Rachel Hussey explains how well-defined and inclusive work allocation practices can boost your colleagues’ career potential. One of the most common and unconscious ways in which old hierarchies are preserved in professional services firms is through the allocation of work, often at the early stage of careers. A well-defined work allocation process ensures a balanced portfolio of experience for future progression. But suppose a person is consistently allocated more challenging projects involving novel issues or premium clients. In that case, their career path is likely to take quite a different course to that of a person assigned more routine tasks, which can result in tremendous and unintended damage to the career paths of individuals. Research conducted by McKinsey in the UK in 2012 across professional services firms found that a man was three times more likely to be made a partner in an accountancy firm than a woman and ten times more likely in a law firm. McKinsey made several recommendations to address the imbalance, one of which was that women have equal access to the right career development opportunities through a systematic work allocation process based on objective criteria, such as competencies or experience. Work allocation goes to the very heart of the operation of a professional services firm. Changes to work allocation practices are hard to implement, but can have a considerable impact on the progression of female talent. McKinsey conducted follow-up research in 2015 and found that work allocation was an ongoing challenge. 70% of women in both law and accounting firms said that their firm’s work allocation process was unfair, and 86% of law firms had no formal work allocation process in place. In the absence of a systematic process, work allocation is a subtle concept that can be difficult to do in a way that promotes diversity and creates a level playing field for men and women. In deciding to whom work should be allocated, partners can make assumptions about women’s desire or capacity to do certain kinds of work or transactions. The result can be to ‘kill women with kindness’ by allocating the more challenging work to men on the team so as not to put too much pressure on a woman. A woman can ultimately end up with less experience, weaker client relationships, and lower revenue – all of which are career-limiting in a professional services firm. This phenomenon is also referred to as unconscious benevolence. Research conducted by the 30% Club in Ireland across 14 of the top Irish professional services firms in December 2019 contained some fascinating findings. For example, 21% of equity partners in accountancy firms are women, and that figure is 40% at the non-equity partner level. The research found that only four of the 14 firms that participated in the research had a formal work allocation process in place. On foot of that research, the 30% Club recommends that where firms have not adopted work allocation policies, they should pilot the introduction of such policies. They should also review work allocation practices to ensure that equal opportunities to gain expertise and experience are available to all. Finally, it urges firms to ensure that family-related absence does not impact work allocation and recognise leaders who successfully manage work allocation on their teams. Across professional services firms internationally, work allocation processes are becoming more formal and technology-enabled. Many resource management consultancies provide services and systems to firms to assist in this critical aspect of a firm’s work. Formal processes can have a significant impact on the development of female talent in firms and should, therefore, be considered as part of a firm’s diversity strategy.     Rachel Hussey is Chair of 30% Club Ireland and a Partner at Arthur Cox.

A lot of work today simply can’t be done well without high-touch collaboration – a challenge when many people are working from home. New tools are helping, though, write Ryan Kaiser, David Schatsky and Robin Jones. The pandemic, with an impact lasting far longer than initially expected, is forcing organisations to rethink how their teams can collaborate from a distance. Some widely used digital tools make certain forms of collaboration – such as sharing and editing documents – easy. But other, critically important types of collaboration remain challenging when colleagues are not sharing physical space, or even time zones. Organisations can experiment with a newer breed of tools, some still experimental, that aim to support remote, high-touch collaboration. In view but out of sync “Did he hear what I just said?” “Was that a smirk?” “She’s looking down – is she texting?” It’s safe to assume that these questions cross the minds of many workers during days of endless video calls. The concentration required to process these virtual interactions can be taxing, leaving workers exhausted. But with so many professionals working from home due to the pandemic, it’s imperative that organisations find effective ways for remote workers to collaborate. New technologies are answering this call: from immersive environments to virtualised offices that facilitate casual interactions, organisations may soon have many more options for helping their teams collaborate effectively at a distance. Collaboration is key, but challenged by remote work Most organisations accept that effective collaboration is essential for high performance. Apple leaders considered collaboration to be so important that they designed its headquarters building to promote creativity and collaboration. Even workers’ perceptions that they are working collectively, according to a 2014 study, can enhance their performance. Thus, collaboration activities are pervasive in the modern office. Indeed, some researchers believe “collaboration is taking over the workplace”, with time spent by managers and employees in collaborative activities increasing by 50% or more in recent years. It’s no surprise that collaboration is among the soft skills that employers seek most. But with the pandemic forcing millions of people to work from home, collaboration has become more challenging. Remote working obscures body language and distorts verbal cues that can be crucial to understanding intent. Formal, scheduled video calls – or more frequent instant messages or texts – are no substitute for quick, spontaneous exchanges of information. Professionals working in sales, customer service, management, design, and other roles in which impromptu and collaborative interactions are integral to the job may be particularly challenged. Some workers feel isolated. Managers are struggling to onboard, integrate, and teach office norms to new staffers, and building and sustaining an organisation’s culture has rarely been more difficult. Even when the crisis is behind us, the need for better remote collaboration will persist. High-touch collaboration still works best in person Of course, many, even most collaborative activities don’t require face-to-face interaction. A wide range of digital communication and project management tools support sharing files, editing documents, and communicating project status. But other valuable collaborative activities – scrum meetings for coordinating software development, brainstorming sessions to generate product ideas, hallway conversations to quickly exchange useful information – have tended to rely on face-to-face interactions. We call such activities high-touch collaboration. High-touch collaboration activities are typically synchronous, spontaneous, or sensory. Synchronous means two or more people are present in the moment when the activity is conducted, allowing for a free-flowing exchange of information. Spontaneous means unscheduled, low-overhead interactions that may occur outside the confines of a formally scheduled meeting. Some of the best ideas, and even businesses, started as impromptu thoughts or interactions between colleagues. Sensory refers to the non-verbal communication or body language we unconsciously decipher when interacting with others. Arm positions, posture, and tone of voice can influence how or when others choose to engage with or respond to us. Leaders can use this simple three-S model to identify the high-touch collaboration activities in their organisation that remote working arrangements may impair. Below are some common examples. They are important in our work and the work of many of our clients – and they can be difficult to perform when collaborators are just faces on a screen. Structured, interactive sessions. Some types of workshops or labs, employing techniques such as design thinking, aim to solve complex problems or help a group achieve consensus on a designated topic. In addition to typically needing a skilled facilitator, participants often need to read the room to assess group understanding, alignment, and engagement. Example: a lab may be used to forge consensus about the vision of a new firm-wide initiative. Ideation and co-creation. Many workers need to brainstorm and exchange information spontaneously, typically in a shared space with a visual aid such as whiteboards or sticky notes. Example: co-creation may be useful for brainstorming new product features to include in future releases. Spontaneous information exchanges. Employees may need to exchange information directly outside a formally scheduled meeting – perhaps as quickly and casually as poking one’s head in an office to ask a brief question. Example: spontaneously exchanging information with colleagues can be helpful when finalising an important client presentation. Informal connections. Conversations that typically take place in the elevator, office kitchen, or other common areas can foster a sense of connection and community; walking the halls can help cultivate relationships with clients and co-workers. Informal connections tend to rely on interpreting sensory and contextual information. Example: managers may informally check in with teams during a stressful time period to gauge well-being and engagement. To bolster collaboration among remote workers, we need tools that provide better support for these kinds of activities. Collaboration tools are proliferating A new crop of digital collaboration tools has emerged in response to the needs of companies with remote workforces. Vendors launched or enhanced at least 100 digital remote collaboration products in the first eight months of 2020, compared to the 24 product introductions we tallied in the fourth quarter of 2019. Established collaboration vendors are rapidly rolling out new features in response to user requests, and some have released free versions of products in an effort to gain market share. Some of this activity involves familiar categories of collaboration tools such as video-conferencing. Other types of tools – such as digital whiteboards, virtual offices, and immersive environments – may be less familiar, but they can provide crucial support to synchronous, spontaneous, and sensory collaboration activities. We scanned the offerings of hundreds of vendors and spoke with more than a dozen of them to learn more about their capabilities. Video-conferencing. When the COVID-19 pandemic forced millions of workers to work from home, many companies responded by substantially increasing their use of video-conferencing Google, Microsoft, and Zoom have all reported a surge in usage of their platforms. Allowing colleagues, clients, and partners to see each other over video can mitigate the feeling of isolation that some remote workers feel and can build and maintain the rapport crucial for collaborative efforts. Recent innovations in this category include the use of artificial intelligence to frame a caller’s face, background obfuscation to prevent distractions, and the use of avatars. But video-conferencing has its drawbacks. Not all work interactions occur in the confines of a formal meeting. Any given video-conference likely includes at least one participant battling audio and video quality issues, including lags that can jumble non-verbal cues and distracting background noise – especially for people sharing space with partners and children. Workers also report feeling exhausted at the end of a day filled with numerous video calls due to the mental focus required to concentrate on a grid of colleagues. Ideation and whiteboarding. Because it supports problem-solving, design, and strategic planning, ideation can be a critically important collaboration activity. A classic setting features a blank whiteboard, markers, and a team with ideas to share. Vendors such as Microsoft, Miro, and Mural offer digital tools that aim to provide the benefits of in-person ideation in a remote environment. Such tools typically feature an interactive workspace designed for visually oriented ideation and problem-solving. They are best suited for co-creation and ideation activities but can also be used to facilitate labs and similar sessions. A variety of features help spur thinking. For example, users may have access to templates or frameworks tailored to a variety of meeting types such as a scrum call or a design thinking session, time-keeping features to keep a group focused, virtual sticky notes to jot down ideas, and polling to streamline the decision-making process. These tools share little contextual information about users, however, making it hard for facilitators to read a room and determine how to best engage participants. Legibility can sometimes be difficult, and employees may need to consider a touchscreen, stylus, or other peripheral to maximise their capabilities. Virtual offices. Other types of tools attempt to replicate office spaces on your computer screen. Virtual offices are intended to run continuously in the background, showing in real-time what your colleagues are doing through the medium of digital aerial views of office floor plans, avatars, or even 3D worlds. And they aim to emulate the natural, rapid types of interactions that frequently take place in a physical workplace like tapping someone’s shoulder to ask a question. These platforms display context about colleagues – are they meeting with a client right now, or are they listening to music? – and they provide multiple pathways by which co-workers can informally connect. Sample virtual office vendors include Pragli, Sococo, Virbela, and Wurkr. Virtual offices typically allow significant customisation (avatars, floor layout, branding, etc.) and integrate with a growing list of social and collaboration applications one might use throughout the workday, such as Microsoft Teams, Slack, and Spotify. These vendors also enable informal interactions through emotive digital gestures such as high-fives or dance movements, allow users to tap each other to instantly join a virtual meeting room, and offer the ability to lock spaces for more private conversations. Many also allow screen-sharing and the uploading of files. Some virtual offices currently lack the ability to integrate with common office software such as Google or Microsoft and may lack common ideation mediums such as whiteboards. Some tools use much of a laptop’s processing power when rendering a 3D office, potentially affecting other applications. Immersive environments. This is an emerging category of tools that aim to enable workers to connect, share experiences, and participate in simulated real-life scenarios using augmented or virtual reality (AR/VR) technologies. Some studies have shown that VR is a promising medium for remote collaborative work. Users experience a 3D shared environment where they can see representations of themselves and colleagues and conduct meetings. Immersive environments are best suited for interactive sessions and co-creation/ideation. The virtual environments provided by tools such as Arthur, HoloMeeting, and Spatial can range from basic rooms to non-cubical architecturally complex spaces that expand creative possibilities. Some vendors make it possible for users to take a selfie and upload and wrap the image around an avatar for a personalised, life-like presence. Combined with spatial audio and visible mouth or hand movements, these technologies can give one the impression of being in the same space as a colleague. Interacting with the environment and accessing menus using one’s hands or controllers is highly intuitive. Typical features include 2D or 3D whiteboarding options, 3D process flows, and the ability to access content from the web, including images and 3D models. While some platforms are accessible by smartphones and laptops, the full experience is typically only available with the use of an AR/VR headset – a factor that may limit adoption in the near term. Early-stage tools may suffer from distracting latency – or lags in refreshing the display – or lack integration with other applications, which limits the type of work one can do, such as co-edit a PowerPoint slide, and most have smaller capacities (usually under 20 participants) when compared to virtual offices. What to watch The descriptions above are a snapshot of a rapidly moving market. Progress in the underlying technology of AR/VR, and increasingly affordable hardware, will likely boost the appeal of immersive environments over the next couple of years, for instance. Other developments in the domain of remote collaboration are worth watching. New features. With so many workers affected by the pandemic, collaboration vendors are quickly responding to user needs and rolling out new features. For instance, Microsoft recently deployed ‘Together mode’, using AI to place meeting participants side-by-side as if they were sitting in a virtual auditorium. Other advances include attention tracking, which alerts a host if an attendee goes more than a few seconds without having an application open; intelligent capture, which can make a person’s video image transparent so users can see content being written or drawn on a whiteboard as it happens; and real-time translation. Organisations should take note of this rapid pace and consider product road maps when evaluating tools. New mediums and uses. Remote collaboration tools are evolving, and organisations are likely to experiment with them in various ways. Some executives have used popular video games such as Animal Crossing, Grand Theft Auto, and Minecraft to conduct meetings, for instance. While some may not be inclined to use video games for collaboration or are unfamiliar with the format, others feel they help people think differently and bond with colleagues. The education sector may be another testing ground as teachers, students, and parents around the globe are now being forced to learn how to use virtual collaboration tools. Other formats are likely to emerge. New insights. Collaborating via software enables novel analytical applications not possible with conventional in-person conversations. For example, Gong uses speech recognition and natural language understanding technology to transcribe, annotate, and analyse data from sales calls to coach salespeople toward better performance. YVA.ai uses artificial intelligence to predict burnout and enhance employee engagement. Talent leaders may want to consider how data within these tools can help inform their talent strategies or improve employee performance. New shortcomings. Improved tools may eventually solve the video-conference fatigue problem, but it’s possible that emerging remote collaboration technologies may give rise to other unpleasant technology-induced side effects such as the dizziness or nausea that can accompany immersive environments. When choosing a collaboration tool, organisations should take these into account and design mitigation strategies such as time limits where applicable. New risks. As workers migrated to home networks and personal devices after the onset of the pandemic, firms faced an increase in hacking attempts, and many are enhancing their cybersecurity posture accordingly. The amount and type of information generated by remote collaboration tools could be especially sensitive, and companies should strive to ensure that such data is secure while meeting workers’ reasonable expectations of privacy. Preparing for a (somewhat more) remote future Many workers will not return to the office or may work from a company office only part of the time. According to a June 2020 Fortune/Deloitte CEO survey, CEOs expect 36% of their employees on average to still be working remotely by January 2022, three times as many as before the pandemic. One forecast suggests that through 2024, around 30% of all employees currently working remotely will permanently work at home. Many organisations are likely to need effective remote collaboration tools and approaches. Managers, particularly those in industries where remote working is already familiar, such as technology, financial services, and business and professional services, should begin exploring the use of remote high-touch collaboration tools, especially for collaborative activities that are synchronous, spontaneous, or sensory. As workers’ exposure to, and comfort with, these tools varies, organisations should consider implementing effective training and adoption strategies as well as policies guiding effective use. It may be helpful to think of remote collaboration as more than just a way of coping with the pandemic. To be sure, the pandemic triggered a surge of interest in remote collaboration and a burst of activity in the market for remote collaboration tools. But even after the crisis subsides, the need to support high-touch collaboration for remote workers will likely remain. This trend may carry the seeds of new opportunities. It may bring greater flexibility to talent models, offer workers new opportunities to balance professional and personal needs, help reduce the carbon footprint of work, and enable entirely new business models and industries. The development of remote collaboration could eventually change how we work in surprising and beneficial ways. Ryan Kaiser is a senior manager in Deloitte’s US Innovation group, where his efforts focus on digital transformation, strategy, and product/solution incubation. David Schatsky, Managing Director of Deloitte US, analyses emerging technology and business trends for Deloitte’s leaders and clients. Robin Jones is a Principal in Deloitte’s Workforce Transformation division, with 22 years of organisation and workforce transformation consulting experience.

