by John McCarthy Consulting Ltd. | Dec 11, 2023 | Blog, News
In last week’s blog we looked at the overall responsibilities of the Money Laundering Reporting Officer
This week we look at the administrative aspects of the MLRO’s role.
STRs received
It is very important to keep a comprehensive record of all Suspicious Transaction Reports (STRs) received by the MLRO, including:
- the reasons, in writing, for decisions made as to whether the STR is sent to the Garda/Revenue or not.
- It is also strongly recommended that all verbal discussions and external professional and legal advice obtained regarding suspicions, are fully recorded.
Internal Quality Control
The guidance from the CCABI places considerable responsibility on the MLRO implementing and maintaining internal controls and risk management around Money Laundering and Terrorist Financing.
- As part of AML compliance, firms must carry out independent AML Compliance Reviews to assess the adequacy of their AML systems and controls;
- External reviews are not always necessary but hiring an external expert who carries out these reviews all the time will result in a more focused manner and will result in a much better compliance outcome for the firm. If the firm has the capacity, a partner or senior manager not involved with AML policies, controls and procedures could carry out the review, with sample checks each year;
- The MLRO should report formally to other partners and directors in writing every year on the effectiveness of the firm’s AML systems and controls.
Contents of the MLRO’s Annual Report
The MLRO’s report should include the following:
- Executive summary for the year highlighting any serious compliance deficiencies, together with details of the remedial action that has been taken;
- Review the number and quality of internal STRs and consider more focused training where none have been received;
- Number of external STRs submitted to the Garda/Revenue;
- Number of new clients declined because of unsatisfactory information;
- Details of staff training during the year –
- number of AML courses;
- details of new/existing staff attending;
- issues/queries/misunderstandings clarified;
- supporting evidence of AML training and proof of understandingg. documented quiz assessment results with supporting attendance certificates;
- Ensure that evidence is retained of the sample check of Client Due Diligence (CDD) files that were examined as part of the AML Compliance Review to ensure all information is relevant and up-to-date (e.g. identification is still valid, records match that of CRO and RBO websites, all ultimate beneficial owners (UBOs) and directors have been satisfactorily identified etc.);
- Sample check of clients’ AML risk assessments to ensure that existing risk ratings are still appropriate, relevant and up-to-date;
- Check that the AML Policies, Controls & Procedures Manual is up-to date;
- Check that the Firm-Wide Risk Assessment is current and up-to-date;
- Check that employees understand the role of ML and their individual responsibilities; and
- Ensure that recommendations from past internal/external inspections are fully implemented.
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 (March 2022) available here, which accompanies the AML Manual. It explains the current 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.
by John McCarthy Consulting Ltd. | Dec 2, 2023 | Blog, News
The term ‘MLRO’ is not mentioned in the legislation but at this stage has become well-established in practice. In this short series of blogs, we explore the role and responsibilities of the MLRO in an accountancy firm.
The MLRO is responsible for the following anti- money laundering (ML) tasks is an accounting firm:
- Implementing and enforcing an appropriate risk-based approach;
- Ensuring that the systems and controls in place are appropriate to manage the risks faced by the firm; and
- Ensuring that the firm complies with the legislation and CCABI Guidance.
The MLRO must also:
- Possess the knowledge, skills and understanding of the firm’s ML risks;
- Complete, and periodically update, the Firm-Wide Risk Assessment (also known as the Business Wide Risk Assessment) under section 30A of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 which outlines and provides an assessment of these risks;
- Receive internal STRs (Suspicious Transaction Reports) from employees and Senior Management in the firm;
- Make the ultimate decisions on behalf of the firm on whether these suspicions need to be reported externally to the Garda And Revenue;
- Report to Garda And Revenue by completing and submitting an external STR on the GoAML system and subsequently with Revenue on ROS.
IT Controls Assessment
Auditors are reminded that there are relatively significant changes in the requirements of ISA 315 Identifying and Assessing the Risks of Material Misstatement for accounting periods commencing 15 December 2021, which in practical terms means, accounting periods Ended 21 December 2022 and later.
Auditors dealing with the audits of entities with such accounting periods affected by these change will need, to adopt new audit programmes and, in additional to the normal audit tests, to also assess the entity’s IT controls (no matter what the size of that entity).
