As Feargal McCormack takes the reins as President of Chartered Accountants Ireland, he shares his thoughts on the quality of the Institute’s membership, the importance of positivity, and his role as the conductor of the orchestra. In the corporate world, people often talk about their “core values” or “guiding principles” but few people live out their philosophy as comprehensively as Feargal McCormack, Managing Director at PKF-FPM. Feargal, who recently succeeded Shauna Greely as President of Chartered Accountants Ireland, is a firm believer in the philosophy of St Francis of Assisi – it is in giving that we receive – and this principle has shaped not only his work ethic, but also his leadership style and sense of value. Addressing the 130th Chartered Accountants Ireland AGM, the Warrenpoint native echoed the sentiment of St Francis when he outlined his main objective for his presidential year – caring for members, staff, trainee students and the community. While his evident sense of empathy could be attributed to the accumulated learnings from 27 successful years in business, it has its roots – in part at least – in his own family’s personal tragedy. “I went over a few hard stones on the way,” he said. “Our first child, Eimear, died after four days and our second child, Seamus, is severely autistic and requires round-the-clock care. Then, when my wife Anne was pregnant with Ruairi who is now 17, she suffered a brain tumour which she thankfully recovered from fully. “Although you wouldn’t want them or go looking for them, those experiences do prepare you for life. They put things into perspective and as a result, I’ve never lost a wink’s sleep over work,” he continued. “I love my work and I love life. From the outside, people would say I’m a reasonably busy person, but I love every moment of it.” A high achiever To say that he is “reasonably busy” could easily be described as an understatement given the amount of time and expertise he has shared with organisations throughout the island. From Special Olympics Ireland and his beloved GAA to Ulster University Business School and the Prince’s Youth Trust, Feargal has balanced his role as Managing Director of an award-winning mid-sized accountancy firm with various extracurricular roles – something he is keen to encourage in those who work with him. “I’ve always been able to mix work and home life with extracurricular activity, and I feel that both work off each other. You have to have balance in life, but interaction is important,” he said. Indeed, Feargal attributes his involvement in activities beyond the workplace with his ability to succeed as a young leader. “When I joined the Industrial Development Board, I was the youngest ever Principal Officer in the Northern Ireland Civil Service at 26 years of age,” he said. “At that stage, all of my subordinates were considerably older than me, but extracurricular activities gave me the experience to deal with that because from my teenage years, I was secretary or chair of committees where people were, in general, considerably older than me – old enough to me my father, I’m sure. “I believe that it’s key in any organisation to encourage your team to get involved in areas they’re comfortable with – whether that’s charity, sport or the church, for example – because they can then bring the skills they develop back to the workplace. I genuinely don’t believe that you can turn the clock off at 5pm so if you’re not a caring person after 5pm, you won’t be a caring person before 5pm.” Putting people first Feargal encapsulates this idea in another life-long mantra – “I don’t care how much you know until I know how much you care” – and he hopes to bring this to life within the Institute during his presidency. “For me, continuity is key. I’m a member of the Institute’s oversight board and I can’t recall one decision in the last three years that wasn’t unanimous, so there won’t be any solo runs,” he said. “I only see a slight change of emphasis to increase our focus on becoming more caring and people-focused. That’s very consistent with our core values of integrity and ethics so I will be encouraging us, as an organisation, to walk that vision.” The ultimate aim is to increase the Institute’s relevance amongst its membership and create a team of 26,000 brand ambassadors who will raise the profile of Chartered Accountancy – and Feargal plans to lead this charge. “I’ve always found that the key to happiness is looking outwards,” he said. “And throughout the Institute, there are many role models across many sectors who – both in work and beyond work – are making fundamental, positive differences to the societies in which they live. “I hope to have an opportunity to shine a light on those role models but to do that, it’s important to get out there and meet those members,” he added. “So, over the next 12 months, I will be busy visiting companies and schools throughout the island. You’ll also see Council members hosting events where the President can meet members, and this will give us a great opportunity to tell the story of how Chartered Accountants make a difference to society because ultimately, that is our key contribution.” Building the Chartered brand Feargal also plans to enhance the external profile of Chartered Accountants and build on the “excellent work” currently under way to raise the Institute’s voice in the business community and beyond. While this is a key ambition for his presidency, Feargal sees himself more as the “conductor of the orchestra” who brings the best out of people. “The diversity of our membership is our greatest strength – diversity not only in skillset, but geography also. There are some areas I’d like to explore a little bit further, including the diaspora of international members,” he said. “I would personally like to chair a taskforce to assess how we can best make use of our international dimension both for our membership on the island of Ireland and also, as a professional network for our overseas members and younger members wishing to work abroad.” Another area of focus for Feargal is the parallels between sport and business. “Nobody really wants to speak to a 58 year-old man promoting our profession, so I would like to see Chartered Accountants who are also involved in sport promoted as role models for the profession. It will be interesting to hear how they blend their Chartered Accountancy studies and career with success in the sporting arena; how that discipline of study and integrity in the workplace can be transferred onto the field. There’s a lot we could learn from this group.” Adapting to change Learning from each other feeds into another important issue for Feargal – enhancing the Chartered Accountant’s capacity to adapt to change, which is more important than ever in the context of a volatile international landscape. “If we think about leadership in the corporate setting, it’s all about the ability to adapt – to be agile and change,” he said. “There’s no doubt that we’re in a very challenging market environment but in challenging environments, there are always exciting opportunities. “We should therefore have positivity in the breadth of our membership. We can’t control what happens around us, but we can control how we respond and I firmly believe that there is no problem out there – however and whenever it arises – that we as an Institute cannot deal with,” he continued. “We have to prepare ourselves and be in a state of readiness, but there is nothing we should fear.” Feargal does acknowledge, however, that technology, regulation and governance will bring many good things, but they will also bring challenges for the profession. “Am I confident that these are issues that we, as an Institute, will address? Yes, I am. We may have to work in collaboration with other accountancy, professional and – in some cases – statutory organisations, but are we up to that? We certainly are.” Indeed, this drive for agility extends beyond qualified members and into the Chartered Accountancy syllabus, with a number of changes in the pipeline – a responsiveness that Feargal is keen to nurture. “Two new electives will soon be introduced for FAE students and I think that’s the start of a trend,” he said. “We’re also seeing responsiveness in the enhancement of technology in our exam process and in the flexibility we can now offer to students. All these factors will help us address challenges as they arise. “The most important thing for the Institute is to listen, and then move forward with pace. I suppose I would have a reputation – rightly or wrongly – for getting on with it and if we make a mistake, we go back and correct it,” he added. “If I have one frustration in life, it’s too much talking and not enough action. I firmly believe that action is the way forward – yes, conduct research but get on with the job quickly and learn from your experience.” He added, “I’ve only seen positive things in the last 12 months but I can assure you, if I come across any negativity I will ask people to desist or leave the room because I believe you must be solutions-focused. I’ve been known on quite a few occasions to stop meetings as in my view, negativity has no place in any progressive and forward-looking organisation.” The challenges ahead Despite the challenges ahead, the Institute is in a very strong position according to Feargal – a testament, he says, to the leaders that preceded him as President. “The Institute’s current churn rate is minimal and the fact that members who previously terminated their membership are now returning as members demonstrates better than anything else the value of being a member of our great Institute,” he said. “I would certainly like to encourage the Institute to continue the very good work that’s currently under way. We have made very significant progress in recent times and while we have achieved much, we must continue to work to ensure that we remain relevant to our members. Therefore, it’s always good to try new ideas and I certainly see us continuing to innovate because, in my experience, you either innovate or evaporate. “Finally, I am very honoured to become President of Chartered Accountants Ireland. The Institute has been fortunate in the quality of its leadership and I hope I can carry on that tradition,” he said. “I am also very conscious that it is the 130th year of the Institute and while we have come a long way in 130 years, the journey has only just begun.” Feargal McCormack is Managing Director at PKF-FPM and President of Chartered Accountants Ireland.

What can AlphaGo-Zero’s reinforcement learning process teach teams about their actions? Towards the end of 2017, we were introduced to AlphaGo-Zero, arguably the strongest player (albeit a virtual one) in the history of the ancient Chinese game of Go. Previous versions of AlphaGo learned to play by absorbing details of thousands of human amateur and professional games, but AlphaGo Zero learned to play simply by playing games against itself, starting from completely random play. It learned to play a game in which there are more theoretical moves available to players than atoms in the known universe by learning solely from itself. After 40 days of self-learning, AlphaGo-Zero defeated the previous human-champion-defeating version of AlphaGo by 100 games to 0. And on day 21, it reached the standard of the top human players of all time by achieving ‘grand master’ status. In artificial intelligence (AI) terms, this is called ‘reinforcement learning’ – a learning process in which “the learning agent has to decide how to act to perform its task. In the (intentional) absence of existing training data, the agent learns from experience. It collects the training examples (this action was good, that action was bad) through trial and error as it attempts its task, with the goal of maximising long-term reward”, according to Vishal Maini, a machine-learning expert. Creating its own effectiveness One of the big lessons we have learned from Simon Sinek, author of Start With Why and Leaders Eat Last, is that, when we are making a presentation, delivering a training intervention or engaging in any activity where we need the buy-in of others, we need to start with why. Indeed, the idea of AlphaGo-Zero ‘creating its own effectiveness’ provides a compelling ‘why’ when discussing team coaching programmes and interventions. Why do we coach teams? Because it puts learning from experience, with the goal of maximising long-term performance levels, right at the centre of the team’s agenda. It challenges the team to decide how to act in order to best achieve its commissioned purpose. It empowers the team to create its own effectiveness. As Peter Senge points out in his excellent book, The Fifth Discipline, “we learn best from experience, but (sometimes) we never directly experience the consequences of our most important decisions” as often the primary consequences of our actions occur, as he puts it, “somewhere in the distant future or in a distant part of the larger system within which we operate”. In unpacking this thought, Senge introduces the concept of learning horizons, which he describes as the “breadth of vision in time and space within which we assess our effectiveness”. He claims that “when our actions have consequences beyond our learning horizon, it becomes impossible to learn from direct experience”. The role of reflection However, a growing body of evidence suggests that learning horizons can be significantly expanded through strong, reflective practice and it is in this area that team coaching programmes and interventions can be successfully utilised. Kouzes and Posner in The Leadership Challenge demonstrate that regular exploration of the question “what can we learn from this?” can triple team effectiveness when compared to those who rarely or never reflect in this way. Thus, not only does “what can we learn from what just happened?” become a stock question in a team coach’s tool-kit, but it is frequently expanded into the wonderful question, “what can we learn from what just happened that will improve life for your customers’ customers?” This creates an impetus within the team towards thinking more systemically; towards locating itself within its wider organisational context, which in turn delivers much greater “breadth of vision in time and space”. In so doing, the coach is empowering the team to more deeply develop the capacity to take perspectives, view authority in new ways, and see shades of grey where they once saw only black and white. Complexity, ambiguity and change Today’s organisations want their workforce to handle complexity, ambiguity and all the accompanying stress involved in working in an environment of constant change. However, coping well with such issues is not simply a skill anyone can acquire, but more a way of living in the world. Robert Kegan, author of The Evolving Self, calls this process one of “meaning making’ which, if you think about it, is pretty much the challenge that our artificially intelligent chum AlphaGo-Zero was faced with when presented, sans instructions, with a 2,500 year old Chinese game that offered more potential moves than the number of atoms in the known universe! Volatility, uncertainty, complexity and ambiguity have become ubiquitous working companions. They are ever-present members of every team in every organisation, presenting us all with challenges that even five years ago would not have seemed feasible. It is within that working environment that our teams have to begin to, as the psychologists put it, “construe, understand, or make sense of events, relationships and the self.” New terrain This is new terrain for most and while many teams may not be presented with quite as many move options in each new situation as there are atoms in the known universe, there are a lot more options than there used to be. Teams therefore need to inculcate this ability to constantly self-teach into their DNA by “retaining, reaffirming, revising, or replacing elements of their orienting system to develop more nuanced, complex and useful systems”, as noted by James Gillies in The Meaning of Loss. To do that, they need to learn to reflect, as Peter Hawkins puts it in Leadership Team Coaching, “on their own performance and multiple processes, and consolidate their learning ready for the next cycle of development: for themselves, for their wider systems and to create positive consequences somewhere in the distant future”. And perhaps the most compelling “why” of team coaching is to empower them to do just that. Ian Mitchell and Sian Lumsden are co-founders of Eighty20 Focus, a real-time executive coaching organisation.