As the global accountancy profession began adapting to the COVID-19 pandemic and its consequences, the International Federation of Accountants convened a series of round-table discussions to understand the implications of the pandemic for professional accountants and leaders. Kevin Dancey and Alta Prinsloo outline the findings. Crises inevitably demand that difficult decisions be made. Yet, the preferred conditions for making such decisions – time to deliberate or a clear sense of focus, for example – are in short supply. Countless small business owners, CEOs, government leaders and more confronted this reality in 2020. For many of them, professional accountants were there as trusted advisors when there was no semblance of certainty. Like every profession, accountancy will emerge from COVID-19 changed. We will be accustomed to digital processes we once thought impossible. Our change management abilities will be sharper than ever. How we anticipate the future will be informed by an experience many of us never imagined would happen. Right now, the profession has the opportunity to transform for the benefit of business, government, and society. It is also a critical moment to nurture existing talent and attract new talent. We must achieve this progress collectively, with clear and measurable goals. Through it all, the pandemic highlighted the importance of future-proofed skills that can anticipate challenges and opportunities, and are agile in a new world where professional accountants are established as strategic leaders. A shock to the system In the Netherlands, virtual work has been commonplace for more than a decade. When COVID-19 forced lockdowns, professional accountants were ready. In other regions, the transformations were not as simple. In South Africa, workers embraced change very quickly, but the more remote areas of the country found it difficult to find immediate solutions. In China, meanwhile, the shift to remote work was rapid. In the US and many other countries, new systems took root overnight, but with them came new-found concerns about security and the availability of technology. 94% of the global workforce live in areas where workplaces closed in 2020 due to lockdowns, according to the International Labour Organisation. These challenges impacted governments, businesses, and employees. In our new hybridised workplaces, preserving the tenets of trust and integrity while also embracing opportunities that virtual environments introduce is key. For example, when firms are not bound to a physical office, hiring more diverse talent from different geographies is possible. Educators and students were also disrupted and had to manage through a wide range of trials. On the one hand, universities and professors moved faster than ever to online instruction and, in some jurisdictions, had to overcome legal limitations in administering examinations online. On the other, students had not only to navigate internet bandwidth challenges, but also the mental health toll, personal economic hardships, and more, which the pandemic inflicted. One silver lining of remote learning is that classes not bound to a physical classroom can capitalise on the connective power of technology. In academia, as in the workforce, it has become clear that much of the accountancy profession’s infrastructure needed to transform – not just for the immediate future, but also the long-term. While the core skills of the professional accountant have not drastically changed due to COVID-19, the profession is changing. This crisis cast a spotlight on anticipation and agility, making it clear that the profession must take the opportunity now to rethink our curricula, our business models, and how professional accountants maintain their competency and relevancy so that they are ready for anything. Evolving technology, regulations and standards In early 2020, digital transformation was either in progress or identified as a strategic growth driver across businesses, accounting firms, governments, and beyond. Through the crisis, however, technology and data have been imperative not only to stay operational, but also to inform new and evolving strategies and ways of working. In a Deloitte survey, more than one-third of financial services industry firms in the US said technology upgrades were the top priority emerging from COVID-19. Meanwhile, more than half cited digitising client interactions as the first imperative. Across all industries, according to PwC, more than 60% of global CEOs acknowledge that they need a more digital business model for the future and that working outside of an office is here to stay. The way businesses everywhere operate is altered forever, and that reality has shifted how professional accountants engage with stakeholders. Professional accountants are the custodians of information that drives long-term strategy and, as businesses transform to stay relevant, professional accountants must be at the centre of that transformation. With change comes uncertainty, both for professional accountants and our stakeholders – especially the public. In this moment, the profession must align around clear goals for our members so we can collectively meet the changing demand around us. This is critical as we aim to leverage technology in new ways, and as we continue to champion trust and transparency in businesses and governments worldwide. As a profession, we cannot passively accept change; we must seize the opportunities change creates while also anticipating and mitigating risks. We have the guiding principles to do this and international standards for financial reporting, audit and assurance, ethics, public sector, and, hopefully soon, sustainability, will continue to help the profession evolve. Even regulators are being challenged to adapt to how accountancy work has changed, especially in light of 2020. In round-table sessions, we discussed how accounting firms should consider advocating for a way forward by partnering with regulators on the latest approach to financial reporting and auditing in a digital-first world. This will also serve us well as we align ourselves with a shared vision of the role sustainability reporting, focused on environmental, social, and governance (ESG)-related matters, will play in the future of the accountancy profession and our stakeholders. Accountancy is directly tied to prosperity, and a more holistic view of how people and planet fit into our profession is imperative. According to many stakeholders, sustainability is now an indisputable necessity. A long-term strategy rooted in sustainability helps guarantee any organisation’s place in the future. Indeed, two-thirds of global respondents in a recent BCG study on how the pandemic heightened awareness of environmental challenges agreed that economic recovery plans should prioritise environmental concerns. To that end, we must evolve our mindsets and reporting, and perhaps most importantly, our curricula for future talent. In particular, the students we spoke with were passionate about a much larger focus on ESG in the accountancy profession. As one student from Hong Kong said, “We are not prepared to handle ESG because there are no strict standards to hold us accountable”. For the future of the profession, transparency and accountability concerning ESG and long-term sustainability must be ingrained in high-quality reporting and assurance practices globally. IFAC is committed to advocating for new sustainability standards that would offer a reliable and assurable framework relevant to enterprise value creation, sustainable development, and evolving expectations. This is an opportunity for accountancy to evolve and to offer the next generation of professional accountants, many of whom identify as global citizens and environmental advocates, a strong foundation to make a difference. The important marriage of technical and professional skills Change management and sharp communications: From every region, discipline, and position, one skill was referred to more often than any other in every round-table we convened in the past three months: change management. We were in a rapid state of evolution before COVID-19. At the start of 2020, McKinsey & Co. noted that nine in ten business managers said skills gaps existed in their organisations or soon would. That reality has only become more evident. Accountancy is not a profession operating in a static world, and the skills learned have to reflect an equal measure of agility. There is a clear need for well-rounded skillsets that combine technical skills and professional skills that are rooted in relationship-building and communication. Doing so means placing more emphasis on stronger, trust-based relationships with key partners. This requires a focus on interdisciplinary skills when engaging with colleagues and in our strategic discussions with clients. Stronger communication skills will help professional accountants manage risks and garner buy-in for solutions. Scenario planning and storytelling: Professional accountants are dynamic thinkers with an aptitude for proactive planning. We are trusted partners in times of change and uncertainty, and we must be prepared for that demand to continue. We have to maintain the momentum 2020 created and the renewed trust imparted on our profession. Many round-table discussions spent significant time on the importance of accountants continuing to build in the areas of professional skills and focusing on new techniques for analysing and interpreting data in differing circumstances, and aptitudes for strategising on increasing priorities such as ESG. Our stakeholders agreed that the profession must become better storytellers, able to effectively show how all the pieces fit together and how the finance function bolsters resiliency and growth. The basics of this can be taught in classrooms, but this skill will largely be shaped on the job. Upskilling: How we compete in the learning and development space – with dynamic curricula, more agile credentialing and continuous learning models that are suited to a hybrid world – will be a differentiator moving forward. “Professions that invest [in education] now are going to come out of this with a competitive advantage,” said one academic leader. We have to show aspiring accountants and those who might be upskilling during their career that the profession is anticipating, adapting with agility, and remaining a step ahead. Affirming the need for agile, future-proofed skills, one professional accountancy organisation CEO said, “I’ve worked through three pretty major crises in my career, and the common theme through all of them is that you must use it as an opportunity for change. A crisis gives you license to adapt”. Defining the accountant of the future Professional accountants are, and will continue to be, strategic partners in any setting, be it in the private or public sector. The pandemic tested our capacity as business drivers, and we rose to the occasion. This is a pivotal moment for the accountancy profession, one where we will change old paradigms and embrace new skills for the digital and rapidly evolving world in which we live. How we act in this moment will define the future of the profession, and the opportunity for positive change is immense. Right now, societies and economies around the world are trying to find a way to move forward from a crisis-laden year. Professional accountants are the highly strategic and collaborative problem solvers who will help businesses and governments, large and small, move forward. In the round-tables IFAC conducted in recent months, CEOs, auditors, academics, students and more from around the world shared a clear vision: we, as a profession, must accelerate new ways of working, embrace technology, align our work to new and evolving societal demands and, above all, ensure we are investing in the right balance of skills that will fortify the profession for whatever the future holds.   Kevin Dancey is Chief Executive at IFAC, and Alta Prinsloo is Chief Executive at the  Pan African Federation of Accountants and former Executive Director at IFAC. The research process The International Federation of Accountants (IFAC) spent the past three months engaging with dozens of people associated with the accountancy profession across more than 20 countries with a range of perspectives. They included chief executives of professional accountancy organisations, chief executives in business, chief financial officers, audit committee members, auditors general, accounting firm leaders, academics and students.  By convening these various stakeholders, IFAC set out to understand the implications of the pandemic for professional accountants and leaders, and how their experiences will affect the future of accountancy and, more specifically, accountancy skills. The global COVID-19 pandemic has accelerated change and forced us to reconsider the role of professional accountants. We heard from our stakeholders about the transformation of organisations, the agility of business, and the resilience of professional accountants managing through unanticipated change.

