by John McCarthy Consulting Ltd. | May 1, 2026 | Blog, News
Concluding our three-part series on Audit Hot Topics for 2026, last week and the week before we looked at some of the main areas that are topical at the moment. This week we look at a further tranche of issues to remind auditors as the audit season for SME entities commences.
Independence issues
Common pitfalls around audit independence include situations where:
- Individuals within firms, or entities related to the audit firm act as company secretary to audit clients or as trustee for a trust with a material interest in an audit client; and
- non-audit services provided on a contingent fee basis (normally linked to capital allowances claims, research and development tax claims or similar work) are provided.
SoQM
So that a System of Quality Management (SoQM) can be effective it needs to include:
- appropriate administrative and accounting procedures;
- an internal/external quality control process (typically hot and cold file reviews);
- effective procedures for risk assessment, and
- effective control and safeguard arrangements for the information processing system used by the audit firm i.e. data security.
If your firm needs assistance with its SoQM implementation and compliance with the ISQM 1 standard, please see our website store for the ISQM Toolkit.
Audit evidence and documentation
Many of the audit cold file review findings relate to documentation weaknesses. A very useful guidance document was published by the Chartered Accountants Ireland in March 2026 called ‘Guidance for audit evidence and documentation’ which will be a great help to audit teams to improve their audit documentation.
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 27, 2026 | Blog, News
Continuing our three-part series on Audit Hot Topics for 2026, last week we looked at some of the main areas that are topical at the moment. This week we look at some more to act as a reminder to auditors as the audit season for SME entities commences.
Revenue
Revenue is always one of the most significant items in any set of financial statements and is often a significant risk area. Weaknesses in testing are common in the testing of revenue, especially in the areas of:
and it’s important for audit teams to commence the testing from outside the client accounting system i.e. from the sales order (external), not from the sales invoice (internal).
Journals testing (ISA 315)
Journals entries processed at the client entity must always be tested, but many files are lacking evidence that this work is done.
Some audit firms are making good use of technology to test journals, like data analytics within Excel or specialised data analytics tools but it’s important to define the outliers you are looking for in the software so that they are appropriately tailored to the audit entity.
Accounting Estimates ISA 540
Everyone acknowledges that the audit of accounting estimates is a difficult area. Auditors need to appropriately challenge the method, assumptions and data used in the determination of the estimate. Sometimes this may involve having discussions with experts, like quantity surveyors, pensions actuaries and property valuation experts.
This communication should document an assessment and evaluation of the expert’s qualifications, experience and independence, but also challenge the expert’s approach to calculate the estimate.
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 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, but 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 mandatory 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.
