Ireland’s auditing framework sits at an interesting crossroads with forthcoming regulatory changes reflecting a clear shift in focus among standard-setters internationally.

Irish statutory audits are performed under International Standards on Auditing (Ireland) issued by the Irish Auditing and Accounting Supervisory Authority (IA ASA).

They are largely based on the International Standards on Auditing (ISAs) issued by the International Audit and Assurance Standards Board (IAASB) with Irish add-ons in certain areas.

At the same time, those Irish standards issued by IAASA— ISA (Ireland)—are adopted under licence from the UK’s Financial Reporting Council (FRC). As a result, auditors, particularly firms with cross-border practices, often feel the influence of UK audit developments in real time.

Recent corporate failures, cases of high-profile fraud and enforcement actions across jurisdictions have increased the scrutiny of the auditor’s use of laws and regulations to address fraud and non-compliance.

In this context, three significant changes are influencing audit discussions:

1. The IAASB’s updates to ISA 240 concerning fraud and ISA 570 relating to going concern;

2. The FRC’s proposed UK-specific reforms to ISA (UK) 250, which addresses laws and regulations; and

3. The IAASA’s revision to its Ethical Standard for Auditors (Ireland) 2025.

ISA (UK) 250 does not apply directly in Ireland, but it matters because IAASA has a policy of adopting UK auditing standards in Ireland when those standards do not conflict with Irish law.

This auditing standard may also impact audit methodologies and regulatory scrutiny, particularly where Irish teams interact with UK group auditors, UK audit committees and/or UK investors.

Changes to fraud and going concern standards

Internationally, the IAASB’s revisions to ISA 240, issued in July 2025, represent one of the most significant updates to auditors’ fraud-related responsibilities in recent years. These revisions are designed to:

• Clarify responsibilities;

• Strengthen the identification of, and response to, fraud risk;

• Reinforce professional scepticism; and

• Enhance communications and transparency.

ISA 570 (Revised 2024) on going concern was developed as part of a coordinated revised package with ISA 240 (Revised), whereby the two standards were deliberately aligned to strengthen professional scepticism and reinforce the linkage between fraud risk considerations and the auditor’s going concern assessment.

Both standards are effective for audits of financial statements for periods beginning on or after 15 December 2026.

Fraud and going concern: why the revisions should be implemented together

Although ISA 240 and ISA 570 remain separate standards, the IAASB has deliberately aligned its revisions to reflect the increasing intersection of fraud and going concern risks in the current economic environment.

Many businesses are now operating under sustained cost pressures, driven by high inflation, rising interest rates, increased energy costs and supply chain disruption.

These cost pressures place a strain on margins, cash flows and compliance with financing arrangements. They also heighten the potential for both management bias and fraudulent financial reporting.

At the same time, efforts to conceal deteriorating performance or liquidity stress can obscure early indicators of going concern uncertainty.

ISA 240 (Revised) strengthens the linkage between fraud risk factors, the auditor’s understanding of the entity under evaluation and the design of targeted responses. This reinforces the need for the continued application of professional scepticism and judgement as conditions continue to evolve throughout the audit process.

For Irish auditors, the practical message is to avoid siloed workstreams. Going concerns cannot be treated as “static” with no regard for new facts and pressures that emerge as the audit process progresses.

Ongoing reassessment is needed as new information emerges. When going concern risk rises, the auditor must revisit the fraud risk assessment. Equally, when fraud indicators emerge, the auditor must reevaluate the going concern and the related disclosures in the financial statements.

This integrated approach also strengthens audit committee discussions, helping those charged with governance to decipher a clear line between business reality and financial reporting risks—thus helping the auditor to demonstrate their planned audit response to these risks.

FRC revision to UK laws and regulations

As part of its move to create a risk-based and targeted approach to audit work on laws and regulations, the FRC in the UK launched a re-consultation proposing revisions to ISA (UK) 250 and ISA (UK) 270 in March 2026.

This re-consultation was required because stakeholders, although in agreement with the objectives of the revised standard, felt they would have the unintended consequence of increasing the scope and thus the cost of the audit process.

The re-consultation closed in May 2026 with feedback to be provided later in the year. Although the outcome is, as yet, unknown, the re-consultation proposals emphasise a risk-based approach focused on:

• Risks of material misstatement arising from noncompliance with laws and regulations;

• The removal of the “ direct vs indirect” distinction; and

• The need to focus audit attention on laws fundamental to how an entity operates.

The FRC also clarifies that specialist legal expertise will not be required in most cases.

Concerns remain in relation to the clarity, operability and scalability of the revised proposals among practitioners, however.

In addition, the proposals would replace ISA (UK) 250B with the renamed and more principles-based ISA (UK) 270, clarifying that reporting obligations to appropriate authorities could arise across any area of the audit and, thus, may involve more than one authority.

