by John McCarthy Consulting Ltd. | Aug 10, 2020 | Blog, News
Now is a good time to update your CPD over the summer months before the crazy busy tax season starts. Of course, nowadays there is no such thing as a quiet time, so it is best to plan your CPD time now. Why not set aside time on Friday afternoon this week to do a catch up. All our webinars come with a quiz to test your learning and an automatic CPD certificate is issued once you have viewed the material.
Some of the relevant topics on our website include the following webinars:
Accounting for Impairments
The webinar online video is 52 minutes in length, broken into two parts. It deals with many issues that are topical now under the Coronavirus (COVID-19)
• Inventories which are treated differently than other impaired assets;
• Impairment trigger points;
• Testing Goodwill for impairment;
• How to recognise an impairment loss;
• Disclosures;
• Small entities – what are the Section 1A disclosures?
FRS 102 The new Regime from 1 January 2019
• FRS 102 – the Triennial Review;
• Directors’ loans – ‘small’ entities, relaxation of some of the amortisation requirements;
• Intangibles in a business combination;
• Investment property rented within a group;may be v
• Classification of certain financial instruments;
• Definition of financial institution;
• Reconciliation of net debt in statement of cash flows; and
For a full list of all our webinar recordings, please got to our webinar site here. They may be viewed at any time for 12 months after the date of purchase.
We also have a complete set of complementary letters of representation, updated for the Coronavirus (COVID-19), and letters of engagement for immediate download here.
by John McCarthy Consulting Ltd. | Jul 7, 2020 | Blog, News
Now is a good time to update your CPD over the summer months before the crazy busy tax season starts. Of course, nowadays there is no such thing as a quiet time, so it is best to plan your CPD time now. Why not set aside time on Friday afternoon this week to do a catch up. All our webinars come with a quiz to test your learning and an automatic CPD certificate is issued once you have viewed the material.
Some of the relevant topics on our website include the following webinars:
Accounting for Impairments
The webinar online video is 52 minutes in length, broken into two parts. It deals with many issues that are topical now under the Coronavirus (COVID-19)
• Inventories which are treated differently than other impaired assets;
• Impairment trigger points;
• Testing Goodwill for impairment;
• How to recognise an impairment loss;
• Disclosures;
• Small entities – what are the Section 1A disclosures?
FRS 102 The new Regime from 1 January 2019
• FRS 102 – the Triennial Review;
• Directors’ loans – ‘small’ entities, relaxation of some of the amortisation requirements;
• Intangibles in a business combination;
• Investment property rented within a group;may be v
• Classification of certain financial instruments;
• Definition of financial institution;
• Reconciliation of net debt in statement of cash flows; and
For a full list of all our webinar recordings, please got to our webinar site here. They may be viewed at any time for 12 months after the date of purchase.
We also have a complete set of complementary letters of representation, updated for the Coronavirus (COVID-19), and letters of engagement for immediate download here.
by John McCarthy Consulting Ltd. | Feb 27, 2020 | Blog, News
We have just published an update to the AML Policies Controls & Procedures Manual last week, which is available to purchase now on our website. Our latest February 2020 edition includes the following updated items:
- Pronouncement by the FATF arising from their Public Consultation on FATF Draft Guidance on Digital Identity (discussed at the FATF plenary meeting in Paris from 19-21 February 2020)
- The latest developments on the RBO register since June 2019
- Further guidance on carrying out electronic searches and the validity of sourcing electronic data for client identity purposes.
This Manual contains everything you need to successfully implement the requirements of the Criminal Justice (Money Laundering and Terrorist Financing) Acts, 2010 to 2018 which became law on 26 November 2018 and the Register of Beneficial Ownership which came into effect on 22 June 2019.
This Manual comes with a, free of charge, Excel spreadsheet called the ‘AML Control Sheet’ which firms may use to give a ‘helicopter’ view of progress made with keeping client AML data up to date.
The Manual includes eleven Appendices with templates/guidance on how to implement the legislation efficiently. It retails for only €150+VAT and may be downloaded, ready to use, in Word format.
by John McCarthy Consulting Ltd. | Feb 25, 2020 | Blog, News
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.
by John McCarthy Consulting Ltd. | Feb 17, 2020 | Blog, News
One of the most common types of lease incentive is where a landlord allows a business tenant a period of time rent free, often at the commencement of the lease. This is to incentivise the tenant to occupy the premises.
Typically, FRS 102 spreads the implicit gain (to the lessee) and the cost (to the landlord), arising from this rent free period, on a straight-line basis over the lease term and therefore as a reduction to the overall lease expense (FRS 102.20.15A). The treatment was different in old GAAP. The rent free period is known as a ‘lease incentive’ (as defined in the glossary of FRS 102).
Requirements
With any lease, it must be determined whether it is a finance lease or operating lease – the guidance for this assessment is detailed in FRS 102.20.5.
Assuming the lease is an operating lease (i.e. it does not transfer substantially all the risks and rewards incidental to ownership to the lessee), the lease payments must be recognised on a straight line basis over the lease term in accordance with FRS 102.20.15.
Exceptions to the straight line basis apply where another systematic basis is representative of the time pattern of the user’s benefit or the payments to the lessor are structured to increase in line with expected general inflation to compensate the lessor for their expected inflationary cost increases. These situations are not especially common.
There are other types of lease incentives which include; the landlord paying the cost of fitting out the tenant’s premises and/or paying the tenant’s legal fees associated with the lease agreement.
Example
A lessee enters a new ten year lease to rent a property. The first six months are rent free, and rent of €7,500 is payable quarterly thereafter.
In line with the above requirements, the lease payments will be recognised on a straight line basis over the lease term and the rent free period will be spread over the lease term as a reduction to the lease expense.
Lease expense
The total lease expense is:
€7,500 per quarter x 38 quarters = €285,000
The annual lease expense is therefore:
€285,000 / 10 years = €28,500 per year
Accounting entries
The accounting entries will therefore be as follows.
| Year 1 |
Dr P&L expense (as above) |
€28,500 |
|
|
Cr Cash (2 x €7,500) |
|
€15,000 |
|
Cr Accrual |
|
€13,500 |
| Years 2-10 |
Dr P&L expense (as above) |
€28,500 |
|
|
Cr Cash (4 x €7,500) |
|
€30,000 |
|
Dr Accrual |
€1,500 |
|
To purchase our latest June 2019 AML Manual for only €150+VAT click here and the accompanying AML webinar for €45 on the latest 2018 AML legislation click here.For more practical advice and examples on FRS 102 and the Triennial Review Amendments see our webinar here called FRS 102 – the New Regime from 1 January 2019.
The webinar will look at:
- Directors’ loans – ‘small’ entities, relaxation of some of the amortisation requirements;
- Intangibles in a business combination;
- Investment property rented within a group;
- Classification of certain financial instruments;
- Definition of financial institution; and the
- Reconciliation of net debt in statement of cash flows.
See also our new letter of representation for an audit client using IFRS – published on our website February 2020.
