performed within one year following 15 December 2022 ISQM (Ireland) 2 Effective for audits of financial statements for periods beginning on or after 15 December 2022 and other assurance or related services engagements beginning on or after 15 December 2022 ISA (Ireland) 220 Effective for audits of financial statements for periods beginning on or after 15 December 2022 The standards are on IAASA's website. 

Following public consultation, IAASA has updated the definition of ‘’listed entity’ in its Glossary of Terms. The amendment will align the definition of ‘listed entity’ in the Irish auditing framework more closely with the International Auditing and Assurance Standards Board (IAASB) definition. It will also provide additional clarity to auditors about the entities classified as listed entities in Ireland. The revised definition applies to audits of financial statements for periods beginning on or after 15 December 2021. The revised Glossary of Terms is available here. The feedback paper is available here. Responses received are available here.

  IFAC has released its Vision for High-Quality Sustainability Assurance, in which it describes sustainability-related disclosure as "finally taking its rightful place within the corporate reporting ecosystem, through global and jurisdiction-specific initiatives". In order to be trusted, sustainability disclosure must be subject to high-quality, independent, external assurance. This vision addresses the importance of global standards, regulation that supports decision-useful disclosure, and the value of an interconnected approach to sustainability and financial information reporting and assurance. IFAC explored these issues further in a video The State of Play in Sustainability Assurance – in which IFAC staff detail the global benchmarking study that captures and analyzes the extent to which companies are reporting and obtaining assurance over their sustainability disclosures, which assurance standards are being used, and which companies are providing the assurance service.  About IFAC IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce. In October 2021, Chartered Accountants Ireland co-published Climate Essentials for Accountants, a short glossary explaining common climate terms and jargon associated with climate.  

The FRC has published a revised Audit Enforcement Procedure (“AEP”) and feedback statement. This follows consideration of the responses received to the consultation launched on 22 July 2021 regarding proposed amendments to the AEP.   The FRC welcomes the constructive and helpful engagement from stakeholders and has carefully considered respondents’ feedback and comments. The AEP has been further amended to reflect those responses.   The revised AEP will come into force on 5 January 2022. Current guidance will be amended to reflect the amendments to the AEP and will be made available on 5 January. A link to the revised AEP is available here.  A link to the feedback statement is available here. 

IAASA has published a thematic paper discussing the use of data analytics in Ireland’s statutory audit market, available here. IAASA’s paper provides an overview of the areas where auditors perform data analytical audit procedures and supports in place for auditors in using data analysis tools. IAASA’s paper also discusses challenges faced by auditors when using data analytics and looks at plans for further development and roll out of data analytics in audit. IAASA’s paper identifies key considerations for audit committees and sets out the focus of audit regulators with regard to data analytics, both from an international and an Irish perspective. The appendices to IAASA’s paper provide some examples of data analysis supports and the use of data analysis in audit areas. IAASA’s YouTube channel also now includes a video that shares key observations set out in the paper, available here. IAASA has also published some factsheets summarising insights from this paper. The factsheets on data analytics are available here.