Chartered Accountants can bring a host of skills to their organisation’s CSR efforts. And as good business partners, they should. Chartered Accountants can use their unique skill set to help drive their organisation’s corporate social responsibility (CSR) agenda. Now, I know you are probably saying: “Does this guy not know how much work I have already?” Well, I can guess, but on the other hand, you know that you are already doing more than you have to; that you can do even more; and that you will get much satisfaction in making your organisation – and the world – a better place. How much you can help depends on your position in the finance hierarchy, but that’s the thing about being a good business partner: anyone can do it. I won’t go into the issues covered by CSR (for a comprehensive understanding, I recommend ISO 26000 Guidance on Social Responsibility). Instead, I will focus on the scenarios you are likely to encounter in business when dealing with your CSR department, which will typically comprise environment, safety, labour practices and business ethics. Earning legitimacy Your organisation’s CSR department may be chaotic. The subject is still relatively new, even though the Brundtland Commission’s report on sustainable development was published over 30 years ago. The department may struggle to establish legitimacy in the eyes of a management team that lies somewhere on the scale between sceptical and hostile. It may be trying to stay afloat despite being destabilised by the latest CSR issue, which it is likely ill-equipped to tackle. Such topics could include water extraction, tax payments, community involvement, plastic bottles, lobbying and so on. The department will probably feature environmentalists, human rights practitioners, labour rights specialists or business ethics aficionados – this will depend on what management sees as the “key CSR issue” – but will lack those with “pure” management or business skills. Because so many issues fall under the CSR umbrella, there will probably be insufficient coordination among these elements. In that context, Chartered Accountants may wish to consider the following: Get involved and make friends with CSR. They will be delighted that someone wants to help them; Comment on the suggested policies and procedures covering internal control, collection of information, budgets and so on. Chartered Accountants can write policies and procedures in their sleep, so consider how your organisation’s CSR policies can be made more robust; Challenge the CSR department on the appropriateness and objectivity of its chosen indicators. They shouldn’t merely be indicators that are easily achievable or collected out of habit; Critically review how the team sets CSR targets. Are they stretching yet achievable? Do they link to the business strategy? Has the organisation budgeted for the investments necessary to achieve the objectives?; Guide the CSR team on how to cost projects realistically. You will bring a dose of realism to the table and help your colleagues remove their rose-tinted glasses. You will do this not to scupper a project, but rather to ensure that, if approved, there is a fair chance of success; and Design appropriate graphs to help your colleagues visualise the organisation’s actual CSR performance. Encourage the team to move away from the useless-but-ubiquitous pie charts (at best, they add some colour to a report) and toward trend charts that show actual progress over time compared to the target. Working towards meaningful action Often, management’s commitment to CSR is shaky at best. The business is only “doing” CSR because an influential stakeholder has demanded it, which may result in lip service without any real commitment. Management will want to see “progress” – winning an award (any award) every year, reducing the number of non-compliances, or increasing the volume of CSR-related content in the annual report or on the organisation’s website – provided it doesn’t cost much or do anything to rock the corporate boat. If this paints a familiar picture, you may wish to consider the following: Challenge management by illustrating any lack of commitment and remind them of the risks associated with the weakest links in their approach. One example is the business that emphasises excellent progress in one area of CSR (gender diversity, for example) while remaining silent on another aspect it would prefer not to talk about (the absence of a whistle-blowing policy, for example); Push for a robust and objective CSR strategy that integrates into the overall business strategy. Ensure that it is real and motivates staff and other stakeholders, and is not just a convenient communications-friendly bolt-on; Develop and argue the business case for CSR with opponents who refuse to accept that there is one; Push for the inclusion of CSR targets in the strategy, budgeting and forecast cycles so that the business has a benchmark for actual performance; Challenge the mix of indicators used so that there is a reasonable balance between the following: Compliance (those for which there is no choice, such as the number of penalties for environmental transgressions); Capacity (measures indicating how the business is preparing for CSR, such as board attendance performance or implementing that whistle-blowing policy); and Commitment (realising a reduction over time in water use, CO2 emissions or the ratio of CEO remuneration to average employee pay). The reporting dilemma It is possible that reporting will also be chaotic, partly as a result of the department’s disorganisation but also because guidance rules on CSR are still imprecise – very much so compared to what you will be used to in accounting. You may, therefore, wish to consider the following: Help the department choose appropriate and objective norms and standards to use. There is a proliferation of these, usually set by profit-making organisations. The risk is that these standards may be too focused on one aspect of CSR or too heavy in specific sectors; Devise calculations in the absence of full information. For example, how much water is recycled? What CO2 emissions are attributed to employees’ travel to work or business travel?; Check that the indicators’ units of measure allow for consolidation at each level in the hierarchy. For example, there is little real benefit in collecting the number of female managers at each location or subsidiary if you don’t also know the total number of managers at each; Help the CSR department adopt reliable variance analyses incorporating volume, price, mix, efficiency and one-off elements. It is misleading to claim an improvement in an indicator by taking the change in the total value. You need to obtain an understanding of the drivers behind the change. It wouldn’t be acceptable for management to take credit for your business becoming greener if, in reality, legislation brought about the change; Push to get a standardised CSR reporting system, including what you would consider as standard input and validation checks (with blocking controls also). Data quality and data management will probably be dreadful: most data will be held in individuals’ Excel spreadsheets. Each element of CSR could well have different reporting routes and cycles that replicate information requirements, often with differing definitions. It would be best if you pushed for the adoption of one reporting system for all non-financial indicators; and Encourage the CSR department to collect information every month rather than in an annual free-for-all after year-end, so you can see trends emerging and do something promptly. Final thoughts Finally, there are some other ways in which Chartered Accountants can help CSR. You may wish to consider the following: Work to develop an annual report that gives a reasonable balance to each of the financial, CSR and other non-financial elements; Be a good citizen and push to ensure that the finance department applies relevant CSR policies; and Talk positively about CSR internally, as you will generally elicit a favourable reaction from staff who are willing to give their views or participate in initiatives. Peter Gillespie FCA is the founder of Meaningful Metrics. He worked in manufacturing and services in several countries for 30 years.

Chartered Accountants Ireland is a proud supporter of the Trinity Centre for People with Intellectual Disabilities. In this article, we hear from those involved in the programme including Eavan Daly, who completed a very successful internship with the Institute last year. An introduction Shauna Greely, Chair of the Diversity and Inclusion Committee and a Past President of Chartered Accountants Ireland. Diversity has become an area of significant focus in the business world. Businesses recognise that having a diverse workforce with a greater variety of talents and experiences enables them to adapt to dynamic markets and be more innovative. A focus on diversity also allows under-represented groups to get their fair share of opportunity, and opportunity is a critical word in this regard. Chartered Accountants Ireland, through its Diversity and Inclusion Committee, ensures that the Institute focuses on the areas of diversity and inclusion that impact on and are important to its members. One diversity and inclusion initiative the Institute is involved with and which members may not be aware of relates to our involvement as one of the early business partners to a programme run by the Trinity Centre for People with Intellectual Disability (TCPID). Over the past 10 years, the Institute has invited several students with intellectual disabilities to gain work experience in Chartered Accountants Ireland. During my involvement with Chartered Accountants Ireland, I have been privileged to attend many events, meetings, courses and lectures where I have learned of the positive difference the Institute makes on accountancy, business and the wider community.  However, the event that stands out for me was my attendance at a presentation in the lecture hall of Chartered Accountants House given by a TCPID student. Eavan Daly has an intellectual disability and had completed many months of work experience with Chartered Accountants Ireland. Eavan gave a presentation on her experience and I was struck by that fact that, although this was her first job, Eavan was making a professional presentation in a lecture hall to a large group of colleagues. The experience led to many firsts for Eavan, and I was incredibly proud that Chartered Accountants Ireland made this possible. I saw first-hand the benefits that participation in this programme has brought to Chartered Accountants Ireland as an organisation and the positive impact it has had on staff. Equally important are the enormous benefits afforded to Eavan and her family. The experience gave Eavan the independence and confidence to go to work each day with a staff ID card, a desk to sit at, a computer to log-in to, and buddies to have coffee or lunch with – things many of us take for granted. There are many accountancy, financial services, legal and other business organisations already partnering with TCPID to offer internship and work experience. This programme provides such wide-ranging benefits that I would urge other organisations to consider getting involved. My work placement with Chartered Accountants Ireland By Eavan Daly Eavan Daly is my name, and I completed an 18-week work placement with Chartered Accountants Ireland in September 2017. I travelled alone by train from Drogheda to Dublin on Tuesdays and Wednesdays. I worked from 10am to 12.30pm on both days. I loved the whole experience of making new friends, learning new skills and facing new challenges. Most of all, I loved feeling included and being part of the workforce. In Chartered Accountants Ireland, I worked in reception as a member of the Conference and Facilities Team. It was my duty to meet and greet all visitors to the building. I showed them where to go or contacted the person they were looking for to let them know they were there. I received and signed for all deliveries and registered post. I emailed or rang the person whose delivery it was to let them know it had arrived. I visited the Publishing Department and sat in on a meeting, and I was invited to the President’s Dinner where I learned about networking. This was one of my highlights. At the end of my work experience,  I gave a presentation. My work colleagues, guests from the broader working community and my mentors from Trinity came to see me. Eavan has completed work placements in Chartered Accountants Ireland, Orix Aviation and Bank of Ireland. An employer’s perspective Bernard Delaney, Director of Human Resources at Chartered Accountants Ireland Chartered Accountants Ireland is proud to be an enabler of the TCPID programme – not just because of the benefits for the students and our staff, but because it is the right thing to do. Our proximity to Trinity College Dublin allows us to offer a safe environment where students have a familiarity with the locality while providing just enough challenge as they join a new workplace – a stressful event for most people. Our employees gain hugely by working alongside people with a different perspective and life experience. It informs and enriches our work experience by being inclusive rather than just diverse, and helps us challenge our ingrained views and work habits. We are a member organisation that values the contribution of every individual; this programme is a win-win for us, and we are privileged to be involved. A coordinator’s perspective Marie Devitt, Pathways Coordinator at the Trinity Centre for People with Intellectual Disabilities The Trinity Centre for People with Intellectual Disabilities is an established not-for-profit organisation, operating a pioneering education programme for students with intellectual disabilities. We are part of the School of Education at Trinity College Dublin. Our Level 5 Certificate in Arts, Science and Inclusive Applied Practice covers a wide range of modules over two years. Our goal is to equip students with the requisite education and training for future employment or further education, allowing them to lead more independent lives. We have established a robust network of business partners, including Chartered Accountants Ireland, who work with us to provide student work placements, mentoring, paid internships and, in some cases, permanent employment for our graduates. Our business partners have allowed us to offer insight into potential career paths for our students and graduates. In the past, these young people were marginalised with few opportunities for meaningful paid employment. With the help of our partners, this is now changing. Not only are we able to offer supported career pathways for our students as they move on from Trinity College Dublin, but thanks to the range of the business partners, we can now offer them real choice and allow them to look at specific industries that might suit their particular interests and skills. We developed the TCPID Graduate Internship Programme with the support of our partners. Since launching this programme on a pilot basis in January 2017, we have had over 23 paid graduate internships, five of which converted into permanent roles. In addition to these permanent roles, a number of our graduates have been in paid internships with our business partners for more than six months with their contracts renewed. Our ultimate goal is to find permanent roles for those who want them and transition pathways into further education for those who may wish to explore other options.  Our business partners are a core part of our programme and have supported us in many ways. We are looking to expand our network of partners to help increase the options available to our students and graduates. Together with our TCPID business partners, we can make a real difference and build true inclusion within the workplace and within society. A parent’s perspective Olwen Daly, Eavan’s mother Eavan’s family, friends and her local community are proud of her achievements and are grateful for, and appreciative of, those enlightened employers who choose to give her a chance. To those who have no experience of anyone with intellectual disability, we believe that to become fully literate, as Eavan has, and to travel alone from Co. Louth to Dublin is a magnificent achievement. It is the accumulation of thousands of tiny steps, often supported by extraordinary individuals and organisations. Marie Devitt along with the TCPID Graduate Placement Programme and supporting business partners fall firmly into this category. Eavan’s goal is a job, and we know she will get there. Please continue to support her and other students in their endeavours. For further information about how your company can become a part of the TCPID Business Partners Programme, contact Marie Devitt, TCPID Pathways Coordinator at devittma@tcd.ie or (01) 896 3885.

