by John McCarthy Consulting Ltd. | Jun 6, 2022 | Blog, News
Question from a firm – From time to time we have temporary staff and contractors, perhaps only for a few weeks or a month or so. We ask them to read our in-house AML Policies Controls & Procedures Manual and view the AML training webinar including the quiz. Are we being over-zealous by insisting on this?
Typically the level of client contact for temporary/contractor staff will be low, but they will take phone calls, see incoming correspondence/e-mails and so on. It is conceivable that they could be the first person here, or perhaps the only one, to become aware of a money laundering issue.
Answer -Section 54 of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 requires ‘persons involved’ to be given training. Section 54 (10) defines ‘persons involved’ as including ‘a reference to directors and other officers, and employees, of the designated person’ so that will include temporary/contractor staff. It is irrelevant whether they have face to face client contact or not.
The safest option would be to provide training to all employees including temporary/contractor staff as they may come across suspicious activity, in the course of their work that needs reported to the MLRO. It is best practice to retain records of the training including the materials used, the date, names/signatures of the attendees and the results of the quiz that helps prove their understanding of the topic.
For more on this topic see the newly created Chartered Accountants Ireland AML Technical Hub.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date 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.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | May 27, 2022 | Blog, News
You are the MLRO for a firm of accountants. At a Chamber of Commerce dinner you were attending recently, a client you met there tells you that he is having an extension built onto his home. The contractors want payment in cash, which he says he suspects is because they will not be declaring it to the Revenue.
Do you have a duty to report this suspected tax evasion as money laundering, especially as the contractor has nothing to do with your firm?
The issue here is not that payment is in cash, but that the client has said he suspects tax evasion by the contractor. If the information comes to a relevant person (the MLRO in this case) during the course of his/her business, this must be reported.
The intention to commit a crime (in this case tax evasion) can itself be a crime, and although you do not know for a fact that the contractor intends to evade tax, it seems probable that he does.
Suspicion is enough (no proof is required from the MLRO’s point of view). You have obtained the information in the course of business, and it makes no difference that the person under suspicion is not actually your client.
You should not inform the client of your action, as this could constitute ‘tipping off’ or prejudicing the investigation according to Section 49 of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021. Your report to the Garda and the Revenue Commissioners (via the ROS portal) can name only your client: If the Garda/Revenue decide to investigate, they can ask for the information from your client.
For more on this topic see the newly created Chartered Accountants Ireland AML Technical Hub
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date 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.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Apr 14, 2022 | Blog, News
A significant legislative change made five years ago will only impact affected companies this year. The amendment made by the Companies (Accounting) Act 2017 amended section 1274 dealing with unlimited companies (known as a ULCs).
‘Designated ULCs’ lose accounts filing exemption
Among other changes, certain types of ULC (known as ‘designated ULCs’) are required to file their accounts with the CRO (including group accounts where applicable) for the first time. While most changes in the law came into effect from 1 January 2017, this one was delayed until accounting periods commencing 1 January 2022.
The amended Section 1274 Companies Act, 2014 broadly states that for accounting periods commencing on or after 1 January 2022, a ULC that has been a holding company of an undertaking which was at that time limited must file financial statements along with their annual return for accounting periods commencing on or after 1 January 2022.
This applies across the board regardless of the size of the group as section 1274 does not have any exclusion clause that says the section disapplies sections 347/348 making the filing of annual returns/accounts compulsory.
ULCs may qualify for audit exemption
In a related point Section 1230 Companies Act, 2014 allows such designated groups, where they are private ULCs (provided they satisfy the ‘small’ company criteria) to claim audit exemption (assuming all the other criteria are satisfied – annual returns filed on time, no 10% shareholder objections etc., their constitution permits audit exemption etc. ) because the Table disapplying certain sections of the Companies Act, 2014 for ULCs does not disapply the audit exemption and ‘small’ company criteria for ULCs contained in Parts 1-14 of the Companies Act, 2014.
Filing Exemption Remains for non-designated ULCs
So-called ‘non designated’ ULCs under Section 1274, that do not have any limited liability subsidiaries and whose direct and indirect shareholders do not comprise solely of limited liability undertakings will continue to be exempt from the requirement to file their financial statements.
In other words where a company is a ‘pure’ unlimited company (i.e. there is no ultimate protection of limited liability in the group structure), it will still be possible to avail of an exemption from filing financial statements.
