Ireland has adopted the Financial Reporting Council (FRC) auditing framework for the UK, following feedback on the Irish Auditing and Accounting Supervisory Authority’s (IAASA) consultation over which existing audit framework should be adopted by Ireland
The consultation last year followed from Ireland’s signing of the European directive on statutory audits, which meant t IAASA became responsible for the adoption of the auditing framework in Ireland.
It put forward three options: adapting the UK FRC audit framework for the Irish market; adopting the International Auditing and Assurance Standards Board (IAASB) international audit framework; or developing domestic standards.
Earlier this year IAASA announced it was going to base the auditing framework for Ireland on the FRC framework for the UK, saying the FRC standards provided more detail than the international equivalents in some areas, and particularly in relation to ethical matters; while this approach would also result in minimal disruption to businesses and auditors, particularly those who operate in both jurisdictions.
The feedback document notes that nine parties responded with comments, and none of them supported the idea of developing Irish domestic standards.
Four respondents (KPMG, Irish Stock Exchange, PwC, and the Association of International Accountants (AIA)) preferred option one, which was the eventual choice.
Three respondents (Deloitte, CPA and ACCA) preferred option two (IAASB), while two respondents (CAI and EY) did not specify a preferred option.
In its response ACCA, along with several other respondents, noted that following the UK standards may start to diverge from the European standards and Ireland may be forced to move away from the FRC standard.
The AIA indicated that in the longer term there is a clear trend towards convergence of International standards and it is to be assumed at some point that Ireland will be forced to implement its own ‘homegrown’ audit framework.
Deloitte indicated that ISAs issued by the IAASB are legislative neutral and therefore can be adopted without the creation of a standard setting process in Ireland. The Irish Stock Exchange considered adopting the FRC framework to be the most straightforward approach, and said any Brexit related amendments can be decided at a later date when there is clarity on whether or not the FRC auditing standards remain in full compliance with EU law.
IAASA stated that its policy in relation to amendment of the framework for use in Ireland is to have minimal amendments to the UK regime. Amendments will be considered where there is a conflict with Irish or EU law or where there are clear, distinct differences between the Irish and UK market, which impact upon the applicability of standards.
A number of consultation responses indicated that any requirements that are not contained in law should be removed. IAASA notes that the legislation sets out the minimum standards that must be applied and that the standards adopted can impose additional restrictions and requirements.
IAASA’s feedback paper: the future auditing framework for Ireland is here.