Vision-Banner-Issue-2-min
Member Profile

Baker Tilly’s Diarmaid Guthrie ACA divides his time between Ireland and Cyprus, where he helps Cypriot banks manage their non-performing loan portfolios. What does your current role involve? My current role is divided between Dublin and Nicosia, Cyprus where I was on secondment for 12 months in 2018. In Dublin, I am responsible for managing and overseeing the progression of cases such as examinerships, liquidations and advisory projects together with training and development of other team members as they progress through their own careers. I am still involved with a number of projects in Cyprus, particularly restructuring and advisory services to Cypriot banks, which requires me to travel regularly to Cyprus. How did the secondment opportunity come about? After qualifying as a Chartered Accountant in early 2017, I made the decision to travel and experience different cultures around the world. I didn’t travel after college; I instead jumped straight into my training contract with Baker Tilly so this was the perfect opportunity to combine work and travel. I approached Neil Hughes, Managing Partner in Baker Tilly, in mid-2017 and expressed an interest in going on secondment to another firm within the Baker Tilly International network. Neil’s response was: “tell me what you need me to do”, which was exactly what I wanted to hear. I explored a number of options for the secondment but I settled on Cyprus as it recently enacted examinership legislation, which is almost a verbatim copy of the Irish legislation. Our department had also worked on a number of projects with our Cypriot colleagues and from my research, it was also interesting to see that the Cypriot economy was where Ireland was five or six years ago. So, I thought I could bring some of our experiences from the last five years to Cyprus to help kick-start the recovery there How did your average day pan out in Cyprus? Similar to the Dublin office, every day at Baker Tilly Cyprus was different – different challenges, meeting different people. One of our contracts in Cyprus required me to spend three days per week in a bank providing them with restructuring advice in relation to their non-performing loan portfolio, which was around €500 million. I spent the other two days in the Cyprus office working on liquidations and other restructuring projects and meeting potential new clients. Do you have any habits or routines to help you get the most out of your day? One routine I certainly find helpful is taking five minutes at the start of each day to plan or map out what I need to get done; it’s kind of like a mini ‘work-in-progress’ list. I might not get to every item on the list as other emergencies may arise and need to be dealt with first, but at least I know I’ve made a note of matters to be addressed and they won’t be left to one side. Another good habit is managing my mail inbox. Once I’ve dealt with an email or read it, I immediately move the email to a specific folder for that case. I aim never to have any more than 10 emails in my inbox at any one time. What’s the most interesting thing about you, which we wouldn’t learn from your CV? I have a great memory for remembering pointless details and nuggets of information. This comes in very handy for charity table quizzes here and there.

Jun 03, 2019
Comment

Welcome to the June edition of Accountancy Ireland. This edition focuses on the evolution of the accountant. It will examine the potential impact of digital technologies, the changing needs of business and the latest thinking from industry experts on what it all might mean for the accounting profession. As the largest professional body of accountants on the island of Ireland, it is vital that we look ahead to meet those challenges and to lead the profession. Brexit delay The 29 March Brexit deadline came and went. Following a nine-hour summit of the heads of state of the EU, Brexit has been delayed until 31 October. It seemed that the UK Prime Minister had hoped to get a three-month extension and the result is shorter than the 12 months preferred by some EU leaders. The deadline can still be shortened if the UK Parliament passes a Brexit deal.  The EU did send one clear message from the summit – the withdrawal agreement is not up for renegotiation. The UK Parliament must now agree on a way forward. In the meantime, Brexit updates and commentary are available via www.charteredaccountants.ie. Influence The Institute’s Influence leadership conference took place at Lyrath Estate, Kilkenny on 10 May. The issues tackled at the event have informed the content of this edition. For example, how Artificial Intelligence will shape the future of the profession, creating new roles and empowering existing ones. We are delighted that Influence managed to bring international work transformation experts together to discuss the impact of disruptive technologies – and how best they can be harnessed. I trust that our delegates found the event both thought-provoking and inspiring.  New members We’re always pleased to bring through a new group of members ready to make a terrific impact with our member firms in industry and the public sector. Over the last couple of months, we’ve welcomed 301 new members to the Institute at conferring events in Belfast, Cork and Dublin. All of them can be rightly proud of their achievement, but there is one new member who deserves a special mention. Rachael Bell of KPMG became the first recipient of the prestigious Chartered Accountants Ireland Gold Medal in 19 years for her exemplary performance in her final exams. Rachael becomes only the 24th recipient of the Gold Medal since 1924. Well done to you all, and to all those who helped, mentored and encouraged those new members every step of the way. Societies and AGMs I’d like to offer my congratulations to the new Chair of the Ulster Society, Richard Gillan, elected at the society’s AGM in April, and also to his predecessor, Niall Harkin, for a very successful year in office.  Congratulations also to the Leinster Society on its 90th anniversary. It was celebrated in some style in the Conrad Hotel in April. The centenary celebrations in 2029 will have a lot to live up to. Finally, the Institute’s AGM took place on 17 May, with Conall O’Halloran elected as President. I wish Conall every success in his year in office and on behalf of members I’d like to thank Feargal McCormack for an exceptional year as President. Barry Dempsey Chief Executive

