The high street is firmly back on the business agenda for UK entrepreneurs keen to boost visibility and engagement with customers, influencers and the media. Customers are buying and UK businesses are using every channel at their disposal to service demand while being in the spaces and places of the target shopper.  Because founders come looking for content and support on topics from raising money to hiring staff, Enterprise Nation is able to track sentiment and trends. Right now, the prevailing topic is how to service customer demand.  Customers, both large and small, are actively shopping both online and off line. Consumers are heading out in search of new experiences and products, and big brands – including corporates and government – are buying from small firms offering the niche services they are after.  Entrepreneurial founders are intent on servicing this demand regardless of the rising cost of doing business. There are three ways in which we are seeing this trend materialise:  E-commerce There are many platforms from which small businesses can sell both within the UK and overseas. Amazon has long had a position of strength in enabling spare room start-ups and growth companies to reach customers across the globe. The e-commerce giant is now being joined in a busy market by new platforms, such as Faire.com, which connect retailers to wholesalers, high street brands like John Lewis and Joules, who are starting their own marketplaces stocked with products from small businesses, and emerging sector-specific niche platforms, such as Glassette.com for homewares. All offer small businesses a rapid route to market, with payment solutions such as Klarna enabling a straightforward sales process for the customer.  Pop-up retail In order to meet customers, buyers, influencers and journalists on the High Street, small businesses are testing physical retail locations and bringing their brand into the real world. Property operators, including Sook, SituLive and Space and People, are making physical retail a viable option for the smallest of companies by allowing them to rent space by the hour, and on a budget. In-person events After a two-year hiatus, physical events are making a comeback, with the number of live business gatherings listed on our platform doubling in the past two months. As a result, we’re also seeing the return of the serendipitous meeting during the workday coffee break, or after-work drink, once again opening up new opportunities for the hustling entrepreneur.  Small businesses are powering on all cylinders and are staying updated on the techniques that will help them reach more customers effectively and efficiently. Doing so will deliver revenue, economic growth, and a vibrant business community successfully servicing market demand in entrepreneurial style.   Emma Jones is the Founder of Enterprise Nation, a business support platform and provider that operates in the UK and Ireland.

COVID-19 has changed the face of banking globally, but what’s next? Billy O’Connell delves into the top 10 emerging trends shaping banking this year. The COVID-19 pandemic has irrevocably changed the banking industry. Customers have become more demanding on multiple fronts - from service fees to sustainability - banks have doubled down on technology, accelerating their innovation drive, and new entrants to the market have become more ambitious, broadening the scope of services they offer. Here are the ten trends most likely to impact banking globally and locally in the months ahead.  1. Everyone wants to be a ‘super-app’ Just as the smartphone consolidated our hardware needs within a single device, super-apps are consolidating many of our retail, social and other needs.  Most digital banking consists of checking balances, paying bills, and making deposits — functionality more and more big technology players are incorporating into broader platforms alongside other services like commerce and social networks.  How should traditional banks respond when faced with the expansion of Amazon, Meta, and others into financial services?  They can try to add non-banking functionality to their own services and compete head-to-head for customer attention or partner with a super-app to provide white-label services. A third option is to wall themselves off from the fray and defend their traditional franchise.  2. Green gets real Investors and regulators will need to see environmental promises being delivered as they urge financial firms to become better stewards of the planet.  Proposed rules will require independent verification, proving that banks are living up to their claims. They will face immense pressure to redirect credit away from carbon-heavy companies toward sustainable energy.  In Ireland, lending has become increasingly ‘green.’ The main financial institutions are evolving their product offerings, focusing on supporting environmentally-friendly economic activity. These products make a real difference as they actively guide consumers towards a change in their behaviours.  3. Innovation makes a comeback Globally, the decade after the great financial crisis was a period of retrenchment in which many banks pulled back from introducing new products and focused on getting the basics right. Start-ups and digital challengers have emerged, with new offerings leveraging innovative solutions to target specific customer pain points.  The growth of Buy Now Pay Later (BNPL) providers is an example of this. However, banks are fighting back with creativity. Irish retail banks have invested significantly in the last five years in technology and innovation projects to deliver new digital services for customers.  We are seeing this in product innovation across the board – in the introduction of fully digitised customer journeys for personal lending and mortgages, instant account opening, data analytics and new digital capabilities to support SME lending.  During the pandemic, we saw retail banks improvising and innovating at speed as they leveraged their technology investments to respond with creativity and agility to the new challenges. 4. Fees Over the last several decades, banking fees have shifted from regular charges for services like account maintenance to in-built fees for facilities like overdrafts.  Fintech firms arrived, promising an array of services for the magical price of free, only to reveal later that revenue must come from somewhere.  Banks are creating features that put the users in charge of fee decisions. Fortunately, digital, AI and cloud capabilities are converging to provide the perfect platform for personalised advice that will help build consumer trust and involvement. 5. The digital brain gets a caring heart Before and during the pandemic, banks continued to invest heavily in digital technology to make banking more accessible, faster, and efficient. However, it is more difficult than ever to win customer loyalty.  Banks realise they have much to gain by learning to better understand and respond to customers’ needs and individual financial situations. Being well-positioned to meet customer needs through the challenges of the past 24 months has been important for banks and customers who needed their support.  Building on this momentum and focusing on AI and other technologies will be important to help banks predict customers’ intent and respond with more tailored messages and products. 6. Digital currencies grow up Several central banks worldwide are now launching digital currencies, and more are thinking about it. These are accompanied by maturing regulations around cryptocurrencies and a recognition that, while decentralised finance (DeFi) may still be in the experimentation phase, many of the core concepts of decentralised trust will likely have enduring value.  We will likely see more financial institutions and government agencies sharing data and ideas on how to incorporate aspects of this new type of money into the global financial system.  According to the Competition and Consumer Protection Commission (CPCC) research, one in ten Irish investors (11%) held crypto assets or cryptocurrency like Bitcoin in 2021. The number jumps to one in four (25%) for those aged between 25 and 34, indicating the appetite amongst younger generations in Ireland for digital money.  7. Smart operations put zero in their sights In 2022, banks will apply artificial intelligence and machine learning to back-office processes, enabling computers to outperform humans in some tasks. This will, eventually, decouple bank revenue from headcount.  Banks have made incremental efforts to streamline their operations at a global level. These new technologies, along with the use of the cloud and APIs, can accelerate their efforts well beyond small efficiencies and toward the long-held dream of ‘zero operations’ where waste and latency are eliminated.  8. Payments: anywhere, anytime and anyhow Getting paid and sending money are now anytime, anywhere features we’ve come to take for granted. The next step in this payment revolution is for these networks to open up. China has already demanded that internet companies accommodate rival payment services. At the same time, proposed legislation in India would force digital wallets to connect and mandate that merchants accept payments from all of them.  Banks with payment offerings will have to compete and cooperate with rival banks, fintech, and other players as the world of networks opens up. We’ve seen this gathering momentum locally, with AIB, Bank of Ireland, KBC, and Permanent TSB coming together on a joint venture to create a real-time payments app. The continued investment highlights the desire to evolve in response to customer needs and compete with digital challengers, such as Revolut.  Customer trust is an essential factor in driving success in the financial services industry. If the banks can give consumers the digital functionality they crave, alongside reliability and service, they could leapfrog their challengers. 9. Banks get on the road again Just as individuals are relishing getting out from under pandemic travel restrictions, banks too will go wandering in search of growth both at home and abroad. In Ireland, we’re already seeing M&A activity from the core banks, causing a seismic shift in the entire landscape.  This includes Bank of Ireland’s takeover of the capital markets and wealth management divisions of Davy stockbroker and its purchase of KBC’s loan book; AIB’s acquisition of Goodbody Stockbrokers and its JV with Great West LifeCo; and Permanent TSB’s purchase of Ulster Bank’s loan book.  10. The war for talent intensifies Figures released from The Workhuman Fall 2021 International Survey Report indicated that almost half (42 percent) of Irish employees plan to leave their jobs over the next twelve months.  As technology has become a critical enabler for banks, a much-publicised shortage of engineering, data and security talent presents a real challenge. Younger workers, in particular, want flexibility and to be valued in their jobs.  Forward-thinking banks are developing integrated plans that holistically address their work and talent issues. They’re mapping the skills they need now and expect to need in the future and are using a variety of approaches to recruit and retain them. They are also re-assessing their structure, culture, and work practices to improve their appeal as employers.    Time for a different approach Decades from now, the most successful banks will be those that continuously shape their businesses to the needs of customers, employees, and other stakeholders. Their greatest asset will be their ability to identify opportunities and innovate efficiently.  Billy O’Connell is Head of Financial Services business at Accenture Ireland.

Irish CEOs are becoming increasingly concerned about the dangers posed by cyber-risk and many are taking steps to mitigate the potential threat to the bottom line.  Cyber-risk has moved up the corporate agenda, cited as the dominant risk facing business leaders this year in a new global CEO survey. Forty-nine per cent of the respondents in PwC’s 25th Annual Global CEO Survey identified cyber-risk as their top concern, up from 47 percent and second place in the same survey last year. Irish CEOs are even more concerned about cyber-risk than their global counterparts, the report has found, with 58 percent citing it as the top threat they face this year, compared to the global average of 49 percent. For Pat Moran, Partner and Cybersecurity Lead at PwC Ireland, these findings are no surprise.  When Moran joined PwC in 2016, his cybersecurity team had fewer than 10 people. Now, in response to rising demand from clients nationwide, the headcount has risen to more than 50. “Cybersecurity is a major issue now, but that wasn’t always the case. I remember working for a bank back when I started my career. We would carry out technology audits and present our findings to the audit committee, but we were generally at the bottom of the agenda,” said Moran. “Cyber-risk was seen as a very technical area; one that couldn’t really have any major impact on the wider organisation. These days, it’s very much the opposite.  “Everyone wants to know about potential cyber-risks – the audit committee, the management team, the board of directors. Cyber-security is seen as a major business issue, and with good reason.” The high-profile ransomware attack on the Health Services Executive (HSE) in 2021 had the effect of catapulting cybersecurity even further up the corporate agenda in Ireland. “The HSE incident was a major wake-up call for all organisations in Ireland in both the public and private sector,” said Moran. “It caused unprecedented disruption and people realised that, if something like this could happen to a critical public service like healthcare, it could happen to anyone. That was when the penny really dropped and organisations in Ireland started to sit up and think seriously about cyber-risk.” Eight-two percent of CEOs in Ireland have factored cyber-risks – including hacking, surveillance and misinformation – into their strategic risk management, according to PwC’s Annual Global CEO Survey. As Moran sees it, however, many are still unprepared for a potential cyber-breach and have yet to put systems in place to ensure business continuity and recovery. “The HSE attack really showed, not just the financial risk associated with a cyber-breach, but also the potential risk to an organisation’s reputation,” he said. “Dealing with a cyber-attack can be a nerve-racking experience. Just this week, I got a call from a client hit by a ransomware attack and they were really panicked.  “They weren’t sure what their next steps should be; how they should communicate the incident internally; who they should contact outside the organisation. They hadn’t figured out the chain of communication, and that really added to the upheaval they were facing.” Moran advised CEOs and management teams to examine the response from Paul Reid, CEO of the Health Service Executive, to the ransomware attack on the HSE to help formulate their own response strategy in the event of a similar cyber-attack on their organisation. “Paul Reid was out there front-and-centre, supporting the HSE messages going to the public and the media. That really helped to mitigate some of the impact,” said Moran. “The number of organisations reliant on their online presence and ability to do business online increased dramatically during the pandemic, and consumers and clients can be quite unforgiving when it comes to data breaches, in particular. “They get understandably nervous when an organisation with access to their data is compromised. The question is: ‘If security is an issue here, do I really want to be a customer?’”  How organisations communicate in the event of a data breach is, therefore, critically important, according to Moran.  “I think CEOs and boards do now understand that a cyber-incident or attack doesn’t just impact one part of an organisation. It impacts all parts of the organisation,” he said. “It impacts every employee. It impacts customers and suppliers. It impacts the leadership and the board and they need to play a really prominent role in any recovery from a major incident, and in planning for that recovery – not just in prevention.” The HSE attack was traced back to Conti, a ransomware group thought to be based primarily in Russia, which has since signalled its support for Russian President Vladimir Putin’s assault on Ukraine. So, what does this mean for the global cyberthreat landscape in 2022? “There is now an increased risk that there will be more cyberthreats and attacks coming from Russia,” said Moran. “Richard Browne, the Director of the National Cyber Security Centre, has advised that organisations be vigilant and monitor their networks for potential vulnerabilities, phishing or denial-of-service attacks.  “Speaking to our own US colleagues at PwC, there is definitely an expectation that we will see more attacks. Our guidance to clients is to increase monitoring activity and rehearse their incident response, so that – in the event of something happening – they can respond quickly, and people know in advance what their roles and responsibilities will be.”

