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The public trust in charities and not-for-profit organisations had been in decline, but the work of accountants as trustees and volunteers has assisted the charities sector in regaining the trust Irish society once had in them, says Liz Hughes. We build our personal and professional relationships on a foundation of mutual trust. Where trust is present, relationships can survive difficult times; where it is lost, it can be incredibly difficult to regain. In Irish society, trust has been significantly challenged in recent years. Like many other pillars of Irish society – politics, banks, the church – public trust in charities has seen a decline. Several high-profile failings in the charity sector have had a seriously damaging effect on public trust in this area. Charitable engagement is part of the Irish psyche. Ireland is currently ranked the 5th most charitable nation in the world in a survey carried out by the Charities Aid Foundation. However, charities depend on trust to effectively do their job. If the public doesn’t trust the charities sector, donations of time and money decrease, often resulting in the decline of these charitable services to the people that need them most. A good deed done In order to regain and maintain public trust and confidence in the work of Ireland’s 10,000 charities, high governance standards are key. The new Governance Code is a welcome addition to the codes and standards that the sector has developed in recent years and because of this, confidence in charities rose to 31% – up 7% from 2017, according to Amárach for Charities Institute Ireland research. However, navigating a host of unique regulatory, financial and operational barriers while the regulatory framework undergoes significant change can be incredibly difficult for charities, and an area where accountants step in to help, but how do they play a part in further rebuilding trust in the charity sector? Accountants can make a real difference to charities as auditors, trustees and chairs. For example, without accountants, the Charities VAT Compensation Scheme would not have been such a huge success. The initiative resulted in over 1,100 charities submitting qualifying claims under the scheme. These claims amounted to almost €40 million, close to eight times more than the scheme cap of €5 million per year. Accountants also receive professional training and CPD throughout their careers and, as such, are sought after as charity trustees who bring a wealth of governance, strategy and financial reporting experience. Accountants are also bound by professional standards and obliged to behave ethically, not only on behalf of their clients but also for the public good. Working towards SORP compliance We know that transparency goes a long way towards rebuilding trust so clear, concise information is essential to support any decision making by management and donors. The most obvious source of information that is accessible to everyone is a charity’s financial statements. The adoption of FRS 102 and the charity SORP has long been considered best practice for charities in Ireland, and many of Charities Institute Ireland’s members produce SORP compliant accounts. However, adopting SORP is not yet mandatory and, as a result, charities are producing financial statements that are more appropriate for a commercial entity, and when a donor, volunteer or member of the public wants to find out how a charity uses their resources to deliver the objectives of a charity, they access a version of the accounts that omits detailed information on income and expenditure. The public good would be best served by charities preparing SORP financial statements and filing these full financial statements with the Companies Registration Office.  I encourage those working with charities to check what type of financial statements are filed and, if they are abridged, ask why. We want everyone to work towards SORP compliant accounts for 2020. Lending your expertise As we come to the end of 2019, we are calling on accountants to consider volunteering with a charity or not-for-profit to bring their knowledge to a charity that needs it. By doing so, you could be help build the public trust once again. Liz Hughes is the CEO of Charities Institute Ireland. You can learn more about leadership in the charities sector at Charities Institute Ireland’s Bolder Board Training event in Dublin on 12 November.

Nov 10, 2019
News

Who can believe we are nearly done with 2019? It’s easy to get caught up in a holidays-are-coming feeling, but if you want to end 2019 on a productive high, you must focus on what is achievable in this small timeframe, says Moira Dunne. What are the key things you planned to do this year? Have you even started them? What should you prioritise for the next six weeks? With a little planning, this can be your most productive time of the year. You can finish the year on a high and move into 2020 feeling motivated. What do you want to achieve? You must first evaluate any existing goals. Are they still relevant? Then ask yourself these questions: What will it look or feel like to achieve the goal? What work do I have to do? Do I need help or input from anyone else? Make a plan The only way to get going is to make a plan for what you need to do. Start by thinking about what goal you’re trying to achieve. Break the goal into sub-goals if required, and brainstorm each sub-goal to create a list of tasks needed to complete your them. From here, make a plan by looking at the tasks and deciding when each task needs to be done. Are some tasks inter-related? Can you identify milestones or achievements along the way so you can keep yourself on track? Work that into the plan. Don’t overbook yourself It’s essential that you are realistic about how much time you have to work on your goal. You are already busy, so think about how to ‘create’ extra time. What in your daily work schedule doesn’t need as much attention before 2020, and can you complete your goal in that allocated time? Remember to be practical when looking at your schedule. You can’t treat December like a typical month because of all the holiday activities. Aim to finish your plan by mid-December. Measure and track progress You’ll want to stay on track, so be sure to have targets to hit on the way to achieving your goal. Create a target time for each task completed and compare it to the actual time each task takes along the way. If you miss a target date, does it have a knock-on effect on the remaining targets? Readjust your plan as required to be sure you hit your goal. Acknowledge what you achieve By prioritising and planning out your goals, you have a higher chance of achieving them. Celebrate if you do end 2019 on a productive high! And, even if all the work does not get done, you will have completed more than if you had no plan at all. Because of your detailed plan, you know what tasks you must complete first thing in 2020 – and that is a great way to start a new year. Moira Dunne is the Founder of BeProductive.ie.