Jun 03, 2019
Comment

Cultural courtesy in Hong Kong masks an interesting honesty when it comes to matters of tax and reputation. Beside the main entrance to the modern building that houses the Hong Kong Inland Revenue Department is a floorplan – the Business Registration office, the Stamp office, the Enquiry Counter, the Torture Appeals board. I have seen revenue offices using many tactics to get the taxpayer’s attention, but I confess that having a torture division was new to me. Also new to me was the open approach of the Hong Kong tax authorities to their position within the Hong Kong economy. I saw this open approach first hand recently at a meeting facilitated by our colleagues in the Hong Kong Institute of Certified Public Accountants. Hong Kong is not oblivious to the importance of international reputation, yet the tax authorities there seem clear that all this newfound concern for  the intenational tax playing field called Base Erosion and Profit Shifting (BEPS) is something to be noted, rather than slavishly followed up. In contrast to the European Union, and therefore to the Irish approach, Hong Kong will fulfil only the minimum OECD (BEPS) multinational tax requirements. There is courtesy certainly, but no particular enthusiasm to cooperate with revenue authorities in other countries. The Hong Kong authorities see the tax system as a lever to migrate an economy whose fundamentals are currently import/export to a knowledge environment. Generous direct funding by the government on business incubators, on the acquisition of know-how, and on university start-ups is being matched by luxuriant research and development tax credits. The Hong Kong authorities differ markedly in their forthright approach from the approach of many other European regulatory counterparts. Irish civil servants are more likely to nod politely and describe their role as policy-takers rather than policy-makers. Which approach is more correct? One of the authors of Hong Kong’s economic success was Sir John Cowperthwaite, who was Financial Secretary in the 1960s. His policies were responsible, at least in part, for Irish people of a certain age (your correspondent included) thinking that everything plastic was made in Hong Kong. Cowperthwaite insisted that economic data relating to Hong Kong should not be published for fear that well-meaning but interfering businesses and officials alike would create havoc with interventionist initiatives. The market and common sense would ultimately sort  everything out. The man may have had a point. Look at the relative economic successes of the UK in the past two years. Was it despite or because of the political stagnation over Brexit, which resulted in little or no active management of the UK economy? Look at the situation in Ireland, where the combination of a minority government and a cabinet of ministers peculiarly disinterested in business matters still achieves embarrassingly large GDP growth. Northern Ireland muddles through without Stormont and thus, without political direction on its economy. However, it is not all about economic success. There is another aspect of engagement by the private sector in economic decisions, and that is the democratic process. In a democracy, civil society should have a say in government decisions on economic issues. In jarring contrast to the openness of the dialogue with the Hong Kong authorities was the jailing there in April of political dissidents. And what of the Torture Appeals board? I understand that it is not a subdivision of the Hong Kong Revenue at all. Rather, it is a separate agency that considers applications for political asylum by reason of the unfortunate person claiming to have suffered torture in their homeland. It shares its premises with the tax officials. The torture had nothing to do with tax after all. Apparently. Dr Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland.

