VIP Video Library – Session 15

VIP Video Library

The Irish Accounting & Tax Summit

Session 15 - Charity Financial Reporting & Audits under COVID-19

Session 15 - Presentation

Session Transcript

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

So what would I try? Well, Paul, what we’re going to cover off today on five topics. There’s a lot in it. So again, a lot of this, it will be very much high level to a certain extent, but we’re going to go into detail on certain areas, but we’ll go out to you with the fucking report and issues and fucking showers,

but one of the issues, and it’s a small section there on the ranker issues. So again, the CRA and reporting to M two, two, two, two funders, you know what they’re looking for, what, you know, you know, what, what will be expected on a particular app COVID-19 considerations again, throughout the entire presentation bed. All we dealt with were with,

we’re trying to Colbert offer there, and then where we are, look, we’re all here. I’d have a point of view on my laundry because, Oh, what, what, what are we seeing? I want to be picked up from my experience as an either review or Mike’s experience. And then, and then what we’re seeing now from the point of view of,

uh, of, um, of Modi business, which, um, which have been gone remotely. And for the last one, look, I’m going to kick off Dan with our first topic. So flash reporting issues. So, you know, in turn, in terms of, of the issues, what are we seeing from the point of view of,

of, of, of what charities have an issue with the first point would be, you know, all the issues we’re getting, we get regarding concessionary loans. So in terms of, you know, not having an accounting policy on the front statements, and then not considering those loans from an FRS or two perspective in terms of those teeth, what we’d be seeing will be,

I think we bought what we see a lot would be issues regarding am the capital assistance schemes, or kind of CAS schemes. So obviously in the, in the, in the current climate, you know, there’s that, there’s, there’s, there’s a housing crisis. So, you know, so government County councils and government departments are providing these loans. Maybe 2:00 AM,

2:00 AM, housing associations and various things like that. So again, how are they a tree? How are they County treatment for those? How are they, how are they disclosed in the financial statements is our, is our Israel, is there an appropriate accounting policy for them? So again, they, you know, these are, these are, these are areas where our cherries are falling down on and I need to,

I need to am, you know, bear in mind. I say simple thing, like not disclosing the fact that it is a public benefit entity. Again, you know, this disclosure point. And again, we’ll be, won’t be a big point in terms of, you know, uh, I review in terms of stating that the cats are UPenn in accordance with the store,

you know, you’re, you’re not actually using the store. So I think, I think in RNM, but you know, probably Mike and hope don’t be here. Like we have, we have this kind of range of organizations where are not applying the sore. Okay, fair enough. There’s no requirements at the moment are applying to soar and then get the gray area in between where I’m trying to apply the store.

They’re picking things that thumb there are saying that they’re there, they’re in compliance with the soft, but they aren’t reading. And, you know, in order if you’re adult and how can I put, and if you’re saying you’re comply with the SOC, you’ve got to comply with the soar. You don’t don’t don’t if you’re not going to comply with the soar in full,

don’t say you’re doing doc because, you know, that’s a breach disorder. Yeah. Like a statement that you’re complying with the SRP, like it’s called state and recommended practice. But if you’re saying you’re complying with the Thor, there’s that there’s an awful lot of disclosure, additional disclosure requirements. So it’s not, it’s not a note to put in just,

just for the sake of putting it in. If you’re putting it in your you’re, you’re committing yourself to additional disclosures, significant, significant amount of extra disclosures. Now, if charity is a pioneer, that’s fair enough. You know, don’t put it in if you’re not applying for A hundred percent, unlike like, you know, I mean, it will be frequently frequently raised on em on,

on monitoring visits and frequently raised on, on reviewed as well. And then the next point that will be something that actually came up there recently enough. It’s not, not applying the assets help or service potential. And instead of book, it I’m in a book on impairment based on value and news. So, you know, a lot of, a lot of,

a lot of assets are big properties and, you know, sporting venues, community centers, all of these kinds of things are all, they’re all held for surface potential. So they’re, they’re held for the, for the, for the betterment of the, of the, of the community. So and so in terms into, in terms of the soar and,

you know, it’s, it’s dark as hell for a surface potential. So you shouldn’t be, you shouldn’t be looking to book an impairment and based on the value and you should be looking at, I know a charge of measure for four, I can do for those things such as the presale, the replacement cost. So, you know, again, it’s,

it’s, it’s, it’s, it’s, it’s, it’s knowing that on your file slows nine with my statements and I get a week, which will be what it will be a number of issues that will be, would come up from the point of view of, of, of the soldiers on, on and on the files. And then the last point will be,

you know, if you, again, if you’re, if you’re using, if you’re using the soar and applying the accrual concept for grants and, and which, which isn’t, isn’t, isn’t allowed, if it’s the performance to them, the performance concept and or grants that you’re applying apply to the source. So again, if they’re saying you’re applying the soar and you’re using the cruelest concept where they end up to<inaudible> reach to the source,

the term escapes me, but, you know, so again, that would be something that would be coming up regularly. And it’s an, it’s an easy pickup. And from the point of view, you know, you’re reading the class statements, you’re reading the accounting policy saying where you just need to grow this concept. And then you’re even another documents.

I know that the basic preparation, same we’re using the store. So again, I mismatched there. So just bear that in mind, in terms of your goal, and if you’ve got to use this, it’s got to use a store, you can’t use it across content. And then a couple of other points here as well will be, you know,

especially, you know, not disclosing old recognized volunteer services, so it’s requirements. And, and if you’re a public, a public benefit entity to, to, to, to, to recognize that you have, um, you know, volunteer services and in terms of understanding, and also the last point, they’re not recognizing the value, uh, of donated goods and services in income and expense.

Again, you know, if you’re applying the soar or if you’re a public benefit entity, there’s a requirement they’re on their own under reference to, to actually go off and, and, and quantify that. And then, and then, and then recognize, recognize that in the, in the, in the, in the financial statements, and again, these are small things like that.

