VIP Video Library – Session 13

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The Irish Accounting & Tax Summit

Session 13 - KnowledgeHUB – Most Common Technical Queries of 2020

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Session 13 - Presentation

Session Transcript

This transcript was created using AI and may contain some mistakes.

Okay. So why come here today? And I’m not going to do a huge introduction and I’m looking at all the names here. Everybody has been on, on this series with the snow for a couple of weeks, you know, the drill and what’s most important here right now is that we get into the goalies. He’s sharing the content, sharing the information.

And one request that I would make of you is I can see Elisabet smiling face. And how are you there, Elizabeth? And I can see Katrina always has our camera on, and sometimes we get to meet Katrina’s baby. And so I don’t know what are we’re going to, I put Katrina’s baby to sleep on an audit workshop a couple of weeks ago.

And so anybody that has camera facilities, and Brenda you’re always the camera. So anybody who has camera facilities, I would invite you to turn on your cameras. And so that we can feel a little bit connected, like as if it was an in person event. And it’s the little things that matter. Okay. So where does our session come from today?

And we have column John and Mike. And what we’ve done is we’ve gone through the most common queries that have come up in knowledge hope in the last couple of months. And we’ve identified the queries that are coming up and open up and basically three, four different queries that are going to cover it in column three. John has for you, Mike is for recovering 12 topics,

and these are bite size chunks, three, four, five minutes. Each we’re going to cover a lot of ground. And so I’m going to shut up talking and I’m going to pass it over and to call them, who’s going to kick off first before we do that, if you can download the notes from today’s session and the Slanes do give a good summary of what we’re of what we’re covering.

And John has an a case study in here as well, which is, which is a helpful, helpful document. So if you download the notes pranks, Jonathan has put them up on the portal, make sure that you have your notes to go through and column. Let’s not waste any more. Turn on, just share my screen. I got to go.

Yeah. Folks as we go through and there is four, so there’s three different sessions, but as we go through, if you have questions, shoot them into the chat box and all the guys have the chat box. We will answer the questions if we can. And the central bank regularly to cause problems. Yeah. If they all chest, okay.

So, you know, and the, these queries would come up on a, on our regular basis from ourselves, from, you know, from, from, from Omnipod clients, you know, maybe as a result of, you know, laundry visits as a lot of, besides myself and Mike being out there, or dad just, just, it just keeps on coming up.

So, you know, what are we looking at? We’re looking at mainly these two types of entities. So investment insurance intermediaries, these are the guys who are regulated under the investment intermediaries after 1995 and then insurance and reinsurance intermediary. So it’s an important distinction. These are guys who are regulated under Nate under the authorized on the European union insurance director regulation 2018.

So there has been a change over the last one. I think this is boss is, is causing, is causing issues. What I would say first off is set up bike, really powerful lit lamp of search engine. They’re on the central bank. If you’re doing an audit for any of these guys, this is where you need to go first, you need to,

we need to, you need to find out, well, what are they authorized for? So the favorite bike has a, has a search, a search facility there where you put in the, uh, the, the name of the provider on it’ll bring up what they’re regulated for. So it’ll tell you immediately what you’re actually looking at. So I think industry,

that’s the first protocol that everyone should go to. And of some of the people here that are looking at the names are well-experienced, I’m dealing with central banks. And I know that for some of them, this is kind of like telling them to soak egg. Unfortunately, the reality here folks is the siting point of the problem with most of these regulated entities in monitoring visits and the solution to most questions that we get is to do this search.

The column has up on the screen in under central bank website, find out what they are and find out what the Prudential handbook is that relates to that entity, because that tells you exactly what you got to do. Exactly. So, and you don’t, you know, this like this, you’re starting so budget once you know where you are within, within,

you know, it’s all, you, it’s either going to be an investment in Nadiri under the AIA. If I backed art or it’s an insurance and insurance re reinsurance, and there there’s a re there’s a big difference and a big differentiation as we’ll find, as we go along. So what can a queen, I would still call up now, I know that you said that like,

you know, we’re telling people how to suck eggs and they say, well, still we’re still kind of cold up. So, you know, can they evade all the exemption? Can they find a breach, a breach of our statements? Can they repair accounts under warranty or efforts would advise Dan, what are my, as an auditor, my report requirements to the central bank.

And then what auto work do I need to do? So it comes back to, again, it goes back to this thing, if you don’t know what you’re regulated for, you don’t know what the, what you are, what your, what your am, what our work is, your evolved to what you were required to do. So, but the first three,

we can kind of cover all fair, you fairly quickly in terms of, okay, so, so section three 50 comes at 14 era forest and shackle flight companies. Okay. And in that, under, under scheduled flight, it refers to any other company, the carry on of business, which is required by virtue of any enactment or instrument to be authorized by the central bank.

And that’s kind of where, where it’s common form. So all, all, all, all these insurance, all these insurance from investments in meters, or, or insurance, reinsurance, and meters are required to be authorized by the central bank, therefore are scheduled for a company. What, what, what does that mean? It basically means that in essence,

they’re deemed to be a large company and they can’t, they can’t avail the counter van of the, uh, of the M uh, the, the, the small Cobra, small Coby provisions, because they’re deemed to be a large copy. They have the fairs. It’s a bit unfair because the vast majority of, of, of, of, of entities are we would come across from South and Mike on,

on, on our, let’s say our reviews, no offense to anyone, but they’re a bit Mickey mouse, you know, maybe 40 grand, 50 grand, a hundred grand turnover and their gene for a large company. And the problem comes with this. Whereas there are, there are a large company, therefore, the countervailing board exemption, they can’t find a bridge accounts.

They must use the full efforts wall or two. You’ve got to have additional, additional disclosures regarding audited. Auditor’s re renumeration. So we’re going down this rabbit hole. And then as a large company, they can’t avail of, of the, of the passing. So this will be, this will be a big, a big issue for a lot, a lot,

a lot, a large number of practitioners, because again, they’re small, small entities. They probably do do, do not all it services though. It’s prepping preparation of the flesh statements. They probably do CT warns and coal sack and all that kind of stuff there. They kind of ended up on the policy, so I’d have to apply. So kind of other safeguards to get around the non,

all it services. Just let’s, let’s just jump in here to an issue that comes up again and again, for accounting firms, if you’re an accounting firm who was incorporated, and if you’re an accounting firm, who’s incorporated as a standalone entity and you are regulated by the central bank for investment business purposes, you know, we’re a schedule for entity. Yeah.

So you being a scheduled for event. Now, you’ve got your, you’re got to do full accounts. You can’t do a bridge account. You fall fully into this. Now here’s where it’s getting more complicated. Sometimes when John is working with firms, we set up groups for various reasons. We might set up a group cause there’s a property over here.

We might set up a group because we’ve got bookkeeping here and this entity, and we’ve got accounting and auditing in this entity and you’ve got a group situation. Now, if one of these entities is regulated by the central bank, Not only Is this subsidiary got to produce full that I just say, put the parent to produce consolidated accounts. So This has a knock on effect on you guys,

not just your clients, but you need to watch yourselves. If you’re regulated by the central bank, like it’s 2018. Since these regulations came in and I came across somebody in the last week who has this problem, totally oblivious, totally oblivious to the issue in their own firm. And that is unquestionably going to be a serious red line item in a monitor.

Yeah. And I, a hundred percent, I’m actually, at the last point I was going to make here on the, on the, on the non, all the services, you know, you know, they, they, the, the safeguards to apply for provision of not all service, if you can’t, if you don’t have separate teams. So if you’re,

if you’re a sole practitioner or a smaller firm, tight teams, I know how you don’t have separate teams to provide the non services with what is your go to your go to basically gives to am is too is too hot for review. And you’re already under pressure from these guys for fees because, you know, dad, you said it’s for years, a lot,

a lot of these guys, you know, aren’t really worth the hassle because they’re highly regulated. They’re going to be a lot of monitoring visits and the fees are probably there to do. You’re already adding on an extra fee on you to get a hot flight review on a small turnover, cope with that. You know, if it’s not worth, We have to be careful Coleman on these seminars and make a sweeping statements about charities and property management companies.

And now regulated entities. Folks. We’re not making sweeping statements. We’re just being practical and realistic. Is it worth it? Isn’t more turmoil. And I have somebody actually want to check on the, on the call and somebody had a conversation with last week. And you know, if you’re doing the kind for years and years and years, the second generation from,

but it’s just, the client is not generating enough fees to pay them a proper fee. And it’s just, it’s ridiculous. The message is walk away. If you’re not getting paid, if it’s not worth the risk, the new regulations in 2018 column are, it’s strange to say new regulations, 2018, but they’re still causing some difficulties. Yeah, exactly.

So like we moved onto the more housekeeping stuff. Now we’re kind of on to report and records. So this is where, this is where the queers were coming from. Okay. So report requirements, insurance intermediaries. If they’re authorized under the insurance, the European union insurance distribution regulation, 2018, they’re not required to file<inaudible> reports. Okay. So that’s,

that’s really important there. And Just to be clear on those guys, right? Cause people for years, people were whipping them. You got to do your 27 and 27. See you’ve got to complete your reporting requirements. So now if they’re covered under the 2018 regulations, what’s going into the central bank. What does that like is nothing from the altar.

The firm has to sand in the form of the sand. In the night, you turn on an annual basis and the central bank monitors, monitors, dam on their, on their normal Prudential type of type of monitoring, monitoring, okay. From nothing from looking from the altar needs to go in and you made us come, come before. Cause we raised it a few times.

The center of bike would accept all these things. Don’t worry about it. Like they, if you, if you want to say one name that accept us. Well, the problem comes is when you’re comfortable managing business. And if, if you’ve got a fake dude in clued in and monitor, they’ll say, well, why are you sending this in?

And you’re going to go as well, half done. You’ve got to go away. And you don’t. So does that come down to knowledge, the entity, you know, they call it, it opens up a myriad of problems. Well, there’s two issues come. First of all, the central bank will accept anything you send in. And second of all,

when you don’t comply with the requirements, the central bank don’t raise any issues. And once they’re once every four or five years, then they do a troll and say, when you have this, this, this, and the center, the central bank standard group is they write to the auditor to write the declines and they notify the Institute. Exactly. And then if,

you know, if I’ve instituted your more than likely going to get more and more likely going to get a very quick Swift monitoring visit because it’s a, it’s a, it’s a, it’s a regulated entity. And, uh, and you know, you’re, you’re not compliant, which are, which are with your, um, sure. Obligations. Then what I would say is basically,

I always say this to all firms, you know, it’s unfair to set a bike. They’re very good ring or contact the central bank, Adobe, Adobe confirm. I would always say doctor, I’m happy a hundred percent because I’ve had a couple of cases where I’ve asked them to rate and they’ve confirmed. I’ve got to straighten the horses notes. What,

again, always an ultrasound, just cover your backside and contact them to double check that this particular entity, if they’re only registered, if they’re only authorized for this, you don’t have to do it. We’ll just be beware on bass. So that’s a big change now. Okay. Then the audit work, it’s a lot, a lot simpler. Now you still,

you still need to, you still need to do your M you still need to work on your amp on your knowledge of the entity. You’ve got planning and consideration of the, of the regulated aspects, all of that kind of stuff. Put the physical order work is so much less. It’s all around solvency, all around, you know, Holy right.

Professional indemnity insurance, the submission of the annual return have to obviously within six months of the year, and it was a tie into the odds of the counts. No differences organics. If you do have, if they do have climbing preemployment, pretty Mackenzie, if they need to refer to slides, that’s petrified handbook. If you’ve got a client print and testing,

cool, that is still there. So it’s a lot less. And if you’re, if you’re, if you’re a fully blown in insurance and investment intermediary, good. Yeah. What could went on to the guys who were authorized under the act? Now this is where the obligation come from. Okay. It’s actually a section 33 of the, of the IAA act.

And then the reason this is why you’re knowing what guys are, there is an obligation to file your RM, your confirmation twice. I haven’t be report a copy of your mind or a letter or a nail statement. Again, firms fall down. If there’s nothing to report, if you don’t, you shouldn’t manage letter, we’re still obliged to send in.

What’s known as a nail statement saying there was nothing. There was no amendment letter issued nothing to actually am. Sure. Awesome. These guys also are required to send it any copies of OECE reports, maze. So if you’re in the unfortunate situation where you’ve got an insured on an investment, intermediate shows an investment in Dimitri under the IAA act, and you have to make a report to the OTC,

maybe because of it, which is low or something like that, that report also needs to go in and to the, to, to the central bank pretty much, I mean, almost immediately after you’ve actually filed this with the ODC. So it’s, it’s a fairly owner, Sam owner’s obligation. Nope. Last it’s an important point. A lot of these guys we’ll have more than one authorization authorization.

So they might actually be authorized under the insurance intermediary. It’s your turn. I regulation on aging as well, Bush the trumps at all. So that comes up. If you’re authorized under task, irrespective of what you’re also authorized you fall under your obligations. I’m com when you do the search that you showed in the first screen, this is again for you.

Oh, yay. 2018 and insurance distribution act. That’s why the search starts everything and clarifies the problem. Exactly. And the covers also with you the covers off your knowledge of the ends and your covers off, you know, you know what to do with your report and requirements. And then really well, we all know where we are internally in terms of the audit work.

It’s a lot more involved. Like how can you send in the<inaudible> saying it’s not wrong without doing the orders. It’s all around all around section 33, you know, we know compliance would, you know, regarding second 23 is reported under your section to be confirmation and your 27 C report, they’re looking at books and records. You looking at turtle country.

