by John McCarthy Consulting Ltd. | Jun 23, 2025 | Blog, News
The UK Financial Reporting Council published, in May 2025, some brief guidance, as part of a campaign to support SME Auditors which explains What is an Audit?
The main topics dealt with in the guide include:
- What is an audit?
- What do we mean by ‘materiality’?
- What is the purpose of an audit?
- What value does an audit bring to the audited entity?
- What are the principles common to all audits?
This week we will look at the topic that explains the ‘Principles Common to all Audits’
The guide points out that each audit is different, but there are some principles that are foundational to all audits. The three main ones are:
| Independent |
Professional scepticism |
Risk Based |
| To fulfil its primary purpose of enhancing confidence in the financial statements, the auditor must be and be perceived to be independent. This gives the intended users confidence that the auditor will have the willingness to challenge management where appropriate, and conduct a robust audit |
Professional scepticism is a core part of an auditor’s mindset. It is characterised by a willingness to challenge and inquire, to look for contradictory as well as corroborative evidence to critically assess information. |
Audits are fundamentally risk based. This means that the auditor will allocate more time and resources to transactions, balances and disclosures that have a higher risk of material misstatement. This principle is the source of most of the proportionality that is inherent in an audit |
This guide is well worth reading and passing on to your clients to help better explain the valuable service that auditors provide. See What is an Audit? for more detail
For audit cold file reviews and tailored training sessions explaining more about various topics like AML, Audit, FRS 102, please send a mail to john@jmcc.ie.
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:
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. | Jun 3, 2025 | Blog, News
As we said last week, the UK Financial Reporting Council published, in May 2025, some brief guidance, as part of a campaign to support SME Auditors which explains What is an Audit?
The main topics dealt with in the guide include:
- What is an audit?
- What do we mean by ‘materiality’?
- What is the purpose of an audit?
- What value does an audit bring to the audited entity?
- What are the principles common to all audits?
This week we will look at the topic ‘What value does an audit bring to the audited entity?’
It explains that the primary benefits of an audit, from the audited entity’s perspective, stem from the enhanced trust and confidence that can be provided to users of the financial statements.
Many
- Banks
- Lenders and
- Investors
find audited financial statements will signify that the robust business practices operated by businesses that are subject to audit help give such stakeholders as these, additional confidence and may help inform their decisions to allocate capital.
An audit may also result in
- lower risk premiums on investments;
- be a precondition as part of a loan agreement; or
- be a requirement as part of a contractual arrangement.
In each of these cases, the audit provides accountability and transparency for the users of financial statements. In addition, an auditor can provide an informed perspective on the controls and processes, which can in turn support management in enhancing them.
The guide emphasises that the auditor must abide by ethical and independence standards. While the auditor may provide an opinion and feedback on judgements made by management, it is not their role to play a part in management decision taking.
This guide is well worth reading and passing on to your clients to help better explain the valuable service that auditors provide. See What is an Audit? for more details.
For audit cold file reviews and tailored training sessions explaining more about various topics like AML, Audit, FRS 102, please send a mail to john@jmcc.ie.
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:
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. | Jun 3, 2025 | Blog, News
The UK Financial Reporting Council has recently published some really useful guidance, as part of a campaign to support SME Auditors which explains What is an Audit?
Auditors themselves will find the guide helpful in explaining to existing and prospective clients what an audit is and what it is not.
The guide explains:
- What is an audit?
- What do we mean by ‘materiality’?
- What is the purpose of an audit?
- What value does an audit bring to the audited entity?
- What are the principles common to all audits?
For example, the section on materiality explains that materiality is central to the audit. A material misstatement is one that could reasonably be expected to influence the economic decisions of the intended users of the financial statements.
The auditor is not, therefore, attempting to identify all misstatements of any size that may be present in the financial statements, only those that are material.
It draws attention to the fact that a misstatement can be material by nature as well as by value. For example, a fraudulent misstatement may be deemed material even if it is below quantitative materiality.
This guide is well worth reading and passing on to your clients to help better explain the valuable service that auditors provide. See What is an Audit? for more details.
For audit cold file reviews and tailored training sessions explaining more about various topics like AML, Audit, FRS 102, please send a mail to john@jmcc.ie.
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:
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. | May 30, 2025 | Blog, News
The UK Financial Reporting Council (which writes the audit standards for the UK and Ireland. These standards licenced by the IAASA for use in Ireland) is inviting stakeholders to join a webinar where the ‘International Standard on Auditing for Audits of Financial Statements of Less Complex Entities’ (ISA for LCE) will be discussed.
You had better get your skates on as the webinar is Wednesday 4 June 2025 from 1pm to 2pm Irish time. Registration is free of charge and is available here.
The International Auditing and Assurance Standards Board (IAASB) issued the International standard on auditing for audits of financial statements of less complex entities (‘ISA for LCE’) in December 2023. It becomes effective for jurisdictions that have adopted it for audits beginning on or after 15 December 2025.
Previously the FRC said that there is no intention by the UK to adopt ISA for LCE. Hopefully this is a sign that there is a change of heart, but the outcome will depend on the input from the ongoing consultations and research by the Financial Reporting Council SME Project Team.
Many practitioners and commentators that are of the opinion that the ISAs (Ireland) are disproportionate for SME clients in a number of areas and while they are supposed to be scalable for smaller entity audits, there is insufficient guidance on what this means.
There may never again be an opportunity like this so do play your part to help inform the outcome of this project.
For audit cold file reviews and tailored training sessions explaining more about various topics like AML, Audit, FRS 102, please send a mail to john@jmcc.ie.
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:
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. | May 18, 2025 | Blog, News
We saw last week that the proposed new AML Regulation AMLR places additional emphasis on AML training for employees and others.
This week we look at Article 13 of the EU AML Regulation AMLR which mandates regular assessments for individuals responsible for an obliged entity’s AML/CFT compliance.
Such personnel must be regularly evaluated on their:
- Skills
- Knowledge
- Expertise
- Integrity, and
- conduct
The assessments carried out must be performed on new personnel prior to taking up responsibility for AML compliance activities, including agents and third parties. The intensity of the subsequent assessments shall be risk based and determined on the basis of the tasks entrusted to the person and risks associated with the function they perform.
Conflicts of interest
Conflicts of interest must be avoided, and employees must disclose any close personal or professional relationships with the entity’s current/prospective clients to the compliance officer.
The firm must have procedures in place to prevent such staff from being involved in compliance tasks related to these clients.
For audit cold file reviews and tailored training sessions explaining more about various topics like AML, Audit, FRS 102, please send a mail to john@jmcc.ie.
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:
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. | May 18, 2025 | Blog, News
The proposed new EU Anti-Money Laundering Regulation (AMLR) is expected to be effective in Ireland in 2027. This week we look at one aspect of that Regulation relating to AML training.
Article 12 of the AMLR places greater emphasis on AML Training which is a more comprehensive requirement than in the 4th AML Directive. The 4th AML Directive only required AML training for the obliged entity’s employees who were involved in AML compliance.
Under the new proposed AMLR, accountancy firms must ensure that all individuals involved in implementing AML/CFT measures receive adequate training. The reach of the AML training requirement will be much wider than heretofore and accountancy firms will be held to account in a more comprehensive way for their AML training responsibilities.
Those that will need to have the AML training under the AMLR include:
- Employees;
- Agents; and
- Third party contractors.
The AML training should enable these personnel to recognise potential ML/TF activities and know what steps to take when they encounter them.
For audit cold file reviews and tailored training sessions explaining more about various topics like AML, Audit, FRS 102, please send a mail to john@jmcc.ie.
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:
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.