Cormac Lucey explains why, as societal fissures and inequality grow, we must no longer be satisfied with unduly simple answers to complex questions. The biblical story of the Tower of Babel explains how humans across the world speak different languages. In the generations following the Great Flood, humans spoke a single language and migrated to the land of Shinar, where they decided to build a tower tall enough to reach heaven. Unhappy at this impudence, God intervened so that humans spoke several different languages, were unable to understand each other and were thus unable to build their idolatrous tower. Today, it is not different languages, but several other aspects of life, that risk pulling us apart. Specialisation has been one of the key ingredients of dramatic economic growth in recent centuries. But growing vocational differences and technical specialisation make it more and more difficult for national leaderships comprised of generalists to manage and control a society increasingly comprised of technical specialists. Consider the economic disaster of the financial crash just over a decade ago, and the failure of the Central Bank of Ireland and the Financial Regulator to take corrective action. Consider the current lockdown and reflect on the fact that, if everyone in the Republic contracted COVID-19 and we suffered the median fatality rate estimated by the World Health Organisation (0.23%), the resulting fatalities would equal around one-third of total fatalities that we suffered from all causes in 2019. Another serious societal fissure is growing economic inequality and the increasing role of education in determining an individual’s earning capacity. Here in Ireland, we are lucky that income inequality has not grown over recent decades. But it has grown substantially in the US. We can see the political polarisation that has followed and, increasingly, political affiliation in the US follows education. This pattern was very evident when the UK voted for Brexit. The political and media establishments may dismiss those who dared to vote for Brexit or Trump. But if the pandemic has taught us one thing, it is that in an ever more complex world, our fates are increasingly interdependent. In such a world, it makes little sense to dismiss large blocs of fellow citizens as if they are fools. Yet that is what has happened. This sneering reaction feeds another fissure, that which separates insiders from outsiders. We can see this in the rise and rise of monopolies and quasi-monopolies in the US. A paper published recently by two Federal Reserve economists found that the concentration of market power in a handful of companies lies behind several disturbing trends in the US economy such as a falling share of national GDP going to labour, a rising share going to capital, increasing inequality, rising financial leverage, and an increase in financial instability. Here in Ireland, we are confronted by a different monopolistic power, that of the State. At the end of Q2 this year, average weekly earnings in the Irish public sector exceeded those in the private sector by 32.6%. In the UK in 2019, (pre-pension) public and private sector earnings were approximately equal with public sector earnings 3% ahead before consideration of bonuses and 3% behind after their consideration. The stark public/private gap in Ireland arouses little public commentary, but feeds the fissures in our society. What can we do as we face this increasingly divided world? We should be careful of those who suggest simple answers to complex questions that generally don’t have yes/no answers but, rather, difficult trade-offs. Independence of judgement matters just as much for our public life as it does for our auditors. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.

2020 was nothing short of a disaster for many people, but a constellation of emerging factors can give us hope for 2021 – from an economic standpoint at least, writes Annette Hughes. For the Irish population, COVID-19 has in many ways been a double-edged sword over the past nine months. The recent transition from levels two and three to a nationwide level five lockdown caused a significant number of businesses to close once more and pushed the number of those in receipt of government wage support through the Pandemic Unemployment Payment (PUP) up by 50% month-on-month from 228,858 on 11 October to 342,505 on 9 November. However, this is still well below the 5 May peak of 598,000. EY’s labour market forecasts suggest that, for November, this represents approximately 14% of those in employment. Kerry and Donegal suffer most, with about one in five workers in receipt of PUP at present, possibly due to their dependence on tourism. The reality for the fortunate segment of the population that managed to hold on to employment is quite different. The Central Bank of Ireland has reported that household deposits increased by 10.9% year-on-year in September 2020. This is indicative of a general trend of reduced consumption and increased savings since the beginning of the pandemic, as the measured savings ratio reached an unprecedented 35.4% in Q2 2020 with a quarterly increase in savings of €10 billion for Q2 2020. This suggests that there is a section of Irish society that is broadly unaffected, has money, and is merely waiting to spend. Results from a recent survey conducted by EY indicate that the world mood is anything but black and white. The impact of COVID-19 on consumer behaviour has led to diverse spending patterns globally. In the October release of our Future Consumer Index, 26% of consumers noted that they were unaffected and unconcerned for the future, while 31% stated the antithesis, commenting that they were struggling and worried about what is yet to come. A lack of job security, family health, and discomfort around a premature return to societal norms are foremost in the minds of those who believe the COVID-19 impacts will remain in the medium- to long-term. The remaining consumers surveyed classed themselves as either okay but adapting (30%) or hard-hit but optimistic (13%). Retail in Ireland is a mixed bag of late. The CSO release for September proves the lockdown ‘banana bread, work-from-home, DIY’ hypothesis with sales of hardware, paint and glass up 31.3% year-on-year while food, beverages and tobacco also increased by 12.4%. Meanwhile, sales for fuel have reduced by 10.2%, with stationery, books and newspapers also down by 11.6% as large swathes of workers, particularly those working in multinational companies, no longer commute to Ireland’s urban centres. EY expects that economic recovery will resume in 2021, with GDP forecast to rise by 3.5% after a 3.9% contraction in 2020. The current accumulation of deposits, which are earning meagre interest in the banks, combined with reduced reliance on PUP and projected employment growth of 6.5% should significantly support consumer spending next year and act as a catalyst for increased economic activity. Annette Hughes is a Director at EY-DKM Economic Advisory.

Leigh Harrison outlines the practical issues, for both the auditor and management, that may arise when applying the revised going concern standard. As auditors rapidly approach the start of ‘busy season’ and management near the end of the financial year, one of the biggest challenges that will impact on both the auditor and management are the changes to the going concern auditing standard. The revised standard, applicable for periods beginning on or after 15 December 2019, increases the auditor’s work effort, which includes expanded risk assessment procedures over going concern, increased scrutiny over management’s going concern assessment and enhanced reporting requirements in the auditor’s report. The directors’ responsibility for going concern is seated in company law, with the duty to prepare financial statements that give a true and fair view, in accordance with the applicable financial reporting framework. The accounting standards require the preparation of a going concern assessment, taking into account all available information about the future, for a period of at least 12 months. The financial statements are prepared on a going concern basis unless management determines that they intend to liquidate the entity, cease trading, or have no realistic alternative but to do so. Complexities in the current year The world is now a very different place than it was at the start of 2020. In a matter of months, COVID-19 swept across the globe. The pandemic subsequently led to travel restrictions, business closures, cancelled events, and lockdowns. Governments responded with a range of financial supports in an attempt to support jobs and businesses. During this time, management will have had to revisit their business plans, forecasts and cash flows in response to the ever-changing economic environment. Meanwhile, calls for better climate change reporting and the end to the Brexit transition period compound the complexity. Practical issues for management Although the directors are ultimately responsible for the assessment of going concern, in many cases, they may delegate the preparation of the assessment to management. The directors will need to possess the skills and knowledge to understand and challenge the assessment prepared by management and have a robust governance, oversight and approval process to challenge and validate management’s assessment. For management in smaller businesses, where an assessment of going concern may not have been formally prepared and documented in previous years, the requirement in the current year is likely to be a step-change. In some ways, the continually changing economic environment in which businesses currently operate will have prepared management for the preparation of their going concern assessment as they continuously re-assess the impact of change on their business. Ahead of year-end, management should engage with their auditor to agree on the expected audit deliverables and ensure that they have the processes in place and resources required to perform the assessment. Remote working may add further complications as inputs required for the assessment are likely to be prepared across the finance function, and team members may be on furlough. Management will need to factor in additional time for scenarios where, for example, additional funding is required or waivers of covenants must be negotiated and agreed, as credit approval may be delayed due to the impact of bank staff working remotely. Management will need to have specific processes in place, including a risk assessment process to identify, assess and address risks facing the business relating to going concern. Management will also need to explain to the auditor how they measure and review financial performance, use their information systems to identify and capture events or conditions that may impact the going concern assessment, and how management identified the relevant method, data and assumptions used within their going concern assessment. The assessment must be prepared and documented by management in all cases and should be tailored and right-sized for the business. For some non-complex businesses with high levels of cash reserves, management’s assessment may not require detailed cash flow forecasts. A memorandum detailing management’s analysis and considerations may suffice. In contrast, more complex entities will require a thorough assessment of current and future risks, forecasted cash flows, consideration of current funding available, and the identification and assessment of plans to address identified risks. The area management must consider when preparing their assessment is wide-ranging and includes risks facing the business (both internal and external, current and future), the business environment, developments in the industry, and future prospective plans. The purpose of the assessment is to determine whether certain events or conditions may cast significant doubt on going concern and whether those events result in a material uncertainty to exist. In preparing and documenting their assessment of going concern, the auditor might expect to see the following: Analysis of the core operations of the business as they relate to going concern, including the business model, types of investments or disposals planned, how the business is financed and so on. Analysis of the current financial position compared to the prior year, considering key metrics such as net current assets/liabilities, operating cash inflow/outflow for the year-to-date, funding arrangements in place and related covenants, and so on. Analysis of the results post-year-end compared to the prior year, including revenue, profits, and status of funding. Details of events or conditions identified by management that may cast significant doubt on going concern and may affect the future performance of the business. For example, changes in demand for products or liquidity challenges. Where events or conditions are identified by management, management should document their plans to address those events. When management consider that a detailed assessment is required, they should document the model, assumptions and source of data used in their assessment. Management may find it useful to prepare a sensitivity analysis, where there are several potential assumptions or actions. The assumptions and data used in the assessment of going concern must be consistent with those used elsewhere in the business – when considering the valuation of goodwill, for example. Practical issues for the auditor In the planning phase, the auditor will need to ensure that the team has the resources and experience necessary to perform the required procedures. Where the new requirements present a step-change for clients, it will be particularly important for the auditor to engage early. Doing so will help clients better understand the extent of audit evidence expected, and the level of input that will be required from management throughout the audit process to assist the auditor in their enquiries and procedures. There is no prescribed methodology for management to use when preparing their assessment of going concern. In scenarios where management has determined that detailed forecasts and cash flows are not required, the auditor will need to use their professional judgement to determine whether they consider the assessment to be appropriately detailed. This may lead to difficult conversations. At the other end of the scale, management’s assessment may include, for example, detailed forecasted cash flows that are built on complex models with multiple assumptions and sources of data. In these situations, the auditor will need to obtain a detailed understanding of the model, and careful consideration will be required to determine which assumptions and sources of data are critical to the assessment. Professional judgement will be needed when designing the required audit procedures, which may include evaluating the design, implementation, and testing management’s controls over the process for preparing the assessment. For 2020 year-ends, more entities will likely face liquidity issues given the continuing impact of COVID-19 on business. As such, management’s plans may include seeking reliance on group support. Auditors of components within groups will need to get a ‘big picture’ view of the group’s ability to provide the support required. More than ever, there is a greater need for the auditor to maintain their professional scepticism, challenge management throughout the audit process, and evidence that on the audit file. Conclusion For some businesses, the implementation of the revised going concern standard will be a step-change that will result in changes to processes, controls, oversight arrangements and increased management input to prepare management’s assessment of going concern. For the auditor, greater audit effort will be required, resulting in additional time input throughout the audit process. The auditor will need to exercise their professional judgement when evaluating management’s assessment, identifying the critical assumptions and data, considering whether sufficient appropriate audit evidence has been obtained, and concluding on going concern in the audit report.  Leigh Harrison is Director at KPMG’s Department of Professional Practice.

When it comes to sustainability, the problem is not that there are no standards. Rather, there are too many of them, writes Dr Brian Keegan. In the current abnormal news cycle, something has to be really strange to stand out. One such item in October was a report that UK authorities were to permit the opening of a coal mine in the north-east of England. This runs counter to most of the prevailing trends. True, the rehabilitation of coal was an element of Donald Trump’s first presidential campaign, but that has not prevented its decline in the US in favour of cleaner natural gas and more sustainable sources like wind and solar. Coal from this new British mine is not for energy production. It is apparently to be used in the manufacture of steel. It is also being used in the manufacture of jobs for the impoverished north-east. Job creation tends to rattle sustainability priorities and seems to have been the consideration that swayed the local council into granting permission. The incident does highlight, however, the elusiveness of sustainability because “Decent Work and Economic Growth” is Goal 8 of the 17 sustainability goals promoted by the United Nations. While these goals have garnered considerable traction in the sustainability debate, having 17 goals impedes progress because, in practice, the goals can be contradictory. Goal 13, for example, is “Climate Action”, which is at right angles to opening coal mines in some quarters. This vagueness has conflated the sustainability debate with the already nebulous concept of corporate social responsibility. Corporate social responsibility should be looked upon with suspicion. All too often, HR initiatives to boost staff morale, marketing initiatives claiming green credentials for a particular product or service, or even support for the pet charity of the chief executive are folded in under an ersatz comfort blanket of social responsibility. Claiming sustainable practices or having corporate social responsibility champions won’t cut it. There has to be a concerted drive to come up with broadly acceptable standards to measure genuine corporate progress on sustainability issues. The current problem is not that there are no standards, but rather, that there are too many of them. The current custodians of standards- and ethics-setting, the International Federation of Accountants (IFAC), recently proposed that a new sustainability standards board be established, which would exist alongside the IASB under the IFRS Foundation. This new sustainability standards board should pull together existing expertise and the work of some existing sustainability reporting initiatives. The resulting framework could then be passed to the International Audit and Accounting Standards Board to develop the best assurance processes. This IFAC initiative differs from many other governance initiatives. Too often in the past, ‘solutions’ were provided, for which there was no demand. One of the legacies of this pandemic will be a greater awareness of sustainable practices.  There is demand from investors for comparable and dependable data on environmental, social and governance factors and this form of reporting offers a value-added opportunity for accountants. On the other hand, the initiative carries the risk of becoming hijacked by environmental activism, leading to reporting requirements that would fail a cost/benefit analysis within the SME sector. Earlier this year, Harvard Business Review suggested that the chief financial officer should become the most prominent climate activist in their organisation. There is still some distance to go before this becomes a reality, but in an era when western governments are contemplating opening coal mines, nothing can be ruled out. Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.