That was your internal controls. Okay.<inaudible> okay. Okay. Or a special report very much from, yeah. The rate head, the back office side of the house. So you’re doing, I was going to ask you do a note in the first statement and you’re almost quoting the, the controls are in place for the, for the, um,

for the, the regular inside the house. But again, I’m about to, if the client bring the cans again, you referred to the center. Well, and he’s on task. Okay. Are part of your reports to the app, to the app as you should. Thank you. Bye. So just to be clear, the investments in insurance intermediaries act 1995,

trumps the simpler and insurance distribution regulations. A hundred percent. Yep. Yeah. And if somebody Socrates on their boat,<inaudible>, you’re going, you’re going AIAA. You’re going twice. You haven’t see, you’re gone. That’s confirmation. If you’re only authorized under the age, the insurance in insurance, regulators 18. And that’s the only one you have.

And then, then you’re, then there’s no M then there’s no report and there’s no there’s dog and audit report and recording. That’s it. But that’s kind that covers off that one. So you have two other quick queries very quick on dredges loud. Okay. So query Carly came in, basically. Yes. We’ve addressed as long as they’re given by the,

so it’s the director’s load. It’s breached 10% of relevant assets. The loans been repeated on for pollster and yeah. Well, what if the loan is treated as an extended enlargement? So yeah. You know why our disclosure requirements and reporting requirements though, in terms of three Oh seven three, Oh, wait, you need disclosure of the amounts all by directors and given,

given the mood, was it the year and any provisions made by us? Oh, the three Oh seven eight is disclosure of the percentage. Oh, the rabbit acids at the beginning and the end of the year. And it’s an important base. In addition, if the loan increased over 10% of the assets of the company during the year, that percentage should also be,

should also be status. So when someone, in terms of back eating, even though you’re eliminating the air, which is low by and standing and extending large ones, that need to be, it still needs to disclose the fact it was in excess of 10% of the random license during the year. So there’s the condo real, I’ve got to get out and turns off and trumped up slowly and were regarding regards to that.

And then moving on to the report and obligations something similar, you know, you’re, you’re, you’re, it’s actually two, three, nine prohibits alone making a loan to us, to directors. And, and if it, if it is contravening two, three, nine, they’re giving up a cadre, a two offense. I know I’ve, I’ve copied that to the three 93 there,

in terms of, in terms of the auditor’s duty to report it, where the course of carrying out work, it comes in. So the origin of the old was possession that leads to believe that there is, or have committed Academy one offense, then there would be, and if they, if they have for that opinion, but then there is required to report.

And again, that’s know anytime, anytime throughout the year that that happens even though, even though it probably has been, has been actually resolved. Okay. Yeah. So, so, so column, I’m going to, I want to sort this one across John and in terms of, and how do we deal with, and with the wage subsidy scheme at par people previously would have,

and top to up Saturdays at the end of the year to reverse director’s current accounts. And so I, I wanna, I want fill that one with John and give him a couple of minutes to think about that. And when we, when we come on to his session that maybe he’d have an answer for us in the context of the wave socially scheme,

because I know that is a problem right now, or people that previously would have just, you know, that they would’ve, they would’ve corrected or fixed. And yeah, but now you can’t just do that anymore. You can’t get away subsidy scheme cause trolls, everything else. And then the last one, well, just before we go off that 0.1 thing and in relation to the reporting piece and from a reporting perspective,

okay, if the situation arises, then you are not a heard, there’s no choice here you report. If the kinds of subsequently rectified the situation, obviously you include that in your report, the break of corporate enforcement don’t get involved, but they do write out a letter to say, You’ve done this once. So now it can happen again. It’s not,<inaudible>,

don’t jump up and down in relation to minor issues that have been subsequently resolved. But if somebody habitually has this issue, obviously the director of corporate forcement are going to be, Mmm, I want to be paying attention A hundred percent. And also again, mostly just to be resolved, just be resolved, but also very much so in terms of, in terms of I review our margin,

versus if it’s picked up on a, on a, on a modular basis, reviewers do show, hope it down, even though it has been resolved, if it hasn’t been reported. So it is like, you don’t have to bear that in mind. So even though if it’s picked up on a bill, you haven’t, haven’t done the reports or whatever,

you know, so will it be the way of your problems? And then the last, the last point then is the flip side of this. So if a, if a truck is given a loan to a company and do you know, the question is, do you need to slow the rate of pickup on the Richard loans, given to company, you need to slow interest payments during the year.

And also, yeah, if there’s a chairman, if the trust is also chairman, you have to disclose fees accrued the championship separately three Oh nine disclose requires disclosure of current and preceding material transactions between a company and the director, the director is interested. Yeah. How’s an interesting, now a nice point there is basically is obviously the director himself can’t make that call.

They should be, they should be well they’re directors and the coping should be making the call, wait or not to assess if they are, if they are, if they’re interested, is it his material? Yeah. But you see, and this feeds into a, it feeds into a very deep query when you get stuck into a column, because one of the things here is,

well, the maintenance of the registers and the director’s interest register, which is a problem. The other point, which is very, very subtle is that chairman fee piece and the disclosure of chairman’s fees when we’re used to dealing with owner managed businesses and that we have a non executive chairman Oh, submits fees that is a very commonly breached disclosure and in family businesses.

Exactly. And then, you know, like to the sludge requires our basic data, you know, the, the, the particular terms of the arrangement or transaction the name of the director with the material interest on that and the, and the nature yeah. Of the, of the interest. So, you know, so what’s, what’s has been there.

It’s fairly, it’s fairly standard that those volumes will be disclosed and you’ll see it in the vast majority of flattened statement. You see that a comment, maybe they’d like, they’re all securities, it’s free, repayable on demand, value, know various things and various things like athletics. So, yeah. And then just give you the idea of the point that you made in terms of,

in terms of disclosure of factors when renumeration come from I’m three Oh five and again, I support you guys. Yeah. They aren’t, they aren’t always, aren’t always disclosed and appropriate. Okay. So that’s how it was true topics. Thank you very much column. We’re now going to move on to John and John, just as you are opening up your screen to share there and to share your,

And as you move through your session and John, I want to ask you that question and queer people have a, sort of a director’s loan account. It’s<inaudible> the girls during the year, at the end of every year, they do a bolus, which clears it out. How has that affected by the wage subsidy scheme, John, or have you come across that before you delve into your case study?

Um, I suppose Dacia for 2020, like I suppose it’s a technically, I suppose I don’t like director’s loans anywhere in the first, first place, whether it’s a, you know, it’s been, it’s been done like that tardy to junior end, John, and we’re now in the mid middle of the wage subsidy scheme, and there’s been small little bits of expenditure and built up over the year.

And the company now wants to go and clear that out during the wage subsidy scheme that obviously, can it have an impact if that director has claimed the wage subsidy scheme based on reduced duration? Yeah. How have you come across that specific query John or no, I haven’t come across that specific fight. I suppose, if they go and pay themselves more money in the area that I would say,

it’s not going to, it’s going to impact on the subsea so far that period, I have to go and try and do a bonus for June and not example of one of them, you know, they’re going to end up with no, no sauce because of the fact you made that bonus and that sports isn’t an upgrade necessarily because if you come in next month,

then, or they ended up wanting to be yourself and you didn’t otherwise, I, before I’m like, come off the wait subsidy scheme for a boat, go back onto it the second month. But the optics aren’t great, John. Yeah. That’s it like, you know, it’s, it is an outcome, not a do say you can bring pap some people on one week,

not the other, uh, as long as it takes and you can see the letters are being sent out, you’re asking, did the shareholders get directors, get a pay decrease. So they’re obviously looking at that area. Um, and it’s obviously going to be an area that they’d like to focus on that they’re continuing. Okay. What did they, when they poke a little bit more,

I suppose, and I give a great pep talk to the guys before we started that everybody had their 20 minutes, they needed to stick to the topic and he was going to shut up and keep out of the way and hold on there. No, John, just in relation to the wage subsidy scheme, I’m talking to accountants or talking about their clients and accountants themselves who are looking at well.

I probably even typed it to keep claiming this way. It’s socially scheme. Do you have any anecdotal or practical evidence or advice from the trenches, John from the front line? Well, like the guidance is clear. Like initially when revenue was a monster at a couple of weeks before they shoot, or every four months, seven, like they were saying one of your cash companies that,

and it’s increasing, we’d expect you to going off of, but then they’re effectively just thinks exactly too same Jew eligibility criteria, looking to Q2 in relation to your cash that expect you to be paying I, you know, you know, substantial amount of their wages. And so technically it’s, the roots are what they were black and Q2. That’s the key thing I’ll be,

you might have to, you know, cute tree might be increasing. The rules are you look to Q two and I are caught by legislation there because legislation only has Q2. So they can’t, they can’t go altered at this point in time. So, eh, practically it’s if you meet conditions for Q2, well then, you know, you’re, you’re into the wage subsidy scheme.

What I suppose the thing is, you know, you don’t want to end up paying maybe staff for extra hours or doing so I might end up tapering the, we can do that anyways. So, So your, your take on a John is if you’re eligible and Q2, the legislation doesn’t make any distinction. If you’re eligible in Q2, you can continue to avail until such time as the advise overweight.

Yeah. And their guidance is there, I suppose, as well understand there’s no exchange. And so I’d be printing off the brief of printing off the links to the they’re saying civic thing, or talk with cash companies. They’re obviously going to be poking holes, but are our costs company. So you want to make sure you have your documentation. You met two conditions if you’re out coming off.

No. Well then how are you? I believe you meant to conditions all key here. Um, it’s, uh, It’s a fluid area and I’m sure it’ll change as we go, uh, this month. I imagine as well, they might issue more, but it’s not, it’s not perfect at this point in time. And I’m still that Arctic,

uh, in various areas. Okay. John, you will have a case study here. It’s what I believe is true in terms of winding down, do you want to talk about death and the context of a job? Yeah. So I suppose this is just the, I suppose the facts in this background is in, that is in your notes in relation to,

but in charge, like would say a farm, a subsidiary owns 110 company, an Irish company, 110 company B. So company B effectively has stock trading. You know, they’re, they’re kind of off requires a bit of cash or buying. They, you know, they’re taking note while we might do something with this, what would we do? So if they voiced her Mmm,

company, an and also on company B owes is all word money from company a and it is all relating to trading activities. So, you know, what’s the impact if we wrote it off and what’s the best results here, then company a also is owed money, um, from the foreign apparent effect for me again, all trade-related. So you don’t need to think about this.

And the preference here would be that, you know, the foreign parent wouldn’t want to do it now because ultimately it’s going to be taxed and then their jurisdiction. So I want him to get a solution, right? I want to get the money into a, Do you think details of the case study folks are in your notes pack on page 54? Okay.

So on page 54, John has the detailed background of the question that was asked and the case study in question. Yeah. So I suppose then that the question was, look, we want to try and see, can we get of the company in the best way possible to protect the shareholders? We kind of want it clear to the various States. Like we’d prefer potentially not to,

uh, I’d say one or the options on water, the implications of options. So I suppose the first thing to start about here is you, first of all, look and see what look, artists, trade debtors, and we can see these are trade debtors. So section 87 says effect being charged as if the expense balanced, which is related to what’s a trait.

I hate the P and L of the fact that the write off it would be excellent on the other end, Ruby textbooks belong to either site. And so I wasn’t able to write off that the amount and, or, uh, foreign coal in, in company eight, they might get a tax deduction for it, but in foreign subsidiary, in the foreign subs at parents,

it wouldn’t suit him because David 40 tax bill at that, and they have a higher rate of tax. That’s not what they want, they would want. And likewise, in that balance owed by company B way to company B company, he is company B again. Now I understand transaction hit the peanuts. So it would have that, you know, being taxable in company a,

when we made the sale of textbooks and the other company in relation to us. So you just showed the case to be there. John I’ve stopped sharing as soon as you want your slide. Um, so as well as relevant here then is the net assets of the company. B here is our new share capital 200 K 800 K. So, and they’d asked them 1 million Mmm.

Company B company then has a Natasa on my tree<inaudible> reserves. So I suppose, what did we need to do or automated to look at this particular case, as we say, we don’t want to go down the right hops here, potentially although company a and company B you’re in a text group in Ireland here. And because company B a ceased, technically that would be<inaudible> received,

which is case for tax 25%. So it wouldn’t necessarily be grouped in a and B in relation to it. So the option here, first of all, the seeking me, you know, get that, get the money up to the company in a good manner. And first of all, you have to say, well, look, we’ve got amount,

1 million owed. We only got PNL reserves of 800 K, but we have a, at that our violence from company A’s. So, you know, obviously I would pay a dividend to try and do this, but first question is<inaudible> we don’t have distributors ours. We only have a hundred K<inaudible> 800 tiles on a better balance. Is there any dividend having to set off against that or balance that?

So I suppose it stops perspective. It’s the same. Well, how about we go? And we, uh, it was somebody who’d Sage on that’s section two Oh four, uh, legislation to allow the share capital to reduced from 200 times. I think that stone Truet drags with decoration, that the company has been trying to reduce the share capital Mmm,

special resolution by the members to approve a transaction. So now that we have a situation where we have 999909th night and distributor reserves, we can write off the one Euro and we can clear they have been. So obviously before I met Sarah dividends to have several under company life just distributed reserves to, uh, to allow us, I was amazed here on section one,

one seven of the, of the legislation. So we’d have to have UpToDate management accounts to shoulder right off the Arkestra about a reduction in share capital section one, one seven, nine effectively makes it clear when you reduce your capital. It creates a strip rooms are now rev. It’s effectively the theater they’ve dealt with the peanut reserves with dividends and credit to intercompany debtor with the 999,009 was a nice night.

Is that that’s, that’s solid. Now we’re into<inaudible> strike off situation. We need to think about the tax consequences of it. I did for the painting company, being company, a boat, Irish companies, uh, you know, find the investment income, not taxed from that company at all. And company B then yeah, from their perspective, they are paying a dividend,

but it’s within it greater 50% group companies. There’s no need for a, I’d say your farm B to B, which is, you know, for a few paid gross to Irish companies, which is ordinarily around, okay. Required. There’s a requirement for company B to, to file a division 40 tax form by the 14th of the month, flooding<inaudible> dividends.