Whistleblowers in Ireland will benefit from a raft of new protections laid out in an EU directive that is among the farthest reaching and most significant ever to be adopted by the bloc, writes Minister Michael McGrath. The benefits of protecting people of conscience who speak up about wrongdoing are clear — for both society and democracy. Whistleblowers play a crucial role in preventing corruption in both the public and private sectors, and workers are usually the first to recognise wrongdoing in the workplace.  An Association of Certified Fraud Examiners 2020 Report to the Nations found that 43 percent of fraud was detected through tip-offs. This compared to 15 percent through internal audit and just two percent through law enforcement.  More than half of these tip-offs came from people in a work-based relationship with the organisation they suspected of fraudulent activity.  Members of the accountancy profession can often be the first people to detect wrongdoing through their roles in industry, regulation, or audit. That is why all members of the profession must be aware of the EU Whistleblowing Directive, one of the farthest-reaching and most significant pieces of legislation ever to be adopted by the bloc.  The Protected Disclosures (Amendment) Bill will transpose the EU Whistleblowing Directive into law, setting out new legal obligations relevant to the profession in addition to the reporting requirements already applying under their professional codes. It will encourage, support, and protect workers in Ireland who speak up about wrongdoing in the workplace, bringing about significant changes to the legal obligations applying in both the public and private sectors. Protected Disclosures Act 2014 Many of the EU Whistleblowing Directive provisions are already in place in Ireland, thanks to the Protected Disclosures Act. The 2014 Act was an innovative piece of legislation for its time and remains highly regarded as one of the strongest whistleblower protection laws in the world.  A global study of whistleblower protection laws published last year by the International Bar Association and the Government Accountability Project ranked Ireland joint second in the world for the strength of its legislation.  The 2014 Act prohibits any form of retaliation against a worker who makes a protected disclosure. It establishes channels through which a disclosure can be made – to an employer, an independent regulator known as a prescribed person, a Minister (in the case of public sector workers), and, subject to more stringent criteria, through public disclosure.  The Act provides for redress for workers who are penalised for making a protected disclosure with the option to pursue it, either through the Workplace Relations Commission or the Courts. It also protects workers from civil and criminal liability for any disclosure of information necessary to report a wrongdoing. In most instances, a worker will make a report to their employer, the employer will address the wrongdoing, and the case will be closed. In Ireland, four out of every five workers who report wrongdoing do not suffer retaliation as a consequence of doing so.  Devastating consequences As the testimony given to the Joint Committee on Finance, Public Expenditure and Reform during pre-legislative scrutiny of the draft Bill last year made so clear, where retaliation does occur, and the protections of the legislation are broken, the consequences for whistleblowers and their families can be devastating. I am currently bringing The Protected Disclosures (Amendment) Bill that will transpose the EU Whistleblowing Directive before the Houses of the Oireachtas. This Bill will include provisions to address issues with our existing legislation as were committed to in the Programme for Government and will build upon and strengthen our existing legislative foundation by: widening the scope of persons entitled to protection for speaking up, to include volunteers, shareholders, board members and job applicants; requiring private-sector employers with more than 50 employees to establish formal channels and procedures for their workers to report concerns about wrongdoing. This will come into effect for companies with 250 or more employees initially and for companies with 50 or more from December 2023. Companies in certain sectors and public bodies are already required to have formal reporting channels in place; requiring the recipients of disclosures to follow a specific process and timelines to acknowledge, follow up on, and provide feedback to reporting persons;  requiring prescribed persons to be more proactive in promoting their role as external recipients of protected disclosures, making their reporting channels more transparent and accessible to workers who wish to report concerns about wrongdoing in the sectors they regulate; and establishing an Office of the Protected Disclosures Commissioner within the Office of the Ombudsman to take on the role of directing reports to the most appropriate persons to address the wrongdoing raised and take responsibility for a report if there is no appropriate person to deal with it. The Bill will clarify the interaction between protected disclosures and interpersonal grievances. For individual cases of bullying, for example, there are very clear employer obligations under employment law.  However, if a culture of bullying or intimidation exists within an organisation, this could represent the basis for a protected disclosure. Far from making the current system weaker, this Bill will make this distinction much clearer for an impacted worker.  Crucially, it will enhance the protections that will apply if a reporting person suffers retaliation for having made a protected disclosure. In civil proceedings concerning allegations of penalisation, we are reversing the burden of proof so it will fall to the employer, not the worker, to prove that the alleged act of penalisation did not occur because the worker made a protected disclosure. The provision of interim relief will be expanded to cover dismissal and other acts of penalisation. This is a significant development as it will allow workers who suffer serious detriment to obtain urgent relief where this is necessary. Criminal penalties will apply to persons who penalise or hinder reporting by whistleblowers or take vexatious proceedings against a reporting person, as well as for breaches of the duty to keep the identity of the reporting person confidential. Timeline for enactment Unfortunately, it was not possible to enact the new legislation before the transposition deadline of 17 December 2021. However, the necessary time must be taken to ensure that this critical legislation is right in providing protections for workers who report wrongdoing. I am confident the legislation will be in place in the near future. Strong legislation is an important component in any ecosystem designed to support and protect whistleblowers. It is also crucial to have the right organisational culture, however — one that encourages workers to speak up without fear of reprisal.  This will do more than any new legislation, policies or procedures to support and protect whistleblowers.  Driving cultural change in organisations is challenging, but it is something I, as Minister for Public Expenditure and Reform, am committed to doing in public sector organisations.  The wide reform programme my department is rolling out will support open, transparent and accountable organisations. Preparing for the new bill I would like to encourage all employers impacted by the Protected Disclosures (Amendment) Bill not to wait for the enactment of this new legislation before they respond.  There are some straightforward steps you can take now to prepare. My advice is to review and update your existing reporting channels and procedures, asking the following questions: Is there a designated, impartial person (or persons) responsible for their operation?  What new training do they need? Are the channels sufficiently secure? Are there published procedures for whistleblowing? Are these procedures easily accessible and understood by all workers? Do they provide for acknowledgement, follow-up and feedback within the timelines of the new Bill? How best can I communicate the new changes to all staff? My department is available to respond to questions and will be issuing further guidance material in the coming weeks. More information and the text of the Bill can be found online at: https://www.gov.ie/en/publication/e20b61-protected-disclosures-act-guidance-for-public-bodies/#eu-whistleblowing-directive Michael McGrath is Minister for Public Expenditure & Reform, a TD for Cork South Central, and a Fellow of Chartered Accountants Ireland.

The unsettling effect of the pandemic on the job market is being felt as much in the US as in Ireland, as employers grapple to attract candidates with the skills they need to stay competitive, writes Dr Brian Keegan. People are harder to manage. It’s a stark realisation, expressed by a very senior Irish Chartered Accountant at a Fortune 500 company.   The pandemic may have been the great leveller across the world, but the process of recovery will not be as homogenised.   Just as in Ireland, the US has been scarred socially and commercially by the misery of COVID-19.  Within some sectors of American industry, huge resources are being devoted to little else besides hiring.   The unsettling effect of the pandemic on workers is prompting, not just career change, but location change. From the employer perspective, the traditional skill sets, which might once have automatically qualified people for well-paid employment, are changing.   Anecdotally at least, from the many members I spoke to during the Institute’s St Patrick’s day delegation to the US, led by our President Paul Henry, the most sought-after skill is project management — with specialisation in finance or data analysis an added bonus.   Educational establishments are already picking up on this shift. One Ivy League university is developing micro-certification, which is an accreditation for completing very short courses in high-demand skill sets like data mining. This isn’t merely reflecting the state of the job market, but changes in corporate strategies. Progressive industries have had a digital strategy as a priority for several years. This is now morphing into a “mobile first” strategy.  The pandemic has fostered recognition that consumer and brand loyalty is not merely built by online capability but by ease of access. This means getting your customer order capture and service delivery platforms onto mobile phones.   There is less sense of urgency over resolving supply chain issues. The prevailing sentiment is that, if the pandemic proved anything from a commercial standpoint, it is that supply chain issues can be worked out no matter how severely they appear to have been disrupted in the first instance.   Efficiencies in purchasing and supply need the clever use of data, and data usage brings risks and challenges all its own. There seems to be a view that systems don’t have to be 100 percent secure, just more secure than those of competitors.   As one US-based member in a national leadership role in IT suggested, every system is breakable. The trick is to ensure that yours isn’t the easiest one to break. Despite the staffing challenges, the common thread running through all these observations is relentless expansion. The ‘animal spirits’ which the great economist JM Keynes credited as the prime mover of economic activity are being boosted by an overwhelming sense of relief that the pandemic may now, in fact, be over.   This sense of relief is dangerous. Tragically, we have jumped out of the frying pan of the pandemic into the fire of war in Europe.   Not to diminish the horrible loss of life, the evil and unjustifiable attack by Russia on Ukraine may well cause even greater economic disruption across Europe than the pandemic.  Grain will be scarcer because Ukraine was the breadbasket of central Europe. The worldwide shortage of microprocessors will be exacerbated because key elements in their manufacture, notably Neon, were major exports from a stable and increasingly prosperous pre-war Ukraine.   The West has correctly chosen to punish Russia for its actions with sanctions, but effective sanctions cut both ways. The commercial priorities we had planned as we recover from the pandemic will have to change to reflect the invasion of Ukraine. The only saving grace is that people, though they may well indeed be harder to manage, are adaptable. Dr Brian Keegan is Director of Advocacy and Voice at Chartered Accountants Ireland.

