by John McCarthy Consulting Ltd. | Apr 20, 2026 | Blog, News
Audit Quality and ISQM
There are no major imminent changes to the ISAs Ireland for auditors of SME entities in Ireland during this reporting season, there is a lot for auditors to think about in terms of audit quality. Recent reports from the CAI indicate that audit quality is still a burning topic. These topics were among those touched upon during the recent online Audit Conference organised by the Chartered Accountants Ireland.
Positive Conformation Requests Now Mandatory
Be aware of ISA 505 ‘External Confirmations’ which effectively bans negative confirmation requests. This became emendatory for accounting periods commencing on/after 15 December 2024, which in reality means audits for the years ending 31 December 2025.
A negative confirmation request is ‘a request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request.’ In most cases, in our experience, negative confirmations are hardly ever used in practice.
Positive external confirmation requests are defined as ‘a request that the confirming party respond directly to the auditor indicating whether the confirming party agrees or disagrees with the information in the request or providing the requested information.’
The most common of these would be debtor circularisation’s.
Obtaining Audit Evidence ISA 500
All firms need to constantly improve the documentation around obtaining audit evidence. The main areas for focus in this regard include:
Analytical Procedures ISA 520
The use of analytical procedures often brings significant benefits when used as a substantive audit procedure. Among the benefits are:
- They can provide strong audit evidence and
- They can assist the auditor gain a better understanding of the audited entity.
It is not uncommon that analytical procedures (especially at the planning stage of the audit) are not completed to a sufficiently high standard and not in the predictive way that is required. For example, simple comparisons between years do not provide sufficiently high-quality audit evidence. The comparisons need to be accompanied by commentary that is well informed about the client’s industry along with links to external news and industry insight reports and data that is sourced independently of the client entity.
Sampling ISA 530
The Financial Reporting Council removed sample size caps some years ago and this development has caused auditors no little stress. It’s always possible to justify sample size selection by professional judgement but this is often poorly documented.
It’s also important to ensure that all elements of the client’s target population have an equal opportunity of being selected across the financial period under review.
Our audit file review service is available either on-site or remotely where we will provide you with a written report benchmarking your audit file against the appropriate standards. You will receive a gap analysis of where your firm stands on a particular assignment within clear direction as to appropriate action to consider for improvement.
For those of you still in the process of ISQM 1 implementation, please see our ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please call or e-mail John McCarthy FCA or e-mail him at john@jmcc.ie.
We typically tailor training and brainstorming sessions to suit each firm’s unique requirements.
Publications and AML webinar:
-
- The ISQM TOOLKIT 2022 is available to purchase here.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated 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.
- 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.
by John McCarthy Consulting Ltd. | Apr 14, 2026 | Blog, News
Along with the new FRS 102, the new Charities SORP became applicable for accounting periods commencing on/after 1 January 2026.
In the charity sector, by its very nature, it is a not uncommon feature to have a peppercorn rent arrangement between landlords and their charity tenants so that the property is let to the charity at a very small or no rent. Under paragraph 10.B.75 of the SORP, such ‘arrangements under which the charity pays nil or only a nominal amount of consideration are known as ‘peppercorn’ arrangements.
Paragraph 10.B.76 goes on to state (our own bold italics are inserted here) that ‘while these arrangements may have the legal form of a lease, it is unlikely they will meet the definition of a lease under FRS 102 as the payments due are likely to be very small or there may be no payment due. Any nominal payments that are made are treated as an operating expense. Such arrangements are outside the scope of Section 20 of FRS 102.
Such arrangements may fall within the recognition criteria of another part of the Charities SORP – Module 6, which deals with ‘Donated goods, facilities and services, including volunteers’ meaning that they are considered to be a form of non-exchange transaction.
The trustees will need to consider:
- the benefit that is being received and
- how that should be measured and accounted for.
There is further explanation in paragraph 10B.78 of the SORP and in the examples in Table 9A so that (my bold italics inserted):
- if the arrangement means that an asset is available to the charity to use to carry out its charitable activities, the charity will need to identify the fair value of that asset and account for a donated asset in line with the treatment described in SORP module 6 ‘Donated goods, facilities and services including volunteers’;
- if the arrangement means that a facility or service is now available to the charity, the value to the charity of the facility or service is used and a donation recognised for that amount. Details about the donation of facilities and services can be found in SORP module 6 ‘Donated goods, facilities and services including volunteers’.
