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Comments from the Association of Chartered Certified Accountants
June 2001

The Association of Chartered Accountants (ACCA) is pleased to participate in the consultative exercise for developing a practice note for the Audit of Central Government Financial Statements in Ireland. The paper has been considered by ACCA's Public Sector Technical Issues Committee. The Committee's members are professional Chartered Certified Accountants with considerable experience of public sector auditing and accounting practice.

ACCA welcomes the proposed practice note which provides useful guidance on the applicability of the Statements of Auditing Standards to the audit of financial statements of central government entities. In general the information provided in the proposed practice note appears meaningful as a useful aid to auditors to help them understand the environment in which central government entities operate. We believe that the practice note will go some way towards ensuring the consistent application of auditing standards across the sector.

We acknowledge that the practice note will not provide all of the detail required of auditors of central government entities and that they will need to consider also:

• the legislative and other authorities governing the activities which reflect on the financial statements of individual central government entities
  
  and
  
  
• the rules of government accounting and the directions and guidance on financial reporting issued from time to time by the Department of Finance.

Our specific comments mainly relate to the section on "Fraud in the context of the regularity assertion" (page 14 of the consultation paper). It is our view that too much emphasis is placed on "fraud" with regards to the regularity assertion, concerning those transactions which are carried out without proper authority. We believe that a section on irregularity should focus on the entity's governance and risk management arrangements for ensuring a sound internal control environment for the prevention of irregularity (through error, sabotage or fraud and corruption) including the reporting of such findings by auditors.

We believe that further guidance should be provided on the meaning of materiality in the practice note in order to aid the auditor's judgement for determining how misstatement or omission of information might reasonably be expected to influence the decisions of users of financial statements of central government entities. Examples of decision making that could be affected include the election of members and appointment of officers based on the quality of management.

Although we have not checked the grammatical context of draft, we have noticed that the third sentence of paragraph 14, page 15, needs to be re-written correctly.

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