Níall Fitzgerald discusses the ethics and governance issues that arose for boards during 2017, and what resolutions can help in 2018. Corporate Governance is not actually a big thing – it is a lot of little things. The ability to identify relevant issues and give them the right amount of attention before having to move on to the next is a requisite in governance. Every now and then, a big issue comes along and attempts to knock the wind out of your sails. Like a good captain of a boat, your knowledge of the sea and how to work with the elements is as important as your ability to handle your own boat when it comes to dealing with those big issues. While you, as part of a board, should have control of what goes on inside your organisation, you are unlikely to have similar control over the elements or anyone outside of your organisation.  Uncertainty The uncertainty resulting from political absenteeism in Northern Ireland, Brexit, US fiscal policy proposals, and the myriad of less-profiled but very present issues affecting Irish organisations were raised as concerns to Chartered Accountants Ireland in 2017.  Challenges to businesses come in different waves and, ideally, their impact needs to be considered before they happen. It is not always possible to see the big waves coming but dealing effectively with the smaller ones can help us prepare for the larger ones. Boards and management teams that respond well to uncertainty will have: A good understanding of their risk appetite and what risks they are prepared to take (know your vessel and what force it can withstand); Familiarity with maintaining a risk register and designing strategy to respond to and manage risk (the manoeuvres); A robust system that enables flow of information from ground up and vice versa. This includes management information, communication and financial planning systems (the rigging which will largely determine your ability to manoeuvre); and Robust and effective internal controls that facilitate the efficient flow of information while also safeguarding the integrity of the vessel (hull, RADAR, hydraulics and nautical knots). We don’t wait until a storm forms at sea to prepare the boat so, likewise, the board should not wait until a crisis before addressing the above and obtaining a good understanding of the organisations capabilities.  Board effectiveness Board effectiveness has been a hot topic, so it’s unsurprising that it featured prominently in 2017. While a number of challenges were presented, some of the more common issues related to understanding the role of the board, an individual’s own role as part of a board, board structure and problems relating to discussion or conduct at board and subcommittee meetings. In terms of understanding the role of the board or an individual on the board, the increasing volume of board paper contents, complexity or technical nature of matters for decision being brought to the table, and an increasing prevalence or expectation of foregone conclusions were the main problems. These issues have caused conflict, bitterness and mistrust and, in some cases, have resulted in an inability to progress effectively on other unrelated agenda items. When it came to solving these issues, members understood their role on the board within context of their own responsibilities and fiduciary duties but there was a knowledge gap in understanding where the line between management and governance fell.  The following gives a flavour of some of the quick wins identified during discussion of these issues: Board protocols should be enhanced by setting a more defined time-frame for receipt of papers, e.g. a tiered deadline when papers above a certain size are to be delivered to the Board and clear wording of any protocol for exceptions;  Board retention and delegation clauses in the terms of reference should be clarified and communicated; For boards that do not have established sub-committee structure, the Chair should be empowered to establish a specific task force that will address the more technically complex issues in advance of the meeting; Consideration for the need of external expert advice is given before management presents a complex problem to the Board.  The process of continuous improvement is necessary when it comes to optimising board effectiveness, and it’s important all members are bought into the process. Don’t wait for your organisation to enter choppy waters, take action before issues arise within the Board. You need a full and committed crew on board. Debate is healthy but nobody wants a mutiny. Conformance vs performance To quote Albert Einstein, “A ship is always safe at shore but that is not what it’s built for”. One issue that arises in conversation with members is the common occurrence of too much Board time being spent addressing conformance at the expense of addressing the performance of the organisation. To ensure that sufficient time is afforded to performance (including strategy, improving return and productivity, as well as employee and customer satisfaction), the following featured prominently as simple suggestions: Favour reporting by exception Boards should report compliance updates with a focus on instances of non-compliance while also including what corrective action was taken or recommended. This facilitates a discussion more focused on conformance issues that warrant greater attention while also ensuring that there is sufficient time remaining on the agenda to discuss performance and strategy-related matters. Mandatory strategy day  Whether it’s a half day or a whole weekend, it is important for any board, regardless of organisation size, to give this important strategy development exercise sufficient attention. Make it matter  While this includes typical advice such as having the right mix of skills around the table, ensuring important matters are given sufficient time on the agenda, etc, ‘make it matter suggests going further than a board might normally. This includes devising suitable key performance indicators (KPI’s), outside of boilerplate profit and productivity measurements, that provides board with specific performance related information; performing post-mortem reports of recent projects, whether they were deemed successful or not to identify lessons learnt; and devising a performance led agenda that endorses an “outside in” risk assessment, i.e. what are the threats facing the business based on what is happening in the market and trends in other industries and how would the organisation respond.  Reputation Possibly the most important risk to be managed in an organisation is its reputation. Reputation and trust with all stakeholders is essential for running a successful organisation. To avoid the wind being knocked out of your sails, consider the following actions when it comes to protecting the reputation of the organisation. Make sure ethics and organisational culture is a standing item on the agenda. There is so much happening in the current climate in relation to protection of the public interest (e.g. White collar crime and anti-bribery legislation), employee welfare and intolerable work practices that organisations need to assess their own culture to ensure it is a good fit in modern society. It is the Board’s responsibility to keep this in check and set the right tone at the top. The Board should ensure there is a clear and well-communicated speak up policy in the organisation. Encouraging staff to speak up about wrongdoing they encounter in the organisation without fear of reprisal is a powerful and effective detection control and the right thing to do. Make ethics real. Don’t wait for something to happen before taking the time figure out the organisation’s ethics. Like risk appetite, the Board should know their red lines and have a good understanding of what they consider to be unethical conduct.  Conclusion The above insights are a flavour of matters discussed at Chartered Accountants Ireland events, focus groups, briefings, queries and discussions regarding ethics and governance and key board concerns in 2017, and many of the themes were similar: uncertainty and how organisations can create their own certainty by preparing for and respond to it; implementation of a process of continuous improvement is a healthy solution for increasing board effectiveness; a high focus on conformance issues during Board meetings is important but performance decisions shouldn’t suffer as a result; and reputation means a lot to an organisation but requires good character to earn it and deserves attention to protect it. These key takeaways should sail along into 2018 for all organisational boards. Sail safe!

The success of an NGO depends on a board with the expertise Chartered Accountants already possess, says Michael Wickham Moriarty. Non-profit organisations play a major role in Irish society. They generate more than €10.9 billion in turnover annually, 8% of current exchequer funding is channelled through non-profits and organisations described as Section 38 and Section 39 bodies under the 2014 Health Act deliver much of Ireland’s health and social services. Almost a quarter of Ireland’s official overseas development aid is delivered through NGOs. Non-profits are at the forefront of responding to Ireland’s current housing crisis. Chartered Accountants have a lot to offer Ireland’s 19,505 registered non-profit organisations. Non-profits require volunteers to give their time and expertise to act as directors. The non-profit sector has been subjected to both increased regulation and increased public scrutiny in recent years and there is a need for engaged, educated and diligent directors for non-profit organisations of all sizes. Chartered Accountants are trained as experts in financial management and financial reporting, but what they have to offer non-profits goes much further than this. They are trained in company law and are bound by a code of ethics and professional standards. Many Chartered Accountants have developed expertise in areas such as risk management, strategic planning, governance and investment management, all essential for boards of non-profits. Finding the job There are a number of routes for Chartered Accountants who wish to become directors of non-profit organisations. People do get invited to join non-profit boards by peers or through existing relationships with organisations they support, and many non-profit organisations elect their directors from a broad membership base, which members of the public can join.  There are a few ways someone interested can find out about board vacancies. Some organisations openly advertise when there is an opening on their board. Vacancies can occasionally be found on the careers pages of the Chartered Accountants Ireland website, and the Institute of Directors in Ireland also assists non-profits to recruit new board directors. Recruitment services in the charity sector such as Activelink.ie and Charity Careers Ireland advertise board positions (as well as paid, professional roles), and Boardmatch Ireland is a charity which matches professionals to non-profit boards. One effective route for accountants is to first join a board subcommittee as an external expert. Finance and audit committees may recruit volunteer accountants to work alongside board members. This is a good way to learn about the inner-workings of a non-profit without suddenly taking on  the full, legal responsibilities of a company director. Tools and supports   There are a range of tools and supports available for directors of non-profits. The Charities Regulator has recently published a range of guidance documents, such as Guidance for Charity Trustees, Internal Financial Controls Guidelines for Charities and Guidelines for Charitable Organisations on Fundraising from the Public, which can be found on its website. The Institute of Directors in Ireland has also published guidance for directors of non-profits. The Institute offers many CPD courses that can assist directors of non-profits and has a Charity & Non-for-Profit Group for members active in the sector. Non-profit umbrella bodies such as The Wheel and Charities Institute Ireland run events and training relevant to board directors.  For non-profits that have a cross-border structure or are based in Northern Ireland, there is guidance available from the Charity Commissioner for Northern Ireland. The Charity Commission for England and Wales has extensive resources available online, many of which are relevant for directors of non-profit organisations in Ireland. Common pitfalls  There are a number of challenges that frequently arise for directors of non-profit organisations. Many small non-profit organisations may not have the resources to employ full-time accountants or management staff with a comprehensive range of skills at executive level. In such circumstances, it can be tempting for highly-skilled directors to step in and carry out work that should be the function of executive management. It is important to clearly define and document the separate roles and responsibilities of management, and those of the board of directors. Directors should remember the old adage that they should put their noses in, but keep their fingers out. Sometimes board members can over-rely on these finance experts. Boards may appoint treasurers from among their members and they may establish subcommittees such as finance and audit committees to focus on specific areas. However, such structures can never delegate away the responsibility of the board of directors for the sound financial management of the non-profit.  It is vital that all directors understand the financial affairs of the organisation and that they contribute to key financial decisions. Chartered Accountants on boards can assist by ensuring financial reports to the board, such as management accounts are presented in a way accessible to non-financial experts.  The most serious governance failures often occur where one individual or a tight knit group control the organisation over an extended period of time. The board of directors as a collective body should exercise ultimate control over the non-profit instead of a CEO or founder. As unpaid voluntary directors, a non-profit board is heavily reliant on executive management to inform them about the organisation and to implement their decisions. The relationship between the Chair of the board of directors and the CEO is crucial to maintaining appropriate control and delegation. In a well-governed non-profit, this relationship should have some healthy tension. Reporting for non-profits The Charities Statement of Recommended Practice Financial Reporting Standard 102 (Charities SORP FRS 102) is mandatory for UK charities and is considered best practice for charities in Ireland. The Charities Regulator has signalled his preference for this to become compulsory in Ireland in the near future. Since not all non-profits are regulated charities, this accounting standard is not appropriate or applicable to some non-profit organisations. Where it is applicable, directors of non-profits should ensure that the Charities SORP FRS 102 fully is implemented in their financial reporting. In cases of charities where it is not in place, directors should seek a road map for its adoption. Directors should seek that non-profits have a clear objective manner of measuring their success against their aims and objectives and that these should be communicated to stakeholders. There are a range of voluntary and mandatory codes of compliance applicable to sub-sets within the non-profit sector. For example, the Code of Practice for the Governance of State Bodies from the Department of Public Expenditure and Reform applies to many non-profits funded by the Irish state. The Department of Public Expenditure and Reform Circular 13/2014 sets out some of the responsibilities of non-profits in receipt of state grants. Dóchas – the umbrella bodies for overseas aid NGOs – has a Code of Corporate Governance for Irish Development NGOs. In addition, there is a more widely relevant Code of Practice for Good Governance of Community, Voluntary and Charitable Organisations. Directors should understand which codes are most suited to their organisation. They should understand whether these are voluntary or mandatory and they should understand how their organisation measures up against these standards.    For non-profits seeking to benchmark themselves against the highest standards of the sector, there are some annual awards to consider. The Leinster Society for Chartered Accountants runs the Published Accounts Awards and includes categories for non-profits. Separately, the Good Governance Awards is an initiative that recognises and encourages adherence to good governance practice by community, voluntary and charitable organisations in Ireland. Charity umbrella bodies such as The Wheel and Dóchas run awards that recognise the impact of non-profit organisations. Boards should take a look at the calibre of the reporting the winners have displayed and aim to emulate that standard. Conclusion There are many opportunities for Chartered Accountants to volunteer as directors of non-profit organisations and they have so much to offer. These roles come with challenges and the duties are not to be taken lightly. While serving as a non-profit director is unpaid, it can be a personally very rewarding experience.  Michael Wickham Moriarty is the Head of Finance of the Central Remedial Clinic and he is a Governor of the Rotunda Hospital.

