Summer has faded and we’re now full swing into autumn, which is the perfect time to re-examine your goals and focus on what you can achieve by the end of the year. Moira Dunne outlines five easy steps to a more productive you. Autumn is a great time to reset and refocus. The summer months are often filled with distractions, especially as most will take the time to recharge and refresh. Now October has arrived, it is an excellent time to consider the final three months of the year. Review your goals Consider the goals you set at the start of the year. There may be goals you haven’t started yet or new goals that emerged as the year progressed. Now is the time to re-evaluate your priorities so you can focus on the most important things between now and December. Be realistic By this point, you should have a realistic view of your busy schedule. Where can you find extra time to work on your goals? Set one goal to achieve over a realistic timeframe. Once you make progress, you will feel productive and motivated to tackle the next one. Remove the vague The key to making progress is to break down a big goal into smaller actions; that way, you can begin to make gradual progress every week. Use short gaps in your schedule to work through a few tasks each day. They all add up and, if well planned, will result in you achieving the overall goal by your deadline. As Tim Herrera recently said in his Smarter Living article in the New York Times: “Rather than looking at tasks, projects or decisions as items that must be completed, slice them into the smallest possible units of progress, then knock them out one at a time”. Setting goals Here are five simple questions to help you set a good goal. What is the change I want to make? Be clear and specific. This will help you decide the work that needs to get done to achieve the goal. Why do I want to do it? What is my motivation? What difference will it make? Does this fit with my overall vision and purpose? When does this goal need to be achieved? Set a deadline for completion and then work backwards to set interim deadlines for smaller tasks along the way. This helps you stay motivated and focused throughout. What are the risks, the stumbling blocks or things that may prevent you from succeeding? List anything that may get in the way – things that could cause you to give up, things that blocked you in the past, things to avoid this time. What actual work needs to be done to achieve the goal? This will help you develop an action plan – essentially, to map out the work you need to get done. Action plan Once you work out the above steps, you can start to build your action plan. Add target dates, measures and resource names for who will complete the work. A simple table or an Excel spreadsheet will help you track your progress against the plan. How great would it feel to finish the year on a high? Now is the time to focus so you can have a productive fourth quarter. Moira Dunne is the Founder of BeProductive.ie.

