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To assist with preparations for the UK's exit from the EU, the Financial Reporting Council (FRC) is writing to audit committee chairs and finance directors setting out some of the generic actions companies should consider in advance of the UK’s exit.  The FRC suggests UK companies check staff that are EU citizens can continue to work in the UK, and consider whether their business may face additional legal, regulatory and/or administrative barriers in the event of a no-deal Brexit. You can read the full letter here. (Source: FRC)

Sep 18, 2019
News

IAASA has published its annual Observations paper highlighting some key areas that warrant close scrutiny by those preparing, approving and auditing 2019 financial statements in the upcoming reporting season including: the impact of new accounting standards – governing revenue measurement and recognition, lease financing and bad debt provisioning; identification and disclosure of the significant judgements made in preparing financial statements and the sources of estimation uncertainty inherent in those financial statements; the presentation of key performance indicators (KPIs) or alternative performance measures (APMs); and disclosures of the maturity analysis (or ageing profile) of financial liabilities which can indicate the risk that a company will have difficulties in paying its financial liabilities. The 2019 Observations paper may be accessed here. Source: IAASA

Sep 18, 2019
News

Making an impression at a new job can be difficult, but Orla Brosnan says anyone can do it in eight easy steps. Starting a new job can be intimidating. You are entering into a new workplace, where you are not only expected to learn the ropes of your new job and deliver excellent work, but you also have to learn the culture and dynamics in your new work place. Here are eight steps to making a good impression. Arrive prepared Making a first good impression starts long before you arrive at your new work place. You should have already done your homework during the interview process, but there is a lot more to learn once you are on the inside. Learn as much as you can about the company. Google the people you will be working with. However, the way to learn the true company culture is not in a book or training video but by seeing it in action, and learning the ropes from your coworkers; they will teach you the way things really work in the company. Your coworkers are your life line in your new job. Positive attitude Nothing works better at making a great impression than having a positive attitude. Let your enthusiasm for your new job shine through with your interactions. Leave personal problems at home. For each person you meet, try to collect a business a card or jot down a few notes and fact about them. Occasionally study the notes as a reminder of the new people on the team. This trick can help familiarise yourself with team members at a faster pace. Dress for success Wearing clothes you feel confident and polished in at work can affect your posture, your mental well-being and how others interact with you. Check the dress code for the office. If it is normal business attire, invest in a new well-tailored suit, ensure your trouser or skirt length is appropriate and your shoes are polished and in good condition. Personal grooming is essential. Ensure good posture and open body language, and greet everyone with a smile. Ask questions Never be afraid to ask questions and take notes. You might feel like you are a nuisance, but they will appreciate the fact that you are making an effort to learn. If you have a lot of questions, it might be best to schedule a short meeting to discuss at a convenient time. Getting to know the decision makers By identifying and getting to know the key players in the company, you will get a sense as to how they will influence your job and career. They are instrumental in your career progression, promotions and pay rises – they may even be a future mentor. By getting to know them from the very beginning, will make a lasting impression and will be sure to be on their radar. Stay away from office politics Stay away from office politics for as long as you can. On your first day, listen 90% of the time and talk just 10% of the time. If you have a legitimate contribution, make it; if not, just listen to those around you. Track your accomplishments From the very start of your new job, track your accomplishments. There may be so many different projects going on that it becomes difficult to remember everything you have accomplished over time. This is very important for your annual review process and wise to start early. Say thank you Show your appreciation to everyone who helps you learn the ropes in your first few days, from your coworkers to receptionists to human resources. Be considerate, respectful and honest with others in your work environment. Mind your manners and be courteous at all times. Remember: relax, keep an open mind, get to know your team members, do every task to the best of your ability. This is what will help you go far and make a lasting impression. Orla Brosnan is the CEO of the Etiquette School of Ireland. 