Directors must understand the vital role of ethics in establishing the values and behavioural DNA of a board and its organisation. The ethics and values of an organisation are generally formed and espoused by the founders. They can be based on a set of strong beliefs about a particular issue such as ethical beauty products, climate change or a particular way of doing business. Regardless of the starting point, these ethics and associated values will be formative in how an organisation evolves and is run. Ethics and values cannot be painted onto an organisation, however. Ethics  In a business context, ethics involves the exercise of values – such as trust and integrity – which influence and determine the day-to-day behaviours and actions of a company. Embedded values and ethical behaviours are hard-won company assets built up over time that can easily be destroyed by actions that are, or perceived to be, unethical. Ethical behaviour instils trust and empathy. It also enhances reputation, which can in turn improve income by attracting more customers who are attracted by the associated brand. It should in turn mean greater financial sustainability and finally, while good behaviour engenders more good behaviour, the opposite is also true. If you are considering a directorship, whether as a non-executive or an executive director, it is important that you have a good understanding of the ethics and values of a company. If you work in the company, these should be self-evident. If not, it needs to be part of your due diligence. This process can include talking to current and former board members and senior executives. If you would have a difficulty in supporting these ethics and values, then you may want to reconsider whether becoming a board member is right for you. Looking at the same issue from the company’s perspective, during the recruitment process board members should evaluate closely the ethics and values of any potential director against those of the company. The induction and ongoing professional development process for all board members, as well as staff, presents a good opportunity to introduce and reinforce ethics and discuss the company’s values – in other words, what it feels strongly about. Ethics and the role of the board Once you have joined the board or are an existing board member, part of your role will be to ensure that ethics are embedded and exercised in the organisation. Company directors are responsible for setting the ethical standards and values for their organisation, and this is the most valuable asset directors can cultivate within an organisation. If these standards are embedded in the organisation, they will form the bedrock for the company’s future sustainability.  The process of embedding ethics and values is not an easy task, as ethics and values tend to be intangible. Yet, they must be made tangible to staff and customers for them to be real. Therefore, ethical standards and the associated behaviours must be led, developed and disseminated by the board. The board – both as a collective and as individuals – set the ethical tone from the top of the company and must ensure that it becomes part of the DNA of the company. Ethics, values and the appropriate behaviours should permeate every pore of an organisation and be reflected in its mission, vision and strategy. In this context the board’s responsibilities include: Developing, agreeing and documenting the ethical and values framework of the company; Living these values as the leaders of the company; Supporting ethics programmes for staff at induction and on an ongoing basis; and Ensuring that the company lives up to its stated ethical values through appropriate monitoring mechanisms. Ethics in practice The larger the company, the more difficult it is to maintain consistency in the application of values and ethical behaviour. It is unlikely that all staff can be relied upon to react in the same way, particularly where there is significant cultural diversity in the countries in which a company operates. This is why a code of ethics is essential. A well-written code, consistently applied, will minimise uncertainty and raise awareness of ethical issues in the company. The code should help to operationalise ethics and values by developing an associated set of behaviours that will help guide the actions of staff in situations where they may face ethical challenges. For example, a retailer selling clothing in Ireland might have questions over the type of labour and the employment conditions used in developing countries to produce their goods. Similarly, if a company is seen to exploit tax planning to the limit, even though it may be permissible within the tax codes, it may impact on the values and the reputation of the company. Ultimately, good ethical practice should improve transparency, decrease the risk of fraud and reduce the likelihood of reputational damage. A code of ethics A company’s ethics programme should contain the following elements: Code of ethics A code of ethics is a written set of guidelines issued by a company to its management and staff to help them conduct their behaviour and actions in accordance with its values and ethical standards. The communication of the code of ethics is important. It should be included in the induction process for new staff and in staff handbooks. It should also be available online as a staff resource. Training Training in ethical behaviour ensures that all directors and employees know what is expected of them. It helps instil ethics in the culture of the company. Companies should have a person responsible for ethics. For instance, Coca-Cola’s code of ethics is administered by an Ethics & Compliance Committee composed of a cross-functional senior management team. It oversees all ethics and compliance programmes and determines code violations and discipline. The Ethics & Compliance Office has operational responsibility for education, consultation, monitoring and assessment related to the code of conduct. A means to report breaches of the code of ethics Companies should provide the means for staff and others to raise ethical concerns. Companies should encourage good faith reporting (‘whistle-blowing’) and foster a culture whereby they are protected. Rewarding those who ‘live the ethical culture’ Ethical behaviour should be recognised and rewarded. Adherence to the company’s code of ethics should be part of the performance review process for all staff, including directors. Those who breach the code of ethics should face appropriate action. The requirement to follow and conform to the code of ethics should be included in employees’ contracts and directors’ service agreements. Monitoring and reporting Companies should monitor the impact of their ethics programme and report the findings internally with an improvement plan to address areas of concern. Many companies issue corporate social responsibility (CSR) reports annually, which cover ethics and values. Summary The board of directors is responsible for setting ethical standards and values, and ensuring that they are embedded in – and become part of the DNA of – their organisation. An ethical business should be a more sustainable business. David W. Duffy is author of A Practical Guide for Company Directors and founder of www.governance-online.com.

For employees to truly buy into an organisation’s value system, leaders must make the most of the ‘moments that matter’. Ros O'Shea explains. The South Sea islanders have a word, “mokita”, which translates as “a truth everyone knows but nobody speaks”. And so it is with organisational culture. Creating an environment in which employees implicitly understand the values of the organisation and, more importantly, behave accordingly, takes time and effort. Many businesses will have implemented the requisite compliance framework to help foster a culture of integrity. This typically includes a code of conduct and associated policies, training programmes, a whistle-blowing channel for employees and so on. While these are both helpful and necessary, on their own they are not enough. If values are to truly become part of the DNA of the business, they must be part of a continuous conversation. There are some decisive points in both the development of an organisation and employees’ careers when these messages will really resonate and define the true character of an organisation’s leadership. These are the ‘moments that matter’. From recruitment to promotion and even departure, the values of an organisation should be clearly demonstrated at these key junctures. “In looking for people to hire, you look for three qualities: integrity, intelligence and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire someone without integrity, you really want them to be dumb and lazy,” writes Warren Buffet. He is so right. Imagine how much trouble a clever, highly motivated and corrupt new hire could cause. Personal integrity The first of these moments that matter, therefore, happens right at the start of the recruitment process. Ethical considerations should be incorporated into the brief for the position and subtly reflected in the interview plan. Rather than asking a candidate straight off if he or she is morally bankrupt, which really only invites one response, probe a little deeper to truly gauge their personal integrity. For example, “Have you ever faced an ethical dilemma? How did you handle it?” Successful at interview, a new recruit’s next encounter with the company’s value system should be a carefully designed induction programme. Indeed, some companies require employees to sign up to their code of conduct as a condition of employment. Whatever the approach, the code should be explained to new employees in some detail and it is much more powerful if a senior leader, ideally the CEO, can deliver this in person. Consider also assigning a mentor to each new team member. This can facilitate their smooth transition into the company and provide a safe harbour for new hires to ask questions and quickly navigate its culture. In some organisations, that is where the story ends. The employee’s CV and the signed code of conduct is filed away and forgotten on a shelf in the HR department. But if ethical character is to be cultivated, it must be continuously calibrated. More pragmatically, if the mantra “what gets measured gets done” is true, then ethical competencies should be monitored as part of the formal performance appraisal process. Explicitly including values in compensation strategies, in addition to the usual financial metrics, makes a very clear statement to employees that because these things matter to the company, it should also matter to them. It also serves as a reminder that there is no reward for breaking the rules. Promotion presents another timely opportunity for an ‘integrity NCT’, ensuring the newly promoted employee’s values and those of the organisation are still aligned and that any training needs associated with their new position are addressed. This is particularly relevant if they are assuming a managerial role, with staff relying on them to lead the way in terms of appropriate behaviour. It is also relevant in the case of overseas assignments, where the employee will be representing the company abroad and will be responsible for maintaining home-grown values, which may conflict with local customs. A frank perspective An exiting employee can provide many valuable insights. Liberated from office politics, soon-to-be-ex-employees can provide reliable and candid accounts of the organisation’s ethical norms. Whether at the informal leaving drinks, or more properly conducted as a formal exit interview, an astute chief executive does not pass up the opportunity to get a frank perspective on the cultural status quo from someone who has decided to move on to new pastures. Core values Moments of significant corporate change or times of crisis offer powerful opportunities for values-related communications. The tone should be confident and reassuring – that while there may be changes or challenges ahead, core values will prevail and integrity in all business transactions must be upheld as normal. Finally, in the event that the company suffers an ethical breach, particularly when this reaches the public domain, it is important that the CEO moves quickly to communicate with staff and affected stakeholders. If, at the height of the crisis, the leader makes values their touchstone, in that moment employees will understand that ethics truly do matter. Ros O'Shea is an expert in governance and business ethics, and author of Leading with Integrity: A Practical Guide to Business Ethics.