However, they will need to file an auditor’s report attached to the Annual Return which confirms that the auditors have audited the financial statements of the company for the relevant financial year in accordance with sections 336 and 391.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date 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.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Apr 14, 2022 | Blog, News
In last week’s blog we looked at some of the key implications that may impact on the work of auditors. In the previous week’s blog we looked at the implications in circumstances where audit clients are not directly impacted. This week we conclude with some final matters for auditors to consider.
Going concern
Management of affected entities, especially those with operations in Ukraine, will need to evaluate the impact on the going concern assessment and revisit this. The auditor will also need to show increased professional scepticism when making going concern judgements to verify that management has taken all the relevant factors into account. Some of these factors are highlighted below.
Supply chain issues
Some companies have stopped trading with Russia and therefore there will be an unavoidable impact on supply chains. We have already seen higher fuel prices which are likely to affect many companies’ cost base, and cause transport disruption. Auditors will need to document their assessment of the impact on clients’ business models, cash flows, and their ability to continue as a going concern. electronic
Currency valuation
Sanctions have triggered a devaluation of the Russian Rouble and there are consequent implications for the Belarussian Rouble. Translation of Roubles to other reporting currencies may lead to material exchange rate losses for affected companies.
Insurance cover
In some circumstances insurance cover for companies may be restricted, especially if insurance policy exclusion clauses state that a loss event is considered to be an ‘Act of War’.
These circumstances may not be restricted to the use of conventional weaponry, but also retaliatory cyber-attacks. Trade credit insurance may also be more difficult to obtain and companies/ their auditors need to take this into account.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date 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.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Apr 14, 2022 | Blog, News
The war in Ukraine is an evolving human tragedy. In last week’s blog we looked at some of the key implications that may impact on the work of auditors, even if one’s clients have no immediate connections with Ukraine/Russia. This week we continue with a quick reminder of some pertinent topics for auditors to consider.
Non-compliance with laws and regulation (NOCLAR)
Auditors fulfilling their responsibilities under ISAs (especially ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements) with respect to laws and regulations will be auditing and reporting in a constantly changing environment. This may be the case right up to the point of signing the auditor’s report, depending on the period end of the entity and timing of the audit. Auditors will need to be vigilant and maintain regular communication with management in order to monitor NOCLAR up to the signing of the audit report.
It will often be difficult for management to ensure that they have complied with laws and regulations, let alone articulate how they have complied.
Post balance sheet events
For companies with 31 December 2021 year ends, the war in Ukraine would be considered a non-adjusting event, because the conditions did not exist at the end of the reporting period. For 28 February 2022 period ends and later, the impact of the war is an adjusting event.
Management’s disclosures about material non-adjusting events, and related estimates of its financial effect, must be appropriately disclosed in the notes to the financial statements and auditors will need to check these disclosures.
We will conclude our review of these issued in next week’s blog.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date 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.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Apr 10, 2022 | Blog, News
Auditors in Ireland would be forgiven for thinking that, apart from rising fuel costs, the war in Ukraine is far away and has few audit implications. This blog is attempting to highlight the requirement in recent changes to the audit standards for auditors to ‘stand back’, frequently mentioned by the Financial Reporting Council in recent publications.
In this case, while your audit clients may not have direct connections with Ukraine or with sanctions against Russia, there may be relationships through clients’ supply chains, clients’ customer base and clients’ overseas subcontractors that leave the business exposed to a potential negative impact – even as simple as the shortage of raw materials (E.G. VW group) and its wider implications for the European economy.
The war in Ukraine is evolving rapidly, as is the reaction by the Irish government and its international counterparts with sanctions against Russia. In this blog we take a look at some of the key implications that may impact on the work of auditors.
Auditor’s Risk Assessment (ISA 315) – the ISAs (Ireland) still apply. The risk assessment will need to reflect changes within the audited entity’s business and operating environment and whether there are any new risks, significant or otherwise such as business interruption that may impact the entity’s ability to continue as a going concern. This may drive additional disclosures about the impact of the war, changes to forecasts, future plans, or even the entity’s business model or strategy.
Groups – The situation may also impact on group audits and collecting audit evidence (ISA 500).
Sanctions and AML – accountants are urged to look hard at any connections with Russia among their client base and perform updated due diligence, thinking more about the spirit of the law and not just the letter of the law. Accountants are re-screening clients, looking at sanction lists beyond the EU, and considering clients with Russian connections where they do not appear on sanctions lists.
We will take a look at further audit implications of the war in the Ukraine, in next week’s blog.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date 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.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