And also, um, the next thing is in company, aided proceeded dividend company is technically Frank investment signed investment company is subject to tell us when you surcharge. I suppose there’s two options here. Company is going to end up dividing up foreign subsidiary within 18 months. Any us there’s not going to be an issue and our particular case. Mmm, sorry.

I just need to share just can’t screen here again. So, so, um, so company is better, then it’s going to pay it out. It’s not going to be, tell us companies are charged with nanny event. If the one going to pay that name wants there’s always election and section four, two, four, three, eight. There’s a dividend here from company B to company a at the company,

be kind of like to ignore it for exhaust when we start charge perspective. So no issues there because they don’t have any other income, which is a state investment income company then can take the box in the 44th J and a corporation tax return. And again, that’s ignore from the surcharge perspective they are. So again, I’ll go, companies started their company aid and made the decision.

My look, would they put in volunteer, strike off or under one 50 assets, and I’d rather these several ready to go. Are you<inaudible> if I asked you that compared to Vantiv strike offers, they can’t be in stage company with him at two years for operating dissolve first 20 years the other way. So it depends on the race in that company as to what charges take company.

Then you go into and you say again, Nope. What can we do? We don’t want to write these bounces off. So again, it’s David and<inaudible> same idea. Uh, we’re, we’re all two by 1 million. Um, So figuring out a little bit out there and mind, but you’re reducing the share capital again, doing so many proven procedure.

In that particular case, I created mr. Bruisers and now you’re declaring. And even, and again, texting again, different holding tax returns, uh, I’m paying it off before to pay out the dividend, give the counterparts. They should get the Spanish parents filed a form B to B, and which is a revenue farm to give them before they make them otherwise,

it would have to put a wood holding textbook because the farm parent Is he a, you are a double tax treaty country. You don’t even need to withhold tax. As long as the it’s a form. B2B is on that, on the foil in companies, right? Cars<inaudible> effect. We now company a can make the difference out to us, the foreign and Spanish company,

a tier, a standard company that at that point in time. Yeah. And I suppose the one thing that strikes me, John, as you’re showing this example, query that you got in, like many of you are members of knowledge hope. And so you’d be familiar with the process, but you know, sometimes people ask basic questions or knowledge, hope that we can get a quick answer to are the questions already answered.

And this one here is probably on the coast. It’s a very complex question for knowledge hope. Well, we do a more complex questions in there. And if there’s a question that goes way above and beyond knowledge hope, and in terms of your basic subscription, and we can always top up your subscription and answer these type of extremely detailed questions. And John,

I think the reason why you included this question in today’s session, it’s not only sharing the technical information that you’ve just shared companies now, as we come into the pen pression and what kind of the economy on suspended animation here at the moment as we come out into the pan pression for some people winding down is the thing to do. Um, so, so you’ve,

you’ve got, John has got multiple questions, both through knowledge hub and direct from a consultancy perspective, here’s the company, what do we do? How do we get the cash out? How do we tidy this up? Yeah. So I was born that day. You know, the other thing you would look at there is if the company B was owned,

that wasn’t acquired from inception by company a or then the dividend of the company B might be locked in, unless you do some improve improvement herself, to a point where the spare parts being owned before potential collaboration, won’t be an issue it’s only a matter of pre-acquisition reserves. The dividends in Pado that you would might have to do with some reproved seizure to allow that that,

that David had deemed to be distributed for the future on more different. The next area is very quick. Section 16 of that first one and two, as we know, it was mentioned for periods beginning, January, 2019, does the hospital judge me, which I would have said usually science shouldn’t have been taken anyway. There was a possibility, not the fair value investment property versus non to cross street.

Mmm. But if you have that situation, you have taken on new prospects. No, and you’re coming into tardy Farsi December 19 year, and you’ll have to go back and restate prior to the period and the start period part of fair value amount that should’ve been there. Uh, you know, cause it has to be retrospective adjustment. So that wouldn’t mean rigid,

reversing, potentially depreciation that you might’ve been posting on that type of investment property, which you took to get out. I’m not going to obviously tax unpack really from the point of view of, um, the company’s perspective. Obviously the fair value movements are not going to be taken into account to talk cause they’re not texting. They’re only capital transactions notion transactions in relation to it is appreciation reverse of the creation on the investment property.

In that case, you know, again, wouldn’t have been an average tax deduction anyway, so it has no impact. The only way the impact here is on a surcharge. And this is a big, I prob I call me that holds property and they’ve, they’ve potentially not paid<inaudible> are charged based on hundred demonstrator reserves or not. So because of this adjustment,

obviously this will restate that comparative period 10 across December 19. And my example are 18. My example, on your 2019 year, we’ll have a different 2018 year. We’ll have this date for distributors are now compared to all signed off those counts. So when you’re going to say, what can I pay it? And what do we need to pay from a point of view to provide it to us.

Companies are charged. I should try to force December 18 year ends. You know, we have 18 months to do that. So what set of accounts should we be looking at here? So technically, you know, on a company law, you can’t make a distribution unsanctioned. It’s always going to star out roads in section 44, section 44 can make it clear that if you’re not permitted to do it by company at all,

but then there’s no surcharge. So if you haven’t got suspicious, are our distributors are what you only pay up to the amount of resorts you have. So it’s an important question and not one look at December 18 and set of accounts. Now, now I’m doing an earned set of accounts. So what based my analysis, almost open surcharge effectively. What do you want?

You have to, you have to know that there’s a common and all road. The real key is when you make a different section one to one size you look and see, is there a distributor, ours based on your last relevant accounts, which should ask counts for a relay before the board of directors at that doesn’t apply. Um, you then can then only if you want,

you can gain go up to management accounts, which were prepared and cards by company law and French report standards. So effectively here, if you’ve done accounts, um, for the first December, 2019, under common law rules, if the dividend is being declared at say<inaudible> 7,019 being the year in which to change the account policy has to happen. You have to go to the current years to assess what are,

what are your sugars are in relation to what not to do? That is a dangerous, let’s say under reason why you wouldn’t want it is because obviously the current year would show the sugar of his arms, which are a lot higher potentially than the previous set of accounts because of the fact that there was depreciation charge on that pension investment property potentially at that time.

So it’s just flagging us. I just to be aware that, you know, you should be looking at the 31st December, 2019 accounts. There is now you would say if you’re 19 accounts signed off, whether then under the section one to one, you look to the previous set of accounts. I just think that’s a little bit dangerous because revenue per call would say,

when you click on the accounts and you put it on it’s 1919 accounts, when you were doing it and you didn’t do it on partners. Yeah. The thing that strikes me, John, and this query is when, when people think of investment properties and the classification of investment properties, that for a lot of people it’s, well, it’s a deferred tax issue,

all consulted contained within efforts, one or two. Um, and the real danger here is that it’s not just an, for us one or two deferred tax issue. This is an actual tax impact that Canberra definitely. And John has highlighted in answering that question. It’s not every company that has an investment property is going to be impacted by every property that has an investment property that previously was not valued at fair value.

They have to go and consider one final question, John, before you leave this section, and if somebody has an investment property, just to clarify, if they’re restating the 18 accounts and you’ll have easy most to make a distribution, is the 30th of June a deadline or are once we get into the month of July, is this option of redoing a distribution to reduce the distributable reserves in eating gun?

Or is there a gap in terms of that timing? Well, I know that it increased the one that the matcher ends. I think I’m I’m, I, I, I’m not sure what her living with it, but push forward to, you know, an extra extension for COVID-19. I don’t know, off the top of my head, hard to push that forward at this point in time.

But at dad, monsters is always Jay, without the COVID-19 will have to be done within 18 months. You missed, you missed it. There’s no, there’s no second chances. There is no any way in relation to, and it’s something that I just go into my iPhone was account account recall. Now the December 18 moments push And your next query,

John is different. It’s kind of some way related. You’re talking to here about defective financials that stay up and some mistakes. Yeah. And I suppose this is an unfortunate story in that, you know, if you’ve got an Irv, not just David’s and you want to, uh, let’s say you don’t have to, but let’s say you have to,

you want to, you have to correct the previous year from that state. So it’s a big art are there. And I think probably are just when you want it off the record or on the record last years were wrong or you can go down groove. And it’s actually Tracy Tracy, seven three stage two at foil restate and financial standard CRO the old financial statements will stay on the red card,

but they’ll be visible. That’d be one excess there. The unfortunate thing that we’re seeing is even as recent as yesterday versus seeing the CRL sending back docket since 2015, 2016, and in relation to talking to the blending that Bendigo, as saying, they’re not happy with the layout in relation to the notice that’s required for three, six, eight, they want to display,

it says compensation today seem to recently just take an, um, a blind approach. But our definition of prominent, prominent prominent position is they expect that the financial statements without revise and I to stay up on every page they expect at the front page, which state, you know, the fact that these are for taste and financial statements at the replace, the original financial statements for the year ended,

there are noticed actually fast stands party those years under happy and prepared as is 80 regional financial States were signed on how they differ from how, how, why the changes made and why it didn’t comply with, at, in relation to them. So they were on the top page and they also say they wanted on the balance sheet as well. So like before,

like we would, Bob said we weren’t being sent that, you know, you’re put in North accounts, just make sure that, you know, you have all these Dodgers there, but they have now CA in a prominent position. I had an argument with the CEO. It’s very hard to talk to anyone now because they don’t do four ones. It’s all email and relationship,

but they’re there. They’re not urgent. They’re saying common position is X, Y, Z. I went back and said, how does this make sense? We know it’s being put in whatever tree to tree years called directors could have went, you know, and it wouldn’t be the same people of tall here. Um, and, and a problem position like this that’s judgment in as best of time.

It’s in the legislation. If you have a, an interpretation of a point on leave for trying to treat and let us know what your interpretation is, instead of having us doing guests here as to what you think position is. Um, and they, they, they that’s the fact that they said they still had the things prominent position. I just said,

would you want to do that? And he let us know about it. He couldn’t leave for 23. We’ve had this before. Um, minor matters with the CRO. I’m not suggesting this is a minor matter, but it’s, we’ve had this on interpretation pieces. And we had one, a couple of years ago. And in relation to property management companies and the stores,

your own property management companies now after about six months, they backtracked and after about six months, they just went okay. Okay. Okay. Yeah. Maybe our interpretation was wrong and I’m not suggesting their interpretation is wrong or not congesting don’t want to backtrack here, but this is clearly based on training is a coronavirus issue where somebody too much time on their hands,

somebody got to be Nirvana and we can’t get to the person who can help us solve the problem. So, and there’s not much we can say John, other than if you have submitted financial statements that could be coming back to you, we’re working on this. We continue to work on it, but it’s, it’s, it’s, it’s just, it’s one of these crazy interpretations under section three 68.

Yeah. And if you, if you’re doing this, um, you know, if you’re doing it now, just do it the way they’re saying it basically. So you don’t have the hassle emulation to him. Like, it’s, it’s just crazy the way to culminate in 2016, 2017, and we’re trying to get it back. I questioned it. They said,

I hope to see our role can decide, you know, to prioritize, wanting and not do another thing and growing up. Yeah. Cause it makes, it makes perfect sense to retrospectively look at accounts number five, three years ago with no guidance, no material, no warning. And because that’s just makes perfect sense. The next you’re looking at John is possible insolvency.

Yeah. So this is just wrong. Well, it’s the ROTC that I’m the senior handout that they issued us all in effect for dealing with this, to just say the recognize the fact that COVID-19 is an exceptional item at an exceptional thing. And they’re just reemphasizing that when they’re going to assess this, they’re going to look and say, why is this,

did the insolvency at Roy as a result, as a direct result? COVID-19 if without, if it did well, then if they are happy that they acting good fate response for them relation to and undertook actions to necessary, they don’t see any restrictions on us all with indication over, let it, you know, over the years I think with that, or if they come in and say that these are all kind of,

they did this, this and this, and it was in line. They’re not going to look for a restriction against the direct germination to it. And to be fair, I think, you know, you here is a 10% of all applications get, get a restriction. So it’s, it’s rare enough and getting a restriction. So it’s rare enough, they’re making it rarer.

Page 55 of your normals fact is the guidance document. And I think this is critical for all of you who are companies who are under pressure. And it’s back to what, let’s be honest, it’s back to John’s voice back in the last week in March, it’s the same advice that John gave him March, April, may. This guy who was documented was published on the 5th of June John’s guidance was document document document.

And your last query is a quick one, John. Yeah. That’s it like it, Obviously people are trying to, you know, probably not as easy to pay wages, like they’re trying to give maybe employees, things like this, just time, this time, maybe some incentive to go get into the business and a flowering share of road share effectively.

It’s it’s the ability of the person coming in, potentially employee coming in, getting an uplift in value. So for the value of the company today is a million effective, right? To the share would say, Sarah, look at he’ll be issued a share equal to, well, you’ll get value. Once the macro by your company goes over a million based on the percentage of shares that you hold.

So it’s I suppose, an incentivization to that employee to grow the company. And it also keeps them, I suppose, happier, and that they now have ownership in the company and they’ll get back in these times, it’s given an opportunity to build the company from that perspective, from a tax simplification perspective, you know, the Mac value is key, getting a right.

I would say there is hope by you. If you’re given a shares to a, an employee and the company is making, there’s a big hope that it will be promised in the future. So you show put a nominal value, at least if you’re issuing the shares on the payroll, because the way he’s going to POI parasite for not volume relation to it from a company line patient,

obviously there’s a new class to share every issue because the existing owners would say the only other class this year, I still own the a million. In my example, what the new fastest share will have at the rice Ang involved that would be shared with the employee portion to ship as very specialized solutions. Let’s take your company there, John. And the going into COVID-19 based on balance sheet based on turnover was a million value company.