They may seem like small things, but again, there are there there’ll be ice that will be picked up a routinely, M and D. And they’re also reporting issues because obviously, you know, I, I, I I’ve used said Mike, there’s a lot more stuff involved in, in, in applying and applying the soar and, and, and,

and, you know, I’m even not even as a public benefit entity in training in terms of selling all the, all the items on the, on the funnel and then recording on the file. And have we had any visibility column on wind when the surf is actually applicable or mandatorily applicable to twin cities in Ireland? No. And from, from, from talking to John on,

on actually on the, on, on an area and an area charge, he’s M M um, charities webinar, and John, John says like, it’s in tray and it’s, it’s, it’s, it’s in it’s, it’s in the legislative process, but again, you know, coping, coping this stage, it won’t be 2020. It could be 20,

21, 2022, before that he does come in. And it also currently at the moment, it isn’t a requirements both while we’re seeing basically his boss, obviously the larger charities have already, you know, it’s, as you said, like it’s a, it’s a, it’s a recommended best practice. So you can see a lot of the larger charities are kind of opened their game or they’re,

they’re moving to best practice. So they have migrated removed over to the store a lot, a lot, a lot, a lot of the smaller charities are, are, are starting to move. And now I do know, you know, we need to do all that, a number of the big, uh, you know, funders as part, as part of their,

as part of their, their, their agreement or their FLAS and their grant agreements are looking for charities to start to make the move to the soar. So it is the common is becoming a, a bigger, a bigger ticket item and a very topic look like currently it isn’t, it is mandatory and it is mandatory in the UK. So again, they know better,

you can apply. Yeah. At the moment, um, in term, in terms of next point regarding efforts, one, two, one eight, and yeah, look, you know, the smaller charges are perfectly, you know, in, in entitled to apply that what’s happening is based is the, um, a lot of grant funders. So a lot of,

a lot of bad government grant funders, like POBO Tuzla agency, all those kind of things, as part of their agreements, they’re saying, well, we don’t want you to apply. And, um, the section one eight, because it isn’t given us the, you haven’t given us the, the disclosure requirements that, you know, that we actually need.

And so I’ve been forced to efforts more to a minimum onstage, and then I’ll be with them, with them, with, with them, with, with the ground providers, there’s, there’s additional, additional and disclosure and add on daughter we’re working in, in terms of grants and how they’re accounted for and, and, and, and all, and all that aspect of it and call them,

uh, just, uh, on the, uh, on the frameworks. I mean,<inaudible> section one eight, we also have FRS one Oh five. I’m guessing, you know, it’s probably not set in stone as regard. It’s not specifically precluded from using that phrase, but I’d imagine it’s, uh, it’s not, you know, your dad writing it,

isn’t it isn’t, it isn’t, it isn’t precluded boss. Um, your funders, aren’t going to be too happy with seeing them, like, they’re like, you know, this would be, this will be, you know, we’d be talking to firms and I, you know, especially more so up on this side of the fence and the reviews were doing that.

Like, they need to have a look at the agreements they need that they need to really have a look at the grant agreements. And because, you know, in, in, in those grant agreements will be what kind of accounts that, you know, disclosures you’ll require, what kind of framework that you’re going to be used. They’re more likely not going to be not going to be saying you can’t,

you need to call me saying you can’t do different, want to fight because of the lack of transparency and the lack of disclosures in there regarding cause as you know, you’ve, don’t many, any webinars now and effort as well falling. So it is a specific stand alone framework and assumed, assumed tray know, assumed, presumed true and fair while, you know,

the big brother efforts wanting to, and the smaller brother efforts were to want a, you know, you know, all the work around that and disclosures are, are, are actually there. Um, and then, and then just, you know, in terms of, you know, in term, in terms of transition issues, so, you know,

firms are, you know, firms in charge are looking to transition over time from Fs to, to, to the soar, a big item has gotta be grants. So, you know, it’s the performance model mandated by the store and you can’t do, you can’t use your crow’s model if you’re going to, you’re going to have, you’re going to have adjustments.

If you have been using the amp, the cruise model under effort to, again, bear that in mind, you know, depending on the size could be a big or small, a small name, a small adjustment would like just a bad element that that’s probably the biggest issue that’s gonna come up again, investment properties. It must, it must be at a fair value.

And then if it’s, if it’s not totally complete and it can’t be, it can’t be classified as an investment property under, under the soar. But I think the big thing that will be in front of take from it is, again, you know, if you are talking to your clients, if you are told your charges and they are looking to transition now is the,

now is the time start talking now is the time to put into the procedure that they can, they can actually, they can actually transition on because as you said, as you rightly said, like there’s a lot more disclosure points, like from the point of view, you’re talking to form the counties. You’re talking about like restricted funds on rustic phones, you know,

in downwind funds and all you’re looking to go back over, over, over agreements over fundings and say, well, look allocating well, which is restricted to, which is non, which is not restricted or unrestricted, but that can be a big exercise. And it all goes slowly around there. That’s how we can support costs over those particular forms. And,

you know, the soap accounts could be, you know, you’ll see the set of Caterpillar that are there in the pack. That can be a massive, massive set of accounts for arresting small arrest, smaller charging, because a couple of other points there just in terms of just watch out for it may not, it may not apply for M for amp for,

for all, all the, all the smaller charities. But again, just got to bear in mind that there are, there are certain nuances in terms of, in terms of, in terms of that up, that you would need to bear, bear in mind. We’d like the flash report issues. If they’re the big, the big ticket items would be,

you know, concessionary loans and<inaudible> around, around, around the accruals versus the performance model or the grants. And you’re looking at like, you know, am I in the store before or not applying or not, not applying you at all? Or, you know, you are, if you are in a kind of hybrid model, I’ll say you’re applying the soar because you will kind of be kind of be ding dong and look then can move it on to move it onto the audit issues.