This is a significant new development for auditors of SMEs, in particular, and will be a game changer ion the type of audit documentation and evidence of assessment of such IT controls by the auditor on audit files.
For an easy to implement additional (two page) IT Controls Questionnaire to help document the above process, please click on this link to download immediately for only €60 + VAT.
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 (March 2022) available here, which accompanies the AML Manual. It explains the current 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.
by John McCarthy Consulting Ltd. | Nov 28, 2023 | Blog, News
A controversial proposal to update the UK FRC Revised Ethical Standard from the Financial Reporting Council in the UK states that they are proposing to enhance the prohibition (among other proposals) on certain tax services that can be provided to the majority shareholders of unlisted entities. The proposal is for this service to be banned in the UK from 15 December 2024. Please note that this is a UK proposal only and is not necessarily going to be adopted as currently worded. It does not apply to audits for Republic for Ireland entity audits.
The proposal wording is as follows (quoting from the consultation document):
Tax Services
5.67 The range of activities encompassed by the term ‘tax services’ is wide. They include where the firm:
(a) provides advice to the entity on one or more specific matters at the request of the entity; or
(b) undertakes a substantial proportion of the tax planning or compliance work for the entity; or
(c) promotes tax structures or products to the entity, the effectiveness of which is likely to be influenced by the manner in which they are accounted for in the financial statements, or in audit subject matter information;
(d) performs any of the services described in paragraphs a-c to individuals who are the majority owner(s) of an unlisted entity relevant to an engagement.
This latter service is proposed to be banned from 15/12/2024 in the UK.’ The consultation is now closed as the deadline was 31 October 2023.
The reason we bring this to the attention of our readers in Ireland is that quite often the Irish Audit & Accounting Supervisory Authority (the audit regulator in Ireland) has, in the past, incorporated similar changes to the Code of Ethics for Auditors in Ireland, sometimes with amendments, but not always.
The normal process would be for the Irish Audit & Accounting Supervisory Authority to consult in Ireland on any changes to its Code of Ethics and, taking account of feedback received, may then publish a new Ethical Standard for auditors, which would most likely not be effective before 15 December 2024. At the time of writing we have no notice of such intent on the part of the Irish Audit & Accounting Supervisory Authority.
IT Controls Assessment
Auditors are reminded that there are relatively significant changes in the requirements of ISA 315 Identifying and Assessing the Risks of Material Misstatement for accounting periods commencing 15 December 2021, which in practical terms means, accounting periods Ended 21 December 2022 and later.
Auditors dealing with the audits of entities with such accounting periods affected by these change will need, to adopt new audit programmes and, in additional to the normal audit tests, to also assess the entity’s IT controls (no matter what the size of that entity).
This is a significant new development for auditors of SMEs, in particular, and will be a game changer ion the type of audit documentation and evidence of assessment of such IT controls by the auditor on audit files.
For an easy to implement additional (two page) IT Controls Questionnaire to help document the above process, please click on this link to download immediately for only €60 + VAT.
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 (March 2022) available here, which accompanies the AML Manual. It explains the current 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.
by John McCarthy Consulting Ltd. | Nov 1, 2023 | Blog, News
The risks of money laundering occurring are changing all the time. At a recent ACCA Ireland Conference one of the talks was on AML and it was highlighted that while over 47,000 Suspicious Transaction Reports (STRs) were filed in Ireland in 2022, only nine were filed by accountants and only one by an auditor. Only 492 accountants and 51 auditors are registered on GoAML which is the online reporting portal for reporting suspicions of money laundering and terrorist financing. More accountants and auditors are strongly encouraged to sign up.
Some of the more recent economic crime trends that accountants need to watch out for include:
Trafficking in human beings
- Significant cash lodgements from different parts of the country;
- Significant mobile phone top-ups and property rental payments;
- Lower-than-expected employee labour costs;
Investment fraud
- Little or no separation of client and business funds;
- Investment returns that are too-good-to-be-true;
- Small payments back to clients (5%-10%) within a few weeks of the investment
- Trade-based money laundering -including (but not limited to) charging ridiculously high prices to customers;
- Funds being ‘pooled’ in business accounts and transferred to accounts abroad to purchase goods that are then shipped to their final destination;
Emerging challenges
- Cryptocurrency and blockchain: it is important to understand what product in this area your client is providing;
- Virtual IBANs: If you see someone providing these, there is a risk of abuse for fraud and money laundering.
