There are several signs that the EU may be splintering at the edges, writes Cormac Lucey. One of our weaknesses as a species is our self-regard. Sitting at the top of the evolutionary tree, we are in danger of overlooking some fundamental weaknesses. One is the conceit that we make critical decisions based on our thoughts when there is considerable evidence that feelings heavily influence our decision-making. A prime example of feelings misleading decision-making occurred in the Irish property market in the years 2006 and 2007. In a Davy research note published in March 2006, Rossa White (then the stockbroker’s chief economist, now occupying that position with the National Treasury Management Agency) issued a warning in the note’s title “Dublin house prices headed for 100 times rent earned”. He cautioned investors that “the fundamentals suggest that it will be an adjustment in prices – rather than rents – that will eventually bring valuations down to more realistic levels”. The problem was that investors had extremely positive feelings about property as an investment class resulting from its extremely strong performance in the preceding decade and a half. Feelings trumped thought. Thousands got caught in the resulting carnage. There is a danger that similar forces may blindside us to weaknesses developing within the European Union (EU) today. When we look back, we see a relatively strong and united body. From an Irish perspective, we associate the dramatic rise in our prosperity in recent decades with our EU membership (much more than with our turbo-charged foreign direct investment sector). But there are several signs that the EU may be splintering at the edges. Faultline one… There have been recent calls from the Élysée Palace for the EU to issue jointly guaranteed bonds (debt securities) to help those member states worst afflicted by COVID-19. The alternative, according to the French president, is to risk the collapse of the EU as “a political project”. What you may not be aware of is that in 2019, before any of us had heard of the virus, France and Italy already had the second and third largest budget deficits in the EU. Having maxed-out their own national credit cards, they now want to use the hard-won creditworthiness of others to borrow more. Faultline two… The differing borrowing capacity of various EU member states has resulted in widely varying budgetary responses to the pandemic. Germany, which went into the crisis with relatively healthy public finances, plans to spend more than 6% of GDP to boost its economy, before considering the effect of loans and guarantees. Italy, by contrast, entered 2020 with a weak fiscal position and can afford an immediate fiscal impulse of less than 1% of GDP, even though it has been hit much harder by the pandemic than Germany. France is similarly constrained. We can look forward to more wailing from the Élysée Palace. Faultline three… The actions of the European Central Bank (ECB) are increasingly running up against political and legal constraints. The German Federal Constitutional Court recently ruled that the ECB had exceeded its legal mandate and “manifestly” breached the principle of proportionality with bond purchases made under previous quantitative easing programmes. How might it rule on the ECB’s current programme, which has been deliberately disproportionate to reduce financial strains in Italy? A related problem concerns the ECB’s Target 2 balances. They are a key measure of financial market strains within the euro area. They record how much a national central bank is borrowing from the ECB to lend to domestic commercial banks that are suffering deposit withdrawals. For years, Italy and Spain have been borrowers while Germany has been on the opposite side of the equation, helping to fund the ECB. In March, the Italian central bank’s borrowing jumped by over €100 billion to €492 billion, while the amount the Germans lent into the system rose by more than €100 billion to €935 billion. As the US economist Herb Stein quipped, “if something cannot go on forever, it will stop”. We just do not know when. Cormac Lucey FCA is an economic commentator and lecturer at Chartered Accountants Ireland.

Annette Hughes outlines the four consumer behaviour trends that have emerged from the COVID-19 pandemic. The COVID-19 crisis is being defined by four distinct consumer behaviour responses, according to the first edition of the EY Future Consumer Index. The survey tracks consumer sentiment and behaviour across several geographies, but these four behaviours, outlined below, are all evident in Ireland and have implications for the pending economic recovery. Cut deep (27%): these consumers are mainly more than 45 years old and have seen the biggest impact on their employment status. Almost one-quarter have seen their jobs suspended, either temporarily or permanently. 78% are shopping less frequently, while 64% are only buying essentials. Stay calm, carry on (26%): these consumers do not feel directly impacted by the pandemic and are not changing their spending habits. Just 21% are spending more on groceries, compared with 18% who are spending less. Save and stockpile (35%): this segment has a particular concern for their families and the long-term outlook. 36% are spending more on groceries, while most are spending less on clothing (72%) and leisure (85%). Hibernate and spend (11%): usually aged between 18-44, these consumers are most concerned about the impact of the pandemic with 40% shopping less frequently. Rationalised personal consumption From the Irish economy’s perspective, the unprecedented impact on the labour market has a significant effect on consumer spending. Personal consumption accounts for around one-third of Ireland’s GDP. Before COVID-19, the economic recovery was associated with a healthy annual average growth in consumer spending of 3.5% over the last five years. With the categories affected by containment measures accounting for around one-half of consumer spending, according to the Central Bank of Ireland, a sharp contraction in consumer spending is expected in 2020, which in turn impacts on investment and overall GDP. Recent projections from the Department of Finance forecast that personal consumption will contract by 14.2% this year, with GDP down by 10.5% (April 2020). The impact of the pandemic on employment, supply chains, travel and tourism, and mobility has hugely reduced consumer confidence and spending – and the shock is likely to be felt for some time to come. Looking beyond the immediate effects of COVID-19, few consumers expect to revert to pre-crisis behaviours any time soon. Overall, 42% of respondents believe that the way they shop will fundamentally change as a result of the COVID-19 outbreak. Plummeting consumer confidence While these four segments could morph as the crisis abates, the adverse impact of the pandemic on consumer confidence remains. In an Irish context, the KBC Consumer Confidence Index fell to its lowest level in the survey’s 24-year history due to a combination of weak conditions and the risk of poorer prospects. 584,600 people are in receipt of the Pandemic Unemployment Payment while the unadjusted Live Register total for April 2020 was 214,741. An additional 425,204 are being facilitated through Revenue’s Temporary COVID-19 Wage Subsidy Scheme. This implies that in the region of 1.224 million people – or almost 50% of the workforce – are in receipt of some form of income support. Joined-up thinking required The recovery in consumption will depend on the extent to which the unemployment situation is reversed. Companies that were struggling to keep up with changing consumer behaviour before the pandemic are now faced with the challenge of anticipating how consumers will evolve beyond the pandemic. The Government’s roadmap to ease COVID-19 restrictions and re-open Ireland’s economy and society on a phased basis are welcome, but the pace at which different sectors and regions begin to recover will vary greatly. While smaller towns may benefit from increased local spending, online sales are likely to remain high, at least in the short-term. We must look at what business and governments can do together to help everyone get through what continues to be an incredibly difficult period to ensure that they are all ready to participate in the recovery when it comes.   Annette Hughes is an Economist and Director at EY-DKM Economic Advisory.

Des Peelo shares his one guiding principle for setting a fair professional fee. Professional fees occur in many occupations including dentists, doctors, accountants, solicitors, barristers, and architects. Public relations practitioners, management consultants, estate agents, investment bankers and technical advisers of all kinds also charge professional fees, as do lecturers and conference speakers. But how should you calculate a professional fee? There are no guidelines as such, other than custom and practice within a particular sector. Competition law prevents price-fixing within a sector. Nevertheless, norms or rules of thumb usually develop over time. Enquiry suggests that a routine GP visit costs between €55 and €70, while a medical consultant may charge between €250 and €300. An estate agent may charge 1-2% plus outlays and VAT on the sale price of a property, and an architect may charge a percentage of the project costs. Practising accountants typically charge an hourly rate for routine services such as audit, accountancy, and tax work. For more complex work, mainly carried out by larger firms, such as a major investigation or a difficult liquidation, an hourly rate of €450 per hour plus VAT has been quoted in the High Court for a partner’s time. This €450 currently seems a benchmark rate and is scaled downwards for less senior staff. In general, straightforward work such as audits for an accountant, conveyancing or probate work for a solicitor or routine dental work for a dentist is competitive, and fees fall within identifiable ranges. It is difficult, however, to generalise in linking a fee to the mix of expertise provided, responsibility taken, and the value to the client. What is the value of a careful and competent diagnosis of a malady from a GP, or a substantial tax saving through expert knowledge? What is the value of the identification and rectification of a serious IT glitch, or a crisis successfully managed by a skilled public relations practitioner? Round sum fees are common for non-routine work or work not measured in terms of time incurred. There is the story of a computer glitch that closed down an entire business. A technician arrived, turned a nut, and got the system up and running again. The bill was €1 million, and the client demanded a breakdown. The response was €100 for the hour in turning the nut, and €999,900 for “knowing which nut to turn”. Legal fees, apart from routine matters, can be a mystery – particularly in litigation. There are regular reports of substantial fees across all types of litigation. A UK judge once remarked that the Savoy Hotel and the courts are open to everyone. In my experience, this is because of the extensive input necessary in almost any litigation, such as identifying the issues and the law relating thereto; assembling the relevant documentation and preparing the required procedural paperwork; accessing expert evidence; consultations; and, of course, the actual court hearing. There is an amusing story about legal fees allegedly involving a firm of solicitors in the United Kingdom. A long and complex litigation case had come to a satisfactory conclusion, and it was time to finalise the bill. The more technical aspects had already been completed as to measuring the files at £100 per inch and weighing the files at £150 per pound. Instead, each partner had to review the files and put his or her estimate of the total fee in a sealed envelope, placed in a box. When the box was opened, the partner with the lowest estimate did not share in those fees and the partner with the highest estimate had to collect the fees. An optimum balance. Investment bankers charge astronomical fees. This is because they can. The transactions involved are mega takeovers or the funding of large projects. The enormous sums of money involved are often backed by prestigious names, not necessarily professional expertise, and this is what underpins the hefty fees. Fees of 1-3% of the amounts involved do not seem unduly high when expressed that way, but these percentages translate into millions of dollars or euro. George Bernard Shaw observed that professions were conspiracies against the laity. This, of course, does not refer to Chartered Accountants and professional fees. A guiding principle as to good professional practice is to ensure that the subsequent fee is not a surprise to the client. Service before remuneration.   Des Peelo FCA is the author of The Valuation of Businesses and Shares, which is published by Chartered Accountants Ireland and now in its second edition.

Richard Day and Alannah Comerford look at how Chartered Accountants can explore the potential for robotic process automation using UiPath. In this series of articles, we are exploring the power of visualisation and data analytics and the benefits it can bring to Chartered Accountants. As you may know, the FAE syllabus was recently updated to include data analytics concepts and tools such as Tableau, Alteryx, and UiPath. Previous articles dealt with the concept of data visualisation and the value it can bring to an accountant, and most recently we covered the data processing tool, Alteryx, and the significant advantages it affords when performing data transformations and calculations. In this article, we will move to the more advanced area of automation. Robotic Process Automation (RPA) is an acronym you are probably familiar with, as more and more businesses seek to streamline their operations and exploit the advantages of automation. UiPath, which has been selected by the Institute, and similar tools enable RPA at a practical level. UiPath is a software solution that acts like a robot, programmed to perform the various activities in a process just as a human would. The tool can be used to run without human supervision or can work as an assistant. Automation without human supervision is extremely difficult and may not be the answer for complex processes that require significant judgement, reasoning or analysis from the person performing them. In such cases, automation may still support the person who is completing these tasks as an assistant, but human intervention is vital. However, if we consider those processes that are suitable for automation, they can usually be described as highly repetitive, manual processes where the employee does not exert judgement. All decisions are made based on business rules and pre-defined logic. Significant value can be derived from automation where there is interaction between multiple systems, but the inputs required are standard, making the process tedious and time heavy. Similarly, when the current manual procedure is inadequate for standardising a process and remains subject to error, automation – which has the power to perform the process accurately every time – can be invaluable. As an accountant, you might think that opportunities for automation should fall under the remit of those working in IT. Accountants, with their holistic knowledge of how a business operates and analytical nature, are ideally placed to identify potential automation opportunities and act as a key stakeholder throughout the process. Automation at work Consider a simple process whereby you are required to run reports or extracts from different systems and perform some data transformation and analytics on the information to produce an output, perhaps in the form of a reporting dashboard. Alteryx can be set-up to run workflows to deal with inputs from different systems and produce the desired output. However, you would still need to run the input files and refresh the dashboard manually. Incorporating UiPath can automate the process even further. UiPath can log-in to each system and can be used to run specific reports from different systems at set times, replacing the need to download data manually. It can then load this data into Alteryx, run a pre-defined workflow, and produce the desired dataset. This information can then be brought into Tableau to refresh a dashboard with the current information. In this way, UiPath can be configured as an interface between systems to offer a fully integrated solution. These processes can be as simple as taking a list of suppliers from one system, along with balances from another. UiPath can automate the production of these lists and balances for processing in Alteryx to produce a customer statement. This statement is then converted to a named PDF document and emailed to each customer. In an audit context, where proof of delivery can provide recognition of a sale, client records can be reconciled with those from a third-party delivery company, exceptions identified and presented for further investigation by the auditor. A business can reap many rewards from automation. While efficiency and time-saving with a shorter cycle time immediately spring to mind, increased quality and compliance as a result of a reduction in errors and an increase in accuracy are also often seen. Unlike mere mortals, robots never sleep and processes can operate autonomously 24/7, driving real-time transactions and analysis. While certainly more challenging to measure than the benefits outlined above, increased employee satisfaction through a focus on higher-value activities and a reduction in time spent on menial, repetitive tasks is a clear benefit. It helps shift the priorities of the employee to innovation, strategy and activities that add value to the business proposition, resulting in a happy and productive workforce and consequently, higher output. While the benefits that automation can bring when applied to appropriate processes are clear, we must bear in mind that, while automation can reduce hours in the long run, up-front investment is required to get it right. Also, control-aware accountants would know that any automated process requires ongoing review. A successful move towards automation requires the skills that accountants use all the time. For example, detailed process maps that are validated by walk-throughs are essential as well as thorough testing with scenario analysis. Consideration of the impact on controls, appropriate training, procedures, and user manuals are also required along with a measurement of actual versus expected results and periodic performance assessments. Accountants are likely to be key stakeholders in each of these activities. Admittedly, we have only just skimmed the surface of the potential of UiPath and what it can be used for. Still, given the myriad of considerations included above, this is hopefully understandable. We hope we have sparked a reflection on potential use cases in your own business and perhaps demonstrated areas where Alteryx alone may not go far enough. We encourage you to consider these use cases, investigate whether your organisation has the necessary experience and consider a proof of concept. In the world of RPA, do not be afraid to consult and draw on experience.   Richard Day FCA is Partner, Risk Assurance Leader, at PwC Ireland. Alannah Comerford ACA is Senior Manager, Data Analytics & Assurance, at PwC Ireland.