What are the implications of there’s whole value? So now you issue a flowering chair. And basically what you’re doing is you’re locking in the company, whatever the evaluation is today. And you’re then that if the market value raises 2 million in five years time, well, that employee is getting the difference between one and 2 million. And when you talk about the whole value on payroll,

John, what does that look like? What does that amount to, or how do you put a value on hope value? Well, I suppose that is an art. There is a science, I suppose, and there’s interpretation as to what that value is and what likes just various valuations that there, which is, you know, a bit like, uh,

you know, options, things like that at that point, not quite, not the oatmeal method book, one method that might be used as one. Look, if I can give them this shares on, there’s no voting rights in this share while I take 15% off the value of the company straight away, and then say what, maybe I’m only given five,

10% of the company of the future uplift to the individual. So I don’t discount it as it would use. The, maybe it’d be, you know, usually it will be at 78% uptake, the percentage that you’re getting. So 10% of a million, let’s say you’ve taken a million, take 15% off. Then you get to 85%. Then you take 10% of that.

For example, to give you the macro value, you after minority discount. And I would even discount it, potentially buy another, you know, 10, 15% or more to get to overall nearly a 99% discount on the video shows. That’s just my opinion in relation to how you might go value. Um, you know, there are various interpretations, but I think the key thing is that you put a value on it and you recognize it as a value on it.

I know some, some people would say, there’s nobody on it, but I know that the HMRC are looking at this at these type of structures in relation to it. And they’re saying, well, you can find you at zero here because there is a hole, there are no tax. And likewise, if the HMRC are looking at decrease revenue, wanting to open up the operational army Yeah.

Stuff that happens over there eventually comes here. Okay. So Mike and excellent, Mike has four queries, and I know Mike, you have the grand total of six minutes. So folks, I don’t want to undervalue, I don’t want to undervalue the importance of links queries, and they are important, but at the same time, I don’t want to ruin this event over on everybody.

So what we’re going to do, Mike, how about we give you 12 minutes so that we want a room to six minutes past the hour and in my, without rushing through M did you share and the value that’s in your queries in the best way possible in the 12 minutes. And so Elizabeth and jr just giving you notice that we’re, we’re, we’re,

we’re going to kick back and, and hopefully every bear witness, and you’ll still get your notes, you still get everything covered off and in the session. And so Mike, I’m going to shut up 12 minutes, thanks, four shark babies There today. So hopefully, hopefully they won’t take too long. And the first one I have here is a query that came in.

They had clients, it was a firm who had recently taken on a new audit clients they’d wrote to the previous audit or for professional clear in several times, but they hadn’t replied. And that the question they had to ask Bose was, well, can we accept appointments? So, um, I suppose it’s important for us to Paul, just, uh,

this was a charter burn. So we had Susan in accordance with chartered accountants, our code of ethics. We’re just to be aware that you need to consider whatever regulatory body you are, it’s considered their specific code of ethics. Uh, for this charter firm, it was a section three, plenty of the code of ethics that’s a, they needed to go to.

So, um, section three 20 requires you to, um, you know, see confirmation from the outgoing going auditory or professional reasons why you can’t access the engagements and you, you should get the client’s permission to do this. Section three 20 also reminds you to be mindful of any AML issues. No, but in reality, if you know that there’s AML issues,

while you, I don’t think that’s that common of an issue with it. Just say to your mind that if there are any AML issues with the clients you’ve taken on to be mindful that you shouldn’t tip off, you’re going off to surplus again. I don’t think that’s a, I don’t think that’s a common comment of an issue. So then the guidance goes on to say,

well, where professional clearance isn’t answered the accountant should write to the predecessor, predecessor, auditor, again, play recorded delivery. So again, you’re, you’re, you’re, you’re keeping a record that you sent it to them and they obviously have to sign assigned to confirm receipt. So within that measurement, Basic registered post, basic, basic form of delivery,

or to have to sign for acceptance. And you need to be careful using couriers now because you had a cold, but as you well know, I’m like, they’re not getting signatures and on posters, the only one that I believe at the moment who was getting signed. Yeah. Yeah. And I suppose within that lesser, you just need to state that you have an intention to accept the appointment.

Um, and in the absence of a reply within a specified periods, if you don’t get a reply that you will accept the appointment, now they don’t say what is a reasonable period is, you know, logically you’d say probably a couple of weeks, which would be reasonable. Uh, and if they don’t respond to that, then the firm is entitled to assume that the silence in response implies that there’s no adverse comments to be made.

And again, it’s just a reminder that don’t, this is the exception and not the rule under normal circumstances, you’d follow the normal procedures. And it’s only in these exceptional circumstances where you’re not getting a response that you should follow that to that methodology. So just the key thing there is, you know, uh, send it by recorded delivery and within the lesser just station intention that you’re,

you’re gonna accept appointments in the absence of replay within a specified period of time. Yeah. Like this is not helping your timelines, the question there, and I have a practical answer to was, but I’m wondering, do you have a technical answer to Elizabeth’s question in relation to<inaudible> AML and notifying the new agents? Uh, I’m just reading the query here.

Um, so if you have an ex client who you have to report on for money laundering, the new accountant does not yet written the letter professional cleaner. Should I write to him anyway and let them know about the report and from a tipping off perspective, from a tipping off perspective on the surface that would look like no. However, Elizabeth practically, I believe in the updated regulations in 2018,

they did take notifying an incoming accountant of reporting off the tipping off lists. Elizabeth. I think what we have to do is we have to go look at, and we have to go look at the legislation to be sure, to be sure on this one. So perhaps if you could submit and if you could sit them in an email and into us and Mike and myself was sorted out one OT in the afternoon.

Yeah. Uh, the next one is a really, really quick one. Um, I have a company who bought shares at a hundred thousands. They’re now valued at 30,000 at the year end and carried at that figure in the financial statements. So the question is for the devaluation of 70 grand, should we be recognizing a deferred deferred tax assets? Um,

and I suppose what we look at there is section 29.7 of FRS one or two, and we look at well, is it probable that the losses will be, uh, recovered against the reverse, reverse to the future tax liabilities? Um, you know, and, and I suppose there’s a bit of judgment to be applied there. And you, you,

you kind of need to look at the specific circumstances of the company or the, you know, the things we’d be looking at there were, what are the future projections, uh, what’s happened since the year end have, have they recovered in value? How much losses have encouraged, uh, you know, do the license expire at some point in the future?

I would say, unless, unless you can kind of see some concrete proof that they’re, that they’re going to be recovered. I would say that the probability thresholds isn’t met little circle. So again, it’s just a, you need to prove that the losses that is probable, that the losses will be recovered against future textbook profits. It’s in it in a,

in a private company, Mike, um, that can be hired. You, you need to document and justify, well, how can we say that this is a deferred tax assets? And there’s a possibility these shares, particularly in these uncertain times may not recover so deferred tax assets, some grace, but in reality here, if it were me, I,

unless it was very clear indicators, I’d probably not be going down that route. Mmm. They need to be strongly justified in order to recognize them. And probability threshold is, is a lot higher than, you know, potential or, you know, it’s a high threshold to reach the next one again. And again, this is a really quick one.

So if I’m auditing a set of financial statements where the prior year is on all the suits, are there any additional paragraphs include in my audit reports? Um, and I know as a former reviewer, and I’m not sure if column is the same or not, but it’s, it’s not, it’s not an area that I would have probably honed in on as,

as a reviewer, but there is a provision there. I said seven, 10 a paragraph 14. So that says if the prior year financial statements were not all just the auditor shall state and another master paragraph in the auditor’s report powers of figures that are our own auditors. So that that’s a requirement. It’s not an option on what makes some of the other map on like some of the other masters paragraphs it’s,

it’s a requirement. So we have to stay in our auto records that the prior year figures are own knowledge. There’s no specific guidance that I’m aware of in section seven, 10 as to how that should be worded. This is an example paragraph that could be included. Just so again, just the statement that the prior year financial statements were not subject to all of us and consequently to comparative figures or something along those lines,

it should be included within the audit report for the first time. Yeah. And just go back to your point there, Mike, that you didn’t necessarily go looking for this art column didn’t necessarily go looking for this. There are some reviewers who are picking this up, so it’s not a, it’s not yes. Addict tasks from the institutes. So for example,

the charities should, are not saying that the reviewers you’ve got to pick this up, but it is being picked up. So this is stuff that we’ve seen before. Once one reviewer is picking it up, I asked her, do their reviews, it’s happening over here. Next thing I asked her to come in and say, well, this needs to happen across the board.

It is black and white is in the auditing standards. And it is a very, very common mistake. People are taking up audit exempt companies. They finally had rather than a tree for three years, or for whatever reason they need to be honest. This is just black and white breach of auditing standards. Yeah. And again, I’m not going to go back to the previous slide,

but just a reminder too, that if the prior year is our own, I’ll just that then there is responsibilities to look at the opening balances as well and audit those and document how you’ve altered the doors as part of your, your first year of assignments at The next paragraph, doesn’t solve the problem. You still have to do the audit work in accordance to the auditing standards.

Absolutely. Yeah. And so the final question I have, and this is kind of a, COVID-19 sort of related one. So we have a client who holds an assets, which cannot be easily valued in this situation was that it was like sporting venue. COVID-19 has presented an impairment indicator, and I’m trying to carry out an impairments review. How can I assess the fair value in this instance?

And I suppose this is a, you know, a lot of the time when we’re looking at assets that are carried as fair value, it’s quite easy to establish or having a good, have a good attempt at, by what’s fair value, but in, in kind of specialized things like this, like sporting venues, it can be difficult. But the first area to look at is section 27 of our first one or two,

we have an impairment indicator. So, you know, severe decline in economic circumstances, I think it’s section 27.9. That’s one of the impairments indicators because of COVID-19. We have that impairment indicator. And as a result doing was carry out an impairment review. So we look at the carrying value versus the recoverable amount. The carrying value is obviously what’s what it’s at at the balance sheet.

The recoverable amount then is the higher of the value in use and fair value, less cost to sell. So the value in use, if we had another half an hour, we could spend half an hour talking about value and you just calculations. We look at the present value of the, of the future cash flows, and it’s expected to be derived from the cash generating units,

the fair value, less cost to sell. Then that’s what, that’s what we’re trying to establish. We take the higher of the value in use on the fair value, less cost to sell that becomes a recoverable amounts. And if our recoverable amount is less than our carrying value, then we have an impairments to recognize. And again, that’s value and use of just with the sections there for us one or two that we need to look at if you’re already using value and use calculations,

make sure and look at the little sections because there are some very prescriptive rules and I’d imagine it’s going to be an area that’s reviewers are going to be Target’s in quite a lot. I’d imagine over the next 12 to 18 months, Well, we benefit the entities in terms of Mike has given us. Here’s what I first wanted to say this, but is there a possible ghetto calls for public benefit entities where,

you know, the value of use of a sporting facility is not the same as the commercial assets? What is the, it’s a specialist in Acer, I suppose, but is it for the benefit of the community? I see. So public benefit is a fine in there. So we have seen that’s the likes of that swim pools that affect that you’re saying there is no value.

There is no impairment because of the fact you were holding this far, you know, providing these services as part of the public benefit, as, so as a result, you know, it hasn’t been damaged effectively. It’s still performing as it always performed. Therefore there’s no need to impair those cases, assuming that it meets the definition as a public benefit in that,

that is there. And assuming not been a public benefit interest at definitions, man. Yeah. And it’s not, it’s not always matched, but sometimes it’s an extra nuance to consider. Yep. Yep. Last word from Mike. Yeah. So this is just a general point on when you, when it’s difficult to establish fair value. We look to section two of FRS one or two,

when we look to the hierarchy that set out there. So the, obviously we look at the first one and if that’s not matched, it goes to the next one, the next and the next one. And so the best evidence of fair value, it’s a quoted price for it and identical assets or similar assets in an Aspen inactive Marcus. So if we have,

for example, the development of houses or something like that, there’s a quarter of the price for a four Bay hosts, three bed house, whatever the case may be, uh, subsequent to that. If we don’t have that situation, we look at the binding agreement or a recent transaction for an identical assets. So again, if there were similar assets sold in the recent past,

well, that’s, that’s the, a good indication of fair value. Just the one thing thing to be careful about there is if there has been a significant defining economic circumstances since that lasts a binding sale, well, that’s not going to be a good judge because that’s obviously partners at the moment with COVID-19. If you had a sale in January, it might not necessarily be a good indicator of the fair value for something that’s that we’re buying.

Know if those two, if those two don’t work, then we need to look at the valuation technique and see if we can and use that to determine fair value. Uh, so evaluation technique, uh, it should be commonly used by market participants and the technique should demonstratively provide reliable estimates of prices obtained. And the key thing here, we need to use Markus determined inputs and not entity determined input.

So, I mean, you, you kind of be looking down the line of getting, getting evaluated and looking at their, at their methodology and see, well, you know, can we arrive at a reasonable evaluation? That’s been proved to be valuable in the past. Uh, so evaluation technique, it can only be used if it reasonably reflects how the markets can be expected to price the assets and,

uh, the, uh, the in quotes, uh, reasonably represent market expectations and the measures of the risk and the final point, if following all those steps, we can’t establish what fair value is. Well, then we need to look at w w we’re then precluded from using fair value. And as a result, when we’re looking at our, at our recoverable amount for value and use,

we look to the value and use and not, not the fair value. So, so that’s kind of the, the kind of the steps to able to go through, to establish, well, how do we get to fair value when it’s, when it’s not as apparent? I think in Mike’s point, it’s like, this is going to be, sorry.

It’s not going to be, this is one of the hot topics of accounting right now. Anybody who has property on the balance sheet, you could spend an entire day on this in terms of looking at value use and fair value, how it all ties in with Mike has given us a snapshot. Mike has, has opened up a query in his answer to question everybody that has assets on the balance sheet.