Although 2019 has been a busy year to date, you can expect more activity and a bumper Finance Act in the second half of the year.   There seems to be no let-up in developments across the global tax world, with the first half of the year likely to be trumped by an even busier second half. It is not possible to cover everything, but let’s look at some of the key developments so far and what is coming down the tracks. Interest deductibility Earlier in the year, the Department of Finance completed its consultation phase in respect of changes to interest deductibility (and hybrid) rules. Following ATAD1 (EU Directive), Ireland is obliged to amend regulations governing interest deductibility, with interest capped at 30% of EBITDA subject to certain conditions. It looks increasingly likely that the new legislation will be introduced well before the initially proposed date of 2024, with its inclusion in October’s Finance Bill now a possibility (and effective 1 January 2020). Transfer pricing A consultation process also took place earlier in the year in respect of transfer pricing (TP). We can expect significant changes in this year’s Finance Bill to our existing TP regime. It is almost guaranteed that TP will be extended to non-trading transactions such as the provision of interest-free loans, which are currently outside the ambit of the TP legislation. What is not so clear-cut is whether TP will also be extended to small- and medium-sized enterprises (SMEs), which would place an extra administrative burden on smaller companies with potentially little additional tax revenues raised. It is possible that a compromise solution will be reached, with the new rules extending to SMEs but with more relaxed documentation conditions, as is the case in some other countries. For companies already within TP, the introduction of 2017 OECD TP guidelines into Irish legislation will see more onerous documentation requirements, with both a master file and local file required at the head office and local country subsidiary level respectively. Transfer pricing audits are also likely to be a more prominent feature of our tax landscape in the future. Digital taxes The good news is that the European Union (EU) has, for the moment, dropped its Digital Services Tax proposals – although several member states have unilaterally introduced their own such taxes (for example, the UK, France and Austria). However, the digitalisation challenge has instead been picked up by the OCED which, in February, launched a public consultation on ‘Addressing the Tax Challenges of the Digitalisation of the Economy’. This consultation seeks to build on previous reports on the area and agree on a consensus-based, long-term solution between OECD members by the end of 2020. The OECD’s proposals potentially go much wider than just digital companies, with the concept of “marketing intangibles” bringing many more companies within scope. While there is as yet no clear consensus amongst OECD members as to the best way forward, many countries favour the concept of linking value creation to the customers’ location. If ultimately consensus is reached that sees a portion of profits allocated to where consumers sit, this will undoubtedly dilute the benefit of our 12.5% corporate tax rate. We can expect further developments in this vital space over the coming months as negotiations progress. More recent consultations  In recent weeks, the Department of Finance has launched separate consultation phases in respect of Entrepreneur Relief, EIIS, research and development (R&D) tax credits and the KEEP (share option) scheme. While there is a different rationale for each consultation, the fact that they are taking place indicates that we may see changes in the future. The legislative provisions governing EIIS and KEEP in particular have proved problematic for taxpayers attempting to access the reliefs. The Department is also looking  closely at Entrepreneur Relief. While further changes to this relief may be made, it is optimistic to believe that the €1 million lifetime limit will be increased to €10 million, certainly in the immediate future. The R&D tax credit was the subject  of a previous review, which showed that the credit was working as intended with the additional jobs created by the credit trumping the cost to the Exchequer of funding the credit. The Department is now seeking to reaffirm this finding and determine whether the relief remains fit for purpose. Unwinding of “Double Irish” structures Grandfathering provisions for so-called Double Irish structures will come to an end on 31 December 2020. As a result, intangible assets currently held in tax havens have in recent times been “on-shored”, in many cases to Ireland. We expect this to continue for the remainder of the year and next year, with many groups keen to execute the migration before the law changes in the countries where the intangible assets currently sit. Due to the mechanics of the tax relief for intangible assets, any such acquisitions should see additional tax revenues flow to the Exchequer. Indeed, with intangible assets increasingly aligned with substance, additional payroll taxes may also accrue in due course. The US tax reform package has, in many cases, made it more expensive for groups to house their intangible assets outside the US. Notwithstanding this, we expect to see further significant migrations of intellectual property to Ireland. Minimum tax rate in Europe? In recent European Parliament election debates, the notion of a minimum corporation tax rate (18%) across the EU was raised. The abolition of the right to veto any tax changes has also been mooted. While both of these ideas are likely to get more air time for the remainder of the year, for the moment, we would assess the likelihood of either happening as remote. So in summary, a lot has happened already this year, and we can expect at least as much activity in the second half with a bumper Finance Act likely to wrap up the year. Paschal Comerford FCA is a Tax Director at Grant Thornton. Peter Vale FCA is Tax Partner at Grant Thornton.

It seems to be the season of public consultations on tax matters in the Department of Finance, with four launched in the month of May alone. This brings the total to 14 in the past two and a half years. While some areas under the current review such as transfer pricing and the R&D credit haven’t been scrutinised by way of consultation in recent years, others have been examined and re-examined and then examined again. One such example is the Employment and Investment Incentive (EII) scheme, which was introduced in Ireland in 2011. The relief, which offers a tax break of up to 40% in investments in certain corporate trades was explored in 2014, 2015 and 2018 – and now again in 2019. Over the years, many professional bodies, including this Institute, have consistently made the same points in its responses, seeking solutions to problems in schemes such as the EII – many of which have yet to be solved. In considering the most recent wave of consultations, it is apparent that in order to secure proper engagement with the consultative process, respondents need tangible evidence that their comments and suggestions are being listened to and acted upon. Departments cannot continue to seek and re-seek answers to the same questions without acting on some of the solutions proposed by respondents. Acknowledging that there have been some minor amendments to the EII scheme as a result of the last three reviews, these changes haven’t addressed some of the main concerns with the scheme. These include the restrictions that block access to the relief for many potential investors and the penalties if self-certification when claiming the relief is incorrect. Tax consultations in Ireland might help identify problems with the various reliefs, but there is little tangible evidence of any of the problems being solved – or, in some cases, even addressed – in response. One improvement to the process could be the introduction of a code of consultation principles, similar to the one that operates in the UK, which provides undertakings on time limits, responses and actions. Otherwise, what’s the point of having a public consultation?   Cróna Clohisey ACA is Manager, Tax & Public Policy, at Chartered Accountants Ireland.

Nothing can ruin a summer like getting caught with unreported taxes. Renee Dawson has provided a short guide to some common pitfalls in employment taxes. As we start a new tax year, it is an opportune time for employers to review employment taxes for the year ahead and identify any weaknesses in tax reporting processes. This article aims to highlight some common areas where employers can inadvertently fail to report employment taxes accurately. Staff entertainment All payments made to or on behalf of employees should be reviewed. Are employers funding staff entertainment, which falls outside the scope of HMRC exemption of £150 per employee for annual events? The supply of meals to staff when working late or the funding of team events can lead to an employment tax liability. Employers should consider applying for a PAYE Settlement Agreement with HMRC for the 2019/20 tax year to remove the need to declare on forms P11D.  Trivial benefits The provision of vouchers to employees at Christmas should be reviewed in conjunction with HMRC trivial benefits exemption. This exemption allows employers to provide non-cash gifts of up to £50 per employee tax-free as long as the gift is not an incentive or reward for service and is provided to all employees. Any vouchers provided to employees exceeding £50 or as an incentive or reward must be either returned on form P11D or included in a PSA. Termination payments Following the changes to the taxation of termination payments in April 2018, employers must comply with the new rules regarding Post-Employment Notice Pay (PENP) whenever an employee leaves without working a full notice period for whatever reason. The notice period must be confirmed using the PENP formula and pay as you earn (PAYE) and national insurance contributions (NIC) applied. This is due to change from 6 April 2020, when ex-gratia payments in excess of £30,000 will be subject to employer’s NICs. If the termination qualifies for £30,000 tax exemption under S 401 ITEPA 2003, any excess payment over this amount is subject to tax only and is still NIC free. This, however, is due to change from 6 April 2020, when payments in excess of £30,000 will be subject to employer’s NICs. Cash allowances Many employers are unaware of the full extent of the changes to salary sacrifice introduced in April 2017. Now called Optional Remuneration, the changes removed the tax advantages with the exception of pensions, childcare vouchers and cycle-to-work schemes. However, Optional Remuneration also introduced new rules where the employee has a choice of a benefit or a cash alternative. The most obvious example of this is a cash allowance in lieu of a company car.  Where there is a clear choice available, the employee who chooses the car will be taxed on the actual car benefit calculated according to the car list price and CO2 or the cash foregone, thus removing any taxable benefit in selecting a green CO2 friendly car.  Director current accounts Employers should aim to closely monitor any director current accounts to establish if there is a reporting requirement. Many directors regularly use their current account for cash withdrawals and clear the outstanding balance prior to the accounts year-end by payment of a dividend. However, many employers do not realise that, even though the account has been cleared at year-end, a significant overdraft exceeding £10,000 during the year could lead to a benefit in kind reporting obligation.  Temporary subsistence rules Care should be taken when employees are working away at a temporary location. Employers should monitor the 24-month rule for travel and subsistence costs under temporary workplace rules. If it is known from the outset that the assignment will exceed 24 months, the payments will be taxable from day one, or if it becomes apparent during the course of the secondment tax should be applied from that date.  Many employers will choose to place employees in rental accommodation rather than a hotel. This can cause issues for tax, especially if the amounts involved exceed £2,500 per annum.  HMRC requires the employee to complete a tax return to disclose the benefit and then make a contra-business expense claim to negate the benefit.  Off-payroll working Any gross payments made to individuals working off-payroll should be treated with caution. Payments to an individual who claims to be self-employed should be scrutinised to determine the status based on the tests such as control, integration, substitution and financial risk, and you should ensure that a contract of service does not apply to make the arrangement one of employment.  However, if the individual is operating through the intermediary of a personal service company (PSC) and provides services to an engager in the private sector, the risk lies mainly with the PSC rather than the engager, at present. From April 2017, for PSCs operating in the public sector, the burden of responsibility rests clearly with the engager making the payment to the PSC. The roll-out of this legislation to businesses in the private sector will take place on 6 April 2020. It is worth pointing out that the PSC will be taxed as an employee but will not benefit from any employment rights.  In advance of the new rules to come into effect on 6 April 2020, employers should review all engagements with PSCs. HMRC have introduced a new interactive tool called CEST (check employment status tool) to assist with this review. All payments made outside payroll should be reviewed on an individual case by case basis. This presents a risk for employers and potentially increased costs with the employer’s NICs.  The new tax year brings a fresh opportunity to review all employment tax reporting obligations and the systems in place to ensure you are fully compliant with HMRC. Happy new tax year!   Renee Dawson is Tax Senior Manager at BDO Northern Ireland.