Mairead McGuinness, EU Commissioner for Financial Services, Financial Stability and Capital Markets Union, talks to Elaine O’Regan about her role in implementing sanctions to stop the “Kremlin war machine”, her ongoing contribution to the future of sustainable finance  and her role in laying the foundations for the Capital Markets Union. You’re 18 months into your role as EU Commissioner. What do you see as your most important achievements so far, and what are your priorities now? I am responsible for sanctions and their implementation by the Commission and this is top of my agenda right now, given the terrible war in Ukraine and the need to respond to Russian aggression. We want to cut off funding to the Kremlin war machine.  We’ve listed hundreds of individuals, including Vladimir Putin, his Foreign Minister Sergey Lavrov and dozens of oligarchs, which means their assets are frozen. They can’t be provided with funds, and they are also subject to travel bans.  We’ve cut Russian access to EU capital markets, including a full asset freeze on three Russian banks with strong links to the Russian state, excluding seven key Russian banks from Swift, and blocking Russia’s EU-held foreign exchange reserves.  We also have measures on energy, transport, dual-use technologies, trade, visas for diplomats and disinformation. And, we have sharpened sanctions against Belarus, so it cannot be used by Russia to evade our sanctions.  At the same time, we’ve been working closely with our partners, including the US, Britain, Canada, Australia, Japan and others, to impose comprehensive and complementary measures that ensure Russia’s illegal actions bear a high cost. The focus now is on making sure that the sanctions are properly implemented so they are as effective as possible – and we stand ready to put more sanctions in place as the situation evolves. Beyond this, over the past 18 months my work on sustainable finance and the contribution of finance to tackling climate change has been important, as well as work on building up the Capital Markets Union to give companies across the EU better access to finance.  I’m also passionate about using my role to highlight the importance of financial literacy. People should understand how the financial system works, how they can make the best use of their money, and be confident enough to ask the right questions about their personal finances. The Ukraine invasion has placed energy supply at the forefront of the EU agenda. How do you expect the situation in Ukraine, and its impact on the flow of energy supply globally, to influence the policy initiatives laid out in the EU Green Deal?  Russia’s aggression against Ukraine makes a rapid transition to clean energy more urgent than ever. We’re too dependent on Russian gas. We must have a reliable, secure, and affordable supply of energy for Europe.  We already have the Green Deal indicating where we need to go, but Russia’s aggression has brought into very sharp focus our vulnerabilities and why we need to accelerate the transition to a more sustainable economy.  The Commission adopted a plan in March – REPowerEU – with new ways to ramp up green energy production, diversify supplies, and reduce demand for Russian gas.  The financial system has a key role to play in the Green Deal. The goal is both “to green finance” and “to finance green” to help the financial sector become sustainable and to make sure that the financial sector provides the money for business to become sustainable.  We’ve put clear and consistent rules in place, namely the EU Taxonomy, a disclosure regime for non-financial and financial companies; and investment tools, including benchmarks and standards like the European Green Bond Standard.  We are now increasingly moving to the implementation phase to make sure these rules are effective.  How far along is the Taxonomy at this point, and what are the next steps in the pipeline for the year ahead? What do companies operating in the EU need to know? The Taxonomy helps signpost the way for private investment to contribute to our climate goals: it provides clear definitions for sustainable economic activities. Companies can use it to plan their transition and to show the market what they are doing.  Last year, we adopted the first rules on activities that make a substantial contribution to adapting to and mitigating climate change.  They cover 170 economic activities, representing about 40 per cent of listed companies in the EU, in sectors responsible for around 80 per cent of direct greenhouse gas emissions in Europe.  The rules are applicable from January 2022. We have also specified how market players should disclose the extent that their activities are taxonomy-aligned. We’ve put forward proposals for how gas and nuclear can make a contribution to the transition to sustainability. We have not designated gas and nuclear as “green”, but we have recognised the specific role certain nuclear and gas activities can play in the transition to full sustainability, subject to very strict conditions and phase-out periods. This proposal is now under scrutiny by the European Parliament and the Member States. We have work to do on including more sectors in the Taxonomy and we will be preparing details on the four remaining environmental objectives – water quality, circular economy, biodiversity, and pollution prevention. The International Sustainability Standards Board (ISSB) is expected to put its first set of standards to public consultation later this month. How do you foresee the EU Commission working with the ISSB to progress the wider ESG reporting agenda?  The EU has been the global leader on sustainable finance. We are ahead when it comes to the contribution of the financial system to tackling climate change. So, we’ve gone further than others, and we’ve done that faster – which is important given the urgency of the climate challenge. But, of course, the climate challenge is global, and markets are global too. So, we are fully engaged in efforts on global standards. EU sustainability reporting standards have shown the way, to a great extent, and informed the international context.  We see global standards as a common baseline that allow us to go further to meet the ambition set out in the EU Green Deal.  At a practical level, the body that drafts EU accountancy and sustainability standards – the European Financial Reporting Advisory Group (EFRAG) – has established close cooperation with the ISSB. The CSRD proposal – and the reporting standards that will be part of it – will ensure that corporates disclose sustainability information that underpin the rest of the sustainable finance agenda.  EU standards must be coherent with the EU’s political ambitions and with our existing framework for sustainable finance, including the Taxonomy and the Sustainable Finance Disclosure Regulation.  From the beginning, EU standards will cover all ESG topics under a double materiality perspective – companies will have to report about how sustainability issues affect them and about their own impact on society and the environment.  In contrast, the standards set by the ISSB only look at risks to companies, but not at the impact of companies, and in the first instance they are focusing on climate.  EU standards will build on and contribute to global standardisation initiatives. We should build on what exists, and seek as much compatibility as possible, while also meeting Europe’s specific needs. At the recent IIF Sustainable Finance Summit, UBS Chairman Axel Weber said “banks can be a facilitator of channelling money into the right uses for a carbon transformation of the economy, but it’s not a banking issue.” What’s your take on this stance? All financial institutions, including banks, but others too, need to play their part in the transition to climate neutrality and improve their environmental performance as part of their financing, lending, and underwriting activities.  Financial institutions should integrate EU sustainability goals into their long-term financing strategies and investment decision-making processes.  We will help them accelerate their contribution to the transition, by reinforcing science-based target setting, disclosure and effectiveness of decarbonisation action, but also monitoring the financial sector’s commitments. The Corporate Sustainability Reporting Directive (CSRD) is being viewed as a crucial step in bringing sustainable reporting on par with financial reporting. It will require assurance on non-financial statements, however. Who do you foresee this responsibility falling to? The CSRD proposal requires statutory auditors to give an opinion on sustainability reporting – the idea is to ensure that the sustainability information disclosed is credible.  This will require statutory auditors to have the necessary skills in the assurance of sustainability reporting, helping to ensure that financial and sustainability information is connected and consistent.  We are mindful of the potential risk that the audit market could become even more concentrated, however. That’s why the proposal allows Member States to accredit independent assurance service providers to verify sustainability reporting. The proposal for the EU Green Bond Standard was published by the European Commission in July 2021 as part of the Strategy for Financing the Transition to a Sustainable Economy. Tell us about this proposed regulation.  Green bonds offer a great opportunity for financial markets to directly support the transition to a climate-neutral economy. They bring issuers reputational benefits and sometimes also a lower cost of funding.  They give investors transparency about how companies allocate their money. So green bonds make business sense as well as climate sense — and the market is booming. Last year, after many years of on average 40 percent growth, issuance increased by another 65 percent compared to the previous year.  However, there are some challenges. As new issuers enter the market, there is less consensus on what is green. This means more effort for issuers to prove their green credentials, and more work for investors to check them.  Companies acting as external reviewers of green bonds help investors navigate this complex landscape, but the wide range of methodologies they use can also be a source of confusion.  That’s why in July 2021, the Commission adopted a legislative proposal for a European green bond standard, as part of its work to guide investors towards greener investments. The overall aim is to create a new gold standard available to all green bond issuers on a voluntary basis.  While building on market best practice on reporting and external review, this standard would add two important new elements. First, full alignment with the EU Taxonomy, to ensure that funds raised by these bonds are spent on economic activities that are sustainable. Second, supervision by ESMA of external reviewers that provide opinions on the alignment with the standard.  There is already a lot of interest from both issuers and investors. But, in the end, success depends on whether we keep the environmental ambition high, and the unnecessary burden on issuers low. Negotiations are ongoing in the European Parliament and the Council, and we are hoping that an agreement can be reached as soon as possible.   You recently indicated that a bill to introduce a digital euro may be tabled in the EU in early 2023, providing a legislative framework for the ongoing work of the European Central Bank on a digital version of the euro. What are the potential benefits of introducing this digital euro? A digital euro would be to complement cash – which remains vital – and other means of payment provided by the private sector.  A digital euro would provide a digitalised form of money backed by a central bank, which would be designed to allow everyone to use it, from the tech savvy to those excluded by the financial system. How exactly it should be designed to meet those goals is currently being examined.  Other countries are working on or are already issuing central bank digital currencies, and the use of stablecoins is increasing. A digital euro would strengthen the EU’s ability to determine its own course and maintain the autonomy of EU monetary policy.  The digital euro raises challenges, but also opportunities. This is why we are working hand in hand with the ECB and listening to all stakeholders on this key project.  The ECB would be responsible for issuing any digital euro, while the Commission would need to put forward the legislative framework to allow the ECB to do so.  Currently, we are looking at early 2023 to introduce the proposal to give time for the Parliament and EU Member States to work before the ECB would decide how and whether to issue a digital euro. The EU is responding to the need for improved online security for cryptocurrencies with the Markets in Crypto-Assets Regulation and Digital Operational Resilience Act. What do you see as the biggest risks in this area? Unfortunately, the level of operational resilience in the crypto-asset space is not good enough. There are also a lot of hacks and thefts.  The Markets in Crypto-Assets Regulation (MiCA) will bring crypto into the regulated space and will mean that crypto service providers are covered by financial services legislation.  MiCA will put in place consumer protection measures and limit the risk of fraudulent behaviour in the market.  The Digital Operational Resilience Act (DORA) is for the whole of the financial services sector, to ensure ICT risks are better managed by financial companies. When MiCA enters into force, crypto service providers will have to adhere to the highest levels of operational resilience, as they will also be covered by DORA. DORA and MiCA are currently part of negotiations between the EU institutions. 

Russia’s invasion of Ukraine has dampened the global economic outlook, prompting predictions of spiralling price hikes not seen since the 1980s and looming recession. But, is it too soon to predict with any accuracy what really lies ahead? Professor Anthony Foley investigates. After two years of economic uncertainty because of the pandemic, Russia’s invasion of Ukraine, and its associated sanctions, have unsettled our markets once again, lowering projected GDP growth rates and increasing global inflation rates in 2022 and, to a lesser extent, in 2023.  However, the exact scale of the impact is as yet uncertain. It will depend on several factors, including the duration of the conflict, developments in economic sanctions — both in terms of impositions on Russia and its own retaliative measures — and the nature of any possible peace deal.  Together, Russia and Ukraine comprise a relatively small part of the global economy, making up about two percent of GDP internationally. They are important players in the markets for certain products, accounting for about 30 percent of global exports of wheat, 20 percent of corn, roughly 20 percent of fertilisers, 20 percent of natural gas and 11 percent of oil.  Both countries also have substantial uranium reserves and are significant suppliers of the inert gases used to make semiconductors and the titanium sponge used in aircraft manufacturing.  On top of that, Russia is a major supplier of the palladium used in the catalytic converters for cars and the nickel used in batteries and steel, while Ukraine is among the world’s foremost producers of sunflower oil and sugar beet. Mechanisms of the economic impact of war There are several mechanisms through which war has an economic impact. Trade flows are suppressed, hitting integrated global supply chains. The rising cost of commodities like gas, fertiliser and oil upends business cost models and lowers real consumer income.  Even had there been no response from the rest of the world to the Russian invasion, Ukraine would still be unable to maintain existing supplies of products, such as wheat and minerals, to the global market. This alone would result in supply chain disruption and price hikes for certain products.  Uncertainty, in general, suppresses economic growth, muting confidence and lowering consumer spending and enterprise investment — and this is especially true of the current situation in Ukraine. The intervention of the West thus far, through economic sanctions imposed on Russia and Belarus, has increased the economic impact of the war by limiting trade engagement with Russia.  Russia may retaliate against these sanctions by restricting gas supplies or defaulting on sovereign debt, which would further deepen the economic impact.  Energy prices were rising even before the Ukraine invasion, but the war has now accelerated the rate of inflation. Even if a country has no direct trade link with Russia, it will be affected by ongoing global price hikes.  Countries with trade links to Russia will have lower growth rates, curtailing their capacity to trade with other countries – even those with no direct trade links to Russia — triggering further global economic impact. Hundreds of western companies have opted to cut business ties with Russia, even if not required by official sanctions, including big brand names like Coca-Cola, McDonald’s and Nike. In addition, there are implications for the public finances of those countries taking refugees from and sending aid to Ukraine. If a peace settlement is reached, there will then be the cost of rebuilding Ukraine.  Irish trade with Ukraine & Russia Ireland exported goods worth €627 million to Russia in 2021 (just 0.4% of its total exports) and imported goods worth €598.1 million from Russia. In the same period, goods exported to Ukraine totalled €91.7 million, while imports came to €70.2 million.   The imports of goods are dominated by petroleum and petroleum products (€231 million), coal and coke (€140 million) and fertilisers (€134 million). These three imports are 84 percent of total Irish imports from Russia.  The value of services traded with Russia is much higher, however. Ireland’s service exports to Russia were valued at €3,242 million in 2020 (i.e. 1.3% of total service exports). The value of services imported to Ireland from Russia in the same year was €360 million. The main services exported to Russia were computer services (€1,840 million), operational leasing (€926 million), financial services (€81 million) and insurance (€27 million). The main service imports from Russia were business services. Service exports to Ukraine were €647 million in 2020, and imports were €49 million. Impact on economic growth and inflation There is significant uncertainty about the magnitude and duration of the economic impact of the war. However, the OECD, the National Institute of Economic and Social Research in the UK and the European Central Bank (ECB) have all recently attempted to quantify the economic impact.  The OECD estimates that in 2022, the war will reduce global growth by about one percent, from 4.5 percent to 3.5 percent. Global 2022 inflation will increase by 2.5 percent from 4.2 percent to 6.7 percent.   The Euro area economic growth will drop by about 1.4 percent from 4.3 percent to about 2.9 percent. Euro area inflation will increase from 2.7 percent to about five percent in 2022. The estimated impact on the US is almost one percent off the growth rate and 1.5 percent on the inflation rate. The assessment by the National Institute of Economic and Social Research in the UK is a little more optimistic but broadly similar to that of the OECD. Global growth this year may fall by 0.5 percent, while inflation could rise by about three percent.  Next year’s impact will not be as drastic, but it is something to watch out for. In 2023, we will see about one percent less in growth and an added two percent on the inflation rate. Euro area growth this year will fall by 0.9 percent, and inflation will rise from 3.1 percent to 5.5 percent. Euro area growth would be about 1.5 percent lower in 2023, and inflation would be about 0.8 percent higher.  Three economic scenarios The ECB recently undertook a detailed analysis of the economic impact and presented three scenarios (Table 1). In December 2021, the ECB forecast a GDP growth rate of 4.2 percent and 3.2 percent for the Euro area in 2022. These figures were revised in March, following the Russian invasion, to GDP growth of 3.7 percent and inflation of 5.1 percent.  This “baseline projection” assumes that current disruptions to energy supplies and suppressed confidence are temporary and that global supply chains are not significantly affected.  The ECB also produced forecasts based on two more negative but possible scenarios.  The adverse scenario assumes a worsening in all three impact mechanisms of trade, prices and economic confidence. The severe scenario assumes a more significant and prolonged increase in commodity prices, leading to second-round inflation and financial system impacts.  The differences between the severe scenario and the pre-war forecasts here are substantial. The growth rate drops by almost half from 4.2 percent to 2.3 percent, and the inflation rate more than doubles from 3.2 percent to 7.1 percent.  Of course, we do not yet know what the eventual impact of the Russian invasion of Ukraine will be. We can be sure there will be lower growth, and inflation will rise. On the most extreme assumptions, growth could almost halve, and inflation could more than double compared with the forecasts for the Euro area before the invasion. The ECB has also considered the potential longer-term impact of the Ukraine invasion on growth and inflation in the Euro area into 2023 (Table 2).  The news here is relatively positive, in that growth is closer to the ECB’s pre-war forecast of 2.3 percent on the severe assumptions, compared to 2.9 percent in December 2021. The same is true for inflation — 2.7 percent on the severe assumption compared to 1.8 percent in December 2021. Possible economic impact on Ireland Before the Russian invasion of Ukraine, the economy was expected to perform well in 2022. The Stability Programme Update, published by the Department of Finance in April 2021, forecast GDP growth of five percent this year, followed by 3.5 percent in 2023.  Modified domestic demand was expected to grow by 7.4 percent this year and 3.8 percent next. Inflation was expected to be 1.9 percent in 2022 and 1.5 percent in 2023. Up until the invasion of Ukraine, this forecast was expected to be exceeded.  The forecasts underestimated the rise in inflation, however – the October 2021 budget forecast Irish inflation rates of 2.2 percent in 2022 and 1.9 percent in 2023.  Using the relativities of the severe ECB scenario, Ireland might face a growth rate of about 3.5 percent instead of around six percent in 2022 and inflation of eight percent instead of four percent.  The good news is that growth is still likely in Ireland and the Euro area because of the relatively high growth rates before the effects of the war.  Of course, particular sectors face a more daunting situation. Ireland’s aircraft leasing sector has high exposure to Russia, and it is uncertain how this will play out in terms of aircraft recovery.  International tourism was expected to rebound after COVID-19 in 2022, but the war may have a dampening effect, particularly in the case of US tourists. Many enterprises in Ireland have had to pause or end their business activities in, and trade contacts with, Russia. Ireland must now cope with the financial requirements of taking in possibly 100,000 Ukrainian war refugees. However hard this may be, consider the position of Poland with millions of refugees to support. The major immediate economic problem is the very high inflation rate to which the war has contributed but is not entirely responsible. How will consumers and producers cope with the price increases? To what extent can the Government shield households from the effects of rising energy prices?  It is already clear that the economic impact of the war is substantial, and the scale and duration of the impact are still unclear, but, as of now, we should be able to avoid recession. Over the longer term, the economic impact will depend on whether there is a return to the pre-war normal (which is unlikely) and what the new normal will be in terms of trading blocs, continuing sanctions, higher defence spending, cyberwar, political tensions and bank payment systems. Anthony Foley is Emeritus Associate Professor of Economics at Dublin City University Business School.

