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The benefits of workplace wellness

Organisations big and small are realising the advantages of workplace wellness programmes, for the business and the employee. Workplace wellness programmes can be extremely effective in helping employees look after their mental health and sustain a healthy lifestyle, while also having significant benefits  the organisation. Failing to take time to create a happy and healthy workplace can put employees at risk of absenteeism, high stress levels and a decrease in productivity. It’s for these reasons that investing in workplace wellness has become a common trend for many modern businesses.  Benefits In the past, corporate wellness programmes have often been viewed as something that is ‘nice to have’, but not a necessity. According to the ESRI, work-related stress, anxiety and depression is the second highest cause of illness in the Irish workplace. There is a greater risk of this for those working for extended periods, in particular those working over 50 hours per week. While a professional services career is extremely rewarding, those rewards often come with hard work which include long hours, hectic periods and heavy workloads. Wanting to do their best for their clients while still being able to switch off when not at work, is a balance many employees struggle with, particularly those in junior positions. For these staff members, it is not just about the hours they put in, but also the need to experience fulfilment and job satisfaction throughout the workday. Studies show that there is a strong link between workplace well-being and employee productivity, retention and all-round happiness. Focusing on workplace wellness, offering employee perks and additional well-being benefits is a key growth driver in recruiting and retaining top talent. Workplace well-being Recognising potential health and well-being issues in the workplace and addressing them before they become a serious problem is essential. This is why it is so important to create an environment where employees feel confident and secure. Earlier in the year, speaking on the on the new National Healthy Workplace Framework initiative, Biddy O’Neill, Health Promotion Manager in the HSE, said, “The concept of a healthy workplace is coming up more and more in the corporate social responsibility and health and safety areas.... We want to look at the culture of organisations. It is a question of trust and ethics – where on the agenda is health and well-being? There are benefits for both employees and employers but the challenge is to get it embedded.” Wellness initiatives should offer a variety of programmes which can include yoga classes, lunchtime seminars addressing everything from nutrition to stress management to financial well-being, first-aid classes, fitness challenges, meditation, and counselling or health screenings and assessments.   At Glandore, we have found that changes in workspace design can also have a positive impact on workplace wellness. Focusing on elements such as ergonomic office furniture, light settings, natural light points, thermal comforts and air quality are simple measures companies can take to ensure employee health and well-being. Encouraging flexi-hours and regular breaks, offering healthy food options and creating breakout and social spaces to encourage employees to take time away from the desk are also some ways in which companies can foster wellness.  Getting it right In recent years, some firms have taken a greater part in raising awareness. Mental health, well-being and stress are all major concerns for those working in the professional services industries, and more and more companies are starting to quantify the proven benefits of well-being for employees.  According to Jessica Carmody, Chair of KPMG’s Be Mindful network, KPMG’s leadership team promotes open support, awareness, and learning in order to create change for the better. KPMG also offers access to BeWell, their employee assistance programme. Deloitte is also on board. They recently published research which states that “greater public awareness, increasing political attention and an increased emphasis on employer responsibilities are driving an increased interest in workplace mental health and well-being.’ Their wellness programme, aptly named Unplugged, addresses the physical and psychological components of well-being by offering information sessions and programmes on a subsidised basis, while their Equilibrium programme aims to offer a more balanced working week for their employees. KPMG and Deloitte aren’t the only companies acknowledging the significant part that employee well-being plays in the productivity and performance of a business. In January of this year, PwC launched their new employee health and well-being initiative, Boost.  Michelle Heron, HR Consultant at PwC Ireland said, “PwC recognises that performance in work is directly linked to a healthy body and mind.”  The case can be made that some companies only encourage wellness in the workplace on an occasional basis but Heron pointed out that their wellness programme is “ongoing throughout the year, not just for Workplace Wellness Day.” Having a corporate well-being programme is also a driving factor when it comes to our future leaders deciding to which company they will work. A recent survey by PwC found that 95% of millennials listed well-being in a job as “very important” to them. Companies like EY also recognise the importance of assisting their employees when it comes to financial well-being. According to a report published by EY in September 2017, 30% of employees said they think about personal finances while on the job and more than half of them said they would be more productive without such worries. Their survey showed that those who offer financial wellness plans saw a direct correlation to employee well-being, retention and productivity. It’s not only multinationals who can implement a wellness programme within a workplace. Businesses of any size can create and sustain a successful workplace health and wellness programme that delivers results. Personal tax advisory company Fenero state that “although we deal in finance and figures, we are a very people-focused business.” Through initiatives such as offering employees monthly health checks, weekly fresh fruit deliveries, pedometer challenges and mindfulness sessions, Fenero was chosen as a Small Business Winner in the Nutrition & Health Foundation National Workplace Well-being Awards.  At Glandore, we list wellness as one of our core values and completed a successful and balanced wellness programme for all of our member companies during 2017. We believe that working in an environment where one feels safe, respected, and valued, where the demands of the job are reasonable, and where growth and interpersonal development are supported are most important for well-being in the workplace. Because of this, we have achieved high engagement levels and increased productivity among members. For organisations, it is crucial to give priority to health and wellness in order to move toward a culture that proactively manages mental well-being. When it comes to implementation, creating a company culture of health and well-being must come from the top down. A leader who is passionate and persuasive about the well-being of their employees will ultimately result in a more engaged workforce. If employees see their manager, partner or CEO getting involved in well-being initiatives, they will feel more encouraged to take part. Clare Kelly is the Marketing and Business Development Director at Glandore.