Nov 10, 2019
Strategy

Creating an ethical workplace isn't just about punishment when things go wrong – it's essential to foster an ethical outlook within the organisation. Stephanie Casey explains how to give employees the tools to deal with ethical dilemmas. When corporate scandals arise, the senior leader is often reprimanded, but the issue of ethical misconduct cannot simply be solved by firing the manager. Award-winning research from Amanda Shantz and Catherine Baily indicates that while managers are key to cultivating an ethically strong environment, organisations must invest in ‘distributed’ ethical leadership in order to ensure lasting change. In other words, they must hire and cultivate leaders at all levels who promote ethical behaviour. According to the study: “an ethically strong situation is one in which people understand events in the same way, where there is clear information about the consequences of behaving (un)ethically, and where employees have the skills and motivation to do the right thing.” By contrast: “an ethically weak situation is one in which employees respond idiosyncratically, where the appropriate ethical response is unclear, and where there are few incentives to behave ethically.” Fostering ethics So, how do managers foster ethically strong situations? Shantz and Bailey sought to address this question by conducting in-depth case studies of five organisations, as well as surveying a representative sample of over 1,300 workers, across the UK. Their research reveals some important recommendations for managers. Acknowledge ethical ambiguity Many organisations fail to discuss ethical challenges their employees may face. This drives individuals to internalise their decision-making processes with potentially negative consequences.  Instead, managers should encourage open discussion on ethical issues and possible solutions. This gives employees a clear understanding of the organisation’s ethical values and the confidence to seek support from their managers without fear of judgement. Clarify ethical trade-offs In 1950, Johnson and Johnson founder, Robert Wood Johnson, identified four stakeholder groups that he saw as vital to the success of any corporate endeavour: employees, customers, the community and shareholders. He maintained that if a company looked after the first three groups, then the shareholders would be the beneficiaries. Although the needs of all stakeholders can sometimes be met, trade-offs are usually necessary. When employees are unsure of how to manage this tension, unethical approaches can develop. In these scenarios, managers should establish a consistent ethical framework with guidelines for balancing stakeholder interests to help employees weigh up competing concerns and make appropriate decisions. Ensure role-modelling from the top down Employees pay more attention to how leaders behave than what they say about ethics. The key is for leaders to not only be ethical but to also be seen as ethical by championing ethics and values at every opportunity. It’s clear that no organisation is immune to ethical breaches, but by equipping employees to deal with daily ethical dilemmas and enabling them to raise any concerns they may have in the knowledge that they will be protected from any form of penalisation or retaliation, the next corporate scandal could be prevented. Stephanie Casey is the Programme Manager of Integrity at Work at Transparency International Ireland. Amanda Shantz will address the Integrity at Work Conference at the Radisson Blu Royal Hotel, Dublin on 20 November 2019.