Private companies that fail to think long-term about ESG reporting risk losing out on funding opportunities. Andrea McAvoy explains why. One of the advantages of a private company structure is greater autonomy over governance. Theoretically, private companies face a lighter burden of bureaucracy than their publicly listed peers, allowing them to be nimbler. Nor do they have to cater to the demands of public shareholders increasingly focused on environmental, social and governance (ESG) factors. Even without these external pressures, however, private companies need to start thinking carefully about their ESG strategy and what it will mean for their long-term future. Times are changing and, in the past year alone, three separate developments have shunted ESG to the forefront of the SME agenda. 1. Regulatory changes The assumption that only listed companies will be subject to increasing ESG regulation is outdated. While ESG regulations introduced by the European Union, such as the Corporate Sustainability Reporting Directive (CSRD) and EU Taxonomy Regulation, will impact large private companies by 2023, their scope will expand to include all small- and medium-sized enterprises (SMEs) by 2026. These new regulations will also have an indirect impact on SMEs, because they will influence their business relationships with listed customers and suppliers. The requirement for ESG data disclosures — in particular, climate-related information — will only continue to grow. 2. Funding requirements ESG is now part of the lexicon of most private fund providers – from private equity to debt and beyond. According to the Pitchbook 2021 Sustainable Investment Survey, 81 percent of general partners are either already evaluating ESG risk factors or will be focusing more on ESG risk factors in the near future. The integrity and diligence of such pre-investment ESG reviews may vary. However, at a minimum, private companies should develop an ESG narrative to prevent excluding themselves from funding opportunities. While most private equity (PE) firms include ESG as a non-financial risk for reviewing investment decisions, some also use it to help identify opportunities for value creation during the deal life cycle. Ensuring that ESG is addressed in all forms, and integrated into a company’s long-term strategy, can help private companies maximise exit value, compete for capital against listed peers, and align with increasing listing requirements. More than 50 percent of the global stock exchanges published ESG reporting guidance last year, compared to just 15 percent in 2015. 3. Commercial longevity In a rapidly evolving world, where the operating landscape is adapting constantly to sudden events — emerging pandemics, climate disasters and social disruptions, for example — a focus on ESG could help SMEs mitigate future risk. Developing a genuine ESG narrative can also support key stakeholder relationships with customers, employees, and communities. Some elements of this narrative will be aligned with immediate outcomes (i.e., how short-term expense will impact the bottom line). Others will relate to the cost of capital or the ease of doing business over the long term. Applying an ESG lens to business strategy can bring broader benefits, however, helping SMEs shift the strategic focus from short- to long-term value creation, measured not just by profit, but also by environmental and social value. Andrea McEvoy is Climate Change and Sustainability Services Senior Manager at EY.

As we embark on shaping the next phase of work, there is a mix of concern and excitement about getting the transition right. Kevin Empey explores what leaders can do with this once-in-a-generation opportunity to mould the future of work here and now. After overseeing the most dramatic shift to work in modern history over the last two years, leaders are now centre stage again with the expectation to guide and lead organisations through an even more complex and tricky phase of work design. As many have remarked in recent months, it was one thing to get people out of the office against the backdrop of a pandemic and a standard set of rules and guidelines for everyone; it is quite another to get people back to a new model of work that is complicated by choice and continuous comparison with what everyone else is doing. Three work phases Most organisations moving to a hybrid or more blended model (remembering that there are thousands of jobs where remote working is not an option) typically agree that we are looking at progressing through at least three phases: Experimental: a tentative, almost experimental type experience that is currently underway for many, influenced by the changing realities of COVID-19. Transitionary: a more deliberate, test and learn and strategic phase, with a transition to different ‘target’ working models that are more sustainable and hopefully free of the constraints and concerns around COVID-19. Most agree that we are also not likely to get this transition perfectly right the first time. Bedding-down: the realities, lived experience and outcomes from the transition to new target models are truly revealed, understood, and implemented over the next couple of years. On the back of these three phases, leaders need to consider two things: The operational and logistical challenge of getting people safely through these phases; and The strategic challenge of creating a new work model, associated people processes, and a leadership approach and culture that is ultimately successful and purpose-built for the organisation and its future. Strategic agility The exact sequencing of these three phases and two workstreams will differ from organisation to organisation. However, there is one foundational quality that will maximise the success of this change-management experience and prepare the organisation and workforce for further inevitable disruption into the future. That quality is strategic agility. Strategic agility is a complex, ambiguous, vulnerable leadership challenge for everyone: organisational leaders, managers, human resources, and employees. But the transition to the next phase of work is also an invaluable case study of agility in action – a case study that we can learn from, experiment with, and embed into our ways of working. The longer-term prize for leaders and employees Over the next 6 to 12 months, the potential prize for organisations is not just a safe and successful transition to a new, post-COVID-19 work model. It is also about using the learning and experience of this transition (along with the lived experience of leaders and employees over the last 22 months) to help organisations develop and embed more agile ways of working, leading and thinking for the future. Being deliberate about developing these skills over the coming months will give us the ability to deal with any change, uncertainly and disruption. Importantly, it means our leaders and our workforces will be able to flourish and thrive in the longer-term future of work and not just respond and cope from one disruption to the next. Conscious development of the sustained and deliberate capability of agility at an organisational, team and individual level will be the long-lasting legacy of COVID-19. And this prize can be won through our combined work over the next year as we go through the experience of co-creating new, successful working models and working lives. Kevin Empey is the Founder and Managing Director of WorkMatters. He is also the author of Thrive in the Future of Work, published in 2021.

Julia Rowan answers your management, leadership, and team development questions. My team works hard and to a high standard, but a couple of people on my team turn every team meeting into a moan about the company. I’m worried that this will affect new team members. The company is a pretty decent employer. What can I do? A. It seems that there are two issues here. First, dealing with the moaning (I will use your word here) and second, making sure that it does not affect new team members. Let’s deal with them separately. When team members moan, our natural tendency can be to jump in, explain, defend, etc. And sometimes that may be the right thing to do, but there is often a “yes but” no-win game being played. There are a couple of things you could do. You could just listen, thank the team member and move on without comment. Or you could listen and ask, “who do you need to talk to about this?” or “who needs to know this?” Or you could have a one-to-one with the moaning team member and try to get under the issue. Only do this if you can be genuinely curious. You could ask questions like “how does that affect how you show up?” and “how can I support you here?” Many people work hard and moan hard, in which case I would praise them for working hard despite their misgivings. If you have a good conversation, you could share your concern that their negativity affects new team members. Loud complainers can create a strong gravitational pull, and you are right to be concerned about their impact on new team members. Make sure to spend plenty of one-to-one time with the new team members, opening up a two-way dialogue, establishing a good feedback relationship, meeting with them regularly, talking about their development, etc. The manager-employee relationship is the most important relationship at work – make sure it’s a good one. I feel my team regressed in the last work from home period. Now we’re working from home again, what can I do to hold the team together? A. Leadership is so important when people are working remotely, as everything is moving online. Five-minute conversations in the canteen often turn into 30-minute Zoom conversations. And you only see your own team and key stakeholders, with none of that easy connection with ‘corridor friends’. Be proactive here. Bring the team together and take some time to review the learning from the last lockdown (what worked well, what worked less well) and invite them to create a set of guidelines (sometimes called a team charter or ground rules) to help them navigate this period. Make this a live document. Check whether it is working and ask, “what else can we do to make this easier for everyone?” You can’t fix this on your own; step back so that the team can lean in. Create a ‘social only’ meeting once a week and get it into people’s diaries. If your team is large, put people into small breakout rooms of two to four people for 15 minutes to give time for connection. If budget permits, send a small gift from time to time. One-to-one check-ins are critical too. Julia Rowan is Principal Consultant at Performance Matters, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie.