Dec 01, 2017
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Brexit-proof your career

With the impact of Brexit expected to be felt in 2018, now is the time to plan your next career move. From an employment perspective, 2018 is slated as the year Brexit will make its presence known in Ireland. This will present both opportunities and challenges for Chartered Accountants, and has the potential to impact on most strands of employment in Ireland. It is important that Chartered Accountants working in Brexit-impacted sectors begin to optimise their career prospects if they haven’t already done so. There will be winners and losers in this shake-out and as a Chartered Accountant, it is imperative that you are employed by a company which is on the front foot in dealing with the associated challenges. Export-led sectors Chartered Accountants working in export-led sectors in industry that have historically relied heavily on the UK market should be cognisant of the potential negative impact of Brexit on their employer’s business. They should also consider whether adequate contingency plans are in place. Irish companies in the FMCG and agri-food sectors are likely to be among those most negatively impacted. Most companies in this space have fully-formed Brexit contingency plans and are now in implementation mode. Since mid-2017, Azon has recruited on behalf of a number of construction companies that are shifting their focus away from the UK and towards projects in newer markets in Northern Europe as a hedge against the possible fallout from Brexit. In their own best interests, Chartered Accountants working within export-led sectors should align themselves with companies primed to deal with Brexit challenges. Positive impact for financial services The financial services sector is expected to benefit from Brexit movers who wish to remain in the single market post-Brexit. Throughout 2017, AES International has conducted several talent scoping assignments for potential Brexit movers. In addition to those already announced, we expect a number of additional firms to announce their intention to establish or expand operations in Ireland. We expect many of these jobs to come on stream in the first three months of 2018 with strong demand for executives with cross-jurisdictional experience in finance, risk or controlled function roles, as defined by the Central Bank of Ireland, as well as select revenue-generating and infrastructure functions. As this will be the first foray into Ireland for a number of organisations, the credibility of the ACA/FCA qualification will hold a lot of weight in their assessment of talent pools as Brexit movers will want their investment to be protected by the professional qualifications of the people they appoint to management positions. Remuneration levels within financial services Caroline Bruno, Partner at AES International and the organisation’s Brexit client advisor, is heavily involved in supporting UK-based clients with their plans to move senior level roles to Ireland. Caroline’s view is that salary levels and overall remuneration packages offered by Brexit movers will be more compelling than current local market packages. This is due to the fact that the overall investment in infrastructure and other aspects of establishing an operation in Ireland will be far greater than the organisation’s overall remuneration cost for the executives appointed. Furthermore, employers will want to ensure that the right people are in place to deliver on the roles they are appointed to, given the start-up risk associated with new operations. Premiums on existing market remuneration levels in relevant financial services areas in Ireland are therefore likely to be the order of the day in the early stages. This should push salary levels up across the financial services market in general. In addition, following the global financial crisis, remuneration packages within many domestic firms – and, in particular, within the pillar banks – were pared back considerably. While some firms in the UK did scale back, it was not to the same degree as in Ireland and remuneration packages in the UK historically contained significantly more ancillary benefits. To illustrate this point, it is useful to highlight the elements beyond base salary and bonus that typically constitute remuneration packages of UK-based executives within financial services. Here are the typical executive’s ‘local’ benefits in UK financial institutions, as compiled by AES International: A long-term incentive plan with access to additional shares at discounted price, which vest in the