Now we have to look at the requirements of the section 27 in relation to the first one or two we’re just, Oh, so nine minutes past the tank, John column for today’s session. And obviously I want to thank Elizabeth jr. And all the team for hosting today.

Okay. So why come here today? And I’m not going to do a huge introduction and I’m looking at all the names here. Everybody has been on, on this series with the snow for a couple of weeks, you know, the drill and what’s most important here right now is that we get into the goalies. He’s sharing the content, sharing the information.

And one request that I would make of you is I can see Elisabet smiling face. And how are you there, Elizabeth? And I can see Katrina always has our camera on, and sometimes we get to meet Katrina’s baby. And so I don’t know what are we’re going to, I put Katrina’s baby to sleep on an audit workshop a couple of weeks ago.

And so anybody that has camera facilities, and Brenda you’re always the camera. So anybody who has camera facilities, I would invite you to turn on your cameras. And so that we can feel a little bit connected, like as if it was an in person event. And it’s the little things that matter. Okay. So where does our session come from today?

And we have column John and Mike. And what we’ve done is we’ve gone through the most common queries that have come up in knowledge hope in the last couple of months. And we’ve identified the queries that are coming up and open up and basically three, four different queries that are going to cover it in column three. John has for you, Mike is for recovering 12 topics,

and these are bite size chunks, three, four, five minutes. Each we’re going to cover a lot of ground. And so I’m going to shut up talking and I’m going to pass it over and to call them, who’s going to kick off first before we do that, if you can download the notes from today’s session and the Slanes do give a good summary of what we’re of what we’re covering.

And John has an a case study in here as well, which is, which is a helpful, helpful document. So if you download the notes pranks, Jonathan has put them up on the portal, make sure that you have your notes to go through and column. Let’s not waste any more. Turn on, just share my screen. I got to go.

Yeah. Folks as we go through and there is four, so there’s three different sessions, but as we go through, if you have questions, shoot them into the chat box and all the guys have the chat box. We will answer the questions if we can. And the central bank regularly to cause problems. Yeah. If they all chest, okay.

So, you know, and the, these queries would come up on a, on our regular basis from ourselves, from, you know, from, from, from Omnipod clients, you know, maybe as a result of, you know, laundry visits as a lot of, besides myself and Mike being out there, or dad just, just, it just keeps on coming up.

So, you know, what are we looking at? We’re looking at mainly these two types of entities. So investment insurance intermediaries, these are the guys who are regulated under the investment intermediaries after 1995 and then insurance and reinsurance intermediary. So it’s an important distinction. These are guys who are regulated under Nate under the authorized on the European union insurance director regulation 2018.

So there has been a change over the last one. I think this is boss is, is causing, is causing issues. What I would say first off is set up bike, really powerful lit lamp of search engine. They’re on the central bank. If you’re doing an audit for any of these guys, this is where you need to go first, you need to,

we need to, you need to find out, well, what are they authorized for? So the favorite bike has a, has a search, a search facility there where you put in the, uh, the, the name of the provider on it’ll bring up what they’re regulated for. So it’ll tell you immediately what you’re actually looking at. So I think industry,

that’s the first protocol that everyone should go to. And of some of the people here that are looking at the names are well-experienced, I’m dealing with central banks. And I know that for some of them, this is kind of like telling them to soak egg. Unfortunately, the reality here folks is the siting point of the problem with most of these regulated entities in monitoring visits and the solution to most questions that we get is to do this search.

The column has up on the screen in under central bank website, find out what they are and find out what the Prudential handbook is that relates to that entity, because that tells you exactly what you got to do. Exactly. So, and you don’t, you know, this like this, you’re starting so budget once you know where you are within, within,

you know, it’s all, you, it’s either going to be an investment in Nadiri under the AIA. If I backed art or it’s an insurance and insurance re reinsurance, and there there’s a re there’s a big difference and a big differentiation as we’ll find, as we go along. So what can a queen, I would still call up now, I know that you said that like,

you know, we’re telling people how to suck eggs and they say, well, still we’re still kind of cold up. So, you know, can they evade all the exemption? Can they find a breach, a breach of our statements? Can they repair accounts under warranty or efforts would advise Dan, what are my, as an auditor, my report requirements to the central bank.

And then what auto work do I need to do? So it comes back to, again, it goes back to this thing, if you don’t know what you’re regulated for, you don’t know what the, what you are, what your, what your am, what our work is, your evolved to what you were required to do. So, but the first three,

we can kind of cover all fair, you fairly quickly in terms of, okay, so, so section three 50 comes at 14 era forest and shackle flight companies. Okay. And in that, under, under scheduled flight, it refers to any other company, the carry on of business, which is required by virtue of any enactment or instrument to be authorized by the central bank.

And that’s kind of where, where it’s common form. So all, all, all, all these insurance, all these insurance from investments in meters, or, or insurance, reinsurance, and meters are required to be authorized by the central bank, therefore are scheduled for a company. What, what, what does that mean? It basically means that in essence,

they’re deemed to be a large company and they can’t, they can’t avail the counter van of the, uh, of the M uh, the, the, the small Cobra, small Coby provisions, because they’re deemed to be a large copy. They have the fairs. It’s a bit unfair because the vast majority of, of, of, of, of entities are we would come across from South and Mike on,

on, on our, let’s say our reviews, no offense to anyone, but they’re a bit Mickey mouse, you know, maybe 40 grand, 50 grand, a hundred grand turnover and their gene for a large company. And the problem comes with this. Whereas there are, there are a large company, therefore, the countervailing board exemption, they can’t find a bridge accounts.

They must use the full efforts wall or two. You’ve got to have additional, additional disclosures regarding audited. Auditor’s re renumeration. So we’re going down this rabbit hole. And then as a large company, they can’t avail of, of the, of the passing. So this will be, this will be a big, a big issue for a lot, a lot,

a lot, a large number of practitioners, because again, they’re small, small entities. They probably do do, do not all it services though. It’s prepping preparation of the flesh statements. They probably do CT warns and coal sack and all that kind of stuff there. They kind of ended up on the policy, so I’d have to apply. So kind of other safeguards to get around the non,

all it services. Just let’s, let’s just jump in here to an issue that comes up again and again, for accounting firms, if you’re an accounting firm who was incorporated, and if you’re an accounting firm, who’s incorporated as a standalone entity and you are regulated by the central bank for investment business purposes, you know, we’re a schedule for entity. Yeah.

So you being a scheduled for event. Now, you’ve got your, you’re got to do full accounts. You can’t do a bridge account. You fall fully into this. Now here’s where it’s getting more complicated. Sometimes when John is working with firms, we set up groups for various reasons. We might set up a group cause there’s a property over here.

We might set up a group because we’ve got bookkeeping here and this entity, and we’ve got accounting and auditing in this entity and you’ve got a group situation. Now, if one of these entities is regulated by the central bank, Not only Is this subsidiary got to produce full that I just say, put the parent to produce consolidated accounts. So This has a knock on effect on you guys,

not just your clients, but you need to watch yourselves. If you’re regulated by the central bank, like it’s 2018. Since these regulations came in and I came across somebody in the last week who has this problem, totally oblivious, totally oblivious to the issue in their own firm. And that is unquestionably going to be a serious red line item in a monitor.

Yeah. And I, a hundred percent, I’m actually, at the last point I was going to make here on the, on the, on the non, all the services, you know, you know, they, they, the, the safeguards to apply for provision of not all service, if you can’t, if you don’t have separate teams. So if you’re,

if you’re a sole practitioner or a smaller firm, tight teams, I know how you don’t have separate teams to provide the non services with what is your go to your go to basically gives to am is too is too hot for review. And you’re already under pressure from these guys for fees because, you know, dad, you said it’s for years, a lot,

a lot of these guys, you know, aren’t really worth the hassle because they’re highly regulated. They’re going to be a lot of monitoring visits and the fees are probably there to do. You’re already adding on an extra fee on you to get a hot flight review on a small turnover, cope with that. You know, if it’s not worth, We have to be careful Coleman on these seminars and make a sweeping statements about charities and property management companies.

And now regulated entities. Folks. We’re not making sweeping statements. We’re just being practical and realistic. Is it worth it? Isn’t more turmoil. And I have somebody actually want to check on the, on the call and somebody had a conversation with last week. And you know, if you’re doing the kind for years and years and years, the second generation from,

but it’s just, the client is not generating enough fees to pay them a proper fee. And it’s just, it’s ridiculous. The message is walk away. If you’re not getting paid, if it’s not worth the risk, the new regulations in 2018 column are, it’s strange to say new regulations, 2018, but they’re still causing some difficulties. Yeah, exactly.

So like we moved onto the more housekeeping stuff. Now we’re kind of on to report and records. So this is where, this is where the queers were coming from. Okay. So report requirements, insurance intermediaries. If they’re authorized under the insurance, the European union insurance distribution regulation, 2018, they’re not required to file<inaudible> reports. Okay. So that’s,

that’s really important there. And Just to be clear on those guys, right? Cause people for years, people were whipping them. You got to do your 27 and 27. See you’ve got to complete your reporting requirements. So now if they’re covered under the 2018 regulations, what’s going into the central bank. What does that like is nothing from the altar.

The firm has to sand in the form of the sand. In the night, you turn on an annual basis and the central bank monitors, monitors, dam on their, on their normal Prudential type of type of monitoring, monitoring, okay. From nothing from looking from the altar needs to go in and you made us come, come before. Cause we raised it a few times.

The center of bike would accept all these things. Don’t worry about it. Like they, if you, if you want to say one name that accept us. Well, the problem comes is when you’re comfortable managing business. And if, if you’ve got a fake dude in clued in and monitor, they’ll say, well, why are you sending this in?

And you’re going to go as well, half done. You’ve got to go away. And you don’t. So does that come down to knowledge, the entity, you know, they call it, it opens up a myriad of problems. Well, there’s two issues come. First of all, the central bank will accept anything you send in. And second of all,

when you don’t comply with the requirements, the central bank don’t raise any issues. And once they’re once every four or five years, then they do a troll and say, when you have this, this, this, and the center, the central bank standard group is they write to the auditor to write the declines and they notify the Institute. Exactly. And then if,

you know, if I’ve instituted your more than likely going to get more and more likely going to get a very quick Swift monitoring visit because it’s a, it’s a, it’s a, it’s a regulated entity. And, uh, and you know, you’re, you’re not compliant, which are, which are with your, um, sure. Obligations. Then what I would say is basically,

I always say this to all firms, you know, it’s unfair to set a bike. They’re very good ring or contact the central bank, Adobe, Adobe confirm. I would always say doctor, I’m happy a hundred percent because I’ve had a couple of cases where I’ve asked them to rate and they’ve confirmed. I’ve got to straighten the horses notes. What,

again, always an ultrasound, just cover your backside and contact them to double check that this particular entity, if they’re only registered, if they’re only authorized for this, you don’t have to do it. We’ll just be beware on bass. So that’s a big change now. Okay. Then the audit work, it’s a lot, a lot simpler. Now you still,

you still need to, you still need to do your M you still need to work on your amp on your knowledge of the entity. You’ve got planning and consideration of the, of the regulated aspects, all of that kind of stuff. Put the physical order work is so much less. It’s all around solvency, all around, you know, Holy right.

Professional indemnity insurance, the submission of the annual return have to obviously within six months of the year, and it was a tie into the odds of the counts. No differences organics. If you do have, if they do have climbing preemployment, pretty Mackenzie, if they need to refer to slides, that’s petrified handbook. If you’ve got a client print and testing,

cool, that is still there. So it’s a lot less. And if you’re, if you’re, if you’re a fully blown in insurance and investment intermediary, good. Yeah. What could went on to the guys who were authorized under the act? Now this is where the obligation come from. Okay. It’s actually a section 33 of the, of the IAA act.

And then the reason this is why you’re knowing what guys are, there is an obligation to file your RM, your confirmation twice. I haven’t be report a copy of your mind or a letter or a nail statement. Again, firms fall down. If there’s nothing to report, if you don’t, you shouldn’t manage letter, we’re still obliged to send in.

What’s known as a nail statement saying there was nothing. There was no amendment letter issued nothing to actually am. Sure. Awesome. These guys also are required to send it any copies of OECE reports, maze. So if you’re in the unfortunate situation where you’ve got an insured on an investment, intermediate shows an investment in Dimitri under the IAA act, and you have to make a report to the OTC,

maybe because of it, which is low or something like that, that report also needs to go in and to the, to, to the central bank pretty much, I mean, almost immediately after you’ve actually filed this with the ODC. So it’s, it’s a fairly owner, Sam owner’s obligation. Nope. Last it’s an important point. A lot of these guys we’ll have more than one authorization authorization.

So they might actually be authorized under the insurance intermediary. It’s your turn. I regulation on aging as well, Bush the trumps at all. So that comes up. If you’re authorized under task, irrespective of what you’re also authorized you fall under your obligations. I’m com when you do the search that you showed in the first screen, this is again for you.

Oh, yay. 2018 and insurance distribution act. That’s why the search starts everything and clarifies the problem. Exactly. And the covers also with you the covers off your knowledge of the ends and your covers off, you know, you know what to do with your report and requirements. And then really well, we all know where we are internally in terms of the audit work.

It’s a lot more involved. Like how can you send in the<inaudible> saying it’s not wrong without doing the orders. It’s all around all around section 33, you know, we know compliance would, you know, regarding second 23 is reported under your section to be confirmation and your 27 C report, they’re looking at books and records. You looking at turtle country.

That was your internal controls. Okay.<inaudible> okay. Okay. Or a special report very much from, yeah. The rate head, the back office side of the house. So you’re doing, I was going to ask you do a note in the first statement and you’re almost quoting the, the controls are in place for the, for the, um,

for the, the regular inside the house. But again, I’m about to, if the client bring the cans again, you referred to the center. Well, and he’s on task. Okay. Are part of your reports to the app, to the app as you should. Thank you. Bye. So just to be clear, the investments in insurance intermediaries act 1995,

trumps the simpler and insurance distribution regulations. A hundred percent. Yep. Yeah. And if somebody Socrates on their boat,<inaudible>, you’re going, you’re going AIAA. You’re going twice. You haven’t see, you’re gone. That’s confirmation. If you’re only authorized under the age, the insurance in insurance, regulators 18. And that’s the only one you have.