Why changes in UK auditing standards are relevant to Irish audits

IA ASA’s framework for auditing standards is built on international standards, but Irish teams are also required to manage the practical effects of UK market expectations, particularly on cross-border groups and public interest entities (PIEs).

Developments in the UK auditing standards can raise expectations for risk assessment, documentation and reporting for Irish audits. These expectations often flow through group audits, shared audit methodologies across networks, regulatory inspections and audit committee or investor scrutiny.

Group audits represent a particular pressure point. UK group instructions to Irish component auditors are likely to evolve, and Irish component teams may be asked to provide broader coverage, clearer evidence trails and more explicit conclusions in respect of their audit approach to noncompliance with laws and regulations (NOCLAR).

Separately, Irish audit committees may ask more probing questions about how law and regulation risks are identified and addressed, particularly where UK subsidiaries are subject to the revised UK standard.

IAASA Ethical Standard for Auditors (Ireland) 2025

IAASA has aligned the effective date of its Ethical Standard for Auditors (Ireland) 2025 with ISA 240 (Revised) and ISA 570 (Revised), reflecting that ethics and independence are an integral part of the auditor’s risk response.

The revised ethical standard reinforces integrity, objectivity and independence—and, crucially, expects firms and engagement teams to identify, assess and address threats throughout the engagement, rather than treating ethics as a one-time client acceptance step.

In its revised ethical standard, IAASA has introduced the concept of a “publicly traded entity” which brings the Irish Ethical Standard into alignment with both the International Ethics Standards Board for Accountants’ code of ethics and the UK’s ethical standard.

This harmonisation is a positive development for Irish audit firms as it reduces divergence in independence requirements in the UK and across the European Union.

IAASA’s revised ethical standard also introduces new complexity—in particular, the concept of a “beneficial ownership group”, which expands the scope of independence considerations beyond the audited entity itself.

This will require engagement teams to consider relationships and interests across commonly controlled entities rather than the legal entity/group boundary. This is likely to increase compliance costs and operational effort, particularly where ownership structures are complex or span multiple jurisdictions.

Further, the revised standard broadens audit firms’ obligations concerning the reporting of breaches.

Previously, firms were required to report independence breaches as part of their annual compliance cycles. The updated standard has introduced an additional requirement whereby firms may need to provide more frequent reports outside the regular reporting schedule, depending on the severity of the breach under evaluation.

These revisions to the ethical standard reinforce the expectation that ethical issues are addressed in a timely manner, rather than deferred to periodic reporting processes. This becomes particularly important where an organisation is experiencing sustained cost pressures or operating under tight reporting timelines.

Elevated fraud risk or concerns regarding management integrity can give rise to intimidation or self-interest threats for the auditor, including fear of losing the client or pressure arising from fee dependence.

The ethical assessment should, therefore, be revisited as risks evolve, including when fraud risk increases or suspected fraud is identified.

Similarly, situations in which events or conditions are present that may cast significant doubt on an entity’s ability to continue as a going concern, often coincide with heightened economic dependence and intense time pressure

The future of audit: a new regulatory focus

The revised fraud and going concern standards, alongside the revised local ethical standard—all effective for periods beginning on or after 15 December 2026—reflect a clear shift in regulatory focus.

The auditor’s response to fraud and going concern will be an integrated process, rather than one in which the response to any one incident is treated as a discrete compliance exercise. This integrated process will sit at the centre of audit quality, public interest expectations and trust in financial reporting.

The combined effect will be higher expectations for professional scepticism, and a need for the auditor to demonstrate clearer linkage between risks identified and their response to those risks.

In parallel, the UK’s proposed reforms to ISA (UK) 250 and ISA (UK) 270 will not change Irish requirements directly, but they are likely to influence group audits, audit methodologies and stakeholder expectations.

Audit leaders who anticipate these forthcoming changes will be better placed to deliver consistent and higher quality audits.

For Irish auditors acting as a component auditor on UK engagements, the most immediate impact will be evident where group teams request different evidence, expanded documentation around legal and regulatory risks, or revised component reporting templates.

Even when the component statutory audit is performed in accordance with ISA (Ireland), UK risk frameworks and reporting expectations will likely impact Irish statutory audits where a team is also performing a component audit to support the group team’s ISA (UK) group audit.

Ultimately, these developments represent an opportunity as much as a challenge.

By embracing a more integrated, risk-focused and ethically grounded framework, Irish auditors can strengthen audit quality, enhance the relevance of their insights to audit committees and investors, and better demonstrate the value of the audit in an increasingly complex and pressured economic environment.

Noreen O’Halloran is Audit Quality Leader and Principal, Department of Professional Practice, Audit and Assurance, KPMG Ireland