Marie Donnelly, Chair of the Climate Change Advisory Council, discusses her organisation’s role in helping Ireland achieve  its ambitious climate change targets – and how Chartered Accountants, and we as individuals, can support that work – with the Institute’s Public Policy Leader, Cróna Clohisey FCA. Cróna Clohisey: First, as Chair of the Climate Change Advisory Council, could you explain your organisation’s purpose, remit, and ambitions? Marie Donnelly: The Climate Change Advisory Council was established by the Climate Action and Low Carbon Development Act in 2015. We are an independent advisory body, and our role is to assess and advise on how Ireland is making the transition to a low-carbon, climate-resilient and environmentally sustainable economy by 2050. It is probably relevant to point out that in July of this year, there was an amendment to that Act called the Climate Bill Amendment Act and it has had a material impact on the Council, both in terms of its operations and structures. For example, the Council is now mandated to bring forward carbon budgets for the five-year periods 2021–2025, 2026–2030 and a provisional one then from 2031–2035. These budgets set out the maximum amount of greenhouse gas emissions that can be emitted by Ireland in the five-year period. The budgets are all-economy budgets and once the Government receives them and hopefully accepts the budget from us, the Government then allocates the budget across each of the sectors with ministerial responsibility for keeping their sector within the budget. That’s the most immediate and visible action emanating from the Act. Each year, the Council also conducts an annual review. The annual review heretofore was a catch-up on a range of things. The Act is now quite specific in that the Council must review each sector, identify the emissions coming from each sector, and identify the policies and actions that are working or, as the case may be, not working. It’s a sectoral review, and much more detailed than has been the case up to now. The new form of review will begin in October 2022. In principle, the cycle is that the carbon budget will be published, the Government will allocate a budget to each of the sectors, and Government will then publish a Climate Action Plan. This plan has policies, practices, and initiatives by sector designed to reduce emissions and stay within the carbon budget. We then comment on each sector’s emissions and the following year, the Climate Action Plan will be adjusted because some things will have been done, or more needs to be done. We are into a rolling cycle of activity thereafter. It is often said that time is running out in our fight against climate change. For context, can you explain where the world is currently in terms of that fight, and what might happen in the decades ahead if the appropriate corrective action is not achieved? I think it is clear to everybody that climate change is already happening, even here in Ireland. If you look at the IPCC (Intergovernmental Panel on Climate Change) report that was published this summer, it was very well presented in that they had maps so you could pick up your own area and learn what is likely to happen. It is probably fair to say that the implications of climate change for more southerly countries include extensive droughts with a shortage of water, impacting on food production and, indeed, the capacity to live in some of those spaces. Further north, you could have greater cold measures with higher rainfall, snow and ice. The island of Ireland is in the middle. We are a temperate climate so for us, we are looking at warmer and possibly drier summers and somewhat colder and probably wetter winters. The impact on Ireland is likely to come from a number of things, though. First, we are likely to have more storms and they are likely to be more intense. I don’t think there was a hurricane in Ireland before Ophelia, so we’ve had our first hurricane and we have seen some horrendous storms. The number of named storms we have is increasing every year. Second, and we can see this for ourselves, is rainfall that can be almost tropical in nature. This is leading to floods. Third, the sea is warming and sea levels are rising at about 1mm per year. We did a coastal workshop recently and the implications for coastal cities like Cork, Dublin, Galway and Limerick are really quite significant over the next 30-50 years. We may need to look at coastal defences for these cities because of sea rise. There are implications, even in a country like Ireland. We are a small country and a temperate climate, but even in Ireland you can see the implications coming down the track so action clearly is necessary. Now, people have argued that Ireland is so small, our efforts don’t really matter – but that’s not correct. We need everyone to put their shoulder to the wheel or we won’t succeed, so there isn’t a free pass for anybody. It doesn’t matter whether you are big or small, rich or poor, we all have to do something in this space. That’s the urgency for us – to do something, and to get on with it. The Paris Agreement was a time of hope, but events have arguably diminished that optimism with some extreme weather events this year alone – not to mention that climate change and its impacts are reportedly accelerating. In that context, what does the COP26 event in November need to achieve? Sometimes words are very important, so I think there must be a declaration of ambition and a commitment to that ambition from each of the countries. Ireland has declared its ambition of a 51% reduction by 2030 and we need to put it into action. We have seen numbers come from other countries – the US, Canada and the EU member states – but what we are really looking for is the other big countries to make that commitment, and first among them would be China. We then need an acknowledgement from fossil fuel-sourcing countries such as Russia, Saudi Arabia and Australia, for example, to make the kind of commitments that are necessary – to at least make the pledges. Then, the second stage must be to put them into practice. In that challenging context, is net-zero genuinely achievable by 2050? Yes, and I have no doubt that it is achievable. I would admit, however, that I could not tell you today how we will achieve it but I am absolutely convinced that solutions will be developed in the coming years that haven’t even been thought about today. Technological evolution and the capacity to innovate will be brought to bear in this space, but it is a black box for the moment. Nonetheless, for now we must use the technologies that are available, and intensify our efforts.  There are many levels of responsibility when it comes to fighting climate change – political, corporate, societal, individual. In your view, what is the route to sustainable life in the medium-term and who bears the brunt of the responsibility for bringing about change? Everybody has a role, but there are distinct responsibilities for various groups. Certainly, the Government has a role. It has to set the ambition, which indeed it has, but it must follow-up that ambition with the economic environment, the behavioural environment, that allows for success. Part of it will be ‘command and control’, such as the standards in our building regulations, part of it will be through a carbon tax, part of it will be through grants and incentives, and part of it will be through ensuring that the policy environment allows both businesses and individuals to make the right choices. So I do think that Government has a really important role to play. But, of course, it won’t be able to deliver on this itself. I also believe that industry in its widest sense has a huge role to play. It needs to be a leader in itself and many companies are making announcements regarding net-zero or carbon reductions, for example. Some of these announcements could be interpreted as marketing activities because they say that they will reduce their carbon footprint by a certain amount, but they are going to buy carbon credits to achieve that. It’s good, and I don’t wish to denigrate that, but it isn’t the depth of action we need. Industry has a hugely influential role in the context of its stakeholders and if you add up the number of contacts an organisation has with clients and customers, the communication potential is enormous.  While I do see industry as being very pivotal in this space, it’s also down to you and me as individuals. Ultimately, we will be presented with choices and sometimes, the choices might be a little bit more expensive or difficult. But really, the onus is on us to make the right choice because in the end, it will benefit ourselves, our families and the climate. Our more than 30,000 members are often relied upon for guidance in this space as advisors to, or within, a business. So, what is your message for Chartered Accountants specifically with regard to their role in fighting climate change? The first thing is to know your number. Accountants are very well-placed to know what the number is for the business or activity. By that, I mean: what is your emissions profile today? You can have a pseudo-calculation of that by looking at your energy because you can then do your calculation from energy into emissions. If you happen to be sourcing products from the agricultural sector, you might have to take methane into account as well. But the first thing is to put a number on it and understand the composition of that number. Doing so allows you to then develop a plan to tackle the number. It’s like any business activity – what’s the number, and what will the cost of investment be? Once you know the cost of investment, you can plan each of the steps on that basis. I would also say that it isn’t just the accountants that should know the number; it’s important that all others in the business know the number too. Sometimes, the number can be impacted by something as simple as daily routine in the workforce. That kind of information is really the first step, and then you can build various mechanisms to reduce emissions thereafter. A recent op-ed in the New York Times asked whether we need to shrink the economy to stop climate change. In your view, can economies continue to grow while we rely on “rapid market-led environmental action and technological innovation” to diffuse the threat? First, we need to consider what we mean by growth. Sometimes people talk about GDP growth and other times, they talk about job growth or quality of life so the metric you use for growth is important in this context. If I start with quality of life – will that improve in a more sustainable world? To that, the answer is a clear yes. There is no discussion that a more sustainable world will be a healthier world because we will have cleaner air and water. It will be a more comfortable world once we get our houses both comfortable and carbon-free. The world will be sustainable in itself because we will not be depleting natural resources to the point where we won’t have any left, we will recycle them. So, the answer to that is quite clear and obvious – but it is difficult to put a number on it because how do you quantify quality of life? It’s not necessarily a monetary thing. If I look at jobs, this whole change we are going through will have an impact on jobs. I’m old enough to have lived through the digitalisation process. Way back in the 1990s when we were talking about computers and the internet, the horror was that computers were going to displace people from the labour force as the work would be done by computers. Some of that was correct in that jobs that were there in the 1990s are not here anymore. But we are employing more people today, in different ways and doing different things. The change this time around will be exactly the same. However, we need to focus on those who will be adversely affected and ensure that measures are in place to allow them to be aware of, and access, training and alternative opportunities. Those who will be somewhat impacted – plumbers or electricians, for example – will need opportunities to upgrade their skills. They will still be there, but they will be doing different things going forward. I think it’s a manageable process on the employment side. The positive for Ireland is that we have discovered a natural resource that will power our economy going forward. We can substitute importing that energy with our own, and that’s very positive in terms of jobs. In terms of the GDP element of the economy, it’s going to cost money. Different numbers are put out there, some people are talking about 2% of GDP into the future but there are two elements to consider. If you look at our capital expenditure, how much additional expenditure will be required? And more importantly, how much of our current capital expenditure should not be spent in the areas in which it has traditionally been spent and should instead be diverted? That will be the challenge in terms of the more macroeconomic considerations. You spent many years working at a European level to promote energy efficiency and global leadership in renewable energy. Can Ireland do more, in your view, as an island nation to lead the charge in renewables? Yes, and we are really at the cusp of that right now. When we talk about wind, solar energy and – in time, perhaps – marine, the opportunity is, of course, that it is a natural resource. There is a higher capital investment, yes, but a much lower operational cost and that’s a characteristic of renewables in any context. Take the electric car, for example – a little bit more expensive to buy, but cheaper to run. The electricity system on this island is unique in Europe in that we have a pooled electricity system with Northern Ireland. It is the only integrated electricity system in Europe. We are an island off an island, and the analogy in size would be Demark. But unlike other countries, we have a very distinct characteristic vis-à-vis Demark in that Denmark is between Norway, Sweden and Finland on the one hand and Germany, the Netherlands and Poland on the other. It’s part of what’s called the Nord Pool electricity scheme, and it means that electrons can float very easily between all of those countries. So if, for whatever reason, the wind doesn’t blow in the North Sea and the Danish offshore wind electricity volume drops, they can source from Germany, for example, and interchange very easily. Ireland doesn’t have that. We’re an island off an island and at the moment, we just have one interconnector to the UK. So we don’t have what’s called a balancing possibility through a very large electricity system like the one on mainland Europe. We will therefore have to be able to bring variable renewables to our electricity system and balance them on the island. That will require quite a bit of innovation, both in terms of technology and in terms of the management of our electricity system. In order to make that work, Ireland will have to be a real demonstrator of demand management for the electricity system. In that, we will need both industry and consumers to manage their demand. Otherwise, if the peak gets too high, it will break the system. So, we need to spread the demand away from the peak to maintain a stable system. That will be very innovative for electricity systems globally and in that context, I think it’s fair to say that Ireland is a living laboratory. As the interview nears its end, is there anything you would like to add? We are in a situation where we are kicking off a very complicated process in Ireland coming out of the Act. We’re a little bit slow because we are already one year into the first set of five-year budgets, so we will eventually have to catch up. I think the single biggest challenge we will face, however, is not money – although money is always a problem. It’s not even innovation or technology. It’s behaviour – our own behaviour and industry behaviour. That will have to shift because we will not be able to behave in the future as we have in the past. This is what I mean by choices and I think the pandemic has been a forerunner of some of the choices we will have to make. We as individuals will have to think more about the way we live and do things. It’s not that we need to necessarily deprive ourselves, but we do need to box smart as to how we get the services we want. Mobility is a service, for example. If you want to go from here to there, think for a moment about the most sustainable way of getting there. It’s not to say don’t make the journey – although that might be correct at times! – but rather, what is the most sustainable way to travel and can we change our behaviour a little bit in that context. In terms of the way we heat our homes, is there another way of achieving a comfortable living space other than the way we have done traditionally. The other issue about behaviour is the more we can automate it, the more likely we will be to succeed. As an example, using various energy-intensive appliances at home can be done in a more sustainable way. With a smart meter and programming capacity, the use of these appliances at times of low demand, which is probably at night, in an automated way is a real support to behavioural change. Nobody wants to manually put a wash on at 2am but if you automate it using technology, that will be a huge support to behavioural change. Behaviour is the hardest thing to influence, and that is the single biggest challenge we have before us when it comes to tacking climate change. I couldn’t agree more. I have come to the conclusion that putting a carbon tax on petrol or diesel, for example, isn’t enough to change behaviour. But perhaps the simple act of including the amount paid in carbon tax on each receipt could have an effect. Visibility is vital. That’s right. And if we were to eliminate all of the subsidies to fossil fuels as a first step, it would go a long way to paying for some of the climate change measures. It seems like a no-brainer to be perfectly honest. Why tax people when all you need to do is remove the subsidies? This is a serious question we will need to consider into the future.

After 18 long months of remote working, many people are feeling fatigued at the thought of attending yet another virtual meeting or event. Patrick Gallen gives us top tips on how to cope in these virtual settings. Do you find yourself avoiding, cancelling, or rescheduling virtual meetings, virtual coffee or virtual team events? When you do attend such virtual meetings or events, have you noticed that during the meeting you’re not present or focused, and afterwards you’re incredibly tense or tired? These are all potential signs that virtual fatigue has set in and you’re not alone. It is reported that 38% of workers say they’ve experienced virtual fatigue since the start of the pandemic, and anecdotal evidence would suggest that this trend is growing. Virtual fatigue is the feeling of exhaustion that often occurs after attending a series of virtual meetings or other virtual events such as webinars or training. Stanford researchers identify four causes for virtual or ‘zoom fatigue’ and found that not only is it more fatiguing seeing ourselves in real-time, but the cognitive load placed on our brains is much higher in virtual settings. But why does this happen more so than the typical in-office meetings we are used to? Our focus is diminished When we’re at home and in a video call, it’s easier to lose focus or get distracted. We tend to try to do things simultaneously, like answering emails or sending texts while attending a virtual meeting. The home environment also lends itself to other distractions, particularly if we do not have access to a private working space.  It is more difficult to ‘catch up’ In a face-to-face meeting, it is easier to ask clarifying questions, pick up on non-verbal cues, and help the meeting stay on track. In a virtual setting, if we miss something, have people speaking over each other or if there are technological challenges, it becomes more difficult to stay engaged. Looking at a camera is exhausting In a virtual setting that involves cameras, we feel obliged to appear engaged by looking into a camera for extended periods. This can lead to extensive scrutiny of our own performance and appearance which can have negative, long-term impacts on our self-esteem. Now that we know how to identify virtual fatigue it is important to consider how to reduce it with a few handy tips. Meeting structure Keep meetings short and try to limit the number of people present on calls. Where possible, avoid scheduling consecutive video meetings. Don’t forget the real world Take regular and structured breaks during the day from your workspace, and take time outside in fresh air and sunlight. Avoid multitasking Try to be ‘in the here and now’ when engaging in virtual activity. Avoid emails, texts, and external distractions where possible. Turn your camera off If it’s appropriate and you need a break, then turn your camera off – but don’t be tempted to use this as an opportunity to do other things. Instead, use it to really start listening to what people are saying and engage meaningfully Switch up your communication method Is a meeting really required? Would a phone call or email suffice? Think about the most effective communication method for your messaging and how you can get this across. Pay attention to how you’re feeling, and take these steps to prevent fatigue before it becomes a problem. Patrick Gallen is the Head of People and Change Consulting at Grant Thornton.