And then, then you’re, then there’s no M then there’s no report and there’s no there’s dog and audit report and recording. That’s it. But that’s kind that covers off that one. So you have two other quick queries very quick on dredges loud. Okay. So query Carly came in, basically. Yes. We’ve addressed as long as they’re given by the,

so it’s the director’s load. It’s breached 10% of relevant assets. The loans been repeated on for pollster and yeah. Well, what if the loan is treated as an extended enlargement? So yeah. You know why our disclosure requirements and reporting requirements though, in terms of three Oh seven three, Oh, wait, you need disclosure of the amounts all by directors and given,

given the mood, was it the year and any provisions made by us? Oh, the three Oh seven eight is disclosure of the percentage. Oh, the rabbit acids at the beginning and the end of the year. And it’s an important base. In addition, if the loan increased over 10% of the assets of the company during the year, that percentage should also be,

should also be status. So when someone, in terms of back eating, even though you’re eliminating the air, which is low by and standing and extending large ones, that need to be, it still needs to disclose the fact it was in excess of 10% of the random license during the year. So there’s the condo real, I’ve got to get out and turns off and trumped up slowly and were regarding regards to that.

And then moving on to the report and obligations something similar, you know, you’re, you’re, you’re, it’s actually two, three, nine prohibits alone making a loan to us, to directors. And, and if it, if it is contravening two, three, nine, they’re giving up a cadre, a two offense. I know I’ve, I’ve copied that to the three 93 there,

in terms of, in terms of the auditor’s duty to report it, where the course of carrying out work, it comes in. So the origin of the old was possession that leads to believe that there is, or have committed Academy one offense, then there would be, and if they, if they have for that opinion, but then there is required to report.

And again, that’s know anytime, anytime throughout the year that that happens even though, even though it probably has been, has been actually resolved. Okay. Yeah. So, so, so column, I’m going to, I want to sort this one across John and in terms of, and how do we deal with, and with the wage subsidy scheme at par people previously would have,

and top to up Saturdays at the end of the year to reverse director’s current accounts. And so I, I wanna, I want fill that one with John and give him a couple of minutes to think about that. And when we, when we come on to his session that maybe he’d have an answer for us in the context of the wave socially scheme,

because I know that is a problem right now, or people that previously would have just, you know, that they would’ve, they would’ve corrected or fixed. And yeah, but now you can’t just do that anymore. You can’t get away subsidy scheme cause trolls, everything else. And then the last one, well, just before we go off that 0.1 thing and in relation to the reporting piece and from a reporting perspective,

okay, if the situation arises, then you are not a heard, there’s no choice here you report. If the kinds of subsequently rectified the situation, obviously you include that in your report, the break of corporate enforcement don’t get involved, but they do write out a letter to say, You’ve done this once. So now it can happen again. It’s not,<inaudible>,

don’t jump up and down in relation to minor issues that have been subsequently resolved. But if somebody habitually has this issue, obviously the director of corporate forcement are going to be, Mmm, I want to be paying attention A hundred percent. And also again, mostly just to be resolved, just be resolved, but also very much so in terms of, in terms of I review our margin,

versus if it’s picked up on a, on a, on a modular basis, reviewers do show, hope it down, even though it has been resolved, if it hasn’t been reported. So it is like, you don’t have to bear that in mind. So even though if it’s picked up on a bill, you haven’t, haven’t done the reports or whatever,

you know, so will it be the way of your problems? And then the last, the last point then is the flip side of this. So if a, if a truck is given a loan to a company and do you know, the question is, do you need to slow the rate of pickup on the Richard loans, given to company, you need to slow interest payments during the year.

And also, yeah, if there’s a chairman, if the trust is also chairman, you have to disclose fees accrued the championship separately three Oh nine disclose requires disclosure of current and preceding material transactions between a company and the director, the director is interested. Yeah. How’s an interesting, now a nice point there is basically is obviously the director himself can’t make that call.

They should be, they should be well they’re directors and the coping should be making the call, wait or not to assess if they are, if they are, if they’re interested, is it his material? Yeah. But you see, and this feeds into a, it feeds into a very deep query when you get stuck into a column, because one of the things here is,

well, the maintenance of the registers and the director’s interest register, which is a problem. The other point, which is very, very subtle is that chairman fee piece and the disclosure of chairman’s fees when we’re used to dealing with owner managed businesses and that we have a non executive chairman Oh, submits fees that is a very commonly breached disclosure and in family businesses.

Exactly. And then, you know, like to the sludge requires our basic data, you know, the, the, the particular terms of the arrangement or transaction the name of the director with the material interest on that and the, and the nature yeah. Of the, of the interest. So, you know, so what’s, what’s has been there.

It’s fairly, it’s fairly standard that those volumes will be disclosed and you’ll see it in the vast majority of flattened statement. You see that a comment, maybe they’d like, they’re all securities, it’s free, repayable on demand, value, know various things and various things like athletics. So, yeah. And then just give you the idea of the point that you made in terms of,

in terms of disclosure of factors when renumeration come from I’m three Oh five and again, I support you guys. Yeah. They aren’t, they aren’t always, aren’t always disclosed and appropriate. Okay. So that’s how it was true topics. Thank you very much column. We’re now going to move on to John and John, just as you are opening up your screen to share there and to share your,

And as you move through your session and John, I want to ask you that question and queer people have a, sort of a director’s loan account. It’s<inaudible> the girls during the year, at the end of every year, they do a bolus, which clears it out. How has that affected by the wage subsidy scheme, John, or have you come across that before you delve into your case study?

Um, I suppose Dacia for 2020, like I suppose it’s a technically, I suppose I don’t like director’s loans anywhere in the first, first place, whether it’s a, you know, it’s been, it’s been done like that tardy to junior end, John, and we’re now in the mid middle of the wage subsidy scheme, and there’s been small little bits of expenditure and built up over the year.

And the company now wants to go and clear that out during the wage subsidy scheme that obviously, can it have an impact if that director has claimed the wage subsidy scheme based on reduced duration? Yeah. How have you come across that specific query John or no, I haven’t come across that specific fight. I suppose, if they go and pay themselves more money in the area that I would say,

it’s not going to, it’s going to impact on the subsea so far that period, I have to go and try and do a bonus for June and not example of one of them, you know, they’re going to end up with no, no sauce because of the fact you made that bonus and that sports isn’t an upgrade necessarily because if you come in next month,

then, or they ended up wanting to be yourself and you didn’t otherwise, I, before I’m like, come off the wait subsidy scheme for a boat, go back onto it the second month. But the optics aren’t great, John. Yeah. That’s it like, you know, it’s, it is an outcome, not a do say you can bring pap some people on one week,

not the other, uh, as long as it takes and you can see the letters are being sent out, you’re asking, did the shareholders get directors, get a pay decrease. So they’re obviously looking at that area. Um, and it’s obviously going to be an area that they’d like to focus on that they’re continuing. Okay. What did they, when they poke a little bit more,

I suppose, and I give a great pep talk to the guys before we started that everybody had their 20 minutes, they needed to stick to the topic and he was going to shut up and keep out of the way and hold on there. No, John, just in relation to the wage subsidy scheme, I’m talking to accountants or talking about their clients and accountants themselves who are looking at well.

I probably even typed it to keep claiming this way. It’s socially scheme. Do you have any anecdotal or practical evidence or advice from the trenches, John from the front line? Well, like the guidance is clear. Like initially when revenue was a monster at a couple of weeks before they shoot, or every four months, seven, like they were saying one of your cash companies that,

and it’s increasing, we’d expect you to going off of, but then they’re effectively just thinks exactly too same Jew eligibility criteria, looking to Q2 in relation to your cash that expect you to be paying I, you know, you know, substantial amount of their wages. And so technically it’s, the roots are what they were black and Q2. That’s the key thing I’ll be,

you might have to, you know, cute tree might be increasing. The rules are you look to Q two and I are caught by legislation there because legislation only has Q2. So they can’t, they can’t go altered at this point in time. So, eh, practically it’s if you meet conditions for Q2, well then, you know, you’re, you’re into the wage subsidy scheme.

What I suppose the thing is, you know, you don’t want to end up paying maybe staff for extra hours or doing so I might end up tapering the, we can do that anyways. So, So your, your take on a John is if you’re eligible and Q2, the legislation doesn’t make any distinction. If you’re eligible in Q2, you can continue to avail until such time as the advise overweight.

Yeah. And their guidance is there, I suppose, as well understand there’s no exchange. And so I’d be printing off the brief of printing off the links to the they’re saying civic thing, or talk with cash companies. They’re obviously going to be poking holes, but are our costs company. So you want to make sure you have your documentation. You met two conditions if you’re out coming off.

No. Well then how are you? I believe you meant to conditions all key here. Um, it’s, uh, It’s a fluid area and I’m sure it’ll change as we go, uh, this month. I imagine as well, they might issue more, but it’s not, it’s not perfect at this point in time. And I’m still that Arctic,

uh, in various areas. Okay. John, you will have a case study here. It’s what I believe is true in terms of winding down, do you want to talk about death and the context of a job? Yeah. So I suppose this is just the, I suppose the facts in this background is in, that is in your notes in relation to,

but in charge, like would say a farm, a subsidiary owns 110 company, an Irish company, 110 company B. So company B effectively has stock trading. You know, they’re, they’re kind of off requires a bit of cash or buying. They, you know, they’re taking note while we might do something with this, what would we do? So if they voiced her Mmm,

company, an and also on company B owes is all word money from company a and it is all relating to trading activities. So, you know, what’s the impact if we wrote it off and what’s the best results here, then company a also is owed money, um, from the foreign apparent effect for me again, all trade-related. So you don’t need to think about this.

And the preference here would be that, you know, the foreign parent wouldn’t want to do it now because ultimately it’s going to be taxed and then their jurisdiction. So I want him to get a solution, right? I want to get the money into a, Do you think details of the case study folks are in your notes pack on page 54? Okay.

So on page 54, John has the detailed background of the question that was asked and the case study in question. Yeah. So I suppose then that the question was, look, we want to try and see, can we get of the company in the best way possible to protect the shareholders? We kind of want it clear to the various States. Like we’d prefer potentially not to,

uh, I’d say one or the options on water, the implications of options. So I suppose the first thing to start about here is you, first of all, look and see what look, artists, trade debtors, and we can see these are trade debtors. So section 87 says effect being charged as if the expense balanced, which is related to what’s a trait.

I hate the P and L of the fact that the write off it would be excellent on the other end, Ruby textbooks belong to either site. And so I wasn’t able to write off that the amount and, or, uh, foreign coal in, in company eight, they might get a tax deduction for it, but in foreign subsidiary, in the foreign subs at parents,

it wouldn’t suit him because David 40 tax bill at that, and they have a higher rate of tax. That’s not what they want, they would want. And likewise, in that balance owed by company B way to company B company, he is company B again. Now I understand transaction hit the peanuts. So it would have that, you know, being taxable in company a,

when we made the sale of textbooks and the other company in relation to us. So you just showed the case to be there. John I’ve stopped sharing as soon as you want your slide. Um, so as well as relevant here then is the net assets of the company. B here is our new share capital 200 K 800 K. So, and they’d asked them 1 million Mmm.

Company B company then has a Natasa on my tree<inaudible> reserves. So I suppose, what did we need to do or automated to look at this particular case, as we say, we don’t want to go down the right hops here, potentially although company a and company B you’re in a text group in Ireland here. And because company B a ceased, technically that would be<inaudible> received,

which is case for tax 25%. So it wouldn’t necessarily be grouped in a and B in relation to it. So the option here, first of all, the seeking me, you know, get that, get the money up to the company in a good manner. And first of all, you have to say, well, look, we’ve got amount,

1 million owed. We only got PNL reserves of 800 K, but we have a, at that our violence from company A’s. So, you know, obviously I would pay a dividend to try and do this, but first question is<inaudible> we don’t have distributors ours. We only have a hundred K<inaudible> 800 tiles on a better balance. Is there any dividend having to set off against that or balance that?

So I suppose it stops perspective. It’s the same. Well, how about we go? And we, uh, it was somebody who’d Sage on that’s section two Oh four, uh, legislation to allow the share capital to reduced from 200 times. I think that stone Truet drags with decoration, that the company has been trying to reduce the share capital Mmm,

special resolution by the members to approve a transaction. So now that we have a situation where we have 999909th night and distributor reserves, we can write off the one Euro and we can clear they have been. So obviously before I met Sarah dividends to have several under company life just distributed reserves to, uh, to allow us, I was amazed here on section one,

one seven of the, of the legislation. So we’d have to have UpToDate management accounts to shoulder right off the Arkestra about a reduction in share capital section one, one seven, nine effectively makes it clear when you reduce your capital. It creates a strip rooms are now rev. It’s effectively the theater they’ve dealt with the peanut reserves with dividends and credit to intercompany debtor with the 999,009 was a nice night.

Is that that’s, that’s solid. Now we’re into<inaudible> strike off situation. We need to think about the tax consequences of it. I did for the painting company, being company, a boat, Irish companies, uh, you know, find the investment income, not taxed from that company at all. And company B then yeah, from their perspective, they are paying a dividend,

but it’s within it greater 50% group companies. There’s no need for a, I’d say your farm B to B, which is, you know, for a few paid gross to Irish companies, which is ordinarily around, okay. Required. There’s a requirement for company B to, to file a division 40 tax form by the 14th of the month, flooding<inaudible> dividends.