From data analytics to robotic process automation and artificial intelligence, audit has come a long way, and it looks to be going further at a rapid pace. While innovation may have been traditionally associated with the advisory arms of professional services firms, innovation in audit departments has raised the bar in recent years. It is enabling firms to transform their audit practice. The progress made is extraordinary and the pace at which we are now able to implement change is accelerating. Embedding innovation Innovation is at the core of the changing audit quality agenda. It shapes the design and execution of audits, how accountants collaborate with clients and how they can bring value that goes far beyond a true and fair opinion on the financial statements. It’s not just about having smart tools, it’s about creating and sustaining a culture of innovation throughout the practice and making innovation work for clients. In Deloitte, this required a mind-set change from our audit professionals at all levels – getting the correct tone at the top was critical right across our audit leadership.  Equally as important is creating an environment where audit professionals at all levels are encouraged to challenge the status quo, to develop and share ideas in the knowledge that we listen and act wherever possible. Some of our most impactful innovations such as D.Price and D.FX, (pricing and foreign exchange tools) have come from members of our audit teams who identified an opportunity and had the tenacity and support to follow it through. Today, we have a more diverse range of skill sets within our audit practice than ever before. This has not happened by accident – firms are purposefully recruiting and investing in specialists such as data analysts and data scientists.  The power of analytics Advanced data analytics and visualisations are already embedded within our audit processes. Firms are recognising that data analytics represents the single greatest opportunity to transform the audit process by: Enhancing audit quality; Providing greater insight to our clients; Providing accountants with a more rewarding experience; and Driving efficiencies in the audit process. Analytics, appropriately scaled, forms part of Deloitte’s audit strategy for all audit engagements. Our vision for analytics is simple: we want every audit client to benefit from the power of analytics and we want to support every one of our audit practitioners to become a ‘black belt’ in analytics by the time they complete their professional training contract. The deployment of analytics engines, like Deloitte’s Illumia, on audit engagements enable accountants to perform a stronger risk assessment process, which means that audit procedures are focused on the areas of greatest risk. In many cases, accountants will be able to perform tests across 100% of the population in order to identify trends and outliers requiring further investigation.  Analytics is driving changes in terms of when and how often audit procedures are performed. Given that audit routines can be pre-coded, they can be performed more often during the audit cycle. Rather than waiting until the end of the financial year or for the interim audit, audit routines can be performed at agreed intervals (monthly, quarterly) with results being provided to clients on a more frequent basis. The move to a more continuous audit ensures that potential issues are being highlighted to management at the earliest possible time and provides a greater level of flexibility on the timing of audit procedures.  Data acquisition The success of analytics depends on the quality and availability of data. Some existing platforms have the ability to extract data in various ways, including through continuous feeds, enabling data analysis throughout the year. Enhanced data extraction is key to optimising the capability of analytics. For many, this is where the challenge lies; the analytics engine may be strong, but if the auditor is not able to easily extract data – due to unstructured data, a lack of standardisation in data format or the challenge of having many different enterprise resource planning (ERP) systems in existence – performing audit analytics can become a more challenging process.  Emerging technologies There are a number of emerging technologies, such as robotic process automation (RPA) and artificial intelligence (AI), that are already impacting how audits are executed. Many clients have implemented an RPA strategy, particularly in cases where tasks are centralised in a shared service centre, driving significant efficiencies in their back office operations. More and more, auditors are evaluating the impact of processes or controls that would traditionally have been executed by humans which are now being done by machines. Our experience has shown that an RPA strategy can deliver great efficiency for clients and significantly reduce, if not eliminate, processing errors.  However, our experience has also shown that just because a machine is responsible for processing transactions, it does not mean that all transactions will be processed correctly. In essence, a machine will only do what you program it to do and so any design flaw in the process could apply to all transactions processed and lead to errors. Regardless of how small it might be at a transaction level, the error could accumulate over time and become material. RPA does represent a great opportunity to tackle large volume/routine tasks and automate them, and is clearly relevant from an audit efficiency and talent perspective. AI is the theory and development of computer systems that are able to perform tasks that normally require human intelligence. For example, Deloitte’s contract interrogation solution, Argus, uses natural language processing (NLP) and machine-learning technology to analyse large volumes of contracts at amazing speed. This enables the auditor to profile populations based on defined criteria and identify any exceptions requiring investigation. Smart visualisation of results enables better decision making and, ultimately, better outcomes for our clients. Working with technology such as AI provides the opportunity for auditors to work smarter, analyse larger samples or even entire populations and simultaneously deliver higher quality audits and better client insights.  Blockchain is the emerging technology that has the potential to cause the greatest level of disruption for the audit profession. While this potential disruption may be a number of years away, some commentators have suggested that the potential impact on the auditing profession could be as significant as the impact the internet had on industries such as travel or retail.  Blockchain is a distributed general ledger which records all transactions that have happened, when they happened and other key details. While Blockchain is often associated with the cryptocurrency Bitcoin (Blockchain is the general ledger on which Bitcoin transactions are recorded), the potential use cases for Blockchain are far reaching. This is an area where, in three years’ time, we may still be underwhelmed by the impact that Blockchain has had on our profession but, when looking back in 10 years’ time, we may be shocked by the level of disruption that has actually taken place. At Deloitte, we’ll see the progress first-hand at the Deloitte EMEA Blockchain lab based in Dublin. The audit of the future It is clear that the rate of change in our profession is accelerating and I strongly believe that the audit of the future will be very different to the audit of today. I believe that audit will undergo a digital revolution, equivalent to the revolution that took place when laptops replaced pens and paper. I believe that the audit of the future represents an exciting opportunity for our profession, presenting great opportunities for our clients and people. Kevin Sheehan is a Partner of Audit & Assurance at Deloitte.

Amid a sea of change, how can insurance entities survive and thrive in 2018 and beyond? The insurance industry in Ireland is undergoing a period of rapid change. How boards and their businesses engage in innovative transformation, on both strategic and regulatory risk management fronts, will dictate whether they get ahead during this transitional period and ensure their sustainability and profitability going forward. This trend extends to the global insurance industry also, which is experiencing technological advances, product changes, increasing consumer demands and increased competition through non-traditional channels. Against this backdrop, the regulation of the industry is evolving with boards now grappling with the implementation of Solvency II, the first annual reporting date this year and the advent of the Insurance Distribution Directive (IDD) and Packaged Retail and Insurance-based Investment Products Regulations (PRIIPs) next year. New products are also on the horizon, such as driverless cars and peer-to-peer insurance, which are being facilitated by price comparison websites, mobile internet transactions and telematics-based services. The domestic landscape On the domestic front, more than 430 international financial services companies operate in Ireland. Together, they employ over 38,000 people, hold €200 billion in assets and generate €32 billion in premium income from domestic and international customers. From a regulatory perspective, Ireland’s insurance sector has a ‘hub and spoke’ structure with 82% of business written by branches outside Ireland. There has been an 11% increase in the number of regulated insurance entities in Ireland since Q4 2015, according to the most recent Central Bank of Ireland annual report. The IMF Financial Sector Assessment Program (FSAP) indicated in July 2016 that Brexit is likely to have a negative effect on the Irish financial system, although it has undoubtedly created opportunities for the insurance industry to grow in Ireland with potential for new market entrants, new business opportunities and even the cessation of current partnerships. Key themes to date 2016 was all about data and most notably, the risk management of cybersecurity. Cybersecurity remains firmly on the agenda of insurance entities as they seek to protect consumers’ data in line with the Central Bank of Ireland’s guidance, issued in September 2016. Insurance entities are required to demonstrate how they manage and mitigate cyber risk including stolen data, lost data, corrupted data and unauthorised use of data. In 2017, the focus remains centred on risk management which is central to the sustainability of all insurance industries. In the words of Sylvia Cronin, Insurance Director at the Central Bank of Ireland, “The creation of long-term value can only be assured by practical and effective risk management which pro-actively anticipates the comprehensive range of risks underlying every business”. From a regulatory perspective, the first annual reporting deadline for Solvency II was May 2017, which included the auditor reviewing parts of the returns for the first time. Insurance entities are now required to ensure that their business models are aligned with their risk management to ensure that adequate capital provisions are maintained. The Solvency and Financial Condition Report (SFCR) required entities to demonstrate effective risk management including classification of own fund items, the ongoing compliance to the tiering criteria, obligations relating to own fund items and the related stress-testing. Boards of insurance entities are also required to approve and monitor medium-term capital management plans. Consumer protection is also a key regulatory theme during 2017. In April of this year, the European Insurance and Occupational Pensions Authority (EIOPA) published a report on its thematic review of issues in the unit-linked life insurance market arising from business links between providers of asset management services and insurers. The Central Bank of Ireland also published a Consumer Protection bulletin in April, which focused solely on the motor insurance industry, and revealed that 62% of personal motor insurance policies are provided by companies incorporated in Ireland and prudentially regulated by the Central Bank of Ireland. The Consumer Protection Risk Assessment (CPRA) guide followed in July of this year and it outlines how the Central Bank of Ireland will assess the consumer protection risk management frameworks in place in all financial services entities. The guide requires that consumer protection not only be part of an entity’s strategy, business plan, policies and procedures, but – most notably – be part of the culture of the business itself. The future Looking to future, insurance entities operating in Ireland will face a number of issues during 2018. The Central Bank of Ireland has established a team to deal with entities considering relocating to Ireland from the UK as a result of Brexit, and it will be interesting to see what entities will relocate here. Looking beyond 2018, geopolitical uncertainty around Brexit and Trump could adversely impact asset values. Insurance entities’ stress-tests will need to be robust enough to ensure that the entity can withstand asset shock. From an economy perspective, the low interest rates experienced for the past 10 years are expected to increase gradually, which will no doubt impact on the investment strategy of insurance entities and ultimately, investment performance. The overall solvency position of the insurance sector remains high but according to the International Monetary Fund (IMF) FSAP, several factors put pressure on long-term non-life sector profits. In the life sector, there is strong resilience to interest rate shocks as few products carry guarantees on principal rates of return. However, the non-life sector is more reliant on investment return for profitability and is facing an increase in the frequency and average cost of claims. The regulatory view From a regulatory perspective, the European Commission is expected to carry out an assessment during 2018 of whether Solvency II should be amended in relation to the prudential treatment of private equity and privately placed debt. The implementation of PRIIPs was delayed in November 2016 and will come into force on 1 January 2018. Some insurance entities which are also MiFID firms will be affected by the implementation of MiFID II and MIFIR on 3 January 2018. The IDD will apply from 23 February 2018, with EIOPA required to submit the final draft regulatory technical standard under Article 10(7), which relates to the adaption of certain amounts in euro to the European Commission. Accounting developments will also have an impact on how insurance companies are required to report their results through their financial statements including IFRS 17, which will replace IFRS 4 from 1 January 2021. Conclusion Insurance entities have faced – and continue to face – an unprecedented level of change. Boards will need to adapt their business models to not only to meet the regulatory challenges, but to also build regulation into their culture. Those that engage in the ongoing innovative transformation of their entity with a focus on risk management will not only get ahead, but stay ahead and ensure their organisation’s ongoing adaptation to the changing nature of the industry and consumer demands. Sarah Lane is Director, Financial Services Risk & Regulation, at Mazars Ireland.