Welcome to a new edition of Accountancy Ireland, the last in what has been an extraordinarily difficult year for most. The best-laid plans made last December are by now  unrecognisable after months spent adapting to shifting realities. Chartered Accountants Ireland started the year with the presumption that Brexit would be the main issue for members in their external environment. Although a global pandemic overshadowed it, the Institute has worked throughout the year to support members on Brexit-related matters and to advocate on their behalf. As we approach the end of the Brexit transition period, our events and updates have continued. We recently opened registration for the third intake of students for our Certificate in Customs and Trade and, in the final quarter of the year, launched a new Brexit Digest e-newsletter full of practical guidance for businesses in Ireland and Northern Ireland. In recognition of Chartered Accountants’ critical role in driving the sustainability agenda, the Institute also recently published the Sustainability for Accountants guide, along with a Sustainability Hub on our website. The fight against climate change is now a corporate imperative. Moving our gaze west, Americans have gone to the polls and the New Year will bring a new administration. In this edition, we look ahead to what the next four years might bring. Change is also afoot in global tax, and Accountancy Ireland looks at the OECD’s proposed reform of the global digital and corporation tax system. Closer to home again, the Institute has endeavoured to respond quickly and effectively to meet the needs of members during the COVID-19 pandemic. Our primary focus has been on providing timely, helpful and practical support to members as they serve their clients and steer their organisations. As an educator, we are acutely aware of the challenges facing students during these months. Our education provision has evolved dramatically over the last year and our CAP1, CAP2 and FAE programmes successfully launched on our new online education platform. Producing the highest-calibre finance professionals is more important than ever for our economy. This festive season will be very different, but I’d like to wish members and students a peaceful, safe and enjoyable Christmas. For those who find themselves in particular difficulty, remember that assistance is available from CA Support. You can find details on our website. Thank you to the committees, volunteers, management and staff of the Institute for their efforts during 2020. I hope that we can make a return to a more normal way of life in the New Year. Paul Henry President

Suzie Arbuthnot ACA, the winner of BBC’s Best Home Cook, discusses life as a parent, entrepreneur, and TV presenter.Earlier this year, you were crowned BBC’s Best Home Cook, how did that come about?Back in 2017, I entered the Great British Bake Off. I was first reserve and was devastated when I didn’t get called up. One of my friends told me to enter this other food programme, and so I did. A few days later, I had a phone interview and then a face-to-face meeting in Northern Ireland, where I had to make a savoury and a sweet dish. I was then flown to London to replicate the three stages you see on the show and, as they say, the rest is history!You recorded the show while setting up your own business. What was that experience like?I became self-employed on 1 February 2019 and I flew to London at the very beginning of March to start filming Best Home Cook. I was completely stressed because I wasn’t bringing in an income, but my husband said: “You have worked so hard for this opportunity, you can’t give up now!” So, having won the title and trophy plate, I had to return to normal life and not tell a soul. It was an agonising nine months. I set up my own practice by following the straightforward steps set by Chartered Accountants Ireland. I was extremely fortunate that my old firm (PGR Accountants, Belfast) referred a piece of work to me, and that got me started.What would you describe as your greatest challenge or achievement to date?I used to say: “finally qualifying as Chartered Accountant”, as it took me eight years. I never gave up, and I knew I could do it. I was able to have my family, have my children, and just enjoy life. I don’t regret a moment of it at all. However, I think winning a UK-wide cooking competition and now presenting my own food-focused TV show, Suzie Lee’s Home Cook Heroes, is pretty amazing!What’s the most valuable lesson you’ve learned?Have faith in yourself in whatever you do, as others are quick to knock you down. This has been true in all areas of my life, so be kind to everyone you meet, treat them the way you would like to be treated, and have no regrets.What do we most need in this world?We need to learn how to switch off. I am a huge culprit, but we are too connected these days – attached to our phones, tablets and laptops. The art of social interaction is starting to wane right in front of our eyes, and it’s all down to our devices.How do you recharge?I love keeping busy, but I get my energy from spending time with family, cooking, going to the gym, playing hockey for Lisnagarvey Hockey Club, and singing with Lisburn Harmony Ladies Choir.

While it might be difficult to find a new job in the current market, it's not impossible. Niamh Collins outlines five key considerations that will put you in the best position to move on in your career. The disruption to employment caused by the COVID-19 pandemic has been severe. From hiring freezes to the Employment Wage Subsidy Scheme to remote working and the tough decision of making redundancies, 2020 has been a year like no other for almost every industry. At the end of July, CSO data showed the COVID-19 adjusted unemployment rate as 16.7% across Ireland – the effects disproportionately spread across younger generations with 41% of 16-25-year-olds out of work compared to 14% for those aged 25-74 years. The employment market is not universally challenged. Despite the economic pressure and instability, there are organisations that need your knowledge, skills and experience. Whatever your reasons for looking for a new role, there are five key considerations which will put you in a better position to get a great job in a challenged market. 1. Be bold with your networking Contacts are invaluable. It’s important to stay in touch with as many people as possible – suppliers, customers, old colleagues and clients. Maintaining these relationships will stand you in good stead because the individuals could provide precious information when it comes to job opportunities, offer useful advice or guidance and even act as a reference when necessary.  Beyond your existing contacts, you can also actively seek out new networking opportunities in your field. Be bold on LinkedIn and connect with plenty of relevant professionals. 2. Be thorough in your research If you have identified a vacancy or a company that you would like to work for, always be thorough in your research. Read up about the business; the values, what they do, who their clients are, and also find out the names of the managers and as much about their careers as you can. Not only will this allow you to address any communications to a specific individual within a department, but it will help you create a better picture of the organisation as a whole.  3. Be flexible about your requirements While you may want the security and stability offered by a permanent job, have you considered pursuing a contract role? The flexibility of hiring a contractor is an attractive prospect for organisations at present. Also, it could be beneficial to weigh-up your salary expectations, especially if (as with many industries) you are able to work remotely. Regularly working from home will save monthly commuting costs and, therefore, lowering your pay demands accordingly (while being sure not to undersell yourself) could increase your attractiveness to employers and might be the difference between being hired or not.  4. Be open to partnering with a recruitment agency Eliciting the assistance of a specialist recruitment agency is a straightforward way to give your job-hunting efforts a boost. It will save you time, give you access to their extensive network of industry contacts, offer a wide range of opportunities that are often not advertised on job search sites and they have the inside line on knowing exactly what hiring organisations are looking for. 5. Be ready to clear your diary and move fast If you are serious about moving jobs, arguably the most important thing to remember is to be ready to act fast as things can change rapidly. Be prepared to clear gaps in your diary so that you can take calls or attend meetings, virtual or otherwise, at short notice.  Clearly explain what your requirements are from the outset and have references ready to go. When markets are difficult and hiring organisations may be looking for its new employee to start at a short turnaround, they will want a quick response if you do get offered a job.  Despite these unusual times, careers are being progressed. Your next role could be a couple of meetings away, but it will require focus, determination and input from you to make it happen. Niamh Collins is Associate Director of Finance & Accounting at Morgan McKinley.

David Duffy discusses recent Irish and EU VAT developments.Irish VAT updatesVAT rate decreaseAs most readers already know, the standard rate of Irish VAT has been reduced from 23% to 21% for the period from 1 September 2020 to 28 February 2021. We expect that most businesses will already have made the necessary changes to their systems and processes to apply the new rate to affected transactions from 1 September 2020 onwards. However, when preparing your September/October VAT return in November, it may be helpful to check that the new rate has been correctly applied. Some of the points to check may include:Has the new VAT rate been correctly applied to your sales? The tax point and corresponding VAT rate for your sales may differ depending on whether the sale was to another business or consumer, whether you operate the invoice or cash-receipts basis of accounting for VAT, and whether a payment was received in advance of the supply. The Revenue Tax and Duty Manual on changes in rates of VAT, available on the Revenue website, provides further guidance on how to apply these rules.Has the appropriate VAT rate been applied to purchase invoices received in the period?Has the appropriate VAT rate been applied to credit notes issued or received during the period? In general, the VAT rate applied to the credit note should match the VAT rate applied to the invoice to which the credit note relates.Does VAT charged at the new rate correctly map to the appropriate general ledger accounts and is it correctly captured in your VAT reports for the period?Extension of COVID-19 reliefsRevenue has confirmed an extension of a number of temporary, indirect tax reliefs introduced earlier this year to help combat COVID-19. These reliefs were originally due to expire on 31 July 2020, but have now been extended until 31 October 2020, subject to further review. The temporary reliefs include:The zero-rate of VAT applies to personal protective equipment (PPE), thermometers, medical ventilators, hand sanitiser, and oxygen when supplied to the HSE, hospitals, nursing homes, care homes and GP practices for use in providing COVID-19-related healthcare services. Relief from import VAT and customs duties applies to the import of medical goods to combat COVID-19 by or on behalf of State organisations, disaster relief agencies and other organisations approved by Revenue, and which are provided free of charge for these purposes. No VAT clawback will arise for the owner of a property used to provide emergency accommodation to the State, HSE or other State agencies in order to combat COVID-19. EU VAT updatesDeferral of VAT e-commerce rulesThe EU has recently agreed to defer the introduction of significant changes to the EU VAT rules for e-commerce transactions from 1 January 2021 to 1 July 2021. The deferral was in response to potential challenges of meeting the 1 January 2021 deadline for tax authorities and businesses as a result of COVID-19. While this deferral gives businesses more time to prepare, it is important for businesses that will be impacted by the changes to begin their preparations. Businesses which will be most affected include retailers with online stores, online platforms and marketplaces which facilitate sales of goods to consumers, and postal and logistics operators which handle imports of goods on behalf of retailers or consumers. A brief summary of the changes coming into effect on 1 July 2021 is set out below. The current domestic VAT registration thresholds for cross-border business to consumer (B2C) sales of goods in each EU member state will be abolished. As a result, a retailer selling goods to consumers in other EU member states will be obliged to charge VAT at the appropriate rate in the member state to which the goods are shipped regardless of their value, subject to a very limited exception where the value of sales to consumers across all EU member states is less than €10,000 per year. The VAT payable to tax authorities in other member states on these sales can be remitted through a quarterly One Stop Shop (OSS) registration rather than requiring an overseas VAT registration. VAT will apply to all goods imported into the EU, at the appropriate rate in the EU country of import, regardless of their value. This is as a result of the abolition of the import VAT relief for low-value consignments with a value of up to €22. This is likely to significantly increase the volume of packages imported on which VAT must be paid. To help facilitate the payment of VAT, the retailer or, in certain cases, the online marketplace facilitating the sale can charge the VAT at the time of sale and pay this VAT to the tax authority in the country of import through a new Import One Stop Shop (IOSS). This return would be filed, and related VAT paid, on a monthly basis. However, this will only apply to imported consignments with a value of up to €150. Packages above that value will be subject to import VAT and customs duty in the normal way at the time of import. An online marketplace that facilitates sales of goods to consumers will be deemed to have purchased and resold those goods in two scenarios: first, the goods are imported from outside of the EU in a consignment of up to €150; or second, the goods are sold within the EU by a retailer established outside of the EU. This will bring additional VAT collection and reporting obligations for these platforms.Additional VAT record-keeping requirements will apply to platforms and marketplaces which facilitate other supplies of goods and services to consumers within the EU.VAT on property adjustmentIn the HF case (C-374/19) the Court of Justice of the European Union (CJEU) ruled that a VAT clawback was payable by a German retirement home operator where it ceased to carry out taxable supplies in a cafeteria attaching to the main retirement home building. The operator constructed the cafeteria and fully recovered VAT on the construction costs as its intention was to sell food and beverages to visitors. This activity would be subject to VAT. It was subsequently determined that there had been approximately 10% use of the café for VAT exempt supplies to residents of the retirement home, which resulted in a partial adjustment of the VAT reclaimed. This was not in dispute.However, subsequent to that initial adjustment, the taxable activity of sales of food and drinks to visitors ceased entirely. The only remaining use was in respect of the VAT exempt supplies to the residents, albeit there was no absolute increase in their use of the building. The question was, therefore, whether this triggered a further adjustment of VAT.The taxpayer had sought to rely on earlier court judgments which support the position that where VAT is reclaimed based on an intended taxable activity but that activity does not subsequently take place, the taxpayer’s right to VAT recovery is retained. However, the CJEU distinguished this case from the others because the intended taxable activity had commenced but ceased and the property was now only being used for VAT exempt activities. Ireland has adopted similar rules (referred to as the capital goods scheme) which can result in a clawback or uplift in VAT recovery where the proportion of taxable/exempt activity in building changes. This typically needs to be monitored over a period of up to 20 years. It is, therefore, important to carefully consider any changes in use of a building as this could have significant VAT consequences.David Duffy FCA, AITI Chartered Tax Advisor, is an Indirect Tax Partner at KPMG.