future; Pension top-ups over and above the standard company contribution; Life assurance (usually multiples of base salary); Top band of healthcare and wellness cover; Professional subscriptions paid for; Mobile and home IT kit paid for; Gym subscriptions paid for; Car or car allowance (£12,000 to £15,000); Parking space paid for or provided; Access to a separate dining area within the office; and Third level education (leadership courses, for example) paid for. And here are the typical executive ‘ex-pat’ benefits in UK-based financial institutions, again compiled by AES International: Housing allowance (to pay rent, the candidate does not receive money. Instead, rent is paid for directly by employer); Temporary housing paid for while a permanent home is found; Housing assistance, such as a housing scout to find a home for the executive; Schooling assistance (to find and pay for school fees); Relocation allowance (normally a cash amount between £5,000 and £12,000); Relocation assistance (house packed up, contents stored or transported to host country); Daily per diem allowance (an additional payment to cover any shortfall in currency exchange); Immigration assistance (arranging and paying for work visa for the executive and their family to relocate to the host country); Filing of international taxes; International health insurance; Club subscriptions where appropriate; and Bi-annual flights to return to the executive’s home country for the immediate family. Returning to Ireland For those financial services professionals who are among the 7,000 Irish-qualified Chartered Accountants based overseas, now might be a good time to consider returning to Ireland. Adequate plans should be put in place to optimise employment options in Ireland and the first port of call should be one’s current employer, as the leadership team may be considering Ireland as a potential post-Brexit location. Chartered Accountants currently working within a financial services institution will already be aligned to the company’s culture. The risk to an employer of selecting that employee to work in the soon-to-be-established Irish operation will therefore be greatly diminished. As a known entity, an employer will have a view on an employee’s technical competence and suitability for a role in any new Ireland-based operation. Given the potential sensitivities to impacted employees, Brexit planning may not be openly discussed. However, that doesn’t mean it isn’t being planned for. Chartered Accountants should engage with senior management to see what internal mobility opportunities involving Ireland might arise as a result of Brexit. If no avenues are open internally, those Chartered Accountants who plan to return to Ireland should reconnect with former colleagues, professional contacts and friends in Ireland to make their intentions known. Establishing relationships with executive search and other recruitment firms likely to be engaged by Brexit movers is also recommended. Commuting to Ireland Chartered Accountants based in UK for a number of years will likely have established firm roots and may not be in a position to relocate back to Ireland. However, an increasingly popular option is to work in Ireland during the week, Monday to Thursday or Friday, and commute back to the UK for the weekends. During the global financial crisis, many UK-based professionals commuted to Ireland while Irish-based financial services professionals commuted in the opposite direction to the UK while managing to maintain an adequate work-life balance. AES International recently conducted a Brexit Impact on Financial Services survey that sought the views of over 500 senior executives working within financial services in Ireland. From a national perspective, respondents expect that the benefits of Brexit will be predominantly confined to Dublin, with 87% of respondents expecting that regional locations outside Dublin will not see significant advantages from Brexit. Chartered Accountants planning to return to Ireland should bear this in mind. As expected, net remuneration was the main priority, while access to airports ranked as the second most important, coming in ahead of access to schools, cost of living and housing. Conclusion Brexit is happening, and it will have a material impact on the business landscape in Ireland. With it will come both opportunities and challenges. Chartered Accountants who want to work in Ireland will need to plan ahead to optimise career opportunities and be Brexit ready. Ronan Colleran is a Partner at AES International, the executive search business within Azon Recruitment Group.