For those of you still in the process of ISQM 1 implementation, please see our ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please call or e-mail John McCarthy FCA or e-mail him at john@jmcc.ie.
We typically tailor training and brainstorming sessions to suit each firm’s unique requirements.
Publications and AML webinar:
-
- The ISQM TOOLKIT 2022 is available to purchase here.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated 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.
- 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.
by John McCarthy Consulting Ltd. | Apr 6, 2026 | Blog, News
- Ireland scrapped its so-called Golden Visa programme, on 15 February 2023. It had attracted several thousand applications. All but 41 of these came from China.According to a 2025 Irish Times report, 1,600 investor applications were undergoing or awaiting consideration as of September 2025 – so there may still be several in the pipeline which accountants may come across. Malta was the last EU country to offer such passports until they were banned by the European Court of Justice in April 2025 after it had given a Maltese passport to at least one sanctioned Russian individual.
The official title of the programme was the Immigrant Investor Programme which offered residency in the State to non-Europeans, when they can prove they have personal wealth of at least €2 million. In return they were required to:
- invest €1 million in an Irish business or
- make a €500,000 charitable donation or
- donate €400,000 in certain other cases.
Meanwhile under Irish AML legislation, Schedule IV of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, states that such investors are potentially ‘higher risk’ for AML purposes.
Higher risk clients trigger additional AML scrutiny known as ‘Enhanced Due Diligence’ (EDD) and the 10 most important Due Diligence steps to take are as follows:
- Additional background checks: These checks are accompanied by a more in-depth investigation into the customer’s background.
- Source of funds and wealth: Investigate the funds to be used throughout the business relationship and the client’s total wealth, supported with documentary evidence, ideally sourced from independent credible sources.
- Independent verification: Seek independent verification of the customer’s identity documents and establish the integrity of any other supporting information provided.
- Increased monitoring: Increase the frequency and intensity of transaction monitoring to detect any suspicious activity as soon as possible.
- Third party validation: Obtain information from third party sources, such as credit reference agencies to verify the customer’s information and help better assess the risk.
- Obtain senior management approval: In the case of Politically Exposed Persons (PEPs) and similar cases, as Irish law requires, as well as reviewing the latest sanctions lists. It is important for senior management to understand the risk an entity undertakes.
- Limiting transactions: In certain circumstances, restrict the type and size of transactions the customer can conduct, or limit their access to certain services that your firm provides.
- Incoming funds: Require that the initial funds and the first transaction to be conducted through a financial institution attracts more intensive AML supervision.
- Ongoing customer reviews: Increase the frequency of subsequent customer reviews.
- In extreme cases: Choose to refuse the business with the customer if the risk of money laundering is too high and beyond your firm’s risk appetite.
After all the above, each firm needs to assess, on an ongoing basis, whether it is really worthwhile dealing with such clients, given the costs of getting the AML risk assessment wrong, versus the benefits of being involved in such transactions.
For those of you still in the process of ISQM 1 implementation, please see our ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please call or e-mail John McCarthy FCA or e-mail him at john@jmcc.ie.
We typically tailor training and brainstorming sessions to suit each firm’s unique requirements.
Publications and AML webinar:
- The ISQM TOOLKIT 2022 is available to purchase here.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated 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.
- 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.
by John McCarthy Consulting Ltd. | Mar 24, 2026 | Blog, News
New anti-money laundering (AML) legislation is expected to be enacted in Ireland in at least two tranches on or before 10 July 2026 and 10 July 2027.
In this blog and in the coming weeks we summarise the points of most interest to accountants in practice, based on the Technical Alert 05/2025 (TA) issued by Chartered Accountants Ireland in December 2025. There are more details in the TA itself.
These AML laws will complete the implementation of the European Union 6th Anti Money laundering package which was enacted by the EU on 9 July 2024.