With fintech innovation transforming the financial services sector, banks must undergo a strategic revolution – as IBM did in the 1990s – to survive and thrive. When your Irish mammy says she’ll “Revolut ye some money” for her grandson’s birthday, you know that fintech has moved mainstream. Leading fintech firms now have market cap valuations to rival the banks, with investors (or speculators) pricing in significant growth expectations at the expense of incumbents.  As banking boardrooms grapple with their response to the fintech onslaught, they could do worse than look through the lens of history to find inspiration from a similarly disruptive period in the IT sector in the 1990s.    Sword to a gun fight Gary Hammel, who is one of the most significant strategic thinkers of the 20th century, once prophesied that “in the new economy, those who live by the sword will be shot by those who don’t”. He observed that, when technological disruption occurs in a mature sector, dominant incumbents often suffer from the “tyranny of success”. They rigidly stick to the business model that delivered decades of success in the misguided belief that it will sustain success into the future. Before they know it, they become irrelevant and decline. Roll forward to 2020 and observe the vast sums of global capital that have been invested in fintech organisations over the past decade, as investors believe they can tap the vast profit pools (and data) that banks have had to themselves for centuries. While global bank CEOs were at first in denial, and even complacent about the fintech threat, many are now concerned by the exponential disruption to their core revenue lines. In considering a response, bankers could do worse than study IBM’s resurrection in the 1990s and how it underwent a strategic revolution to renew its lease on success. But before we go there, let us delve deeper into the disruption that is happening in financial services in 2020 and the banks’ response thus far. Fintech disruption A holy trinity of tailwind forces are driving fintech’s disruption of banking: A technological revolution (e.g. data and artificial intelligence); A paradigm shift in customer expectations (e.g. those who demand low effort and excellent user experience banking); and Favourable regulatory changes (e.g. the second Payment Services Directive (PSD2), which has opened up banks’ transaction data to fintech companies). Fintech companies have developed superior value propositions across nearly every product line. This allows consumers to send and convert money more cheaply, pay for goods and services much more easily, borrow money in an instant (no form-filling), and invest money smartly at a fraction of the cost charged by incumbents. They have perfected these propositions with helpful feedback from digital-savvy early adopters and now have their focus set on acquiring the banks’ core customers. Bank executives attempt to counter the fintech threat by allocating finite investment resources to one product line under massive attack (payments, for example), leaving other product lines open to disruption (business lending or investments, for example). The multi-flank offensive is stretching banks beyond their capacity to respond, but the fintech companies are only getting started. The greatest corporate turnaround of them all Before a mortal blow is delivered, banking CEOs should learn from the greatest corporate turnaround of them all. When Lou Gerstner took over as IBM CEO in 1993, he inherited a sprawling, rigid, loss-making organisation in rapid decline. They could not match the pace of product innovation from a new breed of agile competitors. Each competitor’s specialist focus on a part of the IT value chain enabled them to develop value propositions far superior to the ‘jack of all trades and master of none’ IBM. Within a decade, Gerstner had led IBM through one of the most successful corporate turnarounds and reinventions of all time. Gerstner and his team observed that, while corporate CEOs/CIOs were choosing IT products from competitors, the result was an IT architecture stack encompassing many different suppliers, which brought huge frustrations. These same corporations now needed a ‘technology integrator’ partner with a whole-market knowledge who could help them select, integrate and manage their portfolio of IT suppliers. For Gerstner, this was the eureka moment. This significant emerging customer need showed him that the future of IT would be services-led, not product-led. IBM’s perceived greatest weakness became their most significant asset, as they had the market knowledge needed to win in this lucrative new services market. How could this play out for banking? Let us imagine how this could play out for banking. We are in the year 2030 and the ‘platformification’ of financial services has occurred, with a handful of trusted financial platforms banking all of Europe’s consumers and offering any banking/fintech product these consumers could need. Think Amazon, but for financial services. 90% of incumbent banks will have missed the boat by 2030. They either went bust or are now operating as a utility company, offering commoditised financial products through these platforms. Fintech companies are also resigned to offering their products through these platforms, as the cost and effort involved in customer acquisition became too high. ABC Bank is the exception and has become the dominant consumer financial services platform player in the UK, Ireland, Benelux and the Nordics with 50 million customers. In 2020, ABC Bank saw an emerging market need for a trusted ‘financial integrator’, one that could make sense of – and harness – the multitude of great fintech offerings for the benefit of the consumer. The bank was brave and decisive, investing heavily in the right capabilities to become the Amazon of financial services. In particular, it invested in its digital front-end, third-party management capabilities, and data analytics capabilities. Consumers in these markets know that ABC Bank’s intuitive and secure platform can help them find the leading and best value fintech product offerings on the market. Customers are reassured that ABC Bank has properly scrutinised any fintech offering listed on the platform before giving the green light to offer their services. They have no worries, therefore, about their data or the security of their money. As consumers’ financial affairs (and data) are managed within one platform – cash, investments, pension and expenditure – ABC Bank has a holistic view. Remember, data is more valuable than gold. ABC Bank is, therefore, in a unique position to provide higher value in-house services, such as holistic analysis and advice to help consumers make better-informed financial decisions. If all this seems a bit far-fetched and futuristic, it is worth noting that this change has already occurred in Asia with the meteoric rise of Ant Financial. This financial services platform did not exist five years ago and is now worth $150 billion. Conclusion As banking boardrooms regroup following the pandemic and look once again to the future, perhaps they can dust-down the IBM playbook. They can position themselves at the centre of their customers’ financial lives as the financial integrator, making sense of – and harnessing – the power of fintech innovation for their customers’ benefit. Those who move swiftly and decisively can seize the day. Those who procrastinate and live by the sword will be shot by those who don’t. Vincent Colgan is a financial services strategist with expertise in banking and fintech collaboration.

Although the weeks and months ahead will undoubtedly be challenging, quality should not be compromised argues Fiona Kirwan. Full-year and interim year reporting deadlines are fast approaching for accountants both in industry and practice. Companies’ financial reporting functions and their auditors are getting used to working in ‘new normal’ circumstances. However, these changed circumstances must not compromise the quality of the work we all deliver day-to-day. Here are some issues Chartered Accountants should consider as they seek to maintain the highest level of quality in all aspects of their work. People COVID-19 has transformed the way we live and work. We have heard this phrase a lot in recent weeks, but it remains true. Almost instantly, employees who are used to the rhythm of the workplace became remote workers – many without the chance to prepare adequately. This creates challenges for managers of both finance and audit teams in leading teams remotely. It is more challenging to coach and supervise people who are not physically in the same location. It is therefore important to stay in touch and stay close to your people. Connecting as a community during this time takes imagination. It could mean developing new channels or social tools for employees to share stories; it could mean embracing video calls to create a sense of physical presence. Virtual social events are becoming the norm. Even small investments in building a genuine community can have a significant impact on your employees’ morale. This sense of community helps when coaching teams. People who are closely aligned on a personal level will find it easier to communicate complex information simply and team members will feel more comfortable asking questions and querying essential messages. Teams must be aware that some colleagues may not have optimal ‘work from home’ environments; some are juggling home-schooling with office hours; others are working from their bedrooms in shared living spaces. Organisations should implement flexible working structures to allow teams to deliver quality work while maintaining processes to ensure confidentiality and transparency. Such flexible working structures mean that everyone in the financial reporting process, both finance teams and auditors, must allow extra time to execute tasks remotely. Technology Almost all finance functions and accounting firms transitioned to remote working arrangements overnight, and the quality of an organisation’s technology is critical to day-to-day operations and ensuring business continuity in this scenario. Some organisations may have challenges arising from the fact that their teams are heavily reliant on desktop computers, second screens, or printing facilities that are not available in the home environment. The move to remote working could also leave team members isolated, but this is where the ability to host video conferences, share screens, and collaborate in files in real-time has become vital. Not only do these technical solutions allow teams to communicate internally, they have also become critical channels for communication between auditors and their clients. At PwC, we utilise our combined suite of audit tools – Connect, Aura and Halo – to communicate with our clients and colleagues across the globe. We also use Google’s G-Suite of collaboration tools, and Datashare to help us work with the data of clients with less complex IT systems. The recent uptake in the adoption of these technologies has seamlessly transitioned a lot of this work, which was historically done in person, into the digital realm.  Controls One area where the successful application of technology solutions has become essential is the implementation of internal controls over financial reporting. The appropriate tone from the top is vital; managers need to remind people that remote working might change how controls work, but it does not lower the bar. How companies operate their controls has been amended to allow for remote working. For example, a manual sign-off may now be replaced with a confirmation by email. In these uncertain times, companies will want to ensure that shortcuts are not being taken and rigour – both in procedures and the provision of appropriate evidence to support the implementation of controls – are maintained. Auditors will need to consider whether the controls, as they currently operate, remain fit for purpose and any increased risks that may have arisen from recent changes. Financial reporting The COVID-19 outbreak, and the measures taken to mitigate its impact, are having a significant effect on economic activity. This, in turn, has implications for financial reporting. Companies and auditors must work together to ensure that quality is not compromised – even in challenging circumstances. The following is a sample of the wide range of accounting issues that companies and auditors have considered in recent weeks: Going concern and viability statement: companies must assess going concern at each annual and interim reporting period, with a look-forward period of one year from the financial statement issuance date. Companies impacted by COVID-19 have had to update their forecasts and provide appropriate disclosures to alert investors about the underlying financial impact and management’s plans to address it, including if conditions give rise to uncertainties about the company’s ability to continue to operate; Subsequent events: the consensus is that COVID-19 was a non-adjusting post-balance sheet event for 31 December 2019 reporting. However, the appropriate disclosure of impact on the overall financial statements is a critical element of the financial statements; Measurements of assets: for year-end reporting and interim statements after December 2019, companies and auditors must assess the timing of COVID-19-related events to determine the impact on assets, including goodwill and indefinite life intangible assets, inventories, and deferred tax assets. Companies and their auditors must consider disruptions to the entity’s business or the broader market in determining recoverable amounts of assets. Careful consideration must be given to the net realisable value of inventory and, in the event of a price decline, whether prices will recover before the inventory is sold; Revenue recognition and receivables: identify the appropriate sales price given increases in expected returns, additional price concessions, or changes in volume discounts. Companies and auditors should be mindful that revenue can only be recognised for new sales if payment is probable under IFRS 15; Alternative performance measures: the European Securities and Markets Authority (ESMA) has provided guidance relating to the use of Alternative Performance Measures (APMs) in the context of COVID-19. Consistent with previous guidance relating to the maintenance of consistency of APMs from one reporting period to another, ESMA advises that rather than adjusting existing APMs or including new APMs, issuers should improve their disclosures and include narrative information in their communication documents to explain how COVID-19 impacted and/or is expected to impact on their operations and performance; the level of uncertainty; and the measures adopted – or expected to be adopted – to address the COVID-19 outbreak; and Internal consultations and reviews: audit teams face significant additional internal consultations and reviews in the current environment. Early agreement on timetables and collaborations between companies and auditors will ensure that quality is not compromised. As events continue to unfold, the challenges faced by accountants both in industry and practice are mounting. The weeks and months ahead will undoubtedly be challenging. However, quality should not be compromised. Supporting our colleagues and utilising our technology capabilities will ensure that control frameworks continue to operate, financial reporting will be clear and transparent for all users, and audit quality will not be compromised. Fiona Kirwan is a Director at PwC’s Assurance Practice.