David Duffy highlights the latest VAT cases and discusses recent VAT developments. Irish VAT updates eBrief 48/19 contains links to several new and chapters of Revenue’s Tax and Duty Manual (TDM) concerning VAT. The new chapters primarily concern the VAT treatment of activities of public bodies, and the VAT treatment of certain types of vouchers (see below). Also, there have been updates to several chapters of the TDM to reflect the increase in the VAT rate for certain supplies from 9% to 13.5%, which took effect on 1 January 2019. Public bodies This guidance does not appear to reflect any particular change in Revenue practice in respect of the VAT position of public bodies, but instead seeks to summarise the current position. A public body’s activities are generally outside the scope of VAT where they are undertaken under a power conferred on the public body by any enactment, and the public body is not in competition with private operators in respect of that activity. However, where not applying VAT on the public body’s activities would give rise to significant distortions of competition with private operators, those activities will generally be subject to VAT in the same manner as for private operators. In addition, VAT legislation specifies certain activities that are automatically within the scope of VAT (unless VAT exempt) when carried out by a public body. This includes, but is not limited to, telecommunication services, supplies of water, gas, electricity and thermal energy and transportation of goods. Vouchers New VAT rules in respect of certain types of vouchers, known as single purpose vouchers (SPVs) and multi-purpose vouchers (MPVs) have been in place since 1 January 2019. In eBrief 48/19, Revenue released guidance on the VAT treatment applicable to other types of “vouchers” that do not fall within the meaning of an SPV or MPV. This includes instruments such as stamps (but not postage stamps), coupons, telephone cards, tokens and book tokens (collectively referred to as “vouchers” in the TDM). The guidance sets out the rules that apply to such vouchers in several scenarios, which broadly follow the VAT rules that were already in place before 1 January 2019. In the normal course, no VAT is due on the sale of such vouchers at face value to private customers, and VAT only becomes due when the customer redeems the voucher. However, where the price charged for the voucher exceeds the face value of the voucher, VAT is chargeable at the standard rate (currently 23%) on the difference between the face value and the consideration paid. The sale of vouchers to a VAT-registered person for resale to private consumers (e.g. an intermediary) is liable to VAT at the standard rate (currently 23%) on the payment received. Any future sales of these vouchers by the intermediary, or subsequent intermediaries, is also liable to VAT. No VAT is due on the redemption of the voucher in these circumstances. The sale of a voucher at a discount to its face value is not subject to VAT until the voucher is redeemed. Provided detailed records are kept, the issuer may account for VAT on the discounted sales price received rather than the face value of the voucher. Mandatory e-filing eBrief 068/19 confirms that electronic filing of VAT returns and electronic payments of VAT on Revenue Online Service (ROS) are mandatory for all taxpayers, including new registrations. This has been the case for many years following a phased implementation. EU VAT updates Place of supply on training courses SRF is a company established in Sweden, which provides educational and vocational training to businesses mainly established in Sweden. The courses take place both in Sweden and other EU member states.  The question referred to the CJEU in the SRF case (C-647/17) was whether the place of supply of these training courses was where the business customer was established (i.e. Sweden) or where the course took place. The latter treatment would apply if the service should be classified as ‘admission’ to an educational event, which is an exception to the general place of supply rules for business-to-business services. The CJEU confirmed that the “place of supply” should, in as far as possible, be the place of consumption. Therefore, the CJEU concluded in this case that admission to, and the right to participate in, these training courses should be subject to VAT at the place the courses took place. VAT treatment of  driving lessons In the A&G case (C-449/17), a German driving school sought to treat their driving tuition services in respect of cars and vans as VAT-exempt “school or university education”. However, the CJEU did not agree that VAT exemption could apply in these circumstances and in the CJEU’s view, “school and university education requires the following features: An integrated system for the provision of knowledge and skills relating to a wide and varied range of matters; and The deepening and development of such knowledge and skills by pupils and students according to their progress and their specialisation at the various levels constituting the system. Based on this, the CJEU concluded that driving lessons in a driving school do not fall within the scope of “school and university education”. The CJEU did not consider whether the tuition services could have been treated as “vocational training”, which is a separate heading within the same exemption. The judgment, therefore, largely supports the current Irish VAT position, which treats driving lessons as subject to VAT, except where they are in respect of vehicles assigned to carry at least 1.5 tonnes of goods or at least nine persons (including the driver). David Duffy FCA, AITI Chartered Tax Advisor, is a VAT Partner at KPMG.

With the changed audit landscape, a lot more goes into audits now than in the past. Aine Morgan takes us through a purposeful audit planning process. In working with my clients over the last few weeks, I considered what could be improved during the busy season. One issue that presented repeatedly was insufficient audit planning. It is apparent to me that we are not making time for audit planning as we often undervalue the importance of this critical process. These days, the planning sections of our digital files are significantly more comprehensive than the skinny section of the lever arch file when many of us trained as auditors. The regulatory environment in which we work has evolved and the way we audit has changed radically, making audit planning an even more important task. The best way to ensure that you perform planning procedures for the next busy season is to start planning for planning today. Today Block off two hours in your calendar sometime in the next two weeks to plan for planning.  Your brain will very likely tell you that this pre-planning isn’t necessary and two hours is too much time, but you will thank yourself later in the year.   Your instinct might be to invite the whole team go to this meeting. I encourage you to think carefully about whether or not you want to invite others to this session.  To the extent that you feel it would be helpful to have the input of someone else, be very specific about the exact inputs you’re require from them.  Someone really needs to own planning and that’s going to be you. Consider doing this first session alone and getting input from the rest of the team later. Within two weeks Honour the slot in the calendar when it is time to plan. Close your door and get to work.  You don’t need to check your phone and you don’t need to keep your emails open. These two hours are for planning. It’s going to pay off hugely as you move into the 2019/2020 season. During this planning session, map out what outcomes would comprise a really successful audit plan in as much detail as you can, including acceptance and continuance, internal and external planning meetings, meaningful materiality calculation and fraud risk assessments, control environment testing (taking into account the three year rule), and specialist or expert involvement. This will require you to go into last year’s file and critically consider the work you did.  Ask yourself : how would I feel about this file if it had just been pulled for external review? From there you will know exactly what you want to drill down into this year, and what planning procedures that will require. With a clear view in mind of what you need to plan, make sure you have the staff you’ll need. Make a list of the meetings you will need to have as part of planning procedures,  including a kick-off meeting, taking-stock meetings and client meetings. Make a list for team members who will need to be invited to these meetings.  Close out this session by scheduling time in the partner’s calendar to bring her up to speed on the upcoming audit plan and get her input. Schedule time with your senior as well, so that you can delegate and get him or her started. Within the next month It’s important to meet with the partner as planned and get her input in the next month. The meeting does not need to be formal, but document all discussions and file them to demonstrate the partner’s involvement at all stages of the audit workflow. Meet with your audit senior and have him calendar all the meetings that you planned two weeks ago, both internally and externally. Your brain will think that it’s too early in the year to do this. It isn’t. The earlier you have those meetings carried out, the more ease you bring to the whole audit workflow, and the more meaningfully you can incorporate the outcome of those meetings into your audit plan. Have your senior schedule these meetings well ahead of time, and make the invitation to other staff non-optional.  ISA 300 requires all team members to be at the planning meeting and properly onboarded by agreeing the nature and extent of deliverables from specialists, and timing, so make sure they are actively engaged in key audit strategy discussions. Delegate the work you require your senior to complete ahead of the kick-off meeting to your audit senior and have him put it in his calendar. He should also schedule time in your calendar for review of this work together and to create an agenda for the kick-off meeting.  Within the next three months Review planning procedures in the next three months. If you usually conduct the kick-off meeting in a presentation style, consider moving away from this. Instead, file client/audit history/background information on a shared drive where the team members can read about it ahead of the meeting. Using valuable meeting time for this kind of re-cap may not be the best use of the team’s time. When crafting the kick-off meeting’s agenda, ensure the team members’ time can be optimised and that the key ISA-relevant planning meeting issues of materiality, fraud and audit strategy planning are addressed. Keep minutes documenting key outcomes, making sure to always take note of the partner’s involvement in those discussions so that her footprint is evident. Tailoring your approach For smaller entities, the above process will be too much given the risk profile. That said, just having the kick-off meeting on the first day of the audit is no longer sufficient. As soon as you can, schedule time in the calendar to consider what the success factors of the audit planning process would be for you. Delegate and schedule meetings as above, using well thought out agendas, maximising everyone’s time. A 30-minute engaged kick-off meeting where meaningful inputs are exchanged and risks discussed and documented is a sound basis for a smaller, risk-focused audit that will keep everyone’s focus in check from the get-go. It’s 2019 and the way we audit has changed radically from when we were trained. We know it, but many of us need to start living it. Aine Morgan is the owner of Aine Morgan Coaching and coaches Big 4 Mums who  are returning to work after maternity leave.

Welcome to the June edition of Accountancy Ireland. This edition focuses on the evolution of the accountant. It will examine the potential impact of digital technologies, the changing needs of business and the latest thinking from industry experts on what it all might mean for the accounting profession. As the largest professional body of accountants on the island of Ireland, it is vital that we look ahead to meet those challenges and to lead the profession. Brexit delay The 29 March Brexit deadline came and went. Following a nine-hour summit of the heads of state of the EU, Brexit has been delayed until 31 October. It seemed that the UK Prime Minister had hoped to get a three-month extension and the result is shorter than the 12 months preferred by some EU leaders. The deadline can still be shortened if the UK Parliament passes a Brexit deal.  The EU did send one clear message from the summit – the withdrawal agreement is not up for renegotiation. The UK Parliament must now agree on a way forward. In the meantime, Brexit updates and commentary are available via www.charteredaccountants.ie. Influence The Institute’s Influence leadership conference took place at Lyrath Estate, Kilkenny on 10 May. The issues tackled at the event have informed the content of this edition. For example, how Artificial Intelligence will shape the future of the profession, creating new roles and empowering existing ones. We are delighted that Influence managed to bring international work transformation experts together to discuss the impact of disruptive technologies – and how best they can be harnessed. I trust that our delegates found the event both thought-provoking and inspiring.  New members We’re always pleased to bring through a new group of members ready to make a terrific impact with our member firms in industry and the public sector. Over the last couple of months, we’ve welcomed 301 new members to the Institute at conferring events in Belfast, Cork and Dublin. All of them can be rightly proud of their achievement, but there is one new member who deserves a special mention. Rachael Bell of KPMG became the first recipient of the prestigious Chartered Accountants Ireland Gold Medal in 19 years for her exemplary performance in her final exams. Rachael becomes only the 24th recipient of the Gold Medal since 1924. Well done to you all, and to all those who helped, mentored and encouraged those new members every step of the way. Societies and AGMs I’d like to offer my congratulations to the new Chair of the Ulster Society, Richard Gillan, elected at the society’s AGM in April, and also to his predecessor, Niall Harkin, for a very successful year in office.  Congratulations also to the Leinster Society on its 90th anniversary. It was celebrated in some style in the Conrad Hotel in April. The centenary celebrations in 2029 will have a lot to live up to. Finally, the Institute’s AGM took place on 17 May, with Conall O’Halloran elected as President. I wish Conall every success in his year in office and on behalf of members I’d like to thank Feargal McCormack for an exceptional year as President. Barry Dempsey Chief Executive

