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. | Mar 2, 2026 | Blog, News
We complete many audit cold file review assignments every year. Whilst every audit file is different, and the approach by each firm varies, there are common themes in many of the reviews we undertake. Here we look at three of the most common issues and how firms should deal with them.
IT Systems and Controls
Compliance with ISA (Ireland) 315 ‘Identifying and Assessing the Risks of Material Misstatement’ still causes problems even though the standard came into effect for accounting periods beginning 15 December 2021. Frequently, auditors fail to properly document not only key transaction cycles but also the specific control activities required under ISA 315.26 which may not be part of the transaction cycle. As a result, walkthroughs of the transaction cycle to confirm:
- Design,
- Operating effectiveness and
- Implementation
do not always cover the controls required to be reviewed.
Audit files often overlook the requirement to consider the broader control environment including areas such as:
- risk management,
- how systems and controls are monitored,
- how the culture of the entity contributes to the control environment and
- how the control environment interacts with outsourced service providers like payroll, for example.
It is not sufficient to only document the key business cycles. The audit file must also document the overarching control environment as part of the audit risk assessment.
A useful IT Controls Questionnaire (as a downloadable Word document) to help with documenting part of this process, is available on our website, for €60+VAT at this link.
Going Concern
Many audit files don’t reflect the approach to fulfil the requirements of ISA (Ireland) 570 on Going Concern.
The audit work on going concern that is evidenced on the audit file often neglects to show that management have first of all prepared their own going concern assessment, which is supposed to be reviewed and appropriately challenged by the auditors.
Instead, files often include detailed notes, prepared by the auditors, explaining why the audit team believe the entity to be a going concern, but with little evidence of a challenge of management’s assumptions included an assessment of the budgets and forecasts prepared by management. It can appear that the files include a going concern assessment prepared for management by the auditors, which an inappropriate non-audit service.
Firms are required to show that they have documented management’s assessment of going concern and show how they have tested management’s assumptions, being careful not to be biased in favour or against any particular outcome.
Fraud
Quite often we see on audit files the following text or something similar – ‘the management tell us there has never been a fraud, so therefore there is no fraud in the latest financial year’’.
This approach hardly displays the kind of scepticism required by the standard. For example, ISA (Ireland) 240.13 states (our underline) ‘the auditor shall maintain professional scepticism throughout the audit, recognizing the possibility that a material misstatement due to fraud could exist, notwithstanding the auditor’s past experience of the honesty and integrity of the entity’s management and those charged with governance.
Auditors, please also note the three Appendices at the back of ISA 240 which are not new and are well worth a read, when planning an assignment:
Appendix 1 – Examples of Fraud Risk Factors;
Appendix 2 – Examples of Possible Audit Procedures to Address the Assessed Risks of Material Misstatement Due to Fraud (we call this the ‘Auditors Toolbox’); and
Appendix 3 – Examples of Circumstances that Indicate the Possibility of Fraud.
How can John McCarthy Consulting help?
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 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:
- Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
- Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
- 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. | Feb 22, 2026 | Blog, News
The fallout from the Carillion case continues. On 16 February 2026 the UK Financial Conduct Authority issued a Final Notice and fined Richard Howson, former group chief executive of Carillion plc a total of £237,700 after he withdrew his challenge to the original penalty decision made in 2022. He was CEO of the group until July 2017. In October 2023 he was banned from acting as a company director for six years.
Howson, one of two executive directors on the Board, was aware that Carillion UK and Ireland construction business was in trouble. He failed to reflect this in company announcements or alert its board and audit committee, leading to poor oversight. Ultimately the company had a £200 million black hole.
Howson’s responsibilities included working closely with the group finance director (the other executive director on the board) to ensure Carillion communicated effectively with investors and had appropriate internal control processes. Provisions made on four of the largest projects operated by Carillion were insufficient to cover the loses expected and he did not inform the Board or the Audit Committee about these under-provisions.
In Ireland, there were at least six school projects affected by the collapse of Carillion which were:
- Loreto College, Wexford;
- Coláiste Raithín, Bray;
- Ravenswell Primary School, Bray;
- Tyndall College, Carlow;
- Carlow Institute of Further Education, and
- Eureka Secondary School, Kells.
Bespoke Audit Training at a location of your choice
If you would like a quotation for a tailored audit training session to include the latest accounting changes in FRS 102 (leasing and revenue recognition) dealing with issues like the Carillion case and how to spot these issue in your work, please contact is at 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:
- Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
- Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
- 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. | Feb 15, 2026 | Blog, News
The CPI, or the Corruption Perceptions Index (CPI) is (according to the publishers Transparency International) the leading global indicator of public sector corruption and provides a comparative snapshot of 182 countries and territories. The latest index, for 2025, was published last week (10 February 2026) at this link.
It is often used by MLROs as a supplementary tool to assist in their understanding of money laundering risks in overseas territories.
Transparency International (TI) is a Berlin based non-profit organisation set up by former employees of the World Bank. The index is calculated using data from 13 external sources (including interviews of businesses around the globe) and scores countries out of 100, meaning that the higher the score, the lower the level of corruption is in the country. In this index, Denmark comes out best with a score of 89 in this year’s report – a drop of one point compared to 2024.
Ireland has a score of 76 (compared to 77 in the 2024 report) out of 100, meaning it ranks 15th out of 182 countries (a drop of four places compared to its ranking in the 2023 index).
As a result of this poorer score – Transparency International (TI) Ireland has called on the Government to strengthen transparency and oversight across political finance, corporate and financial services regulation. TI warned that the State remains exposed to emerging corruption risks that receive less public attention but may have significant long-term consequences.
See our ISQM TOOLKIT at this link. We can tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
For AML training and compliance please send a mail to john@jmcc.ie.
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.