Peter Vale considers the items that could become long-term features of Ireland’s tax regime under the new government. In the April issue of Accountancy Ireland, I wrote about the expected impact of COVID-19 on Exchequer receipts for 2020 and beyond. We have now seen the evidence with both VAT and excise down roughly 50% on similar months last year. While some of the drop in VAT receipts might be down to timing with companies deferring payments, a large chunk is an unquestionably permanent loss in VAT revenue due to lower spending. The income tax figures for May are also expected to show a significant drop, due to vastly lower numbers in employment. The Department’s view is that corporation tax figures will hold up better. I hope this forecast is right, but I fear that the hit to corporate profits will be higher than anticipated, with refunds for prior years and losses carried forward likely to feature. What is next? So, what does this mean for future taxes? Will the relatively healthy state of our public finances entering the crisis make for a less painful exit? The Minister for Finance, Paschal Donohoe T.D., has stated that he will not raise taxes this year as doing so would stifle the ability of the economy to recover. This makes sense, assuming we can afford to do it. You also cannot simply raise taxes and expect to collect more tax revenue; you reach a tipping point, after which further hikes result in less tax collected. And many of our taxes are already high. Tax reliefs Of course, ruling out impending tax increases does not mean that there will not be a focus on tax reliefs. While many tax reliefs have been abolished over the last decade or so, certain targeted reliefs remain available to taxpayers. It is unlikely that tax reliefs incentivising environmentally friendly behaviour will be targeted. Furthermore, the research and development (R&D) tax credit is also unlikely to be affected as it encourages more sustainable jobs. Reliefs that allow business assets to be passed (typically) to the next generation are more likely to be in scope. Generous reliefs exist for both the disponer and the recipient. These reliefs escaped the guillotine in the past as they continued to make economic sense; a large tax bill was avoided on a potentially illiquid event, allowing the business to be driven forward by the next generation. Capital taxes Capital taxes are likely to be targeted by the Minister, perhaps initially by way of curtailment of reliefs and in the medium-term via an increase in rates. That said, capital tax rates are already high with our 33% rate one of the highest in the EU. In contrast, the UK capital gains tax rate is 20%. We know that when the capital gains tax rate was halved from 40% to 20% some years back, the tax-take doubled. An increase in capital gains tax rates could see the opposite effect, with fewer transactions and potentially more tax planning resulting in a lower tax yield. Broadening the tax base One thing the Minister may look at in the future is broadening the income tax base. It is questionable as to whether this would be regarded as an increase in taxes, but it would generate more tax revenue. Broadening the tax base would mean more people paying tax, albeit many would pay very little. Adjusting the current exemption limits and credits would facilitate this. Broadening the tax base was a recommendation of the Commission of Taxation over a decade ago, but we have not seen it followed by governments since. While the notion of everybody contributing something may resonate more in the current environment, it may still prove politically unpalatable. Property tax In the medium-term, depending on the state of the public finances, other tax-raising measures may be considered. The options aren’t exactly limitless. Our VAT rate is already comparatively high, as are our income taxes. Our corporation tax rate is low but effectively untouchable. One tax rate that is low in a European context is property tax, in particular for residential property. Many economists see property taxes as the least distortive, so an increase in property taxes might be the ‘least bad’ way to raise taxes. Tackling property taxes would be a brave move for a new government, but potentially something that could be done in year one or year two of a new term. Conclusion In summary, tax increases later this year are unlikely – although we may see certain reliefs targetedand the ‘old reliables’ such as cigarettes and alcohol are unlikely to escape. In the medium-term, COVID-19 will mean that tax-raising measures are likely to feature. In my view, a broadening of the tax base and an increase in property taxes are the most likely outcomes. Both of the above could be long-term features of our tax regime, although much will depend on future government priorities.   Peter Vale FCA is Tax Partner at Grant Thornton.

Geraldine Browne provides food for thought as employers prepare to report end-of-year expenses and benefits. At the time of writing, I am adjusting to working from home and seeking the best working station in the house (I lost). Much of my time is spent assisting clients with queries on the UK Government interventions introduced to help businesses survive in this challenging time. The most common questions relate to furloughed workers as companies struggle to maintain productivity. It is difficult to choose a topic for this article amid the human tragedy unfolding before us on a global scale. As this article will publish in June, employers will be gathering the necessary information to complete Forms P11D and share scheme reporting for the year ended 5 April 2020. For this reason, I will focus on P11D reporting and consider the changes employers face in benefit-in-kind (BIK) reporting in light of the coronavirus emergency. The due date for P11D reporting is 6 July 2020 for BIK provided for the year ended 5 April 2020. While this may have been delayed in line with other announcements from HMRC, the preparation process will nevertheless be the same. What do I need to file? If the employer paid any benefits and/or non-exempt expenses, or if they payrolled any BIKs, a P11D (B) form must be filed. The employer must include the total benefits liable to Class 1A, even if some of the benefits have been taxed through payroll. Employers are also required to give employees a letter informing them of the benefits that were payrolled and the amount of the benefit. What do you need to include on the P11D form? Taxable benefits typically include private medical and dental insurance, company cars, and gym membership, for example. HMRC has published a useful guide for P11D completion, which is a good starting point. Company cars and vans Employers are required to disclose the company car BIK for the full tax year where it is made available for the entire period. The question has been asked as to whether an employer can reduce the BIK value since employees have been asked to remain indoors and business travel in a company car ceased temporarily from March 2020. If an employee is furloughed and the vehicle remains at the employee’s home, the car is seen as being available under the current rules. At the time of writing, HMRC has not yet issued formal guidance on this matter. There have been suggestions that HMRC may accept that company cars will not be deemed available for BIK tax purposes where they are ‘virtually’ handed back by returning keys and fobs. It is worth reminding ourselves of the rules regarding the cessation of the car benefit. The benefit may cease, but remember: The car must be unavailable for at least 30 days to pause or cease a company car benefit; and HMRC will accept that the car is unavailable to the employee if it is broken down and has not been repaired or if the employee does not have the keys. If you have not already considered the company car policy, it is worth seeking advice in this area. Taxable expenses when working from home If employers provide a mobile phone without restriction on private use, limited to one employee, this is non-taxable. If the employee already pays for broadband, no additional expenses can be claimed. If broadband was not previously available in the employee’s home, the broadband fee paid for by the employer may be provided tax-free although in this case, private use must be restricted. Laptops, tablets, computers, and office supplies will not result in a taxable benefit if mainly used for business. If the employee purchases a desk and chair and seeks reimbursement from the employer, this will be viewed as taxable, and you may wish to include this in a Pay-as-you-earn Settlement Agreement (PSA). Some employers may provide employees with an allowance for additional expenses incurred in connection with working from home. This was increased to £6 per week from 6 April 2020 and can either be paid to the employee or reimbursed to them. Businesses and the economy are facing unprecedented financial pressure. It is worth reviewing your current benefits and expenses to identify ways in which you can reduce the cost to your business and reduce the taxable benefit to the employee. With many employees now furloughed and under severe financial pressure, any assistance an employer can provide to increase net pay will be welcome.   Geraldine Browne is Tax Director at BDO Northern Ireland.

David Duffy discusses recent Irish and EU VAT developments. Irish VAT updates VAT payment deferrals  In response to the economic impact of COVID-19, Revenue announced that interest would not apply to late payments by SMEs of their January/February 2020, March/April 2020 and May/June 2020 VAT liabilities. SMEs in this context are defined as businesses with a turnover of less than €3 million and which are not dealt with by either Revenue’s Large Cases Division or Medium Enterprises Division. Businesses that do not meet the definition of an SME but are experiencing VAT payment difficulties are advised to contact Revenue and these issues will be dealt with on a case-by-case basis. Revenue also advised that all taxpayers should continue to file VAT returns within the normal deadlines. Where key personnel are unavailable to prepare the VAT returns due to COVID-19, businesses should file on a ‘best estimates’ basis and any subsequent amendments can be completed on a self-correction basis without penalty.  Furthermore, on 2 May 2020, a scheme was announced to allow businesses that have availed of VAT and PAYE deferrals during the COVID-19 crisis to defer or “warehouse” the payment of those outstanding liabilities for a period of 12 months without accruing any interest. A lower than normal interest rate on late payment of tax (3% per annum instead of 10% per annum) will then apply until the warehoused tax liability has been repaid. Further details of this scheme are available on the Revenue website and legislation will be enacted in due course. Temporary relief from VAT and duty on PPE On 8 April 2020, Revenue announced that the 0% rate of Irish VAT and customs duties would apply to Irish imports (from outside the EU) of personal protective equipment (PPE) and other goods used to combat COVID-19. This relief applies to imports in the period from 30 January 2020 to 31 July 2020. Revenue also confirmed in eBrief 63/20, issued on 17 April, that the 0% rate of Irish VAT concessionally applies to domestic and intra-EU acquisitions of similar goods in the period from 9 April 2020 to 31 July 2020. These reliefs are subject to certain conditions, which are summarised below. For imports from outside the EU, the goods must be imported by, or on behalf of, State organisations, disaster relief agencies, or other organisations (including private operators) approved by Revenue. The goods must be intended for free-of-charge distribution or be made available free-of-charge to those affected by, at risk from, or involved in combating COVID-19. Furthermore, the importer must have both an EORI number and be pre-authorised by Revenue for the relief. In addition, import declarations must include the relevant customs codes in the appropriate SAD boxes. Where VAT and customs duties have already been paid but the relevant conditions for relief are met, a refund of such amounts can be claimed. Application forms to avail of the relief and to seek a refund of VAT or customs duty previously paid are available on Revenue’s website. For domestic supplies and intra-EU acquisitions, the 0% VAT rate temporarily applies to PPE, thermometers, ventilators, hand sanitiser and oxygen supplied to the HSE, hospitals, nursing homes and other healthcare facilities for use in the delivery of COVID-19-related healthcare services to patients. The sale of these products in other circumstances will continue to attract the VAT rate that would typically apply. VAT grouping In eBrief 053/20, Revenue issued guidance in respect of VAT groups. The guidance primarily outlines the requirements and implications of VAT grouping and includes examples, which show how the rules apply in certain circumstances. Businesses that are considering forming or breaking a VAT group should review the guidelines to ensure that the appropriate procedures are followed. The guidance includes a section on the territorial scope of Irish VAT groups and confirms that, where an entity that is established or has a fixed establishment in Ireland joins an Irish VAT group, it is the entire entity, including any overseas branches, that is considered to join the Irish VAT group. Consequently, charges from a foreign establishment of an Irish VAT group member to other members of that Irish VAT group are disregarded for Irish VAT purposes. This has been the Revenue position for some time, but it is helpful to have it reconfirmed – particularly for the financial services and insurance sectors. ROS enhancements In eBrief 58/20, Revenue announced several VAT-related enhancements to Revenue’s Online Service (ROS). Taxpayers now have the option to add a second VAT agent. To add the second VAT agent, taxpayers will need to complete an Agent Link form in the usual manner. Also, the Revenue Record (Registration Details) on ROS now indicates the VAT basis of accounting (i.e. the cash receipts or invoice basis) adopted by a given taxpayer. EU VAT updates VAT treatment of staff secondments The Court of Justice of the EU (CJEU) concluded in the San Domenico Vetraria (SDV) case (C-94/19) that the secondment of staff by a parent company to its subsidiary in return for a payment equal to the parent company’s cost (but excluding any profit margin) is a supply of services within the scope of VAT. The case highlights that VAT can arise on cross-charges for staff time and this should be carefully considered, particularly in cases where there may be no or partial VAT recovery in the recipient entity. In analysing the case, the CJEU re-stated that VAT arises on a supply of goods or services effected for consideration within the territory of an EU member state by a taxable person. A supply effected for consideration requires a legal relationship between the supplier and recipient, and reciprocal performance, meaning that the payment received by the provider of the service is in return for the service supplied to the recipient. In the present case, the CJEU was satisfied that there was a legal relationship between the parent and subsidiary and that there was a payment in return for the service provided. Consequently, where the Italian court, which had referred the case to the CJEU, established based on the facts that the amounts invoiced by the parent company were a condition for the secondment and that the subsidiary paid those amounts only in return for the secondment, VAT would apply to the secondment. The CJEU confirmed that the fact that the payment did not include a profit margin did not impact the VAT analysis, as it has been previously held that a supply for VAT purposes can take place where services are supplied at or below cost.   David Duffy FCA, AITI Chartered Tax Advisor, is an Indirect Tax Partner at KPMG.