Sep 15, 2019
News

It’s that time of year again. On 8 October, Paschal Donohoe will deliver (a likely no-deal) Budget 2020. John Fitzgibbon has made a few budget predictions ahead of the big day. Budget 2020 will likely bring about several changes which will have a significant impact on Irish companies and individuals. Here are a few we’re likely to see on 8 October. Anti-hybrid legislation Undoubtedly, the most complex of these changes will be the introduction of anti-hybrid legislation as required by the EU’s Anti-Tax Avoidance Directive (ATAD). These rules look to eliminate hybrid mismatches arising from the differing characterisation of certain instruments or entities for tax purposes. Hybrid mismatches can lead to a “double deduction” outcome whereby a deduction is obtained in more than one jurisdiction for the same expense, or a “deduction without inclusion” outcome whereby a deduction is obtained by the payer in one jurisdiction without the corresponding income being taxed in another jurisdiction. The new anti-hybrid rules will effectively operate by denying the deduction in one jurisdiction or through the application of a tax charge where such mismatches arise. Changes to transfer pricing rules From a corporation tax perspective, there will be the introduction of new transfer pricing rules which will align our current rules with the latest 2017 OECD Transfer Pricing Guidelines, as well as broaden the scope of transfer pricing in Ireland. The Department of Finance recently released a feedback statement which provided some insight into the proposed changes. This will, among other changes, broaden the scope of transfer pricing rules to small- and medium-sized enterprises (SMEs,) as well as to some non-trading transactions. KEEP, CGT Entrepreneur Relief and EII This year also saw public consultations on a number of Irish tax regimes such as the Key Employee Engagement Programme (KEEP) regime, the CGT Entrepreneur Relief and the Employment and Investment Incentive (EII) scheme, which could indicate that the Budget will introduce changes to these initiatives. KEEP was initially introduced as part of Budget 2018. It offers SMEs a means of competing with larger enterprises when it comes to attracting and retaining key employees. While it seems unlikely that the regime would extend beyond the SME sector, we would expect to see some changes to encourage a higher level of uptake in the participation of the scheme. CGT Entrepreneur Relief encourages entrepreneurs to set up businesses in Ireland by offering a reduced rate of CGT on the disposal of their shares, subject to a few qualifying conditions. The current lifetime limit on which CGT Entrepreneur Relief can be claimed is €1 million. In contrast, under the corresponding UK regime, the lifetime limit available to shareholders is £10 million. This represents a significant advantage to entrepreneurs who establish their business in the UK and, as such, changes could be introduced as part of the Budget to bring this more in line with the UK regime, thereby increasing the attractiveness of Ireland as a competitive location of choice for entrepreneurs..     The EII scheme offers investors tax relief of up to 40% for investments made in particular corporate trades, with 30% of the relief available upfront and the remaining 10% available after three years, assuming qualifying conditions are met. Significant changes were made to the scheme in Budget 2019 and, therefore, it seems likely that any further changes would be minimal. Capital acquisition tax It's possible we could also see an increase to the Group A lifetime threshold for capital acquisition tax, as the Government aims to restore the €500,000 lifetime threshold. John Fitzgibbon is a Tax Manager in Deloitte. Chartered Accountants Ireland is again offering a Budget Summary service to members, with print and digital options available. Click here to order.