And also, um, the next thing is in company, aided proceeded dividend company is technically Frank investment signed investment company is subject to tell us when you surcharge. I suppose there’s two options here. Company is going to end up dividing up foreign subsidiary within 18 months. Any us there’s not going to be an issue and our particular case. Mmm, sorry.

I just need to share just can’t screen here again. So, so, um, so company is better, then it’s going to pay it out. It’s not going to be, tell us companies are charged with nanny event. If the one going to pay that name wants there’s always election and section four, two, four, three, eight. There’s a dividend here from company B to company a at the company,

be kind of like to ignore it for exhaust when we start charge perspective. So no issues there because they don’t have any other income, which is a state investment income company then can take the box in the 44th J and a corporation tax return. And again, that’s ignore from the surcharge perspective they are. So again, I’ll go, companies started their company aid and made the decision.

My look, would they put in volunteer, strike off or under one 50 assets, and I’d rather these several ready to go. Are you<inaudible> if I asked you that compared to Vantiv strike offers, they can’t be in stage company with him at two years for operating dissolve first 20 years the other way. So it depends on the race in that company as to what charges take company.

Then you go into and you say again, Nope. What can we do? We don’t want to write these bounces off. So again, it’s David and<inaudible> same idea. Uh, we’re, we’re all two by 1 million. Um, So figuring out a little bit out there and mind, but you’re reducing the share capital again, doing so many proven procedure.

In that particular case, I created mr. Bruisers and now you’re declaring. And even, and again, texting again, different holding tax returns, uh, I’m paying it off before to pay out the dividend, give the counterparts. They should get the Spanish parents filed a form B to B, and which is a revenue farm to give them before they make them otherwise,

it would have to put a wood holding textbook because the farm parent Is he a, you are a double tax treaty country. You don’t even need to withhold tax. As long as the it’s a form. B2B is on that, on the foil in companies, right? Cars<inaudible> effect. We now company a can make the difference out to us, the foreign and Spanish company,

a tier, a standard company that at that point in time. Yeah. And I suppose the one thing that strikes me, John, as you’re showing this example, query that you got in, like many of you are members of knowledge hope. And so you’d be familiar with the process, but you know, sometimes people ask basic questions or knowledge, hope that we can get a quick answer to are the questions already answered.

And this one here is probably on the coast. It’s a very complex question for knowledge hope. Well, we do a more complex questions in there. And if there’s a question that goes way above and beyond knowledge hope, and in terms of your basic subscription, and we can always top up your subscription and answer these type of extremely detailed questions. And John,

I think the reason why you included this question in today’s session, it’s not only sharing the technical information that you’ve just shared companies now, as we come into the pen pression and what kind of the economy on suspended animation here at the moment as we come out into the pan pression for some people winding down is the thing to do. Um, so, so you’ve,

you’ve got, John has got multiple questions, both through knowledge hub and direct from a consultancy perspective, here’s the company, what do we do? How do we get the cash out? How do we tidy this up? Yeah. So I was born that day. You know, the other thing you would look at there is if the company B was owned,

that wasn’t acquired from inception by company a or then the dividend of the company B might be locked in, unless you do some improve improvement herself, to a point where the spare parts being owned before potential collaboration, won’t be an issue it’s only a matter of pre-acquisition reserves. The dividends in Pado that you would might have to do with some reproved seizure to allow that that,

that David had deemed to be distributed for the future on more different. The next area is very quick. Section 16 of that first one and two, as we know, it was mentioned for periods beginning, January, 2019, does the hospital judge me, which I would have said usually science shouldn’t have been taken anyway. There was a possibility, not the fair value investment property versus non to cross street.

Mmm. But if you have that situation, you have taken on new prospects. No, and you’re coming into tardy Farsi December 19 year, and you’ll have to go back and restate prior to the period and the start period part of fair value amount that should’ve been there. Uh, you know, cause it has to be retrospective adjustment. So that wouldn’t mean rigid,

reversing, potentially depreciation that you might’ve been posting on that type of investment property, which you took to get out. I’m not going to obviously tax unpack really from the point of view of, um, the company’s perspective. Obviously the fair value movements are not going to be taken into account to talk cause they’re not texting. They’re only capital transactions notion transactions in relation to it is appreciation reverse of the creation on the investment property.

In that case, you know, again, wouldn’t have been an average tax deduction anyway, so it has no impact. The only way the impact here is on a surcharge. And this is a big, I prob I call me that holds property and they’ve, they’ve potentially not paid<inaudible> are charged based on hundred demonstrator reserves or not. So because of this adjustment,

obviously this will restate that comparative period 10 across December 19. And my example are 18. My example, on your 2019 year, we’ll have a different 2018 year. We’ll have this date for distributors are now compared to all signed off those counts. So when you’re going to say, what can I pay it? And what do we need to pay from a point of view to provide it to us.

Companies are charged. I should try to force December 18 year ends. You know, we have 18 months to do that. So what set of accounts should we be looking at here? So technically, you know, on a company law, you can’t make a distribution unsanctioned. It’s always going to star out roads in section 44, section 44 can make it clear that if you’re not permitted to do it by company at all,

but then there’s no surcharge. So if you haven’t got suspicious, are our distributors are what you only pay up to the amount of resorts you have. So it’s an important question and not one look at December 18 and set of accounts. Now, now I’m doing an earned set of accounts. So what based my analysis, almost open surcharge effectively. What do you want?

You have to, you have to know that there’s a common and all road. The real key is when you make a different section one to one size you look and see, is there a distributor, ours based on your last relevant accounts, which should ask counts for a relay before the board of directors at that doesn’t apply. Um, you then can then only if you want,

you can gain go up to management accounts, which were prepared and cards by company law and French report standards. So effectively here, if you’ve done accounts, um, for the first December, 2019, under common law rules, if the dividend is being declared at say<inaudible> 7,019 being the year in which to change the account policy has to happen. You have to go to the current years to assess what are,

what are your sugars are in relation to what not to do? That is a dangerous, let’s say under reason why you wouldn’t want it is because obviously the current year would show the sugar of his arms, which are a lot higher potentially than the previous set of accounts because of the fact that there was depreciation charge on that pension investment property potentially at that time.

So it’s just flagging us. I just to be aware that, you know, you should be looking at the 31st December, 2019 accounts. There is now you would say if you’re 19 accounts signed off, whether then under the section one to one, you look to the previous set of accounts. I just think that’s a little bit dangerous because revenue per call would say,

when you click on the accounts and you put it on it’s 1919 accounts, when you were doing it and you didn’t do it on partners. Yeah. The thing that strikes me, John, and this query is when, when people think of investment properties and the classification of investment properties, that for a lot of people it’s, well, it’s a deferred tax issue,

all consulted contained within efforts, one or two. Um, and the real danger here is that it’s not just an, for us one or two deferred tax issue. This is an actual tax impact that Canberra definitely. And John has highlighted in answering that question. It’s not every company that has an investment property is going to be impacted by every property that has an investment property that previously was not valued at fair value.

They have to go and consider one final question, John, before you leave this section, and if somebody has an investment property, just to clarify, if they’re restating the 18 accounts and you’ll have easy most to make a distribution, is the 30th of June a deadline or are once we get into the month of July, is this option of redoing a distribution to reduce the distributable reserves in eating gun?

Or is there a gap in terms of that timing? Well, I know that it increased the one that the matcher ends. I think I’m I’m, I, I, I’m not sure what her living with it, but push forward to, you know, an extra extension for COVID-19. I don’t know, off the top of my head, hard to push that forward at this point in time.

But at dad, monsters is always Jay, without the COVID-19 will have to be done within 18 months. You missed, you missed it. There’s no, there’s no second chances. There is no any way in relation to, and it’s something that I just go into my iPhone was account account recall. Now the December 18 moments push And your next query,

John is different. It’s kind of some way related. You’re talking to here about defective financials that stay up and some mistakes. Yeah. And I suppose this is an unfortunate story in that, you know, if you’ve got an Irv, not just David’s and you want to, uh, let’s say you don’t have to, but let’s say you have to,

you want to, you have to correct the previous year from that state. So it’s a big art are there. And I think probably are just when you want it off the record or on the record last years were wrong or you can go down groove. And it’s actually Tracy Tracy, seven three stage two at foil restate and financial standard CRO the old financial statements will stay on the red card,

but they’ll be visible. That’d be one excess there. The unfortunate thing that we’re seeing is even as recent as yesterday versus seeing the CRL sending back docket since 2015, 2016, and in relation to talking to the blending that Bendigo, as saying, they’re not happy with the layout in relation to the notice that’s required for three, six, eight, they want to display,

it says compensation today seem to recently just take an, um, a blind approach. But our definition of prominent, prominent prominent position is they expect that the financial statements without revise and I to stay up on every page they expect at the front page, which state, you know, the fact that these are for taste and financial statements at the replace, the original financial statements for the year ended,

there are noticed actually fast stands party those years under happy and prepared as is 80 regional financial States were signed on how they differ from how, how, why the changes made and why it didn’t comply with, at, in relation to them. So they were on the top page and they also say they wanted on the balance sheet as well. So like before,

like we would, Bob said we weren’t being sent that, you know, you’re put in North accounts, just make sure that, you know, you have all these Dodgers there, but they have now CA in a prominent position. I had an argument with the CEO. It’s very hard to talk to anyone now because they don’t do four ones. It’s all email and relationship,

but they’re there. They’re not urgent. They’re saying common position is X, Y, Z. I went back and said, how does this make sense? We know it’s being put in whatever tree to tree years called directors could have went, you know, and it wouldn’t be the same people of tall here. Um, and, and a problem position like this that’s judgment in as best of time.

It’s in the legislation. If you have a, an interpretation of a point on leave for trying to treat and let us know what your interpretation is, instead of having us doing guests here as to what you think position is. Um, and they, they, they that’s the fact that they said they still had the things prominent position. I just said,

would you want to do that? And he let us know about it. He couldn’t leave for 23. We’ve had this before. Um, minor matters with the CRO. I’m not suggesting this is a minor matter, but it’s, we’ve had this on interpretation pieces. And we had one, a couple of years ago. And in relation to property management companies and the stores,

your own property management companies now after about six months, they backtracked and after about six months, they just went okay. Okay. Okay. Yeah. Maybe our interpretation was wrong and I’m not suggesting their interpretation is wrong or not congesting don’t want to backtrack here, but this is clearly based on training is a coronavirus issue where somebody too much time on their hands,

somebody got to be Nirvana and we can’t get to the person who can help us solve the problem. So, and there’s not much we can say John, other than if you have submitted financial statements that could be coming back to you, we’re working on this. We continue to work on it, but it’s, it’s, it’s, it’s just, it’s one of these crazy interpretations under section three 68.

Yeah. And if you, if you’re doing this, um, you know, if you’re doing it now, just do it the way they’re saying it basically. So you don’t have the hassle emulation to him. Like, it’s, it’s just crazy the way to culminate in 2016, 2017, and we’re trying to get it back. I questioned it. They said,

I hope to see our role can decide, you know, to prioritize, wanting and not do another thing and growing up. Yeah. Cause it makes, it makes perfect sense to retrospectively look at accounts number five, three years ago with no guidance, no material, no warning. And because that’s just makes perfect sense. The next you’re looking at John is possible insolvency.

Yeah. So this is just wrong. Well, it’s the ROTC that I’m the senior handout that they issued us all in effect for dealing with this, to just say the recognize the fact that COVID-19 is an exceptional item at an exceptional thing. And they’re just reemphasizing that when they’re going to assess this, they’re going to look and say, why is this,

did the insolvency at Roy as a result, as a direct result? COVID-19 if without, if it did well, then if they are happy that they acting good fate response for them relation to and undertook actions to necessary, they don’t see any restrictions on us all with indication over, let it, you know, over the years I think with that, or if they come in and say that these are all kind of,

they did this, this and this, and it was in line. They’re not going to look for a restriction against the direct germination to it. And to be fair, I think, you know, you here is a 10% of all applications get, get a restriction. So it’s, it’s rare enough and getting a restriction. So it’s rare enough, they’re making it rarer.

Page 55 of your normals fact is the guidance document. And I think this is critical for all of you who are companies who are under pressure. And it’s back to what, let’s be honest, it’s back to John’s voice back in the last week in March, it’s the same advice that John gave him March, April, may. This guy who was documented was published on the 5th of June John’s guidance was document document document.

And your last query is a quick one, John. Yeah. That’s it like it, Obviously people are trying to, you know, probably not as easy to pay wages, like they’re trying to give maybe employees, things like this, just time, this time, maybe some incentive to go get into the business and a flowering share of road share effectively.

It’s it’s the ability of the person coming in, potentially employee coming in, getting an uplift in value. So for the value of the company today is a million effective, right? To the share would say, Sarah, look at he’ll be issued a share equal to, well, you’ll get value. Once the macro by your company goes over a million based on the percentage of shares that you hold.

So it’s I suppose, an incentivization to that employee to grow the company. And it also keeps them, I suppose, happier, and that they now have ownership in the company and they’ll get back in these times, it’s given an opportunity to build the company from that perspective, from a tax simplification perspective, you know, the Mac value is key, getting a right.

I would say there is hope by you. If you’re given a shares to a, an employee and the company is making, there’s a big hope that it will be promised in the future. So you show put a nominal value, at least if you’re issuing the shares on the payroll, because the way he’s going to POI parasite for not volume relation to it from a company line patient,

obviously there’s a new class to share every issue because the existing owners would say the only other class this year, I still own the a million. In my example, what the new fastest share will have at the rice Ang involved that would be shared with the employee portion to ship as very specialized solutions. Let’s take your company there, John. And the going into COVID-19 based on balance sheet based on turnover was a million value company.