Dec 01, 2017
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Gender transitioning: governance in the workplace

With the Gender Recognition Act 2015 now in place, boards must ensure that robust, employee-focused policies are developed. Good corporate governance is now widely recognised as being sited in a sound corporate culture which includes, among other things, real respect for all persons. Most companies have a suite of policies on equality and diversity and although the human resources department is normally responsible for managing these policies, boards have an oversight role in ensuring that written policies are genuinely embedded in the practices, behaviours and reward systems of the organisation. This should include policy and procedures to cover situations where employees are gender transitioning. The Gender Recognition Act 2015 A human rights case in 2007, taken by Dr Lydia Foy, found that Ireland had an obligation to adopt a system to recognise the preferred gender of its citizens. It took until 2015 to introduce such legislation and several unfortunate clauses were removed from the Bill in its slow movement towards enactment. It was originally drafted so that gender identity would have to be established following a “medical evaluation” model. Good sense prevailed and the Act allows for a process enabling trans people over 18 years of age to achieve full legal recognition of their preferred gender and allowing them to obtain a new birth certificate reflecting the change. This preference is based on “self-determination” rather than certification by medical practitioners. It was originally proposed that married people could not apply, which would have required a “forced divorce”, but following the same-sex marriage referendum this requirement was removed. There are very restrictive provisions for persons of 16 and 17 years of age to apply for gender recognition, but there are no provisions for anyone younger than 16 to apply. Although there is no specific reference to intersex persons or to non-binary persons, it is widely assumed that the Act covers such persons. In the period between 4 September 2015 and 31 December 2015, 198 people were legally recognised under the Act, of whom eight were 16 or 17 years old.  At the time of writing, the Government had undertaken to commence a review of the workings of the Act in September 2017 and to report before September 2018. Implications for the person The main implications for a person whose preferred gender is recognised include: For all purposes, his/her gender becomes the preferred gender; She/he shall not be required to produce the certificate of gender recognition (unless by his/her own choice); His/her rights and liabilities and consequences of actions taken in the original gender remain unaffected; There will be no change to his/her parenthood status; There can be no effect on a property to be willed where the will was drawn up before the change; If desired, the marriage status can remain unchanged; and The change cannot interfere with any pursuit of an alleged sexual offence or an attempted sexual offence against him/her. Implications for the workplace Organisations need to enhance their suite of equality policies by having a specific policy covering transitioning by anyone in the organisation. While there may not be many such situations each year, it is important that a policy is thought out, discussed and agreed before a live case is presented. This policy should include: a basic statement of support; a statement of the understanding of the definitions of terms used in the policy; and an agreed procedure to support anyone who is transitioning. Statement of policy The policy should fit with the lived culture within the organisation, but might look something like: “As part of our suite of policies on equality and diversity, the board has approved this policy on gender transitioning to amplify our culture of welcoming and respecting diversity. We undertake to provide appropriate support to any person who is transitioning either with or without medical/surgical intervention. We will not tolerate any behaviour which disrespects or damages the dignity of any such person or engages in any form of bullying, sexual harassment or harassment. “We recognise that, while most people’s gender identity matches their sex assignment at birth, there is a small number of people for whom the sex assignment at birth does not match their innate feeling of being male or female. For those people who wish to transition, i.e. to align their life and physical identity with their gender identity, we undertake to be a safe and respectful workplace in accordance with our culture but also in compliance with the requirements and the spirit of the Gender Recognition Act 2015. The most commonly acceptable term used to describe people who wish to transition is “trans” and that term will be used in this policy. “Just as gay, lesbian and bisexual employees are welcome here, so also are employees who are trans. We recognise that a transitioning employee must come out to us, as his/her employer, so that she/he can live consistently with their preferred gender identity and we undertake to become fully involved to support this process. We recognise that each person will have different needs and so, this policy is as flexible as possible to tailor support as appropriate.” Definitions For the purpose of clarity, the policy should state the definitions of terms that should underpin the organisation’s policy. These might include: Gender identity: this means a person’s innate, deeply-felt psychological identification as male or female. This may or may not correspond to the person’s body or designated sex at birth and included on the original birth certificate. This term is not the same as ‘sexual orientation’, which is the preferred term used to refer to an individual’s physical and/or emotional attraction to people of the same or opposite gender. Gender expression: this refers to the