So look, there’s a merit of all of, all of the issues in term, in terms, in terms of, and in terms of em and the charities. But look, we’re just picking out three, three or four big ticket items in terms of terms of audit issues. You know, always at three, one five understanding of the entity we spoke at the,

at the, at the, at the introduction, you know, understanding the entity, the accounting systems, internal controls and fraud, obviously insurance is a major, is a major risk measure, a major area. And then obviously they’re the, you know, the old, the old chestnuts to 3,500, primarily looking at like, you know, and complete as an income and expenditure cause these are the areas that are going to be,

are going to kind of be looked at in terms of the three, one five. Yeah. Just to, just to kind of revisit and, you know, you’re, you’re required to get an understanding of the Anthony. It’s an environment as internal controls, sufficient to identify and assess the risk of material misstatement of this. My staples were due to fraud or error,

especially statements and assertion, landfill and sufficient, especially to design and perform further audit procedures. So again, that’s something we all we all kind of are, are aware of, but again, in terms of practical risk assessment, what don’t, we kind of look at us. So are we, where do we need to focus our attention on, but we’re looking at showers,

we’re looking at revenue recognition, we’re looking to get out potentially management override. We’re not in a complete dizzy of income. We’re looking at grants, you know, we’re looking at, and you know, you know, if they have material property and property assets in the, in the balance sheet, we’re looking at, you know, what we’re looking at at the areas that I would call a backend and a full aisle,

which is looking at, you know, income, we’re looking at wages and salaries, and we’re looking to expenditure and we’re looking at all those particular areas in terms of, well, how are we all doing those and how are we going off on the, on the wrist about that? So you’re looking at like, you know, cultural offer y’all can ask,

you know, complete accuracy and all those other assertions. It’s all basic stuff with all of the stuff that really comes into focus when you’re looking at showers and then what are the issues that we need to consider on our, on our final, you know, falling form your final opinion as to how the bus sufficient appropriate audit evidence as a 500 and how we then documented that documented that one on,

on our file is ready. Guys. You need to deviate from the standard, all the testing. So is there anything unusual in there that we need to, we need to, we we’d go out, I would say, outside of the normal standard stuff, and then do we need to consider more testing or take a bigger size sample? Again, this comes back to your area of other risk.

So how, how have you assessed your risk in term in terms of the particular areas that are, that are, that are on the balance sheet, you’re going line by line item, you know, your line items and fixed all the way down to see whether we are aware or you’re aware our URM, your risks, how are they low, medium,

low, medium, high risk. So, you know, the vast majority of, uh, fires we’re going to be looking at, we look at how far she is, like all the, all the risk areas are low and you’re kind of going, well, look, we’re a charity. You need to eat it. But Ben, more thought about doc.

Like, so if you’re, if we’re thinking revenue recognition and it could be the vacant is a low area, maybe, maybe it is, but you really need to have a, you know, another thought whether or not then to have more testing on a bigger sample size. I know sample size is going to be a problem in the best of times.

I know it’s, it’s interesting. Um, you know, we sometimes see the other side of the charity audits and the unfortunate side where there’s a complaint or a claim or something against the firm. And, you know, when you boil it down by like down to the facts of what’s gone wrong, those, those three things you mentioned there, uh,

you know, sales, uh, sales recognition, uh, expenditure frauds, you know, it kind of those blow jobs with those. So, you know, it’s important to recognize those, the planning and to it, and to have some kind of a plan to address those. You’re not always going to identify everything, but, you know, like is you hopefully reduce that,

that possibility. Yeah, very well. So I like it all starts off. It all starts off with planning. Exactly, exactly where you’re sitting down and saying, well, look, you know, you know, recognize, and this isn’t a standard old, you know, and recognize that we’re not there. I don’t mean nuances, allegory specifics to us.

And that comes from, that comes from your planning, your code from using then your standard specific charges and, you know, work like on the art. We’ve got the chat where you have a chat or work pack, which deals directly with us. You’re looking at, you’re looking at the, because if the specialist nature of the, of the NC.

So if you don’t know, if you don’t understand the, the entity, I know nine times out of 10, we were talk to practitioners and they know the chart and the ducks lines inside and nextdoor cherries inside and what they haven’t documented the fire and they haven’t delved enough into it. And that’s, that’s what comes up in the backside. If there is,

if there’s an issue of a fraud radio, and this may be a fraud as well. And like, you know, what are we talking about when we’re saying we’re documented in the system of internal controls, you know, you’re you, the processes you’re documenting the people. And like I said, I think I said at the start, no matter how simple you think your showers,

he is, it is depending on the type of funding it’s getting type of expenditure, you know, it’s encouraging, it actually might be a lot more complex than you actually think. So your, your document that people are involved, how they’re, how they’re recording, how the recording of information, the validity checks, authorization, segregation, the Judy’s big,

big ticket item here. Whereas, you know, his expenditure has expanded your being property authorized on it. Are there other, other checks on the authorization is the expenditure, you know, and appropriate for the charity in line with the in line with the grant agreements. And, you know, for the purpose of the charity, is there, how many times have you come across,

you know, at trips abroad on charities, like, you know, for no, no apparent reason. And, you know, it’s hard, it’s hard to, it’s hard to kind of justify to us in a particular charity. They get, she said in relation to Judy’s again, we’re now, you know, COVID-19, I know we’re coming out of the coming out of the lockdown,

but again, you know, how has, how, how, how normal Colby has been dealing with this, how char has been dealing with this and in terms of the potential, you know, Judy’s the rest of segregation, Judy’s in some of the smaller charities, but again, putting in those systems and controls your, your, your, your, your,

your LinkedIn, your LinkedIn, you know, documentation to, to, to, to addressing all of this, um, walk through tests vital, like in terms of, you know, once you, once you actually have documented your, your, um, your actual internal controls and, and, you know, your, your systems does a requirement, other three,

one to five to evaluate the design and implementation of those controls. Now that can be done in a very, a variety of ways, obviously discussion, you know, with, with the, with the clients and, you know, you know, on an analytical review and observation, but the real only way of getting to see if they actually work is by doing your walk through tests.

And there’s a requirement that you do some kind of system test, some kind of walk through tests. Now I know for going to push back and say, look, call them. We’re not doing this. We’re not doing the controls test we’re doing as a stance of all just going to be a hundred percent, that’s perfectly fine. What three, one,

five requires of you, some kind of controls testing, so you can justify, or you can, you can document that you have evaluated to design an implementation, ambulance implementation of those controls and observation and discussions. Aren’t aren’t good enough. So cut some contests and I’m just going to hopefully this. Okay. Yeah. So I’m just going to go in and go through the pack there.