Here is a five-step plan to help charities tell their story through the annual report and financial statements.   The public has a right to know that charities are economical, efficient and effective in the work they do. High-quality financial reporting by charities plays a key role in meeting the public’s reasonable expectation of probity and impact by charities. While it is often in the best interests of a commercial organisation to be somewhat minimalist in its reporting, the opposite is true for charities. I view the annual report and the financial statements as a valuable opportunity to tell your story, show the good work you are doing and demonstrate your impact. It is also an opportunity to highlight for stakeholders the challenges and the risks faced by your organisation. In being truly open and transparent, you will win stakeholder confidence and support and, in effect, secure your financial sustainability. In the absence of specific legislation or regulation to guide financial reporting by charities in Ireland, Charities Statement of Recommended Practice (SORP) has long been recognised as the cornerstone of best practice for financial reporting by charities. While heretofore adoption of Charities SORP has been entirely voluntary for charitable organisations in Ireland, it is no secret that mandatory application of the standard is coming down the tracks for charities of a certain size operating in Ireland. For some time, a small number of organisations in Ireland – less than 10% at the most recent count – have recognised the value of proactive early adoption of Charities SORP in the interest of openness and transparency. There are many, however, who are daunted by the prospect or who quite simply don’t know where to start. Words such as ‘onerous’ and ‘complex’ have often been associated with Charities SORP, but it need not be so. Follow our five-step plan to assist you on the journey and remember, Rome wasn’t built in a day. Good governance and high-quality financial reporting do not happen overnight, but are a journey of continuous improvement. Step 1: telling your story Before you even put pen to paper, sit back and think about the story you want to tell and the message you want to convey through your annual report. What is your one overall theme and what are the three key messages you want the reader to take away? You also need to think about your audience. Charities have wide and extensive stakeholder groups including service users and beneficiaries, employees, volunteers, funders, regulators, the general public and more. You are ultimately dependent on the goodwill and support of all of these groups. You need to meet the information needs of all of these groups through your annual report but you also need to connect with them in a positive and engaging way. At the very highest level, you should aim to convey the message of the good work you are doing. This should link to your mission, goals and objectives on the one hand but it should also link to the financials so that the reader can see what you achieved with the income you received and how you expended that income in fulfilling your objectives. Telling your story need not be done solely through hard facts and figures. Testimonials and case studies can portray a message in a very powerful, tangible and meaningful way. Equally, the use of graphics, images and lots of colour can bring your story to life and engage your audience more effectively. Step 2: governance The public has a right to know that charities are well-governed. While Module One of Charities SORP provides details of what should be included in the trustees’ report in respect of the governance of the organisation, it is worth going beyond these basic requirements in an effort to clearly demonstrate the commitment of the organisation to good governance. Separate to the trustees’ or directors’ report, the chairperson’s statement (or equivalent) should specifically address governance and clearly demonstrate an ownership and a real desire to continuously enhance governance rather than viewing it as a box-ticking exercise. Compliance, or otherwise, with sectoral codes should be demonstrated and any initiatives on the board’s agenda to enhance governance structures and practices should be outlined and explained. Equally, it is worth considering the disclosure of items not specifically required by SORP such as attendance at board/committee meetings by individual members and details of how conflicts of interest or loyalty are managed. Step 3: financials Too often, I read the financial review in a trustees’ or directors’ report and it doesn’t tell me anything more than what I read in the primary statements. To my mind, the financial review should provide insight into what is driving the key numbers in the primary statements and it should also place those numbers in the context of the plans, targets and budgets for the year. So rather than just reiterating what is in the primary statements, think about the key headings or key performance indicators which you, as an organisation, focus on. Secondly, think about what might be interesting, informative or useful to the reader and to your stakeholder group. Ultimately, you want to demonstrate to the reader where your money comes from, what form it is received in (e.g. grants, legacies, donations etc.) and how you use that money. Looking at that information for two years in isolation, however, has reasonably limited value and that is why you will see that many of the higher quality annual reports include five-year or even 10-year financial summaries. Good graphic design can capture this type of summary data in an appealing, easy-to-read manner. In terms of the technical aspects of the financials, there are two areas which, in my experience, prove to be most challenging on first-time adoption. Restricted and unrestricted funds: you need to think about the nature of your funding and whether restrictions apply to that funding. You need to think about this in the context of the current and prior year but also, in the context of earlier periods where there are unused funds remaining in opening reserves. Factors such as the nature of your funding, the level of detail of historic records and even the degree of change and staff turnover can have a strong bearing on how easy or difficult this task may be. Deferred income: it is important to note that Charities SORP is different to FRS102 in the treatment of deferred income and there are quite limited and specific circumstances under which income, including capital grants, can be deferred. This has presented two challenges in particular for charities: In the year of transition, where there is a significant opening deferred income balance and the SORP criteria for deferral are not met, there can be a significant once-off credit to the income statement/statement of financial activity; and Many feel that recognising income upfront, which heretofore would have been amortised over the life or matched to related expenditure, “muddies” the income statement/statement of financial activity and they struggle with no longer presenting the “true operating results” for their organisation. The good news, however, is that while Charities SORP does prescribe a particular format for the statement of financial activity, there are ways to meet the requirements of Charities SORP while also presenting what finance professionals consider to be the true operating position. The key to addressing these challenges is to start early and seek support from those who have experience working through such challenges. Step 4: accounting policies The importance and value of accounting policy is, in my view, significantly underestimated. Well-written, organisation-specific, meaningful and insightful accounting policies can make a significant difference and add real value to the financial statements. Boilerplate accounting policies that bear little relevance to the actual income, expenditure, assets and liabilities are of limited value and, in my experience, can in fact confuse the reader. It is worth investing time and effort in developing your accounting policies. By all means, use pro forma financial statements and the accounts of other similar organisations as a point of reference, but ensure you make them your own and ensure that they enhance rather than diminish the understandability of your financial statements. Step 5: outputs, outcomes and impact While some organisations are making an effort to report on outputs, outcomes and impact in the annual report and others are even publishing separate impact reports, it would be fair to say that this hasn’t gained much momentum in Ireland – at least not in any meaningful way. While I would acknowledge that there are many challenges to this type of reporting, not least the fact that not everyone has the same understanding of the terms, reporting on outputs, outcomes and impacts is one way of demonstrating to funders (whether institutional, governmental, corporate or individual) the value of their contribution. Reporting on outputs, outcomes and impact centres on the change you as an organisation are effecting over time. While there are various models and tools available for measuring and monitoring that change, it is important to bear in mind that outputs, outcomes and impact are by and large specific to an individual organisation. It is therefore not possible to provide a template or a ‘one size fits all’ solution. In simplistic terms, before reporting on outputs, outcomes and impact, you really need to start with your strategic plan and, in designing that plan, identify what you want your outputs, outcomes and impact to be. In essence, what is the change that you are trying to bring about through your work? You then need a means of recording, measuring and monitoring that change over time. Easier said than done! Conclusion By way of conclusion, if I was to offer some key tips to assist you on your journey through our five-step plan, I would suggest the following: View the annual report as an opportunity to tell your story and as a very valuable communication tool to build your reputation; Promote a commitment to transparency and openness right across the organisation, but particularly from the board and senior management; Use clear, concise language, avoid boilerplate and repetition; Ensure there is a consistency, linkage and flow between the quantitative and qualitative information; While it is important to be optimistic and positive, be careful of painting too rosy a picture. Ensure that the story you tell is reflective of reality and gives a flavour of the challenges and constraints facing the organisation; Read winning annual reports and learn from them. Understand what works well from a reader’s perspective; and Don’t be afraid to seek help. While responsibility for the accounts and the annual report rests with the organisation’s directors or trustees, your external auditors are likely to have experience in advising a wide range of organisations. They can therefore provide insights into best practice. Aedín Morkan is Director, Audit & Assurance, at Mazars Ireland.

US tax reform is still likely, but there’s work to do on the detail. US tax proposals have run into the sort of roadblock that only the US system can produce, with differences between both the House and Senate having the potential to delay changes. At the time of going to press, it is difficult to predict what compromise will be reached and what elements of the respective reform packages will be dropped. Or indeed, what might be added. From Ireland’s perspective, the general view is that our relatively low tax rate in Europe will continue to make us an attractive location for US groups to do business. It is also worth noting that when you include state and local taxes, the US corporate tax rate will still be double the Irish rate. The biggest danger to Ireland in the immediate aftermath of the US election was the so called “border adjustment tax”, which would heavily penalise Irish companies selling into the US. Due to significant lobbying, this element of the reform package was dropped. However, a potentially lower tax rate for US exporters has emerged in the new proposals. This is probably the key element to look out for as the haggling continues. EU not letting go on various fronts Outside the US, the EU’s drive for changes to the taxation of digital companies continues. In short, the EU would like to see greater direct taxation in the jurisdiction where consumption occurs as opposed to where the product or service originates. To most people, taxation at point of consumption looks like VAT – but not in the eyes of the EU. It is difficult to see how the EU’s digital tax proposals would sit comfortably with the OECD’s BEPS proposals, which place much emphasis on the link between value creation activities and taxable profits. Reconciling this with the EU proposals looks difficult. As the use of tax havens seems to be at the heart of EU concerns, in my view the EU proposals around the digital economy should be put on hold until the OCED BEPS package has been developed properly and tested over a period of time. If concern remains that tax avoidance in the digital context has not been sufficiently addressed, further measures can be considered at that point. The EU hasn’t given up on its tax consolidation plans either, with the CCCTB proposals still very much alive. CCCTB seeks to attribute profits based on sales, employees and assets, which would impact negatively on small countries such as Ireland. Again, it is difficult to see the rationale for CCCTB if the OECD’s BEPS plans are endorsed and implemented by member states. However, the EU hasn’t shown any signs of letting this one drop. The changing pace of much EU tax reform depends on who holds the presidency. With low-tax Bulgaria taking over in January, don’t expect to see much movement on CCCTB in the first half of next year. Ireland’s reputation still strong The Panama papers – and more recently, the Paradise equivalent – have further projected tax planning into the general domain. There is increasing pressure on governments to be seen to be doing their part in tackling tax avoidance. In Ireland, attention moved recently to the so called “Single Malt” structure, which involves an Irish incorporated but Maltese tax resident company. Such a structure is not unique to Ireland, with many developed countries including our nearest neighbour having a clause in their tax treaties that the place of effective management determines tax residence, not the place of incorporation. In theory, as both the Double Irish and Single Malt do not involve the avoidance of Irish tax per se, they shouldn’t be our problem. However, the adverse coverage surrounding the Double Irish structure had an impact on our reputation and the general view is that we made the right call in amending our tax residence rules. Maintaining our reputation was, and is, key. The Finance Minister has said he will look at the revised rules and whether they are sufficiently robust in light of more recent coverage. There are good arguments that no changes are required to our existing rules, which are consistent with other developed countries. Whether the tax rules in certain other jurisdictions are appropriate is a matter for another authority to determine, such as the EU or OCED. Ireland cannot realistically be expected to oversee the tax rules of its treaty partners. In summary, the uncertainty continues. Unfortunately, on many fronts, it doesn’t look like that uncertainty is going to be resolved any time soon.  For businesses operating across borders, accurately predicting tax costs in cash flow projections beyond the immediate period remains precarious. Peter Vale is Tax Partner at Grant Thornton.

In recent years, there has been a radical change in the approach taken by tax authorities when it comes to sharing information. With the recent Panama and Paradise papers, the definition of what constitutes a “tax haven” has seemingly widened and some countries with relatively robust tax policies have found themselves tarnished by the tax evasion brush. In Ireland, the Revenue Commissioners recently announced an inquiry to catch taxpayers engaged in offshore tax evasion and avoidance. This follows the receipt of 2,734 offshore disclosures totalling €84 million gathered under the offshore disclosure regime, which closed last May. Those with undisclosed offshore tax liabilities will now face much harsher penalties. With programmes such as FATCA, DAC and the OECD’s Common Reporting Standard, Revenue now has access to data of Irish taxpayers in over 100 jurisdictions. Revenue says its systems can interrogate the data, match the incoming information to existing records such as names, dates of birth and tax reference numbers, and identify suspicious patterns. So if you have valuable offshore assets but no obvious means disclosed on your tax records to fund these, you might alert the system. In addition to the international exchange of taxpayer information, iXBRL filings and the onset of real-time PAYE reporting will result in a vast increase in the amount of taxpayer data gathered by Revenue. It now seems that they are beginning to find ways to use it. Cróna Brady is a Tax Manager at Chartered Accountants Ireland.

Tax-effective incentives may ease the burden on Northern Ireland businesses struggling to recruit and retain key talent. In our most recent Quarterly Economic Survey in conjunction with Northern Ireland Chamber of Commerce, BDO Northern Ireland reported that recruitment difficulties were a major concern for local businesses with a staggering 81% of manufacturers and 71% of services businesses saying they had difficulty recruiting for positions in the second quarter of this year. Recruitment difficulties – particularly in professional and managerial staff and skilled trades for manufacturers – place a burden on other employees and lower productivity. An inability to recruit and retain skilled employees also restricts business growth and lowers productivity. There is an apparent lack of appropriate skills and not enough applicants with the required attitude or motivation, according to our research. Similar results were seen in the Future of Family Business survey, with the recruitment and retention of employees becoming increasingly difficult. An apparent shortage of appropriate skills, together with an uncertain future for EU nationals working in Northern Ireland and the potential impact of the national living wage, mean that some businesses are struggling to attract the right employees and retain the employees they have. Employers are forced to be more inventive and generous in the benefits on offer as they work to retain key employees and attract the skilled workforce they require. Incentivising employees There are some basic points to consider when choosing which benefits to offer employees: The benefit must be a real incentive (i.e. something the employee will be able to realise in due course); The benefit must not be a disincentive for other staff; The benefit should be capable of being withdrawn in the event of non-performance (if the employee leaves the business, for example); The benefit will provide some tax advantage for the employee and/or the company; and The implementation and administration costs must be proportionate to the incentive provided. Many family businesses in Northern Ireland reported that retaining family control of the business was important. However, they are not averse to giving shares or share options to key non-family employees. In fact, many realise that they may need to offer this type of incentive to attract key non-family employees. There are numerous ways in which shares or share options can be used to incentivise employees, as outlined below. Tax-advantaged shares scheme An enterprise management incentive (EMI) scheme would typically be used to incentivise key management employees, although all qualifying employees can participate if the company so wishes. In an EMI scheme, employees acquire the option to purchase a set number of shares in the company at a later date. Such a scheme would typically be used to incentivise key employees if it was anticipated that an exit event was likely in the future. On a share sale, the employee would exercise her or his option to acquire the shares and immediately dispose of them. Provided they acquired the shares at the market value at the time the options were granted, the proceeds they receive on disposal should be liable to capital gains tax rather than income tax. Growth shares Growth shares are a separate class of shares and are typically used when a large number of staff wish to participate in the growth of the company, with a relatively low entry cost. Growth shares entitle the holder of the share to participate in the value of the company over a set hurdle i.e. the value of the company on the day the shares are issued plus an agreed hurdle. The growth shares have no entitlement to value on day one, as they only participate in the value once the company has overcome the hurdle. A low valuation can therefore be agreed with HMRC, allowing employees to subscribe for a number of shares at minimum cost. When the employees sell their shares in the future, the resulting gain should be subject to capital gains tax. Awarding bonuses Employees can also be rewarded with cash bonuses based on share valuations (also known as a phantom share scheme) or by reference to specific targets and objectives. The employee will be liable to PAYE and national insurance contributions on the bonus when paid. It is important to have a share valuation mechanism in place if a bonus is to be paid based on the value of the company, or a method of evaluating performance if the bonus is to be paid based on performance targets. The benefit of this type of remuneration plan is that the employees can be rewarded while never actually owning shares or share options in the business. Angela Keery is a Tax Director at BDO Northern Ireland.