The pandemic has broken several business taboos and accelerated the role of digitisation in all walks of life. The UK tax system is no different. HMRC’s role in developing the job retention and self-employed schemes’ online portals at speed to deliver support to employers and businesses at a time of crisis has shown that digitisation can be done quickly. It might not have been perfect, but it was very good. On the back of these lessons, the UK Government published its vision for tax administration in the UK in July: building a trusted, modern tax administration system. The strategic importance of this goal has clearly been brought into sharper focus by the pandemic.An important part of the July publication was the announcement of further steppingstones in the roadmap of the Making Tax Digital (MTD) project, starting with extending MTD for VAT to VAT-registered businesses with turnover below the current £85,000 VAT registration threshold from April 2022. MTD for income tax will commence for self-employed businesses and landlords with income over £10,000 from April 2023.But there’s one glaring issue missing from the picture: UK tax legislation is extremely complex. Unless this is seriously addressed, efficient, problem-free, further digitisation of the UK tax system cannot be effectively achieved. For that reason, the Government should also develop a roadmap for simplification of the UK tax system which should work as a precursor to any new digital services developed. This should begin with income tax complexity. If this doesn’t happen, having to navigate legislation that continually increases in complexity coupled with a requirement to make multiple filings to HMRC has the capacity to be extremely challenging for both HMRC, the taxpayer and their agent. The UK Government must simplify to digitise.Leontia Doran FCA is a UK Taxation Specialist with Chartered Accountants Ireland.

Budget 2021 is the next instrument in the government's response to the impacts of COVID-19 on the Irish economy. Between the pandemic and a possible disorderly Brexit, Budget 2021 will not be a normal budget, says Kim Doyle.COVID-19 has presented unprecedented challenges for the global economy. Governments, along with their tax authorities worldwide, have adopted and administered emergency measures to preserve the health of their people and defend against collapse of their economies. In Ireland, we had a mini-Budget in the form of the July Jobs Stimulus, a €7.4 billion package of measures aimed at supporting the Irish economy in response to the impact of COVID-19. We also have a number of administrative measures in operation by Revenue to ease taxpayers’ compliance burden. Brexit also brings challenges. At this stage, we do need to respond to the immediate impacts of Brexit, and a possible disorderly Brexit, and plan for the long-term stability and robustness of the Irish economy. Climate change is, too, the ‘defining challenge of our generation’, according to the Minister for Finance. And, indeed, a raft of measures were introduced last year to tackle this challenge, while others were promised in the future. EU and OECD tax reform proposals continue to pose challenges and bring additional uncertainties into play. The impact of these on the Irish economy could extend well beyond corporation tax receipts and may influence unwanted changes in investment decisions by MNC groups going forward.Framing Budget 2021Budget 2021 may target revenue raising measures to cover the expenditure introduced to deal with the recent challenges brought about by COVID-19 and a possible disorderly Brexit, but any budgetary measures must avoid undoing the impact of the July Jobs Stimulus Package. Health and housing priorities will also have to be addressed in the budget. The government has said the measures will focus on the short-term and not beyond 2021.The government has pledged no increases to income tax credits or bands. (This is also promised in the Programme for Government.) The level of government expenditure over the coming months is unlikely to fall substantially, if at all. Despite the backdrop, tax receipts for the first eight months of 2020 are only 2.3% behind the same period in 2019. Given that some of this deficit is a timing issue and will be recovered in 2021, this is a remarkable outturn. September tax returns will be the final “piece in the jigsaw” before the final Budget 2021 is decided, according to the government. ExpectationsPre-COVID-19, Budget 2021 was expected to be framed around Brexit and climate change. Now, amid a pandemic, what are we more likely to see in the Budget from a tax perspective? Income taxConsidering the government has stated there will be no broad based increases in income taxation, we don't expect to see much by way of income tax measures. We may see some modest tax cuts in the form of increased tax credits for stay-at-home parents and other credits and reliefs targeting lower and middle income earners. We would like to see a long-term commitment to a reduction in our high marginal tax rates of 52% and 55% for employees and self-employed respectively; however, there is no fiscal space to make any pledge to reduce these rates in the short-term.The concept of broadening the tax base, so more people pay a little, has long been debated with very little reaction by government. The main reason may be it is likely to be unpopular with constituents. However, considering the challenges for the Irish economy, the government may need to embrace this concept but balance it with the pledge for no broad income tax increases. A new form of tax relief for individuals working remotely is a possible outcome of the Department of Business, Enterprise and Innovation public consultation on Guidance for Remote Working. Some responses to this summer consultation called for changes to the tax rules for reimbursement of employee expenses and changes to the tax treatment of expenses incurred by employees. We may see some tweaks to the Irish Tax Code in response. Corporation taxThe government reaffirmed its commitment to the 12.5% corporation tax rate in the Programme for Government. The importance of this commitment is evident in the remarkable tax receipts for the eight months to end of August 2020, which are largely driven by large corporation tax increases along with a strong start to the year pre-COVID-19 and more resilient income tax receipts. Ireland is obliged under EU law to implement changes to our tax code to restrict the interest tax deduction taken by companies. At the time of writing, these changes are more likely to take effect in 2022. The EU agreed last year to park its digital tax proposals in order to allow global consensus be reached through the OECD digital tax discussions. Changes to accommodate any digital tax proposals will be premature in 2020 and, therefore, unlikely to be a feature of Budget 2021. Capital taxes In order to further stimulate the economy, lowering both the CGT and CAT rates will likely promote activity in the market and should ultimately see assets put to a more productive use. This rate reduction has been called for and debated in recent years. Perhaps Budget 2021 will deliver. Considering residential property prices have fallen in recent months, there may be scope to increase the related Stamp Duty rate. However, such a rate increase will likely be unpopular among constituents and not helpful considering the struggles reported by many in getting a foot on the property ladder. VATThe extension of the 9% VAT rate to construction services would help encourage the scale of property development needed to absorb the current demand and address the housing shortage. The re-introduction of the 9% VAT rate to stimulate the hospitality sector would complement the other measures, such as the Stay and Spend Tax Scheme. An extension of the new temporary 21% VAT rate, while desirable by many, is unlikely; the headline VAT rate is a useful revenue raising measure. Increasing the threshold for cash-receipts basis of accounting, and the VAT registration thresholds, may support businesses to deal with the current challenges. Old reliablesPetrol and diesel excise increases may feature, particularly in the context of requirements to address climate change. Increases in the excise to diesel only to bring it in line with the cost of petrol at the pumps is more likely. Excise increases on alcohol and cigarettes is possible but the hospitality sector has already taken a battering due to COVID-19 and any further perceived attacks may not be in favour. ConclusionOverall there isn’t the fiscal space for wide-ranging and significant tax reductions and reliefs in Budget 2021. But the Budget 2021 equation must consist of tailored tax measures to support and stimulate the hardest hit sectors of the Irish economy and defend against the impacts of a possible disorderly Brexit on the economy while also satisfying climate change targets.Kim Doyle FCA is Tax Director, Head of Tax Knowledge Centre in Grant Thornton.

Taking the time to carry out a corporate simplification project during COVID-19 could help sustain your business while safeguarding employees’ motivation and focus, writes Claire Lord.The effects of COVID-19 are severely impacting the global economy. To ensure long-term protection and sustainability, organisations are likely considering ways to reduce costs and improve business efficiencies. Simplifying your corporate structure by removing dormant or unnecessary companies is one way to achieve both objectives.It is not uncommon for organisations to have complicated corporate structures. While many companies within these structures serve a particular purpose that brings value to the business, other companies may be inactive and costing the organisation money to maintain. A lack of time and resources often results in organisations putting off any review of the efficacy of their corporate structures.Perhaps now, a time when employee capacity could be higher and long-term sustainability is a crucial focus, is time for your organisation to examine whether your current structure meets the changing needs of your business? The sooner the steps in a corporate simplification project are taken, the sooner your organisation can enjoy the many benefits.Cost savingsThe cost of maintaining a dormant or inactive company is usually understated. The actual cost can exceed €8,000 per year when compliance and audit costs are taken into account. This does not include the hidden costs of administration and employees’ and management’s time spent coordinating this compliance.Employee productivityMany employees are worried about job security as a result of COVID-19. A project demonstrating that your business is focused on long-term sustainability may help improve employee motivation and focus, consequently enhancing productivity and alleviating fears of job security. Workloads may also be lighter due to the impact of COVID-19 on the economy, and utilising employee time to assist with a simplification project can ensure that their time is spent productively to help sustain the business.Business efficiencyManagement, legal and compliance teams must focus their time, now more than ever, on the core companies required to sustain and grow a business. Eliminating unnecessary companies allows these teams the time to do that. A less complicated structure can also simplify the repatriation of cash from trading subsidiaries and other intra-group financing arrangements.Mitigate riskThe existence of a company can expose a business to risk, including error, fraud, or a failure to meet regulatory or compliance requirements. These risks arguably increase with dormant and inactive companies, given the likely reduction in monitoring as management focuses on the core companies required to run the business. There is also the risk that, over time, corporate memory will disappear, making it more difficult to assess whether a company needs to be retained.Governance standards and transparencyWith ever-changing legal and corporate governance requirements for companies, including new anti-bribery and data protection laws, ensuring that companies meet the required standards is a constant challenge. It is easier to maintain these standards with a less complicated structure. Improved transparency through a simplified structure is likely to be welcomed by investors, finance providers, and other stakeholders.Tax benefitsComplicated structures can sometimes lead to tax inefficiencies, such as tax leakage or additional tax compliance burdens when repatriating cash through the business. Simplifying the complexity of a structure may resolve these inefficiencies and allow for improved tax planning for the business.ConclusionAt a time when organisations must reduce costs and increase business efficiencies to ensure long-term sustainability, considering a corporate simplification project may be a simple step that delivers meaningful results.Claire Lord is a Corporate Partner and Head of Governance and Compliance at Mason Hayes & Curran.

