Audit report guidance
The Irish Auditing and Accounting Supervisory Authority (IAASA) has published an updated edition of its Compendium of Illustrative Reports, which reflects the auditing standards and legislation in effect as at 30 June 2025.
The compendium includes example audit reports for:
- financial statements of a private company
- financial statements of a private group
- financial statements of a micro company
- revised financial statements
- abridged financial statements
- financial statements of a qualifying partnership
- financial statements of an industrial or provident society
- financial statements of a friendly society.
Key changes include an updated and simplified link to the description of the auditor’s responsibilities on the IAASA’s website, and updated language in the auditor’s opinion section to refer to ‘material accounting policy information’.
The compendium also includes sample wording to reflect the requirements of SI No 322/2023 – European Union (Disclosure of Income Tax Information by Certain Undertakings and Branches) Regulations 2023. For reports prepared under the Companies Act 2014, the auditor must include a statement on whether the entity was required to publish a report on income tax information for the previous financial year.
IAASA plans a minimum of two unlimited examinations of sustainability statements
Finally, the compendium reflects updated legal references, amended terminology and new footnotes within the example reports for industrial and provident societies and friendly societies, providing additional guidance for auditors on the content and format of their report.
Corporate reporting in UK
The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting. The report shows that the quality of corporate reporting across FTSE 350 companies is being maintained. The three areas identified as in need of improvement are impairment, cashflow statements and explanations of key assumptions. The FRC also identified a lack of internal consistency within the annual report as being an issue.
Findings include the following:
- Cashflows triggered a ‘substantive question’ letter from the FRC in almost one in 10 of all cases reviewed. The main item identified was misclassification errors.
- Impairment of assets also triggered a 10% query rate, with inconsistent assumptions, incomplete or missing sensitivity analysis, and issues with the discount rate used being the most common issues arising. Recoverability of investments in subsidiaries was also a cause for queries being raised.
- Financial instruments raised questions in the areas of repurchase of company shares, warrants, the accounting treatment applied to embedded derivatives and the use of the expected credit loss model to group company loans.
- Revenue recognition disclosures caused issues due to lack of an explanation of the accounting policies applied to a significant revenue stream, how the effect of variable consideration had been considered and the rationale for recognising revenue over time.
The UK government is not yet mandating a requirement to disclose sustainability information, but the report notes that it is consulting on the use of UK Sustainability Reporting Standards (UK SRS). UK companies must still, however, make Climate-related Financial Disclosures.
IAASA findings
The IAASA published the results of a similar exercise in Ireland. The report notes that 2025 was the first year in which issuers were required to publish sustainability reports and the IAASA said that it is planning to undertake a minimum of two unlimited examinations of the sustainability statements of issuers in 2026. It is planning to focus on the connectivity between the sustainability statement and the financial report, and evaluate the double-materiality assessment.
Sanction breaching has moved up the political agenda in Ireland
The IAASA identified weaknesses in reporting in the areas of asset impairments, provisions, contingent liabilities and recoverability of deferred tax assets, highlighting these as areas that will require additional attention due to the current economic uncertainty. The impact of tariffs on possible impairment triggers and calculations, global minimum tax rules on current and deferred taxation, and the geopolitical risks affecting recoverability of deferred taxation assets are all discussed in the report.
The report can also be viewed on YouTube.
Sustainability reporting
EFRAG has released a summary report on the outcomes from its symposium on sustainability reporting standards for SMEs.
Sanction breaching
Sanction breaching has moved up the political agenda in Ireland with the publication of the General Scheme of the Criminal Justice (Violation of EU Restrictive Measures) Bill 2025. Head 10 proposes to make sanction busting punishable on conviction on indictment, to an unlimited fine or imprisonment for a term not exceeding 10 years or both.
For accountants in industry, the list of prohibited exports or customers is extensive and being added to regularly. For accountants in practice, there is a list of persons for whom the accountant may not act and a general prohibition on the provision of account, audit or taxation services, indirectly or indirectly, to a client with an establishment in Russia.
In the UK, Colorcon has recently been fined £152,750 for breach of the UK’s Russia financial sanctions. The fine relates to 79 payments totalling £128,277.72, made by Colorcon’s Moscow office to its Russian employees and service providers. While the employees were not designated as sanctions targets, their banks were designated, meaning Colorcon breached financial sanctions by paying into accounts at the sanctioned banks.
Companies cannot rely on third parties to undertake financial sanctions checks
Having self-reported the breach to the Office of Financial Sanctions Implementation (OFSI), Colorcon received a 35% discount on the fine in recognition of its voluntary disclosures and full cooperation with OFSI’s investigation; without this reduction, the penalty would have been £235,000. However, it did not qualify for the full discount because OFSI considered that it had unreasonably delayed in reporting the breaches.
OFSI assessed the breach as ‘serious’. It considered that aggravating factors included Colorcon’s status as a global company with an established presence in Russia that had ‘significant awareness’ of sanctions risk but failed to take reasonable care. It also noted the repeated and persistent nature of the errors made by Colorcon in failing to identify multiple payments to accounts held at designated banks over an extended period. (Payments were made between March and December 2022.)
OFSI noted that companies cannot rely on third parties to undertake financial sanctions checks on their behalf and they will be liable for any breaches that occur. They should regularly reassess sanctions policies and processes. In Colorcon’s case, relevant documentation had not been materially updated since 2018, and although 44 of the payments were covered under a general licence before its expiry, Colorcon failed to comply with its reporting obligations and continued transactions even after the licence had expired.