David Duffy highlights the latest VAT cases and discusses recent VAT developments. IRISH VAT UPDATES Budget and Finance Bill Budget 2018 and the Finance Bill, as initiated on 19 October 2017, contained a small number of VAT-related measures. The principal measures are summarised below: VAT rates: the current Irish VAT rates remain unchanged. However, an increase in the VAT rate applying to sunbed services from the reduced rate of 13.5% to the standard rate of 23% will take effect on 1 January 2018. Education and vocational training: the Finance Bill contained measures amending the legislative provisions regarding the VAT exemption for certain education and vocational training services. The main impact of the changes is to clarify the scope of the VAT exemption for vocational training and retraining, and to place on a statutory footing general Revenue administrative practice in respect of the application of the VAT exemption to such services. There are also a number of technical amendments to clarify the application of the VAT exemption to certain educational services and to update legislative references. The Bill also provides that regulations may be introduced to further define the scope of the exemption. Providers and recipients of educational and vocational training services should consider the impact of these amendments on the VAT treatment of their services. Charities: the Budget speech and supporting documentation included details of the introduction of a VAT compensation scheme for charities. This compensation scheme will come into effect in respect of VAT incurred by charities from 1 January 2018 onwards, with refunds being paid in the subsequent year. Therefore, the first compensation payments will be made in 2019. Charities will be required to satisfy a number of conditions to make a claim. Where these conditions are satisfied, a charity can apply for a refund of a proportion of VAT suffered on their costs based on the level of non-public funding they receive. For example, where a charity’s gross income for 2018 comprises 70% privately sourced income including fundraising, subscriptions and donations, the charity may apply to claim up to 70% of the VAT suffered on its costs for the year. However, the total Exchequer funds available for VAT refunds are limited to €5 million in 2019 for the entire charity sector. Where total valid claims from all charities in 2019 exceed the €5 million cap, the claims will be apportioned to qualifying applicants on a pro-rata basis. VAT treatment of payment services eBrief 100/17 provides a link to a new section of Revenue’s tax and duty manual entitled “VAT Treatment of Payment Services”. The section contains Revenue’s interpretation of the scope of the VAT exemption for services of negotiating or dealing in payments and transfers – commonly referred to as “payment processing services”. This guidance follows recent Court of Justice of the European Union (CJEU) judgments regarding the scope and application of this exemption. The guidance sets out the conditions for VAT exemption to apply to payment processing services, which are largely drawn from the decided case law. In addition, the guidance clarifies that the status of the supplier and the means by which the service is supplied (i.e. electronically or manually) are not determinative of the VAT treatment of the service. The guidance includes several examples to illustrate these principles. It confirms that VAT exemption applies to a bank’s service of transferring funds from one party’s account to another, as well the services of a merchant acquirer bank or financial institution that processes debit or credit card transactions on behalf of merchants. The key point is that these services effect the payment and bring about a change in the legal and financial position of the payer and payee. However, services involving the transfer of information regarding payments using a secure messaging system would generally not be exempt from VAT as that service does not actually effect the payment. In addition, services involving the provision of infrastructure and technology to enable a merchant to transmit credit card information to a merchant acquirer, but do of themselves effect the payment, would equally not qualify for VAT exempt. The guidance is welcome in terms of clarifying the boundaries between services which effect a payment and those which provide the technology or infrastructure to provide information. However, with the continuing growth of fintech or financial technology and new payment methods, the distinction between VAT-exempt and VAT-taxable services will need to be closely monitored. EU VAT UPDATES Leasing and hire contracts The CJEU’s ruling in Mercedes-Benz Financial Services (MBFS) (C-624/15) is relevant to providers of asset finance products such as leases, hire purchase (HP) and in particular, personal contract plans (PCP). This case concerned a PCP car finance product offered by MBFS where the customer was required to pay an initial deposit and monthly instalments over the term of the agreement. The contract contained a provision which provided that, at the end of the term, the customer had the option to make a balloon payment (equal to approximately 40% of the initial value of the vehicle) in order to purchase the vehicle outright or alternatively, hand back the vehicle. Under EU VAT law, where an agreement for the hire of an asset provides that “in the normal course of events”, ownership of the asset is to pass to the customer at the latest upon payment of the final instalment, it is deemed to be an upfront supply of goods. Therefore, VAT on such supplies is due upfront when the asset is first handed over to the customer. This is the treatment that normally applies to HP agreements. By contrast, an agreement for hire that does not provide that ownership is to pass “in the normal course of events” (e.g. an operating or finance lease) is regarded as a supply of a service and VAT applies as the rental amounts fall due. The CJEU was asked to consider the meaning of “in the normal course of events” in order to determine whether the MBFS agreement should be considered a supply of goods (similar to a HP agreement) or a supply of services (similar to a lease). It was held that, in order for the agreement to be categorised as a supply of goods, two conditions must be satisfied. First, there must be a clause expressly relating to the transfer of ownership of the goods from the lessor to the lessee. This can include an option to purchase the agreement. Second, it must be clear from the terms of the contract that the ownership of the goods is intended to be acquired automatically by the lessee if performance of the contract proceeds normally, over the full term of the contract. For example, this would be the case where the exercise of the option to purchase under the contract is the only economically rational choice for the lessee. It was left up to the national court to apply these conditions to MBFS but on the basis that the optional payment under the MBFS was a significant proportion of the value of the vehicle, the CJEU’s guidance would suggest that it should be regarded as the supply of a service. Asset finance providers should carefully consider the VAT treatment of their supplies in light of the judgment as the designation of the contract as a supply of goods or services will have significant implications for the timing and amount of VAT due on such contracts. David Duffy ACA, AITI Chartered Tax Advisor, is a VAT Director at KPMG.

Welcome to the December edition of Accountancy Ireland. I am now almost half way through my Presidential year. Among the highlights so far have been the many conferring ceremonies held over recent months for newly inducted members of the Institute as well as the FCA designation for those who have achieved 10 years of membership. There have also been diploma and certificate conferrings for the many members who have invested in themselves and completed many lifelong learning opportunities on offer from the Institute. These events were an opportunity for me to meet members, and also for members and their families and friends to celebrate their achievements. Ethics This edition is largely devoted to the theme of ethics and governance. Our members have always taken great pride in the high standards of ethics in our profession. Our integrity, our ethics are right at the core of what it means to be a Chartered Accountant. It’s an area where our Institute has sought to lead the way, and I think the articles in this edition show that we are doing just that. The Institute currently has a research project underway with members  focused on identifying the key issues impacting on ethics and governance, especially as they relate to the charity and not for profit sector. I look forward to the findings being published in 2018. This will provide members with a valuable source of best-practice knowledge and advice. Pension provision In Ireland, the gap between public and private sector employees in pension funding remains wide. 60% of private sector workers are reported as having no pension provision and, instead, will rely on the State-provided pension to fund their retirement. It is an issue which needs to be resolved.  The Institute is about to publish a new report, Pensions in Ireland – A Responsible Way Forward. This is a meaningful, solutions-oriented contribution to the debate. The paper examines a number of different pension funding models in other countries and looks at how an auto-enrolment approach to pension-funding could be used. I believe that the report outlines an approach which will go some way to bridging the funding gap. We have also carried out a survey to gauge what members think about pension auto-enrolment. Thank you to all those who contributed.  Brand campaign As a professional membership body, one of the Institute’s key functions is the promotion of our profession and highlighting the value that we bring.  Supporting this aim, the Institute ran a radio and online advertising campaign in November with the message, “Make Sure Your Accountant is a Chartered Accountant”. This year, we have stepped up the campaign with more print and online advertising, and more branded materials. The campaign also plays a significant role in attracting the next generation of talented and ambitious people to the profession. Annual Dinner Our Annual Dinner will take place at the Convention Centre, Dublin on Thursday 8 February. Professor Louise Richardson will be the keynote speaker. Professor Richardson is Vice-Chancellor of the University of Oxford and was previously Principal and Vice-Chancellor of the University of St Andrews. I am delighted that Professor Richardson will speak at the foremost event in our calendar. I hope that you will come along for what will be a fantastic evening celebrating the talent and impact of our membership. Season’s greetings As we come towards the holiday season, I would like to take this opportunity to wish you all a very merry Christmas. I’d like to thank you for your support throughout the past year. Shauna Greely President

The leaking of confidential information damages lives and reputations, irrespective of the circumstances. The issues raised by the Paradise Papers last month – the leak of confidential documents from the Appleby law firm – are not new. The rights and wrongs of taxation pre-date the tepid “fair share” guff we hear from politicians, journalists and other campaigners, some of whom have agendas far removed from any objective consideration of what is acceptable and what is not. Taxation presents particular ethical questions because it involves a payment without a clear bargain. Tax is paid towards an often unspecified common good. You pay your taxes, but you don’t see anything directly in return. Nor does everyone pay the same amount, either in absolute terms or relative to the income they earn. This can happen by virtue of the legal status of the taxpayer, corporate or individual, or by virtue of the legal status of the income or gain. Recognising the rule of law is second nature to Chartered Accountants, but some of the consequences of applying the rule of law don’t sit well if you expect the tax system to deliver a clear bargain. Confusing the matter further is the fondness of governments to use the system to shape social or commercial behaviour. Not that this is new either. While many people have heard of the Rosetta Stone, an ancient tablet with the same message in three languages which permitted the unravelling of the meaning of Egyptian hieroglyphics, few enough might tell you what that message was. In fact, it was a piece of tax legislation offering a tax exemption for any Egyptian high priest sensible enough to worship the Pharaoh of the day as a god. Finance ministers in the western world have not (recently, at least) sought deification, but they usually look to get re-elected. The principle is the same; the difference merely one of degree. The mismatches in tax systems across borders is sometimes accidental, but also sometimes by design. These mismatches are being ironed out, largely through the efforts of the OECD and partly by EU initiatives, but they make slow progress. It doesn’t suit a finance minister’s re-election prospects to be seen to be acquiescing to international pressures to change domestic tax rules, if those changes result in less tax being collected in his or her own country. Projects like the EU’s Common Consolidated Corporate Tax Base (CCCTB) promote a brave new world of cross-border cooperation on the taxation of companies, but such projects tend to stall. That’s not because of philosophical or ethical objections, but because all cooperative arrangements involve give and take. No finance minister wants to run the risk of losing some of their tax take. Instead, what the Paradise Papers will do is accelerate cross-border cooperation in areas not directly linked to calculating the tax which might be collected. Predecessor revelations to the Paradise Papers – Luxleaks (which involved the publication of confidential material from PwC) and the Panama Papers (which involved the publication of confidential material from the law firm, Mossack Fonseca) speeded up agreements between governments to share financial information about their citizens and businesses with a view to tackling tax evasion. But apparently, not all information is fit to share. The New Yorker magazine has reported that the journalists who received the Paradise Papers leaks analysed the material on computers which were not connected to the internet. I find that insight interesting. The private and confidential nature of the materials which had been leaked was only respected insofar as security was needed to preserve the journalistic scoop. The Paradise Papers may well prompt further coherent action against aggressive forms of tax avoidance across borders, and few would argue that is unreasonable. The end should not justify the means, however. The leaking of confidential information damages lives and reputations, irrespective of the circumstances. A debate on what constitutes a “fair share” of taxation should not be taking place against the background noise of people jumping on the bandwagon. Dr Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland.