observed signs and behaviours that are socially associated with the masculine or the feminine. So this includes dress, manner of speaking, moving, wearing make-up, hairstyles, social interaction and so on. Of course, this can vary from culture to culture. Some trans people feel very strongly that they need to live in their real identity and this can involve a transitioning journey including steps such as changing their names, having hormone therapy or undergoing surgery. Not all trans people want to transition in this way. Some don’t clearly identify as either male or female, but see themselves as being on a gender spectrum between male and female and would consider themselves as being both. Trans: trans people are those whose gender identity does not match the gender assigned. This is an umbrella term that includes people of different gender identities and gender presentations. It includes people who are transsexual, cross-dressers or gender non-conforming in other ways. Non-binary: again, this is an inclusive term that covers all identities that fall outside the clear male/female identity. This includes people who identify as neither completely male nor female; people who identify as both male and female or in any way between or beyond genders. People in this category may describe themselves by a variety of terms such as gender fluid, or bi-gender or gender neutral. Transitioning: this is the journey travelled by those who wish to change from the gender assigned to the gender with which they identify. It might include social, physical or legal changes. It can involve a range of actions including coming out to family, friends and colleagues at work. It can include changing appearance, changing sex designation on legal documents and asking to be referred to a ‘he/him’ instead of ‘she/her’ or vice versa. It may or may not involve medical and/or surgical assistance. Transsexual: this term is limited in its use as it focusses on the polar identities of male and female. It has been confused with sexuality or sexual orientation rather than gender identity. It is a term we will avoid. Cross-dressers and transvestites: a transvestite or cross-dressing person is someone who sometimes wears clothing, make-up and accessories which are not traditionally associated with his/her assigned gender. Usually, this is not associated with any desire to change assigned gender identity and it has nothing to do with sexual orientation. Intersex people: an intersex person was born with one of a range of conditions whereby their reproductive organs do not fit the typical definitions of female or male. They may have surgery to assign gender (i.e. as opposed to trans people who may have surgery to re-assign gender). Sexual orientation: this is the term used to refer to a person’s attraction to the same and/or the opposite gender. Homosexual, heterosexual and bisexual are all descriptions of a person’s sexual orientation. It is not the same as a person’s gender identity. Transphobia: this is the fear, dislike or hatred of a trans person/trans people. People who experience transphobia assume that there is a normal way for men and women to look and behave and diverging from that is ‘abnormal’. Often, derogative and offensive language can be used such as ‘sex change’. ‘she-male’, ‘gender bender’, ‘hermaphrodite’ etc. Policy In writing a policy suitable for your organisation, it will be important to engage in organisation-wide consultation. There is no template for such a policy, but it might be useful to include the following headings and populate each section with procedures: A basic statement of assurance that trans employees and stakeholders will be treated with respect and dignity; A basic statement that all other employees are required to comply with the policy and failure to comply will result in disciplinary action, up to and including termination of employment; An undertaking to take action should customers, suppliers, contractors or other stakeholders discriminate against our employees because of their gender identity; A statement that the policy is dynamic and will be amended as experience is gained in the area. It should include a hope that trans employees and other stakeholders will assist the organisation in reviewing and improving these guidelines; Guidelines for employees should be included, inviting them to make contact in advance of transitioning to discuss intentions, needs and concerns; Provision should be made for a support team and its procedures; Some consideration of how the dress code will operate and assurance that the gender identity preferred will be respected within the provisions of the normal code for employees of that gender; Procedures around the rights to use gender-segregated bathroom facilities. Where necessary, single-occupancy facilities will be provided consistent with the preferred identity; A statement on the eligibility of a trans employee to all welfare rights available to staff; Clarity around the right to confidentiality and the manner in which the change of identity is to be disclosed to colleagues; Guidelines for managers to whom an employee’s intention to transition is disclosed. This should include all the issues referred to above and practical issues such as name change, pronoun change, email nomenclature and the availability of sick pay, if appropriate; and Guidelines for the process of disclosing to colleagues, taking into account the wishes of the person who is changing. This might include a general meeting or may be done on a person-by-person basis. Overriding requirement The most important issue is to ensure that colleagues who have decided to transition, whether surgically, medically or without such intervention, should know that they are valued in the organisation; that their decision is respected and that they will be supported in the manner in which they would like to transition in the workplace. Prof. Patricia Barker FCA is Adjunct Professor of Accounting at Dublin City University.