And if you have a look at and pay your 1320 in the pack. Okay. Yeah. So this is just, you know, the, the, the financial regulator, um, guidance on this is this is a very, very good document. And I think it should be on every, every charity file, you know, and they they’ve issued this.

They, they issued it from, from the point of view of, of, of this is this is what they should be, you know, that the, the best practice. And it’s a, it’s a very good document in terms of document and what is actually there and how things are, you know, income expenditure. This, this is an addition to your documentation of the internal controls.

So again, you know, you know, this, this should be a starting point from the point of view of actually assessing, well, what kind of controls are actually there? Do they have the basic minimum of controls in place? And then this is only kind of a yes, no, it’s a yes, no checklist, but you need to be documenting in detail,

your understanding of those controls and the point of view of your audit and Dan, how are you testing those controls? If they’re, if they’re, if they’re material controls and impacting on the, on the artist, again, you need to document that in detail. And I think on the arc, we’ve, we, we, we, we’ve a number of resources there from,

you know, from a small Colby to a larger entity in ter in terms of how you go about documenting the controls again, related specifically, um, deputy, uh, aimed aim to aim to I charge. So it goes, it goes into income. I go, you know, public, public collections, don’t, you know, that’s the, what they call the shaky book it’s charities.

And, you know, a lot of small Chinese won’t have this and they won’t have a public connections, but then they might have, you know, someone goes off into the parachute jump and, you know, and on their own, but they give them money and so bad at the moment. It goes into all the time, pregnant based income. And again,

Ron’s income. So, you know, you know, it’s, it’s, it’s a really good starting point, give this to your charity, get them to do this, get them to fill that in for you, because this is best practice on the charity regulator are looking for it. So if they don’t have that in place that they should be doing this,

and this can, this can be a starting point from the point of view of your, of your auto work. And obviously it’ll, it’ll, it’ll help you frame it’ll help you frame your potential, your, your, your, your, your manager debtor, or your own a weakness is we don’t actually have these in place. I think then it goes into exposure.

Again, you’ll follow the exposure. Not for, we’ve been talking about it’s all right there for you. I think problem, the hardest parts with controls, in my opinion, there’s always, when you have the blank sheet of paper in year one, and you’re trying to figure out, you know, where do we even start from here? But I think a great starting point there is,

as you said, give that to the charity, get them to fill it out. You know, some boxes would be not applicable, but a lot of it will be applicable. And even, even if they have no documents control in place, it kind of, it sets the wheels in motion. And, you know, it kinda, it addresses your controls.

You should have documented controls by virtue of their responses. What, on top of that, it probably sets the wheels in motion for them as to what they should be doing. If they’re not doing something A hundred percent, a hundred percent, because like, you know, that is the hardest thing is like, you know, where do I start? Well,

that’s where you start, you start when boss and I’m like, you know, you’re taking a step back and you’re saying, okay, well, look, we’ve all this income. And we think that may be from, you know, fundraising we think come from, you know, grant funders, the big thing, they all show up. We all get our money from the state.

We’re all. Okay. What, how did you get the money from the state? Like, so how, how is it? What’s the draw down process? You know, obviously it’s, it’s been driven from a grant agreement or, or, and an SLA. So have you looked at us? So most of what is the charity, what’s the process in terms of,

I make an application for a draw down, how did they go about doing that? Who’s involved in dusk, what are the checks and balances, the data controls, and then you go off and test them. And I’m going to turn, you know, in terms of like, these are, you know, these are the areas that you’re looking to document.

Now, you know, I know people are on the web. I love to make oncologists. So once there, it’s a charge of the oldest, uh, you know, in my previous role and I probably would have less, less time or less, less, less, um, simply for firms. And because it’s a small artist, if you’re doing,

if you’re signing off an old report on your, you’re doing a charity, or you need a box off these things, because I’d like some myself and Mike at our previous are all going to come in and we’ll, I’m a you on us, you know, in, in, in terms of, so, so it is, so it is, it is,

it is important that you do, um, address all the words and the PA and the things I would be picking up is basically is, you know, they haven’t, you have firms haven’t documented their own understanding of all aspects of income. So the different sources and streams of income, or didn’t source in the streets off of expenditure, they might just do it on the big,

the bigger items, you know, the regulators, you know, inspectors are looking at, okay, well, look, these are all these different streams, where have you documented those? Where have you tested those? So again, just bear that in mind. Um, so that’s kinda, that’s kind of,<inaudible> them, you’re, you’re M you’re having systems big,

take a look is document, document, document, and test fraud. Okay. So we’re talking about fraud and the charges. So, you know, fraud fraud is a major risk, risk area in, in, uh, in, in, in a charity, in terms of, you know, two 40, the objective is to identify and assess the risk of material misstatement due to fraud.

Okay. Sufficient, appropriate audit evidence, but designing and implementing appropriate responses. That’s true. Most of the eyes is now sufficient appropriate audit evidence. I don’t feel I could be banging on that. Never next, right? For the last couple of the last couple of months or weeks in terms of all the, all the other workshops, and then you need to respond to suspected fraud identify.