Cultural courtesy in Hong Kong masks an interesting honesty when it comes to matters of tax and reputation. Beside the main entrance to the modern building that houses the Hong Kong Inland Revenue Department is a floorplan – the Business Registration office, the Stamp office, the Enquiry Counter, the Torture Appeals board. I have seen revenue offices using many tactics to get the taxpayer’s attention, but I confess that having a torture division was new to me. Also new to me was the open approach of the Hong Kong tax authorities to their position within the Hong Kong economy. I saw this open approach first hand recently at a meeting facilitated by our colleagues in the Hong Kong Institute of Certified Public Accountants. Hong Kong is not oblivious to the importance of international reputation, yet the tax authorities there seem clear that all this newfound concern for  the intenational tax playing field called Base Erosion and Profit Shifting (BEPS) is something to be noted, rather than slavishly followed up. In contrast to the European Union, and therefore to the Irish approach, Hong Kong will fulfil only the minimum OECD (BEPS) multinational tax requirements. There is courtesy certainly, but no particular enthusiasm to cooperate with revenue authorities in other countries. The Hong Kong authorities see the tax system as a lever to migrate an economy whose fundamentals are currently import/export to a knowledge environment. Generous direct funding by the government on business incubators, on the acquisition of know-how, and on university start-ups is being matched by luxuriant research and development tax credits. The Hong Kong authorities differ markedly in their forthright approach from the approach of many other European regulatory counterparts. Irish civil servants are more likely to nod politely and describe their role as policy-takers rather than policy-makers. Which approach is more correct? One of the authors of Hong Kong’s economic success was Sir John Cowperthwaite, who was Financial Secretary in the 1960s. His policies were responsible, at least in part, for Irish people of a certain age (your correspondent included) thinking that everything plastic was made in Hong Kong. Cowperthwaite insisted that economic data relating to Hong Kong should not be published for fear that well-meaning but interfering businesses and officials alike would create havoc with interventionist initiatives. The market and common sense would ultimately sort  everything out. The man may have had a point. Look at the relative economic successes of the UK in the past two years. Was it despite or because of the political stagnation over Brexit, which resulted in little or no active management of the UK economy? Look at the situation in Ireland, where the combination of a minority government and a cabinet of ministers peculiarly disinterested in business matters still achieves embarrassingly large GDP growth. Northern Ireland muddles through without Stormont and thus, without political direction on its economy. However, it is not all about economic success. There is another aspect of engagement by the private sector in economic decisions, and that is the democratic process. In a democracy, civil society should have a say in government decisions on economic issues. In jarring contrast to the openness of the dialogue with the Hong Kong authorities was the jailing there in April of political dissidents. And what of the Torture Appeals board? I understand that it is not a subdivision of the Hong Kong Revenue at all. Rather, it is a separate agency that considers applications for political asylum by reason of the unfortunate person claiming to have suffered torture in their homeland. It shares its premises with the tax officials. The torture had nothing to do with tax after all. Apparently. Dr Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland.

Create and maintain lasting business connections in six simple steps. As the team at Harbinson Mulholland plan to celebrate the firm’s 21st birthday in June 2019, I am delighted by the number of clients who have been with the firm since its establishment in 1998. There is no doubt that healthy business relationships are the foundation of any business large or small. However, I fear that in a world with emerging technologies in which we can work remotely, analyse data at the touch of a button and communicate without uttering a word, the ability to create and maintain trusted relationships will be diluted. It is imperative that we, as Chartered Accountants, whether in practice or industry, develop good business relationships. These relationships may be with customers/clients, suppliers, employees, competitors, partners, investment or lending institutions. To maintain good business relationships, it is essential to: Build new relationships by diversifying networks; Ensure that relationships are mutually beneficial – give at least as much as you expect to receive; Identify key relationships; Focus on the external environment; Apply time and resources to critical social issues; and Prune, renew and reshape networks frequently. However, err on the side of caution, as more is not always better. Furthermore, over-investment in relationships will take precious time away from the business, and strong networks may act as a barrier to new entrants. Trust and respect Relationships empower us and allow us to recover from losses or setbacks. They ensure that we don’t feel isolated in business. However, there is a cost to acquiring customers and finding suitable business partners. Retaining these contacts is therefore vital to success. If we treat business partners, customers and others with honesty, trust and respect, this will help maintain the business relationship. Trust is your most crucial business asset in the form of relationships. Every interaction is an opportunity to build relationships and nurture trust – from the moment a customer drives into your carpark, visits your website or calls your office right through to the point when they drive out, leave the site or hang up the phone. Great customer relationships are essential, and these should be nurtured. When you have healthy relationships, you have loyal customers. The same principle applies to the workplace – instil trust and respect, and hire the right people. It is worth allocating resources to ensure that you are recruiting the right people. It is also vital to keep employees where relationships have been developed, and trust is embedded. Building business relationships There is no doubt that we need to adapt our training as Chartered Accountants to take account of new technologies and the changing environment in which we operate. Chartered Accountants Ireland has already taken this into account when looking at the syllabus for our professional exams. The Institute also recognises the importance of peer relationships and, through the Young Professionals Group, encourages members to begin building their networks in the early part of their careers. We at Harbinson Mulholland understand the value of businesses building relationships and sharing experiences with similar companies. So, we developed the Family Business Forum, which will celebrate its third birthday in May this year. The forum brings together family business owners and managers and provides an environment for sharing experiences. We are also committed to assisting relationship-building in the third sector and will facilitate a series of seminars for finance managers to discuss current issues and share experiences. Angela Craigan FCA is a Partner with Harbinson Mulholland, the accountancy and business advisory firm.

Claire Lord considers the arrival of the central register of beneficial owners. Under Irish legislation, corporate and other legal entities incorporated in Ireland are required to obtain and hold adequate, accurate and current information in respect of their beneficial owners and put in place their own beneficial ownership register. A beneficial owner is a natural person who ultimately owns or controls the share capital or the voting rights, or has control by any other means. The relevant legislation states that a holding (direct or indirect) of 25% plus one share will be indicative of ownership and control. This information required to be contained in a company’s beneficial ownership register includes name, date of birth, nationality and residential address. New requirements New legislation introduced in March 2019 now requires that, in addition, relevant entities must obtain their beneficial owners’ PPS numbers, where the beneficial owner has been issued with one. This new legislation also requires that from 22 June 2019, Ireland will have a centralised register of beneficial owners. Companies and industrial and provident societies incorporated in Ireland will have five months from that date to submit the information they hold on their beneficial owners to this central register. Such legal entities incorporated after that date will have five months from their incorporation to submit the required information. The current requirement for submission of information to this central register relates to companies and industrial and provident societies only. Therefore, it is not yet clear how and when entities that are not companies or industrial or provident societies (for example, ICAVs) will be required to submit information on their beneficial owners to a central register. Access to information While companies and societies will be required to submit all of the details they hold on their beneficial owners to the central register, the only information that will be available to the public will be a beneficial owner’s name, country of residence, nationality, month and year of birth and nature and extent of ownership and control. Individuals acting on behalf of An Garda Síochána, the Financial Intelligence Unit (FIU), the Criminal Assets Bureau, the Revenue Commissioners and other competent authorities will be entitled to all the information submitted to the central register, save for PPS numbers. Any such authority (save for the FIU) may disclose the information they receive from the central register to a corresponding authority in any member state of the EU. Remedies and sanctions If any details are entered incorrectly in, or omitted from, a beneficial ownership register, or unnecessary delay takes place in updating a register to reflect that a person has ceased to be a beneficial owner, that person – or any other member or beneficial owner of that entity – can apply to the High Court for the register to be amended. The High Court may refuse the application, order for the register to be amended or require the entity to compensate the aggrieved person for any loss sustained. An entity that breaches the new legislation may be liable to a fine of up to €5,000 or, on indictment, a fine not exceeding €500,000. In addition to these fines, custodial sentences of up to 12 months can be imposed on any person who knowingly or recklessly makes a statement to the registrar of the central register which is false. Where an offence is found to have been committed by an entity under the new legislation, and is proved to have been committed with the consent or connivance of any of its directors, those directors will also be guilty of an offence. Conclusion Relevant entities should prepare for the establishment of the central register by ensuring that their internal beneficial ownership registers are up-to-date, include PPS numbers where they have been issued, and that their beneficial owners are aware that their details will soon become centralised and open to public inspection. Directors of Irish companies also need to take responsibility for ensuring that their companies are complying with the new legislation, given the potential risk of not doing so. Claire Lord is a Corporate Partner and Head of Governance and Compliance at Mason Hayes & Curran.

What is stress, and is it bad for you? The dictionary definition of stress is “a state of mental or emotional strain or tension resulting from adverse or demanding circumstances”. In a medical or biological context, stress is viewed as a physical, mental, or emotional factor that causes bodily or mental tension. Stresses can be external (arising from environmental, psychological or social situations) or internal (stemming from an illness or a medical procedure). Stress can initiate the ‘fight or flight’ response, a complex reaction of neurologic and endocrinologic systems. And so we start to see the see-saw relationship we have with stress. It is needed to charge our body and mind, so we can best prepare to deal with challenging situations. It also releases adrenaline to make us the strongest and most productive we can be – this is our friend. However, it is when this delicate balance is tipped that it becomes our foe. The two sides of stress For me, good stress is the feeling before an Ironman – I am nervous, tense, anxious (and indeed, often questioning why I am here!) However, I know that this feeling means my body is preparing for pressure and that the adrenaline being released will fuel my muscles. It is the feeling before a presentation in work or a tough meeting – to some extent, it is a comfort as I know that this will ensure my reactions are charged and I will deal with unanticipated questions. However, stress becomes a problem when it significantly affects our emotional well-being and our ability to function at home, work or in our relationships. For a professional accountant, this pressure can sometimes arise from our work environment and as a member of the community of accountants, we should all be aware of the warning signs in others. Critically, the pressure often begins at the start of our career when we are juggling study, lectures, learning the tools of our trade with clients and dealing with our peers. However, throughout our careers, the lifecycle of an accountant exposes us to different pressures at different times.  It is okay not to be okay While we have come a long way in our ability to talk about our mental health, our profession appears slow to fully embrace the acknowledgement that it is okay not to be okay. From my interaction with students in the profession and my peers, who are often employers, we are still not 100% comfortable, or indeed perhaps don’t fully understand the impact stress can have on a person. Also, not all places of work have a safe environment in which individuals can talk openly. Yes, I am generalising here, but would you honestly feel 100% comfortable telling your employer that you were off on sick leave with mental health issues? If the answer is no, then as an employee or an employer we have an issue. And let us be honest, statistics demonstrate that we should see these sick certs as, on average, stress, anxiety and depression account for nearly half of all sick days taken in Ireland and the UK. Stark statistics Is stress, and the related side-effects when it becomes too much for us, more prevalent in accountants? Research by the Chartered Accountants Benevolent Association in the UK shows that more than eight out of 10 accountants suffer from stress-related problems. Over a quarter of accountants said they drink more than the recommended level and the study revealed that the suicide rate for female accountants is three times higher than the average for other occupations. Stark statistics. So, what can we do as a profession?  Well, we can ensure that our workplaces are open and transparent and that, most importantly, all staff can talk, voice their concerns and articulate when they are feeling stressed. We don’t need to go full throttle and bring in the massage chairs and yoga mats (even though this has been proven to help). However, we do need to ensure that as a community of accountants, we are there to assist each other and spot the warning signs. It is okay not to feel okay – and the more we say it and really believe it, the more we will help break the stigma of mental health and ensure that the profession is a compassionate one that supports its members and enables and empowers people to speak up. If any of the above strikes a chord with you, please note that CA SUPPORT is available to all members to help with matters of mental health. Sinead Donovan FCA is a Partner in Financial Accounting and Advisory Services at Grant Thornton.