Kieran Moynihan explains how boards, and non-executive directors, in particular, can optimise decision-making during times of crisis.A veteran non-executive board director (NED) recently shared valuable insights into the workings of an experienced board dealing with the severe impacts of COVID-19 on the organisation. While this is quite an experienced board with battle-hardened veterans in both the executive and non-executive ranks, he indicated that they collectively struggled with the enormity of the challenge facing the organisation.While the board was quite mature in terms of risk management and business continuity planning, several significant decisions were required in a very short time frame. He was extremely complimentary of the efforts, understanding and commitment of the employees to the organisation as well as the outstanding leadership shown by the CEO and executive team. He also highlighted how much the NEDs “rolled up their sleeves” and provided great support in reviewing, challenging, and providing valuable input to the crisis management plan. He highlighted that the CEO witnessed a “new side” to the board whereby it demonstrated a huge commitment not only to the organisation, but in supporting the CEO and executive team as they implemented an elaborate crisis management plan under severe pressure.Unfortunately, some boards have not performed as well during the crisis. The core problem, I believe, is often the calibre of board members. Some are not strong enough to cope well in an emergency to add any strategic value to the executive team. This scenario continues to play out in boards across the world where, in some cases, board and executive teams have faced existential challenges in terms of their organisation’s survival. Amid the devastating impact on employees, an organisation’s financial health, and its shareholders and stakeholders, boards must stand up and be counted like never before.The following definition of crisis management from Deloitte caught my eye recently: “Crisis management is a special, strategic discipline that enables an organisation to leave ‘business as usual’ behind, and to enter a different mode of governance and operations, designed to get decisions made, implemented and communicated quickly, with clear – but different – designated authorities.” While a board has many broad types of responsibilities, the fundamental duty of a board is to make significant decisions. At a time of extreme crisis management, this acute responsibility comes to the fore. It represents a real test of a board of directors in terms of its calibre, decisiveness, effectiveness, judgement, and performance. The following factors can help a board optimise decision-making in the eye of a storm.Quality informationThe brutal reality of the COVID-19 crisis is that major decisions must be made in compressed time frames of days or, in extreme cases, hours. Many of these decisions have serious consequences for the organisation and its employees, customers, shareholders, and stakeholders. Board chairs have a critical role in enabling the board to overcome these compressed review/decision cycles and drive coherent and decisive decision-making.In normal times, quality information is the lifeblood of a board in terms of significant decision-making. In times of crisis, however, it is challenging for the CEO and executive team to create comprehensive board packs when you may have just 24 hours before the next virtual board meeting. In this context, quality is more important than quantity in terms of helping the board understand the logic behind significant proposals from the CEO and executive team.While not ideal, firefighting CEOs and executive teams rely heavily on gut instinct to choose from what appear to be radically different options. It is essential to provide the NEDs with your gut instincts and blunt assessment of the pros and cons of each option.Challenge, debate, and oversightWhen the stakes are high for significant board decisions, the board must maintain the highest standards of challenge, debate, and oversight. A CEO and executive team under severe pressure could undoubtedly get a big call wrong or struggle to create a coherent proposal for consideration by the board. Despite the challenging time frames for decision-making, NEDs must prepare for board meetings, ask hard questions, and add genuine value (in some cases, by identifying additional options or variations/combinations of options that will help the executive team see the wood from the trees).The board chair has a vital role in balancing the level of challenge, debate, and oversight with supporting the CEO and executive team. Genuine board diversity has been a very positive strength for boards as the broader range of thinking styles has enabled greater left-field thinking and more creative problem-solving, while significantly reducing the potential for group-think. At such a crucial time, shareholders, employees and stakeholders rely heavily on NEDs to provide such critical challenge, debate, and oversight to reach the best decisions.The trust equationThe COVID-19 crisis is testing the bonds in many board teams. In such fraught times, tensions can morph into damaging conflict, which boards can do without. While some high-performing board teams have managed this challenge in their stride, this crisis has also galvanised many board teams around a common purpose.A crisis of this magnitude shines a bright light on the ‘trust equation’ of a board. It can be challenging in such a volatile landscape, with so much uncertainty in each sector, to make concrete decisions. Decisiveness, however, is nevertheless a vital trait for a board in crisis management situations, and it is much more effective when the trust quotient is high. In order to strengthen trust, boards can extend a greater degree of latitude than normal to the CEO and executive team, enabling them to provide timely, insightful updates back to the board on the progress of major decision implementation.Changing courseOne of the most challenging aspects of the crisis for many company boards has been facing up to the requirement in specific sectors to make significant changes to the company’s business model and strategy. For companies that had a dominant market position for many years, it can be challenging to face up to the reality that the market has changed, customer requirements have changed, and in some cases, barriers to entry have been lowered with disruptive new technologies.'Independence of mind' is a critical quality in a NED whereby the board director who is not involved day-to-day is able to step back, take a cold, objective view on the organisation’s position, assess the options and implications of a major proposal being put forward by the CEO and provide a sound independent judgement. In this scenario, where an organisation is facing severe challenges to its existing strategy and business model, independence of mind in the NEDs plays a critical role as it can help the board and executive team face up to and address severe challenges to the existing strategy. Some boards might hope that everything will go back to normal but, for most sectors, things will never be the same. As a result, the organisations that adapt will stand a much higher chance of thriving in the years ahead. Throughout the crisis, I have seen several progressive NEDs utilise this time as an opportunity to evolve the overall mindset and level of ambition in the organisation. NEDs are ideally placed to catalyse this evolving growth mindset as in the majority of cases, the CEO and executive team are in firefighting mode and struggle to have the bandwidth to think strategically and grasp the growth opportunities that the organisation could be presented with.External expertiseWe are in uncharted waters in terms of crisis management. As a board gears up to make big decisions, it is vital that, where appropriate, key shareholders and stakeholders are consulted. They will be forced to live with the consequences of the board’s decisions for years to come.Besides the fact that this is the right thing to do, engagement builds support and is formally required in some instances. It will also provide valuable feedback that, in specific scenarios, may be incorporated into the board’s thought processes.It is also vital that, where needed, external expertise is sought to assist with significant decisions. This might be an existing advisory partner who understands the organisation and sector, or an independent sector expert who could provide an objective assessment of the options.Avoid ‘all-in’ decisionsI play chess at a competitive level, and one of the things you learn as you get more experienced is to avoid, wherever possible, making very committal decisions. This is particularly important when the chessboard is ‘on fire’ with severe complications, and it is simply not possible to calculate the variations. Instead, you seek to stay in the game and get through the next few moves. As the board position becomes clearer, you then make a more committal decision as you execute your plan.The COVID-19 crisis is changing by the hour. As governments struggle to balance the resumption of normal life with the associated public health risks, it is tough for the majority of boards to accurately predict how their sector will look in three months, not to mention one year from now. In some cases, companies are being forced to consider severe changes to their business model. Boards should avoid making premature decisions based on assumptions about how the COVID-19 crisis will influence customer behaviours, business models, and the overall business landscape. Like a game of chess, boards would be wise to develop a range of scenarios linked to the public health and associated economic impacts with appropriate trigger points.Understand the broader impactsAt the start of the year, many boards had made significant progress in increasing their focus on environment, social and governance (ESG) goals, employee engagement, and ‘doing the right thing’ in terms of focusing on the long-term, sustainable wellbeing of the organisation. This has since been severely tested in how boards signed-off on significant decisions impacting their employees, customers, and stakeholders.In some cases, the COVID-19 crisis is undermining much of the significant progress made with decisions favouring short-term shareholder interests at the expense of employees, other stakeholders, and the long-term sustainability of the organisation. Throughout the world, employees have demonstrated incredibly strong commitment and understanding to their organisations and customers. How boards respond to this commitment says a lot about the character, culture, integrity, and values of an organisation. It is encouraging to see a significant number of institutional investors highlight the importance of this for their portfolio of listed companies. In many respects, we saw ESG at its very best in the first few months of the crisis with so many employees and organisations stepping up to help society in its time of need.I strongly believe that the organisations that commit long-term to the core ESG principles of sustainability, partnering with their employees, going the extra mile for their customers and “doing the right thing to ensure the longer-term interests of the organisation” will be the organisations that flourish and thrive going into this uncertain future. The board has a critical leadership role in this. We are moving into an era where progressive boards are evolving into a far more thoughtful balancing of the interests of shareholders, employees and stakeholders. The COVID-19 crisis has crystallised the importance of this multi-stakeholder engagement model and is now firmly in the mindset of customers, prospective employees, partners and investors when they consider engaging with organisations.ConclusionSeven months on, boards continue to grapple with COVID-19 and struggle to make some of the most significant decisions ever made in the history of their organisation. Even the strongest, most high-performing boards struggle to get this right, so for any board members struggling right now, you are not alone.This is a time for board teams to pull together and work closely with the CEO and executive team. Through challenge and debate, you will collectively make the best decisions possible and help your employees, shareholders, and stakeholders envision a path to better days ahead.Key takeaways for boards and non-executive directorsAt a time of such crisis and volatility, it is vital for the board to regularly discuss what is happening with your customers, how the crisis is impacting them, how their requirements are changing both short-,  medium-and longer-term and how the organisation needs to adapt to support your customers.It has never been more vital for the executive reporting to the board to be high-quality, succinct and utilising executive summaries to enable the board members to prepare effectively for the board meeting and assist in the creation of a meeting that can focus on strategic and “move-the-needle” type discussions.Balance cost-cutting, productivity and risk mitigation with supporting innovation-led growth and strategy and business model shifts where needed.Be aware that boards are moving to agile approaches to strategy and budgeting using scenario planning and triggers that work better in situations of high uncertainty such as the ongoing COVID-19 crisis.Organisations, as they facing their greatest crisis, have never had such a strong requirement for board members to demonstrate a great work ethic and commitment to the board and organisation.Kieran Moynihan is Managing Partner at Board Excellence, which supports boards in Ireland, the UK and mainland Europe.

Mark Kennedy explains how ESG strategies that combine uncertainty management with resilience can lead to a differentiated and sustainable market position.There is an urban myth that COVID-19 has displaced the focus on sustainability issues as a significant concern of business leaders. The pandemic has certainly consumed much of our attention in the past six months but rather than replace the concern about sustainability issues, I would argue that COVID-19 has underlined in a profound way why businesses must engage with sustainability (or environment, social and governance (ESG)) issues if they are to achieve long-term success.A strategic approach to ESG means engaging not only with climate change, but also with the range of societal and governance issues that relate to the risk profile of any business. This is a significant exercise and requires a full view of the business, its operations, and its positioning. The primary role of the leadership team, then, is to formulate strategy and create an environment in which the business can address ESG in a structured way while creating a long-term competitive advantage using ESG as a strategic vector. Such an approach requires boards to consider both the risks and opportunities presented by ESG issues.Risk and resilienceLet us start with risk. Today, we acknowledge that the challenge of business risk management has been transformed in two ways. First, the level of uncertainty has changed. We recognise that unpredictability has increased and that the analysis of uncertainty is becoming a discipline in itself. Second, and perhaps conversely, we can know more about risks and their likelihood than ever before. Despite the feeling of shock we all experienced in relation to COVID-19, experts have been predicting a pandemic event for over a decade. Similarly, the impacts of an overly financialised economy and climate change have been flagged for many years. However, business leaders have not traditionally gathered the data and assessed the consequences of these types of event for their business.Of course, ESG offers an opportunity for many, if not all, businesses. Some will benefit from a clear trend in consumer preferences. There is both a marketing and value advantage to firms positioning appropriately on the ESG issues that relate to their ‘theory of the business’. There are also profound advantages in taking a long-term view of strategic elements of a business, such as supply chain, resource management, financing and state aid, and fiscal policies. The EU Commission has supercharged this trend by creating the EU Green Deal, which provides for a radical reorganisation of economic incentives to support profound environmental action. There is also the unarguable benefit to any business of avoiding the worst consequences of crises. Writing about the improvements made to the resilience of financial systems over the ten years since the global financial crisis, Jon Coaffee noted that “the trick now is to ensure they are fit for purpose, and that means baking in flexibility and adaptability in a way that means they not only bounce back, but also bounce forwards when disruption hits”.Making sense of ESGSo, how does a business begin to address what could be a vast and confusing topic? Boards must consider five key issues to address ESG in a structured way.Understand: the board must take a lead in understanding the ESG context. What are the elements? How do they relate to business? Which are relevant to the theory of business/business model? As well as taking steps to understand the issues themselves, the board must also create a framework for the whole business to understand the context, and for all team members to understand why ESG is important and how it impacts their sphere of influence.Analyse: data is king. We must understand the key assumptions that drive the business and results. We must also analyse carefully the impact of ESG issues on those assumptions. This is a significant exercise and leads to the development of key performance indicators (KPIs), which can steer the business effectively.Plan for uncertainty: the management of risk and unpredictability has become a discipline in itself. Techniques such as forecasting, back-testing, crisis simulation, trend analysis and wargaming can form the basis for a board’s evaluation of the issues and possible solutions.Execute: execution differentiates the successful. Change management, influencing behaviours, reporting, and governance are all essential elements of a successful ESG strategy.Embed processes and strategies: finally, businesses must embed the ESG strategy, as they must any strategic component. This means building the key elements into our culture, infrastructures, feedback systems and reporting.The four Rs of resilienceUncertainty management is a key concept in any strategic analysis. A second key concept might be resilience. Since the global financial crisis, we have progressively moved towards a more resilient financial system. If the COVID-19 pandemic has demonstrated anything, it is the need to embed resilience in businesses even more widely. What do I mean by resilience? In essence, it has four characteristics:Robustness: the capacity to withstand shock. In a business context, this might include the consideration of issues such as liquidity reserves, brand loyalty, and stock on hand.Resourcefulness: the availability of adequate resources to continue business during a period of crisis. This includes capital assets, financial capital (both equity and debt), operational assets, and people.Responsiveness: the ability to respond effectively during a crisis. This includes governance arrangements, communication technologies, and the processes to make them work.Redundancy: availability of alternatives where there is damage to, or failure of, a key business component. Can an alternate supplier be found? Have we more than one distribution channel? Can additional staff be sourced?In combination, an ESG strategy that embeds both a sophisticated uncertainty management approach and a resilience model offers a business a differentiated and sustainable market position.A look aheadWe have seen how an event beyond our control – in this case, COVID-19 – can impact businesses and push them beyond the normal operating range. Indeed, we have seen businesses succeed – even in these circumstances.The ESG agenda sets out a template for considering both the risks and opportunities facing a business model. The importance of addressing these issues is also increasingly acknowledged by investors and authorities.In Europe, we will see the emergence of additional and more prescriptive non-financial reporting standards over the next two years. The UK, US and China are also working on these issues. This is forcing a change agenda on the business community and creating a situation where both public and private supports provided during the pandemic might be allocated in a more directed fashion.The science tells us that disruptive events will occur periodically, whether economic, financial, geopolitical or public-health. The question is: will your business be ready?The link between ESG and SDGEnvironmental, social, and governance (ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business.There is mounting evidence that businesses which focus on ESG as a core part of their strategy outperform rivals in the medium-term and long-term. There are three pillars of ESG, which together form a framework for businesses to consider their strategic focus. They are economic, environment, and society.The ESG pillars are linked to the UN Sustainable Development Goals (SDGs), which provide a roadmap for society to address key sustainability challenges. The SDGs list 17 global goals, designed to be a “blueprint to achieve a better and more sustainable future for all”. Set in 2015 by the United Nations General Assembly and intended to be achieved by 2030, the SDGs are part of UN Resolution 70/1, the 2030 Agenda.The Sustainable Development Goals are:No povertyZero hungerGood health and wellbeingQuality educationGender equalityClean water and sanitationAffordable and clean energyDecent work and economic growthIndustry, innovation and infrastructureReduced inequalitySustainable cities and communitiesResponsible consumption productionClimate actionLife below waterLife on landPeace and justice strong institutionsPartnerships to achieve the goalFor business leaders, the SDGs and the ESG pillars provide a template that allows businesses to consider their strategic position in an ESG context.Mark Kennedy FCA is Managing Partner at Mazars Ireland.