So what are we looking at? Well, at a minimum, we’re looking at revenue recognition, so, you know, completes a bank and that kind of stuff, and managing overlays now, you know, in terms of charities. Yeah, it probably is a major issue because, you know, do you have a, do you have a particularly strong and overbearing,

but strong, you know, management who are basically am and who are, who you are, you know, can can override the controls. You need to bear that in mind. So you’ll show, you’re looking to test product. You’re looking for objective. You’re looking at basically any unusual transactions. You love a transaction outside the norm. You’re looking at a scattered,

the nominal ledger for, you know, I think we said, Mike kind of expenditure that’s outside the norm of the charity. How has that been authorized? How has that been approved? I’ve not experienced a bit override for the new fund, the normal, the normal, and, and, and procedures in place. And then you’re looking at a deal review of the material journals that,

that may be the, the, the, the bookkeeper or the, or the, or the, or the accountant on site, and looking to address it in a number of ways and your other, other fraud risks. So what are you looking at? Like you’re looking at basically it’s, you know, really around and kind of expenditure and, you know,

outside the norm, you know, and not, not, not, not for the purposes of that, of the, uh, of, of the charity, depending on what it is, depending on what it is. If there’s, if they’re operating in numbers, are charity shops, is there, is there a risk of staff tech, uh, you know,

all these kinds of now, I know there potentially could be, you know, low value, no value and goods, but again, you know, you’ve got a bed you’re going to bed on a bed out of mind in term, in terms of your, in terms of your consideration of a fraud risk. And what we see a lot is, is basically just handling template risks,

you know, revenue recognition, managing override cost, basically. So we don’t, we don’t, we, you know, firms don’t look into say, okay, stock issues. And, you know, it was probation of phones, you know, you know, what’s the segregation of duties. How are, how is the money accounted for as a comes in,

if there is there is there, is there other, other IRM procedures, a place to open and close, open opening, post counting of cash to two types of tube types of people. And, you know, when you, when did he start accounting for, I kept, I kept him for the, for the money. You know, if you,

if you are doing kind of, you know, phone raising, are you issuing, for example, numbers, numbers, bunch of cards, I’m going to check to get them back. Are you wishing if you are doing shaky book and as I call us, are you wishing Goldberg damn, no booklets. So you’re, you know, these are all to do with fraud risk regarding,

regarding incl it’s. You need to be to bear that in mind, when you are looking at your, at your, at your planning, you know, putting it in place, it goes back to, you know, identifying the risks, designing, implementing your responses, and then responding, responding to suspected fraud. So in terms of, you know,

the main domain fraud, risk factors and cuss spoken about it is, you know, the miss ms. Alec, ms. Application of restricted funds. So we’re going back into the areas of like, you know, you’re getting, even if you’re not applying the soar, you’re go to getting funds from you from the stage, you’re going to be an addict,

you know, funding it up on the basis of M of, of, of, of the type of services you’re providing and on a grant agreement or on, or on a service level agreements. So they’re all particularly restrict your fullness. So how are you applying those phones? Are you applying them for the purposes that are required? And then the expenditure against a lack of control over expenses ties into managing override?

How are you treating cash donations and cash expenses? And again, you know, there shouldn’t be material cash expenses in a charity. Like, I wouldn’t, I wouldn’t think, and yeah, cash donations again, you know, you know, talking to Andy Ron about, okay, well, how, how are you accounting for the us? You know,

if people standing in a nice bag, nice make a change, or, or, or, or, or, or, or, or other types of income, are there two people counting us? How are, you know, how are they buying large bared out in, you know, Goodwill income? I think that’s all to do with, like,

you know, as you know, those, those donations of goods goods and to, to charity shops. So, you know, how are they being accounted for, how are they being recorded in the books, in the, in the box, and then obviously, you know, they’re then being sold. So again, the, the, the counterbalance of basically of,

uh, recognize, uh, recognizing the income, um, again, the, the, the, the last, the last, the second last point of volunteering volunteerism, charity, second, the second secretary yard is fantastic. You know, you know, it’s an amazing, it’s amazing sector. And when I get it realize a loss on volunteers, so,

you know, the vast majority of volunteers are upstanding pillars of the community, but again, you’re going to get the, the, the, the, the, the, the, the, the few that we try and, and, and, and, and, um, and take advantage again. How are you, how, how, how, how does the charity have systems and controls in place to monitor there?

Their volunteers who, who are doing wash, how are they doing that? What controls are in place, they have major big enough risk factors. You need to take into account hunting side of the house Slides. There are columns with two questions in here. Um, first one is, uh, can you just confirm as to whether a charity company applies FRS one or two,

one a<inaudible> is the FSR mandatory? Uh, my, my answer is that there is, if it’s an Irish company, as far as I’m aware, there’s no, there’s nothing. There’s nothing mandatory. No, exactly. It isn’t the salt, but the salt isn’t mandatory beyond the simple answer to that would be, you need to check depending, depending on the type of,

of, of funding that the charity is, is receiving their lead, the check, the grant agreements, and they’re under various fully agree, was to see if, if the grounders have, have asked or mandated that they typically apply efforts one or two, or if there’s a, if they can apply efforts more to one eight. And, And the second question then is,

is a company with a sports exemption from revenue class to the charity. And again, my understanding there is that in order to be a charity, you need to have your, your charity number or your charitable status. So you’d need to check that Exactly. I don’t think you need to check that. I thought that the registered with the, uh, with the,

with the CRA as well and how the appropriate probably CRA number. So again, yeah, yeah. You would need to call it kind of go up and just double check that, um, a couple of, couple of posts before he finished on fraud and always am, and, you know, common, common, common on fraud indicators. Okay. So discrepancy like these all sound fairly basic that,

but, you know, I say they are overlooked. So discrepancy in accounting records, missing documents and inconsistent are vague management or, or, or, or employee responses and, you know, transaction topic recorded a tiny basically again. So, yeah. So it’d be, it’d be dope and unwilling to address the system’s weaknesses. Again, this will be an important point.

So if you’re, if you’re constantly raising issues on your, on your oldest, on your, your imagine letter or you’re on a findings letter and the jars isn’t willing to do to address them the Cobian underlying, underlying issue there. So, you know, so, and again, you know, you need to bear that in mind in terms of how,

how their own willingness, if, if it’s, if it’s deemed to be a material and weakness, and that’s going to impact on your, on your auto work and then on your OT opinion, because, you know, if they’re, if they’re willing to address issues, is that a limitation of scope? Yeah. I’m just kind of throw it out there.