Sep 15, 2019
News

Here are four ways stories can help you communicate your ideas or message in a more effective manner. BY ERIC FITZPATRICK Two key challenges that accounting professionals face is communicating knowledge and presenting figures in a way that captivates and engages their audience don’t have the same level of expertise. One method by which these challenges can be overcome is storytelling. Studies in social psychology show that information is more quickly and accurately remembered when presented as a story. What does this mean for professional accounting communication? It means that stories should be a deliberately and intelligently used tool for connecting and communicating information and ideas. Here are four ways that storytelling can help accounting professionals increase the effectiveness of their communication. 1. Stories bring clarity to complex messages Research has shown that stories generate understanding. When presenting complex data, the inclusion of a story that supports the data or provides an example of how the data was used previously can bring clarity to that idea. Stories paint pictures in the mind of the listener and allow them to understand the data in a simplified manner. 2. Stories ensure your message gets shared People love listening to, and telling, stories. The nature of story as a medium for sharing ideas and information is that it is very easy for a person who listens to a story to become the teller of the same story. Because of this, stories travel and ensure that the idea or information contained in it gets shared with a larger number of people. On occasions, accounting professionals will present information to an employee of a client company and once presented, the employee will then have to present the same information to their own board of directors. Where the accounting professional has included stories in their presentation, the employee will often use the same story when passing on the information. 3. Stories connect you to your audience When information is shared in the form of a story, a process called neural coupling takes place. This means that the story elicits the same emotional response in the listener as it does in the teller of the story. This allows a speaker and their audience to empathise with each other, thereby building a stronger connection and making it easier for the audience to buy into the idea or message being shared. 4. Stories aid recall Stories connect with the brain very differently when compared to facts, figures and statistics. Facts, figures and statistics connect with areas of the brain that generate understanding but do nothing to aid recall. This is why audiences understand facts and figures when they hear them, but can struggle to recall them a short time later. While stories connect with these parts of the brain as well, they also connect with the parts of the brain that aid recall. Stories release dopamine in the brain of the listener, which generates an emotional response to the story being told and, in doing so, commits the story and its message to memory. There are occasions when, as accounting professionals, you have to present information that will need to be remembered or recalled a day, a week or even a month after you have delivered it. Stories make that possible. There you have it – four ways which stories can help you communicate your ideas or message in a more effective and creative manner.   Eric Fitzpatrick is owner of ARK Speaking and Training. Eric will present the Corporate Storytelling for Accountants course on 25 September 2019.  