With the seismic shift to new ways of working, security and the role of the CISO has never been more important. Ross Spelman outlines four key areas a CISO should consider upskilling in to navigate this new landscape. The outbreak of the pandemic and the alarming rise in the number of sophisticated cyberattacks has brought Chief Information Security Officers (CISOs) to the crossroads of disruption and transformation. The acceleration in adoption of new technology has heightened business risk and vulnerabilities. To manage cyber risk better and to strategise for business continuity amidst disruption, the CISO needs to acquire new skills. Establish new and open communication A modern CISO should focus on establishing new and open communication channels and methods to support business enablement. Security by design needs to be an enduring principle for all organisations where trust and transparency will be key. One of the most important skills for a CISO to have in the post-pandemic world is to establish teams that are open and approachable for the business.  Set agenda for qualification of security risk Setting the agenda for the quantification of security risk in financial terms should be a goal of the CISO. This should be directly linked to security investment and measured and reported on a regular basis. Understanding and communicating the value of security investment for the business will significantly help to drive continual improvement and senior executive buy-in. Embrace continual change Embracing continual change is essential for CISOs. The ability to enable the business to evaluate exciting technology innovations in an agile and secure manner could prove decisive for establishing trust. This will be critical from a cultural perspective to change any perception of security as a blocker to that of an enabler for the business. This will move security up the value chain. Enable automation of security control and reporting Automation of security controls and reporting should be central to the objective of any new security initiative that a CISO drives. The days of the perimeter are long gone and this has been reinforced by the pandemic-imposed 'new ways of working'. The result is a shift from technology and data-centric security to a more user-centric security. This will require more sophisticated detective and preventative controls which have begun to emerge through security solutions, leveraging automatioplun, artificial intelligence and machine learning techniques. With the move to more user-centric security, cyber leaders in Ireland need to stay plugged-in to technology developments. Having soft and technical skills in equal measure can help Irish CISOs contain volatility and risk to the business introduced by new ways of working. Ross Spelman is the Cybersecurity Director and Lead at EY.

As Budget 2022 rapidly approaches, which topics will be the most significant? Susan Kilty examines four critical areas that will be essential to creating substantial and sustainable economic growth. Budget 2022 will be set against an ongoing backdrop of significant economic, political and societal uncertainty. In addition to the continuing fallout from COVID-19, the unprecedented challenges we face include climate change, housing, healthcare, international tax reform as well as the scale of Ireland’s fiscal indebtedness, one of the highest in the developed world. But there are many positives that we should account for: the success of Ireland's vaccine programme, a rebound in economic growth, consumer spending and jobs increasing while exports continue to power ahead. Our economy is now firmly in recovery mode. This Budget will be an opportunity to set Ireland on a path to sustainable recovery and growth as Irish businesses seek to restart and recover, while investing in the things that matter for society. There are opportunities to use tax policy in new ways to support investment in targeted areas. Aside from macro issues such as housing and health, there are four critical areas Budget 2022 should focus on to put our economy on a sound financial and sustainable footing to create real growth and jobs. 1. The domestic economy Given that the Budget is a tool that impacts society at large, but is at its core a fiscal plan, we look first at the economic background. The State has borrowed €34 billion to date in additional funding to help us deal with the impact of COVID-19 and ancillary costs. The Government's Summer Economic Statement envisages big deficits right through to 2025, culminating in a budget deficit of €7.4 billion in 2025 (currently estimated to be €20 billion for 2021). Consequently, our national debt is expected to be €282 billion by 2025. Stabilising our national balance sheet will not be easy. We will need our economic growth rate to exceed our national debt interest rate to have a chance at reducing the deficit in the short-term and the overall balance outstanding in the long-term. It is welcome that the Minister has already indicated that “the forthcoming Budget will be the first step in a two-part budget to reduce the deficit”. We need to balance support and investment to the multinational sectors with support for the backbone to our economy, our SMEs and family businesses, to help with their recovery and renewal. Any tax incentives need to be fit for purpose and targeted as a result. 2. International tax reform and FDI One of the only bright points on an otherwise bleak economic tax outlook in the last 18 months was the continued strong performance of multinationals that export goods and services from Ireland. Certain sectors such as pharmaceuticals, technology and manufacturing of high-value goods have bolstered corporate tax receipts and maintained high-quality employment that supported strong personal tax income receipts for the country. This demonstrates the reliance that we place on foreign direct investment to support a range of tax streams both directly and indirectly. This is against a backdrop of international tax reform, led by the OECD, which threatens Ireland's ability to compete for FDI using our tax system. This international corporate tax reform could not only impact our tax take from corporations, but also the PAYE that is supported by multinational corporations (MNCs) into the future. Ireland's position is clear in response to this threat – it will work alongside the OECD in reaching a global solution to the question of global tax reform, but it wants recognition that tax needs to be a lever available for small, open economies that cannot otherwise compete with bigger countries. Our 12.5% corporate tax rate is a cornerstone of our economy. We want fair tax competition, where the interests of small open economies and not just those of large market jurisdictions are taken into account. 3. Digital skills Digitalising and upskilling Ireland is a national objective and Budget 2022 is a key opportunity to continue to support this journey. Many companies are digitising their businesses and people will require new skills to work in this new environment. The Government should continue investing in those skills by providing support to allow people to retrain and to assist employers to provide training for their employees. This would also help improve our competitiveness as a country. With more people working regionally post COVID-19, adequate infrastructure is crucial. Continuing the roll-out of broadband to all parts of the country will be critical. Additional tax credits and capital allowances for people working remotely would also be beneficial to support the digital and the green economy as well as tax supports for the development of regional hubs to create shared office spaces. 4. Boosting the 'green' recovery The Climate Action and Low Carbon Development (Amendment) Act 2021 introduced earlier this year charts our path to carbon neutrality by 2050 and is the most ambitious of any developed economy. Climate change is one of the greatest challenges of our generation, requiring wholescale transformation of every sector of our economy, unprecedented innovation and committed leadership. Tax policy can play a major role, not only by influencing behavioural change towards a sustainable economy (i.e., changing heating, transport and construction models, purchasing habits and packaging as we move towards a net-zero economy), but also by encouraging investment and creating jobs in the right areas while boosting a greener economic recovery. Susan Kilty is a the Head of Tax in PwC.

To be prepared for this new legislation, eligible employers need to start analysing their data and planning accordingly. Aoife Newton tells us what needs to be done before 2022. Gender pay gap reporting legislation was recently signed into law in the Gender Pay Gap Information Act 2021 (the Act). However, when and how the information will need to be reported is as yet unknown. In this regard, the regulations to give effect to the Act are eagerly awaited. The Act amends the Employment Equality Act 1998 by requiring regulations to be made by the Minister for Children, Equality, Disability, Integration and Youth as soon as reasonably practicable after the commencement of the legislation. The regulations will place reporting and publication obligations on private and public sector employers regarding their gender pay gap. They will contain much of the detail on the practicalities of the legislation. Which employers are affected? The legislation will not apply to all employers. Only employers that satisfy certain employee thresholds will be in the scope of the legislation. Where an applicable employer reports that a gender pay gap exists, the employer will be required to explain why the gender pay gap exists and detail the measures being implemented by the employer to reduce or eliminate the gap. Both private and public employers will be affected by the mandatory reporting obligations, but they will initially only apply to employers with 250 or more employees for up to two years after the commencement of the regulations. The scope of the mandatory reporting obligations will widen further to include employers with 150 or more employees on or after the second anniversary of the regulations and those with 50 or more employees on or after the third anniversary. Employers with less than 50 employees will not be required to report on their gender pay gap. What is required? Applicable employers will be required to report on the difference in remuneration between male and female employees, as set out below: the difference between both the mean and median hourly pay of male and female employees; the difference between both the mean and median bonus pay of male and female employees; the difference between both the mean and median hourly pay of part-time male and female employees; and the percentage of male and female employees who received bonuses and benefits-in-kind. Employers will also be required to simultaneously publish the reasons for differences in pay in the context of the above and the measures being taken or proposed to eliminate or reduce such disparities. In addition to the mandatory reporting requirements, other requirements may be contained in the regulations once published, including: the class of employer, employee and pay to which the regulations apply; how the number of employees and remuneration is to be calculated; and the form, manner and frequency with which information is to be published. The information will not be required to be published more than once per year. Enforcement An aggrieved employee can make a complaint to the Workplace Relations Commission (WRC) if an employer is not reporting on its gender pay gap. On receipt of a complaint, the WRC will investigate the complaint’s merits and may order the employer to take a specified course of action to ensure compliance with its reporting obligations. However, the WRC does not have the jurisdiction to order the employer to pay compensation to an employee or impose a fine on an employer. The Act provides for the Irish Human Rights and Equality Commission (IHREC) to apply to the Circuit Court or High Court seeking an order forcing an employer to comply with its reporting obligations. Employers that do not comply with such a court order may be held in contempt of court. The Act also provides that the IHREC, on receipt of a request from the Minister, can carry out (or invite a particular undertaking, group of undertakings, or the undertakings making up a particular industry or sector to carry out) an equality review or create and action an equality action plan. What to do now Minister Roderic O’Gorman has confirmed his intention to have the regulations in force by the end of 2021. He has also indicated that employers may be required to submit their information through a central website. Given that the regulations will likely be in force by the end of 2021, the legislation will probably apply to applicable employers from some date in 2022. Employers can prepare by collating and analysing their remuneration data to assess the extent to which gender pay gaps exist. This will help plan how to remove or reduce any such gaps before they are publicly obliged to report, the reasons for them, and what they are going to do about them. Aoife Newton is the Head of the Corporate Immigration and Employment Law team at KPMG.