Critical behavioural errors can dog investment decisions. Here are seven of humanity’s most prominent weaknesses. At one point in the 1973 movie, Magnum Force, Inspector Harry Callahan (played by Clint Eastwood) uttered the line: “A good man always knows his limitations...” It is important that investors should know their limitations too. Behavioural finance is the study of the influence of psychology on the behaviour of investors. It finds that investors are not always rational, suffer from systemic biases and are limited in their rational self-control. The first step to combatting these often unconscious biases is to be aware of them. What then are the critical behavioural errors that can dog our decisions? The following errors were identified recently by Joe Wiggins, a fund manager with Aberdeen Standard Investments. Myopic loss aversion We are more sensitive to losses than gains and overly influenced by short-term considerations. Often, investors check their portfolios frequently – even if they are operating with a long-term investment horizon. Making frequent investment decisions can worsen your investment results. A 2015 study by the Central Bank of Ireland found that 75% of the retail contract for difference (CFD) clients who invested in CFDs during 2013 and 2014 made a loss. Integration We seek to conform to group behaviour and prevailing norms. Like a limping wildebeest at the back of a herd in the Serengeti, we want to keep pace with the herd for fear of being picked off. The problem is that, in investment markets, the herd is more often wrong than right. That is why Warren Buffett said it is wise to be “fearful when others are greedy and greedy when others are fearful”. Recency We overweight the importance of recent events. In 2006, one had to look back over a decade and a half to observe a year-on-year decline in Irish residential property prices. Accordingly, most market participants grievously underestimated the possibility of a severe property bear market. Today, memories of the property crash are fresh in people’s minds, and many are fearful of another residential property crash. However, that is quite unlikely with rent yields considerably above mortgage rates. Risk perception We are poor at assessing risks and gauging probabilities. We allow the emotional hope of investment gains to override logic in evaluating risks. At the height of the residential property price bubble, houses in some parts of Dublin (such as Howth, Dalkey and Blackrock) were selling for more than 100 times the annual rental income those properties could command. However, many investors were more fearful of missing out on continued gains from the property market despite the dismal long-term return prospects those valuations suggested. Overconfidence We overestimate our abilities. Not only is the recorded investment performance of retail investors poor, but so too is the record of professional fund managers. The empirical evidence strongly suggests that the vast majority of investors would be better off buying low-cost funds that track market indices. Nevertheless, millions of us persist with the belief, hope or illusion that we can do better managing our funds ourselves. Results We focus on outcomes when assessing the quality of our decisions. Even as the Irish property market got more and more overvalued between 2004 and 2007, and risks continued to mount, investors mostly stuck with it because they were enjoying positive outcomes. Stories Captivating stories often persuade us. If you get the chance, watch Alex Gibney’s documentary, The Inventor: Out for Blood in Silicon Valley about the rise and fall of Elizabeth Holmes and Theranos. It depicts the journey of a woman and her company, propelled forward by several captivating stories: replacing injections with thumb-pricks for taking blood samples; replacing an expensive blood-testing duopoly with access controlled by clinicians with cheap tests that individuals could order; having a female entrepreneur enjoy the same success as Apple’s Steve Jobs. But it was all a fraud. In making financial decisions, it is a case of the forewarned being forearmed: the more we are aware of our limitations, the better we can avoid them.   Cormac Lucey FCA is an economic commentator and lecturer at Chartered Accountants Ireland.

Conall O’Halloran FCA, President of Chartered Accountants Ireland, outlines his plans as he prepares for a busy year in office. After six years as Head of Audit at KPMG Ireland and more than 20 as Partner, Conall O’Halloran is very well-prepared to assume his position as President of Chartered Accountants Ireland. The timing is fortuitous given the feverish debate over the value and future of audit. But that is just one of the many issues the Cork native plans to address during his presidential year. Speaking at the Chartered Accountants Ireland AGM following his election on Friday 17 May, Conall noted that his tenure as President would also focus on broadening the public’s understanding of the role and value that Chartered Accountants bring to business and society, and widening access to the accountancy profession at graduate level. Building blocks of the profession At the core of his ambition for the profession, however, is quality. That, he said, begins with the profession’s trainees. “When I graduated from University College Cork with a degree in engineering, Chartered Accountancy offered the most flexible and most appropriate route into business with any degree of authenticity,” he said. “And over three decades later, that still holds true. The training, the discipline and the analytical skills are embedded in a foundation of ethics and integrity, and it is this that makes Chartered Accountants a very compelling proposition as business leaders.” Despite the negative publicity levelled at the profession, Conall points out that demand for the services of Chartered Accountants – particularly in the areas of audit and assurance – continues to increase year-on-year. This, he adds, is mirrored in the number and quality of candidates pursuing a career in the most versatile of professions. “We continue to attract top-quality candidates to this day and they are the profession’s basic building blocks,” he said. “If you don’t have the right foundations in place on day one, you can’t expect quality further down the road. Chartered Accountancy is very fortunate in that respect and that’s very precious to me, to the Institute, and to the wider profession.” Rising to new challenges However, Chartered Accountants and the profession as a whole are facing into an era of new challenge. From regulation to technology, the business landscape has changed in recent years but in Conall’s view, the biggest changes are yet to come. “While there have been huge advances in technology, most of what our audit trainees do today isn’t vastly different from what previous generations of audit trainees did,” he said. “But we are on the cusp of massive change. The larger firms have invested heavily in their data analysis tools and electronic audit capabilities, which are capable of achieving a transformational change in the quality of evidence available to the auditor.”   To help the profession thrive in this new data-driven environment, Conall plans to focus on enhancing the routes of access to a career in Chartered Accountancy in an effort to harness the profession’s full potential. “We are very fortunate that our large- and medium-sized member firms train the vast majority of our students, but there are many other very capable candidates who simply aren’t interested in that particular training mechanism and would prefer to begin their career in industry,” he said. “Training in professional practice is a wonderful discipline, but it isn’t for everyone so I will focus on working with senior Chartered Accountants in industry to reinvigorate our industry training programme while at the same time, the Institute will continue its work on the syllabus to ensure that we train Chartered Accountants who are much more IT savvy.” The value of audit Further change may be forced on the profession as the UK’s various audit reviews are concluded and acted upon. From the Kingman recommendations to the current review by Lord Brydon and the Competition and Markets Authority (CMA) Study, the profession – and audit in particular – is under unprecedented scrutiny. Speaking on the issue following his election, Conall noted that he has recently been looking to the UK and reflecting on the fractured relationship with the regulator, the Financial Reporting Council (FRC) and with society. “Many of the reforms recommended by Sir John Kingman’s recent independent review have now been accepted by the FRC and by the profession and politicians generally. However, the wider review by the Competition and Markets Authority and also the independent review into ‘The Quality and Effectiveness of Audit’ being conducted by Lord Brydon will be fundamental to our future and the future of business more broadly,” he said. “I think we need to be very careful here in Ireland that what works, and indeed what may be required to work in the UK, is not necessarily or automatically right for Ireland. I will work very hard as President to ensure the profession delivers what is expected of us by society and regulators and ensure the very particular strengths that we have in Ireland are protected and nurtured.”   He added: “It is very clear to me that the absolute focus of KPMG and all the large audit firms is on audit quality. We have had a very strong and robust auditor oversight regime in place in Ireland now for many years, and it is heartening to note that our audit regulator, IAASA, has confirmed that, following its recent complete round of inspections, the quality of audit here is generally of a good standard. However, we need also to recognise IAASA’s shared role in driving quality and take actions ourselves to reinforce public confidence in audit.   “Take for instance auditors’ provision of non-audit services to audit clients. The reality for almost all Irish public interest entities (PIEs) is that auditors do not provide any consulting services and only modest levels of tax services. However, because the profession campaigned for a more permissive regime over many years, the impression was created that audit was somehow a loss-leader for the provision of other consulting services. This is absolutely not the case in the PIE market here in Ireland but as a profession, I feel we could have shown more leadership and more respect for the societal role auditors play when we campaigned for more relaxed rules,” Conall continued. “While we need to do a better job of explaining what we do to the public, audit committees can also play an important role in representing and reporting to shareholders,” Conall added. “They understand what we do and the positive feedback from audit committee chairs with regard to the quality, robustness and integrity of our work is incredibly powerful and a great endorsement of what we actually believe about ourselves. What we as auditors read about ourselves in the press is completely alien to how we see ourselves and how we actually deliver our duties to the public.” Acting in the public interest Conall is also very clear on how auditors can play their part in rebuilding trust with the public and key stakeholders; particularly focusing on anything that could damage the perception of audit independence. “That’s the core area where society wonders if we are acting in their interest, or not,” he said. “While the quality of our audit work is difficult for the public to assess, any suspicion that our independence is impaired is easily understood and very damaging to our relationship with society and we do recognise that much more keenly now. I think that all firms and PIE auditors understand that they have an incredibly important societal responsibility and that they treasure the responsibility very carefully.” The voice of business Despite the dialogue and debate surrounding the profession, Conall is extremely optimistic about the profession’s prospects for the future and members can expect to see the Institute take a more prominent position on a range of issues affecting businesses and the economy on the island of Ireland. “Chartered Accountants Ireland is the largest professional body on the island and I think anyone would say that we represent the gold standard in accountancy,” he said. “But beyond our technical capabilities and business acumen, we can also add value by commenting on economic and tax policy, and by essentially acting as the voice of business to help Government and policy-makers understand the consequences of the many options placed before them. Yes, they have to listen to many interest groups also – but when they hear a view from a body like Chartered Accountants Ireland, they take it as being balanced, informed and fair.”   And as with past presidents, Conall will also lead the Institute as it navigates the unpredictable terrain of Brexit – but he has lauded Chartered Accountants Ireland for being to the fore and discharging its all-island remit in the best interest of society both north and south of the border. “We were one of the first business bodies to publicly express a view on Brexit and although there are members who may not have supported our position, we were very strong and very public,” he said. “I also think that while Brexit will certainly challenge our ability to operate as an all-island body, it will not prevent us and my sense is that there is little appetite in the UK to diverge significantly from EU standards in any meaningful way – there is no commercial rationale to do so.”