Jun 03, 2019
Comment

How can businesses underpin and enhance the pricing of their goods and services?   Pricing power is not always recognised as an important component of business success. It is the ability or otherwise to dictate the price of the product or service to the marketplace, and in some instances, this equates to the ability to exclude – or at least restrict – competition for a product or service for which there is a demand in the marketplace. At the same time, there are regulatory, competition and anti-trust authorities across the world trying to identify and/or control abuses of ‘pricing power’. All businesses, adequately focused, seek to underpin and/or enhance the pricing of their goods and services. Sometimes this may not be obvious. For example, a few years ago the CEO of a UK supermarket chain was overheard saying that “everybody knows the price of a pint of milk or a loaf of bread, but not the price of a lightbulb or shoe polish”. He went on to say that the chain focused on achieving at least 20% of its turnover in non-price sensitive goods. A company’s strategic pricing power advantage can be realised by playing to the strengths of one or more of the following: Ownership of intellectual property, such as a patent or copyright. Pharmaceuticals is an obvious example; Development of advanced integrated technology not easily replicated, or only at great expense; Monopoly or quasi-monopoly through exclusive licence, regulation or similar; Strong skills in product innovation and/or substantial investment in product marketing support. Widely promoted consumer brands with established distribution channels are examples; and Strong management record on the quality of service, particularly involving complex technical products or services. In the early days of computer development, there was a saying: “nobody gets fired for buying IBM”. The role of ‘branding’ is a conundrum in pricing a product. A prominent example is the fashion industry. Top brands can obtain high prices as against lower prices for similar non-branded products. Differences in quality can only partly explain this disparity. A perception of being seen to have a top brand may be the answer. A higher price for everyday products may in itself be a form of pricing power. Confronted with a range of similar products, the higher price of one against another indicates a superior product or perhaps exclusivity. Toiletries on a supermarket shelf are an example. Brand recognition is probably a significant factor in pricing consumer products, though competition from ‘own labels’ and discount stores have eroded margins. Recent research by travel companies suggested that keen golfers, visiting overseas, strongly perceived green fees as indicative of golf course quality. The golfers regarded high prices as exclusivity in terms of attracting only good players and therefore, playing there is a testimony to your golfing ability – deserved or not. The acquisition of a business is usually subject to ‘due diligence’. Due diligence is a process of investigation and review, through which a potential purchaser gains a clear commercial, financial and legal understanding of the business, to evaluate both the strengths and weaknesses and decide whether to proceed with the transaction. A wise commercial due diligence process will include a close review of the pricing power of the business, including not only the current position but, more importantly, its possible continuation. Companies and products with perceived high profit margins invite competition, so past performance may not be a reliable guide to likely future outcomes. What about professional fees and pricing power? George Bernard Shaw made the pithy comment, albeit more than 70 years ago, that “all professions are a conspiracy against the public”. The legal profession, for example, has a reputation for high fees that may then become self-fulfilling. Medical professionals perhaps less so. Accountants? Well, apart from auditing (which is competitive within the profession), practising accountants have plenty of rivals in providing financial services. The ability to handle large-scale matters, such as complex liquidations, wide-ranging investigations and international transactions, is an exclusive domain and adds to accountancy firms’ pricing power, though there is a substantial investment in the resources necessary to carry out such work.   Des Peelo FCA is author of The Valuation of Businesses and Shares, published by Chartered Accountants Ireland.

Jun 03, 2019
Comment

Create and maintain lasting business connections in six simple steps. As the team at Harbinson Mulholland plan to celebrate the firm’s 21st birthday in June 2019, I am delighted by the number of clients who have been with the firm since its establishment in 1998. There is no doubt that healthy business relationships are the foundation of any business large or small. However, I fear that in a world with emerging technologies in which we can work remotely, analyse data at the touch of a button and communicate without uttering a word, the ability to create and maintain trusted relationships will be diluted. It is imperative that we, as Chartered Accountants, whether in practice or industry, develop good business relationships. These relationships may be with customers/clients, suppliers, employees, competitors, partners, investment or lending institutions. To maintain good business relationships, it is essential to: Build new relationships by diversifying networks; Ensure that relationships are mutually beneficial – give at least as much as you expect to receive; Identify key relationships; Focus on the external environment; Apply time and resources to critical social issues; and Prune, renew and reshape networks frequently. However, err on the side of caution, as more is not always better. Furthermore, over-investment in relationships will take precious time away from the business, and strong networks may act as a barrier to new entrants. Trust and respect Relationships empower us and allow us to recover from losses or setbacks. They ensure that we don’t feel isolated in business. However, there is a cost to acquiring customers and finding suitable business partners. Retaining these contacts is therefore vital to success. If we treat business partners, customers and others with honesty, trust and respect, this will help maintain the business relationship. Trust is your most crucial business asset in the form of relationships. Every interaction is an opportunity to build relationships and nurture trust – from the moment a customer drives into your carpark, visits your website or calls your office right through to the point when they drive out, leave the site or hang up the phone. Great customer relationships are essential, and these should be nurtured. When you have healthy relationships, you have loyal customers. The same principle applies to the workplace – instil trust and respect, and hire the right people. It is worth allocating resources to ensure that you are recruiting the right people. It is also vital to keep employees where relationships have been developed, and trust is embedded. Building business relationships There is no doubt that we need to adapt our training as Chartered Accountants to take account of new technologies and the changing environment in which we operate. Chartered Accountants Ireland has already taken this into account when looking at the syllabus for our professional exams. The Institute also recognises the importance of peer relationships and, through the Young Professionals Group, encourages members to begin building their networks in the early part of their careers. We at Harbinson Mulholland understand the value of businesses building relationships and sharing experiences with similar companies. So, we developed the Family Business Forum, which will celebrate its third birthday in May this year. The forum brings together family business owners and managers and provides an environment for sharing experiences. We are also committed to assisting relationship-building in the third sector and will facilitate a series of seminars for finance managers to discuss current issues and share experiences. Angela Craigan FCA is a Partner with Harbinson Mulholland, the accountancy and business advisory firm.