What are the implications of there’s whole value? So now you issue a flowering chair. And basically what you’re doing is you’re locking in the company, whatever the evaluation is today. And you’re then that if the market value raises 2 million in five years time, well, that employee is getting the difference between one and 2 million. And when you talk about the whole value on payroll,

John, what does that look like? What does that amount to, or how do you put a value on hope value? Well, I suppose that is an art. There is a science, I suppose, and there’s interpretation as to what that value is and what likes just various valuations that there, which is, you know, a bit like, uh,

you know, options, things like that at that point, not quite, not the oatmeal method book, one method that might be used as one. Look, if I can give them this shares on, there’s no voting rights in this share while I take 15% off the value of the company straight away, and then say what, maybe I’m only given five,

10% of the company of the future uplift to the individual. So I don’t discount it as it would use. The, maybe it’d be, you know, usually it will be at 78% uptake, the percentage that you’re getting. So 10% of a million, let’s say you’ve taken a million, take 15% off. Then you get to 85%. Then you take 10% of that.

For example, to give you the macro value, you after minority discount. And I would even discount it, potentially buy another, you know, 10, 15% or more to get to overall nearly a 99% discount on the video shows. That’s just my opinion in relation to how you might go value. Um, you know, there are various interpretations, but I think the key thing is that you put a value on it and you recognize it as a value on it.

I know some, some people would say, there’s nobody on it, but I know that the HMRC are looking at this at these type of structures in relation to it. And they’re saying, well, you can find you at zero here because there is a hole, there are no tax. And likewise, if the HMRC are looking at decrease revenue, wanting to open up the operational army Yeah.

Stuff that happens over there eventually comes here. Okay. So Mike and excellent, Mike has four queries, and I know Mike, you have the grand total of six minutes. So folks, I don’t want to undervalue, I don’t want to undervalue the importance of links queries, and they are important, but at the same time, I don’t want to ruin this event over on everybody.

So what we’re going to do, Mike, how about we give you 12 minutes so that we want a room to six minutes past the hour and in my, without rushing through M did you share and the value that’s in your queries in the best way possible in the 12 minutes. And so Elizabeth and jr just giving you notice that we’re, we’re, we’re,

we’re going to kick back and, and hopefully every bear witness, and you’ll still get your notes, you still get everything covered off and in the session. And so Mike, I’m going to shut up 12 minutes, thanks, four shark babies There today. So hopefully, hopefully they won’t take too long. And the first one I have here is a query that came in.

They had clients, it was a firm who had recently taken on a new audit clients they’d wrote to the previous audit or for professional clear in several times, but they hadn’t replied. And that the question they had to ask Bose was, well, can we accept appointments? So, um, I suppose it’s important for us to Paul, just, uh,

this was a charter burn. So we had Susan in accordance with chartered accountants, our code of ethics. We’re just to be aware that you need to consider whatever regulatory body you are, it’s considered their specific code of ethics. Uh, for this charter firm, it was a section three, plenty of the code of ethics that’s a, they needed to go to.

So, um, section three 20 requires you to, um, you know, see confirmation from the outgoing going auditory or professional reasons why you can’t access the engagements and you, you should get the client’s permission to do this. Section three 20 also reminds you to be mindful of any AML issues. No, but in reality, if you know that there’s AML issues,

while you, I don’t think that’s that common of an issue with it. Just say to your mind that if there are any AML issues with the clients you’ve taken on to be mindful that you shouldn’t tip off, you’re going off to surplus again. I don’t think that’s a, I don’t think that’s a common comment of an issue. So then the guidance goes on to say,

well, where professional clearance isn’t answered the accountant should write to the predecessor, predecessor, auditor, again, play recorded delivery. So again, you’re, you’re, you’re, you’re keeping a record that you sent it to them and they obviously have to sign assigned to confirm receipt. So within that measurement, Basic registered post, basic, basic form of delivery,

or to have to sign for acceptance. And you need to be careful using couriers now because you had a cold, but as you well know, I’m like, they’re not getting signatures and on posters, the only one that I believe at the moment who was getting signed. Yeah. Yeah. And I suppose within that lesser, you just need to state that you have an intention to accept the appointment.

Um, and in the absence of a reply within a specified periods, if you don’t get a reply that you will accept the appointment, now they don’t say what is a reasonable period is, you know, logically you’d say probably a couple of weeks, which would be reasonable. Uh, and if they don’t respond to that, then the firm is entitled to assume that the silence in response implies that there’s no adverse comments to be made.

And again, it’s just a reminder that don’t, this is the exception and not the rule under normal circumstances, you’d follow the normal procedures. And it’s only in these exceptional circumstances where you’re not getting a response that you should follow that to that methodology. So just the key thing there is, you know, uh, send it by recorded delivery and within the lesser just station intention that you’re,

you’re gonna accept appointments in the absence of replay within a specified period of time. Yeah. Like this is not helping your timelines, the question there, and I have a practical answer to was, but I’m wondering, do you have a technical answer to Elizabeth’s question in relation to<inaudible> AML and notifying the new agents? Uh, I’m just reading the query here.

Um, so if you have an ex client who you have to report on for money laundering, the new accountant does not yet written the letter professional cleaner. Should I write to him anyway and let them know about the report and from a tipping off perspective, from a tipping off perspective on the surface that would look like no. However, Elizabeth practically, I believe in the updated regulations in 2018,

they did take notifying an incoming accountant of reporting off the tipping off lists. Elizabeth. I think what we have to do is we have to go look at, and we have to go look at the legislation to be sure, to be sure on this one. So perhaps if you could submit and if you could sit them in an email and into us and Mike and myself was sorted out one OT in the afternoon.

Yeah. Uh, the next one is a really, really quick one. Um, I have a company who bought shares at a hundred thousands. They’re now valued at 30,000 at the year end and carried at that figure in the financial statements. So the question is for the devaluation of 70 grand, should we be recognizing a deferred deferred tax assets? Um,

and I suppose what we look at there is section 29.7 of FRS one or two, and we look at well, is it probable that the losses will be, uh, recovered against the reverse, reverse to the future tax liabilities? Um, you know, and, and I suppose there’s a bit of judgment to be applied there. And you, you,

you kind of need to look at the specific circumstances of the company or the, you know, the things we’d be looking at there were, what are the future projections, uh, what’s happened since the year end have, have they recovered in value? How much losses have encouraged, uh, you know, do the license expire at some point in the future?

I would say, unless, unless you can kind of see some concrete proof that they’re, that they’re going to be recovered. I would say that the probability thresholds isn’t met little circle. So again, it’s just a, you need to prove that the losses that is probable, that the losses will be recovered against future textbook profits. It’s in it in a,

in a private company, Mike, um, that can be hired. You, you need to document and justify, well, how can we say that this is a deferred tax assets? And there’s a possibility these shares, particularly in these uncertain times may not recover so deferred tax assets, some grace, but in reality here, if it were me, I,

unless it was very clear indicators, I’d probably not be going down that route. Mmm. They need to be strongly justified in order to recognize them. And probability threshold is, is a lot higher than, you know, potential or, you know, it’s a high threshold to reach the next one again. And again, this is a really quick one.

So if I’m auditing a set of financial statements where the prior year is on all the suits, are there any additional paragraphs include in my audit reports? Um, and I know as a former reviewer, and I’m not sure if column is the same or not, but it’s, it’s not, it’s not an area that I would have probably honed in on as,

as a reviewer, but there is a provision there. I said seven, 10 a paragraph 14. So that says if the prior year financial statements were not all just the auditor shall state and another master paragraph in the auditor’s report powers of figures that are our own auditors. So that that’s a requirement. It’s not an option on what makes some of the other map on like some of the other masters paragraphs it’s,

it’s a requirement. So we have to stay in our auto records that the prior year figures are own knowledge. There’s no specific guidance that I’m aware of in section seven, 10 as to how that should be worded. This is an example paragraph that could be included. Just so again, just the statement that the prior year financial statements were not subject to all of us and consequently to comparative figures or something along those lines,

it should be included within the audit report for the first time. Yeah. And just go back to your point there, Mike, that you didn’t necessarily go looking for this art column didn’t necessarily go looking for this. There are some reviewers who are picking this up, so it’s not a, it’s not yes. Addict tasks from the institutes. So for example,

the charities should, are not saying that the reviewers you’ve got to pick this up, but it is being picked up. So this is stuff that we’ve seen before. Once one reviewer is picking it up, I asked her, do their reviews, it’s happening over here. Next thing I asked her to come in and say, well, this needs to happen across the board.

It is black and white is in the auditing standards. And it is a very, very common mistake. People are taking up audit exempt companies. They finally had rather than a tree for three years, or for whatever reason they need to be honest. This is just black and white breach of auditing standards. Yeah. And again, I’m not going to go back to the previous slide,

but just a reminder too, that if the prior year is our own, I’ll just that then there is responsibilities to look at the opening balances as well and audit those and document how you’ve altered the doors as part of your, your first year of assignments at The next paragraph, doesn’t solve the problem. You still have to do the audit work in accordance to the auditing standards.

Absolutely. Yeah. And so the final question I have, and this is kind of a, COVID-19 sort of related one. So we have a client who holds an assets, which cannot be easily valued in this situation was that it was like sporting venue. COVID-19 has presented an impairment indicator, and I’m trying to carry out an impairments review. How can I assess the fair value in this instance?

And I suppose this is a, you know, a lot of the time when we’re looking at assets that are carried as fair value, it’s quite easy to establish or having a good, have a good attempt at, by what’s fair value, but in, in kind of specialized things like this, like sporting venues, it can be difficult. But the first area to look at is section 27 of our first one or two,

we have an impairment indicator. So, you know, severe decline in economic circumstances, I think it’s section 27.9. That’s one of the impairments indicators because of COVID-19. We have that impairment indicator. And as a result doing was carry out an impairment review. So we look at the carrying value versus the recoverable amount. The carrying value is obviously what’s what it’s at at the balance sheet.

The recoverable amount then is the higher of the value in use and fair value, less cost to sell. So the value in use, if we had another half an hour, we could spend half an hour talking about value and you just calculations. We look at the present value of the, of the future cash flows, and it’s expected to be derived from the cash generating units,

the fair value, less cost to sell. Then that’s what, that’s what we’re trying to establish. We take the higher of the value in use on the fair value, less cost to sell that becomes a recoverable amounts. And if our recoverable amount is less than our carrying value, then we have an impairments to recognize. And again, that’s value and use of just with the sections there for us one or two that we need to look at if you’re already using value and use calculations,

make sure and look at the little sections because there are some very prescriptive rules and I’d imagine it’s going to be an area that’s reviewers are going to be Target’s in quite a lot. I’d imagine over the next 12 to 18 months, Well, we benefit the entities in terms of Mike has given us. Here’s what I first wanted to say this, but is there a possible ghetto calls for public benefit entities where,

you know, the value of use of a sporting facility is not the same as the commercial assets? What is the, it’s a specialist in Acer, I suppose, but is it for the benefit of the community? I see. So public benefit is a fine in there. So we have seen that’s the likes of that swim pools that affect that you’re saying there is no value.

There is no impairment because of the fact you were holding this far, you know, providing these services as part of the public benefit, as, so as a result, you know, it hasn’t been damaged effectively. It’s still performing as it always performed. Therefore there’s no need to impair those cases, assuming that it meets the definition as a public benefit in that,

that is there. And assuming not been a public benefit interest at definitions, man. Yeah. And it’s not, it’s not always matched, but sometimes it’s an extra nuance to consider. Yep. Yep. Last word from Mike. Yeah. So this is just a general point on when you, when it’s difficult to establish fair value. We look to section two of FRS one or two,

when we look to the hierarchy that set out there. So the, obviously we look at the first one and if that’s not matched, it goes to the next one, the next and the next one. And so the best evidence of fair value, it’s a quoted price for it and identical assets or similar assets in an Aspen inactive Marcus. So if we have,

for example, the development of houses or something like that, there’s a quarter of the price for a four Bay hosts, three bed house, whatever the case may be, uh, subsequent to that. If we don’t have that situation, we look at the binding agreement or a recent transaction for an identical assets. So again, if there were similar assets sold in the recent past,

well, that’s, that’s the, a good indication of fair value. Just the one thing thing to be careful about there is if there has been a significant defining economic circumstances since that lasts a binding sale, well, that’s not going to be a good judge because that’s obviously partners at the moment with COVID-19. If you had a sale in January, it might not necessarily be a good indicator of the fair value for something that’s that we’re buying.

Know if those two, if those two don’t work, then we need to look at the valuation technique and see if we can and use that to determine fair value. Uh, so evaluation technique, uh, it should be commonly used by market participants and the technique should demonstratively provide reliable estimates of prices obtained. And the key thing here, we need to use Markus determined inputs and not entity determined input.

So, I mean, you, you kind of be looking down the line of getting, getting evaluated and looking at their, at their methodology and see, well, you know, can we arrive at a reasonable evaluation? That’s been proved to be valuable in the past. Uh, so evaluation technique, it can only be used if it reasonably reflects how the markets can be expected to price the assets and,

uh, the, uh, the in quotes, uh, reasonably represent market expectations and the measures of the risk and the final point, if following all those steps, we can’t establish what fair value is. Well, then we need to look at w w we’re then precluded from using fair value. And as a result, when we’re looking at our, at our recoverable amount for value and use,

we look to the value and use and not, not the fair value. So, so that’s kind of the, the kind of the steps to able to go through, to establish, well, how do we get to fair value when it’s, when it’s not as apparent? I think in Mike’s point, it’s like, this is going to be, sorry.

It’s not going to be, this is one of the hot topics of accounting right now. Anybody who has property on the balance sheet, you could spend an entire day on this in terms of looking at value use and fair value, how it all ties in with Mike has given us a snapshot. Mike has, has opened up a query in his answer to question everybody that has assets on the balance sheet.

Now we have to look at the requirements of the section 27 in relation to the first one or two we’re just, Oh, so nine minutes past the tank, John column for today’s session. And obviously I want to thank Elizabeth jr. And all the team for hosting today.