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

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

Dr Margaret Cullen explains the characteristics of good directors, which in turn contribute to board effectiveness and sustainable companies. Although there is no comprehensive definition, the Companies Act 2014 describes a director as “any person who occupies the position of director by whatever name called”. While under previous company legislation, courts recognised some practical differences in capacity, role, duties and responsibilities, the distinction between categories of directors is not widely recognised in the Act. It is within governance codes and guidelines such as the UK Corporate Governance Code, the Code of Practice for the Governance of State Bodies, and the Central Bank of Ireland Corporate Governance Requirements for Credit Institutions that this distinction is made. Executive directors are those involved in the day-to-day running of the company. Non-executive directors, on the other hand, are not actively involved in the day-to-day running of the company. They are typically appointed because they bring particular expertise that can contribute to the company’s success and sustainability. Within the non-executive director element of the board, there are non-executive directors (NEDs) classified as non-independent directors and those classified as independent non-executive directors (INEDs) because they meet the independence criteria specified within the applicable code. NEDs can be further delineated into directors employed within the group to which the company belongs and those who do not work for the group but do not meet the criteria necessary to be deemed independent. A principle enshrined in many corporate governance codes is that at least half the board should comprise NEDs whom the board considers independent. Adam Smith wrote in 1776 that executive directors or managers of companies, “being managers of other people’s money, cannot be expected to watch over it with the same vigilance with which they watch over their own”, thereby articulating the classic agency problem. This agency problem and its solutions constitute the crux of the most articulated corporate governance theory: agency theory. At the heart of agency theory is the assumption of managerial opportunism: that managers are motivated solely by self-interest, not by moral obligation. Thus, agency theorists advocate for monitoring devices, incentive mechanisms, and checks and balances to ensure managers do not abuse power to the detriment of shareholders. INEDs are one such mechanism. The conceptual underpinning of corporate governance codes around the world is the need to respond to this agency problem. Therefore, it is not surprising that principles related to INED representation on boards and INEDs chairing board committees are typically front and centre in these codes. Interestingly, agency theorists assert that the sole objective of a company (de facto the board) is to maximise returns for the shareholders. However, this assertion is inconsistent with directors’ duties under common law. There are, of course, alternative theoretical perspectives that articulate more positive assumptions on the character of managers – stewardship theory, for example. Although they advocate for INED representation on corporate boards, stewardship theorists’ advocacy relates to the advisory and guidance dimension that INEDs bring to the board rather than the need to protect the company from managerial misconduct. Anyone who has sat in my corporate governance class will know that I sit in this camp. I say this not because I am naive as to the propensity for poor behaviour within organisations. On the contrary – we have seen enough corporate governance scandals over the years to know that unscrupulous and greedy people can do bad things. However, for every scandal, thousands of companies survive, prosper, and make significant contributions to society and the economy. I hope that the current gusto in relation to company purpose and environmental, social and governance (ESG) criteria will further influence companies’ societal and environmental footprint to the benefit of all. Sometimes, companies make headlines for a breakdown in controls or sub-optimal risk management rather than any deliberate attempt to defraud the company or customers. Unfortunately, the distinction between the former and the latter is not often made clear by – or to – stakeholders. NEDs are not involved in the day-to-day operations of the company. The entire board should work hard to create a governance framework (across the company and in the boardroom) bespoke to company context, where accountability is created and the board receives the information necessary to do its job. The board is entitled to rely on the integrity of information emanating from within this framework once it has no reason to suspect that the people providing this information are not fit and proper. Wilful blindness to inappropriate behaviour is, of course, not acceptable. If I start as an INED from a position of professional mistrust, however, I am starting from an impossible position. Trust must be at the heart of the board/management relationship. Therefore, the leadership qualities of the CEO/executive directors and the company’s culture are hugely influential on the standards of corporate governance within. INEDs must bring an appropriate balance of trust and professional scepticism to the boardroom. By taking on a pseudo devil’s advocate role, INEDs add an extra governance dimension, enabling the board to make effective collective decisions and/or determinations based on the information to hand that is considered in an honest and responsible way. Getting this balance right is the hallmark of a good director and requires INEDs to understand what being non-executive truly means. Stakeholders must also understand this. Readers of this article will be familiar with the long-standing debate on whether auditors should be viewed as watchdogs (who bark if they see something suspicious) or bloodhounds (who search for something suspicious). Confusion about this distinction serves to undermine the audit process. Equally, considering the collective responsibility of a board, the non-executive nature of INED roles needs to be understood for what it can – and should – entail. To quote my mentor and colleague, Professor Niamh Brennan, it’s “nose in, finger out”. Agency theorists look at corporate governance practices and behaviours through the lens of the agency dilemma. This is an abstraction at the level of the company and its governance structures rather than board behaviour. While recognising the different lenses that categories of directors bring to the boardroom (for example, the knowledge that comes with day-to-day executive involvement versus the information asymmetry attached to being non-executive), the most effective directors demonstrate objectivity and independence of mind. As so much governance is done outside the boardroom, this objectivity across executive directors and executive committee members sets companies up for long-term success. It manifests itself in executive meetings and discussion forums where challenge and debate are encouraged, management information is scrutinised, tactical and strategic opportunities and threats are acknowledged, alternatives are considered, and decisions requiring board approval and areas that would benefit from board-wide input are identified. In short, the executive directors and executive committee can go a long way towards setting the board and the company up for success. Apart from their specific domain of experience, INEDs bring an extra layer of objectivity (with the balance of trust and professional scepticism referred to earlier) to the board to contribute to collective board effectiveness. Group NEDs bring the group perspective (on strategy and risk appetite) and related challenge, requiring equivalent objective mindsets of other board colleagues. This is particularly important, as group NEDs must always act in the interest of the local company. While much is made of the concept of non-executive director independence related to a schedule of criteria, I have always argued that independence of mind across all aspects of governance and all categories of directors is critical to board effectiveness and sustainable companies. There are, however, other behavioural characteristics critical to board success. Several years ago, in the process of designing a governance programme, I had a brilliant discussion with another colleague of mine, Frank Ennis – an experienced independent non-executive director – on what makes a good director. We had previously agreed on the importance of independence of mind (the first ‘I’) for all directors. We explored the importance of technical skill, experience and knowledge to contribute to collective board strength, but determined that it is how these skills are harnessed rather than the skills themselves that are key. We landed on the second ‘I’, intelligence, referring to the capacity of each director not to allow anyone to insult theirs. This second ‘I’ reflects and extends beyond the professional scepticism discussed. Finally, we reflected on corporate governance failures related to fraud and deliberate, inappropriate actions by those in charge and questioned the lack of integrity. We also remembered a keynote speech made by Warren Buffet at Columbia Business School in 2009 when he observed: “Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without the first, you really want them to be dumb and lazy.” Thus, the third ‘I’ became integrity – never, ever compromise yours. We were mindful, of course, that living by the three ‘I’s can sometimes lead to a fourth ‘I’ in the form of isolation, but we agreed that this is a price worth paying. Dr Margaret Cullen is Founder and Principal of Think Governance Ltd. This article was written in collaboration with Frank Ennis FCA, independent non-executive director.