Donnchadh O’Neill explains why boards and their advisers will have to tread carefully as they work to recover their foothold in the new landscape.All professional advisers, including Chartered Accountants, are seeking new ways to support their clients. They are helping them navigate unprecedented changes in their workplaces, their financial reporting, their restructurings, and their contracts. In many cases, they are helping businesses fight for survival. Given the heightened risk of missteps in such a turbulent environment, corporate reputation management is now more vital than ever.In the short-term, clients face practical and legal considerations affecting business reopening following a Government-induced coma. Finance functions have been virtualised and governance structures tested. Workforce and workplace transformation has been sudden. Margin sustainability is the new short-term challenge as costs increase, and that is before you consider the looming recession and inevitable insolvencies that will follow.In the last crisis, services and supports to business changed with firms flexing different muscles more suited to the adverse conditions. Liquidators and receivers found themselves in the headlines, sometimes even taking strict precautions to protect their safety by avoiding media attention.Now no one can predict with any accuracy where this crisis will lead in working trends, in accountability requirements, and in ownership structures post-bailouts and business retrenchment as we face into recession. It is easy to foresee the bloodbath on Grafton Street and in specific sectors, which has already begun in terms of liquidations and receiverships. What is more intangible is the effect this long drawn out crisis will have on corporate behaviour, communications, and corporate reputation. Chartered Accountants are on the front line with their clients as these winds blow.I have worked over many years with excellent companies delivering on what they see as their mandate for their various stakeholders. They focus on delivering shareholder value, but also stakeholder value. Following the financial crisis, good corporate ethics, culture, and governance became a priority. Chartered Accountants Ireland shared a leadership role in this arena, with strong educational initiatives to teach and support members, business executives, and even directors. Accountants helped their clients develop risk management processes, including reputation risk, to embed prudence into corporate culture, prevent hubris, and guide decision-making.Regulation increased, especially in the financial services sector. The banking industry set out to address its behaviours by establishing the Irish Banking Culture Board. The EU grew its oversight activity by exercising its muscle to protect consumers. As climate change moved up the public agenda, companies began to include sustainability reports in their annual reports – and this will continue.Over the past number of years, the corporate sector has increasingly had to become more socially conscious, valuing and measuring its societal impact and its corporate reputation. This emergency has put a whole new speed and power behind what was already a growing trend. As harder decisions are taken in the months ahead, companies and clients will need sound judgement as they implement decisions that have a societal, as well as a financial, impact. The climate crisis is upon us and is already forcing its own reset. Failure to make decisions that account for the common good and the public interest can wreak enormous reputational damage and all the attendant costs of that. Great care and balanced thinking will see companies achieve their goals without being forced by political or public opinion to backtrack or revisit decisions ineptly announced or executed. Markets will judge companies ever more so on their ethical behaviour.Look at the public interest trend of late: companies and wages being kept afloat by the State;   companies declaring a pause in dividends (if only to preserve cash); others being mandated to do so (e.g. the banks). More than 300 listed companies in the UK have cut or cancelled pay-outs. Money earmarked for shareholders will be used instead to service or repay debt, or just to stay afloat. The insurance industry was elbowed by the Minister for Finance, while the courts will probably have the final say. Companies such as Aldi pledged to pay their small suppliers early to keep their cash flow healthy.I do not doubt that as governments the world over ultimately face the bill for this COVID-19 bailout, tax and tax avoidance and wealth taxes will move much faster to the top of the agenda. This will feed into director and corporate reputation management, and advisers will have to be aware of the spirit as well as the letter of the law when advising clients.Commentators are already forecasting a shift away from capitalism and globalisation – that will continue. Growing your food locally and manufacturing locally suddenly look like viable ways to manage your own future risk. Brexit and global trade wars are yet to hit, not to mention the effects of preparing businesses for a low-carbon future.Will companies and their financial advisers, expected to act as citizens, focus on protecting and building up their social capital as well as their share capital? Employee health and protection became the top priority in recent months. How do you provide for unknown bottom line impacts for employee illness, absenteeism, or indeed legal claims? Insecure, gig economy, zero-hours type jobs have also been exposed for their human cruelty, and there will be a continuing priority on workers’ economic health (possibly even a universal wage or basic income for all).While capital will naturally only go where it has a reasonable expectation of a return, will investors be forced to rethink what is proper and possible for successful companies in an era of depression? How will directors and boards justify levels of executive remuneration that might look extreme and still manage to retain the permission to operate under a social contract, maintaining trust and enjoying a corporate reputation that underpins value? Apart from taxes, will companies have to become almost philanthropic in some of their behaviours?Corporate activism will grow as companies need to be seen to be responsible; to solve, not just sell. Liquidators and receivers will have to execute their mandates with an assured eye on the public and political impact of their decisions.Will companies build and wield their ‘soft power’ in focusing on purpose as well as profit? We have all admired genuine public service and public servants in recent months. Will the era of State-owned commercial entities come back into fashion by necessity, forced to step in and own hotels (remember Great Southern?), airlines, food companies (remember Irish Sugar and Erin Foods?), shops and insurance companies? We might well be facing an era of “de-privatisation”.In a perfect storm of increased costs, reduced margins, and recessionary outlook, with bankers and receivers taking hard decisions, the need for companies to communicate, to explain, to justify and most of all, to “do no harm” will be right up there among the top commandments. Boards and their advisers will have to tread carefully as they adjust, speak, and act to recover their foothold in the new landscape. Companies will sustain great reputations not just because they have great products and services, but also because they take full account, in advance, of the public impact on – and reactions to – their decisions.Donnchadh O’Neill is Managing Director of Gibney Communications.

Dr Annette Clancy explains why a growth mindset is critical to success when faced with relentless, and seemingly endless, uncertainty.COVID-19 forced companies to adapt and change with unprecedented speed. Change is always on the agenda, but the pandemic accelerated it. Right now, organisations are planning to bring people safely back to the workplace. Planning is essential to reassure workers and clients that their safety is a priority but, as COVID-19 has demonstrated, plans are only partly useful in a context where the future is complex and unpredictable. Organisations will need to cultivate adaptability to continue to respond to this ever-changing environment.AdaptabilityCarol Dweck is a Professor of Psychology at Stanford University who researches human motivation. After studying the behaviour of thousands of children and their attitude to failure, she coined the terms ‘fixed mindset’ and ‘growth mindset’ to describe people’s beliefs about learning. A fixed mindset assumes that intelligence or character is limited in the sense that it cannot change. As a result, people see effort as fruitless and obstacles as indicators that they should stop working. A growth mindset thrives on challenges and learns from criticism. It sees obstacles as opportunities to learn and persists when faced with a challenge.Dweck’s mindset theory has been enormously influential in how we think about motivation and adaptability, not only in relation to children but also because of its applicability to people and organisations more generally. Dweck’s book, Mindset, has been a best-seller since its publication in 2006. And it has particular relevance today, as a growth mindset approach to planning amid a pandemic is likely to yield more benefits than a fixed mindset approach.The power of ‘yet’Those with a growth mindset do not view obstacles or challenges as failures. Rather, they view them as challenges to be overcome. Dweck shared the following example in her 2014 TED talk.“I heard about a high school in Chicago where students had to pass a certain number of courses to graduate, and if they didn’t pass a course, they got the grade ‘Not Yet’. And I thought that was fantastic, because if you get a failing grade, you think, I’m nothing, I’m nowhere. But if you get the grade ‘Not Yet’, you understand that you’re on a learning curve. It gives you a path into the future.”The concept of ‘yet’ removes the fear of failure. It suggests that it is possible to achieve outcomes with adaptability or change, thereby increasing the likelihood of increased cooperation and the free flow of ideas. From a fixed mindset perspective, changing direction or re-strategising is a significant problem that may throw the company off direction. From a growth mindset perspective, this may be a challenge, but also an opportunity to adapt creatively.Dweck’s research suggests that the latter framing allows for psychological adaptability, which will yield practical results.The blame gameDweck tells us that blame is part of a fixed mindset, as she explains in this quote from her book: “When bosses become controlling and abusive, they put everyone into a fixed mindset. This means that instead of learning, growing, and moving the company forward, everyone starts worrying about being judged.”This type of atmosphere inhibits creativity because employees will fear being blamed for risk-taking, which is central to adaptability. Leaders who exhibit a growth mindset have a vested interest in developing people and encouraging creativity. They rarely use the company as a vehicle for narcissistic posturing. Their interest is in growing the company and supporting the creative adaptability that will ensure the success of the organisation and its people.COVID-19 is pushing everyone to adapt to new ways of working. Dweck’s research on mindsets offers one perspective on enhancing creativity at a time of uncertainty and change.Dr Annette Clancy is Assistant Professor of Management at the School of Art History and Cultural Policy at UCD.

Although the relentless adoption of technology is not without risk, the audit – and the profession as a whole – stand to be net beneficiaries in the long-run, writes Lynn Abbott.The COVID-19 pandemic will undoubtedly usher in a new era for business. There have already been significant changes, with some businesses creating their first online store or introducing contactless payments. Others, however, have realised that they must introduce more sweeping changes, such as offering staff the ability to work remotely. We have yet to see the impact of these changes, but the world will be a different place to the one we knew previously.The Oxford English Dictionary defines a revolution as “a great change in conditions, ways of working, beliefs, etc. that affects large numbers of people”. This accurately describes the transformation that was already underway in audit before the COVID-19 crisis. With advancements in technology, the use of data analytics, artificial intelligence and machine learning are fundamentally changing how business works. Resistance is not only futile but seems to put companies at a competitive disadvantage. The COVID-19 crisis will only serve to accelerate this process, and professional services firms are no exception.Drivers of the revolutionWhen we hear buzzwords like 'data analytics', 'artificial intelligence' and 'machine learning', it can be intimidating. Many people don’t fully understand such concepts, but in truth, you don’t need to. You just need to get comfortable with them. And you probably already are: familiar services like Netflix or Spotify use artificial intelligence to understand your preferences and make subsequent suggestions based on that knowledge. The level of consumers’ expectations is continually increasing, and the successful companies are those that are advancing with technology. The same is true for businesses and their expectations. In audit, the revolution is underway and the sections that follow highlight the key drivers for this change.Improve the audit experienceThe volume of data available to auditors is astounding, but in most cases, this data is simply not being used. If this were happening in any other industry, there would be questions to answer. Data analytics can improve the audit experience in several ways, for both the audit team and for the client.Improve audit qualityDuring the planning phase of the audit, audit teams must shift their focus away from the old mindset of “what could go wrong?” Through analytics, we can turn our attention from what could go wrong to what has gone wrong. Auditors have access to the client’s complete financial data for the period under audit – if they focus on analysing and understanding the data, they could identify an unexpected transaction or trend in the process. During the execution phase, auditors should also build on the knowledge gained in planning to truly understand the business in question and focus their attention on higher risk transactions. Finally, auditors should move away from a ‘random sample’ approach and, instead, focus on the transactions that appear unusual based on their knowledge of the client, business or industry. These are just a few areas where improvements in audit quality can be achieved using data analytics.Improve efficiencyIn the examples above, the use of data analytics in planning will identify what has gone wrong and any associated unusual transactions. In execution, these transactions will be tested as part of the audit sample. It could also cover some requirements under auditing standards concerning journal entry testing, as the journal entries will likely be the data that highlighted what went wrong in the first place. Again, this is just one example of efficiencies gained without even considering the hours saved by automating processes like creation of lead schedules and population of work papers.Post-pandemic worldThe world will be a very different place in years to come. Firms with the ability to perform in-depth analysis using data analytics undoubtedly have a significant advantage over those that do not, given the efficiencies they can gain and the potential reduction of physical evidence required from clients, among other things. Due to the changes we have all had to endure, auditors may also have additional procedures to perform (e.g. roll-back procedures where they were unable to attend stock counts at year-end due to the COVID-19 closures of businesses). Such procedures have the potential to be automated, saving even more time and effort for audit teams.Improve engagementRather than spend time performing mundane tasks such as testing large randomised samples, data analytics allows audit teams to jump into the unusual transactions. This will make the job more interesting to auditors and cultivate a curious and questioning mindset, which will, in turn, lead to improved scepticism and audit quality.Improve client experienceThis might happen in two ways. First, the time saved by the client’s staff (who, in theory, will have fewer samples for which to provide support) and second, through the value the audit adds to the business. As an example, consider an audit team performing data analysis on the payroll for their client. As payroll is a standardised process, the audit team has an expectation around the number of debits and credits they would see posted to the respective payroll accounts each month. As part of their analysis, however, they find an inconsistent pattern. This can be queried as part of the audit and the client will be better able to understand a payroll problem, which they were previously oblivious to.Client expectationsGiven the level of data analysis that occurs daily in the life of anyone using a smartphone, a consistent, high quality is understandably expected in people’s professional lives, too. Audit clients, like all consumers, want more. They want a better and faster audit. They want an audit that requires minimal interference with the day-to-day running of their business, without compromising the quality of the auditor’s work. With troves of data now available to auditors, such expectations are not entirely unreasonable. Audit firms have access to vast amounts of financial and related data – in some instances, millions of lines of information – that, if analysed robustly and adequately, would improve their processes, their clients’ experience, and the quality of their audit files.Aspirations of professionalsAudit professionals can often struggle with work-life balance. Though most firms are getting on top of remote working, the hours in busy season are long. In a time of continuous connectivity, the time frame around ‘busy season’ is also becoming blurred. Through the use of technology, we will one day make auditing a 'nine to five' job. Many will scoff at that idea and, although I do not expect this to happen in the next five years, or even ten years, it is possible. By automating mundane tasks and continuously upskilling our graduates, we can transform how an audit team completes work. There will be more scope to complete work before clients’ financial year-ends, thus moving much of the audit out of the traditional ‘busy season’. Machines can complete specific tasks overnight so that auditors could arrive at their desk, ready to work on a pre-populated work paper that needs to be analysed by a person with the right knowledge. With appropriate engagement by all parties (i.e. audit teams, senior management, and audit clients), we could significantly reduce the hours spent on audit engagements and give this time back to auditors. Along with attracting high-calibre graduates, we will retain high-quality auditors in the industry while also avoiding mental fatigue and burnout, which will again lead to better quality audits.Graduate recruitmentGraduates joining firms in recent years have particular expectations of the working world. They want job satisfaction, flexible hours, remote working, and an engaging role that will challenge them. Professional services firms have to compete for the very best graduates, and no longer just against each other – a host of technology-enabled businesses are attracting talent on an unprecedented scale by meeting the needs listed above. Technology, and data analytics, in particular, can offer the solution to the graduate recruitment challenge – by making the work more efficient and automating mundane and repetitive tasks, graduates can instead focus on analysis. When people find their work challenging and interesting, they will feel more engaged.ChallengesThis move towards technology is not without its risks to the profession. Automating basic tasks removes the opportunity for graduates to form a deep understanding of these sections of the audit file. The onus is therefore on the current cohort of Chartered Accountants to take the reins, both to drive technology advancement forward and also provide practical, on-the-job coaching to ensure that this knowledge is not lost for the generations that follow.Lynn Abbott ACA is an Audit Inspector and Audit Analytics Expert in the Audit Quality Unit at IAASA.