Although the long equity bull market looks set to continue for a little while longer, is an equity bear market on the horizon? With international equity markets reaching new high after new high, is an equity bear market around the corner? There are certainly plenty of grounds for nervousness. Having hit a low of 666.78 in March 2009, the benchmark US stock index (the S&P 500) is now comfortably above 2,500. In addition, US equity valuation levels are elevated. The cyclically-adjusted-price-earnings ratio (CAPE) overcomes a key shortcoming of the traditional P/E, which is that cyclically-elevated earnings can make even inflated values look reasonable. It does this by comparing today’s price to average inflation-adjusted earnings over the previous decade. The result thus compares equity values to a measure of earnings which, being based on a 10-year average, gives us a “through the cycle” value for earnings. At the end of November, the CAPE ratio for US stocks was 30.8. Since 1881, that value has been exceeded twice: in the immediate run-up to the 1929 Great Crash and in the years around the climax of the TMT (technology, media and telco) bubble in 2000. The elevated level of the CAPE ratio has in the past been a harbinger of meagre equity returns. When Mebane T. Faber wrote his paper, A Quantitative Approach to Tactical Asset Allocation, he studied the impact of CAPE values on subsequent real annual equity returns over the following decade for the years 1881-2011. He reported that when CAPE values exceeded 30 in the past – as they do now – subsequent equity returns for the following decade averaged less than zero. In short, US equities are valued at expensive levels which, in the past, have generated dismal returns over succeeding years. Timing signals While valuation metrics may give a good indication of returns in the medium- to long-term, they traditionally work poorly as timing signals. Just because something is expensive today doesn’t mean that it can’t become even more expensive tomorrow. And there are several reasons to believe that this equity bull market may continue for a little while longer. Global money supply continues to grow faster than industrial output. That indicates that the monetary environment is supportive for assets values to continue increasing, as the recent $400 million sale of Leonardo da Vinci’s Salvator Mundi signals. And investors have not demonstrated the frenzied enthusiasm which typically occurs at bull-market tops. Citibank maintains a Bear Market Checklist to warn of an impending reversal in equity markets. This is a list of 18 global factors. In 2000, 17 suggested unsustainable froth. In 2007, 13 factors were telling investors to sell. The subsequent bear markets wiped more than 50% off global share prices in each instance. What is the story today? My main concern According to Robert Buckland, Citi’s global equity strategist, “Right now, only three of our 18 factors are indicating typical bull market excess”. He observed that global equity inflows do not yet look especially frothy. Neither does investor sentiment, according to Citi’s US Panic/Euphoria index. And while global M&A, IPOs and capex are picking up, they remain modest compared with the gains seen in equity indices. The thing that concerns me most about global equity values today is the turn in the central bank cycle from loosening monetary policy to tightening. The US and the UK have already experienced interest rates rises. The key reason why interest rates remain so low this long into an economic recovery is that inflation remains so subdued. If inflation was to pick up, the cycle of central bank tightening would accelerate. It was central bank tightening which eventually caused rising equity markets to reverse in 2000 and in 2007. Today, inflation remains subdued and anticipated rate rises follow a shallow and unthreatening trajectory. So it looks as if the long equity bull market is set to continue, but be careful – with valuations this elevated, being long on equities may be the equivalent of picking up nickels and dimes in front of a steamroller. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.

In the words of  Miley Cyrus: “Change is a thing you can count on”. Technology is advancing at pace. We have all experienced this in our day-to-day lives. There are an estimated five billion mobile phones worldwide, of which 50% are smartphones. And the iPhone is just 10 years old! Car technology is so advanced that vehicles can now drive themselves. Waymo, “a new way forward in mobility”, is the self-driving car company that spun out of Google and runs autonomous minivans around Phoenix. Driverless cars are expected to appear on UK roads by 2021 as a result of sweeping regulatory reforms promoted by Chancellor Philip Hammond, in an effort to position technology at the forefront of a post-Brexit economy. A view of the future for Chartered Accountants So what does the technology future hold for Chartered Accountants? I firmly believe that we are well-placed to be at the forefront of technological change and our skills allow us to be both flexible and adaptive. There is an obligation upon us all to focus on our skills so that we are ready to meet the challenges ahead. Technology causes jobs and roles to change and while some become redundant, others are created. Repetitive manual tasks such as traditional bookkeeping and accounting are already being replaced by smart systems. IT platforms will allow greater ability to outsource the finance function and with that will come greater opportunity for the finance professional to interpret, analyse and communicate financial data. Many large organisations that have centralised accounting functions have discovered the increased need for experienced finance professionals to support sales and production by applying data analytics to interpret performance and improve business margins and productivity. Data is becoming a huge asset and we will need to develop additional competencies to present financial and non-financial data under real-time reporting in a format that is easily understood, while avoiding the risk of smothering users with too much information. The demand to model future trends and scenario plan will also increase with ever more complex strategic planning. With this will come the challenge of strengthening communication and influencing skills so that Chartered Accountants play a central role in decision-making. The scope of influence will extend far beyond the finance function and Chartered Accountants will therefore need to integrate across all functional areas of an organisation. Ethical issues and the influencing of decisions will also become increasingly complex. Audit and assurance Audit and assurance will undergo significant change. Sample testing using a “tick and tot” approach will be replaced with automated interrogation of large data sets and this will drive the requirement for experienced individuals to interrogate exceptions and investigate variances. Judgement workloads are going to increase and there will be greater integration with data programmers. Questions therefore arise as to how trainees will develop the skills needed for career progression. Changing regulatory requirements to communicate “key audit matters” will make reports more useful to stakeholders, but with this will come the need to have increased business awareness, sector knowledge and appreciation of risk.   Our opportunity I feel that change driven by technology provides a great opportunity for Chartered Accountants. Our training equips us to communicate effectively; we have proven skills in developing relationships, especially when interacting with client personnel; and our analytical minds seek to problem-solve and find solutions. No doubt there will be uncertainties when faced with change, but we all have the right fundamental skills to embrace and rise to the challenge. Paul Henry is a Director at Osborne King and a member of Council at Chartered Accountants Ireland.

Every office has a narcissist, you just need to learn how to play to their strengths instead of focusing on their weaknesses. Narcissism is a word we have come to know very well, particularly since the election of Donald Trump. The term itself derives from Greek mythology. A young man named Narcissus saw his reflection in a pool of water. He became enamoured by the beautiful image in the pool but died of sorrow when he realised he could not seduce the beautiful reflection. Narcissists (not surprisingly) are viewed as selfish, entitled, grandiose and uninterested in those around them. They pursue their own agendas and are likely to make critical decisions based on their own instincts rather than the views of others. Narcissists are likely to pursue power but once they have it they are more likely to wield it in their own interest and against the interests of others.  The upside On the surface, this looks like a toxic mix of qualities, but a deeper dive into research tells us that narcissism has an upside: self-esteem, assertiveness, charisma, confidence and a willingness to go with one’s own belief. The value of narcissists is their ability to scope out a vision and relentlessly follow the path to get there. Narcissists, however, can prove tricky to manage, particularly when they think they know best, and their delusions of superiority mean they think of themselves as special. The following are some pointers that may be useful in corralling the harmful aspects of this condition. Step 1: how to recognise a narcissist at work Narcissists complain about their fellow workers. They are likely to diminish the achievements of others as a way of inflating their own achievements. In addition, they rarely admit mistakes and will never take the blame if something goes wrong. They want to associate with high-powered and influential organisational members as they view themselves as superior to those with whom they work.  Step 2: leveraging narcissistic tendencies Narcissists are rarely team players so try to find projects that can be completed solo. If you must have a narcissist on the team, surround them with influential and powerful people, as they are more likely to cooperate when in the company of those they admire. Step 3: hold your boundaries Narcissists have a strong sense of entitlement. It is important to hold narcissists to account for transgressions of organisational norms. This may mean policing boundaries until the narcissist understands that they aren’t as special as they think they are. It also means holding yourself to account for caving into demands for special treatment.  Step 4: the empathy challenge Narcissists rarely empathise with co-workers and are unwilling to recognise the damage they cause to others. This may mean you have to support people in the organisation who may have been hurt. It also means you cannot appeal to a narcissist’s sense of empathy or compassion because they rarely have these emotions.  Step 5: play to their strengths Narcissists love being the centre of attention. Given the correct context, they may be the perfect salesperson or spokesperson for your company (see Step 2). Being front and centre for the company may play to their strengths and help you find the right role for them. Narcissists are never going to like you, care about you or recognise your authority. This means that you have to hold boundaries and get support for yourself as you try to manage this difficult personality type.  Dr Annette Clancy is a lecturer in organisational behaviour at UCD College of Business.

Helen Byrne, Senior Tax Manager at EY, outlines the relevant compliance dates for December and January. Relevant dates for companies 14 December 2017 Dividend withholding tax return filing and payment date for distributions made in November 2017. 21 December 2017 Due date for payment of preliminary tax for companies with a financial year ended 31 January 2018. If paid using Revenue Online Service (ROS), this date is extended to 23 December 2017. Due date for payment of initial instalments of preliminary tax for companies (not “small” companies) with a financial year ended 30 June 2018. If paid using ROS, this date is extended to 23 December 2017. 23 December 2017 Last date for filing corporation tax return Form CT1 for companies with a financial year ending on 31 March 2017 if filed using ROS.  Due date for any balancing payment in respect of the same accounting period. Loans advanced to participators in a close company in the year ended 31 March 2017 may need to be repaid by 23 December 2017 to avoid the assessment (on the company) of income tax thereon. A concessional three-month filing extension for iXBRL financial statements (not Form CT1) may apply. For 31 December 2016 year ends, this should extend the iXBRL deadline to 23 December 2017. 31 December 2017 Last date for filing third-party payments return Form 46G for companies with a financial year ending on 31 March 2017. Latest date for payment of dividends for the period ended 30 June 2016 to avoid Sections 440 and 441 TCA97 surcharges on investment, rental or professional services income arising in that period (close companies only). Contributions made by employers to approved occupational pension schemes are tax-deductible on a payment basis, as are charges on income (patent royalties and certain interest, for example). Companies with 31 December year ends may wish to review their positions to maximise or minimise deductions before the year end. A two-year time limit applies to some corporation tax group relief and loss relief claims. Potential claims for the period ending 31 December 2015 may need to be considered prior to 31 December 2017. Research and development (R&D) tax credits in respect of R&D expenditure incurred in an accounting period ended 31 December 2016 must be claimed by 31 December 2017. A similar deadline applies to capital allowance claims for intangible assets.  Country-by-Country Reports must be filed with Revenue no later than 12 months after the last day of the fiscal year to which the Country-by-Country Reports relates. Country-by-Country Reports for the fiscal year ended 31 December 2016 must be filed with Revenue no later than 31 December 2017. 14 January 2018 Dividend withholding tax return filing and payment date for distributions made in December 2017. 21 January 2018 Due date for payment of preliminary tax for companies with a financial year ended 28 February 2018. If this is paid using ROS, this date is extended to 23 January 2018. Due date for payment of initial instalments of preliminary tax for companies (not “small” companies) with a financial year ended 31 July 2018. If paid using ROS, this date is extended to 23 January 2018. 23 January 2018 Last date for filing corporation tax return Form CT1 for companies with a financial year ending on 30 April 2017 if filed using ROS. Due date for any balancing payment in respect of the same accounting period. Loans advanced to participators in a close company in the year ended 30 April 2017 may need to be repaid by 23 January 2018 to avoid the assessment (on the company) of income tax thereon. A concessional three-month filing extension for iXBRL financial statements (not Form CT1) may apply. For 31 January 2017 year ends, this should extend the iXBRL deadline to 23 January 2018. 31 January 2018 Last date for filing third party payments return Form 46G for companies with a financial year ending on 30 April 2017. Latest date for payment of dividends for the period ended 31 July 2016 to avoid Sections 440 and 441 TCA97 surcharges on investment, rental or professional services income arising in that period (close companies only). Personal taxes 15 December 2017 Capital Gains Tax due in respect of any chargeable gains arising on disposals in the period 1 January 2017 to 30 November 2017 must be paid on or before 15 December 2017.  1 January 2018 0% rate of business in kind (BIK) commences in respect of electric vehicles for 2018. 31 January 2018 CGT due in respect of any gains arising on disposals in the period 1 December to 31 December 2017 must be paid on or before 31 January 2018. General 31 December 2017 Valuation date for 2017 domicile levy. Irish assets held on this date will be taken into account in ascertaining if the €5 million ‘Irish asset test’ has been met. A four-year time limit generally applies to repayment claims. A claim for repayment of corporation tax for the year ended 31 December 2013 must generally be lodged with the Revenue by 31 December 2017. Claims for repayments of income tax for the year of assessment 2013 must also be submitted by 31 December 2017.  Refund of DIRT for first time buyers (including self-builds) applies where the purchase/self-build is completed by 31 December 2017. Relief from stamp duty and capital gains tax on transfer of property rental business of an Irish Real Estate Fund (IREF) to a Real Estate Investment Trust (REIT) expires on 31 December 2017. 2% rate of stamp duty will apply to transfers of non-residential property where binding contracts were in place before 11 October 2017 and where the instruments for the transfers are executed before 1 January 2018.  1 January 2018 The minimum seven-year holding period required in order to avail of capital gains tax exemption on land and buildings purchased between 7 December 2011 and 31 December 2014 is reduced to four years. This applies to disposals of such assets made on or after 1 January 2018. 8 January 2018 Under mandatory reporting rules, promoters of certain transactions may be required to submit quarterly ‘client lists’ in respect of disclosed transactions made available in the relevant quarter. Any quarterly returns for the period to 31 December are due on 8 January 2018. 30 January 2017 Due date for submission of return and payment of IREF withholding tax in connection with the accounting period ended on or before 30 June 2017. Note: the above matters do not take into account any developments in relation to Finance Bill 2017 at Select Committee Stage onwards.