Jun 03, 2019
Comment

Claire Lord considers the arrival of the central register of beneficial owners. Under Irish legislation, corporate and other legal entities incorporated in Ireland are required to obtain and hold adequate, accurate and current information in respect of their beneficial owners and put in place their own beneficial ownership register. A beneficial owner is a natural person who ultimately owns or controls the share capital or the voting rights, or has control by any other means. The relevant legislation states that a holding (direct or indirect) of 25% plus one share will be indicative of ownership and control. This information required to be contained in a company’s beneficial ownership register includes name, date of birth, nationality and residential address. New requirements New legislation introduced in March 2019 now requires that, in addition, relevant entities must obtain their beneficial owners’ PPS numbers, where the beneficial owner has been issued with one. This new legislation also requires that from 22 June 2019, Ireland will have a centralised register of beneficial owners. Companies and industrial and provident societies incorporated in Ireland will have five months from that date to submit the information they hold on their beneficial owners to this central register. Such legal entities incorporated after that date will have five months from their incorporation to submit the required information. The current requirement for submission of information to this central register relates to companies and industrial and provident societies only. Therefore, it is not yet clear how and when entities that are not companies or industrial or provident societies (for example, ICAVs) will be required to submit information on their beneficial owners to a central register. Access to information While companies and societies will be required to submit all of the details they hold on their beneficial owners to the central register, the only information that will be available to the public will be a beneficial owner’s name, country of residence, nationality, month and year of birth and nature and extent of ownership and control. Individuals acting on behalf of An Garda Síochána, the Financial Intelligence Unit (FIU), the Criminal Assets Bureau, the Revenue Commissioners and other competent authorities will be entitled to all the information submitted to the central register, save for PPS numbers. Any such authority (save for the FIU) may disclose the information they receive from the central register to a corresponding authority in any member state of the EU. Remedies and sanctions If any details are entered incorrectly in, or omitted from, a beneficial ownership register, or unnecessary delay takes place in updating a register to reflect that a person has ceased to be a beneficial owner, that person – or any other member or beneficial owner of that entity – can apply to the High Court for the register to be amended. The High Court may refuse the application, order for the register to be amended or require the entity to compensate the aggrieved person for any loss sustained. An entity that breaches the new legislation may be liable to a fine of up to €5,000 or, on indictment, a fine not exceeding €500,000. In addition to these fines, custodial sentences of up to 12 months can be imposed on any person who knowingly or recklessly makes a statement to the registrar of the central register which is false. Where an offence is found to have been committed by an entity under the new legislation, and is proved to have been committed with the consent or connivance of any of its directors, those directors will also be guilty of an offence. Conclusion Relevant entities should prepare for the establishment of the central register by ensuring that their internal beneficial ownership registers are up-to-date, include PPS numbers where they have been issued, and that their beneficial owners are aware that their details will soon become centralised and open to public inspection. Directors of Irish companies also need to take responsibility for ensuring that their companies are complying with the new legislation, given the potential risk of not doing so. Claire Lord is a Corporate Partner and Head of Governance and Compliance at Mason Hayes & Curran.

Jun 03, 2019