Studies show that members of senior management are always 'switched on' for business and, unfortunately, don't feel they have the right to turn off. Is this to the detriment of not only themselves but also the business? Paul Stephens explains. Feeling the pressure at work is not a new phenomenon, but for some, advances in technology have exacerbated the issue. The ‘always on’ culture associated with mobile phones and digital media can make it difficult for people to find a healthy equilibrium between the two. ‘Always on’ culture Research from the Close Brothers Business Barometer, released last week during Mental Health Awareness Week, highlighted that 40% of all senior business leaders ‘do not switch off’, and one in three say that they never turn off their mobile phone. Those in senior financial roles reported a similar struggle to find a positive work-life balance. Two-fifths of Finance Directors and CFOs said that they feel their business requires them to be available at all times, and only a third turn off their phone in the evening or at weekends. However, those in the most senior roles were most intensely impacted, with 60% of Chief Executives and Managing Directors saying they were ‘always’ switched on for business. This continuous pressure can hurt both the individual and the business. A lack of downtime can increase stress levels, reduce effectiveness and have a negative effect on mood. Benefits for everyone Positively, there are signs that workplaces are taking note of the issue. Companies are promoting wellbeing by encouraging behaviours such as flexible working, leaving on time and taking regular breaks and holidays. However, more still needs to be done to ensure that employees at all levels receive support. According to our research, nearly a fifth of senior decision-makers say that wellbeing practices do not apply to them, and a further 13% said that they are only partially relevant. It is vital for the good of the person and the company that wellbeing and mental health initiatives are accessible to all staff, regardless of their seniority. Aside from reducing stress, ensuring that the workplace is a pleasant place to be can bring tangible benefits such as increased productivity, reduced absenteeism and a more committed workforce. Senior figures should lead by example. By working cohesively and ensuring workloads are shared, we can all improve work/life balance. Four things senior management can do to ensure a good work-life balance Keep meetings on time If a meeting is meant to start at 3pm and end at 5.30pm, stick to the agenda and work as efficiently as possible. Make sure everyone – including the most senior manager – is out of the office on time. Learn to delegate properly Be willing to trust the people you hired or work with to get the job done. Micromanaging is bad for office morale and even worse for time management. Insist on taking time off Schedule in the time you will be on holidays or unreachable and stick to it, regardless of what comes up, and respect when your staff want to take time off, too. Know that balance is different for everyone ‘Balance’ for one CEO can mean something different for another. If you don’t mind working 12 hour days but want to be free once you’re home and on the weekend, that’s OK. That’s your definition of balance. Take the time to think about what balance means for your life and how it would ideally work. Paul Stephens FCA, Dip Tax, Dip Corp Fin is the Head of Corporate and ABL at Close Brothers. *All figures unless otherwise stated are from a GMI survey conducted April 2019. The survey canvassed the opinion of 896 SME owners and business managers from several industries across the UK and Ireland on a range of issues affecting their businesses. The survey was commissioned by modern merchant banking group, Close Brothers.

There are many good reasons to operate a practice through a limited company, but doing so brings its own problems. It is now common for accountants to carry out practice through a limited company. While there are good commercial reasons to do so, complications will eventually arise through the elapse of time and the realities of company law. The result can be difficulties and, more likely than not, acrimony. Heading off trouble through a shareholders’ agreement (SA) is best. An SA in the context of a professional practice is the equivalent of a partnership agreement, but more complicated. In effect, it is best for an SA to mirror as far as possible what would otherwise be a normal partnership agreement. Partnerships are governed by the Partnership Act 1890, a concise and well-written law that has never been amended. Originally drawn up to oversee business relationships before the advent of the limited company, the Act’s relevance since the early 20th century has largely been to professional partnerships; though this was not the intended purpose. The Act itself, in effect, constitutes a partnership agreement, though it can be amended by written agreement. There is an ease to the formation, administration and dissolution of professional partnerships. This is not the case with limited companies. In time, partnerships dissolve through resignations, retirements and death, or are restructured into new arrangements through mergers, new partners and so on. However, an actual ‘share’ in a partnership has no independent status and has no title or continuity save vis-à-vis the other partners; unlike a shareholding in a limited company, which has a distinct legal status and continuity. Also, in a professional practice operating through a limited company, the ‘partners’ (i.e. the shareholders) will be paid salaries, taxed in the normal way, as compared to drawings in a partnership. All is well in trading as a limited company until, inevitably, an event happens. It may be the resignation, retirement or death of a shareholder; or it may be difficulties regarding a marital separation or a row with a difficult or non-performing partner. One way or another, the partner concerned or his/her estate will have a shareholding in the company that will continue to hold rights and entitlements. In the absence of a properly constituted SA, the disentanglement of the outgoing partner’s shareholding will be problematic and probably acrimonious. Remember too that clients belong to the limited company. It follows that an SA is essential to the good order and continuity of a professional practice. Legal advice thereon is essential, particularly to ensure that the SA does not contradict the constitution of the company and that the SA is capable of being interpreted and understood, rather than being vague and aspirational. This includes a careful review as to the ability to enforce all aspects of the SA. The primary focus of an SA in the context of anticipating events, as referred to above, falls under three headings. First, the relevant shareholding may be compulsorily acquired by the other shareholders (probably by the company itself acquiring the shareholding); second, a basis of valuing the shareholding; and third, a structure or schedule as to payment for the shareholding. Realistically, that basis of valuation is likely to be the outgoing partner’s issued share capital together with his or her share of undrawn profits. It is almost always contentious as to whether or not a profit share in an accounting practice has a capital value beyond the above basis of valuation. The existence of a limited company will make this more contentious. A short article cannot encompass the arguments thereon. The Valuation of Businesses and Shares, written by the author of this article and published by Chartered Accountants Ireland, sets out the fundamentals on valuing a professional practice. It also covers the area of partnership agreements and related matters. There are a range of issues not yet tested by experience as to professional accountants trading through a limited company. Remember that company law prevails, and not the traditional embodiment of professional practice. For example, a row with a partner may develop into a claim for minority oppression as set out in company law. A surviving spouse of a deceased partner may pursue a continuing share of the practice profits through inheritance of the related shareholding. There will be difficulties should a partner go through a marital separation. As always, there will be tax complications – quite different from partnerships – in the acquisition or devolution of shareholdings. Practitioners, late in life, can find themselves embroiled in disputes simply through the elapse of time. A careful, well-thought out SA is therefore essential. Des Peelo FCA is author of The Valuation of Businesses and Shares, 2nd edition, published by Chartered Accountants Ireland.

Niall Anderton FCA, CEO at Circle K, talks about life at the wheel of one of Ireland’s most visible brands. Always be open to change, because things will change around you anyway. That’s the key lesson Circle K Chief Executive, Niall Anderton, has learnt during his career to date. “Be open to changing your career because things will change whether it’s consumers, the industry or the ownership of your business,” he says. “There’s no point getting worried about what’s going to happen next because it will happen irrespective of what you do. Don’t be afraid of change, look for it.” And he has lived that philosophy since setting out on his career as a Chartered Accountant with KPMG in the mid-nineties. “I love fast-paced and dynamic business environments that are constantly changing.” The son of an IBM engineer, Anderton had no history of accountancy in his family but he knew from a relatively early age that it would be the career for him. “I’ve always liked working with numbers and I was very good at maths at school,” he recalls. “I really enjoyed the structure to accounting; what I liked most about it was the ability to balance things.” Having considered investment banking and becoming an actuary, he chose accountancy for its more defined career path. But that thirst for change led him to move on from auditing and into industry. “I learnt an awful lot in practice in KPMG when I was there, but I felt that I was going in a bit of a cycle. I was there for nearly five years and you were seeing the same customers, clients and challenges but you really weren’t making any helpful decisions in terms of turning the business around or driving it in a certain direction.” Niall worked with a number of retail-focused clients before deciding to make the move into that sector. “I was always aiming for the retail business because my preference would have always been to work in an industry that I could relate to,” he explains. His first role was Financial Controller with Brown Thomas subsidiary, A-Wear. “I did the Brown Thomas audit when I was in KPMG and they had a role as Financial Controller for A-Wear, and I went in there.” It was far from an easy option. “Retailing is tough,” he says. “Whether it’s in finance, operations or buying, what might look glamorous at the front in terms of the models and fashion is very hard work behind the scenes. That’s probably one of the things I learnt from going into the A-Wear business. A-Wear was at a size that meant I learnt a lot from working with the operations guys and the buying guys and I got a lot of exposure to a range of stuff. I was in there doing a negotiation on the leases, walking the streets with the operations guys, going out to China to see how the buying was done, so I got huge exposure to how the business was run and was able to influence decisions. You don’t always get the broad experience that I was very lucky to get.” He moved on from A-Wear to logistics firm, Target Express, before being asked to join telecoms company O2. “The Finance Director of Brown Thomas went into O2 and he asked me to come across because there was an opportunity to look after their retail business and bring it forward. I spent three years in a non-finance role, which was very interesting. You’re promoting a product which is a commodity at the end of the day, so you have to put a lot of marketing behind it. I got lots of really good experience and it was very enjoyable as well.” From there he moved to Primark as Finance Director just as the business was making the change to becoming the slick multinational operation it is today. “Primark is a brilliant business, I really enjoyed it. The cultural change from when I went in was huge in terms of moving from a very old-fashioned, typical retail business into a multinational fast-paced business was incredible. Huge credit to what they’ve done in there.” But then Topaz came calling with the missing piece of the jigsaw. The one thing he hadn’t done so far in his relatively short but highly varied career was mergers and acquisitions.  And what timing. Topaz was just about to acquire the Esso business in Ireland and within 10 months, had itself been acquired by Canadian firm Alimentation Couche-Tard. “I gained invaluable M&A experience within 10 months of joining.” Incredible and a little fraught. Topaz had to deal with the Irish Competition Authority in obtaining approval for the Esso deal on one side while at the same time, negotiating the sale of the enlarged company to Couche-Tard. “We eventually got clearances for the Esso business on 1 December and we agreed to sign everything on 2 December. It was incredible. You can imagine the late night we had on 1 December when we were still negotiating with the guys in Canada and were just closing the deal with the Esso guys in Europe.” Within months, he had become CEO of Topaz, which was about to rebrand its retail operations as Circle K. He is very modest when it comes to that appointment. “I had the experience and the finance background as well, I was probably seen as the safer pair of hands initially.”  The transition from CFO to CEO allowed Niall to develop a more wide- ranging role encompassing all areas of the business across retail, brand, strategy, strategic HR, understanding changing consumer demand and crucially, organisational change by preparing to lead the organisation through an impending and significant period of change. Two years of groundwork went into the Circle K rebrand. “The first two years were spent getting the systems lined up. We had to change our ERP systems, we had to change our structures, our reporting line, basically everything had to change. That was a lot of hard work in terms of alignment and understanding it from a people point of view, understanding how the business works and the cultural changes and so on. That all had to be done in the background. “We started on the rebrand last April and that’s been very quick – we’re doing eight a week – but that’s the last piece if that makes sense. That’s when the consumers see it, but there was an awful lot of work to get us to that position in the first place. I am very grateful for the support I received along the way from my colleagues on our exceptional and energetic young leadership team, and for the hard work and dedication of our wider team at head office and across our network of sites nationwide.” The filling stations are just part of the business. There is also the aviation fuel side, the terminal business in Dublin Port, and the commercial business supplying fuel oil distributors and so on. But Niall is keenly aware of the challenges facing a traditionally low-margin business in the fossil fuels sector. “The fuel business is traditionally a very low-margin, high-volume business,” he notes. We are very dependent on getting customers in as it is a very competitive industry. We have tried to diversify our offering over the past number of years to a more food-based offering whether that’s coffee, food or car wash.” That has seen a €50 million capital investment in the brand and the add-on consumer offers. “I see the business as being much wider than forecourts and it’s all about getting the person to buy the coffee from us rather than making it at home.” Brexit is a challenge in the short-term in terms of its potential impact on consumer spending, but Niall is looking further than that. He mentions a speech by Minister for Energy, Richard Bruton, where he stated that all energy must be from renewables by 2050. “It will be very interesting to see how we get there. The growth of electric vehicles is both an opportunity and a risk so we’re looking firstly at how we meet that demand – there are Tesla and other chargers on our sites, and we have the biggest network in the country. We’re also looking at how we work with other electricity providers to potentially ‘white label’ our products into people’s homes. “Obviously, the challenge for us is to really replace the main footfall driver because people today go to forecourts to buy their fuel and then buy products in the stores. We now need to turn it on its head so that they buy products, and then they get fuel, so we become much more of a retailer than a fuel provider. And as electrification becomes more prevalent, you’ll be charging your car at home or at the office and what does that mean for our business? We need to stay relevant, but the one good thing is that we’re thinking about it now and you won’t really see the impact of this for another five or six years in Ireland. We have time on our side, which is good.” And his own future? “We continue to make Ireland more relevant for the global Circle K business, which is really important,” he says. “I think for us to continue holding the market position we have, developing new offers and so on. In my capacity as CEO of Circle K, I’ve joined the National Council of IBEC which is important for me in the context of the wider business environment Circle K is operating in and as a business, we have much to contribute both from the point of view of our experience in recent years as well as our plans for the future and the opportunities we see.”

