Sustainability assurance
Under the European Corporate Sustainability Reporting Directive (CSRD), sustainability assurance providers need to verify sustainability disclosures in financial statements. The European Sustainable Reporting Standards-compliant disclosures will be required of very large quoted companies from early 2025, and from large quoted and unquoted companies from early 2026.
The European Commission has indicated it intends to adopt a European assurance standard by October 2026. In the meantime the Irish Auditing and Accounting Supervisory Authority (IAASA) has identified three possible options for a sustainability assurance standard in Ireland pending the finalisation of the European standard. These are: the proposed International Standard on Sustainability Assurance 5000 (ISSA 5000), the existing International Standard on Assurance Engagements 3000 (ISAE 3000) or a local standard. IAASA is seeking views on which option it should adopt.
M&As and sustainability
ACCA has produced a guide to incorporating sustainability assessments into merger and acquisition (M&A) activities. The value of a business may increase or decrease due to sustainability factors ranging from the presence of asbestos in a company’s buildings to the possible loss of corporate access to scarce or unsustainable raw material. The guide includes checklists of matters to consider during the M&A process.
CSRD for US multinationals
ACCA recently ran an event for North American members outlining the application of the Corporate Sustainable Reporting Directive on US companies with EU subsidiaries or with substantial sales in the EU, including multinationals based in Ireland. A recording of the workshop is available on demand.
Audit file reviews
The ISQM (Ireland) 1 quality standard requires a firm to establish policies or procedures addressing engagement quality reviews in accordance with ISQM 2, and includes eligibility criteria for appointment as an engagement quality reviewer. IAASA has undertaken a review of compliance with the ISQM requirement and published a summary of the engagement quality review outcomes along with a more detailed video presentation.
FRS 102 updates
The Financial Reporting Council (FRC) has announced amendments to FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, and other financial reporting standards, concluding its second periodic review of them.
The key changes mainly take effect for accounting periods beginning on or after 1 January 2026 and affect lease accounting. Almost all operating leases will become finance leases, although short-term leases and low-value leases can continue to be treated as operating leases.
Another important change is to revenue recognition, and FRS 102 now matches the five-step model from IFRS 15. For most simple businesses the change to revenue recognition will make no difference, but it will make a difference to those with complicated sales.
There have also been minor changes to fair value measurement, the statement of cashflows, share-based payments and income tax, and to section 34 for specialist activities.
The FRC has provided a summary of the main changes.
ISA 505
IAASA has issued an amended version of ISA (Ireland) 505, External Confirmations. The revised version clarifies what constitutes an electronic external confirmation; prohibits the use of negative external confirmations; strengthens the link with ISA (Ireland) 330, The Auditor’s Responses to Assessed Risks; and enhances the requirements concerning the investigation of exceptions.
The updated standard is effective for audits of financial statements for periods beginning on or after 15 December 2024.
AML weaknesses
The UK Financial Conduct Authority has recently issued guidance to entities providing payment services on the common control failings it has identified in anti-money laundering (AML) compliance monitoring.
AML compliance
While accounting practices are AML-supervised by their professional accounting body, ‘unqualified accountants’ are monitored by the Department of Justice. The department has published guidelines to help unqualified accountants and other designated persons supervised by its AML compliance unit to understand and meet their obligations under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended.
Cybercrime
The Garda National Cyber Crime Bureau has published a cybercrime risks and prevention tips document to enhance awareness. The booklet talks through some of the more common cybercrimes such as CEO fraud, ‘update’ pop-ups, the flubot virus and fake refunds or fines. It also covers remote-working threats such as ‘evil twin attacks’, ‘sniffing’ and ‘man in the middle’, which can occur on public Wi-Fi networks.