John Slattery shares his simple three-step process to help you make a career choice you will not regret. In adulthood, bar sleep, we spend more time at work than anything else. Our career will have a massive bearing on the happiness, success, and fulfilment we experience in life. It is critical, therefore, that we make the best career choice possible at every professional junction. Making a career choice is a complex process, and there are many nuances to consider. Inspo’s three-step guide to making good career choices is designed to steer you toward the right decisions for you. The three steps are as follows. Step 1 Create an uninhibited list of career choices One measure of success around career choice will be the absence of any regret upon deciding. For this to be the case, we must identify all possibilities that appeal to us as possible career choices. This will enable us to feel confident that we are choosing from a complete list. You may be able to identify all possibilities yourself. Alternatively, you may need to bounce it off one or more people to help you formulate the list. If so, chat with someone you know who will give you a genuine opinion as to what career options they think would be worth considering. You must also ensure that you build an understanding of what each role entails. You can then make an informed decision as to whether to pursue or discard each option (more on that in step three). The end-goal for step one is to feel that you have identified a complete list of career choices and to have an informed understanding of each option. Step 2 Self-reflect To decide on the suitability of each option, you must self-reflect. You will use the output of your self-reflection to evaluate each option that has emerged in step one. There are three elements of self-reflection to carry out: Vision Positive psychologists Scott Barry Kaufman and E. P. Torrance claim that inspiration is the attempt to realise a future vision of oneself. Making career choices that align with our vision can, therefore, create a sense of inspiration in our professional lives. Research also suggests that making a career choice that is connected to our vision can lead to higher levels of productivity, motivation, and positivity. Therefore, our vision is a critical evaluation criterion. Strengths and interest areas This focus area of self-reflection derives from a definition of meaning by positive psychologist, Martin Seligman. He defines meaning as “using your signature strengths in the service of something greater than you are”. Seligman’s research identifies meaning as the most significant contributor to happiness. Strengths and interest areas are a simplified extraction of Seligman’s definition, but tapping into these two areas will give us excellent access to meaning and joy through our work. So, as with vision, strengths and interest areas are crucial evaluation criteria. Priorities Our career choices must be grounded in the priorities that exist in our lives at the time we make a choice. They might be personal, such as a desire to travel or buy a house, or they might be related or separate financial priorities. Honouring our priorities through our choice gives us the best chance to meet our goals, ambitions, and desires. It is the final critical element of evaluation. Our end-goal for this step is to have a clear vision, a sense of what our strengths and interest areas are, and an understanding of our priorities in life. Step 3 Evaluate, pursue, and decide In the final step, you first evaluate each option against the self-reflection criteria. For each option, you decide whether you are going to pursue or discard that option. This will leave you with a shortlist of options. From here, you pursue each shortlisted option further by furthering your understanding and actively exploring opportunities related to each career option. As you do this, you check-in with yourself regularly as to which prospect feels like the right one. You continuously repeat this check-in exercise during this final stage of exploration until you feel ready to make your career choice. I wish I could offer you a process that guarantees success in your career choice. Alas, neither I nor anyone else can do so. What I can say is that I have seen, through my work, that this process helps people make good career choices – and I hope it can do the same for you. The referendum effect Career choices are an imperfect process simply because the ‘perfect choice’ is rare if non-existent. So here is a concept I call the ‘referendum effect’ to help define success when it comes to career choices. Let us look back to the two most recent Irish referendums – the same-sex marriage referendum and the referendum on the Eighth Amendment. In both cases, there was high-quality information available and thorough debate and discussion on the merits of both sides of each argument. This allowed people to make an informed choice at the polls. In both scenarios, the consensus was that the right outcome was achieved. However, in both cases, more than 30% of people voted against the outcome. For me, these referendums are a good metaphor for what you should hope for with your career choices – that is to collect high-quality, accurate information regarding your options, to self-reflect, and to discuss the issues with people you trust and respect. At the end of the process, you will hopefully have a substantial majority for one choice. That for me would be the best outcome you could hope for when making a career choice. There is another side to this metaphorical coin. Consider Brexit – the quality of information shared with the UK electorate was of questionable quality and clarity. In some cases, the information was alleged to be factually incorrect. Voters therefore went to the polls with much higher degrees of uncertainty and a narrow, unconvincing majority voted in favour of Brexit. It has taken Britain several years to make any type of progress on the back of the referendum result and all the while, a vast cloud of doubt looms over the outcome itself. This is a good metaphor, in my view, for a poor career choice – poor or incorrect information, lack of clarity on the options available, and a very uncertain choice. Given the importance of our career in terms of our overall happiness, fulfilment and success, there is only one approach to take. Take the right one. Given the importance that we’ve discussed our career has in terms of our happiness, fulfilment and success – there is only one approach to take of these two shared in the Referendum Effect. Take the right one. John Slattery ACA is Founder of Inspo.

Is your battery full on Monday, depleted by Wednesday, and empty by Friday? Dr Eddie Murphy considers why we take care to charge our phones, but not ourselves. We have all been there – when you think your phone has been charging all night only to find that you did not flick the switch. You immediately accept that it will not function, or you will have limited usage until your next charging opportunity. Yet, when it comes to our bodies, we push on, potentially until we are stressed, exhausted, or burnt out. I am convinced that people who are continually in stress/overwork mode by choice or by necessity will eventually succumb. Illness will always catch up and then the person is forced to reprioritise. What if it did not have to be this way? What if we could manage our energy levels so that we can thrive rather than survive? As we all try to stay safe and healthy, here are my top five tips to help you keep your body’s battery in the green. 1 Sleep Sleep is the quickest way to emotional health and a fully charged battery. Ireland is a sleep-deprived nation. In general, we do not go to bed early enough or get enough good-quality sleep. Too often, the mobile phone is brought into the bedroom – invest in an old-fashioned alarm clock.    2 Exercise As paradoxical as it sounds, the more you exercise the more energy you self-generate. The issue is often motivation or planning the right time for physical activity. For me, I know that I am a poor trainer on my own but when I get out with the athletic club, the chat and social element keep me going. While social distancing makes that more challenging, you can always look into virtual ways to train as part of a group. 3 Savour moments Be mindful. Each morning when you wake up (before you check your phone), notice your breath and take two or three long deep breaths in and out. Throughout your day, do this whenever you think of it. It calms down the fight or flight stress response and allows the adrenaline to drain from the body. Your body will be less depleted as a result. 4 Write a real  to-do list Making an unrealistic list of everything you have to get done in one day and then attempting to accomplish everything will lead to immense frustration and a feeling of failure. This also wears down the body’s battery. Make a realistic list and you will, therefore, feel that you have set and reached some – if not all – of your goals in that day as best you can. This will not only conserve your battery life, but it will also give you some energy. 5 Call in help If you are struggling, admit it. It is okay; we all struggle. If you feel overwhelmed, share it with family, a colleague, or a friend. You will be amazed at how much better you will feel when you face the problem and how much energy you will save by merely addressing the issue. When asked for help, I know very few people who say no – and if they do, are they a true friend? Conclusion Remember, your battery life is your life, and you only have one of those. We are what we do daily, so check-in with yourself right now. What do you do? Do you need to add or subtract from it? If so, that could make all the difference in keeping your battery life a little healthier than usual. We all want to do a lot in our lives, yet our bodies and brains have finite daily resources. So, as you stick your phone on charge for the night (ideally not right under your pillow), just remember to keep an eye on your own battery life too.   Members and students can contact CA Support on 01 637 7342 or 086 024 3294, by email at casupport@charteredaccountants.ie or online at www.charteredaccountants.ie/ca-support. Dr Eddie Murphy is a clinical psychologist, mental health expert and author.

Orla Doyle outlines the job search activities that reap the biggest reward. The Pareto principle states that 80% of outcomes are borne from 20% of the causes. It is one of the cardinal philosophies in business that ultimately guides business leaders in selecting the most productive inputs to drive maximum efficiency. However, this principle can be applied in many settings, including in the job search. See how you can harness the benefits of the 80/20 rule in your job search strategy to target the right company, the right culture, the right management team, and help you get a job you love. Wasted time The job market is a fickle beast, where the amount of effort you put in doesn’t necessarily correlate with the results you get. Working smart rather than working hard is vital. For instance, many people spend a significant amount of time tweaking their CVs and cover letters. While it is important to spend time on this, people often spend too much time, with any subsequent additions unlikely to move the needle. Interestingly, the majority of job seekers choose the job site route to apply for new jobs. Don’t get me wrong; job sites such as LinkedIn and Glassdoor are great tools to use when searching for a new job. However, churning out 10-20 applications per day on one of these sites is a lot of work that won’t necessarily yield the results you want. The truth is, nobody taught us how to look for our dream job. Most people don’t have a real strategy and as a result, everyone ends up doing the same thing. There are better ways to conduct your job search. It may require stepping outside your comfort zone, but it will ultimately raise your chances of making the right next step for your career. Both approaches described above are passive. There are more downsides to this than the time spent sitting back and waiting for an answer. In many cases, applicants later find that the job isn’t what they wanted or that compensation is too low or, in the worst-case scenario, they get no response whatsoever. Over time, this leads applicants to conclude that the job market is unfavourable, and they adopt a negative mindset. If you have been cranking out a large volume of applications daily without much luck, then you need a catalyst – a change in mindset, approach or methodology that places you on the path to career success. The psychology of spending time on inefficient job search tactics When you read the above, a fair question may be: “Why do people choose to put themselves through that?” The most common answer is that it helps people feel productive. Sending out ten applications a day across four job sites may not be the optimal way to land an interview, but at the end of the day, it helps the sender feel that they have done something or that they have put adequate effort into the job search. It’s a flawed perception, but a satisfactory outcome nevertheless for most job seekers. The other reason is that most people love passing the responsibility to someone else. The thought process here may be that if they want you, they will come back to you; if you spoke with a recruiter, they will come back to you when a relevant role comes in. In a competitive and globalised job market, though, this is rare. With the advent of technology, talent is now available across borders and the labour pool is larger than ever. Hence, if candidates are not accountable for their job search, it is an uphill battle to find suitable employment as hiring managers are likely looking at a dozen profiles that are similar or even identical to yours. To achieve success, you must be willing to do what the others won’t to achieve what they can’t. Applying the 80/20 principle So, what are the things that most people don’t do? Below are three things that you can inculcate in your job search. 1. Get specific Do you know what you want to do or, are you merely seeing what you can get? After some rejection, many people throw in the towel too early and start working their way down in terms of the jobs they are willing to accept. To prevent this from happening, get specific about the type of job you want, the size and the culture of the company, and the particular industry in which you would like to work. And then, do not deviate from that. Do you know the types of companies that hire for these jobs, the exact ones for whom you would like to work? Once you have this clarity, you will automatically be inclined to work harder to source those types of jobs and apply accordingly. You will increase your chance of getting results as your whole approach – from your CV to your references – is streamlined for the position you want. This is not to say that you should be rigid in your job search and operate within this one defined box. It is merely a tip to ensure that you are not aborting the search for your dream job before the appropriate efforts have been expended. Second, get specific about the goals of the particular job search tactic you are using. If it doesn’t work, stop and try a different channel. Many people continue to do an activity without ever stopping and asking: is this working? They adopt the attitude of “try harder” rather than analysing the results of a particular method. Set yourself a goal. For example, aim to secure five interviews through a specific channel. This could be achieved by utilising three different recruiters – but if it isn’t working, stop and take a fresh approach. 2. Network Relationships go a long way in the job market. The best jobs are often snapped up before they are even advertised on a public platform because the candidate had a good relationship with the hiring manager (or at least someone that knew them). A CV is a piece of paper that outlines your experiences at a high level. But, if you can have a conversation with someone where you articulate your expertise and ambitions, they now have a ‘face to the name’ on the CV and can understand your value proposition at a more holistic level. Start by developing a networking strategy (i.e. identify who can help you get to where you want to go and go to them directly). Other people won’t even know what they are looking for, making it impossible to know whom they need to talk to, or what they need to ask. As with all things, practice makes perfect – but it all starts with the first step. 3. Show, don’t tell The next time you have an interview, add an additional dimension to your preparation. Try to understand some of the problems the company or unit you are applying to is facing, and formulate a solution. This could involve producing a one-page document at interview, which outlines what you would do in the first 30, 60 and 90 days in the job to remedy the situation. Make no mistake: this is much easier said than done. However, a lot of successful applicants employ presentation materials where they can demonstrate what they bring to the table. Words are easy to say but tough to back up. Hence, if a hiring manager can concurrently see your work along with your words, you are automatically better than almost anyone else competing with you for the same job.   Orla Doyle is Head of Marketing at Lincoln Recruitment Specialists.

