Are Your Engagement Letters up to Date?

Are Your Engagement Letters up to Date?

Announcing Our Product Updates

The advent of the new Solicitors Accounts Regulations (effective for accounting periods commencing 1 July 2023 i.e. accounting periods ended 30 June 2024) and the significant 2024 revisions accounting standards FRS 102 and FRS 105 have prompted us to give a facelift to most of the templates on the www.jmcc.ie/store. We are adding new products/webinars all the time.

Easily downloadable in Word format, there are over 100 complete templates available at €60 plus VAT each. There is a 20% discount for orders of five or more (including webinars) when purchased in a single order. Depending on your requirements, we can also tailor other types of template letter to order. Please send us an e-mail to john@jmcc.ie.

For more details see https://jmcc.ie/publications-store/

There is also a search bar near the bottom of our home page (www.jmcc.ie) to quickly look up the product or webinar you require.

All our CPD courses are listed here, including our Audit Update webinar.

To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.

Please also go to our website to see our:

  • Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
  • AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
  • letters of engagement and similar templates. Please visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
  • ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
  • We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
After the AML Inspection – 5 Most Important Things to Do (and 2 Things NOT to Do)

After the AML Inspection – 5 Most Important Things to Do (and 2 Things NOT to Do)

So you’ve had an AML inspection from your professional body. Now it’s time to pick up the pieces.

Do:

  1. Respond in good time to enquiries from the reviewer (even if it’s merely to acknowledge receipt of correspondence).
  2. Ensure that the information you supply to the reviewer is meticulously accurate and complete.
  3. If asked to select documents relating to clients for submission to the reviewer, select those clients with care, review the documents before submitting them, and provide additional explanations of these documents to the reviewer if that may help.
  4. Keep a copy of everything you submit (or request a copy from your supervisory body if you do not have a copy).
  5. If you are not confident that your AML procedures are fully satisfactory, consider obtaining external assistance before responding to the reviewer.

 DON’T:

  1. Backdate or falsify any documents to be submitted for review.
  2. Waste the reviewer’s time with incomplete or half-baked responses hoping to buy extra time. If you have insufficient time, simply ask for more time at the earliest possible stage of the process.

All our CPD courses are listed here, including our Audit Update webinar.

To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.

Please also go to our website to see our:

  • Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
  • AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
  • letters of engagement and similar templates. Please visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
  • ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
  • We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
6 Essentials to Prepare for an AML Compliance Review

6 Essentials to Prepare for an AML Compliance Review

If you have an upcoming AML Compliance Review from your professional body, be sure to follow these six essential steps to prepare.

  1. Ensure that you have an appropriate Policies & Procedures document and a Firm-Wide Risk Assessment accompanied by a note of annual reviews of and amendments to the assessment.
  2. Ensure that relevant staff have received money laundering training accompanied by a record of training completion.
  3. Carry out some test checks of records of your client Risk Assessments and Client Due Diligence documentation to assess whether the firm’s Policies & Procedures are being properly implemented.
  4. Check whether an external AML Compliance Review beforehand might be beneficial.
  5. Check that the information held by your supervisory body about the firm and its MLRO are up to date and correct according to the firm’s most recent Annual Return.
  6. Ensure that all the work which the firm is doing is correctly licensed under the terms of the firm’s authorisation from your supervisory body (e.g. insolvency work and Clients’ Money).

Following these six steps will ensure that your firm is well prepared for its AML Compliance Review.

All our CPD courses are listed here, including our Audit Update webinar.

To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.

Please also go to our website to see our:

  • Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
  • AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
  • letters of engagement and similar templates. Please visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
  • ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
  • We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
Professional Judgement – Guidance from the Financial Reporting Council (Part 2)

Professional Judgement – Guidance from the Financial Reporting Council (Part 2)

Following on from last week’s blog about the Financial Reporting Council publication on professional judgement, today we look at the final three biases mentioned in Professional Judgement Guidance. Awareness of these factors allows auditors to make more objective professional judgements and maintain a higher overall quality of work.