Nov 10, 2019
News

According to new figures released by Deloitte on the latest insolvency statistics, there has been a drop in corporate insolvencies. In Q3 YTD 2019 the level of insolvencies stood at 439. When compared with Q3 YTD 2018 (557) this represents a decrease of 21%, a marginally higher decrease than the 18% decrease recorded on Q3 YTD 2017 figures.  78% (343) of insolvent companies were incorporated more than five years ago and this suggests that the majority do not relate to ‘start-ups’, which entities are generally considered to be less than five years in business.  A little over a fifth of companies (22% or 96 companies) that became insolvent during the nine month period relate to companies less than five years old, 23% (100) are in the 5-10 years bracket, 25% (112) are in the 10-20 years bracket, 16% (72) are in the 20-30 years bracket, 7% (29) are in the 30-40 years bracket and 7% (30) are over 40 years old.  Types of Insolvencies A more detailed analysis of the figures recorded show: Creditors’ voluntary liquidation (CVLs) accounted for the majority of insolvencies, with 280 CVL insolvencies recorded in the period (64%). In the comparable period in 2018, creditors’ voluntary liquidations accounted for 379 (68%) of all incidences recorded.  The Court liquidation (CL) process has increased with 50 court appointments or wind up petitions recorded in the period. In Q3 YTD 2019, the CL process represented 11% of total insolvencies and is a significant increase on Q3 2018 YTD figures when 39 court appointments or wind up petitions were recorded representing 7% of overall insolvencies in that period.  Receivership appointments over corporates and corporate assets (84) have remained broadly consistent with the same period last year (106) when analysed as a percentage of overall insolvencies (19%). The figures suggest that the decline in Receivership activity recorded in recent years has now levelled out and a further decline in corporate Receivership activity over the next year is not generally anticipated as acquirers of loan books in 2018 and 2019 work through non-performing loans and enforce over company assets on foot of charges held. Most of the activity has continued to develop in the personally held real estate sector, which includes all property segments, such as industrial, office spaces, retail and residential.  Examinership as a percentage of overall Corporate insolvencies has remained consistent with the same period for 2018 with 25 appointments (6%) recorded in Q3 YTD 2019 versus 33 (6%) recorded in Q3 YTD 2018. The persistent low levels of examinership appointments recorded may reflect, amongst a variety of other factors, an unwillingness of management to take early action to restructure a business in difficulty. (Source: Deloitte)

Nov 08, 2019
News

The IFRS Foundation has appointed Alexsandro Broedel, Joanna Perry and Maria Theofilaktidis as new trustees and re-appointed three of the current trustees. The IFRS Foundation trustees are responsible for the governance and oversight of the International Accounting Standards Board, which sets IFRS Standards. The trustees have been appointed for a three-year term starting 1 January 2020: Alexsandro Broedel is Group Executive Finance Director and Investor Relations Head at Itau Unibanco in Brazil – the largest private financial institution in Latin America. He will take up one of the Americas seats as Maria Helena Santana steps down, having come to the end of her second term. Joanna Perry holds a variety of senior non-executive positions for both public and private organisations in New Zealand, and is serving the last few weeks of her second term as Chair of the IFRS Advisory Council, a position she has held since 2014. She will take up the Asia-Oceania seat as Lynn Wood steps down. Maria Theofilaktidis is Executive Vice-President, Chief Compliance Officer and Head of Enterprise Risk for The Bank of Nova Scotia (Scotiabank), one of Canada’s largest multinational banks. She will take up another Americas seat as Sheila Fraser steps down. Else Bos, Su-Keun Kwak and Guangyao Zhu have been re-appointed for a second and final three-year term, effective 1 January 2020. The Trustee appointments are approved by the trustees and the IFRS Foundation Monitoring Board, the group of capital market authorities that reinforces the public interest oversight of the IFRS Foundation. (Source: IFRS)

Nov 08, 2019
News

Companies applying the new standard on lease accounting need to provide more information on its effects, according to a new report by the Financial Reporting Council (FRC).   The FRC has reviewed the interim reports of 20 companies applying International Financial Reporting Standard 16 (IFRS) Leases for the first time.   The FRC found a number of examples of better practices, which tended to be those disclosures that were tailored to the company’s circumstances and provided more than the minimum requirements.   As required by IFRS, companies are expected to provide more information in their annual reports and accounts to help stakeholders better understand the effect of the new standard. This should include:   information about key accounting judgments made; for example on the identification of lease, or on assessing their length; clearer explanations of the specific transition choices made; a detailed reconciliation between the operating lease commitment under the previous standard and the new lease liability, with clear explanations for reconciling items; and where companies use alternative performance measures to help users of the accounts to understand the effect, these measures should be properly labelled, reconciled and explained, and not give more prominence than the IFRS measures. A link to the review can be found here.  (Source: FRC)

Nov 08, 2019