John Kennedy explains how Chartered Accountants can help their clients break free from the shackles of their current challenges and, instead, work towards a brighter future.As we continue to deal with the implications of the untamed coronavirus, we have all been forced to pause and take stock. Many things we historically assumed can no longer be taken for granted. We, therefore, need to learn new habits, develop new routines, and adopt new ways of thinking.At the core of that change is the need to secure our future by identifying, and wisely investing in, our most precious assets. Take a moment to pause and think of the most valuable assets your practice holds – what are they?In my opinion, there are two: attention and energy. Your future success will be determined by your ability to take control of your attention and energy and, in turn, by how you guide your clients to invest their attention and energy where it is most productive and provides the greatest return. You and your clients must stop wasting your attention and energy on unproductive, corrosive thinking.Corrosive and constructive thinkingThe world is flooded with corrosive thinking right now. And, like anything with massive oversupply, it has no value. Corrosive thinking keeps you in a closed loop of negativity, consuming your attention and energy by focusing on the missteps, the problems, and how costly they will be. You will get no positive return on the attention and energy you invest in corrosive thinking.Constructive thinking, on the other hand, is entirely different. It is scarce and, therefore, has an unusually high value. Constructive thinking moves you away from worrying about how you and your clients reached this difficult place and, instead, focuses your attention and energy on reaching a better place. To move from A to B, however, requires the wise and judicious investment of your vital resources.The key is to take control of your future decisively. This is not an invitation to undertake some form of positive thinking or encourage you to merely wish or hope for better times. It is quite the opposite. It is a specific and practical skill that will enable you to create a clear image of a better future and identify the steps to reach that destination.The kitchen testNeuroscience has helped us understand how to harness the power of our brain and use our capacity to think more effectively. If you don’t take control of this capacity, your brain can easily work against you or steer you off-course. But when you know how to harness the power of your brain and focus it on success, profound change is possible.Achieving the success you seek always begins with creating a clear image of that success. Let us put it to the test.Take a moment to think about a room you are familiar with. Your kitchen is a good place to start. As you develop a clear and vivid image of your kitchen, your mind will work with you and help you set out in great detail the many specific aspects of your kitchen. You will be able to give this image real substance – the colour of the walls, the type of floor, or any paintings, pictures or posters on the walls, for example. You can create an image that is clear, vivid and substantial – and that is a very useful talent.The kitchen test shows that you can harness your thinking to work your way through the recent crisis and create a clear image of a better future. This is key to your investment strategy, as you can create an image of future success that has the same level of detail and clarity as to the image of your kitchenWhy is this important in terms of your future success and your success with clients? Left uncontrolled, your mind will come up with detailed and comprehensive images of the difficult situation you are in. It will default to wasting your much-needed energy by placing too much emphasis on the worries of the present. However, the troublesome present is where the problems lie. You want to be in a better place, but you have – at best – a vague and hazy image of that destination.The difficulties of your current reality will appear more potent than any possible future success. And since the mind values clear and detailed images, it will be drawn to where clarity and detail already exist – in this case, on the difficulties of the present situation. This is why the strength and scale of your problems seem to grow and grow. The more you focus your attention and energy on your current difficulties, the more vivid they become to the point that you may not be able to discern a successful future at all.This is where your investment strategy can provide its most significant return.The high-return investment strategyIn taking active control of your thoughts, you can switch your attention and actively invest your energy where it can deliver a more valuable outcome. This is not a trivial skill – it is scarce, of high value, and the vital key to future success for you, your practice, and your clients.To get full value from this insight, you need to establish a new habit. From this point on, every time a client falls into the routine of talking about the worry and stress they face, take active control of the dialogue and help them create an image of a better future.Don’t waste their attention and energy on vague or wishful thinking. Instead, guide them to create a clear and vivid image of a better place, an image that is as clear and real as the image of your kitchen.Rather than dwell on familiar problems, set them on a quest to establish what a successful future would be like. Your client has already built a business that is successful enough to need your accountancy expertise. Now, you can use your insights to help them leverage their knowledge and experience to create an image of a successful future.Research has conclusively shown that this ability is central to the success of the very highest achievers, those who achieve great success and prevail at times of stress or uncertainty. By helping your clients invest their attention and energy in creating a clear and specific image of future success, you are providing them with an immediate and powerful resource. They turn their thinking, attention and, therefore, energy to what they want to accomplish.For more than three decades, I have encountered a habitual pattern of clients focusing on current problems rather than investing actively in future success. Ironically, this habit can be most pronounced at the very time when it is least useful – when the problems seem so large and so vivid and are the cause of significant corrosive stress.When managers, groups or teams spend their time thinking about their most challenging problems, they tend to become dispirited and demotivated. When you help your clients do the opposite, however, you will become a scarce resource: the route to a better place.John Kennedy is a strategic advisor. He has worked with leaders and senior management teams in a range of organisations and sectors.

David Lucas explains how businesses can access funding and trade through the COVID-19 crisis.The COVID-19 pandemic has impacted businesses throughout the country. Cash flow is scant, debt is mounting, and many companies have yet to resume trading in any meaningful way. Those that are trading again have returned to a desolate and unfamiliar environment. Shops and high streets are empty, many stores remain shuttered and, with further restrictions in the pipeline, dented consumer confidence in certain sectors looks unlikely to rebound fully until a vaccine is developed.SME supportsWithout access to significant cash reserves, liquidity and cashflow are critical concerns for many small- and medium-sized enterprises (SMEs). Fortunately, SMEs adversely affected by the COVID-19 crisis can access a range of Government supports. The schemes listed below have been well-received by business owners, but preparation is the key to a successful application.SBCI COVID-19 Working Capital SchemeThis scheme offers loans from €25,000 to €1.5 million at a maximum of 4% interest to SMEs and small mid-cap enterprises. Applicants must meet at least one criterion related to the impact of COVID-19 on their business and one innovation criterion as per the European Investment Fund’s (EIF) standard conditions. No security is required on loans up to €500,000.Future Growth Loan SchemeThis scheme aims to make up to €800 million in loans available for terms of seven to ten years to SMEs and small mid-cap businesses. Loans range from €25,000 to €3 million per eligible company, with loans up to €500,000 available without security. The initial maximum interest rate is capped at 4.5% for loans under €250,000 and 3.5% for loans more than or equal to €250,000 for the first six months. The rates after that are variable.Sustaining Enterprise FundSupport of up to €800,000 can be provided to eligible companies that have been negatively impacted by COVID-19. Funding will be provided for five years using repayable advances, grant aid, equity, or loan note, comprising a combination of repayable and up to 50% non-repayable support. Administration fees on repayable support will be 0% over the first six months and 4% per annum after that. Repayments will be due in years four and five.Restart Grant PlusRestart Grant Plus is an expansion of the Restart Grant scheme. It provides grants of €4,000 to €25,000 to businesses with 250 employees or less, turnover of less than €100,000 per employee, and a 25% reduction in turnover as a result of COVID-19.Trading Online VoucherGrants of up to €2,500 (with 10% co-funding from the business) are available to companies with ten employees or less seeking to build an online presence. The voucher is targeted at small businesses with little or no online presence, turnover of €2 million or less, and at least six months’ trading history.Business Continuity VoucherBusinesses employing up to 50 staff are eligible to apply for a Business Continuity Voucher to the value of €2,500 towards third-party consultancy costs to assist with developing short- and long-term strategies to deal with the COVID-19 pandemic.Pandemic Stabilisation and Recovery Fund (PSRF)The PSRF is set up to invest in large- and medium-sized enterprises employing more than 250 employees or with annual turnover of over €50 million. Enterprises must be able to demonstrate their business was commercially viable prior to the COVID-19 pandemic, and that they can return to viability and contribute to the Irish economy. Investments are made on a commercial basis and they will seek a return for this and can invest across the capital structure, from equity to debt.Temporary Wage Subsidy SchemeBusinesses have also relied on the Temporary Wage Subsidy Scheme (TWSS), which was replaced by the Employment Wage Subsidy Scheme (EWSS) in September. The main elements of the EWSS are as follows:A €203 flat-rate subsidy per employee per week for businesses with a decrease in turnover of 30% or more;Employers in all sectors may qualify, subject to meeting certain qualifying conditions; andThe EWSS will expire on 31 March 2021. The legislation, however, provides that it may be extended beyond that date.CashflowThe measures above can provide critical relief and cash support to businesses. However, there are other proactive and straightforward ways in which companies can meet their liquidity needs before repayment moratoriums expire in Q4.Businesses can optimise by selling slow-moving stock to generate cash, for example. Also, debtor management might sound obvious, but assets can become tied up and the longer a debt remains unpaid, the less likely it is to materialise.Debt fundingMany people talk about loan-to-value and property, but at the end of the day, cash repays debt. Property and asset values are significant from a security perspective, and the banks draw comfort from having this as security. However, in recent years, cashflow (and its recurring nature as the first port of call in servicing debt) has been increasingly analysed. Banks are not in the business of selling companies or property unless they have to, but they do need to see cash being generated to service the existing debt quantum.In this volatile business landscape, SMEs may need to renegotiate covenants or restructure debt. Many businesses will find themselves over-leveraged and unable to make their debt repayments as they fall due. Banks expect this in cases where COVID-19 has hit businesses hard, but the key to success is open communication with the bank or funder.Think of it as a partnership approach. Businesses must be extremely well-prepared as approaching a bank can be painstaking and time-consuming. That said, they do understand the position you are in; all business owner/managers want to be able to pay down debt and keep their businesses alive.The standard suite of bank covenants comprises leverage (net debt/EBITDA), interest cover, and debt service cover ratio (DSCR), with the latter often proving the most difficult to manage. As a result of existing trading circumstances, all three may have been breached or be approaching a breach. The banks have provided moratoriums in many cases, but they will need to be looked at and renegotiated as they expire later in the year.The amortisation or repayment profile on debt may also need to be readjusted to match the company’s ability to repay. COVID-19 has devastated many businesses, and some may never return to the same trading levels as before. This outcome would, therefore, require a re-calibration of amortisation; back-ending or reducing it may be the only option. Banks will likely begin to pursue ‘cash sweep’ mechanisms to reduce debt positions in a restructure. Cash sweeps can be administratively cumbersome but show the bank that you intend to work with them to pay down debt.Meanwhile, businesses seeking access to further funding must become familiar with the various options available. Alternative lenders can be less onerous in terms of covenants. They tend to lend a little bit more than the traditional banks and offer increased flexibility, but they also charge higher interest, often as high as 7%.Invoice discounting, where banks lend based on an entity’s debtor book, has also become a popular form of lending from a working capital perspective. It gives the lender increased security, as they have direct access to the debtor book. The facility limits can also grow concurrently with business growth.Private equityEquity is another potential option for SMEs in need of a capital injection. This route has become increasingly popular in recent years, as investors provide experience and growth potential as well as capital.Many business owners are apprehensive about trading a piece of their business, but it is always better to own 70% of a thriving venture than 100% of a failing one.ConclusionOpen communication is crucial at this uncertain time. Lenders understand the position many businesses are in and will expect requests to pay down debt at a slower rate, given that earning profiles may have changed. The key to success, however, is organisation and planning.Seven tips for approaching a bank during a crisisSeek expert advice. A skilled and experienced adviser will know what the bank and its advisers want and will be able to communicate this effectively.Accept the situation. Look for the positives and work with the advice given to you to identify areas for improvement in the business. Listen to recommendations and have robust discussions about solutions.Be honest. A bank likes certainty and predictability. These are uncertain times, so work with the bank and do your best.Prepare a deliverable plan. Create a budget that is real and deliverable, with actions and assumptions clearly laid out. Communicate. Deliver the information clearly and precisely to reduce the potential for misinterpretation and confusion. Don’t ignore the bank and hope that the problem will go away.Prepare. Talking to your bank can be a very confronting and stressful process. Be prepared for hard questions, and don’t take it personally.Have back-up plans. Speak to your adviser about alternatives in the market, be it a direct lender or private equity investment.David Lucas FCA is Corporate Finance Partner at PKF O’Connor, Leddy & Holmes.