Six influential Chartered Accountants in business and politics share their stories. Chartered Accountants are in many ways a driving force in the economy. With more than 16,000 members working in industry, and many in C-suite roles, our colleagues are found in every sector and at every level. In the pages that follow, we meet a number of trailblazing Chartered Accountants at various stages in their career. Each has had a significant influence on Ireland Inc. and continues to exemplify the very best aspects of the profession. From Sharon Cunningham, Co-Founder of Shorla Pharma to Michael Cawley, former Deputy Chief Executive at Ryanair, these profiles offer a snapshot of the talent and influence within the membership – qualities that will be in high demand in these uncertain times. Senan Murphy The CRH Group Finance Director discusses his journey from technical subject matter expert to general manager and leader. CRH Group Finance Director, Senan Murphy, divides his career into five chapters, beginning with his education and training as a Chartered Accountant and culminating in his current role. “I was interested in maths, business and science in school and did a BComm in UCD,” he recalls. “You could take a number of routes after that, but Chartered Accountancy looked the most interesting to me. I did a Diploma in Professional Accounting, which took the first three years out of the accounting exams at the time.” Senan joined Arthur Andersen in 1990 when it was one of the so-called Big 8. “I stayed there for five years and it was a very good place to work. It was a great transition from college into the real world. I moved into industry in 1995.” That saw him move to GE and begin chapter two. “Practice is a great experience, but you are an adviser. I wanted to be part of the execution and implementation; not just give advice and come back the following year to see how it worked out.” His GE career took in finance, acquisitions and business development in Europe and then the US, before moving back to Europe to what became GE Money. But the call of home was loud, and he moved back to Ireland with his wife and children in 2003 to begin the next chapter with Eddie O’Connor in Airtricity. “I stayed and helped grow the business until it was sold to SSE in 2008,” he said. That saw the beginning of chapter four with Senan moving into banking, first with RBS Ulster Bank and then Bank of Ireland. “2008 was an interesting time for the sector,” he noted with at least a hint of humour. “When something is in a crisis, you learn more than when things are going smoothly. It was a tough time for the banking industry but an interesting time to be part of it.” He sees the transition from subject matter expert to general management as quite natural for a Chartered Accountant. “The move from accountancy to financial leader to general management happens naturally. You start off learning about the financial side, but most of the job is about managing people. It’s about collaborating, working in teams and leading teams. As a financial manager, you get more and more involved in the commercial and operational sides of the business. In Airtricity, I became more and more involved in growing the business. “In some ways, it’s good to leave the numbers behind,” he continues. “As you go on, it’s about building good teams around you. The expertise around you comes from them. You become an orchestrator in a way. Accountants all start off the same way, and a lot of Chartered Accountants own their own business or end up running businesses. We don’t all stay in the financial world.” His fifth chapter sees him back in the role of Group Finance Director with CRH. “It’s a large organisation with lots of operating companies around the world. My job is to help drive performance and improve the business, but I also help to recruit, develop and promote talent globally. I also spend a fair amount of time talking to the owners of businesses. We have lots of shareholders around the world who want to hear from us.” For Senan, the people agenda is the most enjoyable. “That’s the part I enjoy most. I’m always pleasantly surprised by the people coming through the system who are more capable than their years might suggest. I also enjoy meeting shareholders. Some are supportive; some are quite challenging. Those two parts are very enjoyable.” He believes Chartered Accountancy has provided a good grounding for his career. “When you come out of college, you have to decide if you want to go into a business or go into practice and train as an accountant there. Practice is a good place to start with people of a similar age. You have to be a team player and learn to work with others. You have a number of clients and you have to build relationships with them. You’re not quite in a sales role, but you are really.” Michael Cawley Michael Cawley recalls his unorthodox path to Chartered Accountancy and life as the second in command at one of the world’s most successful airlines. With the candour we’ve come to expect from people associated with Ryanair, Michael Cawley says his reasons for becoming a Chartered Accountant were mostly materialistic. “My sister had a few boyfriends who were accountants and they had cars,” he says. “That was quite impressive, and it stuck out as most people didn’t have cars at that time.” Having never studied accountancy in school, Michael chose to pursue a commerce degree in UCC. “I liked it, and I went to Coopers & Lybrand afterwards. I spent three years auditing, and I hated it with a passion! The moment I qualified and finished my training contract, I walked out the door.” After a year teaching in UCC, he went into industry with the Cork-based motor dealer, Frank Boland. “I wanted to be in the middle of the action rather than just recording what had happened. I worked there until 1981 when I moved to Dublin to work for Kodak for five years.” His next move was to Athlone Extrusions as Managing Director. He led a management buy-out (MBO) of the company in 1990, the biggest such transaction in Irish corporate history at the time. The company later went on to a public flotation. After that, he moved back to the motor industry with Gowan Group in 1993. “I enjoyed my time there, but it was a family-owned company, so there was no prospect of a stake in the business,” he says. His move to Ryanair in 1997 as CFO and later, Deputy Chief Executive and Chief Operating Officer had its roots in the Athlone Extrusions MBO. “I worked on it with Gerry McEvoy in KPMG and Tony Ryan was one of his clients. I stayed in contact with him and he knew I had ambitions beyond the Gowan Group. I was 42 or 43 at the time and I wanted to really have a good lash at something. Ryanair was about to float at the time.” That connection led him to join the airline at a crucial stage in its history. “Incredible as it may sound, I got on with Michael O’Leary from day one. I had a good few rows with him over the years as well, of course. It was always exciting, sometimes frustrating, but I was extremely lucky to be involved. It suited me from the outset.” He describes it as a phenomenal opportunity. “Low fares were in their infancy back then. We transformed air travel across Europe. I have dealt with more than 300 airports across Europe; lots of them were a bit like Knock back then, small with a few connections. We breathed life into many communities and helped them build up tourism industries. Bergamo in Italy had 130,000 passengers when we started there; that increased to 13 million by 2014. Charleroi grew from 30,000 to 7.5 million.” He stepped down from his executive role with Ryanair in 2014. He took up several non-executive directorships with a wide range of organisations including the Gowan Group, Kingspan plc, Fáilte Ireland and, of course, Ryanair. “I was 60 and grandchildren had started to come along,” he explains. “When I joined, we had 3.5 million passengers, and when I left, we had reached 83 million. It was 142 million last year. I’m delighted to still be on the board. I’m in and out every five or six weeks to catch up, so I haven’t really left. I’ve also been lucky enough to have become involved in a number of very fine businesses.” Michael concludes by   emphasising the need to keep pace with change. “You have to be open to change. Despite the advent of artificial intelligence and so on, accountants will still be able to master their environment. But we have to stay up-to-speed and be flexible and humble about the need to change. You can be top of the pyramid today, and irrelevant in six months’ time.” Ronan Dunne Ronan Dunne, the self-declared “accidental accountant”, has taken opportunities as they arose – and to great effect. A stellar career that has seen Ronan Dunne become Executive Vice President and CEO of Verizon Consumer Group, the largest division of the world’s biggest telecoms company, could have been very different if not for a teachers’ strike back in 1981. “I was all set to do Law in UCD, but there was an examiners’ strike the year I did the Leaving Cert,” he says. “The papers couldn’t be marked and there were no college offers.” And then fate took a hand in the form of intervention by Terry O’Rourke, Managing Partner of Touche Ross, and a past pupil of his school. “He contacted the Dean and said if anyone was interested, they had three to four unfilled slots for trainee accountants. I was one of those kids who was always fascinated by finance. My dad worked for Shell in a finance role and I was always interested in it.” A phone call from the Dean and a chat with O’Rourke sealed the deal. “It sounded like an interesting opportunity, so I decided to give it a go. I am an accidental accountant.” Six years later, the newly qualified Chartered Accountant was about to experience his next encounter with fate. An injury in his final year at school had put paid to a promising rugby career, but he was also an excellent soccer player and went on to play at senior level for the Mount Merrion club in south Dublin. “We were playing in a soccer tournament in Wales, and I visited my brother in London as part of the trip. I was sitting in his apartment when my mother rang, saying a lady had called about a job interview. The job was in London so I borrowed a suit and tie from my brother, went for the interview that afternoon with BNP and by 4.30pm had a job offer. It was 1987 and the markets were on fire. They couldn’t recruit fast enough. I signed a contract, went back home and packed my bags, and returned to London three weeks later.” Rapid promotion followed, and by the age of 25 Ronan had become the chief accountant at the bank. He then switched to the banking side of the operation where he dealt mainly with major US corporates with operations in Europe. And then came a call to jump the fence. That saw him switch to senior finance and treasury roles, first with Waste Management International and then with transport and logistics group, Exel. Dunne’s next move saw him follow his former boss at Exel into BT Mobile, which was about to become O2 and de-merge from its parent. “In 2005, O2 was acquired by Telefónica and I became CEO of Telefónica UK in 2007,” he says. “That was an interesting back story. When I became CFO in 2004, my boss gave me responsibility for legal and regulation, then procurement, and then asked me to take on HR as well. After a while, I pointed out that I was doing all the heavy lifting and doing three jobs instead of one. He said I had missed the point. I clearly had the capability to be a general manager, and he was getting me ready to be a success in such a role. I still thought my future was as a big public company CFO. My boss and my chairman saw my potential before I did.” Dunne’s departure to Verizon followed a blocked sale of the business to Hutchinson in 2015. “I had decided to leave once the deal was closed. I had a fairly extensive non-compete agreement, so I had to move sector or move geography. Verizon is the largest telecoms company in the world and when I got that approach, there was no way I would turn it down. In late 2016, we headed off to New Jersey.” “My training as a Chartered Accountant has been incredibly valuable at every stage in my career,” he adds. “It really is best-in-class, and I don’t think there is a better skillset out there. In my opinion, a good Chartered Accountant is better than any MBA from any business school in the world. It’s the best business qualification out there.” And he has some advice for his fellow accountants. “The biggest challenge and opportunity for accountants is to realise that your success is measured not by what you do, but by what you can make happen and the influence you have on people. Building teams, coaching and developing them, and bringing them on a journey with you is what’s most important.” Sharon Cunningham Ambition and tenacity helped Sharon Cunningham forge a path from practice to the cutting edge of pharmaceutical innovation and entrepreneurship.   Award-winning entrepreneur, Sharon Cunningham, learned about business and accounts literally at the kitchen table. The Shorla Pharma founder was interested in business from a very early age. “Both of my parents owned companies, and it was ingrained in us from a very young age. They did the books on the kitchen table. I used to go to the accountants with my mother and was fascinated by the questions the accountant would ask. My mother was focused on things like sales and cash and had her own goals. The accountant was asking about things like profit margins, inventory management and so on.” That early inspiration led her to a degree in finance in UCC. “I wasn’t 100% sure what I was going to do when I went to college at first, but by the time I finished I knew I wanted to be a Chartered Accountant and wanted to get a training contract, preferably with one of the Big 4.” Sharon went to work with PwC in Waterford initially but soon found herself travelling to Dublin, Chicago, New York and London. “It was fun but difficult; it was lots of hard work, but it was great. I went on an international secondment to an investment fund in Manhattan. That was a great experience.” Her move to industry came about almost by chance. “At the height of the recession in December 2010, I was working on a very challenging audit. A colleague of mine got wind of a job going in a pharmaceutical company I had never heard of in Waterford. I met with the co-founders of EirGen, Tom Brennan and Patsy Carney. They are very inspirational people, and I joined the company.” Having spent seven years with the company, initially as a management accountant and later as Head of Finance, Sharon decided that it was time to start her own venture with her colleague, Orlaith Ryan. “EirGen was sold to a multinational in 2015 for $135 million in a very successful exit,” she explains. “After the takeover, the company started to change and was no longer the entrepreneurial organisation that we knew and loved. The excitement wasn’t there anymore, and both of us knew it was time to move on.” Their idea was to establish a speciality pharmaceutical company based in Clonmel, which would develop a pipeline of innovative oncology drugs for women’s and children’s cancers. “We spent two years planning Shorla at night and in our spare time, and we launched the company in January 2018,” says Cunningham. “Both of us would say that at no point were we scared. We believed in ourselves and our vision for what we wanted to do; we never thought it would fail.” That confidence was well-founded. “We don’t have billions of dollars and 20 years to wait like major pharmaceutical corporations. We are not a major corporation, nor are we a generics company. We are somewhere in between. We take existing active substances and do something novel with them. We put them to different uses and make them less toxic to the patient. The time to market is much quicker. Business is great and we are very busy. We are in the middle of multi-million euro ‘Series A’ funding round and we are growing and scaling up for the US market launch of our first product, a breast and ovarian cancer drug.” It is a bit unusual for a Chartered Accountant to set up a pharmaceutical company, she concedes. “But accountancy is a very useful skill to have in any industry. The Chartered Accountant qualification gives you a certain degree of confidence when you talk about numbers; people listen to you and don’t tend to probe too much. They accept and trust what you say. The profession as a whole has a very positive impact on society.” Sharon’s experience has taught her the value of planning. “It’s much more beneficial to work smarter, not harder,” she says. “Everyone should sit down and decide what they want to do and what they want to be, and then map out a way to get there. Don’t get bogged down in small details; don’t sweat the small stuff.” Michael McGrath Having moved from practice to politics via industry, Michael McGrath has brought his training and experience to bear in his role as Fianna Fáil’s finance spokesperson. One of the most prominent faces in politics in recent years has been that of Fianna Fáil finance spokesperson, Michael McGrath. The Cork South Central deputy has earned plaudits for his work on tracker mortgages and the regulation of so-called vulture funds, among other pressing issues. And he attributes at least part of that success to his training as a Chartered Accountant. “There is no doubt about it, the training I received as a Chartered Accountant has proven to be far more valuable than I ever thought it would,” he says. “It equipped me with the skills to get to grips with the finance portfolio. It also makes you comfortable with numbers and reaching informed decisions. The analytical skills you acquire are hugely valuable when it comes to problem-solving.” He started out on his professional and political journeys at a very young age. “I was the first member of my family to go to college when I went to study Commerce in UCC having just turned 17,” he recalls. “My first election was a contested role in the Commerce and Economics Society, and I won.” Having completed his degree in 1997, he joined KPMG in Cork. “I wanted to stay in Cork and was keen to get a professional qualification. I stayed for four years and was fortunate to work with a number of companies and organisations in a variety of sectors.” Then came the move into industry. “Following the end of the training contract, an excellent opportunity came up to join Red FM, a new start-up commercial radio station in Cork. I joined as Financial Controller in late 2001. The station had yet to go on air, and I was involved in helping set up the processes and systems to run it. It was great working for a station with a youth focus. I was reporting to the CEO and the board, and I enjoyed the diverse range of responsibilities. It was very nice having a company car as a 25-year-old, of course. I didn’t think things could get much better.” He left Red FM for a relatively short stint in the UCC finance function. “It was quite a senior role and a step up for me,” he notes. But the call of politics was loud. “I always had an interest in politics in parallel with my working life,” he explains. “I was fortunate to live in a town that still had a town council. That provided a fantastic platform for a young person to contest an election. A few hundred votes was all you needed to get elected. I ran in 1999 at the age of 22 and managed to get elected. My heart was set on politics after that.” Michael was elected to Cork County Council in 2004 and quickly realised he couldn’t continue working full-time. “I resigned from UCC in 2005 and found some part-time work to tide me through the next year and a half.” Election to the Dáil in 2007 followed. Re-election in 2011 was an altogether more difficult proposition, however. “It was an incredibly tough election. Fianna Fáil lost over 50 seats. At a time when the party vote collapsed, I managed to take the fifth and final seat. I focused on playing my part in rebuilding the party after that. Brian Lenihan passed away in June 2011, and I was appointed spokesperson on finance.” He enjoys his role as a public representative. “It is an enormous privilege to be a member of Dáil Éireann, and I still pinch myself walking in as a member. As a T.D., I am juggling a number of responsibilities. I have the finance portfolio and at a local level, I try to serve people to the best of my ability. What I get most out of it is being able to help people. Very often, people come in with difficult and sensitive issues. Sometimes they need guidance; sometimes they need someone to fight their corner.” Serving in government remains an ambition, of course. “Having spent nine years as finance spokesperson and four years involved in confidence and supply, to present a budget as Minister for Finance would naturally be an ambition,” he says. Fergal O’Dwyer Fergal O’Dwyer is one of the driving forces that helped turn DCC into the industrial powerhouse it is today. DCC is one of those quiet Irish success stories. Since its flotation in 1994, it has grown into a significant force in the energy, electronics and healthcare sectors with a substantial presence in 17 countries. From an investor perspective, the company delivered returns of nearly 7,000% up to the beginning of 2020. One constant throughout that success has been Chief Financial Officer, Fergal O’Dwyer, who joined the company in 1989 when it was still a venture capital firm. “Shortly after I joined, the company decided to change its colours and become an industrial group,” he recalls. “That required a complete transformation. We had a number of minority investments and had to decide which ones fitted in with the new strategy and which did not. Between 1990 and 1994, we spent our time moving out of some of them and moving to ownership positions in the others. I am not aware of other companies that made that strategic change.” He began his accountancy career with Craig Gardner (now PwC) almost straight out of school due to a natural aptitude. “I did maths and accountancy subjects at school and was always going to head towards finance or accountancy. I didn’t have a burning desire to be an accountant or anything, I sort of gravitated towards it.” O’Dwyer qualified as a Chartered Accountant at the age of 21 with a year or so of his training contract remaining. Ireland was in the depths of a recession at the time, and the search for opportunities took him overseas. His search took him and his wife to South Africa. “After we got married in 1983, we headed off to South Africa. I worked for three years there for Thomson McLintock, which represented KPMG at the time, and came back to PwC in 1986.” That move back led him indirectly to DCC. “I had clients who were looking for development capital, and I had worked on a number of deals on their behalf with DCC and they had worked out well for everyone. In 1989, I got a call from the founder and former CEO of DCC, Jim Flavin, who asked me to join the firm.” That was a major change. “I became an associate director of a venture capital company. I was dealing with entrepreneurs and building relationships with them. I learned about the venture capital focus on return on capital employed. That’s still the same mantra in DCC to this day. What is the return we are going to get on every euro? We aim to get a circa 15% return because we want returns well in excess of the cost of capital.” He describes the transformation from venture capitalist to industrial group as “very exciting”, but the flotation in 1994 was not without its challenges. “The flotation was a success, but we didn’t raise any capital, and our share price didn’t perform for quite a long time. We wore out a lot of shoe leather explaining our business and strategy. It has been all about constant delivery over the years, getting investors to listen and building a following. We were growing revenue, growing profits, growing cash flow, but still were having to work hard to sell the story. It was frustrating, but we had to accept that the market is always right.” His advice to other Chartered Accountants starting out on their careers is to keep learning. “The qualification equips you to do much more than just the numbers. You’ve got to interpret and advise on them. I still learn every day and you have to try to learn all the time. And you’ve got to learn from your mistakes. You can find business to be stressful, but if you put in the work and effort, it can be rewarding and fulfilling.”