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

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

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

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

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

Prof. Ciaran Connolly FCA and Dr Elaine Stewart draw on their recent research for an Institute report to examine the public sector’s proposed accruals-based accounting framework, which represents a significant shift for the Irish Government. Under the current system of Irish central government financial reporting, budget documents and financial reports are typically prepared on a traditional cash-accounting basis, with their institutional coverage mainly limited to central government. However, Ireland is one of the few remaining OECD countries to account and budget in government on a cash basis. While considered robust and reliable, it is argued that cash accounting alone does not enable the planning and asset management that an accruals-based system allows. Motivated by the 2008 global financial crisis and the OECD’s 2019 recommendations following its evaluation of Ireland’s fiscal reporting, forecasting and budgeting systems, the Irish Government sought to modernise its public sector accounting practices. On 27 May 2021, Michael McGrath TD, Minister for Public Expenditure and Reform launched Chartered Accountants Ireland’s position paper on plans by the Irish Government to reform public sector accounting in Ireland. Researched by the authors of this article and drawing on the views of key stakeholders in the process, The Reform of Ireland’s Public Sector Accounting examines the proposed new accruals-based accounting framework, which represents a significant change to the way the Irish Government accounts. Recommendations to modernise public accounting systems are not confined to Ireland. Over the last 25 years, there has been a global shift towards accrual accounting in the public sector. While several governments (e.g. Australia, Switzerland and the UK) have adopted full accrual accounting, others (e.g. Italy, Philippines, South Africa and Spain) use a modified form. Some, such as Germany, have no immediate plans to do either. Regardless, the use of accruals in the public sector is growing. Of the 165 countries included in the International Public Sector Financial Accountability Index 2021 Status Report, published by IFAC and CIPFA, 49 (30%) use accrual accounting, with approximately half of these applying International Public Sector Accounting Standards (IPSAS) either directly or as a reference point. By 2025, it is estimated that 83 (50%) of the 165 countries will operate accrual accounting, with around 73% using IPSAS to some extent. Governments across the globe, including those in Latin America, the Caribbean, the Middle East and Africa, are instigating IPSAS implementation projects. Meanwhile, in Europe, the European Commission is working with member states to develop European Public Sector Accounting Standards, with IPSAS used as the baseline. Moreover, a small number of countries have implemented consolidated accounts (e.g. Australia, New Zealand and the UK), something that is also included as part of the Irish Government’s proposed reforms (see Figure 1 above). The proposed reforms While acknowledging that cash accounting provides strong control over departmental expenditure, a number of reports, including the OECD’s 2019 report, have advocated significant reform to the current process of financial reporting in Ireland on the basis that: cash-based information alone is insufficient for understanding the public sector financial position; as audited Appropriation Accounts are required to be published within nine months after the period to which they relate, Ireland is among the slowest of OECD countries in making such reports available; and reports from central government, commercial and non-commercial state bodies are not consolidated. This presents difficulties, particularly where reports are prepared for EU bodies such as Eurostat. On 15 October 2019, the Irish Government announced a series of reforms to Ireland’s public sector accounting which, while retaining core elements of the existing cash-based system, include: introducing accrual accounting in central government departments and offices, applying IPSAS as the underlying framework; preparing central government consolidated financial statements; and harmonising accounting practices and standards across the wider public sector to enable the consolidation of all public sector entities into a ‘whole of government’ account. When implemented, it is expected that the reforms will underpin confidence in Ireland’s public finances and unlock value from the State’s assets while realising the benefits of professional financial management, timelier financial reporting, and a general improvement in economic and fiscal performance. Large-scale reforms, like those proposed, are rarely introduced in a single stage but are typically rolled out over many years, often in conjunction with new IT systems. The Department of Public Expenditure and Reform (DPER) is leading the reform process and has developed an action plan to introduce the reforms with a phased approach (see Figure 1). This begins with the application of IPSAS as the underlying framework to introduce accrual accounting in central government departments and offices (Part 1, 2019–2025). Next, the intention is to prepare central government consolidated financial statements (Part 2, 2025–2027), followed by the harmonisation of accounting practices and standards across the wider public sector (Part 3, 2027–2029), and finally, the consolidation of all public sector entities into a ‘whole of government’ account (Part 4, from 2030). The feasibility of this latter part depends on the degree of integration of accounting systems, especially outside central government, where many entities currently use different accounting standards (e.g. FRS 102) and operate separate IT systems. While factors such as the COVID-19 pandemic and complications in developing the Financial Management Shared Services (FMSS) system have impacted the original timelines, progress has accelerated more recently. Purpose, approach and stakeholders’ views Drawing on the experience, progress and lessons learned from other countries and governments that have introduced similar reforms, together with the views of representatives from government departments, agencies and advisory organisations/individuals, the Institute’s position paper examines the driving forces, benefits, challenges and appropriateness of the reforms. The views expressed by interviewees are summarised in Figure 2. The consensus was that the reforms have been mainly driven externally by the OECD, as Ireland is one of the few OECD countries that continue to report on a cash basis. Internal motivations included the potential benefits arising from access to better information on public sector assets and liabilities, including pension obligations. Interviewees highlighted potential staffing, training and IT-related challenges associated with reform implementation, acknowledging that while the process has been slow to start, there is evidence that its pace is growing. However, despite this positivity, it was recognised that the timetable had slipped in a similar manner to that for the FMSS, with the successful introduction of the new system being considered integrally linked with the reform of Ireland’s public sector accounting (e.g. to facilitate the preparation of IPSAS-based departmental and ultimately ‘whole of government’ consolidated accounts). Other anticipated challenges included implementing the necessary legislative changes, with some questioning the logic of introducing accruals-based accounting while maintaining a cash-based budgeting system. While accepting the challenges, the vast majority of interviewees viewed the reforms positively. The consensus was that they could standardise how departments present their financial information, making them more professional and user-friendly. They could also facilitate the closing of accounts in a timelier manner so that the information is more relevant and provides better information for departments’ public representatives. The way forward Experience indicates that political support and leadership at the highest levels is critical if public sector accounting reforms are to succeed. Furthermore, research suggests that their success (however this is defined) is influenced by the extent to which they are shaped by private sector ideas, with the excessive use of private sector consultants often impacting negatively on the receptiveness to change. Thus, while the public sector is entwined with the private sector through outsourcing and privatisation, it remains distinct in terms of its stakeholders, objectives and outcome measures. Therefore, while the reforms have clear implications for departmental accounting functions, their success depends upon input and support from key stakeholders across the public sector so that they fit ‘the Irish public sector context’. Hence, engaging with, for example, departmental managers, statisticians, ministers and public representatives will help to identify the risks, gain political support, and secure buy-in. Relatedly, good project management and governance arrangements are critical to ensure the timely implementation of the accounting reforms (and FMSS) and that the delivery of government services is not unduly disrupted. This might involve piloting aspects of the reforms in some departments or agencies, including having dry-run or dummy years before the changes ‘go live’ to help identify needs and potential pitfalls. For example, training and developing the knowledge of preparers and users of the systems and information is essential. Knowledge transfer is also important to avoid ‘consultant dependency’ while capacity building (e.g. recruitment and training) is critical to project success. As noted above, DPER has developed a plan to implement the reforms in a phased manner over the next decade. Not unexpectedly, a number of issues will need to be considered further, if not resolved, during this period. For example, Ireland’s current constitutional arrangements require the preparation of cash-based Appropriation Accounts. However, there is evidence that ‘full’ accruals-based accounts can be advantageous, including the better management of assets and a greater awareness of obligations, which can facilitate more accurate planning and effective risk management. In addition, although few countries have adopted full accrual budgeting, with many applying a modified version, continuing to operate cash budgeting in tandem with accruals-based notes to the cash-based Appropriation Accounts may cause confusion and limit the potential benefits of the reforms. Although, evidence from the Northern Ireland experience suggests that accrual budgeting creates its own problems. Conclusion Ireland’s planned public sector accounting reforms are ambitious but appropriate and timely. They represent a significant statement of intent by the Irish Government to modernise the State’s public sector accounting practices and must remain a priority. While obstacles and redirections can be expected along the implementation journey, these should be viewed as opportunities to design a system that is fit for purpose and appropriate for the Irish context. For example, while the FMSS system implementation has been delayed, this presents an opportunity to ensure that it will support the preparation of IPSAS-based accounts and assist with the preparation of consolidated accounts, together with the information needed for the EU and Eurostat. Prof. Ciaran Connolly FCA and Dr Elaine Stewart, Queen’s University Belfast, are authors of The Reform of Ireland’s Public Sector Accounting, published by Chartered Accountants Ireland.

