CBI annual report
The Central Bank has issued its 2024 annual report and 2024/25 performance statement. The report includes a detailed commentary on the Irish economy as well as on various programmes including the fitness and probity regime, the launch of an innovation sandbox, the bank’s integrated approach to regulation and supervision, and its analytical work on the housing market.
E-invoicing
With support from ACCA, the European Federation of Auditors and Accountants for SMEs has launched a new vodcast series on e-invoicing (audio-only is also available). The episode on implementation features a conversation with Eilis Quinlan, principal of Quinlan & Co in Naas.
The vodcast looks at: moving from manual to digital invoicing processes; building the business case; implementation timeline and technology selection; overcoming technical challenges and staff/client resistance; and measurable benefits in the form of time savings and improved cashflow. It also includes essential tips for small firms starting their e-invoicing journey or selling e-invoice implementation to clients.
The AB article ‘Countdown to e-invoicing’ explains how to prepare for mandatory e-invoicing.
High-risk countries
In June, the European Commission updated its list of high-risk third-country jurisdictions – those with strategic deficiencies in their national regimes for anti-money laundering (AML) and countering the financing of terrorism.
A designated person, such as an accountant in practice or a financial institution, is obliged to apply enhanced vigilance to transactions involving these countries. In practice, this means seeking an explanation from a client for such transactions, verifying that explanation and taking steps to ensure that the transaction does not involve money laundering or terrorist financing.
Algeria, Angola, Côte d’Ivoire, Kenya, Laos, Lebanon, Monaco, Namibia, Nepal and Venezuela were all added to the high-risk list. Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, Uganda and the UAE were removed from it.
AML compliance
To comply with the International Standard on Quality Management (ISQM), practices have to maintain specific AML documentation and audit programmes, including the following policy and procedure manuals:
- AML policy and procedures manual (all firms)
- AML firm-wide risk assessment (all firms)
- ISQM 1 (if the firm has an audit client)
- ISQM 2 (if the firm has a listed or PIE client)
- standard audit work programme (if the firm has an audit client).
However, some accountants have been obtaining example pre-completed ISQM manuals, standard AML policy and procedures manuals and pro forma AML firm-wide risk assessment documentation, then changing the practice name and presenting them as their own. While there was some tolerance for doing this, especially when ISQM first came out, that tolerance has now ceased.
ISQM is meant to be an exercise in identifying the risk of a particular firm’s audits not being compliant, accompanied by a series of controls and risk minimisation policies and procedures. It is inconceivable that any one firm will have the same risk profile as the example firm in a pre-completed manual.
Simply copying an example ISQM manual will result in an audit fail
While reading an example manual is helpful, simply copying it will result in an audit monitoring fail. Even the superficial addition of a few lines of personalised text to a standard manual will also fail the monitoring. The audit regulators have emphasised the importance of a good ISQM manual, considering it of more importance than the actual audit files.
AML standard documentation, including an example AML policy and procedure manual, is available for free download on the ACCA website. While AML policies and procedures are more standardised than an ISQM manual, these example policies and procedures will also require tailoring. There is no firm-wide risk assessment example on the website, as this should be completely bespoke to each practice.
ISQM and AML documents need to be reviewed annually
An example firm-wide risk assessment is available on request from aidan.clifford@accaglobal.com but is supplied in a non-copyable pdf format to discourage rote copying. The client risk assessment tool, internal suspicious activity reporting form, the ‘fit and proper’ form and the AML monitoring review factsheet, all available free to download from the ACCA website, can be used without tailoring.
The ISQM and AML documents all need to be reviewed annually and evidence of that review documented. Electronic documents will usually include an audit trail of the original creation date and author, and a table of amendments by date. These properties will be lost if the document is converted to PDF (frequently done to reduce its size, making scanning and uploading easier). When manual documents or PDFs are submitted, it is useful to manually include the review dates.
Proliferation financing
Geopolitical developments have heightened tensions in many regions and raised serious concerns around the proliferation of weapons of mass destruction. The Financial Action Task Force has issued a booklet to assist accountants in identifying the risks and implementing mitigating measures. It also outlines the steps to take to prevent UN-sanctioned entities from using the financial system to support their programmes to develop or obtain weapons of mass destruction, and includes guidance on how to prevent sanctions being circumvented.