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 (March 2022) available here, which accompanies the AML Manual. It explains the current 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.
by John McCarthy Consulting Ltd. | Nov 1, 2023 | Blog, News
The intention of this blog is to comment on some of the differences between the Industrial & Provident Societies Acts 1893 to 2021 versus the Companies Act, 2014:
Entity size thresholds – the Industrial & Provident Societies Acts 1893 to 2021 contain no concept for ‘micro’, ‘small’, ‘medium’ or ‘large’ entities, as these are all concepts enshrined in Irish company law by the Companies Act, 2014.
As a result Industrial & Provident societies (mostly these are cooperative ventures between community based groups) cannot:
- Be audit exempt;
- Avail of exemption from consolidation on the grounds of being a ‘small’ group;
- Cannot file abridged accounts; and
- Cannot use Section 1A of FRS 102 there is no concept of ‘small’ in their specific legislation;
- Must always include a Statement of Cash Flows under FRS 102/IFRS.
Statement on Relevant Audit Information – this is a statement required under section 330 of the Companies Act, 2014 where the directors of the company confirm that they have taken all relevant steps to inform the auditors of any relevant audit information and have established that the company’s statutory auditors are aware of that information. There is no equivalent requirement in the Industrial & Provident Societies Acts 1893 to 2021.
Compliance Statement – the Directors’ Compliance Statement (section 225 Companies Act, 2014) is required by certain entities incorporated under the Companies Act, 2014 but here is no equivalent in the Industrial & Provident Societies Acts 1893 to 2021.
There was a Government consultation to modernise the laws about Co-operative Societies which ended in February 2022 followed by a bill published in November 2022 but the bill hasn’t progressed as yet. See the Chartered Accountants Ireland website for the latest information available.
IT Controls Assessment
Auditors are reminded that there are relatively significant changes in the requirements of ISA 315 Identifying and Assessing the Risks of Material Misstatement for accounting periods commencing 15 December 2021, which in practical terms means, accounting periods Ended 31 December 2022 and later.
Auditors dealing with the audits of entities with such accounting periods affected by these change will need, to adopt new audit programmes and, in additional to the normal audit tests, to also assess the entity’s IT controls (no matter what the size of that entity).
This is a significant new development for auditors of SMEs, in particular, and will be a game changer ion the type of audit documentation and evidence of assessment of such IT controls by the auditor on audit files.
For an easy to implement additional (two page) IT Controls Questionnaire to help document the above process, please click on this link to download immediately for only €60 + VAT.
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 (March 2022) available here, which accompanies the AML Manual. It explains the current 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.
by John McCarthy Consulting Ltd. | Nov 1, 2023 | Blog, News
The UK Economic Crime and Corporate Transparency Act, 2023 become law on 26 October 2023 (all 389 pages of it!). The Act is not expected to become effective until early 2024. It makes the following changes:
- ID with be required (for the first time) for all new/existing company directors, people with significant control (PSC) or beneficial owners as we in them in the RoI), and those who file on behalf of companies;
- There are new rules for registered office addresses which means companies can no longer use a PO Box as their registered office address;
- a new requirement for companies to supply a registered email address;
- a requirement for companies to confirm they’re forming the company for a lawful purpose when they incorporate/confirm on annual renewal in subsequent years.
IT Controls Assessment
Auditors are reminded that there are relatively significant changes in the requirements of ISA 315 Identifying and Assessing the Risks of Material Misstatement for accounting periods commencing 15 December 2021, which in practical terms means, accounting periods Ended 31 December 2022 and later.
Auditors dealing with the audits of entities with such accounting periods affected by these change will need, to adopt new audit programmes and, in additional to the normal audit tests, to also assess the entity’s IT controls (no matter what the size of that entity).
This is a significant new development for auditors of SMEs, in particular, and will be a game changer ion the type of audit documentation and evidence of assessment of such IT controls by the auditor on audit files.
For an easy to implement additional (two page) IT Controls Questionnaire to help document the above process, please click on this link to download immediately for only €60 + VAT.
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 (March 2022) available here, which accompanies the AML Manual. It explains the current 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.