As career success depends on more than technical expertise alone, two senior business leaders share their tips for success. The Chartered Accountancy qualification provides an excellent foundation for a rewarding and diverse career, but reaching the pinnacle of business isn’t easy. It requires strategic career decisions and a range of non-technical skillsets. I meet hundreds of accounting professionals every year looking for advice and opportunities to help them advance. Many of them ask questions about the experience and skills needed to help them progress to CFO level and beyond. I recently spoke with senior leaders who have enjoyed successful careers to hear their story. Mark Irwin trained with a Big 4 firm and since making the move to industry, he has worked in financial services through the financial crisis and Paddy Power Betfair, where he is currently Group Director of Finance and Corporate Controller. Mark managed to progress his career despite working in significant change and transformation environments. David Fitzgerald, who also trained in a Big 4 firm, has had a diverse career across the FMCG, technology and pharmaceutical sectors. He has held a mixture of financial, operational and general management positions in a number of companies including Microsoft, Uniphar, Danone, Britvic and Glanbia, where he is currently EMEA Strategy Director. While Mark and David have had different but equally successful careers, both agree that the training they received from working within the profession was fundamental to helping them progress. “Be mindful of where you are,” David advises. “If you are working in audit, for example, really think about the company you are auditing as you have a unique opportunity to see, at a very senior level, how a business operates in lots of different sectors. That’s a privileged position that many trainees don’t necessarily appreciate.” Mark also feels that the ACA qualification holds a lot of weight. It is the foundation on which everything else in his career has been built. “It opens many doors for you. However, it will only get you so far. How you progress is really about the broader range of skills you develop and the experiences you encounter.” Finance of the future The role of finance has changed considerably over the last few years as it becomes more embedded within organisations. So what do Mark and David feel are the skills that finance leaders of the future need to develop to ensure they can continue to progress? “Organisations are investing heavily in improving technology and processes with more tasks becoming automated,” Mark says. “There is no point in hiring talented people to have them simply push numbers through a system. Business partnering as a theme within finance is becoming widespread and to do that, Chartered Accountants must really understand the business they are working in and become more commercially minded.” David has also seen a change in the skills sought within finance. “One of the key things we look for within our business is analytical skills. It is not enough to be able to run the numbers, as technology will do that for you now. It is the interpretation of the numbers that is important. In the past, the emphasis was on the figures being correct; now it is figuring out the true message. What am I picking up from how the business is performing? How do I impart that message to the people I need to sell it to or explain it to?” Accountants have historically been perceived as being purely responsible for reporting the numbers, but David sees finance professionals of the future taking this much further. Finance needs to correlate internal information with external information – what is being said in the press and could the external context be partly responsible for results tracking as they are? “We are living in a data rich world of analytics. The trick is to extract the right bits, put it back together and create meaningful information that will shape the way the business is performing.” Leadership Building on the technical skills learned through training is important, but the most fundamental skills that underpin someone’s ability to progress come with the softer skills associated with personal interaction. Leadership credentials are paramount to successfully moving forward and there are numerous elements to being an effective leader – not to mention the challenges associated with managing teams. “Finance is as much about people as numbers,” says Mark. “If you hire the best people and build the strongest teams, these employees need to be supported and empowered. You have to remember that every employee is an individual and therefore, you need to adapt your style to be effective.” By being conscious of this, Mark has helped to create highly-engaged teams with strong retention rates. “We decided what our team stood for by holding seminars and listening to each other. We then created a charter with a clear vision and purpose, the way we wanted to work, the rules we would operate by and our key objectives. This created a culture of openness, collaboration and helped build momentum.” David also adopts a similar style and would describe himself as a ‘consensus builder’ where he can be. He has found that gathering opinions from his teams has led to greater productivity, although sometimes you do need to be directive and make decisions. Building rapport as a leader is important, as is being conscious of how you frame questions and invite your team members to provide their opinions. To get a team to buy into your vision, a number of soft skills are important. The ability to communicate, build relationships, have demonstrable emotional intelligence and be able to understand what makes each person tick will stand you in great stead as a leader. Using this information, it is possible to build highly-engaged teams, improve performance and generate your own future success. As David points out, “Well-run and highly-engaged teams can do a huge amount of difficult and sometimes horrible work together. Whereas the work could be easy and interesting but if the team doesn’t get on, then you won’t have a happy workplace and productivity will suffer.” From a behavioural standpoint, David notes that leaders also have a responsibility to ensure that they and their teams are focused on getting the job done. “Being reliable is important and you should always keep your stakeholders informed about how you are tracking,” he says. While it might seem pretty obvious, David maintains that it is easy to forget the importance of being confident in your capability and to ask for help where needed. “Never spoof your way through things. Otherwise, you will just let yourself and the business down,” he says. Take ownership of your career Strong technical skills, commercial acumen and leadership skills will put you in a good position but, as Mark explains, promotions don’t just happen – even if you do have a great work ethic. “You need to be proactive rather than reactive, and recognise opportunity when you see it. Don’t be egotistical or superficial, but do deploy energy to promoting yourself and building relationships within your organisation. Speak up in meetings, have ideas and don’t be afraid of failure or to take some risks”. David also states that, when assessing career options, Chartered Accountants must ensure that there is a potential career pathway ahead. “It doesn’t matter how long that pathway is per se, but there needs to be possible opportunity ahead if you perform,” he adds. David also advises that when one looks to move positions, the people aspect is an important factor along with engagement with the brand and the philosophy of the company “If you can’t get on with the people you’re working with and you’ve no passion for the business, then you shouldn’t be there because you won’t enjoy it.” According to Mark, diverse experience is also very important. Ambitious people often look for, and push for, promotion up the ranks. However, making a lateral move into a new area, new industry, new company or international location can really help you hone new skills and position yourself for other opportunities in the future. Being introspective around personal development areas, stepping outside of your comfort zone and being prepared to take a risk can end up transforming your career. This is astute advice as from a talent perspective, I now see demand from clients globally for high performance finance and accounting professionals with a breadth of experience. There are so many career paths available to Chartered Accountants that all experience can be valuable at certain stages. Making the right choices and understanding the benefits and prospective career paths available to you is something that all professionals, but especially those newly qualified or recently qualified, should take time to think about. Not everyone can make it to the upper echelons of the business world but if you make considered career choices, hone your leadership skills, add commercial value and build rapport within your current or future organisation, you will have a strong chance of making it to the top. James Gallagher is an Associate Director at Morgan McKinley.

As the number of virtual teams grows and the amount of face-time declines, managers must take an innovative approach to trust in their teams and organisations. Teamwork plays an increasingly vital role in organisational life. An impetus behind this development is derived from the ever-growing presence of millennials moving into positions of influence and leadership. Meanwhile, technology is disrupting old methodology fast and creating opportunities to develop new ways of working. This in turn presents new challenges for managers, mentors and coaches – many trained and developed before VUCA (volatility, uncertainty, complexity and ambiguity) times, and perhaps feeling ill-equipped to leverage their skills to good effect within the new paradigm in which they are required to work. The virtual team One significant arrival in the workplace is that of the virtual team, which is defined by leadership development adviser Beth Millar as being comprised of members who are not located in the same physical place but in different cities, states or even separate countries; using technology and specific skills to achieve a common goal. This is all very exciting, but it presents challenges. There are challenges to team members themselves – how does a team based in five different locations and who predominantly use phone, tablet and screen to communicate develop what Prof. David Clutterbuck calls “situational team knowledge”, the almost intuitive interpretation of each other’s cues and intentions? And then there are challenges for their coach – be that an external or internal coach, or indeed their line manager – in helping them develop, harvest, build upon and leverage this situational knowledge for the benefit of themselves and their organisation. Some of the most important work in this field has been carried out by American executive coach, Dr Pam Van Dyke, who concludes that a coach must understand that there is an art and a science to creating a virtual presence both during the session and in between sessions. Having understood this, the coach then needs to pay careful attention to developing both disciplines. Commenting on Van Dyke’s work, UK coaching guru Peter Hawkins argues that elements of this art or science begin with the need for the coach to work in real time with the team when it is working together. This will involve joining teleconferences and web-based discussion, and perhaps establishing a closed web-based workroom, where the coach can meet team members in a place that feels secure enough to allow them to become vulnerable. The essential ingredient Vulnerability is an essential ingredient in the building of trust between team members, which is itself vitally important to the development of a healthy approach to conflict resolution. In a world where online relationships can become almost synonymous with anonymity, pretence and manipulation, one vital role of the coach is to create and hold a space that is contracted to be secure, honest, confidential and non-judgemental. A place where, as Patrick Lencioni put it, team members can share their skills and display their weaknesses without fear of reproach. Other productive areas in which a coach can work with a virtual team include two very helpful ideas from Harvard Business Review, the first of which is to help the team to build its own working rhythm. By its very nature, remote working offers individuals the opportunity to create their own working patterns and behaviours, and the very act of agreeing together to set some clear and mutually acceptable touch-points can be the first step towards a commitment to develop mutual accountability, which is a prelude to high performance. The other suggested area is for the coach to work with the team to create a virtual water cooler. The image of co-workers gathering around a water cooler is a metaphor for informal interactions that share information and reinforce social bonds. In its absence, team meetings can become task-focused at the expense of team cohesion and unity. As an initial coaching intervention with a virtual team, this change might generate some great ideas, create excellent working chemistry and set a very positive tone for the ongoing coaching project. A new challenge Michael Eisner, former CEO of Disney, has said that “the worst decisions I ever made were on conference calls”. However, increasing globalisation, cost of travel in terms of money, time and world resources means that we will need to find ways to build trust with less face-time than we have previously been used to. This presents a new challenge for team coaches and managers, one that will have to be addressed both quickly and effectively if the potentially positive disruptive power of technology is to be fully leveraged into strong bottom line human performances. Ian Mitchell and Siân Lumsen are Partners at Eighty20 Focus, a boutique executive coaching firm.