by John McCarthy Consulting Ltd. | Jun 18, 2026 | Blog, News
The ISQM 1 regime is now fully in place since its initial roll out in 2021. Every Irish audit firm will need an ISQM-compliant System of Quality Management (‘SOQM’).
Many firms have already prepared their ISQM 1 policy statement (called the Statement of Quality Management or SoQM), but have you reviewed yours in accordance with the standard on an annual basis since its initial implementation.
Our ISQM TOOLKIT is the answer to your needs and is available to purchase now for immediate download to help you. Click here for more details.
Regulators are looking for clear evidence of progress with the application of the standard and especially with evidence of root cause analysis (RCA).
Here are our top ten tips to helping you get your SOQM across the finish line:
- Read the ISQM. There’s really no way around this!
We’d recommend you also get hold of the IAASM Implementation Guide, which is genuinely helpful – although be warned; this is for the international version of the ISQM and doesn’t include the additional quality responses added to the Irish standard by the Irish Audit & Accounting Supervisory Authority (IAASA).
- Assess your current approach to audit quality. Firms have various audit quality policies and procedures already in place. While we want to stress that you shouldn’t simply ‘bolt on’ ISQM to your existing approach, it’s helpful to get a clear insight into what’s happening now (e.g., by taking a look with a critical eye at your existing procedures and matching them to the requirements of our ISQM Toolkit).
This may mean gathering various documents (like staff appraisals, CPD plans and IES 8), clarifying existing arrangements with the rest of the audit team and organising your thoughts.
- Find out what your team thinks about your current approach. Chances are, you and your team already have sound insights into what’s working well and what isn’t, and some honest feedback may be painful but is essential to making progress.
John McCarthy Consulting Ltd. (working in conjunction with our colleagues in Apex Professional Consulting Ltd.) has produced the ISQM TOOLKIT for the Republic of Ireland. It comes with a unique team questionnaire that can help you to gather anonymous feedback including suggestions for tackling problem areas.
- Start with leadership and governance issues. For most if not all small firms, a critical success factor for ISQM compliance is the degree of support from partners, especially managing partners within firms.
Whether your firm is a sole practitioner or a larger firm, ISQM 1 challenges senior leadership to demonstrate genuine commitment to audit quality, recognising that this may not always align with a firm’s commercial strategy or its leaders’ priorities. You need to identify and deal with those conflicts, if present. You’ll also need to consider how much of the SOQM can be delegated to others and how the firm’s leadership will demonstrate that they bear ultimate responsibility for its success.
5. Don’t dismiss the appointment stage. Many firms assign consideration of (re)appointment to junior audit staff who lack the judgement to assess ethical threats and to apply the right safeguards. Accepting a client relationship or engagement inappropriately removes any chance to achieve a quality audit.
6. Be honest about priorities. Many firms say that they’re committed to audit quality, but a cursory scrutiny about how much of the firm’s time and money is spent in supporting and developing high quality audit may suggest otherwise. ISQM 1 demands that firms allocate enough resource to recruit and develop audit teams, supply them with appropriate tools (including hardware and software) and allow them the time to conduct audits thoroughly. You’ll also need to assess the quality risks of over-relying on external training providers, file reviewers or providers of methodology or IT tools.
7. Refocus on prevention rather than cure. In the past, many audit firms have relied on regular cold file reviews to ensure their quality is up to scratch. Whilst such reviews will still play a key role, firms need to consider how to avoid audit defects altogether. For many audit partners, this may mean reducing the amount of time spent in review, and increasing the time spent in directing and supervising audits whilst in progress. Better prepared and managed teams should produce better audit files that need less review and remediation.
8. Plan your monitoring as you go. As you set out your SOQM, make sure that every element is trackable and assign responsibility for monitoring to specific individuals, with clear instructions about how they should check progress and how they must record this. This should make the ‘monitoring and remediation’ part of the process much less burdensome. Don’t leave it all until the end!
9. Get familiar with Root Cause Analysis (‘RCA’). This is a tool that has increased in profile of late, and while RCA can be sophisticated, it needn’t always be so. The aim is to identify systemic defects that, if corrected, will prevent problems from recurring. Don’t be afraid of asking ‘why did X happen’ multiple times when a quality problem is spotted, until the roots are uncovered.
10. Consider external support. Whilst it’s possible to implement ISQM 1 without any other support, especially if you use a good transition tool you may find that getting the assistance of a specialist can be hugely valuable, even if just as a sounding board.
If you need assistance with implementation, or have any questions please contact John by e-mail john@jmcc.ie.