You know, you know, you it’d be a case by case basis is, is, is, is, is, is, is, is you’re willing, is the on willingness or to address any issues on previous audits, imposing an limitation on the work that you are going forward. And therefore we haven’t imagined the posting date of scope. Are you required to,

you know, you you’re going down now allowing, okay, the disclaimers are going down, you know, of not accepting or the, the, the, the, the appointment on the, in the next year, because, you know, you know, that there’s issues to having an address, I suppose, just before you move on, there are columns like that,

but those last two slides, you know, the reason charities are high risk. The reason why some firms just adopt a blanket approach of seeing, well, we don’t touch charities. It’s for the reasons of what’s in the last two slides, you know, a lot of the time when issues or current charities, it’s stuff that never even hit the accounts.

So sometimes it’s very difficult to spot a lot of the issues that go around in charities and they’re high risk from a fraud point of view. So those two slides are quite good. And they’re the highlights. The risks plays well on charities. Exactly. Yeah. I am then look to move, move, move it on to documentation and execution. So big eyes and dark.

I competed that income. So in terms of, in terms of documenting the internal controls, you know, created a great test, like that’s on all on all material income streams share a lot of donations, income, fundraising aspects. And, you know, that’s kind of where that’s kind of where you’re, where you’re actually are focusing on us. Um,

and then in terms of, you know, walk through tests, you know, performing on all and all elements of the, of the income system, and, you know, you’re proven how the system operates and you’re looking at cradle to grave. So you’re starting off at the primary doc is working the way through the system, and you’re looking at a detailed and analytical review.

And then, and then at the end of it, after you’ve done your sample and transaction testing, after you’ve done your, you know, your transaction, your transactions as Uptown’s of testing and your, your, your, your, your, your, your detailing, your final, an analytical review, and you’re drawing it all together. And that’s kind of where these are.

These are the main purpose is always going to be a focus area on a charity artist. And it’s definitely going to be, you know, in terms of, uh, of, uh, of a multivisceral, that’s basically what it will be. It will be, it will be expenditure. You know, what are you looking at? You’re looking at basically your,

your analyst, your review, your knowing, the reason for the marriage, the ma the ma the major variances, here’s your sample, your sample testing, or your expenditure Baranoff DUS testing you and your village. You need to expand on it to Tessy for proper authorization, again, from C to stop sample testing for the validity. It don’t move onto proper authorization.

Again, it comes back to managing over ice, and then it doesn’t tie in, you know, and testing out the expenditure tie in, and it should be in line with the activities and the 40 agreements. So are they spending the money on the type of service that they required? And then the waste, the salaries tests that aren’t in line with the contracts,

the pay scales, the 40 agreements they had, these are all laid down in those documents. So, you know, it’s, there’s a lot more involved in just testing the waste and Saturdays for existence and Atlanta and recalculation. You got to look in more depth, and again, as you said, that’s why cherries are kind of, you know, farms are pushing back on doing charities,

even the smaller ones. So moving on to the regular issues, nothing really here. So I kinda, kinda kind of over on through it, just to, just to bear in mind that the CRA are, they’re fairly active. You know, a lot of people, if they’ve been on other webinars on charges, you’ll see it, you’re seeing this kind of,

these, these are slides before I just kind of updated them for the last couple of, you know, they’d be fairly active, like, you know, And they, and they am, it may age, No, the, the, the inspector’s report regarding the solar gall, I picked your palace again, you know, um, in M in 18,

the Goldman’s cold was launched. And then, and then more, more and more recently advanced COVID-19 or guidance in may, May, 2020. And that is other, there’s been other, other inspections in place. They are regarding caribou. How do you association with in mind in term, and then there’s various concern, you know, basic concerns raised, you know,

on, on your, on your auto files, you need to bear in mind that you need to be, you need to understand what your reporting requirements are to the CRA. So, you know, it comes on your, um, I know we call them section 59 of the, of the, of the, of the charities act. You know,

you might have external requirements to report to who am to external funders and then have the CRA themselves on their websites. Um, you know, you know, what kind of concerns are they looking at their concerns over internal controls, um, and their trustees perspectives, or trustees responsibilities if they’re overstepping or almost stepping down their eyes, but you need to kind of bear the bed in the mind when you’re doing you when,

when you’re doing your own. So you need to understand what your, what your reporting requirements are, and in terms of govern government agencies, again, this is the point we’ve been kind of talking to, tread to trade this morning is, is the phony agreements might, might specify the type of reporting framework required. So they might say, if it’s a soar or it’s effort efforts,

one or two, and they may not allow sexual Monet or efforts were five. So we’re kind of, you know, we’ve, we’ve heard about a few times on an exactly that last point is they may work. They may, on the numbers basis, they may be odd exempt, put them funding where we’re required. So again, to bear that in mind,

and I think the current limit in the CRA is a hundred thousand of income. So if required a doctor level. So it is, you know, so if you are a registered charity and you’re getting 40 about level, you, you’re more like a requiring and watch out then for the extra extra requirements for the actual drawing, the grant funders, and turns off in terms of what needs to be disclosed and untested.

And then when, when you are testing us, you need to tell your testing will come out to the last point you’re telling you’re testing for, you know, you’re looking at your service level agreements, you’re looking at your grant contracts, you’re looking at specific transactions. And so it’s not a testing on your classification of expenditure. So, you know, is it properly extended?

So you’re testing, it goes back to the previous points, have sorry, on, on them, on the way back. And in terms of your testing of expenditure is a property authorized, is a properly and expended, you know, in line with the grant agreements in line with the types of services that are provided by the charge. So you’re testing your experience.