The Financial Reporting Council publication looks at six biases (taken from International Standard on Auditing (Ireland) 220 (Revised December 2021), ‘Quality Management for an Audit of Financial Statements’, paragraph A35 which states that the six biases set out here are not intended to be a complete list of all biases that could affect audit judgements, just an illustrative list of some that might be especially relevant.

The last three biases alert auditors to be aware of:

  1. Groupthink: a tendency to think or make decisions as a group that discourages creativity or individual responsibility.
  2. Overconfidence: a tendency to overestimate one’s own ability to make accurate assessments of risk or other judgements or decisions.
  3. Automation bias: a tendency to favor output generated from automated systems, even when human reasoning or contradictory information raises questions as to whether such output is reliable or fit for purpose.

The following example given in the publication helps illustrate how these types of bias affect professional judgement.

Example: A trainee auditor is using automated tools, specifically audit data analytics, in the identification of high-risk journal entries. She uses the program’s default selection parameters, without tailoring them based on the entity and its environment. The generated selection of “high-risk” journal entries includes several items categorised as such due to having been posted at the weekend by members of the finance team.

The trainee auditor knows from her prior work on the audit that the finance team often works weekends, especially at month-end, and thus she ought not to take the output of the analytic at face value. However, the trainee auditor places a lot of weight on the fact that a specialised piece of software deemed the journal entries unusual, and plans to perform further procedures over all of these journal entries. This is an example of automation bias, because she relies on the system output without considering whether her wider understanding might imply it is not fit for purpose.

Finally, the FRC publication encourages auditors to cultivate qualities to proactively support effective professional judgement, especially self-awareness, perceptiveness, listening skills, and willingness to consult with others.

To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.

All our CPD courses are listed here including our Audit Update webinar .

Please also go to our website to see our:

  • Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
  • AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
  • letters of engagement and similar templates. Please visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
  • ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
  • We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
Professional Judgement – Guidance from the Financial Reporting Council (Part 1)

Professional Judgement – Guidance from the Financial Reporting Council (Part 1)

Making professional judgements is one of the most crucial and frequent tasks of an auditor. Failure to consistently practice good professional judgement can lead to a significant decrease in audit quality; therefore, it is essential to have an effective methodology for making professional judgements. In 2022 the Financial Reporting Council published guidance entitled Professional Judgement Guidance to address the key aspects which ought to be considered in every professional judgement.

One key aspect discussed in the document is “Mindset,” particularly understanding biases and other relevant psychological factors which can subconsciously hinder logical reasoning.

The Financial Reporting Council publication looks at six biases (taken from International Standard on Auditing (Ireland) 220 (Revised December 2021), ‘Quality Management for an Audit of Financial Statements’, paragraph A35 which states that the six biases set out here are not intended to be a complete list of all biases that could affect audit judgements, just an illustrative list of some that might be especially relevant.

The first three biases alert auditors to be aware of:

  1. Availability bias: a tendency to place more weight on events or experiences that immediately come to mind or are readily available than on those that are not.
  2. Confirmation bias: a tendency to place more weight on information that corroborates an existing belief than information that contradicts or casts doubt on that belief.
  3. Anchoring bias: a tendency to use an initial piece of information as an anchor against which subsequent information is inadequately assessed.

To illustrate anchoring bias, the FRC uses the example of an audit senior manager tasked with determining performance materiality for a company’s current year’s engagement. He starts by looking at the audit file from the prior year and sees that the engagement team set performance materiality at 75% of materiality; however, he is aware that a higher than expected number of misstatements were identified in the prior year, and that the control environment remains relatively weak. To compensate for this he resolves to choose a lower percentage of materiality for performance materiality, setting it at 70% of materiality.

His judgement here may have been affected by anchoring bias, if he put undue weight on the initial piece of information gathered, namely the prior year figure. If he had started from a broader consideration of the entity and its environment and a range of factors that affect the expected level of misstatements in the current year, he may have arrived at a different figure.

Awareness of biases such as these can help auditors avoid falling into these traps, and thus enables the auditor to make more objective professional judgements.

We will cover the last three biases in next week’s blog.

To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.

All our courses are listed here.

Please also go to our website to see our:

  • Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
  • AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
  • letters of engagement and similar templates. Please visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
  • ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
  • We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.