by John McCarthy Consulting Ltd. | Nov 16, 2025 | Blog, News
The Chartered Accountants Ireland last month filed its response to the FRC consultation about the draft Practice Note on the Audit of Less Complex Entities.
The PN is basically the updated version of the much loved PN 26 Guidance on Smaller Entity Audit Documentation which was withdrawn in 2016. The latest version still has the same hotel/restaurant case study example (Bulls Restaurant and Hotel) but with updated references to the latest ISAs and the latest technology.
While the Institute supports the development of additional guidance in principle as small and medium-sized practices need to be able to apply the ISA proportionately to the scale of their audit clients. The Institute prefers that the FRC would focus on the IAASB standard called the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE’), which is better customized for the needs or SME audit market.
Among other things, in its response, the Institute has called for:
- Better alignment/mapping to the underlying ISAs, which would aid ease of reference when navigating the ISAs;
- More guidance and examples on the calculation of performance materiality including how firms should document the rationale for calculations used and use of associated benchmarks to support calculation of performance materiality;
- Enhancements to the PN such as examples regarding:
- documentation of professional judgement;
- further guidance and examples regarding scope of the PN, and
- dealing with IT general controls (ITGCs) in an SME audit environment; and
- examples need to be more innovative and not merely focus on straightforward circumstances to ensure they are useful in practice.
The Institute also calls for better coordination between the ISAs and the PN because as paragraph 4 of the PN states, the PN does not contain commentary on all the requirements in the ISAs and reading it should not be seen as an alternative to reading the relevant ISAs in their entirety.
Ultimately this means that SME auditors, inspectors, and software providers would still have to follow over 1,000 pages of the full ISAs and have regard to another 64 pages of the PN.
The response also draws attention to the fact that only nine ISAs are referenced in detail in the PN which could result in inconsistent interpretations and confusion when practitioners are performing SME audits. It would be more helpful for regulators also if there were better cross-referencing as to where requirements are not relevant or where requirements are scalable for SME audits in the form of a mapping document. This would remove the need for practitioners to review the entire series of ISAs when performing SME audits
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. | Nov 16, 2025 | Blog, News
Section 392 Companies Act 2014, requires auditors to file a notice with the Registrar of Companies when they form the opinion that a company has failed to keep adequate accounting records. The form used to make such a filing is called a H4. The average number of H4 reports filed with the CRO in the last 6 years is 4 per year.
Unfortunately, the latest CRO Annual Report, that for 2024, does not publish the statistics for the numbers of H4s filed in prior years. All it gives is the numbers filed for 2024 itself, but in 2020 and prior years the CRO report names the companies for which H4s were filed, but it has since discontinued that practice.
The numbers of H4s filed in recent years is as follows:
| Year |
No. of H4 Reports |
Year |
No. of H4 Reports |
| 2024 |
5 |
2021 |
0 |
| 2023 |
3 |
2020 |
7 |
| 2022 |
4 |
2019 |
5 |
In recent memory the best known H4, has to be the first one that was filed in 2019 which was for the Cumann Peile na hEireann, (otherwise known as the Football Association of Ireland). It was filed in April 2019 and over five years later, the investigation by the Corporate Enforcement Agency (CEA) into the situation at the FAI is still ongoing at the time of writing.
Auditors who fail to file such a note face a Category 3 penalty which is either up to six months in prison or a fine of up to €5,000 or both.
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. | Nov 5, 2025 | Blog, News
A new bill aimed at protecting the title “accountant” in Ireland has recently been introduced in the Dáil. The bill, if passed, will ensure that the title ‘accountant’ is reserved for those who meet stringently recognised standards and oversight.
The Bill is called The ‘Companies (Protection of Title: Accountant) Bill 2025’ and seeks to make it illegal for any individual or company to call themselves an “accountant” unless they are properly qualified and recognised by the Irish Auditing and Accounting Supervisory Authority (IAASA).
