Welcome to this week’s Technical Roundup.
In developments this week, the European Financial Reporting Advisory Group (EFRAG) has announced that it has completed its due process regarding amendments to IAS 21, the Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability and has submitted its Endorsement Advice Letter to the European Commission. The European Banking Authority has extended its AML/CFT guidelines to crypto-asset service providers (CASPs). The new guide highlights risk factors and mitigating measures CASPs must consider.
Read more on these and other developments that may be of interest to members below.
Auditing
IAASA Consultation on ISA (Ireland) 505
IAASA has published a Consultation paper seeking views on their proposed revisions to International Standard on Auditing (ISA) (Ireland) 505 External Confirmations with related conforming amendments to ISA (Ireland) 600 (Revised February 2023) Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors).
The proposed effective date of the revised standard is for audits of financial statements for periods beginning on or after 15 December 2024.
Responses are requested by Friday 23 February 2024.
The consultation paper and proposed revised standard can be found here along with the proposed conforming amendments and a response template.
IAASB Consultation on publicly traded and public interest entities definitions
The IAASB has launched a consultation process on proposed narrow scope amendments to ISQMs, ISAs AND ISRE 2400 (REVISED) to achieve greater convergence with the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (Including Independence Standards).
These proposed revisions have two key objectives:
- align definitions and requirements in IAASB standards with new definitions in the IESBA Code.
- the amendments would extend the applicability of existing differential requirements for listed entities to meet heightened stakeholder expectations regarding audits of public interest entities (PIE).
Key proposed revisions include extending the scope of the entities included under the International Standards on Quality Management and the International Standards on Auditing such that they will be subject to:
- Engagement quality reviews;
- providing transparency in the auditor’s report on specific aspects of the audit, including auditor independence, communicating key audit matters, and the engagement partner’s name; and
- communicating with those charged with governance to help them fulfil their responsibility overseeing the financial reporting process.
Responses are requested by 8 April and the documents can be accessed here.
Financial Reporting
EFRAG, the European Financial Reporting Advisory Group, has published its December 2023 update which summarises public technical discussions held and decisions taken during the month.
EFRAG has announced that it has completed its due process regarding amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, and has submitted its Endorsement Advice Letter to the European Commission.
EFRAG has published its draft comment letter on the International Accounting Standards Board’s (IASB) Exposure Draft ED/2023/5 Financial Instruments with Characteristics of Equity (Proposed amendments to IAS 32, IFRS 7 and IAS 1). Comments are welcomed by EFRAG by 20 March 2024.
ESMA, the European Securities and Markets Authority, has published the latest edition of its newsletter.
Anti – money laundering
10 January 2024 saw the commencement of the Money Laundering and Terrorist Financing (Amendment) Regulations 2023 (Amending Regulations), which were laid in mid-December and provide for changes to the enhanced due diligence (EDD) requirements in relation to so-called domestic PEPs (i.e. a politically exposed person entrusted with prominent public functions by the UK).
The Economic Crime and Corporate Transparency Act (ECCTA) received royal assent on 26 October 2023. It includes a new much-debated failure to prevent fraud offences and new enhanced powers for UK Companies House bringing changes to the way it will conduct its business. Few of the provisions will apply immediately with secondary legislation and system development within Companies House required for many of the provisions. The Institute has produced a brochure outlining some of the changes which may be of interest to members which can be accessed here. One of the intentions of the ECCTA is to improve the accuracy and quality of the data of the registers of Companies House and to help tackle economic crime and drive confidence in the UK economy. Companies House have published a summary of steps that will be taken to improve Companies House data and also outlines a new identity verification process that will be operational later in 2024.
One of what the Serious Fraud Office in the UK describes as key provisions of the ECCTA came into force on 15 January 2024 with the extension of the Serious Fraud Office’s section 2A ‘pre-investigation’ powers. Prior to the extension the SFO writes (in a social media newsletter) that it could under section 2A obtain information from companies or individuals to support its intelligence work and to help determine whether to open an investigation. From the 15 January SFO notes it has these powers across every intel operation - including fraud. This means it can now obtain data such as banking records before a formal investigation even begins, which will also allow them to restrain assets more quickly where they identify they could be at risk - helping to speed up the early investigative stage of their cases and better protect victims’ money.
Sustainability
The IFRS Foundation and Global Reporting Initiative have published a summary of interoperability considerations for greenhouse gas (GHG) emissions. This illustrates the areas of interoperability a company should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 GHG emissions in accordance with both GRI 305: Emissions and IFRS S2 Climate-related Disclosures.
IFAC, The International Federation of Accountants, has published “A Literature Review of Competencies, Educational Strategies, and Challenges for Sustainability Reporting and Assurance”. This report discusses the new and existing competencies required of accountants to meet the sustainability-related disclosure, reporting and assurance challenges faced by stakeholders.
Other news
The Government recently approved guidance on the use of AI in the Public Service, brought to Cabinet in the wake of agreement on a new European AI Act reached between the European Parliament and the Council. The Government has instructed that all AI tools used by the Irish Public Service should comply with seven requirements for ethical AI that have been developed by the European Commission’s High Level Expert Group.
The European Banking Authority’s latest AML/CFT Newsletter is out. Take a look for the latest on consultations, new guidelines, risks and the EBA's work on tackling financial crime.
The European Banking Authority has extended its AML/CFT guidelines to crypto-asset service providers (CASPs). The new guide highlights risk factors and mitigating measures CASPs must consider.
The Government Chief Whip, Minister Naughton, has published the Spring 2024 legislative programme with 46 priority bills due for progression.
The AI Advisory Council, established by Minister of State with responsibility for Digital, Dara Calleary TD, to provide independent expert advice to government on artificial intelligence policy, met for the first time on 17 January. The Council will provide independent expert advice to government on artificial intelligence policy, with a specific focus on building public trust and promoting the development of trustworthy, person-centred AI.
For further technical information and updates please visit the Technical Hub on the Institute website.
This information is provided as resources and information only and nothing in the information purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the information. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of the information we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained herein.
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