Tony Óg Regan ACA, a performance psychologist and former inter-county hurler, outlines the key lessons you can glean from top athletes and teams. Develop the person first, employee second Personal purpose What difference do I want to make in the world? How do I add value to my relationships, community and organisation? Such questions are tough to answer, but purpose fuels our drive and energy and gives us clear direction and meaning in life. A purpose is your big ‘why’ and provides meaning about why you do what you do, why you make the choices you make and why you appreciate what you have. When we have big decisions to make, be it personal or professional, asking yourself ‘Why I am doing this?’ is a great place to start. Personal values What is my internal compass for making decisions? How do I judge what is right or wrong? What behaviours are important to me? And how do I want to demonstrate them? The top sportspeople and leaders have a very strong sense of who they are and what they stand for. They are true to themselves, regardless of the situation. A value that is very strong in most leaders is honesty. They speak openly about what was done well and what wasn’t delivered on, and why. Sometimes we can get caught up in making plans, to-do lists and goals, but we shouldn’t overlook the question: who do I want to become? Personal strengths and skills  Awareness is vital in identifying your main skills and strengths. In sport, we look at individual and team goals and behaviours. What are the key performance indicators in your role and what are the key behaviours you strive to demonstrate every day to make these happen? It is important to have a clearly defined measure of success for people, as we thrive on making progress and working towards a goal. Self-reflection on our skills and behaviours is also critical while feedback from respected peers crystallises the learning. Personal goals  Having a goal and making progress towards goals is what fulfil is us; it stops us stagnating. We need to continually adapt and improve, but the challenge is to simultaneously meet the needs of clients, customers and the organisation. Setting out specific goals in our personal and professional life will mean that we consistently grow and add value. Many sportspeople perform on a Sunday, but they know the importance of preparation and practice to enable their best performance. As the Spartan saying goes, “Sweat more in practice, bleed less in battle”. What practices or routines do you have to improve your work performance? Personal energy  Self-awareness is critical for any leader. Knowing yourself, the impact your behaviours have on others and recognising the emotional moods/needs of others is a fundamental skill all top leaders possess. The energy you bring or don’t bring into the team affects the team’s performance and people’s trust in you. Leaders must expand and renew their four dimensions of energy – physical, mental, emotional and spiritual – so that they can perform at their best and make the right decisions. There will always be challenges, but our attitude and how we respond to adversity will define our results.   Developing high-trust teams The framework I use when building high-performance teams consists of these components: Right compass – vision, values, strategy, goals, roles and responsibilities; Right people – capability, character and capacity; and Right cohesion – how we work together, social and task cohesion (i.e. team dynamics). Team purpose In Viktor Frankl’s book, Man’s Search for Meaning, he states that “he who has a strong enough ‘why’ can bear any ‘how’”. He survived eight concentration camps by focusing on his ‘why’ every day. He tapped into his humanity and by helping others, he redefined his purpose. So, what difference do you wish to create? Team values Core values are the fundamental principles or beliefs of a person or organisation; their views of what is important. Our values affect our decisions, goals and behaviours. They are standards that guide our judgements, actions and attitudes. These guiding principles dictate behaviour and can help people differentiate between what is acceptable and unacceptable behaviour. Regardless of the situation or the scoreboard, the team should live these values, the non-negotiable behaviours we expect from each other. What we do when no one else is watching doesn’t guarantee a win, but it does give us a better chance of winning. A team that has a strong value system, in my experience, is more connected, committed and accountable. Team goals In working with elite sports teams, I break down the route to success into task-focused and training-focused goals during the week, and process-focused and performance-focused goals for match day. When we get these pillars right, the score takes care of itself. In business, we set daily, weekly, monthly, quarterly and yearly goals. What we can learn from sport is to review these more regularly. When I played for Galway, every Monday we reviewed our key performance indicators against our targets. We identified what we did well, and we were honest when we underperformed and took responsibility in practice to improve on this. In business, however, we sometimes do only yearly reviews with staff. It has been shown that feedback improves performance by up to 50%, so why not tell your staff more often what you appreciate about them, what they can do more of and why? Team cohesion A key element of successful teams is strong, honest and trusting relationships among team members. When an individual comes under pressure, he or she relies heavily on teammates to support, encourage or challenge him or her to higher effort and performance. The best teams don’t leave each other isolated at any stage; they are aware when someone is down or struggling. They recognise that when someone is struggling, the team struggles. When someone is frustrated, the team is frustrated. Creating an environment where people feel valued, trusted, connected and respected is how we will get the best out of each other. Leaders must strive to make people feel this way. High-trust teams are comfortable displaying their fears and vulnerabilities; they aren’t concerned about the judgement of others. They communicate openly and positively challenge each other to do better. Above all, they care for the people they work with. Honesty and accountability In sports teams, we are constantly under the microscope. 82,000 people attend the All-Ireland final each year with millions of viewers worldwide. After each game, we review our performance on video. If you were videoed for a week in work, what would people see? Would you be proud of the effort you put in, how you communicated with colleagues, and the skills and behaviours you demonstrated? Sports stars are not afraid to ask hard questions of themselves and their teammates. When we underperformed, we got help from our coaches to improve our skill deficit. Does your organisation provide adequate coaching to staff if there is a skills deficit? Summary Developing individuals and teams requires a holistic approach. As individuals, it is important to identify key strengths, skills and development areas. It is not enough to be good technically; that is only 20% of your role. The 80% that we must continue to review and develop is our people skills, learning and behaviours. Having a strong culture of feedback in your organisation is vital to raise responsibility in people. Building high-performance teams takes effort but by putting the key pillars in place (right coordinates, right people and right team dynamics), you can create repeatable sustained performance and success year-on-year.   Tony Óg Regan ACA is a performance psychologist and has played at the highest sporting levels with the Galway senior hurlers.

Blockchain might be the trend du jour, but it is just one part of the distributed ledger  technology revolution. I am going to be completely honest: I am not a blockchain expert. But I do have a strong interest in how blockchain technology is going to change our profession. In 2017, I joined a MeetUp group – Blockchain for Finance – to learn more about blockchain. This group hosts regular networking events throughout the year with speakers from various companies using distributed ledger technology (DLT) to create solutions for the problems and inefficiencies facing businesses today. As part of my research for this article, I spoke with two blockchain company founders to find out more about their respective companies and better understand DLT’s practical applications for businesses. QPQ QPQ is a company creating a 21st century digital financial network which, according to founder Greg Chew, promises to reduce transactional costs by automating and digitalising the transaction processes with proprietary smart legal contracts. Greg, a barrister by profession, explained that for true automation of a transaction, one must be able to govern what it does and how it does it. The ability to govern a transaction is central to what QPQ aspires to create and the company has developed its own operating governing code engine (OGCE), which will enable it to create reg-tech smart legal contracts (SLC). The OGCE will convert a contractual document into operating code (i.e. the SLC). It will also include any other items that impact on an entity’s dealings such as regulations, tax, logistics and customs, for example. Having these additional items embedded in the operating code ensures compliance throughout the transaction. Greg outlined the following example to illustrate how logistics could work using QPQ’s financial network (logistics being only part of the contractual document informing the SLC). Logistics example Imagine your company orders 100 barrels of mango concentrate from India, to be shipped to the UK. While the ship is at sea, a storm destroys 20 barrels. Using Internet of Things (IoT) technology, a signal will be broadcast to QPQ’s OGCE to inform the SLC in real-time of the accident. Before the ship arrives in the UK, at which point the accident would ordinarily be discovered, the SLC will already have determined that the following actions be taken: Contact the supplier to inform them of the accident and re-order 20 more barrels; and Instruct the shipping company to return the 20 destroyed barrels before entering the UK, thereby avoiding paying unnecessary customs duty. In this example, the additional transactional administration was removed and unnecessary costs were avoided. QPQ is conducting extensive research with accountants to ensure that its development process considers the specific requirements of different industries, sectors, geographies and regulations. To read more, visit www.qpq.io Piprate Piprate is an Irish insurtech start-up using blockchain to solve the insurance industry’s fundamental data-sharing problems. I met with Stanislav Nazarenko, co-founder and CEO, to find out more about Piprate’s plans to revolutionise the insurance industry. Stanislav, who worked in the insurance industry for several years, explained that the industry has a lack of trust between parties due to the manner in which data is shared. As a result, a significant number of processes are inefficient. For example, roughly half of a loss adjuster’s time is spent confirming the facts of an insurance claim. Piprate uses DLT to create a platform for the insurance industry, which allows all parties involved to share data in a more efficient, transparent and trustworthy way. Stanislav added that creating such a platform comes with many challenges, which DLT helps them overcome. Data will be spread around a single network (in data wallets), so no one party will have access to the entire system. In fact, parties will only have access to the data they need to perform their function (your home insurance broker doesn’t need to know if you have penalty points, for example).By having one definitive and reliable source of truth, Stanislav explained, you will enable efficiencies and as a result, insurance could become value-add for businesses and individuals alike. Consider the following examples: Insurance renewal: instead of businesses filling in various renewal forms, which are labour intensive and inefficient, Piprate’s platform will share data with multiple parties simultaneously to provide a quote much quicker; and Preventative measures: if you have a cybersecurity insurance policy and install various software programmes to mitigate the threat, this data could be shared to reduce your premium. I asked Stanislav if Piprate’s platform could lead to cheaper insurance premiums in the future. He informed me that the platform will create efficiencies and reduce operating costs – whether these savings will be passed on to customers remains to be seen. Conclusion Blockchain, or DLT, promises to make Chartered Accountants more efficient by removing the significant amount of time currently spent verifying the information provided to us. As a result, we will be able to reinvest this time to work on value-add activities for the clients and organisations we serve. Five things you need to know about blockchain It is not a cryptocurrency, it is a type of DLT The common misconception is that blockchain is a cryptocurrency. Blockchain is distributed ledger technology – the underlying technology that enables cryptocurrency to exist. There are various types of distributed ledger technology and blockchain is just one example. It gives you control of your data and has enhanced security The average consumer isn’t aware that GDPR has made them the owner of their personal data. DLT will give consumers even more control of their information and allow them to manage who has access to it. Your data will be more secure as information is stored across a network of computers instead of on one single server, making it very difficult for hackers to compromise the transaction data. In any industry where protecting sensitive data is crucial, DLT can change how critical information is shared by helping to prevent fraud and unauthorised activity. It increases efficiency and reduces costs DLT data is more reliable because the record-keeping is completed using a single digital ledger that is shared among participants. You don’t have to reconcile multiple ledgers, which enables transactions to be completed faster and more efficiently. It is more transparent and trustworthy DLT provides a verifiable and auditable history of all information stored on a dataset. All network participants share the same documentation as opposed to individual copies. That shared version can only be updated through consensus. In addition, DLT removes the need to trust third parties because now, you can trust the data. Accounting for crypto-assets Blockchain and DLT have enabled the creation of new crypto-assets (such as cryptocurrency, tokens, coins and so on), which is a constantly evolving and fast-growing area. As such, there are no specific accounting standards in place to deal with crypto-assets. This will provide a challenge for anyone preparing accounts for entities that hold crypto-assets. Michael J Walls is the Founder and CEO of Dappr and the 2018 Young Chartered Star.