A successful COVID-19 vaccine roll-out, a growing economy and shifting priorities – 2021 may not have been the year we expected, but it has definitely delivered change and opportunity. Four members review the challenges they overcame, the surprises they faced and their hopes for the future.  Thady Duggan Senior Manager of CFO & Enterprise Value in Accenture At the beginning of 2021, I was expecting the impact of the pandemic to diminish faster than it did. Given the success of working from home and the fact that we proved, by and large, that many of us can do our job from home, I did not think things would return exactly to the way they were, but I did expect to be in our offices and our client offices more often. The biggest challenge, however, was home schooling. My sister is a teacher and I used to tease her about her holidays – she deserves them! However, professionally, it was continuing to work remotely. We have great collaboration tools and have become smooth at remote workshop facilitation, but there is something to be said for the personal touch. Conversely, because I was working from home, I was able to work on some global projects that I might not otherwise have had the opportunity to do. Under normal circumstances, a portion of my work could be in the UK or, to a lesser degree, Europe, but this year I was able to work with our US team on one of the world’s largest M&A deals. In 2021, I have been pleasantly surprised at how quickly we have galvanised around sustainability and climate. Work was clearly being done over previous years but there seems to be momentum, certainly from individuals and businesses, around these topics that were not there previously. I am also probably a little surprised that the rate of change we saw in the second half of 2020 has not slackened.  After the last year, I take more joy from smaller things and focus on the benefits small actions can have. I have probably done less socially over the past 12 months, but I try to enjoy each activity more. I hope COVID-19 peters out into just being like flu season, and we get back to having face-to-face client engagements again. Stephen Prendiville Head of Sustainability at EY I really didn’t know what to expect of 2021. For a while it was hard to see beyond the next week, not to mind the coming year. But when EY globally stepped out at Davos early in the year and committed to being net-zero in line with science-based targets for 2025, I knew the year was going to be dominated by the pursuit of that commitment. Over the course of 2021, we also became carbon negative, offsetting and removing more carbon than we emit.  On a personal level, it was a year of change. My family and I moved closer to extended family in Donegal and I took on the role of Head of Sustainability. Taking on the role came with a dual purpose: pursuing and supporting our internal sustainability goals at EY, but also structuring our teams to respond to the ever-increasing and challenging focus on the broad concept of sustainability and decarbonisation.  A professional highlight for me this year was representing EY and Irish business at COP26. While the climate diplomacy of COP can be difficult to appreciate, in the wings I had the opportunity to meet people at the cutting edge of technology and business that really do speak to the vastness of our new economic prospects. Prior to COP26, I would have considered that Irish business had a lot of common ground with the Irish Government. What I now see is that both the Irish Government and Irish business have more in common with the climate activist compared to our peers. Ireland can be a great disruptor. When we speak, people listen. We need to use that power not only to help the planet, but also to position ourselves in the new forthcoming global economy. In 2022, we need more dialogue. We need to get deeper on climate action. With the carbon budgets now in place, and the Climate Action Plan 2021 setting a sense of tone of direction, I think 2022 will nurture a great national dialogue and step-change in action for Irish business in particular.  Chalene Gallagher Regulatory Data Senior Associate at the Federal Reserve Bank of New York With everything that happened in the United States last year that served to highlight the inequities faced by minority groups throughout US history, it felt even more important for me to do more in the diversity, equity and inclusion (DE&I) space. The murders of Ahmaud Arbery, George Floyd, Breonna Taylor and too many others felt personal to me. Although I did not grow up in the US, as a black woman, the situations that led to their deaths could just as easily happen to me, a member of my family, or a friend.    The effects of the pandemic also served to compound disparities, as the loss of life and livelihood was felt most by communities of colour and by women who were the predominant employees working in the most impacted industries and who now had to take on more care-giving roles. Although the US and global economies are in recovery mode, it is by no means equitable, creating a K shaped recovery that further serves to highlight the struggles faced by minority groups.    My perspective really changed during the year in that instead of focusing on the feelings of frustration felt in 2020, in 2021, I chose to focus on action. Although I had been balancing my day role as a Regulatory Data Specialist with supporting people and culture-related efforts within the Bank, I personally felt the need to do more. So, I worked with my manager at the start of the year when I became the Vice President of the Women’s Employee Resource Network to intentionally split my time between regulatory reporting analysis and DE&I. Raising awareness, having tough conversations and trying to meet people where they are on their DE&I journey to help move the needle has been a challenge and an emotional investment. But is has been worth it.   Although there is still a lot of work to be done, I feel like we’re moving in the right direction.  For 2022, I hope we can continue to keep these topics at the forefront of the conversations we have in public and behind closed doors so that we can keep the momentum going and make real, tangible and sustainable change.  Sinead Fitzmaurice CEO of TransferMate Global Payments The COVID era has applied pressure to companies’ capital and cash flows, but those who experienced a surge in demand needed immediate information on cash flow and supply chain aspects. As we entered 2021, I expected to see a rise in demand from CFOs for the modernisation of payments infrastructure via digital platforms, and that theme has indeed dominated 2021.   The challenge is always the same: it’s about striking the right balance between personal and professional lives. They are both joined at the hip, like it or not, and both can be stressful in their own way. Striking the right balance is dependent on the talent you surround yourself with, and I am honoured to work with such a talented team at TransferMate who help us achieve our corporate goals daily.  I am always surprised at the resilience of the human spirit and our adaptability in the face of adversity and change. This has been tested to the extreme over the past 20 months in our personal and professional lives. We have a philosophy at TransferMate: “it is our people who make us who we are”. I can honestly say that I am inspired every day by our teams. They consistently rise to any challenge and deliver with utmost professionalism time and time again, regardless of the circumstances. The events of the past 12 months (20 months, actually) have been dominated by COVID-19 and for most of us, our lives have been put ‘on hold’. Yes, we have carried on as best we can within tight constraints, but we still have never really felt completely free. If nothing else, I have come to appreciate the freedoms we had taken for granted – the freedom to interact with people the way I want to, the freedom to travel, etc. In 2022, I hope we emerge from the pandemic for the better; we never forget the sacrifices that people have made as we wrestled with defeating it. I hope we learn not to be complacent about the possibilities of new threats rising and be prepared to defend ourselves when they do. On a professional level, 2022 promises to be a breakout year for my organisation. My goal will be to execute the plan flawlessly and blow through every milestone along that journey to the end of the year for everyone at the company.

Despite persistent and difficult challenges, Dawn McLaughlin is bullish on the north-west’s prospects for 2022 and beyond. This time of year is often a natural time to reflect and contemplate what has happened over the past 12 months. 2021, for all its challenges and difficulties, has been a greater whirlwind than the preceding year in many ways. While still profoundly challenging, businesses have got to grips with issues like the pandemic and the Northern Ireland Protocol, adapting to the challenges before them and seeking new ways of working to meet their customer needs and obligations. I have witnessed the hardship and listened to stories of decimation and uncertainty. But I have also been heartened by how businesses reacted to the crisis, putting their people before themselves. As we look towards 2022 and consider all that it may bring, it is important to look at the challenges we have faced, what we have achieved, how we have progressed, and what still needs to be done. For the north-west, it has been a year of optimism and positivity as well as change and progression. February saw the heads of terms signed off on the £250 million Derry and Strabane City Deal, an investment package that will see 7,000 jobs created over the next decade and an extra £210 million in GVA (gross value added) generated in our regional economy annually. It is difficult to overstate the transformative potential this deal could have for our region – a part of the island that has historically been underfunded, underdeveloped, and under-prioritised. If we get this right, there is an opportunity to carve out the north-west as a leading location in Western Europe for technology, health and life sciences, diagnostics, artificial intelligence, and other emerging industries that will become increasingly important to the global economy over the next decade. It has been a joy to finally see future doctors and consultants training in the city, with the opening of Derry’s new School of Medicine in September. The further expansion of Ulster University’s Magee campus is something that City partners are committed to making a reality, and we will continue to work collaboratively towards this goal. We have welcomed new Executive ministers this year, new MLAs in Foyle, and new party leaders. Ahead of the next Assembly election in Spring 2022, we have been working hard to get our message out there and tell our local candidates precisely what they must support to see our region flourish and prosper. We hope that issues like our regional connectivity and infrastructure, the expansion of our local university, job creation, attracting new investment, and skills development will be front and centre for our elected representatives in May. Specific issues still linger as we look ahead to 2022. Continuing disagreement over the Northern Ireland Protocol does no one any favours, especially businesses. Companies crave certainty, and they thrive when things are stable. While the Protocol is by no means perfect and difficulties are still to be ironed out, these are not insurmountable. Both sides can come to a positive conclusion through committed dialogue, and Northern Ireland can begin to take serious advantage of access to both the UK and EU markets. With growing inflation, a squeezed labour market, and rising costs of materials, services, and utilities, businesses face persisting challenges as we go into the New Year. However, I have spoken regularly about my optimism for the north-west throughout the past 12 months. This optimism has not abated, and I still believe 2022 will be a year of opportunity and prosperity for our region. Dawn McLaughlin FCA is Founder of Dawn McLaughlin & Co. Chartered Accountants  and President of Londonderry Chamber of Commerce.

A recent global compliance study of 890 senior compliance professionals in 25 countries highlights an increasing emphasis on compliance as a value creator. Mairéad Divilly analyses how compliance professionals are factoring in this shift, the benefits to business, and the challenges ahead. Following a year of economic uncertainty arising from the COVID-19 pandemic, businesses worldwide are considering how to extract more value from their operations. The compliance function is no exception. In the past, companies tended to commoditise global compliance, seeing it purely as an overhead. More recently, there is growing evidence that businesses increasingly appreciate both the tangible and intangible values of good global compliance. Analysis of the global compliance survey results suggests that businesses are now much clearer on the benefits and opportunities of good compliance. According to the survey, 58% of compliance professionals now view global compliance as an opportunity to create value rather than an obligation that results in a net cost, as indicated by 37% of respondents. More specifically, 65% of respondents feel that good compliance increases investor confidence, while 64% say it increases client and customer trust and 61% say it helps build a good reputation. The benefits of good global compliance Recognition that good compliance brings returns in the form of a stronger reputation and greater revenue is increasingly evident, particularly when we consider that compliance failures carry significant repercussions. Compliance leaders know the considerable risks of falling short, with 77% saying their business has faced accounting and tax compliance-related issues somewhere in the world during the last five years. These consequences most commonly include reputational damage, internal disciplinary action, and fines. Pivoting from obligation to opportunity Squeezing extra mileage out of good compliance requires businesses to shift their approach from purely tactical to one that sees compliance as a strategic investment. It requires more engagement by top executives to drive real efficiencies, increase opportunities, and become more competitive. It’s an approach not lost on our survey respondents where compliance is seen as a core function of modern businesses, with C-suites devoting more time and attention to proactively managing it. According to the survey, the executive committees and boards engage with compliance at least once a quarter in 75% of businesses, and 39% engage monthly or more. Compliance as a commercial priority featuring more regularly on the calendars of senior leaders is validated by 44% of respondents who say the main reason decision-makers engage is to explore new insights or business opportunities. Only 28% say their senior people primarily focus on compliance to deal with an urgent issue or crisis. So again, we see compliance emerging as a business imperative that drives opportunities and not something seen as low priority or as a reaction to external developments. Reflecting this shift of top management focus is the continued growth of compliance funding, with three in five businesses having increased funding for global compliance over the last year and 68% planning to increase funding in the next five years. Regarding specific funding projects, 73% of respondents predict investment in developing new skills and capacities within teams, while 34% see monitoring external developments in accounting and tax as significant areas for investment. However, the biggest beneficiary of funding will be new technology to achieve compliance goals and drive future improvements, with over 78% of businesses looking to invest in new accounting and tax compliance technology in the next five years and 42% planning a major new investment, according to the survey. This focus on technology is not surprising as 39% of respondents say effective technology is the biggest factor in meeting their compliance goals today. In addition, 45% say new accounting and tax compliance technology will be the most significant factor in the compliance function’s improved performance in five years. Of those who plan to invest in technology, 49% of compliance leaders say artificial intelligence (AI) and machine learning (ML) are their biggest priorities for investment in the next five years. Robotic process automation (RPA) and blockchain are the top priority for 25% and 24%, respectively. Regarding specific compliance function technology-related investments, 38% state that tax compliance will be their priority, while 28% plan to explore the potential of risk management tools. Navigating the challenges ahead Despite this shift to global compliance being viewed as a strategic investment, companies face significant challenges in developing a strategy that takes them to the next level. While 82% of respondents express a high level of confidence in meeting compliance obligations now and in the near future, there is an acknowledgement that the increased complexity of tax rules, new compliance legislation, and the aftermath of COVID-19 will test abilities and compliance functions to the max. According to the survey, some 38% expect the ongoing impacts of the pandemic and increased complexity of compliance to be the two toughest challenges ahead. Meanwhile, 36% expect new legislation in the countries they already operate in to be one of their biggest challenges and 35% cite expansion into new countries. Political disruptions such as those connected to Brexit are also a factor, but are seen as a less likely disruptor with only 23% of respondents citing it as one of their most pressing challenges. Challenges compliance leaders expect to face In contrast, COVID-19 has raised new global challenges with over 75% of compliance leaders saying it has had an impact. The biggest challenge here is remote working, with 52% of respondents citing moving to home environments for work, particularly when in a different country to their employer’s location, has increased compliance needs, adding more pressure on the tax and accounting compliance functions. There is also an acceptance that new legislation and standards are leading to stricter compliance. Over the last few years, compliance reporting obligations not only doubled and sometimes tripled in size, but changes have been complex and fast-moving. As well as seeking the help of experts, the survey highlights that, as discussed above, businesses are investing in technology to leverage compliance functions and meet the need for real-time reporting obligations. While these are welcome improvements, the rise in cybercrime presents an additional risk that needs to be factored in when introducing any technology. Nor are automated and integrated compliance tools risk-free. Machines and algorithms are only as good as the information they are fed. Lack of knowledge remains a significant challenge in meeting compliance obligations, with 42% of respondents citing the need to develop the knowledge and skills of their compliance teams. The combination of skills shortages and the introduction of new technology can often add a new and unexpected layer of risk to the compliance function. Pockets of success lead the way forward The study does, however, highlight pockets of success in navigating the challenges of global compliance. COVID-19, for example, is seen as having a positive impact on individual employees by giving them more flexibility and forcing compliance leaders to become more vigilant. Additionally, while not a new phenomenon, more companies have begun to surpass legislative requirements on tax transparency. Over two-thirds of organisations (70%) voluntarily publish more than the law requires, 45% choose to publish some extra information, while a quarter publishes extensive, detailed information well above what is required by law. Tax transparency is now seen as a microcosm of the broader compliance story. Over one-third (36%) of compliance leaders cite building trust with tax authorities, politicians, and regulators as a key benefit of publishing extra information about the taxes their business pays. Plus, a third say improving their organisation’s public reputation is a crucial benefit of enhanced tax transparency. A further measure we see implemented by businesses that goes above and beyond is the inclusion of compliance strategies in annual reports. This sends a strong message to regulators and clients that can help improve company reputations. Looking ahead, we can expect tax transparency to evolve and measures like publicly available country-by-country reporting to become the norm. While large multinationals are likely to take the lead, tax transparency appears high on the agenda of all businesses irrespective of size and location, according to the survey. The global findings demonstrate that compliance professionals are also aware of the future direction of travel. Compliance-related demands on businesses will increase, leading to the dedication of more resources to meet compliance goals. At the same time, over half of businesses expect meeting compliance requirements to be more challenging in the future. Next steps In terms of the next steps, businesses should review and refresh their organisational setup and compliance functions to adapt to changing circumstances. This will include focusing on regulation as well as management processes to reduce risk and seize opportunities. Anticipating new laws and having the ability to react is vital. In particular, firms must understand their limitations to mitigate the risks linked to compliance. Nurturing agility will allow leaders to anticipate changes so their teams can keep up with global compliance rather than being hindered by it. The return on compliance investment may often be indirect and hard-won, but it should never be underestimated given its importance to growing businesses. Technology can also help companies with global compliance, but the development of skills and knowledge has to be addressed simultaneously. Using internal and external expertise to find the right balance between humans and technology is essential. With over a third of international respondents citing a more complex global compliance landscape as a significant challenge over the next five years, it’s clear that increased complexity will be a feature for years to come. As a result, businesses planning to expand globally will need to be secure in their ability to comply with employment, taxation, payroll, and company legislation in other jurisdictions. As the study demonstrates, when global compliance is done well, it builds investor confidence, increases client and customer trust, and shapes a positive reputation with the outside world. Shifting compliance from an obligation to an opportunity is something all businesses should now explore. Mairéad Divilly is Lead Partner, Outsourcing and Compliance Services, at Mazars Ireland.