Testing is taking it a lot more aspects. The COVID-19 considerations really in term, in terms of, in terms of where we are now, in terms of a lot, a lot of people are today have been on our, on our, on our, on our COVID-19 and kind of webinars. So a lot of stuff it will be, won’t be,

won’t be, and won’t be too, um, it will be familiar to everyone, you know, so the planning issues are going to be, have you updated your you’re putting mammo for COVID-19 depending on when you started your own. So if you were looking off the five year old, but, you know, pre December 19, and you’re already chosen off there,

because cause the lockdown are you, have you updated your planning memo? Have you taken the taken on board and you know, COVID-19 COVID-19 issues and how do you update your wish ledger? How do you update your risks for COVID-19 so that the risk of fraud who the real risks. So, you know, there’s all, there’s all the stupidest people out there who are trying to take advantage of maybe the breakdown and controls in place,

because people are working remotely people aren’t working on sites. That’d be trying to try to, you know, scam, scam, money and scam cash off of businesses. So charges, charges, wouldn’t be, wouldn’t be exempt from that. They’ve got to bear that in mind, have you updated your understanding of the, of the business and the entity and in terms of the state,

as we go back to the beginning where you’ve, you’ve documented your accounting system and external controls, how, how have they been impacted or changed because of COVID-19? So they’re no, probably no longer the head office or, or in the sub offices. And even if I working from home. So how has that impacted on segregation of duties? How, how,

how has that impacted under their shows over, over income, over cash, over various things like that. And it would turn in terms of you probably, you know, a lot of charges have how close a lot of their, um, their, their activities. You know, if they’re, if they’re, if they’re, if they’re, you know,

residential units, they may have closed, their shops have closed the Ford racing, how’s that impacted on the, on the knowledge of the entity. And then in terms of how have you danced with, you know, managing your team and managing the engagement and, you know, and document the, your, your, your, your, your considerations with the,

with the, um, with the, with them as a team, again, completion issues, you know, the big elephant in the room is going concern. You know, how, how have you, how has, how have you, how have you obeyed your procedure in terms of global concern, if the stock trading, because the shops are closed body intentions to,

to, to, to open up after COVID-19, they’ll again, you know, I’m doing it from junior, from port leash. I know, I know a lot of chairs, these shops have had gradually started to reopen such great things, but that’s it cause the concern was, they’re not gonna charge you, wouldn’t be able to reopen the shop if the,

if the lockdown went down Atlanta any longer. So y’all got to go thing, you know, so that’s probably starting to give, give, give an idea regarding golf, the search, what you’re looking at, the type of funding, the type of state of sports there, you know, it’s a goal, it’s a goal based approach. That’s your starting point?

Is, are these Chinese go to, you know, will they be in existence in 12 months? Time, again, you just need to bear in mind. And then what you have for your reporting requires and obligations. I know that I know the CRA of how they extended filing deadlines for accounts and various things happen when returns due to COVID-19. But again,

bear that in mind, when you are doing both backup to the point, the first point, do you have a supplementary procedures in place? You know, you’re not going to go off and read and re reinvent the wheel on your PC, on your, on your, on your general charter procedures. What are you using? For example, the army pro COVID-19 checklist,

which what was off all of these points. So at least you’re focusing on the areas that are impacting because COVID-19 is a massive issue. And I think when we move, we move on to the am, let’s move on to the monitoring business and like COVID-19 fires are being picked. So, and they’re being picked. And I think, I think Mike,

you know, you’ve had some experience with this as well. I like that they are picking COVID-19 fires are both fires that would, may have other risks, other risks, um, what the risks in, um, that would maybe on a normal and normal wood would be locked up. So because COVID-19 is fresh, it’s new, it’s a major risk area.

The margins are a lot in the COVID-19 files. So again, you need a bed. You need to bear that in mind, in your, in your, in your, in your, when you’re completing your files on your Aponte, they get all the more than likely will. Those COVID-19 funds with the pictures. And It works Dayton too. That’s um,

you know, when, when regulators come on, come along, they pick what they will call regulated clients, uh, covers charities. So if you have a charity, if you have a charity central bank clients, those types of clients, at least one of those will be picked as part of the monitoring process. So, you know, the whole area of charities comes in under the banner of regulators of clients for as far as the regulators are concerned.

So there is high probability of being picked apart for monitoring visits. Exactly. Yeah. And the, and the, the high probability, and then they’ll pick the prime pick. I recently won and more, a little more likely to be a COVID-19 file. So again, I think we’ve, we, we touched on these, you know, these issues to add the threat,

the visits, you know, application the store, are you applying the soar in for, or are you a hybrid? You know, are you discolored like, so again, you know, these will be, are you on, are you using a specific charities, slaughter checklist, are you using a specific and thorough checklist? That’s a big, they’re big ticket items,

but the firms are, I’ll be dinged on. And in terms of overall kind of an issues, you know, standard NOFX issues, both tailored, hinted work programs, are you using a tailored work program or are you, how are you, how are you addressing the specialist nature of the client? Because it is a specialist nature. So know in terms of your reviewing internal controls,

reviewing and grounds agreements, you know, the man went are all of these co all these kinds of things, you know, how have you tendered your, your, your auto planning memo, have you specifically stated that they are rational? The CRA what the CRA number is, what the tax exempt status is? You know, what are your reporting obligations we’ve mentioned that should have been,

you know, the charities act and, you know, any, any other reporting obligations to the CRA directly to the external funders? Cause they obviously would have report requires them as well. Any other laws and regulations that would particularly apply to your charity involved depending on what they’re doing. Like, you know, obviously jobs has been saved and various things like that when you know what you should have covered up.

We’ve, you know, we’ve, I hope have hammered on the bank, inadequate documentation of your accounting system and turn controls your walk through tests. You’re gotta do walkthrough tests, some kind of testing of controls. If you’re not doing this, you know, it’s going to be picked up on issues are your, your, your document is too brief. It doesn’t cover all the aspects of the charity.

You know, all, all the all material activities, all the material, income streams, and completing completed income testing, you know, we’re getting into it or getting into really the areas, which I’ll be focused on. Cause if you’re looking at it, if I’m looking at a charity or I’m looking at undoing a credibility review, I’m looking about financial statements and kind of go,

okay, what am I looking at? I’m looking at planning. What am I looking at? I’m going to planning to see if you actually understand what cuts out it is, what a dose, you know, where it’s based type of system controls, your planning, your fraud and your risk assessments. That’s really kind of S M and then moving into the fire.