The general public are mostly unaware that they could be engaging with an accountant who is unqualified and who is not obliged to carry professional indemnity insurance. Architects and physiotherapists had the same problem up to some years ago until they got their professional titles protected in law.
The bill was introduced to the Dáil by Malcolm Byrne, TD for North Wexford, and seconded by Galway East TD Albert Dolan. Byrne told a local Wexford radio station that that consumers deserve to know they are engaging with a qualified professional who is accountable to a recognised regulatory body.
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. | Mar 21, 2022 | Blog, News
Following the recent CCAB-I Joint Statement to the Profession about sanctions, accountants must carry out checks on their clients’ potential exposure to sanctions, as part of AML processes and procedures. An important part of this process will be to check whether the accountant holds or controls any funds/economic resources for people or institutions affected by the sanctions.
The CCAB-I is the umbrella group for the accountancy bodies in Ireland and its latest pronouncement (only 5 pages long) emphasises that that these measures are directly relevant to both members in business and practice and the public sector as well as the charity and not for profit sectors. The Guidance contains links to the relevant sanctions lists and websites where further guidance is available.
Many of the sanctions will affect PEPs (Politically Exposed Persons) and people closely connected to them (including family members and business associates). Accountants need to have appropriate training and AML procedures for staff so that prior to approval of the business relationship they obtain senior management sign-off and then take sufficient measures to establish the source of wealth and funds; and perform enhanced ongoing monitoring (called Enhanced Due Diligence of EDD) of the relationship.
If funds connected to sanctioned institutions or individuals are held (e.g. in a clients’ money account), accountants are legally obliged to freeze such funds and any funds owned/controlled by such persons and must refrain from dealing with these assets or making them available (directly or indirectly) to persons/institutions on the sanctions list.
There is also an increased potential risk of money laundering among every client on an accountants’ client base, as individuals and businesses (directly or indirectly connected to such sanctions) try to evade the sanctions regimes and perhaps disperse funds/assets to other persons/institutions not currently on the sanction lists.
Another important matter in the Guidance is the potential impact the sanctions may have on the operation of exclusion clauses (if any) in professional indemnity arrangements. CCAB-I recommends that accountants check the current position with their providers.
The Joint Statement is available here.
The latest EU Sanctions list as of 15 March 202 is available here. Because this is a fast evolving situation, readers are advised to check the websites of your appropriate professional body and the European Union for further sanctions updates.
We have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
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. | Mar 15, 2022 | Blog, News
In several recent blogs we looked at some examples of money laundering in practical day to day business life.
Here is another one that is based on an example from the latest Consultative Committee of Accountancy Bodies (CCAB) AML Guidance released on 4 March 2022.
Your client has paid a dividend based on draft accounts. Subsequent adjustments reduce distributable reserves to the extent that the dividend is now illegal. Do I need to report this as a money laundering offence?
The answer is that whether it is money laundering or not will depend on the circumstances and the intentions of the Directors.
- Report as a money laundering offence – If there is suspicion of fraud.
- Do not report as a money laundering offence – If there is no such suspicion. It may be a simple error and will need rectified without delay.
The payment of an illegal dividend is not a criminal offence under the Companies Act.
Commentary
A company can only pay a dividend if it has sufficient ‘distributable profits’ (as defined) available for distribution. Sections 124 and 125 of the Companies Act, 2014 are the principal sections that deal with declaring dividends and the Directors ought to prepare calculations in advance, based on the company law requirements, to ensure they are calculated from profits that are available for distribution, as defined in Section 117. If a dividend is declared unlawfully the directors are potentially liable to repay it to the Company.
Please note that potential money laundering reporting scenarios are not usually clear cut and legal and professional advice may be necessary to fully understand your obligations. There is a significant technical document available on the ICAEW website, Tech 02/17BL, which, although based on the UK Companies Act, 2006, would be persuasive under Irish company law, as GAAP in both Ireland and the UK is the same (at least for now) and both countries have the same accounting frameworks with similar underlying legal principles.
We have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
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.