The ISQM TOOLKIT is available here to purchase now for immediate download.
All the templates on our website have had a refresh as of June 2026 and the letters of engagement have had new paragraphs added for:
- the potential use of artificial intelligence and machine learning on client assignments;
- along with auto enrolment for payroll assignments.
There is a bulk discount (five templates for the price of four) for purchases of five or more templates when purchased in a single transaction.
If you need an up-to-date engagement letter, there is a search bar near the bottom of our home page (www.jmcc.ie) to quickly look up the item you need. More details see here.
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 our training and brainstorming sessions to suit each firm’s unique requirements.
Publications:
All the templates on our website have had a refresh as of June 2026 and the letters of engagement have had new paragraphs added for:
- the potential use of artificial intelligence and machine learning on client assignments;
- along with auto enrolment for payroll assignments.
There is a bulk discount (five templates for the price of four) for purchases of five or more templates when purchased in a single transaction.
If you need an up-to-date engagement letter, there is a search bar near the bottom of our home page (www.jmcc.ie) to quickly look up the item you need. More details see here.
For those of you still in the process of reviewing your 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 our training and brainstorming sessions to suit each firm’s unique requirements.
Publications:
by John McCarthy Consulting Ltd. | Jun 18, 2026 | Blog, News
Once upon a time it was possible to have the same client engagement letter in place for several years, without too much upset.
However, the pace of change in the various pieces of overlapping legislation that impact on engagement letters, seems to be getting faster and faster. Different obligations under criminal law, tax law, company law and anti-money laundering that are now required in the typical contract with your client, mean that there is a never-ending requirement to review your letters and issue revised and updated letters to your clients on an annual basis.
Here is a quick checklist of the legislation you need to include in audit engagement letters:
| Topic |
Legislation |
| Company law |
Companies Act 2014 |
| Criminal law
|
· Section 59 Criminal Justice (Theft and Fraud Offences) Act, 2001 and 2021
· Criminal Justice Act 2011 |
| Tax law |
Section 1079 Taxes Consolidation Act, 1997 |
| Anti-Money laundering/terrorist financing |
Criminal Justice (Money Laundering and Terrorist Financing) Acts, 2010 to 2021 |
| Data Protection |
Data Protections Acts 1988 to 2018 and the GDPR |
All the templates on our website have had a refresh as of June 2026 and the letters of engagement have had new paragraphs added for:
- the potential use of artificial intelligence and machine learning on client assignments;
along with auto enrolment for payroll assignments.
If you need an up-to-date engagement letter, there is a search bar near the bottom of our home page (www.jmcc.ie) to quickly look up the item you need. More details see here.
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 our training and brainstorming sessions to suit each firm’s unique requirements.
Publications:
by John McCarthy Consulting Ltd. | Feb 8, 2020 | Blog, News
As we highlighted last week there is a newly revised and restructured Code of Ethics coming soon for accountants in Ireland, expected to be effective from the 1st of March 2020.
Sometimes accountants realise they have a conflict of interest due to lack of foresight or pre-planning. An example could be trying to sort out a dispute between two clients of the same accountant. The new Code seeks to address this with more guidance.
Conflicts of Interest
The sections on conflicts of interest in the new code have been completely replaced and split into two sections, 210 and 310, covering ‘business’ and ‘public practice’ respectively.
These sections have been revised and the guidance on ‘how to apply the conflicts of interest requirements’ has been enhanced.
The new section maintains the requirement for all parties to be notified of the conflict and obtain their explicit written consent, but also:
- Gives examples of the types of conflict of interest;
- Makes explicit reference to the ‘RITP’ test – the Reasonable and Informed Third Party test (which was only hinted at in the past). The definition of ‘RIPT’:
- The reasonable and informed third party is someone ‘who weighs all the relevant facts and circumstances that the accountant knows, or could reasonably be expected to know, at the time the conclusions are made. The reasonable and informed third party does not need to be an accountant, but would possess the relevant knowledge and experience to understand and evaluate the appropriateness of the accountant’s conclusions in an impartial manner.’ – (from 120.5 A4 in the proposed new Code of Ethics)
- Sections 210/310 also provide additional discussion of matters such as conflict identification processes, safeguards, types of disclosure and consent, and when work can be taken on without disclosure and consent.
A helpful flowchart to aid the decision-making process regarding conflicts of interest is available at this link (courtesy of the ICAEW helpsheet from December 2019).
Watch our website for the forthcoming webinar on the new rules.