Sep 15, 2019
Ethics

Francis McGeough reports on a study of governance practices in fifty of the largest charities in Ireland which reviewed the information contained in their annual reports.   The importance of good governance in charities was highlighted by shortcomings in two well-known charities last year (Rehab and the Central Remedial Clinic). Bad publicity from these events had a serious impact on the fundraising efforts of all charities with many reporting a substantial drop in donations. Donors to charities need to be assured that their funds are being used appropriately and the requirement for increased accountability highlights the importance of governance practices in charities. Charities must not only apply the highest standards but must also be seen to be behaving appropriately.   A key task of the recently established Charities Regulatory Authority (CRA) is to increase public trust in the charitable sector. The legal framework under the Charities Act 2009 gives the CRA legal tools to do this. However, the essence of good governance lies in the culture of an organisation rather than following the letter of the law.  Governance The word governance originates from the Latin word meaning to steer or to give direction. While, there is no all-embracing definition of governance, there is agreement that governance involves taking responsibility for managing the organisation, balancing the needs of stakeholders, ensuring accountability to stakeholders, and ensuring that the organisation achieves its objectives. Therefore, the Board should have a strategic focus; with a focus on organisational performance, and a clear division of responsibilities between the board and managers.   Charities have a valued status in society due to their good deeds. Consequently, charities are likely to be held to a higher set of standards. Thus, when things go wrong, they are particularly susceptible to public disillusionment. Therefore, charitable organisations must ensure that they maintain their reputation. Good governance practices can help in this process by underpinning public confidence in the charity, and reduce the likelihood of scandal.  Complexity of governance in charities  In publicly quoted companies, the Board represents shareholders and they hold the management to account for their performance (measured by profits and share price). However, for charities, there are a number of complications: Firstly, there may be many stakeholders with conflicting views on how the organisation should be run; secondly, there may be no agreed measure of performance and stakeholders may have different views on what is good performance which increases the difficulty for the board in holding the managers to account; thirdly, many charities rely on the goodwill of their volunteers and managers who may become resentful if their actions are constantly questioned by the Board.    Therefore, charities must find the right balance between trust and control. Too much control can lead to distrust and poor relations with the board. On the other hand, too much trust can lead to complacency and potentially bad behaviour. Survey The annual reports of fifty of the largest charities in Ireland were reviewed to determine the level of disclosure of the key elements of governance. The charities were identified from the Boardmatch Ireland listing of the hundred largest charities in Ireland. The annual reports were downloaded from the charities’ websites in October 2014. Therefore, it would be expected that the latest reports would be for 2013; however, 30% of the charities had annual reports relating to 2012 or earlier (Table 1). While there may have been a delay in uploading the accounts onto the websites, it is surprising -- given the importance of the website as a communications tool -- that the websites did not have the latest annual reports.    In relation to the disclosure of the key elements of governance, Table 2 sets out twelve elements of governance are derived from governance codes such as Boardmatch Ireland and the UK’s Charity Commission’s Statement of Recommended Practice (SORP) and shows the number of organisations which reported each element in its annual report.    Most of organisations examined provided the names of the board members in their annual report (forty three organisations representing 86% of the sample).     In relation to the elements that could be used as proxies to determine the effectiveness of the board, the level of reporting by the organisations examined is mixed (the percentage of organisations disclosing these details is outlined in brackets following the element). Board effectiveness can be measured through the recruitment process for board members (26%) biographical details of the board members (6%); length of time on the board (6%); the existence of induction processes (16%); the number of board meetings (24%); and the existence of sub-committees (52%). Therefore, readers of the annual reports would have difficulty in assessing board effectiveness in managing the organisation.    Notwithstanding the recent controversy about pay levels for managers in some charities, only fourteen organisations (28%) disclose the pay levels for their senior managers.    In relation to resource management, the level of disclosure is again quite low, with 44% of organisations identifying their key risks and outlining how they manage these. In addition, only 20% of the organisations outline what their policy in relation to reserves is.   In relation to the disclosure of non-financial information, a majority (58%) disclose some information. The study does not attempt to evaluate the quantity or quality of the non-financial information disclosed but simply examines the existence of non-financial information.    The final element examined is whether a statement of compliance with a governance code is made. The research finds that just 22% of organisations disclose such a statement. This may be due to the relative newness of a governance code and as such, it is expected that this will improve in the future.   Table 2 shows that only three of the twelve elements are disclosed by more than half the organisations. Overall, this suggests that the level of disclosure is limited and this is further emphasised by Table 3 which outlines the range of elements disclosed by the organisations examined. Table 3 shows that thirty of the organisations (60%) disclosed three or less of the twelve elements. While, only four organisations (8%) disclose ten or more elements. Conclusion The research suggests that there is considerable room for improvement. In relation to the dates of the annual reports, it is a matter of concern that fifteen organisations did not have their latest accounts available on their websites. The research suggests that organisations are publishing a very limited amount of information. Thirty organisations (60%) disclose three elements or less, while four organisations (8%) close nine or more elements. Furthermore, only three elements are disclosed by more than half of the organisations.    In overall terms, it would be difficult for the readers of the annual reports to be able to assess the effectiveness of the board. Furthermore, given the recent controversies about remuneration levels in two Irish charities, it is somewhat surprising to see that only 28% of the organisations surveyed disclosed remuneration details of their senior managers.    The annual report provides a window into what is deemed important by the organisation and is also an opportunity for the organisation to account to its stakeholders for its stewardship. If that is the case, the evidence presented here would suggest that Irish charities place limited emphasis on presenting information on governance and performance. In today’s environment, this is a missed opportunity. However, this does not imply that there is a problem with governance standards in Irish charities but it does suggest that charities must review the information provided because they should not only apply the highest standards but must be seen to do so. In this regards, there is much room for improvement.    Francis McGeough PhD lectures in Accounting and Finance at the Institute of Technology, Blanchardstown. This article is a shortened version of a paper to be presented at the British Accounting and Finance Association annual conference in Manchester in March 2015.  

Sep 13, 2019