You know, I’d be looking at probably six acids. If this material for thousands of dollars sheets, there would not be debtors many, many a bit by testing that accreditors Manny around the grant grant funding on how your, how your, excuse me, how you’re am I counting for the grants? You’re looking at concessionary loans. You’re looking at say, if you’re a housing association,

looking at the cast is capital capital land and assistant schemes. So how do you accounting for those, you know, in terms of, have you looked at the things, and then I’m looking at the backend of the file, it goes straight into the computer. They come, go straight into. I explained your testing. I’m looking at these things, you know,

I’m looking, are you covering all the material income streams? Are you do your cradle to grave? What is your, is your completed thing? Is your income testing, just addressing validity and accuracy. How are you, how are you doing complete this? And then the big thing is you’re not overall over up. You’re not, you’re not am including overall uncomplete and almost like,

Oh, I’m only a few more slides. So I kind of run through them and your expand your testing. I know we’ve dealt with it earlier on, but these are square. The, this is where firms are being, are being dinged on, or that they’re being hammered. That, yeah, you’re, you’re testing isn’t for proper authorization. Again,

this dove tails into manage it, override it dovetails into fraud and proper authorization to send insurance. That kind of thing. Is it a, is it a valid expense of the organization? Are we heading off to America for Afro jolly or whatever, or, you know, I don’t tell me cheek or, or are they, you know, are they,

are they a simple thing actually? And they’ll combine a simple thing, like a staff noisier or a staff party in a charity being funded by a government funding, you know, that’s, and I know from a fax, you know, that, that isn’t considered a valid expenditure, you know? So is that coming from, is it coming from other funding that’s allowed?

So, you know, I know it’s pedantic, but bear in mind, I’m not, I’m not testing for proper purpose. So is it aligned with the funding agreements? And again, this is where a lot of firms come back on when they have an order, buy it, Hey, Jesse, or to have a lot of buy to Slack or other government funders,

they commented the hammer on this and they kind of say, well, look, it isn’t in line with the government. It isn’t in line with the funding agreements. So you, so we want the money back. Can I go well, you know, and then they go back to the origin and go, well, you never picked up on this.

It will, you know, so, you know, it goes back to your testing in terms of Basque and wages and salaries testing again in line with contracts, you need to have a look at the contracts, you know, and then, and then in line with the fully agreements. So, you know, I know I, for example, that our crashes would have funding from,

from the government. They would have specific, you know, am and funding and, you know, um, wages scales, or there are other organizations, again, depending on what my service to provide, they would have to, it would have to be in line with the government’s, uh, wage scales for put a particular organization they’re doing. So have you tested that,

have you tested that kind of applies and those agreements fraud, and I was humbled on about it again for this morning revenue recognition margin override. You’re looking at like, you know, Curio journals, you know, nominal, nominal, ledger review in line, in line with in low with type of type of organization you’re doing, and then gold concern, you know,

how are you testing? I think we have a query in there regarding M and examples of gold concerns, notes. I think you’ve covered off a loss in your M in your, in your financial reporting, in your refresh reporting and, um, seminars. So we know desktop is available. It is available on, on, on the arch. Yeah.

It’s up on the Ark. Although obviously what’s up in the arc is kind of only, you know, it’s an example and you’d need to tailor it to the specific circumstances of the charity. So depending on where the charity is or what the situation is, you know, that would obviously need to be tailored. But if you look up, see what’s on the air,

cause a few examples there of, you know, where there is a material uncertainty where there isn’t a material uncertainty and so on. So that should be that hopefully that will help. Yeah. I, a hundred percent do I have the basis is there, but it needs to be tweaked and you need to, you need to tie it in. So the goal is you a reliance.

We, I see on fires plays on the funders, but how have you tested that? How have you tested that? The relies on the funders? Have you looked at the funding agreements? When did they end? Are they, are they, are they a three, three, four or five year funding agreement? How far, how far into the future do they go?

Do you give, are you confident that those, that those agreements will still be in place and they’re there and they won’t be, they won’t be renegotiated. And then what, you don’t have the funding for future funding. It’s 12, most of the proof that he counts with this stage. Now we’re looking at the end of 20, 21. No,

I don’t have a crystal ball, Mike, I’m sure you don’t, but you know, like, you know, things are, things are starting to, you know, we’re coming out of the lockdown, but now we’re looking into, as Dan says, a pan pandemic recessional and Hannah’s session, you know, so, so it’s a bit of a tongue twister.

So, and so when you’re looking into that, so you need to bear in mind as it, as in, you know, are we looking at, we’re looking at basically you’ve got a fairly difficult budget potentially in October, you know, the first, our first protocol has gotta be on, it’s gotta be on expenditure. Next protocol has gone beyond the voluntary sector.

So how are those fundings going to go? I got to stay in place when with the government departments have the money to give to the funder, give to the organization, to fund them again, or you’re looking at that. And you’re, and you’re assessing also your learning boundary is there, is there enough is enough money there? It was in, in reserves to actually,

um, carrying food 12 months from the date of approval into 2021. And then, you know, you know, again, the sore nonstop, how have you tested restricted unrestricted income? Have you tied them into the underlying agreements, the conditions you’re testing, and that’s basically it. I know we’re slightly over, so apologies, but there’s a lot in that.

There’s a whole thing soapy. So you’ve got something from DAS mainly about the areas where you’re, where you need to bear mauling from the monetary cause on dam, you know, couple of points I would say is completely better testing on your accounting system. Attorney controls. You’re you’re, you’re, you’re, you’re looking okay. Not good if you’re you’re looking okay.

Brilliant. Thanks very much for that column. And I’m conscious we’re a little bit over, so I’m going to wrap this up fairly quickly. So, uh, we, we now have a 20 minute coffee break, probably 15 minutes at this stage at a 1220. We have our, our tech session with, uh, with Declan McAvoy who will be discussing firearms tax issues.

Uh, thanks for everyone for attendance. And I hope you found that the session beneficial I’d like to thank God for his expert insight into the area of charity audits and financial reporting and its implications on the incurrent environments. I know it’s faster. It’s not an easy topic. So his expertise is, is, is, uh, is very useful, uh,

thanks to jr for his it support as well. And I think that’s our law from the Irish and accounting tax. We hope you found it all beneficial and report to CSM, sort of thanks and goodbye.