These laws comprise two parts:
- A Regulation called the AML Regulation (EU) 2024/1624) which is about the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
- A Directive called the AML Directive (EU) 2024 /1640) on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
As we know from the GDPR (Data Protection Regulation from 2018) regulations must be implemented across the EU Member States without any local changes, whereas Directives permit some minimal local variation.
These new rules will be overseen by the new Europe wide AML Regulator called the Anti-money Laundering Authority (AMLA).
For the time being accountants should refer to the existing up to date AML guidance for accountants in Ireland called Technical Release 01-2019 (Updated March 2022) AML Guidance for CCAB-I members. This guidance will need refreshed when the new legislation comes into effect.
The main changes coming into place include:
- Independent Audit Function – As part of the accountancy firm’s internal policies, procedures and controls entities are required to have in place an independent audit function to test the internal policies and procedures and the controls in place in the firm. Where such an independent audit function is not present within the firm, it may have the test carried out by an external expert.Firms must ensure that the person responsible for the AML audit function can report directly to the management body. Independent audit appears to be mandatory under the AML Regulation.
Firms will also be required to take measures to ensure employees, agents and subcontractors like are aware of AML requirements and these measures include participation of those employees, agents and subcontractors in specific ongoing AML training programmes that show them how to recognise operations which may be related to money laundering or terrorist financing and to show them how to proceed in such cases.
- Integrity and Honesty Assessment – Article 13 of the AML Regulation requires firms to assess employees, agents and subcontractors who directly participate in the firm’s AML compliance functions as having appropriate skills, knowledge and expertise to carry out their functions effectively including an assessment of their honesty and integrity and whether they are of good repute.
How can John McCarthy Consulting help?
Our audit file review service is available either on-site or remotely where we will provide you with a written report benchmarking your audit file against the appropriate standards. You will receive a gap analysis of where your firm stands on a particular assignment within clear direction as to appropriate action to consider for improvement.
For more on engagement and representation letter templates and a variety of CPD webinars on money laundering and other accounting/audit related topics, please go to our website for:
- Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
- Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
- ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard. We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
by John McCarthy Consulting Ltd. | Mar 21, 2026 | Blog, News
If you have clients in the high value goods dealer (HVGD) sector, then you will need to be aware of this case.
According to the website of the AML Compliance Unit of the Department of Justice HVGDs ‘are businesses involved in the sale of goods of high value where the trader accepts cash payments of €10,000 either in one transaction or a series of linked transactions. Examples of these businesses include antique dealers, boat and car sales, dealers in precious stones, jewellers.’
In a recent February 2026 case the Dutch branch of Louis Vuitton suffered a €500,000 penalty in an out of court settlement, for significant violations of the Money Laundering and Terrorism Financing Prevention Act in the Netherlands.
The underlying criminal case against the three individuals involved remains active, reflecting a trend where regulatory authorities often prioritize corporate accountability through financial sanctions while simultaneously pursuing criminal prosecutions against the specific actors who orchestrated the laundering scheme. The three main suspects face prosecution in a Rotterdam court.
The sanction followed a comprehensive police investigation into a sophisticated money laundering network that utilized luxury retail channels to disguise the origins of criminal proceeds.
The company was found guilty of falling short of the AML requirements by allowing a single customer to conduct a series of high-value transactions without triggering the necessary internal red flag alerts or verification procedures. The failure to monitor and report suspicious activity enabled a criminal organization to convert more than €2 million in cash payments over a multiyear period from 2021 to 2023.
HVGD retailers are expected to not only:
- Identify their customers, but also
- Investigate the source of funds when transactions meet certain risk profiles.
In this case, Louis Vuitton allegedly ignored multiple red flags, including the frequent use of different aliases by a recurring customer and the sheer volume of physical currency being exchanged for designer handbags. The acquisition of these goods was not for personal use but was instead a critical step in a value transfer process known as the Daigou trade. The UK National Crime Agency produced a detailed report on the Daigou AML phenomenon in 2019.
The Daigou model involves the purchase of luxury items in Western markets for resale in territories where such goods are more expensive or heavily taxed, such as China. The use of luxury retail items as a vehicle for laundering is particularly attractive to criminal groups because these products maintain high resale value and are easily transportable.