Dr Brian Keegan explains why less is often more when it comes to the written word, despite the innate tendency to elaborate rather than edit. The first draft standard from the International Sustainability Standards Board (ISSB) was published last month. Dealing with climate, it runs to a mere 39 pages. But then you have to add on the appendices, which run to well over 500 pages. Even though it is still in draft, that’s a lot of material for people to get their heads around. There will be changes before it is finalised, and I wouldn’t bet that those changes will make it shorter. James Joyce rarely cut sentences when he edited his own work; he just added more words. Many of us subscribe to the Joycean approach. The business and regulatory environment has undoubtedly become more complex. That has a bearing on the volume of information we need to process, but it is not the only reason. Annual reports are growing in length; witness the growth in the size of the published accounts the Leinster Society considers and awards each year. Senior figures in the profession are now predicting the emergence of a more narrative form of assurance on corporate results. More reporting reflects business complexity and stakeholder expectations, of which the new ISSB draft standard is a paradigm example. Much of what we write shows a desire to be seen to have written rather than showing that we want to be read. We may literally be the authors of our own misfortune. Copy and paste functions aid and abet the blossoming of word counts. In this age of email and social media, it is trivial to point out that it is easier to send than to receive; it is certainly quicker. By tolerating this growth, we all do ourselves a disservice. One distinguished senior member and non-executive director put it succinctly to me earlier in the year, as he glumly surveyed yet another multi-volume set of board materials. The bigger the pile of papers, the more it suggested to him that the board didn’t trust management, that management didn’t trust the board, and that everyone assumed that everyone else had too much time on their hands. Even if none of that was true, it would be hard to disprove given the evidence. The tide may be turning, at least in some quarters. Many websites and journals now advertise the length of time it will take to read an article. This tactic is not without its risks either, as it insults fast readers and panics slow ones. Yet, we communicate best when the reader is minded to hear what we have to say. An assurance that the communication won’t take up too much of their time is a good way of getting an audience onside. The French philosopher, Blaise Pascal, is credited with first making the excuse for something he wrote being too long – because he had no time to make it shorter. Time cutting the verbiage is time well spent; the reader is much more likely to hear the message, but it’s not easy. We need to stop hiding behind executive summaries and elevator pitches and instead manage better what we write in the first place. I propose to lead by example. This column is supposed to be 600 words long, but it will be a little shorter this month. I hope the editor is okay with that. I hope you are too. Dr Brian Keegan is Director of Advocacy and Voice at Chartered Accountants Ireland.

Julia Rowan answers your management, leadership, and team development questions. Q. I get no feedback from my boss unless he’s unhappy about my work. I work hard and give the people on my team plenty of feedback, but I feel very unsure of myself. A. Of course, your boss should give you feedback. You could try to change him, but (and sorry for the cliché) the only person you can change is yourself. So, let’s look at what’s happening for you: your boss is not communicating with you and you are telling yourself a story (he doesn’t appreciate me, my work is sub-standard) that undermines your confidence. What if you trusted yourself and told yourself a different story? For example, ‘Isn’t it great that my busy boss can cut to the chase about my work?’ or ‘Isn’t it interesting that somebody that senior does not see the importance of giving feedback?’ These stories free you from feeling bad about your boss’s behaviour and allow you to be easier with the situation. Funnily enough, when we lose our anxiety, what we are searching for often manifests. As there is little communication, it could be an idea to write a short weekly email to your boss outlining, for example: Three main things your team progressed/achieved this week; Three main priorities for next week; and Issues impacting the team. That way, you build up a record of communication about progress centred on goals and priorities. Then, your boss will be aware of what’s going on and can respond if he chooses. On another note, it may be useful to pay special attention to your longer-term career development. Think about what you really want in the short- to medium-term (lead a team, manage a project, broaden your capabilities, specialise) and find someone who can be a listening ear. Also, focus on building relationships across your organisation to create a wider network of people who can support you. Q. I’ve just been appointed to lead the dream team. They’re hard-working and talented. But I can’t believe they gave me the job, and I wonder if I’m the right manager for them. A. If this team is experienced and motivated, they don’t need much direction – you could focus on coaching and facilitating the team, both individually and as a group. Here are a few things you could do: Develop your coaching skills. Coaching is a great way to build people’s competence and confidence through questioning and listening. It also helps the leader to work from a more strategic place. Help the team become more self-sufficient by locating and sharing resources and encouraging team members to share challenges and opportunities. Use your team meetings to challenge the team. Ask them where they want to get to – both individually and as a team – and start planning your way there. More importantly, you need to give that imposter syndrome the heave-ho. You got the job for a reason (if it helps, ask the interviewers why they chose you), but leaders need to develop a special blend of ‘confident humility’ – the confidence to acknowledge their strengths and the humility to keep learning. We do everyone a favour when we acknowledge our strengths; by acknowledging them, we make them available to others. Julia Rowan is Principal Consultant at Performance Matters, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie.

Bríd Heffernan provides an update one year after the Monitoring Group issued its proposed reforms to international standard-setting boards. In July 2020, the Monitoring Group issued its much-anticipated paper outlining reforms to the international standard-setting boards – namely, the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA). This article will reflect on the reforms proposed in the July 2020 Monitoring Group paper and analyse where the reforms stand one year on. The journey so far The Monitoring Group is a group of international financial institutions and regulatory bodies committed to advancing the public interest in international audit standard-setting and audit quality. The last set of reforms faced by the standard-setting boards were agreed to in 2003 by the International Federation of Accountants (IFAC) and the Monitoring Group. These 2003 reforms created the Public Interest Oversight Board (PIOB), which was tasked with increasing investor and stakeholder confidence in the standard-setting boards and ensuring that standards are responsive to the public interest. The 2003 reforms put IESBA and IAASB under the oversight of the PIOB, thus making them independent of IFAC. This, in turn, led to IFAC providing support to the standard-setting boards. The proposed July 2020 reforms do not change this structure, but they do propose changes to address the Monitoring Group’s concerns. Effectiveness reviews were built into the 2003 reforms. Every five years or so, the Monitoring Group conducts an effectiveness review and makes recommendations to improve the system. In the early reviews, the recommendations were made and agreed upon, and enhancements were implemented. However, the most recent review in 2015 resulted in the 2017 Monitoring Group consultation paper. Since then, there has been extensive discussion between the Monitoring Group, IFAC and other stakeholders culminating in the issuance of the July 2020 Monitoring Group paper. Monitoring Group concerns The July 2020 Monitoring Group paper titled Strengthening the International Audit and Ethics Standard-Setting System set out recommendations for reforming the standard-setting process. Below is an overview of the Monitoring Group’s main concerns that led to the recommendations, which are also discussed later in this article. The public interest is not given sufficient weight throughout the standard-setting process. Stakeholder confidence in the standards is adversely affected as a result of the perception of undue influence of the accountancy profession on the following two grounds: IFAC’s role in funding and supporting the standard-setting boards and running the nominations process; and Audit firms and professional accountancy organisations providing the majority of standard-setting board members. Standards are not as timely and relevant as they need to be in a rapidly changing environment. IFAC’s response As IFAC operationally runs the standard-setting boards, the Monitoring Group’s concerns and recommendations directly impact IFAC. In an update to its members, IFAC’s Chief Executive, Kevin Dancey, stated that IFAC was focused on agreeing on a workable set of changes that would enhance stakeholders’ trust and confidence in the standard-setting process. These reforms also provide an opportunity for IFAC to address its own issues with the current process, which are: That PIOB members are almost exclusively from a regulatory background. IFAC believes that the PIOB should have a multi-stakeholder composition and perspective. That the PIOB must be more transparent, and there is a need for clarity on its role and the role of the standard-setting boards and how the PIOB carries out its mandate. 2020 recommendations  The July 2020 Monitoring Group paper proposals retain the two standard-setting boards with the same mandates, and they will be retained in a similar size (16 members, down from 18 members). The respective roles of the PIOB and the standard-setting boards are also clarified. The Monitoring Group’s proposals clarify that the standard-setting boards are responsible for developing, approving and issuing the standards. The role of the PIOB is oversight. Combined with making the workings of the PIOB more transparent, this is a step forward. Responsibility for ensuring that the standards were responsive to the public interest was a source of confusion in the past. Was this the responsibility of the standard-setting boards or the PIOB? The July 2020 Monitoring Group paper contains a public interest framework, which confirms that it is the standard-setting boards’ responsibility to certify that the standards are responsive to the public interest. The PIOB will also have to certify that the standards are responsive to the public interest as part of its oversight function. Both the PIOB and the standard-setting boards will have a multi-stakeholder composition. For the PIOB, this means that its members will not simply be representatives of the Monitoring Group members. And for the standard-setting boards, this will ensure a diversity of views at the standard-setting table. Recognition of the significant role of both IFAC and the accountancy profession is a key improvement over the 2017 consultation paper. Current practitioners can still become members of the standard-setting boards, up to a maximum of five practitioners. Impact of the changes on IFAC With respect to IFAC, its ongoing role has been acknowledged in the July 2020 Monitoring Group paper: IFAC will continue to provide operational support to the standard-setting boards, the only difference being that it will be set out in a formal service level agreement. IFAC’s role in adopting and implementing the standards, promoting the standards, and monitoring their adoption and implementation has been acknowledged as an important ongoing responsibility. There will be a change to the nominations process for IAASB and IESBA members, however. The process is currently run by the IFAC Nominating Committee, which is chaired by the IFAC president. To ensure adequate independence in the nominations process and ensure good governance, the July 2020 Monitoring Group paper recommends that the nominations process sit under the supervision of the PIOB. The legal structure will also change. Currently, the standard-setting boards are committees of IFAC. The July 2020 Monitoring Group paper calls for the standard-setting boards to sit under a separate legal entity, independent to IFAC. Furthermore, changes have been recommended to the staffing model for the standard-setting boards. The proposals call for an increased staff complement and for staff to have greater responsibility for drafting the standards with less responsibility in the hands of the standard-setting boards. Since IFAC provides operational support for the standard-setting boards, this request for an increased staff complement will impact IFAC. Transition planning phase It was assumed by many observers that, with the issuance of the July 2020 Monitoring Group paper, all would be known. However, five years after the initial review, the reform process is only at the end of the beginning, seeing as many of the details remain unresolved. According to IFAC, the July 2020 paper is a significant improvement on the proposals outlined in the 2017 consultation paper. It is evolutionary rather than revolutionary. It sets out several high-level recommendations and principles that can be worked with. Right now, IFAC and the Monitoring Group are in the transition planning phase of the reforms – but many outstanding items must yet be worked through. The transition planning phase consists of IFAC and the Monitoring Group developing an implementation plan by participating in 26 workstreams. The goal is to work through all outstanding issues and finalise the recommendations in 2021. The implementation of the recommendations will then take place over the next three years, up to 2024. The changes will be phased in to ensure a smooth transition and no disruption to the current standard-setting process. Funding of the reforms  It is clear from the July 2020 paper that there is no new funding model. The profession’s resources were stretched before COVID-19, and this limitation will be exacerbated post-pandemic. This represents a significant fiscal constraint on implementing the reforms. IFAC’s funding for 2021 is down 13.5% from 2018, and there is no improvement anticipated in the funding outlook beyond 2021. Therefore, a key challenge is to reconcile the cost of the Monitoring Group’s recommendations to the funding available. Next steps As noted, the process is currently in the transition planning phase. The goal is to resolve all outstanding issues in 2021 while reconciling the cost of the recommendations to the funding available and reaching a deal on the phased implementation of agreed changes by 2024. While there is a long way to go before the reforms are implemented, it is positive to see progress that ultimately serves the public interest. Bríd Heffernan is Associations & Institutions Leader at Chartered Accountants Ireland.

