Aidan Clifford is advisory services manager, ACCA Ireland

Cash and equivalents

The Irish Auditing and Accounting Supervisory Authority (IAASA) has issued a YouTube presentation on the audit of cash and cash equivalents. Lasting just two and a half minutes, it serves as a useful reminder, coming into the busy audit season, of the key objective when auditing cash.


The Committee of European Auditing Oversight Bodies (CEAOB) has issued revised guidelines on auditors’ involvement in European Single Electronic Format (ESEF) financial statements. ESEF is the new e-format for annual financial reports for certain listed companies for financial years beginning on or after 1 January 2021. EU law requires auditors to provide an opinion on whether the financial statements included in annual financial reports comply with the requirements of the EU’s delegated regulation 2019/815, which specifies ESEF.

What makes a good audit?

The UK Financial Reporting Council (FRC) has issued what it describes as a ground-breaking report highlighting what it considers to be the key attributes of audit quality. The attributes identified in What Makes a Good Audit? are split between those required for a good audit and those required for a high-quality audit practice.

The report examines the audit process in terms of the risk assessment and planning, the execution, and the completion and reporting. It considers the characteristics of a high-quality audit practice through the lens of governance and leadership, ethical requirements, acceptance and continuation of appointments, engagement performance, resources, and information and communication. The report identifies examples of good and bad practices, and issues that have been identified in the FRC’s audit inspection monitoring.

Insurance accounting

The European Union has endorsed IFRS 17, Insurance Contracts. The standard is effective for annual periods beginning on or after 1 January 2023 and replaces IFRS 4.

Unlimited companies

Unlimited companies that have limited liability subsidiaries are approaching the public disclosure deadline. Up to now, an unlimited company with limited subsidiaries could avoid filing accounts, but section 1274 of the Companies (Accounting) Act 2017, as amended, requires that public filings be made for accounting periods beginning on or after 1 January 2022. Filing can be avoided if the subsidiary is converted to an unlimited entity, but there is a three-month time limit for doing this.

CDD for overseas clients

Accounting practices can experience difficulties in completing customer due diligence (CDD) for anti-money laundering purposes for an overseas client. Certified true copies of a passport and utility bill are poor evidence when there is no way of proving the identity of the certifier. Even if the overseas client visits the practice, most Irish practitioners are not expert in assessing the authenticity of a foreign-language passport or national identity card.

An alternative now emerging is an online identity document verification service, which allows the practice to send an email to the client with instructions and a link; the client then completes the CDD process itself online, and the practice is supplied with evidence of the client’s identity. Examples of online identity document verification services include ID-Pal, which operates on a fixed-fee basis, while UBO Service offers a per-use service.

Covid interruptions

According to the Central Bank, more than 30,000 insurance policies have been associated with Covid-related business interruption or other interference, paying out over €130m to 4,371 policyholders in settled claims and interim payments by the end of August 2021. Not all businesses will have been interrupted by Covid-19, so not all will make a claim. The bank says that retail insurance intermediaries are expected to assist their clients in making Covid-related claims and that it will focus on ensuring valid claims are paid promptly.

Common ownership

A natural person owning two different companies will not normally cause a group relationship to exist. However, section 7 of the Companies Act 2014 provides that two companies managed on a unified basis and under common ownership are in a group. As far as old UK GAAP was concerned, ‘managed on a unified basis’ was defined as: ‘the whole of the operations of the undertakings are integrated and they are managed as a single unit. Unified management does not arise solely because one undertaking manages another.’

This is quite a strict definition, requiring both integration of the businesses and their management as a single unit. If it can be shown that the two businesses are managed on a unified basis, then those companies are in a group and lending between them is legal without the need for a summary approval procedure. Lending between companies not in a group but under common ownership would be illegal without a summary approval procedure if the debit entry exceeded 10% of the net assets in the lending company.

As a group the companies are treated as a whole for the purposes of group size when considering the need for consolidation and entitlement to audit exemption. Even if the group exceeds the consolidation limits, section 303 of the Companies Act 2014 allows a subsidiary to be excluded from a consolidation where ‘severe long-term restrictions substantially hinder the exercise of the rights of the holding company over the assets or management of that subsidiary undertaking’. In the case of a ‘managed on a unified basis’ group, neither company has rights to a dividend from the other and so each is subject to ‘severe long-term restrictions… over [access to] the assets’.

Bogus self-employment

There has been confusion over newspaper reports that the chairman of the Revenue Commissioners informed the Dáil’s Public Accounts Committee that Revenue has no responsibility for regulating bogus self-employment. However, what the chairman actually said was that Revenue did not have a role where a person set up a company and invoiced the ‘employer’ for their services through the company. Revenue will continue to challenge the bogus self-employment of sole traders.

The situation is different in the UK where the IR35 system of off-payroll working rules allows a contractor supplying services through a limited company to be treated as an employee of the main company. This is not the case in Ireland.