Dr Annette Clancy lays the ground rules for a successful spell of remote working. The work restrictions and social distancing introduced by the Government in response to COVID-19 may prove to be a watershed moment for flexible/remote working. The immediate shut-down of many workplaces forced hundreds of companies and thousands of workers to get creative about how to work and deliver services to clients and customers while observing public health protocols. As many are finding out, however, working from home presents a whole new set of challenges. So, how can we make flexible/remote working work? Keep going to work Not everyone has a home office or even their own room. Yet, you must still go to work. First, acknowledge the change in your work situation. It is not the same as going to the office. You may, for example, have to juggle childcare so be realistic about what you can achieve given the current circumstances. Discuss this with your employer and work around it for the time being. Then go to work. This is as much psychological as it is physical. Your home is an obstacle course of exciting activities, which throw themselves into your path before a deadline looms. Laundry, dish-washing, reorganising books (by colour, author or topic?) all seem to take on an urgency previously unheard of as the clock ticks closer to the dreaded deadline. You must defend yourself against this distraction before you begin. Create a workspace at home. This could be as simple as defining part of the kitchen table as the place where you put your laptop, phone charger and papers. Keep this clear of all other personal items. When you sit down at this space, you are at work; when you leave, you are at home. Maintaining this boundary is essential, otherwise work and home will become blurred. This is important when you work from home because it’s easy for work to bleed into your personal (psychological and social) life and before you know it, you are on your computer at 11pm and again at 7.30am. Keep communication channels open People go to work for myriad reasons. Obviously, there is the work itself, but we also develop our sense of identity through work; we make friends and develop relationships (some life-long). These relationships can feel threatened when we are no longer close to our work colleagues. People who work at home (even those who are used to it) can feel isolated and lonely. If your business uses technology such as Slack, Google Hangouts or Skype, for example, these are probably your go-to communication tools. But if not, it’s crucial to build in times when you check-in with your colleagues by phone, text or WhatsApp – whatever method works for your group of colleagues. Managers who have no experience of managing teams remotely will need to take particular care to check-in with their people as it is easy to lose contact in a remote working context. Keep things normal Social distancing can quickly turn into social isolation unless we keep some semblance of normality. We may not be able to go to the pub on a Friday with friends or go out to dinner with colleagues, but we can organise ‘virtual coffee dates’ or ‘remote lunches’ using Skype, Zoom or Facetime. This means organising specific times to be together online, but away from work. Of course, it isn’t the same as being in the same room. And yes, it’s a bit ‘weird’. But the main point here is to maintain social contact to ensure that workers do not succumb to loneliness, and for managers to engage in non-work conversation with their colleagues. Once you crack it, we may look back on this time as the research and development phase of a new way of working. Dr Annette Clancy is Assistant Professor at UCD School of Art, History and Cultural Policy.

Some of the commercial habits that are already being formed could serve us well once the COVID-19 crisis is over, writes Dr Brian Keegan.  By now, all businesses and institutions have taken some preventative and containment measures against COVID-19 for their staff, but the early adopters of social distancing won headlines and even kudos for so doing. They were the first to tell personnel to work from home, to block staff from hosting or attending large meetings or any type of gathering, and to have placed an embargo on international travel. Those early adopters had much in common. Typically they were large, multinational, and flourished in the online sales and services environment. By contrast, the indigenous SME sector often operates within a market segment where having people work from home is not practicable. The sector is now suffering the most from the collapse in demand caused by the pandemic. We have seen epidemics before, but how well did we remember the lessons of Zika virus a few years on? Or SARS? Or swine flu? How much better are we at defending ourselves? At the time, these were serious crises, but they seem to have faded from the collective memory very quickly. That may be simply because their social and economic impact was far less pronounced than that of the current scourge, but I’m not sure the reason is as straightforward as that. It may instead be because they left no lasting behavioural changes in most of the businesses and societies they affected. Societies that did remember how bad things could get were better prepared for COVID-19. Singapore is not the most open of jurisdictions, but they read the warning signs early. Also the isolation wards built there to tackle SARS in the early years of the century were still available to hold patients ill with COVID-19, and that in turn allowed the authorities to be more prescriptive about quarantining and testing. No business, nor even a country, can (or even should) sustain the kind of “just in case” procedures, buffers and Singaporean-style infrastructure to guard against once-in-a-century pandemics. This, however, is a crisis for all of us, and we should not waste an opportunity to take some insight from it. Some of the commercial habits that are already being formed could serve us well once this crisis is over. Because the situation is changing daily, I am hesitant to be too prescriptive and not all these behaviours will sustain or improve the bottom line. Nevertheless, there is already evidence that businesses are accommodating, and staff are delivering through, more flexible working practices. This is not just about working from home where that is possible, but about varied working hours, role definition and service delivery methods. In days when demand is in decline almost everywhere, the Institute sees an upswing in demand from members for resource materials and online training. This could be down to a desire to fill empty hours, or more positively, it could be down to a broader recognition that additional skills and tools are needed for future survival. Behaviour is the hardest thing to change. The reluctance to lend or borrow, an antipathy towards speculative development, overcautious economic policy and even the rise of the gig economy can be traced back to the downturn a decade ago. The legacy of the 2007/08 recession sometimes lingers less on balance sheets than it does in the collective memory. The businesses that bounce back the fastest could well be those who are the early adopters of the new business behaviours prompted by the crisis. Just like the last recession, COVID-19 is now creating memories of its own. We will need to hang on to the positive ones. Dr Brian Keegan is Director, Advocacy & Voice, at Chartered Accountants Ireland.

