Many accountants and auditors are working hard this week to assist primary and post-primary schools around Ireland meet the 28 February 2020 deadline set by the Financial Support Services Unit (FSSU) for the filing of schools’ annual financial statements.
The Education Act, 1998 (the Act) is the relevant legislation that governs this area but it’s out of line with the latest thinking on accounting and legal language used in the Companies Act, 2014 in Ireland.
When compared to this later legislation, The Education Act is found to be inadequate in at least these three areas:
- The Act speaks about ‘all proper and usual accounts’ instead of ‘adequate accounting records’ used in the Companies Act, 2014;
- The Act, is vague about whether the financial statements should give a ‘true and fair view’, which, clearly, they should;
- The Act does not specify precisely the financial reporting framework that ought to be best applied to school accounting, which is now FRS 102, (The Financial Reporting Standard Applicable in the UK and the Republic of Ireland).
This single financial reporting standard applies to the financial statements of entities that are not applying EU-adopted IFRS, FRS 101 or FRS 105. It came into being in 2015, and Section 1A of that Standard came into being in January 2017, well after the Education Act was written. FRS 102 replaced the earlier version of Irish Generally Accepted Accounting Practice (GAAP), to which the Act refers, which had been in place for about 45 years.
New International Audit Standards (ISAs) were enacted for Ireland in June 2016 and the Act does not refer to these either.
Interim solution for Accountants / Auditors
Clearly the Education Act, 1998 needs a refresh from an accounting and audit perspective. In the meantime, these deficiencies are causing a technical difficulty for reporting accountants and auditors in helping schools meet the February deadline.
In an effort to help reporting accountants with this work, we have created a set of four templates, which address the inadequacies of the Act and clarify state how best to achieve a true and fair view in the midst of these inadequacies, through greater disclosure etc.
The templates are:
- Audit assignment engagement letter template under FRS 102
- Audit assignment representation letter template under FRS 102
- Audit exempt compilation assignment engagement letter template under FRS 102
- Audit exempt compilation assignment representation letter template under FRS 102
They templates are available for purchase on our website here for €50 each and may be downloaded immediately as Word templates for easy adaptation.
Have you prepared an AML Business-Wide Risk Assessment which is required if you have an AML Inspection visit? There is a template available and a webinar on how to prepare it. Both of these help firms comply with the latest requirements of Section 30A of the Criminal Justice (Money Laundering and Terrorist Financing) Acts, 2010 to 2018.
For many other webinar topics including Investment Property Accounting, FRS 105, Common Errors in FRS 102 Accounting and the latest on FRS 105 and company law, visit our online webinar training website.
