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. | Feb 22, 2026 | Blog, News
The International Standard on Quality Management (ISQM) 1 has now been in place since 15 December 2022. Have you reviewed your ISQM in action and updated it for any root cause analysis carried out in the interim?
The standard requires firms to record quality objectives in six key areas. These are:
- Governance and leadership;
- Relevant ethical requirements;
- Acceptance and continuance of client relationships and specific engagements;
- Engagement performance;
- Resources; and
- Information and communication.
The first of these areas is Governance and leadership. This is of paramount importance to quality management because it drives how the firm is perceived by its Partner, staff, audit clients and ultimately the public. Governance and leadership principles serve as the framework for how the firm’s decisions are made.
The standard has enhanced requirements regarding the firm’s commitment to quality through its culture.
4 Key Areas of Quality
The requirements now also focus on 4 key areas:
- The firm’s public interest role;
- The importance of professional ethics, values and attitudes;
- The responsibility of all personnel for quality relating to the performance of engagements or activities within the Statement of Quality Management (SoQM), and their expected behaviour; and
- Quality in the context of the firm’s strategic decisions and actions (e.g. will we expand the Tax Department and offer tax planning services to our private company audit clients?), including the firm’s financial and operational priorities.
There are requirements that:
- Address leadership’s behaviour and commitment to quality, and their accountability for quality;
- Address the organizational structure of the firm and the firm’s assignment of roles, responsibilities and authority; and
- Address resource needs, and resource planning, allocation and assignment, which also include financial resources for matters like up-to-date software and training.
This brief blog is only a summary of the main requirements.
For more assistance please see our ISQM Toolkit or if you prefer to chat through the different audit risks and potential appropriate responses presented by this standard, please call or e-mail John McCarthy FCA on Governance and leadership or e-mail him at john@jmcc.ie
Other publications and AML webinar
by John McCarthy Consulting Ltd. | Mar 25, 2024 | News
A recent UK High Court case reported in January 2024 makes interesting reading. The auditors were cleared of any liability in a claim for negligence brought by their former client.
A claim for negligence was made by a Travel firm called Ickenham Travel Group (Ickenham) against its auditors, Tiffin Green (TG) Ickenham alleged that as a result of the auditors’ negligence Ickenham achieved £6m less than it could have achieved otherwise, when it sold a business division called BTD.
The claim stated that TG were:
- Negligent and
- In breach of contract;
- Failed to identify various irregularities and an understatement of £4.5m in the financial statements (caused by overstated creditors);
- For each of the four years ended 30 September 2014, 2015, 2016 and 2017 in which they audited Ickenham.
Ickenham stated that if the error had been identified, the company could have taken action to address the amount and avoid any recurrence of the issue.
Ickenham is a travel agency and that had two divisions until July 2019:
- a business travel division called ‘Business Travel Direct (BTD)’ and
- a consumer travel agency, called ‘LetsGo2’.
In early 2019, Ickenham discovered serious irregularities in its accounting systems and records, which originated before the FY14. As a result the trade creditors of LetsGo2 were overstated by £4.5m (the ‘understatement’). In 2019, the combined turnover of LetsGo2 and BTD was £95m, so the understatement was material, even though the accounting problems only related to LetsGo2.
The £4.5m understatement is believed to have built up over a long number of years and started before TG was appointed. It was accepted by Ickenham at the end of the trial that the understatement was at least £2.5m in September 2014 when TG were first appointed. TG first identified the understatement before completion of the audit of the FY 2018 , when new auditors were appointed.
In response to Ickenham’s claim, TG said that BTD was sold for its true value and among other matters was not the ‘type of loss for which TG was liable’.
The Court agreed with the expert witnesses for both sides who gave evidence at the trial and concluded that ‘a reasonably competent auditor probably would have identified and alerted Ickenham to the irregularities and understatement’. TG had failed to do so and had accordingly breached their duties as auditors in both contract and tort by failing to act as a reasonably competent auditor.
These breaches included:
- failing to identify the understatement of £4.5m and
- failing to identify the irregularities’.
Judge Tinker ruled in favour of TG stating that Ickenham had failed to prove that it suffered any loss when it sold BTD, rejecting the loss and factual causation argument.
In the writer’s opinion the claimant would be more likely to have made a more successful case if they had made a different type of claim.
To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.
All our courses are listed here.
Please also go to our website to see our:
- Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- letters of engagement and similar templates. Please 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.
- ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
- We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
by John McCarthy Consulting Ltd. | Mar 19, 2024 | News
A 2023 ACCA disciplinary decision relating to a member makes interesting reading.
The main complaint was that he had created a document falsely claiming that his AML policies had been in existence for five years, when in fact they had not.
An ACCA remote AML inspection in October 2020 concluded by seeking additional documents including the firm’s AML Policy and Procedures document.
The ACCA compliance officer asked for the original version of the AML policy allegedly created in October 2018. The member claimed no updates had been made to the document and said that after reviewing the firm’s AML policy there was no need to make any changes to it.
At the subsequent disciplinary tribunal, the ACCA Case Officer pointed out that the AML Policy and Procedures document could not have been created in October 2018 because it was based on and ACCA technical factsheet “Anti-Money Laundering (AML) Policy and Procedures”, published by ACCA in February 2020.
The member eventually admitted that he had acted dishonestly when he claimed the AML policy had been in place since October 2018.
AML breaches
The AML Policy and Procedures created by the member had the following deficiencies:
There was a lack of evidence of:
- A Firm-Wide Risk Assessment;
- AML training to relevant staff;
- The firm’s criteria for different risk ratings.
There were also problems with:
- Inconsistency in the firm’s application of its AML Policy and Procedures Manual, because some clients had been incorrectly assessed as ‘medium risk’ when they displayed characteristics of one of more of the ‘high-risk’ factors listed in the firm’s AML Policy and Procedures document
- Lack of evidence of AML training for staff;
- The simple ‘Yes’/’No’ template used didn’t provide an assessment of the risks the firm faced or the actions to take to mitigate those risks;
- The AML template document did to relate to relevant AML processes operated by the firm and had few details of the firm’s day-to-day processes.
The disciplinary committee decided that Hung’s dishonesty and AML breaches reached the highest threshold of sanctions and excluded him from membership of the ACCA and he was ordered to pay costs of £6,000.
To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.
All our courses are listed here.
Please also go to our website to see our:
- Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- letters of engagement and similar templates. Please 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.
- ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
- We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