Jane O’Hanlon explains the common tax-related issues facing members in business and how to deal with them before Revenue comes knocking. As a tax advisor working in a specialised tax practice, I encounter similar tax issues in various businesses. This article will focus on the most critical issues and help ensure that your business is tax compliant. What should I do when Revenue knocks on my door? The answer to this depends on the nature of the knock! Any correspondence issued by Revenue must be looked at carefully to understand the purpose of the query. A letter might issue from Revenue with queries due to an incorrect entry on a tax return (referred to as an ‘Aspect Query’ letter). Where a business files a VAT return and is in a VAT recovery position, standard VAT verification letters are often issued by Revenue seeking documentation to support the VAT refund due. This type of correspondence is routine and while it should be dealt with promptly, it should not result in undue concern. If an error is discovered as you prepare your response, it is usually possible to make a ‘qualifying disclosure’ to Revenue. By making a qualifying disclosure, you can reduce the penalties payable, avoid prosecution, and avoid publication in the list of tax defaulters. A disclosure is unprompted if it is made before notification of a Revenue audit is received. Any disclosures in relation to items covered by the audit made after the audit notice is received is prompted, and the penalty reductions for unprompted disclosures are higher than for prompted disclosures. However, Revenue recently indicated that it intends to move disclosures made by a business under an ‘Aspect Query’ to the ‘Prompted Disclosure’ category. Although publication can still be avoided, higher rates will be applicable if penalties apply. When a Revenue audit letter issues, depending on the tax head and the period covered, the taxpayer should conduct a full review of all tax matters. Common problems include businesses making cash payments to casual staff without PAYE, incorrect claiming of VAT input credits, incorrect operation of benefit-in-kind (BIK), and incorrectly claiming a tax deduction for income or corporation tax purposes. When that audit letter is received, it is essential to at once consider whether the business will need to make a prompted qualifying disclosure. If it does, it can write to the Revenue auditor requesting time to prepare the disclosure. In my experience, the time spent at this stage is well worth it as it often results in the audit running more smoothly and concluding promptly. It is not in the interest of any business to have an audit process continue any longer than it needs to. Therefore, it is crucial to ensure that a full disclosure, if needed, is made and that all supporting documentation is gathered and available to the auditor. Cooperation is the best policy. * Review your tax compliance position on VAT and PAYE. Cooperation is the best policy when dealing with Revenue and, if necessary, make a voluntary disclosure. What VAT can I recover? At a high level, VAT can only be recovered by a business providing VATable products or services. This means that the business charges VAT on sales to customers. You may think that a business providing only products or services subject to VAT can recover all VAT charged by its suppliers. However, that is not the case. It is never possible to recover VAT on the purchase of food and drink items for use in an office kitchen. I frequently encounter cases where VAT is being reclaimed on bottled water purchased by the business, for example. Similarly, if a business owner purchases items for personal use, VAT should not be recovered as that purchase has not been made to provide taxable (i.e. VATable) supplies. Furthermore, if a company carries on a trade and owns several rental properties, you must determine if the expense relates to the trade or the rental properties. For example, if repairs are carried out on the business premises and all supplies by the business are liable to VAT, the VAT charged can be recovered. However, if repairs are carried out on a rented residential apartment owned by the business, the VAT cannot be recovered as the rental income from the residential apartment is not liable to VAT. In summary, consideration must be given to each invoice to determine if the business can recover the VAT charged. In addition, businesses can recover 20% of the VAT incurred on the acquisition or leasing of a car, provided it is used for business purposes at least 60% of the time. Businesses must also be aware that, in most cases, the supplier will not have charged VAT when the business purchases goods or services from outside Ireland. The business must self-account for Irish VAT at the appropriate rate and claim an input credit if it is entitled to do so. If foreign VAT has been charged, the business should satisfy itself that this is correct before payment is made to the supplier. A business cannot include an input credit in an Irish VAT return for foreign VAT charged. A business can only include a claim for a VAT input credit where a valid VAT invoice has been received. Accounts payable staff should be trained to ensure that all invoices are valid VAT invoices before settling them. It is easier to seek a proper invoice from a supplier when the invoice has not yet been paid. * Check that you are correctly claiming VAT input credit on cars and foreign purchases. How long do I need to keep documentation for? In general, documents must be kept for six years after the tax year in question. However, that is not as straightforward as it may sound. For example, I know of one situation where an individual claimed capital allowances on a building, with the capital allowances available over seven years. The tax return covering the sixth year in which the allowances were available was selected for verification three years after the return was filed, and Revenue sought copies of documentation to confirm the nature and the availability of the allowances. In this case, the taxpayer needed to provide documentation from nine years earlier. The key point from a tax perspective is that the burden of proof rests with the taxpayer. Therefore, you need to ensure that you can prove your entitlement to a deduction for any expenses or any capital allowance claimed in your tax return. Many recent tax appeals decisions have referred to this point. An Appeals Commissioner cannot decide a case in favour of a taxpayer where the taxpayer cannot discharge the burden of proof. Regarding an asset that is a capital asset, it will be necessary to keep documentation for six years after the property is disposed of. If a property was bought in 2000 and sold in 2021, for example, documentation regarding the purchase of that asset must be retained until 2027. Doing so enables you to prove your entitlement to a deduction for the costs of acquisition incurred in 2000 in determining the capital gains tax payable (or indeed the capital loss) on the disposal of the asset. The retention of documentation is also important in the context of VAT and the Capital Goods Scheme. When an asset is disposed of, the vendor is often obliged to complete Pre-Contract VAT Enquiries (PCVE) as part of the sales process. The PCVE contain full details of the purchase/development of the property, how it has been used since it was acquired, and how it is currently being used. To determine the correct VAT treatment of the sale, there can be no gaps in terms of how the property has been used. It is easier to maintain this information on a contemporaneous basis rather than pulling together information on all prior years as you prepare to sell the property. * Review your document retention policy as in some cases, you may need to keep certain records for more than six years. How do I ensure compliance with BIK rules on the provision of company cars? Employers who provide employees with company cars are obliged to keep contemporaneous records of business mileage. BIK operates by applying a percentage rate to the original market value of the car provided to the employee (other than electric cars, where different rules apply). The applicable percentage depends on the annual business mileage driven by the employee and ranges from 30% down to 6%. If any rate other than 30% is used, the employer must be able to prove the business mileage. Where an employee is provided with a car, they must complete a monthly log of the business journeys for their employers. While the tax is payable by the employee, the obligation is on the employer to operate the tax correctly. In addition, if the vehicle provided is a commercial vehicle or a van, the appropriate BIK rate is 5% regardless of the business mileage. * Review how you are calculating PAYE on the BIK on company cars and keep appropriate contemporaneous records of staff business mileage. What information does my tax advisor need to prepare my tax return? Where your accountant prepares your business’s financial statements, they will generally have sufficient information to prepare an accurate tax return. Where the financial statements are prepared by the business and provided to the tax advisor, however, they will generally need answers to the following questions: Are all expenses incurred wholly and exclusively for the purpose of the trade? For example, consider business entertainment, charitable and political donations, personal expenditure, and expenses paid for by the business that may not relate to that business. Was the employer’s pension contribution paid during the year, or is there an accrual in the profit and loss account? A tax deduction is only available on a paid basis. Can you provide an analysis of professional and legal fees? Fees that relate to capital transactions (e.g. asset purchases/sales) are not deductible in calculating trading profits. Can you provide a schedule of fixed asset additions to include the date of acquisition, the cost of acquisition, and the nature of the asset? Also, can you provide a schedule of fixed asset disposals so that accurate capital allowances claims and balancing charges/allowances can be prepared? Can you provide a reconciliation of any finance lease creditors from the opening position to the closing position? Can you provide a schedule of directors’ remuneration split by director? Can you provide details of any dividends or distributions paid during the year? Can you provide details of any non-trading income? Where medical insurance is paid on behalf of the staff, can you provide details of the tax relief at source (TRS) amount and confirm whether the gross or net amount has been included in the profit and loss account? * Save time and fees by completing the checklist your tax advisor will need to prepare your tax return. These issues occur in a wide range of businesses. You should aim to ensure that your business is compliant with tax legislation on an ongoing basis. Careful consideration should be given to amending any errors you discover – before you get that knock on the door. Jane O’Hanlon is a Director at Purcell McQuillan and a Fellow of Chartered Accountants Ireland.