See our latest additions to the website store which are the AML Business-Wide Risk Assessment Word template 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, effective from 26 November 2018.
For 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 4, 2020 | Blog, News
As we highlighted last week there is a newly revised and restructured Code of Ethics coming soon for accountants in Ireland, expected to be effective from the 1st of March 2020.
As readers might know, the Code of Ethics used by accountants across the British Isles is based on the code issued by the International Ethics Standards Board for Accountants – the IESBA code. The format and layout for the new Code of Ethics will look completely different from the previous version. The purpose of this change is to help with the understanding and application of ethical practice.
NOCLAR
The most significant change, however, is the inclusion of ‘NOCLAR’ (Non-Compliance with Law And Regulation), which provides further emphasis on whistleblowing in the ‘public interest’. The term ‘public interest’ is dealt with in 100.1 of the existing Code as follows:
‘Acting in the public interest involves having regard to the legitimate interests of clients, government, financial institutions, employers, employees, investors, the business and financial community and others who rely upon the objectivity and integrity of the accounting profession to support the propriety and orderly functioning of commerce.
This reliance imposes a public interest responsibility on the profession. Professional accountants* shall take into consideration the public interest and reasonable and informed public perception in deciding whether to accept or continue with an engagement or appointment, bearing in mind that the level of the public interest will be greater in larger entities and entities which are in the public eye.’
NOCLAR is dealt with in two brand-new sections 260 and 360, which cover members in ‘business’ and ‘public practice’, respectively.
The Code includes additional guidance material giving members specific permission to breach confidentiality where the accountant considers it to be in the public interest.
The inclusion of NOCLAR in the IESBA Code requires an accountant suspecting a business or client related illegal act to consider whether the act is inconsequential; and if not, they should raise it internally with the client or employer. If the accountant does not consider that the client or employer has dealt with the issue properly, the accountant should make disclosure to the relevant external authority, if it is in the public interest to do so.
The previous version of the Code of Ethics, however, already included specific detail to breach confidentiality in the public interest and so the NOCLAR provisions (new sections 260 and 360) can be seen as a change of detail rather than of substance.
Next week we will look at the second most important change in the Code’s structure, to do with conflicts of interest.
Please see our latest additions to the website store which are the template AML Business-Wide Risk Assessment template 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 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.
Once the webinar viewing is completed, customers will automatically receive a CPD Certificate confirming their learning.
by John McCarthy Consulting Ltd. | Jan 27, 2020 | Blog, News
A reminder of what they are before the new Code of Ethics becomes effective
The nature of accountancy and the complexity of the work that accountants, tax advisers, insolvency practitioners and auditors do, means that this work needs to be trusted, and demonstrate the highest standards of professional conduct.
The Code of Ethics and its obligations are therefore a key part of the accounting profession’s commitment to these standards.
Early this year, Chartered Accountants Ireland (among the other professional bodies that subscribe to the IESBA Code) will be launching a new Code of Ethics. If you want to get a sneak peek at what the new Code will look like, have a look at the UK ICAEW Code here at Code of Ethics, updated from 1 January 2020.
It is not expected that there will be many changes of substance to the Professional Accountancy Bodies Codes of Ethics. One of the primary differences, however, is expected to be the new style of language used in writing the Code. The purpose of this change is to make the new Code easier to navigate and to help with the understanding and application of ethical practice. For example, it will be clearer which parts of the new Code are requirements, and which are guidance.
Before this new Code comes into effect, as a reminder, let’s look at the five fundamental principles (which will remain unchanged) of the existing code. These principles govern all ethical behaviour for accountants in practice and in business and indeed accountancy students:
Fundamental Principles of Ethical Behaviour:
- Integrity – to be straightforward and honest in all professional and business relationships. Integrity also means that members must not knowingly be associated with misleading information.
- Objectivity – not to compromise professional or business judgements because of bias, conflict of interest or undue influence of others. If undertaking an assurance engagement, members must also be and appear to be independent.
- Professional Competence and Due Care – to attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organisation receives competent professional service, based on current technical and professional standards and relevant legislation; and act diligently and in accordance with applicable technical and professional standards.
- Confidentiality – to respect the confidentiality of information acquired as a result of professional and business relationships. Confidential information must not be disclosed outside the organisation without authority, unless there is a duty or right to disclose, or disclosure is in the public interest and permitted by law.
- Professional Behaviour – to comply with relevant laws and regulations and avoid any conduct that the professional accountant knows or should know might discredit the profession.
Please visit our website for 20 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.
Once viewing is completed, customers will automatically receive a CPD Certificate confirming their learning.