Digital proved to be a vital tool in helping businesses navigate the upheaval during COVID-19. But now, it needs to move from a tactical response to a key pillar of strategy, writes Cormac Hughes. Businesses crave certainty. After the past year, however, that precious commodity is in short supply. So how can organisations be ready for and respond to uncertainty, both to make themselves less vulnerable to risk and to be prepared to take advantage of opportunities that emerge in unpredictable times? The answer is digital transformation. However, those two simple words disguise a more complex readjustment. Going digital is not just about building a new website. That would be like applying a fresh coat of paint to your organisation’s existing building when in reality, it is a fundamental restructuring from the floorboards to the ceiling. It is a wholesale realignment that touches every part of an organisation and puts digital at the heart of its strategy. In this article, I will outline the benefits of this approach, identify the areas of your organisation most impacted by the change, and provide practical advice on the steps to take wherever you are on the journey. From survival to strategy The first thing to say is that we are not at the starting line for digital transformation; the race is already underway. Many organisations had to rapidly hit their full stride because they had no other choice: the COVID-19 pandemic turned the digital agenda from a marathon to a sprint. The move to remote and distributed workforces at scale was only possible with digital technology. In many cases, online channels became the default means of interacting with customers and suppliers. That so many managed the change so effectively without dropping the baton is a testament to people’s incredible spirit and collective effort. But the swift onset of that crisis meant that many of the solutions put in place were short-term and tactical in nature. Now, as we can all catch our breath and start looking to the future with some optimism, we have an opportunity to evaluate the lessons learned. And the biggest lesson of all is that digital is not an enabler of strategy but a driver of it. We can say this with confidence based on a global study of 2,860 executives in the commercial and public sectors, which Deloitte carried out earlier this year. This research concluded that digital is fast becoming the norm across all sectors. Nearly two-thirds of respondents believe that organisations that don’t digitise in the next five years will be “doomed”, so having the right strategy that takes advantage of digital possibilities and capabilities will ultimately differentiate the winners and losers. Digital maturity confers advantage Deloitte’s research showed that the more digitally mature an organisation is, the better able it is to navigate rapid change and the better it performed financially. 78% of leaders surveyed said that their organisations’ digital capabilities played a significant part in helping them stay resilient as the COVID-19 crisis evolved rapidly. A similar percentage reported that their digital transformation initiatives were already having a significant positive effect on their businesses. Against this backdrop, digital spending is increasing. This might seem counter-intuitive because many organisations came under financial pressure during the pandemic. Yet, according to a CEO survey by the technology research company Gartner, over 80% of organisations planned to boost their investments in digital transformation. The firm forecasts that spending on enterprise digital transformation will grow at a 15.5% compound annual growth rate from 2020 to 2023. The Deloitte study supports this finding: 69% of the leaders surveyed intend to commit more spending to digital transformation in response to the pandemic. Our figures also show that their budgets for digital transformation represent a higher percentage of their annual revenues than in prior years. The agility to react to new opportunities Digital transformation also changes the competitive field and creates new opportunities for organisations to differentiate themselves. With the experience of the past year, it is now clear that digitally sophisticated companies are especially well-placed to react to new customer trends or buying habits. At the same time, our study found that many commercial leaders believe that their main competitor in five years will be an emerging start-up or a ‘digitally native’ company that hasn’t needed to shed the legacy of older technology (more of which later). Fewer than one-third of our respondents believe that their biggest threat will come from a current competitor. It is worth emphasising here that the window of opportunity for embracing digital remains open. For example, several Irish retail banks recently announced plans to form a consortium to develop a money transfer app to compete with emerging fintech providers. The findings above hint at the extent of the dynamic situation, so we dug deeper into leaders’ perceptions of change. More than three in four leaders anticipate that their business will “change significantly” over the next five years and more so than the previous five. Instability, by its nature, brings uncertainty, and it is not surprising that more than half of respondents believe that the fast pace of technology change is “not good” for their organisations. In our opinion, this makes it even more important to take a proactive approach to digital transformation rather than just letting it happen. Against this backdrop, how do organisations further embed digital across the business? We have considered this question across several areas: talent, finance, operations, and customer. Let us look at each of these in turn. The talent opportunity The past year has had an enormous impact on how we think about the nature of work. Business leaders need to consider this from a multifaceted perspective: who does the work? What kind of work do they do? And where do they do it from? From our engagements with clients, many will need to assess the skills they have in their workforces today and map them to the capabilities they will need in the future. This could involve identifying candidates for training so they can take up new roles. The ability to work remotely could be an opportunity to recruit talent that would previously have been unavailable because those people lived beyond a commuting distance to an office. It is also a chance to re-frame HR practices, such as moving to a more flexible team-based model rather than having people work in fixed roles organised along rigid departmental lines. The finance opportunity The finance function plays a vital role in a digitally transformed business, but it too must change to carry out this newly expanded remit. Traditionally, the job of finance was to report on what had already happened. Now, finance must look forward and spend most of its time and resources on planning and forecasting. To do this effectively, it must be able to use powerful analytics tools that can sift through data and deliver the insights the business needs to drive its decision-making. When this is in place, finance can become a strategic business partner and apply analytical thinking to solve challenges. The operations opportunity Operations is the through-line connecting every part of an organisation, from the customer-facing online channels to support, order processing and fulfilment. When the customer engages through a website, online store, app, or chatbot, they judge the success of that interaction on the seamlessness of the experience. How swiftly can they complete a transaction? When is the product or service ready? What updates do they receive about the progress of their order? Data is the glue that binds all parts of an organisation together. Every aspect of the operation needs to be digitally enabled and connected to have the data it needs, in real-time, to fulfil the order and share relevant information with the customer. Then, operations can analyse this data to identify areas where it can continually optimise. These improvements can be internal (streamlining processes that employees must use) or external (delivering a more efficient service to customers). The customer opportunity This leads us neatly to the customer: top-performing digitally-enabled organisations realise it’s not all about them. They put the customer first, delivering an experience that’s easy, convenient, and secure. This helps strengthen customer loyalty and trust. At the same time, they also dig deeper to understand their customers’ needs. They know that although digital may be the default means of engagement in today’s world, there are nuances to different customer segments and groups. Looking closer at the behaviour of those groups uncovers distinctions that enable businesses to target their offerings more effectively, identify up-sell and cross-sell opportunities, and stay competitive at a time when the customer has never had more choice. The cloud imperative The four areas outlined above have one element in common: the cloud. This is fast becoming the dominant model for organisations to avail of IT services. Delivering technology and services through the cloud equips people to work from anywhere. It also enables finance to get data faster and move from historical reporting to forecasting while empowering all elements of operations to work together more effectively and deliver a seamless customer experience. Cloud offers a consumption-based pricing model that links IT spend to the demand for that service. It also offers speed: unlike legacy infrastructure, the cloud enables businesses to test new products and services far faster than before. And when an organisation’s IT platform is adaptable, that means its business is adaptable too. With no data centres or servers to maintain and run, leaders can focus purely on the business and reduce the need to ‘mind’ the technology. Cloud also makes it easier to access the latest technology such as artificial intelligence, machine learning and robotic process automation, and high-powered analytics that can identify new areas for improvement. This is a very wide-ranging agenda for any organisation, so it may be helpful to think of it as follows: first, set the strategic direction for operations, finance, talent, and customer-facing functions from one direction. In parallel, begin a managed transition from the business’s siloed and legacy technology systems today to cloud platforms that provide the agility and flexibility the business will need. Moving to the cloud provides the basis for the strategy to come to life, but it can be complex in an organisation with a lot of existing IT. When creating a roadmap to move to the cloud, four useful stages are: Step 1: Identify the business problem Determine where the biggest burning need exists in your business today, as this will have a strong technology element. Find a problem that is a priority and will let you cut through all the decisions you have to make in your cloud adoption journey. Step 2: Start small and target quick wins Start with a small project, work to tightly defined parameters, and measure business value as you build support at all levels of the business. For example, this might be a non-critical application or a legacy system nearing the end of its support contract. Use cloud’s agility to your advantage. The ability to launch new systems quickly shortens the typical procurement cycle to days. This means you can identify a project that will deliver quick wins, act as a proof of concept, and build momentum from there. Step 3: Apply lessons and expand Use the proof of concept to identify what has been learned, build a business case, and bring stakeholders on the journey as they become familiar with the cloud. Starting small also allows the enterprise to develop the people and process aspects necessary to succeed in cloud adoption. The technology alone is not enough; there needs to be a change in culture and skills in addition to transforming processes in the business to embrace agile ways of working. Step 4: Build capability in the business in parallel to IT As the cloud project develops, ensure that those in charge have identified the necessary skills in the team, whether they exist in the business today, and whether you need to supplement the team with external expertise. That can be achieved by recruiting or working with a partner that can supplement your resources. Bear in mind that the skills for successful cloud projects go beyond technology alone. Your cloud team should also cover governance and operating models so that you implement suitable structures that can evolve as your cloud adoption matures. What’s next? When the cloud underpins digital transformation, scaling becomes easier because the organisation no longer relies on the capacity of technology it acquired at a moment in time. It can be more agile by quickly identifying and responding to customer needs. Growth is returning, and tomorrow’s world is one of expanded skillsets, a workforce that’s no longer tied to one place, and a wide range of opportunity. No matter what change awaits, the digitally transformed business can be ready. Cormac Hughes is Head of Consulting at Deloitte Ireland. Prepare now for the next disruption Despite the COVID-19 pandemic, digital spending is still on the rise. Deloitte’s 2021 Digital Transformation Executive Survey reinforces this expectation of growth, with 69% of surveyed leaders globally planning to increase their financial commitments to digital transformation in response to the pandemic. This vigorous growth in digital transformation investment makes it even more critical for   enterprises to make digital transformation a foundation of their strategy. Organisations should assume that their competitors are just as committed to developing their digital capabilities right now. The winners will be those that successfully move digital from a tactical response to a key pillar of strategy. To do this, CEOs must make explicit choices about their strategy across several areas, including talent, finance, operations and the customer. Doing so will help improve efficiency, power new products and services, enable new business models, and ensure that the customer experience is easy, convenient, and secure. Ultimately, it is about being as ready as possible for what may be next as further disruptions will come.

