In Practice News
In Practice News
Sector Specific and Non-EU European Sustainability Reporting Standards
The European Commission has put forward a number of proposals to reduce the reporting burden for financial market participants in their recently announced Work Programme for 2024. One of the proposals is 2-year delay of the date of adoption of the sector specific ESRS and the proposed standard for non-EU companies with business in the union, currently required to be adopted by July 2024.

A first set of European Sustainability Reporting Standards (ESRS) was adopted by the Commission on the 31st of July 2023. The ESRS in this first set are sector agnostic, meaning that they apply to all undertakings under the scope of the CSRD, regardless of which sector or sectors the undertaking operates in.

This postponement will allow companies in scope to focus on the implementation of the first set of standards and will allow EFRAG time to develop proportionate sector specific standards.

Kind Regards, CSRD Team

IAASB approve auditing standard for less complex entities
The International Auditing and Assurance Standards Board have approved their standard for the audit of less complex entities. The standard is expected to issue following approval by the Public Interest Oversight Board of the IAASB’s due process, which is anticipated in December 2023.

CPA Ireland has welcomed this standard and looks forward to working to support the adoption of the standard globally and for use in the Irish market.

FRC to strengthen auditor reporting requirements of breaches of laws and regulations.
The Financial Reporting Council (FRC) has launched a consultation to strengthen auditor requirements to detect and report material misstatements from non-compliance with laws and regulations and to clarify instances auditors should report such breaches, and other significant matters, to the relevant regulators.

CPA Ireland Bye Law Amendments
Updated changes to Bye Law 7, 14 and 15, will become effective from the 1st January 2024. The main changes are laid out as follows:

Bye Law 7-Quality Assurance (QA)

Addressing of Quality Assurance recommendations

7.7-An emphasis is now placed on the requirement for firms and relevant individuals to take all reasonable steps to ensure that recommendations arising from quality assurance reviews are implemented within a reasonable period.

QA review selection process

7.12.1- The process for selecting firms and individuals for a QA review adopting a risk-based approach was expanded to incorporate those who were non-compliant with their obligations as a designated person under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 as amended and where information was received from other regulators.

QA Shortened cycle

7.12.2-A QA review cycle of a firm may now be shortened where:

  1. two consecutive Grade Bs are scored by a firm in an audit review,
  2. where there is a failure to demonstrate adequate improvements within a reasonable time frame in any review area; or
  3. in any circumstance where there is a heightened risk associated in line with risk criterion.

Review Grades

7.17-Grade categories were expanded to introduce a “no grade” category. This is to be awarded where it is not possible to assess the adequacy and appropriateness of the quality of the engagement files undertaken by a firm or where a firm will not engage in the review process. This new category of grade also applies to Anti-money laundering, Continuous Professional Development and Investment Business reviews per Bye Laws 7.17.2, 7.17.3 and 7.17.4.

Thematic Reviews

7.23- The Bye Law was expanded to allow the completion of thematic reviews. Such reviews will undertake an assessment of a particular focus area and its implementation by firms and/or relevant individuals. These may occur on an ad-hoc basis and will be undertaken separate to the standard QA cycle review process.

Bye Law 14-Investment Business Regulations

Capital and Monitoring Requirement

4.01- The monitoring cycle for a firm in procession of a category 1A will increase from a minimum of once in every six years to ten years.

4.01- Those holding the category 2(1) of authorisation will be required to have positive financial assets. This will supersede the existing capital requirements in place.

4.01-Similarly, those holding a category 2(2) authorisation will be required to have a minimum capital requirement of €125,000, this represents an increase from the existing requirements which differs for sole traders and partnerships. Those in this category will also be now subject to an annual monitoring cycle.

Bye Law 15-Anti-money laundering (AML) Regulations

Remote reviews

15.17.17- The Bye Law was expanded to facilitate remote AML reviews.

Re-review outcomes

15.17.20-The potential outcomes for a re-review were detailed in the revised Bye Law. These mirror those of an initial review.