In an age of information overload, what websites and internet resources can someone who wants to keep up-to-date with the world of finance and financial management rely on? Here’s Cormac Lucey’s selection. For daily business news… The RTÉ website offers us the opportunity to read the daily survey of business and financial news published by the main Dublin stockbrokers. This is not just a useful survey of the previous day’s financial economic news, it also offers readers the opportunity to understand how financially literate readers view that news.   Visit www.rte.ie/news/markets/broker_reports (and check out Goodbody Stockbrokers). For detailed financial data on leading Irish corporates… I opened up an account with Davy Stockbrokers largely to get access to the company’s Weekly Book. That is a compendium of corporate data for quoted companies covering recent financial history, near-term financial forecasts and key valuation metrics. For avid financial number crunchers such as myself, it’s the equivalent of crack cocaine! Visit www.davy.ie  For an up-to-date overview of the Irish economy… The National Treasury Management Agency (NTMA) borrows money on behalf of the State. That requires regularly updating international debt investors (who may buy Irish government debt) on economic developments here. Visit www.ntma.ie (and look for ‘Investor Presentation’).  For an overview of the Northern Ireland economy… EY’s Chief Economist, Neil Gibson, provides a regular and authoritative update on what is going on up North.  Visit www.ey.com (and search for ‘EY Economic Eye: Northern Ireland’). For a global economic overview from a monetary perspective… Simon Ward, Janus Henderson’s economic adviser, uses monetary and cycle analysis to assess economic and market prospects. Visit www.moneymovesmarkets.com For general trends in financial management… Two large international consultancies offer regular publications that combine a focus on the practical problems facing financial staff in corporations with intellectual rigour.  Visit www.mckinsey.com (and search for McKinsey on Finance, which offers readers a quarterly selection of useful and stimulating articles). Visit www.bcg.com/capabilities/corporate-finance-strategy/insights, which offers regular corporate finance updates. For current developments in international markets… The Financial Times has an excellent capital markets blog (www.ft.com/alphaville), and there is an offshoot of that (www.ftalphaville.ft.com/longroom/home) on which you can (once registered) access interesting research reports from the world’s top investment banks. Another website where you can access high-level research reports from investment banks is www.savvyinvestor.net (registration required). For the technical situation of main financial markets… Steve Blumenthal, executive chair of Capital Management Group, produces a useful technical survey of the main US markets each week.  Visit www.cmgwealth.com/ri-category/on-my-radar  For financial chatter, conspiracy theories and the occasional blinding insight... It’s all available here: www.zerohedge.com  Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.

As businesses across the island of Ireland grapple with the post-Brexit trading environment, any and all opportunities for growth should be grasped with both hands, writes Dawn McLaughlin. The new trading arrangements brought about by Brexit and the Northern Ireland Protocol have caused much economic and political upheaval and controversy since the turn of the year. We are all well versed by now in the arguments for and against the Protocol. However, it remains the case that businesses, in the main, are largely supportive of the new arrangements in the absence of any better solutions. While no one would claim that it is a perfect situation, for businesses in Northern Ireland – particularly those in the north-west border region – there are advantages. Being able to trade freely with the rest of the UK and into the EU and the rest of the island of Ireland is a distinct competitive advantage afforded to businesses on one side of the Derry-Donegal border that isn’t available to the other. Another positive consequence has seen north-south trade in Ireland boom since the start of 2021. It has increased by over 60%, according to the Central Statistics Office’s most recent figures. Some local businesses have begun trading with their southern neighbours for the first time, shifting supply chains and finding new markets and customers. However, many of these businesses will not have realised that they are technically exporting their goods or services, often considered to be the preserve of shipping products across the world. The Londonderry Chamber of Commerce, in collaboration with our partners at Invest Northern Ireland, Derry City and Strabane District Council, InterTradeIreland, and Enterprise North West, have established Growth North West. This partnership is developing new initiatives to help businesses grow their operations across several business areas, such as exporting and innovation. Focusing on the export journey first, experts will cover different aspects of the exporting process to show attendees how to make the most of the export opportunities available to them. Then, businesses can schedule a one-on-one appointment for a more bespoke review of their exporting needs and challenges. This covers everything from export documentation, logistics and sales prospecting to maximising social media and perfecting your pitch. Growth North West is a one-stop-shop for everything your business needs to begin expanding into new markets and trading with new customers. As well as a series of monthly webinars, a mapping exercise has been carried out detailing all available export support. As a sole practitioner, I know that keeping up-to-date with ever-changing programmes and supports is hugely time-consuming. So, to help Chartered Accountants add value and guide clients on their export journey, Growth North West will hold awareness sessions in the coming months. These sessions will be publicised through the Chamber and are open to all. We look forward to engaging with businesses of all kinds, shapes and sizes as they begin or expand their export operations. There are significant opportunities for our local firms, both beyond these shores and on our shared island. As we all grapple with the post-Brexit trading environment, any and all opportunities for growth should be grasped with both hands. Growth North West aims to deliver stimulation and growth opportunities for our region at a time of economic uncertainty and upheaval. Throughout the pandemic, firms have been innovating their services and pivoting their operations to stay afloat. Looking outwards at new export markets is one way our local businesses can positively react to both the effects of the pandemic and the UK leaving the EU. Dawn McLaughlin is Founder of Dawn McLaughlin & Co. Chartered Accountants and President of Londonderry Chamber of Commerce.

David Swinburne outlines the practical considerations for members as they prepare to deal with the Small Company Administrative Rescue Process. With the much-anticipated legislation for the Small Company Administrative Rescue Process (SCARP) ready to be enacted, it will be interesting to see how the process evolves. SCARP aims to rescue struggling businesses that form the backbone of the Irish economy – small and micro companies. These SMEs provide the greatest number of jobs in Ireland. The process, by and large, mirrors the successful examinership process, which has been around for 30 years. However, the costs associated with SCARP are expected to be significantly lower than those associated with examinership. Under SCARP, there is no automatic involvement of the Court. Therefore, the costs associated with legal representation for both the company and the examiner are not applicable. Under SCARP, a company does not have protection from its creditors. However, there is the comfort that the Court is there should it be required. Of course, if recourse to the Court is required, costs will increase. What should a company or its external accountant be doing now? In a typical examinership case, there is invariably some event that occurs at very short notice or an unforeseen shock that pushes the company into insolvency. This, in turn, leads to an urgent application to Court for protection and the appointment of an examiner. Thus, the process for the duration of the examinership becomes a pressure cooker. For SCARP to be successful, planning at a very early stage and engagement with an insolvency practitioner (known as the ‘process advisor’ under SCARP) is vital. The insolvency practitioner will need to quickly assess whether or not the company is a suitable candidate for SCARP. The company can only be a suitable candidate if it has the prospect of survival, which means that it must be viable. Before commencing the SCARP process, the company will therefore need to determine (in as far as it can) that there is a strong likelihood that it will emerge successfully out the other end. For this, it must have a viable core business and source sufficient financial resources to fund the SCARP (if its creditors are to be settled immediately instead of over a period of time). The company’s stakeholders will want certainty on the outcome for them. This will form their decision as to whether or not they will support, and therefore vote in favour of, the SCARP. Fail to plan, plan to fail Early engagement with an insolvency practitioner will also allow them to identify creditors that are likely to be more challenging to deal with in the SCARP due to the complexity of the contractual relationship between such a creditor and the company. Such creditors may include landlords and others to whom the company has more onerous obligations. These creditors can be dealt with under SCARP (subject to their consent). However, if the issues are likely to be difficult to resolve, an application to Court may be required. Identifying such creditors before the process begins will be crucial in setting out the options and, consequently, the further anticipated costs that may arise in dealing with them. Based on recent applications before the High Court, it is evident that the Court will want the company to endeavour to engage with creditors and attempt to resolve difficulties before bringing the matter before the Court. Therefore, the Court should not be the first port of call in resolving issues with any creditor. Excludable debt The possibility for State creditors (with a particular focus on Revenue, which is likely to be a creditor in any SCARP scheme) to opt-out of the process has generated mixed reactions. In my experience, however, Revenue is not a blocker. Instead, it is – and will continue to be – supportive of company restructurings, whether informal or formal (i.e. SCARP or examinership). For Revenue to take such a supportive stance, the company and its directors will need to have a compliant and transparent record in their dealings with Revenue. Therefore, companies must continue to meet their Revenue filing obligations – even in circumstances where the company has warehoused debt and is not in a position to discharge its ongoing taxes as and when they fall due. Directors’ duties Under SCARP, there is a requirement for the process advisor to report any offence to the Director of Public Prosecutions (DPP) and the Office for the Director of Corporate Enforcement (ODCE). It is therefore vital that all directors act honestly and responsibly at all times. When will SCARP cases commence? There is a view that as long as COVID-19 State supports are in place, companies will not succumb to the pressure that they may face after the removal of all State supports. However, not all Irish entities are receiving State support. And those that are not are heavily reliant on their trading partners to discharge their obligations to ensure their own survival and future success. Formal insolvencies are at an all-time low. Given the impact of the last 17 months on the economy, you would expect insolvencies to have increased, not decreased. There is no doubt that the various extensive State supports, coupled with payment breaks and holiday periods from other key creditors and stakeholders, have ensured the continued survival of businesses that would otherwise have run out of cash. As the ‘new normal’ continues to be rolled out and we all adjust and adapt, creditors will be forced to become more active in their efforts to collect cash and recover amounts owing. This is when a company becomes vulnerable in terms of its future survival and direction, as its creditors start to take matters into their own hands. Control in terms of survival will quickly switch from being with a company to its creditor(s). Therefore, as highlighted above, early engagement with an insolvency practitioner and an assessment of SCARP as a credible option is a must. Time-frame The end-to-end time-frame for a SCARP is much shorter than examinership (70 days versus 150 days), which means that much preparatory work will take place before the SCARP is formally kicked off by the directors via a resolution and the appointment of the process advisor. Getting difficult and challenging creditors onside is time-consuming. If certain creditors are unlikely to be supportive before the commencement of the SCARP, it is more likely that they will object to it. This will result in an automatic application to Court to seek approval for the SCARP, which impacts the certainty of the outcome for the company, its employees, and its consenting creditors. What should I do next? If one of your clients is struggling now or is highly likely to struggle in the future, or you own or lead an SME that is eligible for SCARP (see sidebar), you should consult now with an experienced insolvency practitioner. David Swinburne FCA is an insolvency practitioner and Advisory Partner at FitzGerald Legal & Advisory, Cork. SCARP eligibility An SME will be eligible for SCARP if it satisfies two of the following three criteria: Turnover of up to €12 million; A balance sheet of up to €6 million; and/or Up to 50 employees.

Dr Brian Keegan takes the jobs theory of David Graeber to task, arguing that he fundamentally missed the point of the work that he deemed superfluous. As we emerge from pandemic lockdowns, people are realising that at least some of the work totems that we have subscribed to all our working lives were false gods. Many (though by no means all) businesses have recognised that working from home can be a successful and efficient way to carry out white-collar work, if only for some of the time. The tumbling of the ever-present-in-the-office totem may also foster a notion that a four-day working week, for the same pay, might be just as productive as the five-day week grind. The idea is not new. John Maynard Keynes theorised in the 1930s that, with the advent of technology, we could all possibly produce as much with just a two-day working week. At least one Irish trade union is taking up the short week cudgel, but among its most vociferous advocates was David Graeber, a professor at the London School of Economics and author of Bullshit Jobs: A Theory. Graeber is possibly best known for the latter, which outlines his theory on pointless jobs that exist, as he put it, just for the sake of keeping us all working. Graeber kept a “little list” of such occupations, though in practice, it was a long list of salaried professionals whose work he thought would not be missed were they to stop doing it. A world without nurses, refuse collectors, mechanics, teachers or dockworkers would soon be in trouble. Graeber wanted to know if the same could be said if we had no lobbyists, actuaries, telemarketers or legal consultants? Or even, perhaps, accountants. Most people, irrespective of what they do, have spent Graeber-esque days wondering if their jobs have any real meaning. Graeber’s theory may not differ from other economic or management theories that encapsulate a solitary insight but get pushed too far. The Peter Principle says that everyone ultimately gets promoted to their level of incompetence, beyond which they will go no further. That doesn’t, however, describe all career trajectories or the management structure of most successful organisations. Similarly, Parkinson’s law, which posits that work expands to fill the time available, also misses a fundamental point. As society progresses and demands higher standards, the same tasks take longer because the demand is there to do them better. Graeber’s theory falls down because it misses the point of the work he deems superfluous. Every society needs its members to share a commonality of goals, aspirations and standards. There are few processes slower and more tedious than the political process, with a small ‘p’ rather than a capital ‘P’. So many of the jobs dismissed by Graeber contribute to the creation of society’s culture, structure and shared understanding. That requires a degree of patience often lacking in an anarchic perspective like his. Many such jobs are also meaningful to those who do them and thus confer dignity to their time and effort. There is a maxim among anthropologists that fish don’t see the water they swim in, so the discipline’s contribution is to point it out. Equally, however, academics and theoreticians don’t always see that they themselves are swimming in an environment supported by the kind of work decried by Graeber. So, perhaps the real contribution of Graeber’s theory is to serve as a hazard warning for the rarefied academic environment from which it emanated. But then again, maybe a four-day week isn’t such a bad idea… Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.