From 1 January 2026, the Netherlands has implemented a ban on accepting cash payments of €3,000 euros or more for professional sellers of goods. This same €3,000 threshold will apply in Ireland once legislation enacting the 6th AML Directive comes into force within the next two years.
This legislative change is specifically designed to eliminate the room for manoeuvre previously enjoyed by those who structured payments just below the old €10,000 threshold, which still applies in Ireland for the time being.
How can John McCarthy Consulting help?
Our audit file review service is available either on-site or remotely where we will provide you with a written report benchmarking your audit file against the appropriate standards. You will receive a gap analysis of where your firm stands on a particular assignment within clear direction as to appropriate action to consider for improvement.
For more on engagement and representation letter templates and a variety of CPD webinars on money laundering and other accounting/audit related topics, please go to our website for:
- Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
- Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
- ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard. We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
by John McCarthy Consulting Ltd. | Mar 2, 2026 | Blog, News
We complete many audit cold file review assignments every year. Whilst every audit file is different, and the approach by each firm varies, there are common themes in many of the reviews we undertake. Here we look at three of the most common issues and how firms should deal with them.
IT Systems and Controls
Compliance with ISA (Ireland) 315 ‘Identifying and Assessing the Risks of Material Misstatement’ still causes problems even though the standard came into effect for accounting periods beginning 15 December 2021. Frequently, auditors fail to properly document not only key transaction cycles but also the specific control activities required under ISA 315.26 which may not be part of the transaction cycle. As a result, walkthroughs of the transaction cycle to confirm:
- Design,
- Operating effectiveness and
- Implementation
do not always cover the controls required to be reviewed.
Audit files often overlook the requirement to consider the broader control environment including areas such as:
- risk management,
- how systems and controls are monitored,
- how the culture of the entity contributes to the control environment and
- how the control environment interacts with outsourced service providers like payroll, for example.
It is not sufficient to only document the key business cycles. The audit file must also document the overarching control environment as part of the audit risk assessment.
A useful IT Controls Questionnaire (as a downloadable Word document) to help with documenting part of this process, is available on our website, for €60+VAT at this link.
Going Concern
Many audit files don’t reflect the approach to fulfil the requirements of ISA (Ireland) 570 on Going Concern.
The audit work on going concern that is evidenced on the audit file often neglects to show that management have first of all prepared their own going concern assessment, which is supposed to be reviewed and appropriately challenged by the auditors.
Instead, files often include detailed notes, prepared by the auditors, explaining why the audit team believe the entity to be a going concern, but with little evidence of a challenge of management’s assumptions included an assessment of the budgets and forecasts prepared by management. It can appear that the files include a going concern assessment prepared for management by the auditors, which an inappropriate non-audit service.
Firms are required to show that they have documented management’s assessment of going concern and show how they have tested management’s assumptions, being careful not to be biased in favour or against any particular outcome.
Fraud
Quite often we see on audit files the following text or something similar – ‘the management tell us there has never been a fraud, so therefore there is no fraud in the latest financial year’’.
This approach hardly displays the kind of scepticism required by the standard. For example, ISA (Ireland) 240.13 states (our underline) ‘the auditor shall maintain professional scepticism throughout the audit, recognizing the possibility that a material misstatement due to fraud could exist, notwithstanding the auditor’s past experience of the honesty and integrity of the entity’s management and those charged with governance.
Auditors, please also note the three Appendices at the back of ISA 240 which are not new and are well worth a read, when planning an assignment:
Appendix 1 – Examples of Fraud Risk Factors;
Appendix 2 – Examples of Possible Audit Procedures to Address the Assessed Risks of Material Misstatement Due to Fraud (we call this the ‘Auditors Toolbox’); and
Appendix 3 – Examples of Circumstances that Indicate the Possibility of Fraud.
How can John McCarthy Consulting help?
Our audit file review service is available either on-site or remotely where we will provide you with a written report benchmarking your audit file against the appropriate standards. You will receive a gap analysis of where your firm stands on a particular assignment within clear direction as to appropriate action to consider for improvement.
For more on engagement and representation letter templates and a variety of CPD webinars on money laundering and other accounting/audit related topics, please go to our website for:
- Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
- Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
- ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard. We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
