Welcome to this week’s Technical Roundup.
In developments this week, the Financial Reporting Council (FRC) has published new firm-level audit quality indicators (AQIs) following clear support from users of audit services for greater insight into many of the indicators that drive audit quality; following a global conference on criminal finances and cryptocurrencies, Europol and the Basel Institute on Governance have issued a booklet with 5 recommendations for crypto assets related crime and money laundering
Read more on these and other developments that may be of interest to members below.
Auditing
IAASA have updated their website. The statement of auditors’ responsibilities is now at https://iaasa.ie/publications/description-of-the-auditors-responsibilities-for-the-audit-of-the-financial-statements/ while the standards are at https://iaasa.ie/auditing-and-assurance-standards/.
ISQM Transition issues
A new Technical Alert (TA 05 2022) has been issued which discusses the transition from ISQC1 to ISQM 1 in relation to assurance engagements and reports prepared under international standards.
The Financial Reporting Council (FRC) has published new firm-level audit quality indicators (AQIs) following clear support from users of audit services for greater insight into many of the indicators that drive audit quality.
The AQIs will provide users of audit services provided by the largest UK audit firms with more information about factors that drive audit quality and help them make an informed choice when selecting an auditor.
The 11 AQIs include a range of comparable indicators on perceived culture within an audit firm, audit quality inspection results, staff workloads, and the level of partners’ involvement in audits. Audit committees and others will also be able to assess firms on a consistent basis, with the knowledge that AQIs across the firms will be calculated in the same way.
The FRC has announced new supervision measures to support smaller audit firms seeking to grow their share of the audit market without compromising audit quality.
Chartered Accountants Ireland has responded to a consultation by IAASA on International Standard on Auditing (ISA) (Ireland) 600: Special Considerations – Audit of Group Financial Statements (including the Work of Component Auditors).
Sustainability
The Central Bank Director of Securities and Markets Supervision spoke at a recent event which was primarily on the subject of fund management companies but also touched on the topic of sustainable finance in light of the forthcoming deadline for compliance with the disclosure requirements under the EU Sustainable Finance Disclosures Regulation (SFDR). She referenced a recent CBI seminar in this area and the CBI Information Note on the topic. You can read her remarks in full here. See also the remarks on climate change made by the CBI Director of Credit Institutions Supervision Federation of International Banks in Ireland annual conference. You can read the news item here.
The EU Council has adopted its general approach for the proposed Corporate Sustainability Due Diligence Directive (“CSDDD”). This Directive will lay down rules on obligations for large companies regarding actual and potential adverse impacts on human rights and the environment, with respect to their own operations, those of their subsidiaries, and those carried out by their business partners in their chain of activities. It also will lay down obligations for companies to adopt a plan ensuring their business model and strategy are compatible with the Paris Agreement on climate. Lastly, the CSDDD will also specify penalties and civil liability for violating the obligations.
The proposal for the CSDDD is available here.
Crypto news
Crypto continues to be in the news and some readers may find interesting a recent speech by a Member of the Executive Board of the ECB on the bursting crypto bubbles and the destiny of digital finance. He goes through 3 fundamental flaws in crypto finance, being unbacked crypto assets offering no benefits to society, stable coins being exposed to runs and crypto markets being highly leveraged and interconnected. He also discusses the destiny of digital finance and regulating crypto assets. Click here to access the speech.
Following a global conference on criminal finances and cryptocurrencies Europol and the Basel Institute on governance have issued a booklet with 5 recommendations for crypto assets related crime and money laundering. It includes a recommendation to break down silos between traditional and crypto saying that the separation between “traditional” and “crypto” organised crime and money laundering is increasingly unhelpful. It also says that it is essential that crypto assets are treated like any other asset for the purposes of AML/CFT supervision and enforcement.
Readers can access the booklet here.
Other news
The Dept. of Enterprise Trade &Employment tweeted on Thursday that in the light of ongoing repercussions of the pandemic on Irish businesses, the Government has approved the further extension of 2 important temporary measures of the Companies Act to 31 Dec '23
📌virtual general meetings will continue
📌Threshold a company is deemed unable to pay its debts remains at €50k.
The Minister of State for Trade Promotion, Digital and Company Regulation Dara Calleary said the increased threshold of 50k is retained until Dec '23 to assist in the ongoing operation of struggling or recovering businesses and will ensure that fundamentally viable companies will not be wound up for relatively small debts of €10,000.
He also said that importantly, work continues to put virtual AGMs and general meetings on a permanent statutory footing. The extension to Dec '23 will allow companies & co-ops to continue to comply with their legal obligations in what is a challenging trading environment.
Please click here also for the Dept.'s recent press release on the subject.
The Charities Regulator has recently published the latest issue (19) of its bulletin “Charities Regulator News”. It includes details of a survey of the charity sector where it wants to hear from charity trustees, employees and advisers to a charity. It also contains details of its new charity classification standard and some information on the sale authorisation process for charity properties.
The Irish government this week launched its White Paper on Enterprise 2022-2030 setting out the government’s enterprise priorities in the period to 2030. At the launch the Tánaiste and Minister for Enterprise, Trade and Employment spoke about decarbonisation, the Minister for Trade Promotion, Digital and Company Regulation spoke about the importance of Ireland as a hub for the digital sector and the Minister of State for Business, Employment and Retail spoke about local business community in Ireland playing an increasingly important role in creating jobs. You can read details of the press release here and download the white paper here .
Readers who deal with credit unions will be interested to know about the recent publication by the Dept of Finance (DOF) of the Credit Union (Amendment) Bill 2022. It is the first substantive credit union legislation since 2012 and covers items such as the creation of corporate credit unions, as an additional regulated vehicle through which credit unions could collaborate, improving members’ services by allowing credit unions to refer members to other credit unions and to participate in loans of other credit unions and allowing the Minister for Finance to set a maximum interest rate .You can read the DOF press release here and access a copy of the draft bill here.
The Central Bank has issued a “Dear Chair” letter regarding: “Follow up on thematic review of fund management companies’ governance, management and effectiveness”
The letter covers areas where improvement is required including diversity, INED tenure, director time commitments and dedicated CEOs. There is a requirement for firms to bring this letter to the attention of their boards and must ensure that any areas “requiring improvement that directly relate to a firm are given due consideration to ensure robust and appropriate governance arrangements are in place”.
The full text of the letter is available here.
The UK Fraud Advisory Panel recently launched the findings of its annual survey into fraud within the charity sector in association with BDO. This year’s report offers a snapshot view of how some charities in the UK (particularly large ones) have been affected by fraud over the last year. Readers can see how charities perceive their fraud risk, and importantly, what measures charities can put in place to combat fraud risk during times of great pressure and uncertainty. Click here to access a copy of the report.
The Dept. Of the Taoiseach recently launched a public consultation on the Irish National Risk Assessment 2023.The National Risk Assessment provides a systematic overview of national-level risks and since first published in 2014 has drawn attention, at an early stage, to the importance of phenomena such as the UK’s departure from the EU, housing shortages, as well as pandemics. The Dept. has listed Proposed 2023 Strategic Risks and asks stakeholders to assess whether the draft risks identified accurately represent the major risks facing the country, whether there are any significant risks that should be added, or whether any of the proposed risks do not warrant inclusion. The consultation is open until Friday the 17th of February 2023. Please click here for more details on the consultation and for the draft list of strategic risks.
For further technical information and updates please visit the Technical Hub on the Institute website.