For organisations to thrive in a modern Irish society, serious work needs to be done on fostering diversity and inclusion in business organisations. Sandra Healy explains an evidence-based approach. Today people want to work with organisations where they feel respected and valued, no matter how diverse they are. In Ireland, we have the youngest population in the EU, with one in eight people from a migrant background. This young, diverse population expects organisations to have supportive, inclusive cultures that reflect the society we live in. Additionally, all over the world, regulators, shareholders and investors are demanding fairness, transparency and a customer-led approach to doing business. While many employers have positive intentions regarding equality, diversity, and inclusion, it can be challenging to know where to begin, what to prioritise, and how to make progress in building an inclusive culture. Branding vs supporting Some organisations get behind diversity and inclusion (D&I) initiatives for employee resource groups (ERGs) through external sponsorship or brand campaigns. Externally, it demonstrates to customers, shareholders, and potential talent that your organisation values diversity. For D&I initiatives, it can be a powerful way to amplify reach. However, the external investment must be accompanied by a commitment to fostering inclusion and diversity within your organisation. Evidence for change Building an inclusive culture takes time, resources, focus, and commitment. To make progress, it is important to understand what challenges exist and where. An evidence-based approach takes the guesswork out of culture and ensures that actions are meaningful, impactful, and make a difference. A very relevant and important example of this is gender pay gap reporting, which will commence in Ireland in 2022. A lack of representation at senior level will be an issue and a reputational risk for those that are not prepared when the time comes. Organisations need to plan now by examining their data as it relates to gender, position, and pay scale and understanding the barriers that exist for female progression. In addition to external reputation, employers must consider how the pay gap information will land internally and whether there is a potential risk in terms of current female talent exiting the business when the time comes. Organisations have the information they need to take action now and make a commitment to improving gender representation. Furthermore, those that get ahead will be able to control the external and internal narrative when the time comes – thus avoiding unnecessary fallout.   Going beyond gender As examined above, the gender pay gap is just one example of where and how organisations can use data and evidence to deliver meaningful change. However, organisations must also consider the levels of diverse representation beyond gender at all levels. If organisations are willing to commit and focus time and resources, there is much that can be done to enhance and improve wider diversity across areas such as race, age, neurodiversity, sexual orientation and disability – to name just a few – building more equitable and inclusive cultures for all. Retaining diverse talent requires an inclusive, supportive culture where people can be who they are. Research shows that more diverse and inclusive organisations deliver better customer outcomes, foster more innovation, and have better reputations. Ireland is a young multi-cultural society, and we have a great opportunity to get it right. Organisations are competing globally for talent and if employers are not proactive in building inclusive workplaces, they will lose out to those that do. Sandra Healy is the CEO of inclusio and Founder of the DCU Centre of Excellence for Diversity and Inclusion. inclusio puts science into culture change so organisations can build workplaces where people want to work by levelling the playing field for employees. 

Over the last number of years, ESG has become increasingly important to investors. By dedicating time and resources to ESG now, companies can reap greater rewards in the future. Edel O’Reilly explains. In my organisation, I act as a conduit between many publicly listed companies and the global investor community, and I have witnessed first-hand how important the issue of environmental, social, and governance (ESG) criteria has become to that community in recent years. Increased regulation, societal demand, underlying customer demand and perhaps, most importantly, improved investment outcomes are the key issues that have fuelled this change, and global investors and lenders now see the adoption of ESG practices as a crucial driver of value creation. This has been reflected in an acceleration in engagement levels between companies and their investors on the key issues.  What are investors looking for? So, what do investors care about and what are they looking for? I regularly organise corporate governance and ESG roadshows, and investors are intensely focused on corporate governance as a key indicator of evaluation. Why? Because good governance underpins strong business performance without excessive risk-taking. Investors focus their attention on board members, the processes in place to support adequate oversight, and board accountability. Board chair and members For allocators of capital, it is critical that the board chairperson is independent, while a diversity of skills and additional board experience are important criteria for board members. And, as the world becomes ever more digital, investors like to see board members who have cybersecurity and IT skills. Processes and oversight When it comes to governance architecture, best practice dictates that there should be three board committees: A nominations committee to ensure board balance; An audit committee to oversee the financial reporting aspects; and A remuneration committee with responsibility for proper alignment with executive pay. Investors want to see balanced compensation packages for management teams that reward performance but that are also related to long-term goals. Investors assess potential long-term value by judging the quality of policies and processes in place and the board’s diligence and care in overseeing their implementation. Accountability Critically, good governance can’t stand still and, as a company grows, it should have governance in place for each stage of its maturity. There must be continual reviews of whether the board structure and policies in place are fit for purpose at every stage of development and growth phase of the company. A formal external evaluation process and response plans to any gaps identified are important steps and initiatives that investors like to see.  Companies that demonstrate a strong commitment to ESG best practices will benefit from greater access to debt and equity capital at competitive costs. Any company seeking a loan or equity investment will potentially be screened through an ESG lens, which will determine access to – and the cost of – such capital. So, the drive for good corporate governance has never been more important.  Investors are rewarding companies that can prove they are legitimately committing resources to sustainable goals – good governance is an essential part of this journey.  Edel O’Reilly is Head of Investor Relations at Goodbody and a member of the Chartered Accountants Ireland Sustainability Expert Working Group.

Dawn McLaughlin knows first-hand that a problem shared is a problem halved. And that is why she is utterly convinced of the positive impact of peer-to-peer networking and collaboration in professional services. Sole practitioners are no different to any other business owner. Shoulders not big enough to carry the weight of the world, they are afraid to show weakness by sharing problems. They make decisions in isolation and hope they get it right each time. They are a jack of all trades, and fire-fighting is a crucial skill developed over the years. Time is limited, and the to-do list grows longer with each passing day. This will undoubtedly strike a familiar chord with many readers. Some years back, our Institute championed the idea of bringing us together by encouraging us to establish local network clusters throughout Ireland. Accountants getting together – well, that was a challenge! The only time we spoke to our competitors was possibly over a coffee at a training session, if at all. I went to a group session in Derry with anticipation, and it was the beginning of a long relationship between like-minded individuals. As a closed group, we learned to trust one another. We shared experiences, knowledge, how-to tips, and valuable connections. Sales leads were passed for services we did not provide ourselves. Those relationships have stood the test of time. There was comfort in knowing that others feel the same and share similar issues daily. Your problem had probably already been solved by another member, and we all benefited from these relationships. Even something as simple as a group moan where we put the world to rights was therapeutic. This cluster approach proved vital during the pandemic when so many found themselves isolated. In our Chamber of Commerce, members join a sector cluster and benefit in a similar fashion. Collaboration, alliances, knowledge transfer, innovation, and synergy abound. The benefits of clusters impact each and every one of us. As a Chamber board, we provide a lead director for each cluster, a direct link with benefits flowing both ways. Accurate, timely, and relevant data flows from each cluster on skills gaps, challenges, and opportunities. As an organisation, this gives us evidence-based data to lobby on their behalf. It provides the Chamber with a stronger voice and is vital in the drive to get relevant support to where it is needed most. The benefit of clusters was evidenced locally when one of our board members identified a significant skills gap in his cluster. Welders were in short supply, and the local engineering companies were suffering. Every effort went into determining the need, getting buy-in from the local companies, and lobbying the educational establishments to develop relevant courses. A course was then created, so we had a win-win for the local college, the employers, and – more importantly – for the young people who signed up and went on to get guaranteed jobs at the end of the course. Over the years, I have witnessed many successes emanating from clusters and shared working, and I am totally convinced of their positive impact. I would encourage organisations and networks of all kinds, shapes, and sizes to develop their own clusters for the benefit of their members. For those Chartered Accountants not already connected, why not start up your own network locally? The impact can be hugely significant, and we all benefit from collaboration and sharing our experiences and knowledge. Dawn McLaughlin is Founder of Dawn McLaughlin & Co. Chartered Accountants  and President of Londonderry Chamber of Commerce.