While anyone can present themselves as an expert on share valuations, integrity is the hallmark of the professional. A Picasso painting may be valued at €50 million; your house valued at €1 million. These valuations have no underlying measurement, save the willingness – through supply and demand – of interested parties to own the asset. The valuation of shares is different, however, in that there are underlying practice and measurement norms. Valuation permeates all aspects of business. It is the measure of capital value on stock markets across the world; the mainspring of wealth and its creation; and the store of value for the economic well-being of a nation. It’s your pension fund. In 2010, Chartered Accountants Ireland published The Valuation of Businesses and Shares by the author of this article. A second edition followed in 2016. Since publication, readers have enquired as to numerous aspects of valuation. This article is a stock-take of these enquiries. The hallmark of the professional valuer A major category of enquiry is share valuation related to legal wrangling of one kind or another. This includes shareholders disputes, marital separations, acquisitions or investments gone wrong, the interpretation of share rights and entitlements, and so on. Some are complicated or have poor paperwork. In my experience, the accepted practice in share valuations is poorly understood. In all circumstances – without exception – integrity (meaning objectivity, independence and impartiality) is the hallmark of the professional valuer. Regrettably, I have seen numerous instances of ‘hired gun’ valuations where the intention is to please the client by presenting an unjustifiably high or low valuation to suit the circumstances. Happily, in my experience the valuer in these circumstances has rarely been a Chartered Accountant. There are no statutory guidelines or restrictions as to presenting oneself as an expert on share valuations. Quite a few individuals and organisations present themselves as experts. Some are competent; many are not. The financial crash starkly illustrated how few investment advisers understood valuation. The nonsensical role of EBITDA Another category of enquiry relates to earnings before interest, tax, depreciation and amortisation (EBITDA). A consistent misnomer, commonly misunderstood or misdirected, is the use of EBITDA in valuations whereby valuations are based on a multiple of EBITDA. The use of EBITDA in valuations is often presented as some form of sophisticated expertise. It is, in fact, nonsensical. Please refer to my article on EBITDA in the August 2017 edition of Accountancy Ireland. For the sake of good order, should any reader feel aggrieved as to my dismissal of EBITDA, please write to me quoting even one textbook approval of EBITDA, any academic study supporting it, or indeed any evidence at all as to the validity of EBITDA as a method of valuation. I will publish it. Valuing different classes of shares A regular category of enquiry – probably the most common – relates to the valuation of different classes of shares. There are many disagreements as to which shares have what value in companies with several classes of shares. There may be different entitlements as to dividends, voting rights and/or assets on a winding up. There may be share options or loan conversion rights which, if exercised, would alter or diminish the rights of existing shareholders. Sometimes, because of restricted rights, a particular class of share is valueless or heavily discounted. The ensuing row is that this likely outcome was not understood by the investor at the outset; leading to allegations of misrepresentation. The allocation of a company’s value across different classes of shares is usually a difficult exercise. It would be better if this aspect was given proper consideration through simpler share structures in the first place. The ‘grievance’ valuation The final issue that regularly appears is the ‘grievance valuation’. An aggrieved shareholder demands that the valuation is set at an unjustifiably high level to including compensation or punishment for the alleged grievance. One or both parties in a dispute may be difficult personalities, with rational thought and reasonable behaviour proving remote in the circumstances. Familiar refrains, as expressed to the writer, include: “I have worked there for X years and you say my shares are only worth X euro”; “This was my father’s business and you are insulting him (or his memory) with this valuation”; and “John Doe is a crook and your valuation is letting him away with it.” One can only explain patiently that the valuation and the value of the grievance, if any, are separate matters. A willingness to listen and explain confirms the hallmark of the professional valuer – back to what was said about integrity at the outset of this article. Des Peelo is author of The Valuation of Businesses and Shares, 2nd edition, published by Chartered Accountants Ireland.

If your company is considering expanding overseas, there are three critical issues to address. Expansion can be an attractive strategic option for businesses, whether mature or start-up, and there is significant motivation for both investors and businesses that are willing to accept the capital opportunities that exist. This willingness must include openness to the impact the investors can have on the business and the drive that investors may have to expand internationally, with all the change that can impose – both positive and negative. The opportunity for this strategic option is significant as, according to the Irish Venture Capital Association, over €600 million was invested by foreign venture capital firms in Irish start-ups in 2017 alone. With foreign equity capital, there is added pressure to expand into foreign markets. This can be driven by investors’ ambition to achieve economies of scale in production and sales by accessing foreign markets. It can also be driven, however, by the need and/or want of the management team to be physically closer to the new foreign investor. In selecting a start-up or business in which to deploy its capital, the foreign investor will go through the due diligence process. They will inspect the health of the business and determine the company’s projected growth, and compare it with their desired investment returns. The promises made at this point can determine whether the company should pursue international expansion to deliver the forecasted revenue growth. To deliver the anticipated capital investment returns and avoid being one of the seven-in-ten start-ups that fail due to premature scaling, according to Forbes, companies must focus on three key issues. They are: product-market fit, which is too often assumed; office expansion, which must be tied to key strategic initiatives; and cultural and operational considerations, which concern the environment and what people do in it. Product-market fit A primary consideration for a company is the identification of a market for its product or service. According to Business Leader, however, 42% of small businesses fail because there is no market for their product or service. For a business to thrive, it must first identify a problem it is uniquely positioned to solve. Product-market fit can be easy to define, but harder to physically identify. One can identify success in product-market fit when the product is delivering its value proposition to those first few customers; when the customers are promoting the product and encouraging further purchases through word-of-mouth; and when the product is selling faster than it can be distributed or shipped. As venture capitalist, Marc Andreesen, once said: “product-market fit is the only thing that matters”. Having completed the product-market fit phase, the next step is to explore, research and frame markets that appear similar to the existing customer profile. Identifying markets with similar behaviours to the existing market will contribute significantly to – or even determine – the success or failure of the expansion. It is obvious, but critical, that thorough due diligence and research into a similar market space is completed prior to any significant investment of time and capital in international expansion. Expanding teams and offices For any international expansion to be effective, there must be clarity in the strategic reasoning such as product-market fit or strategic fit, specifically in relation to human resources. The lure of acquiring new talent is very attractive and the prospect of gaining comparative advantage by leveraging skills in other markets through expansion is often a strong strategic objective. This is why Ireland remains an attractive destination for US companies seeking to expand and establish a European presence.  Indeed, Ireland is the European headquarters for some of the world’s largest technology companies including Hubspot, LogMeIn, Facebook and Google. The country’s educated and technologically perceptive labour force can facilitate growth – and that’s before you factor in the country’s effective tax laws and ready access to the single European market. Irish businesses, on the other hand, often look westward to drive increased revenue through access to the large US market, which is currently very attractive for enterprise and consumer software businesses. To facilitate the market fit, the fulfilment of factor and/or the resource needs, start-ups must focus on the people contribution. They must therefore obtain the right skills; establish a support team in the new country; and develop a centre of excellence in that area. Skills gaps in the areas of manufacturing and mass production are easier to satiate by outsourcing, in particular in non-high-tech or non-high-precision products. The aforementioned support-team approach suits companies that require a customer relationship presence without duplicating all services, and with a focus on local customer and marketing support. Customers generally prefer companies to establish a local presence as this provides the customer with clear access to the product or service provider. The third approach is to establish centres of excellence in cities with particularly strong labour forces, in order to drive the company’s research and development initiatives. Edinburgh, for example, is a burgeoning hub for artificial intelligence (AI) talent thanks in large part to the ongoing efforts of universities such as Heriot-Watt University. Scalable company culture  As a company expands its physical footprint, the day-to-day running of the organisation must evolve. The business structure will have various teams in different locations and different time zones, with potentially different perspectives on the organisation. As growing a business involves a group of people coming together to achieve a shared vision of how a product or service will impact on a market, conflict may arise in terms of people, processes, systems and structures. While trying to achieve the best product-market fit, management must also create a culture that can evolve while maintaining the organisation’s core values and purpose. For people to effectively execute their function in a growing business, individuals must have complete clarity on the reporting structure. Keeping people in specific silos can often be counter-productive when it comes to solving the hardest problems, but management must ensure that individuals are not working on too many teams simultaneously or getting stretched too thin. Likewise, the inverse is also true. Management must be alive to the prospect of redundancy between teams, leading to unclear roles and despondent employees. Communication is the key to striking the right balance, and this involves more listening than talking. Even the virtual experience of presence – using live digital feeds, for example – can connect people different locations in a meaningful way. Technology offered by Slack, Skype and others have made it easier than ever before for colleagues in different countries and time zones to communicate effectively, and thereby enabling a company to scale. Invision, for example, has a completely remote workforce. This intangible work environment and culture is built around technology and transparency, which facilitates communication and collaboration. As good as these collaborative and communication tools are, there is no real replacement for being face-to-face with a colleague or – more importantly – a customer for building relationships. 70% of communication is said to be non-verbal and a lot can get lost in translation, as technology cannot give the feel of the environment and always creates a sense of distance unless the relationship is long-term and very well-established. Businesses must therefore balance the need to combine the capitalist fact of return on investment with feeling in satisfying the needs and wants of clients and customers. It is imperative that a company with teams in different time zones works to create an environment or culture that promotes collaboration, thereby avoiding a ‘them and us’ culture. Intercom provides a good example. In the early days of expansion, Intercom installed a camera in its San Francisco office and transmitted live footage to a screen in its Dublin office to help colleagues in both locations seem that bit closer. This approach has privacy and GDPR issues attached, of course, but it can create a perception of continuous presence and connection. Ensuring that project teams, or ideally the entire company, meet regularly is key to building strong relationships that endure. It is important to budget for these off-site gatherings and while they may appear in the financial statements as a cost, the positive impact may be seen in the retention of a key client or the improved delivery of a project, for example. Alternatively, colleagues may develop a joined-up approach to land a new account while working from different sides of the world. What would that say to a prospective client about the company’s cohesion and approach to integration? Conclusion International expansion requires a thoughtful and strategic approach, ensuring that expansion is commenced for the right reasons – be it to expand the sales efforts in a different market or to capture key talent in order to gain a competitive advantage. For any expansion to be successful, the company’s structures and processes must chime with the company’s overall culture. The key to solving most expansion-related issues is the company’s mission and vision – everything should stem from this. David Andreasson is Director of Finance and Operations at Voysis. Fearghal McHugh is a Lecturer in Business Leadership and Governance at Chartered Accountants Ireland and GMIT.