Recent proposals from the International Accounting Standards Board could have dramatic effects on how companies present their financial performance. By Terry O’Rourke and Barbara McCormack When Gary Kabureck, a board member of the International Accounting Standards Board (IASB), presented an update on IFRS developments in Chartered Accountants House last October, he alerted us to the impending proposals from the IASB on how companies’ financial performance should be presented in the profit and loss account (or to use the IFRS term, the ‘statement of profit or loss’). Sure enough, just before Christmas, the IASB issued a 200-page Exposure Draft proposing substantial changes in response to demands from users for better information on financial performance, which would reduce the diversity of presentation and enhance comparability between companies. At a high level, the profit and loss account would be required to classify income and expenses into the following categories: operating, investing, financing, associates and joint ventures, income tax, and discontinued operations. However, the level of prescription and definition underpinning the presentation of income and expenses in these categories is quite detailed and could cause significant changes in how companies present their results. Operating profit A key proposal is that the operating category, which is intended to include all income and expenses from the main business activities, would be the default category, to include all income and expenses that are not defined in one of the other categories. This would include items such as restructuring costs and goodwill impairments, irrespective of whether they are regarded by management as once-off or exceptional. The resultant operating profit or loss would be presented on the face of the profit and loss account. While many companies currently choose to present operating profit, its composition may well be different under these proposals. For example, associates and joint ventures would be split into those that are integral to the entity’s operations and those that are not. The results from those that are integral would be presented as a separate line item after operating profit while those that are not integral would be included in the investing category. The investing category would also include returns, and related expense, from other investments that are generated individually and largely independently of the entity’s other resources. Prohibiting the use of columns Many Irish and UK companies make use of columns on the face of the profit and loss account to present adjusted profit measures such as operating profit before exceptional restructuring or impairment expense. The proposals in the Exposure Draft include a prohibition on the use of columns to present management performance measures in the profit and loss account. The proposed definition of management performance measures would likely include such adjusted profit measures and they would therefore be prohibited from being presented in columnar format on the face of the profit and loss account. The Exposure Draft notes that “a few entities use a columnar approach” to present management performance measures based on a sample of 100 large companies from around the world. However, had the sample been taken from Ireland and the UK, it may well have shown a much greater incidence of columnar reporting. The IASB notes that the prohibition would be a change for some companies “operating in jurisdictions where the use of columns is common”. It will be interesting to see if stakeholders request further clarity from the IASB on what, if any, types of measures can be included in columnar format in the profit and loss account. Figure 1 shows what an extract from the face of a profit and loss account using columns to strip out exceptional items might look like, while Figure 2 shows the numbers without columns. There will undoubtedly be companies who consider that the columnar format in Figure 1 provides more useful information about their performance, particularly in relation to the year-on-year comparison. It is notable that if the Brexit transition period ends on 31 December 2020, it will be for a newly established UK IFRS Endorsement Board to decide whether to adopt new IFRS standards in the UK having consulted with UK stakeholders. Consequently, if the IASB proceeds to include its current proposals in the final IFRS and the EU adopts that Standard, perhaps during 2021, there is no guarantee that UK listed companies will have to comply with all the requirements of the eventual IFRS Standard. The Exposure Draft proposes that, where a company uses management performance measures to communicate with users, those measures should be included in a note to the financial statements with a reconciliation to the most directly comparable IFRS number, and other information including an explanation as to why those measures are useful. Because EBITDA is a commonly used measure in communications with users, the IASB considered defining EBITDA. But it is instead proposing that operating profit or loss before depreciation and amortisation would be specified as not being a management performance measure and therefore, would not need the above-noted reconciliation and explanation. The Exposure Draft proposes to continue to permit the inclusion of adjusted earnings per share measures in the notes to the financial statements, with appropriate explanation and reconciliation. However, it proposes that such measures would not be permitted to be presented on the face of the profit and loss account. Unusual income and expense The Exposure Draft proposes to define unusual income and expenses as those with “limited predictive value” and that this is the case “when it is reasonable to expect that income or expenses that are similar in type and amount will not arise for several future annual reporting periods”. The amount and nature of items of unusual income and expense would be set out in a single note to the financial statements. The proposed definition of unusual items, with its focus on predictive value, may cause some companies to change their assessment of what unusual items need to be disclosed. Analysis of expenses The Exposure Draft proposes that operating expenses would be analysed in the profit and loss account using either the nature of expense method (e.g. raw materials, employee benefits, depreciation) or the function of expense method (e.g. cost of sales, administrative expenses). However, companies would not have a free choice of which method to use. They would have to assess which method provides the most useful information to users by reference to a number of considerations set out in the Exposure Draft. Using a mixture of the two methods would be specifically prohibited, with very limited exceptions. Where the function of expense method is used in the profit and loss account, an analysis of total operating expenses by nature would be required in the notes, with new criteria designed to curtail the amount labelled “other”. A number of companies that highlight the effect of exceptional items by including line items or sub-totals, rather than columns, in the profit and loss account would have to be careful to comply with the proposed more prescriptive rules on the layout and content of the profit and loss account. Other proposals The Exposure Draft is titled General Presentation and Disclosures, and is intended to replace IAS 1 Presentation of Financial Statements. Although the 200-page Exposure Draft makes a number of proposals in relation to the statement of financial position, the statement presenting comprehensive income, the statement of cash flows and the notes to the financial statements, as well as related changes to other IFRS standards, we have sought in this article to focus principally on some of the key proposals that would affect how the profit and loss account is presented by many Irish listed companies. The IASB has set 30 June 2020 as the date by which it requires comments on the proposals in the Exposure Draft. The IASB has included illustrative examples in the Exposure Draft to show how its proposals should be used by banking, insurance, and property investment companies. Practical implications The IASB notes that, although the proposals do not affect the recognition or measurement of assets, liabilities, income, or expense, they would have a number of practical implications that would give rise to additional costs for preparers. Examples of costs that may arise include the cost of process or system changes necessary to identify and capture the various types of income and expenses to be separated and disclosed, training costs for staff, and the costs of communicating the reporting consequences to stakeholders. The effect on covenants in banking and loan agreements may also need to be considered. Nonetheless, the IASB considers that the changes are desirable in order to respond to the demands of users and it notes specifically the benefits for the quality of electronic reporting, including comparability and consistency. Conclusion It is notable that the IASB has issued an Exposure Draft, rather than a Discussion Paper, indicating it has reached an advanced stage of confidence that its proposals should be implemented. It will be interesting to see the level of support or otherwise the IASB receives on its proposals from companies, investors, and other stakeholders. Given the scale of the changes proposed in the Exposure Draft, we can expect the reaction of the board of the IASB to comments to be closely monitored by companies whose reporting would be significantly affected, and by investors whose demands and expectations the IASB is endeavouring to meet. Terry O’Rourke FCA is Chair of the Accounting Committee at Chartered Accountants Ireland. Barbara McCormack FCA is Technical Manager, Advocacy and Voice, at Chartered Accountants Ireland. 

Raymond Donegan and Ted Webb outline the four steps to a successful sale. As a business owner, selling up is probably the most significant decision you will make in your working life. It is a difficult and often emotional process. However, with the right guidance, it can be navigated over a period of roughly six to eight months to everyone’s satisfaction. Four steps, if followed, will maximise the potential for a successful sale. Step 1: Preparation  The preparation stage sets the tone for the sale. At this point, your corporate finance adviser will draft an information memorandum with your assistance. This should be a compelling document, which will generally contain an executive summary and details of: business history; products or services offered; customers and market; future opportunities; overview of management, staff and facilities; and recent and forecast financial information. In addition to drafting the information memorandum, a comprehensive list of potential buyers should be drawn up by you and your corporate finance adviser. It is better to sell a business that is enjoying a period of growth with some suggestion of future growth remaining for the next owner. Also, if you want or need to retire by a specific date, it is best not to leave the sale too late. Specific areas of preparation to address include financial items such as fixed assets, working capital such as debtors and creditors, operating expenses, and shareholder costs. It is also crucial to assess the status of non-financial items, including management structure, intellectual property, tax status, and the business’ online presence. Step 2: Value the business and make initial contact with potential buyers The key drivers of value from a potential buyer’s perspective are the ability of your business to generate cash and its future risk and growth prospects. Several valuation methodologies can be used, including EBITDA (earnings before interest, tax, depreciation and amortisation) multiples, EBIT (earnings before interest and tax) multiples, and discounted cash flow. Once value has been established, it is time to contact potential buyers. The decision on which parties to approach will depend on the nature of your business and the type of sale process you are planning. Generally, the best result comes from a controlled auction process where several potential buyers are contacted. The benefit of this process is that, by the time the sale goes through, you will definitively know the market value of the business. Your corporate finance adviser will ensure that interested potential buyers receive an information memorandum after signing a confidentiality agreement. Prospective buyers then have approximately four weeks to respond with non-binding indicative offers, and once the offers are received, you and your adviser will decide whom to meet. Step 3: Management presentations and preferred buyer selection There is no substitute for face-to-face meetings; this is arguably the most critical stage of the entire sales process. Afterwards, your corporate finance adviser will request revised offers from interested parties. Now, you and your corporate finance adviser will decide on the preferred party. The price will play a large part in that decision, but other vital factors may include the structure of the deal and bidders’ plans for the future. You will naturally prefer to be paid in full immediately, whereas the buyer will prefer to pay over time. Ways to reach a compromise include: Deferred consideration: when an element of the consideration is paid after an agreed period; and Earnout: when the payment of deferred consideration is conditional on achieving specific financial targets such as an agreed level of sales or profits, or non-financial milestones such as renewing a contract. Once a preferred party is chosen, the heads of terms will be negotiated. This is a short document, which details the key financial and commercial terms of the deal. Step 4: Due diligence and negotiations The final stage of the process involves the preferred party undertaking due diligence on the target business, and all parties negotiating the necessary legal documents to conclude the transaction. Due diligence is akin to an invasive audit, but it is a necessary evil. It usually lasts six to eight weeks and covers several areas including financial and tax, commercial, products/services, legal/intellectual property, human resources and pensions, environmental, technical and property. Remember, the potential buyer’s view of your business can be positively reinforced if you can provide the information promptly. After three to four weeks of due diligence, the buyer’s lawyer will produce the first draft of the legal documents that will give effect to the sale. Assuming you are selling a company, these documents will include a share purchase agreement and a tax deed but may also feature other documents.  Conclusion  Selling a business is a complicated, lengthy exercise that most business owners will only do once in their lifetime. There can be a significant difference between a well-run, competitive sale process and a poorly executed transaction. An experienced team of advisers will know the best techniques to enhance value and mitigate risk for you and your business. Only by engaging with such a team can you expect to maximise your position.   Raymond Donegan is Director and Head of Family Businesses at IBI Corporate Finance. Ted Webb FCA is Managing Director at IBI Corporate Finance.