Four members in business review the challenges and opportunities of the past year, and explain how their organisations have successfully navigated the fall-out of the COVID-19 crisis thus far. John Graham  Managing Director, Andrew Ingredients The speed of the recovery in business after the first lockdown took us by surprise. As sales began to recover, I realised that we needed to start refocusing again on future growth and what we needed to do to support that. That made me reflect on my role, as covering the operational demands of the business was starting to limit my ability to focus on our long-term growth ambitions. As a result, we have just recruited a Head of Operations who started this month. This is a new role for the business and one we couldn’t have imagined creating this time last year. Now we are coming out of the worst of the pandemic, we are pushing ahead with our planned investments to give us the platform for future growth. This includes an extension to our warehouse (adding 50% more space) and the implementation of a new warehouse management system that should improve our efficiency and allow us to take advantage of future advances in technology. We also hope to get back to a full schedule in our WorkWith collaboration hub, where we work with our customers on new product development, trends, and market insights. However, there are still barriers in the way. Brexit and navigating the Northern Ireland Protocol has been a big challenge over the last six months, and that is unlikely to improve in the short-term. The bureaucracy it has created is sucking valuable management time from the business. Hopefully, the EU and UK can find some practical solutions to make the Protocol sustainable over the longer term. Despite Brexit, we believe there are great opportunities for the business, including the continued growth of Andrew Ingredients in Scotland, which is a new market for us, and bringing exciting, new ingredients to the Irish market. Wai Teng Leong Director of Finance – Financial Reporting, Tax & Treasury, Moy Park 2020 had been a truly unprecedented year, and no one anticipated the way the pandemic would change our lives and the way we work. Working from home presented enormous challenges initially, but I am incredibly proud of my team’s strength, resilience, and commitment during this time. As managers, we had to ensure that our teams performed at the high standards expected of a corporate function while finding innovative ways to motivate our people and keep up morale. We hold weekly social calls every Monday morning and arrange regular team-building events, which have ranged from baking cupcakes to book folding art craft. It is essential to take a light-hearted time out when working remotely to fit in social interactions. The rapid actions of our IT department enabled working remotely possible. For the first time in my career, we carried out quarterly and year-end audits remotely – virtual stock-takes were undoubtedly a novelty! Technology and innovative ways of working have enabled us to carry on with business as usual. Over the last year, we have held large virtual conferences (with goody bags delivered to delegates) and introduced e-learning modules to ensure that people development continues to be a priority.  The biggest challenges are inducting new team members and imparting knowledge, as these used to be carried out sitting side-by-side in an office environment. Project work such as ERP implementation also poses similar challenges. It is, therefore, important to be organised and keep a constant flow of communication. I believe that the events of the past year have made us all better managers. Looking ahead, flexible working will lead to a better work-life balance. Still, we also need to ensure that we do not lose sight of the importance of face-to-face interaction to support mentoring for career progression, creativity, and building relationships. As lockdown eases, I am optimistic that we will find a solution that combines the best of both worlds. Jason McIntosh EMEA Finance Manager, Seagate Technology It’s fair to say that how we work has changed significantly over the past year! As a key manufacturing site within our global supply chain, our work has always been very office-based. That shifted for a lot of us overnight. My whole team across the UK has now been working entirely remotely for over a year.  As we have continued to operate, we have maintained a significant on-site presence throughout the pandemic, too. One of the biggest challenges has been enabling continued collaboration between our factory and remote teams while maintaining a culture of innovation and development.  How we work together in finance has also changed considerably since last year. Whereas before we had face-to-face meetings and ample informal collaboration opportunities, now all our interaction is virtual. Having said that, I spend more one-on-one time with my team (via Teams) than before.  We have always worked as part of a global team, particularly in finance. My boss, although Irish, is based in Amsterdam, and I work closely with colleagues in locations like California and Thailand daily. We already knew how to work together virtually and while we had to adapt locally, we already had that experience. If anything, remote working is easier locally because you don’t have time zone challenges.  Making sure that everyone in our team invests in their wellbeing has been vital. I’m proud that our company has invested so much in employee wellness programmes, and I’m confident that they have helped us navigate challenging times for everyone. In the second half of 2021, I expect to see more of our team returning to the office (at least part-time), provided it is safe to do so. The most significant barrier ahead is undoubtedly the uncertainty that remains. Several countries around the world are still under some form of lockdown. When and how we emerge into some sort of ‘steady state’ will shape how we work in the coming years. Like all businesses, we have learned plenty of lessons during the pandemic that will create the opportunity to be more collaborative on a global scale going forward.  John Morgan Finance Director, BT Enterprise  Having just secured a role as Finance Director for a newly formed business unit in BT with a management team primarily based in London, I was geared up to spend a couple of days per week in London, commuting from Belfast. Little did I know that my last day in London would be my final interview in February 2020 and I would spend the next 15 months mainly working from home.   COVID-19 hit our business unit relatively hard for certain revenue streams. For example, mobile roaming revenue turned off overnight and call revenue reduced considerably as offices shut.  If anything, the pandemic has made us look to accelerate some of our existing medium-term plans instead of fundamentally changing our whole business strategy.  Within BT Finance, we had already adopted flexible working. We have found flexibility a key driver of engagement and a differentiator in the recruitment market. COVID-19 has taken this to another level, however. Trust is a massive enabler for this; if you trust and are trusted, it doesn’t matter where people choose to work. I sense that we will remain flexible. While individuals will have different preferences, I envisage the team working around two to three days a week from home. We are lucky in that we are about to embark on a significant property refurbishment in our prime site in Belfast and the team are pretty excited to be moving into leading-edge office space by early 2022.   There are still barriers in the way in our industry, however. The UK telco industry is one the most competitive in the world, and downward pricing pressures are significant. That said, we believe new strategic initiatives such as 5G allow us to differentiate ourselves and add value for our customers. 

Capital allocation and investment appraisal is a senior management team’s most fundamental responsibility, but it is easy to overstate prospective rates of return. Cormac Lucey explains. The goal of corporate investment should be to convert inputs – including money, things, ideas, and people – into something more valuable than they would otherwise be. After ten years in the position, a CEO whose company invests 10% of its existing capital stock each year will have been responsible for deploying more than half of all the capital at work in the business. This makes capital allocation and investment appraisal a senior management team’s most fundamental responsibility. In financial terms, that means that investments should generate an after-tax rate of return greater than the company’s cost of capital. Management will generally use Discounted Cash Flow (DCF) analysis to test whether a project is likely to achieve this goal. Two specific DCF measures can be estimated. If a company’s cost of capital is 7%, its investments need to generate a rate of return of at least 7% to adequately compensate investors for the risk they are exposing themselves to by investing in a company of that particular size, operating in that particular country, and in that particular sector. If the investment generates an 8% return, value is created. If the investment generates a 6% return, value is destroyed. By discounting projected future cash flows into their equivalent present values using the corporate cost of capital, net present value (NPV) quantifies the boost to shareholder value that an investment should generate. The other key DCF measure is the Internal Rate of Return (IRR). For any given set of project cash flows, IRR quantifies the cost of capital that would generate a nil NPV. The IRR measures the average annual rate of return that the project expects to generate over its life. If a project’s IRR exceeds the cost of capital, it will be expected to boost shareholder value. But there is an assumption implicit in DCF mathematics, which can lead to IRR significantly overstating a project’s prospective rate of return. The IRR approach assumes that intermediate project cash flows generated by the project (i.e. those generated after the initial investment period and before the project’s end) are themselves reinvested to generate a rate of return equal to the project’s IRR. If a company’s cost of capital is 7% and the project’s rate of return is 14%, this assumption means that surplus cash flows generated mid-project are themselves expected to be reinvested and to generate a 14% rate of return. This assumption is questionable: why should returns on surplus cash be higher just because they were generated by a high-return project? Modified Internal Rate of Return (MIRR) applies exactly the same approach to evaluating a project as IRR, except it assumes that intermediate project cash flows generate a rate of return equal to the cost of capital (rather than the project’s IRR) when reinvested. This will generally be a more realistic assumption than that underpinning IRR. Having already calculated IRR, it is a simple matter to estimate a project’s MIRR using Excel’s ‘=MIRR’ function. The difference in the measured rate of return between IRR and MIRR can be significant. Consider a simple example. Suppose we invest €1,000 today, and it is expected to generate annual after-tax cash flows of €140 for each of the next ten years, after which the project ends and we get our €1,000 investment back. The IRR of this project is 14%. But, if our cost of capital is 7%, the MIRR of the same projected cash flows would only be 11.4%. Bottom line: IRR can systematically overstate prospective project returns with its unrealistic reinvestment rate return assumption. MIRR corrects this. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.