Cormac Lucey helps you turbo-charge your ability to identify and absorb relevant information in three easy steps. A close friend of mine is a retired journalist. We were in school together for several years in the 1970s. He went into journalism; I went into accountancy. In sixth year, our school won the Leinster Senior Schools cup in rugby for the first time in decades. My pal kept a copy of the following day’s Irish Independent, complete with match coverage. It disappeared under the mountain of detritus we are all at risk of gathering. Then it re-emerged after both parents had died, and the family home was put up for sale. What struck Peter, in the early part of this century, was just how thin that 1978 edition of the Independent was compared to the bulky newspapers we have today. Ironically, our newspapers are bigger and better than ever before, even as they face going down under the online onslaught. In 1978, nobody was at real risk of information overload. If anything, we suffered from information poverty back then. Today, however, we are forced to deal with an abundance of information. Separating the informational wheat from the chaff is critically important today, as each of us could be submerged in the flow of information pouring our way. I read a lot – both online and in print – and have three key rules for managing the information flow I face. Rule 1: Learn to speed read and put it into practice The average best-seller we might take with us on holidays has about 400 words on each page. It is said that President John F. Kennedy could read 2,000 words per minute, equivalent to five pages per minute. I find that hard to believe. But with a disciplined approach, it should be possible to read at speeds of 500-600 words per minute regularly. What are the core elements of speed-reading? Here is a speed speed-reading course: a) Develop the good habit of reading in a smooth rhythm; abandon the bad habit of disrupting that rhythm by occasionally going back to reread a passage; b) Instead of visually absorbing single words, get into the habit of absorbing several (three to five) words with each glance; c) Measure your reading speed when you’re reading a book and focus on getting that speed up; and d) Practice reading some trashy material at an incredibly fast pace. Then, when you read regular content, you’ll find yourself chomping at the bit speed-wise, just like when you come off the motorway and chomp at the bit at the outrageously slow speed limits then imposed. Rule 2: Focus When you read something, you are reading it for a purpose. Be deliberate about that purpose. If I’m reading a newspaper, I want useful information and I want entertainment. I also want to limit the amount of time I devote to reading the paper. I am certainly not going to read all of it. The paper owes you a duty – you owe the paper no duty. Similarly, just because you have started to read a book does not mean you are duty-bound to complete it. Our time and attention are limited. If a book is boring, tedious or just getting you down, discard it and choose another. That book may deserve the dismissive review: “Once I put it down, I couldn’t pick it up!” Rule 3: Discriminate among preferred providers I follow several financial websites closely: RTE.ie – click on “Business”, “Broker Reports” and “Goodbody” and you will be directed to a comprehensive review of the previous day’s business and economic news refracted through the prism of its implications for corporate value. Google “McKinsey on finance” and you will be directed to the website of the management consultants’ quarterly report on corporate finance themes. Each quarter, five or six issues are considered in a succinct and intellectually well-founded manner with a focus on drawing actionable conclusions. Google “Damodaran online”, and you will land at the website of Aswath Damodaran, Professor of Finance at the Stern School of New York University. This site features models, including lots of detailed valuation models; data, including important sectoral cost of capital data; and Damodaran’s blog, where he analytically considers important current financial topics. Cormac Lucey FCA is an economic commentator and lecturer at Chartered Accountants Ireland.

At the time of writing, efforts to contain the spread of coronavirus are undoubtedly the focus of attention for society and business across the island. This is a very serious and fast-evolving situation, and Chartered Accountants Ireland will adhere to the official advice provided by our respective health services and governments. The safety and health of our members, students and staff are paramount, and that principle guides the decisions taken. The Institute is reviewing its programme of activities in respect of members, students and external stakeholders. We will be in contact with everyone concerned to advise them of all decisions made. I would like to take this opportunity to commend businesses across the island for their responsible attitude to their employees and customers in following official guidelines. Such decisive action will, we hope, effectively curtail the spread of the virus. Paschal Donohoe T.D. At the start of March, we were honoured to host Minister for Finance, Public Expenditure and Reform, Paschal Donohoe T.D., who addressed an invited audience of Institute members and guests. Inevitably, coronavirus featured prominently with the Minister predicting that the Irish economy would be impacted by the global slowdown associated with the outbreak. He said: “Many, including the OECD, outline that this outbreak has the potential to slow global growth to its lowest rate since the financial crisis just over a decade ago. To what extent, it is too early to say, but it follows that weaker growth will affect our short-term outlook and my department will update its projects in April”. Turning to Brexit, the Minister argued that while the post-Brexit world will present significant challenges, if managed correctly, Ireland’s reputation as an open, adaptable yet stable economy also presents opportunities.  Engagement with US members and politicians At the time of writing, the Institute’s Director of Advocacy & Voice, Dr Brian Keegan, and myself are currently meeting with members and politicians in the USA. The programme has involved meetings in New York with Northern Ireland Economy Minister, Diane Dodds, and Consul General of Ireland, Ciarán Madden, before moving on to Washington DC for various events including the Irish Business Leaders’ Lunch, the Irish Funds dinner and the NI Bureau breakfast. Throughout the visit, we have had a very warm welcome from members based in the US and some really useful engagement with political representatives from both sides of the Atlantic. Institute signs climate change pledge In February, our Institute announced that it is one of 14 accounting bodies worldwide to become signatories to a call to action on climate change issued by Accounting for Sustainability (A4S). The memorandum of understanding signed by Chartered Accountants Ireland states that signatories will commit to providing the training and infrastructure that accountants need, as well as supporting initiatives and providing the necessary evidence to take action on climate change. In signing the memorandum, Chartered Accountants Ireland recognises that climate change is an economic, social and business risk and that accountants must take action collectively as a profession and individually as professionals working in the public interest. The 14 accounting bodies signed up to the agreement represent a total of 2.5 million accountants and students worldwide. Annual Dinner Finally, this is my first comment section since our Annual Dinner at the end of January. I would like to record my thanks to the 900 guests who supported the event; to our event partners Dublin Airport, Bank of Ireland, PeopleSource and Toyota; to our special guest, Lochlann Quinn FCA; and, most particularly, to the many corporates who supported the event by hosting tables. For me, it was another great demonstration of how Chartered Accountants are at the heart of our economy, driving Irish business. Conall O’Halloran President 

Economic forecasting can be a difficult business, especially when you consider the ‘unknown uncertainties’ the world is currently facing, writes Annette Hughes.  Businesses do not like uncertainty but, at present, that is the prevailing economic theme. An uncertain political situation, ongoing Brexit negotiations and the recent coronavirus outbreak remind us how vulnerable the economy can be to external shocks. Those in the business of economic forecasting understand this vulnerability very well. The purpose of an economic forecast is to measure the impact of ‘known uncertainties’ on future economic performance, but the future is unpredictable and this is further complicated by the ‘unknown uncertainties’ we now face.  Economists, in making their projections for economic growth in 2020, would not have been aware of the coronavirus outbreak until the first reports of a cluster of cases were identified on 31 December 2019 in Wuhan, China. The rapid and continuing escalation of COVID-19 has led economists to revise their economic forecasts downwards, as the initial output contractions in China begin to be felt around the world. It remains unclear what the full effects will be on the movement of people and goods, and economic activity, while the response of policymakers is evolving on a daily basis. Global economy In early March, the OECD reported on the considerable human suffering and major economic disruption that had resulted from COVID-19. OECD global growth in 2020 was revised downwards, by around 0.5 percentage points to 2.4%, from an already weak forecast of 2.9%. The adverse impacts on confidence, financial markets, the travel sector and disruptions to supply chains were all factors contributing to the downward revision. However, without knowledge of the full impact of the virus, the OECD acknowledged that, should the outbreak be more intense and last longer than predicted, global growth could drop to 1.5%. Economists at Oxford Economics believe that the virus will result in Q1 2020 being the first global contraction since Q1 2009, with overall growth of 2% for the year, the slowest pace in the last decade. Irish economy The OECD forecast for economic growth in the euro area was revised downwards by 0.3 percentage points to 0.8% in 2020, although, given that the spread to Europe did not materialise until February, this forecast is likely to be subject to further downside risks.  Ireland has an open economy reliant on international trade and global markets to support economic growth. Ireland and its economy accounts for just 0.4% of global GDP and 0.06% of the world’s population. However, it still remains vulnerable to the impact of the COVID-19 virus.  Economic growth in Ireland will definitely be weaker than projected should the virus spread for an extended period. The main impacts are likely to be felt through supply chain disruptions, travel and tourism restrictions, and reduced mobility (affecting consumer spending and workers staying at home). There have already been reports of delays in the delivery of imported products in the construction sector, according to the Ulster Bank Construction Confidence Index. It has been acknowledged that Ireland will likely follow a pattern seen in other European countries and the Taoiseach’s measures to minimise the spread of COVID-19 could be significant, but much less than the economic and social consequences of acting too late. The flexibility that Irish businesses have demonstrated in dealing with evolving economic, political and social trends are acknowledged in EY’s February 2020 Economic Eye. EY Chief Economist, Neil Gibson, correctly pointed to the coronavirus outbreak as likely to damage global growth in 2020, but as a rapidly evolving situation, it is difficult to predict the full economic impact on the island of Ireland. The closure of many public institutions and private businesses in the Republic of Ireland will no doubt further slow growth across the island, but the sectoral and regional impact will vary greatly. It important to remember, however, that this is first and foremost a human crisis, and we must think about people first. Moving away from GDP numbers, we must look at what business, governments and individuals can do together to help get us get through this incredibly difficult period.  Clearly, these are unprecedented times and taking such developments into account makes economic forecasting a difficult business.   Annette Hughes is a Director at EY-DKM Economic Advisory.

With advice comes responsibility as almost all advice has consequences, writes Des Peelo. As a Chartered Accountant, whether in professional or commercial life, our qualification is relied on by others for knowledge and experience when we provide advice. Advice brings responsibility, as almost all advice has consequences. A course of action undertaken, an investment made, a decision taken, a matter rectified, a risk addressed, and so on. The accountant can sometimes be unaware that somebody has interpreted a comment or course of action as advice. Even responding to a casual enquiry can be an everyday hazard in a complicated and regulatory world. Letter of engagement I, in common with other professional advisers, have experienced clients or circumstances where it is later claimed that advice was wrong or inadequate. Thankfully, none developed into legal claims – though I have acted as an expert witness in many such cases. Common factors in these claims included allegations that the client subsequently raised an issue that was not within the original remit, or did not take the advice, or varied its implementation to suit a different purpose. It may not always be possible in everyday commercial situations, but it is invariably wise to have a clear letter of engagement (LOE) signed as accepted by the client in advance of undertaking the work. The real relevance is that the LOE can avoid any later claim of misunderstanding or ambiguity. The LOE can also state in advance what is to be excluded in the advice, as explained below. Create clarity In my experience, it is increasingly necessary to ensure that the recipient understands what the advice is not, as well as what it is. For example, that it is not legal advice, that it is not tax advice as may arise, or that the advice cannot be taken as reassurance to a third party (such as a bank or fellow investors) as to the standing or validity of the circumstances relating to the advice. The advice is for the recipient alone, and there is no responsibility to third parties. The subsequent written advice to the client may then state: “This advice is provided in accordance with the signed letter of engagement (LOE), dated 1 April 2020. For good order, a copy of the LOE is attached to this letter”. Chinese walls Experience suggests that most professional indemnity claims for negligence arise through allegations of omission. In other words, some aspect was overlooked or understated by the adviser and should have been appropriately addressed. This, of course, enters into the grey area of opinion of which there is little legal definition beyond a simplistic analysis as to what your peer group would have done in the circumstances. In the ordinary course of events, a Chartered Accountant is unlikely to face a conflict of interest in giving advice – although a wary eye is necessary for Ireland’s relatively small business network. Others may, however, experience conflicts of interest in a different way, as explained by a straight-faced story from the rarefied world of high art dealings. In a frank memoir, a retired director of a major auction house in London explained  ‘Chinese walls’ as follows: on one side of the auction house, the potential seller of a painting is reassured as to this being the best time to sell a painting. On the other side, in the same auction house, the potential purchaser is reassured as to the wisdom of investing to future advantage in the same painting. Be brave Good advice is always worth it, but the advice might be unexpected. A senior politician, for example, battered by the vagaries of the world, remarked to me that if you are ‘being an eejit’, the best advice sometimes comes when the adviser tells you so in plain terms. And how much should one charge for all this great advice? A wise PR lady, not entirely tongue-in-cheek, once told me that advice should always be reassuringly expensive. Des Peelo FCA is the author of The Valuation of Businesses and Shares, which is published by Chartered Accountants Ireland and now in its second edition.