Oct 02, 2017
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Investment firm regulations

Sarah Lane outlines the top 10 questions that should be on the minds of directors and management teams. In March 2017, the Central Bank of Ireland published the Central Bank Investment Firms Regulations. This document consolidates all requirements for investment firms into one document, which is timely given the imminent overhaul of EU legislation for markets in financial instruments. For example, MiFID II will go live on 3 January 2018 while other ongoing regulatory changes continue to affect the industry. These include European Market Infrastructure Regulation (EMIR), Base Erosion and Profit Sharing (BEPS) and General Data Protection Regulation (GDPR). The regulations supplement existing legislative requirements, most notably MiFID (European Communities (Markets in Financial Instruments) Regulations 2007) and the Investment Intermediaries Act 1995. While the majority of regulations remain the same, there are some new requirements – particularly for fund administrators. Below, we summarise the top 10 questions for directors and management teams of the affected entities. 1. Who do the regulations apply to? The new regulations apply to investment firms, certain investment business firms (excluding retail intermediaries) and fund administrators. 2. What is the application date of the regulations? The Central Bank Investment Firms Regulations (S.I. No 60/2017) came into force on 7 March 2017. 3. What is the background to the legislation? The Central Bank consulted twice in relation to the regulations, first of all in CP 97 (Investment Firms Regulations) and secondly, in CP 100 (Risk Assessment and Capital Planning for Fund Administrators). The regulations are legislated for through a statutory instrument. Therefore, non-compliance may constitute a prescribed contravention under Part IIIC of the Central Bank Act 1942, giving rise to Central Bank enforcement action. 4. Which sections apply to MiFID investment firms? MiFID investment firms are subject to the requirements detailed in Part 2 (including relationship with the Central Bank, internal audit requirements and reporting requirements). Investment business firms that are not fund administrators are subject to the requirements in Part 2 and Part 3 (additional supervisory requirements, including organisational requirements and telephone recording). 5. What topics do the regulations cover for MiFID investment firms? The general requirements for MiFID investment firms can be split into the following broad headings: relationship with the Central Bank; acquisition and disposal of assets; internal audit requirements; change in auditor; and reporting requirements. There are also additional supervisory requirements for investment business firms including: organisational requirements; client borrowing; books and records; and telephone recording. 6. What guidance did the Central Bank issue alongside the regulations? The Central Bank published guidance on the following topics: relationship with the Central Bank; fund administrators outsourcing; and own funds, risk assessment and capital planning for fund administrators. The Central Bank, on the same date, also published the Central Bank Investment Firms Regulations Q&A to set out answers to queries likely to arise in relation to the new regulations. 7. Which sections apply to fund administrators? Fund administrators are subject to the requirements in Parts 2-5 (including requirements around directors, client assets, fund prospectus, outsourcing and capital adequacy). It is important to note that the obligations of fund administrators under the regulations and the guidance apply to both Irish and non-Irish administered funds and also apply equally to intra-group outsourcing arrangements. 8. What topics do the regulations cover for fund administrators? The regulations replace Chapter 5 of the AIF Rulebook entitled Fund Administrator Requirements, and include those requirements outlined above as well as the following: Fund prospectus; Client assets; Directors: residency is now defined as being present in the State for 110 working days; Outsourcing: a new annual return to the Central Bank is required (see question nine below) and certain activities are prohibited from being outsourced (see question 10 below); and Own funds and capital adequacy requirements for fund administrators: similar to the Capital Requirements Directive (CRD), there is a requirement to develop a risk analysis and capital adequacy assessment process which is documented to identify, assess and manage risk. 9. What is the annual outsourcing return requirement for fund administrators? The Central Bank issued a letter to all fund administrators on 7 March 2017, which emphasised that requirements on the outsourcing of administration activities in relation to investment funds are structured so that all fund administrators maintain a consistent standard of oversight of Outsourcing Service Providers (OSPs) and retain ultimate responsibility for the outsourced activities. The letter stated that between 48-61% of fund administration activities were carried out by OSPs as at 31 December 2015, based on the five larger Irish fund administrators they reviewed. To that end, the new regulations require fund administrators to submit an outsourcing return to the Central Bank annually, which contains the following information at the end of the calendar year: All outsourcing arrangements entered into by the fund administrator; The location of the outsourcing service provider; The date from which the fund administrator was permitted to enter into the outsourcing arrangement; and The names of all investment funds in the event that the fund administrator has outsourced the release of the final net asset value (NAV) where permitted (under permission from the Central Bank). It is important to note that governance and oversight of outsourcing remains a key control for the directors in order to ensure they minimise potential risks arising from outsourcing. The Central Bank included observations and recommendations regarding outsourcing arrangements within Irish fund administrators, which should be adhered. The recommendations include a documented, formalised outsourcing policy and the establishment of an outsourcing committee. 10. What activities cannot be outsourced for fund administrators? The Central Bank guidance for fund administrator outsourcing dictates that core management functions shall not be outsourced in order for the fund administrator to exercise adequate and effective control and decision-making. Core management functions include: Setting the risk strategy; Setting the risk policy; Setting the risk-bearing capacity of the fund administrator; Management functions, such as the setting of strategies and policies in respect of the fund administrator’s risk profile and control; Oversight of the operation of the fund administrator’s processes; The final responsibility towards clients and the Central Bank; Maintenance of the shareholder register; and The check and release of the investment fund’s final NAV. Sarah Lane is Director, Financial Services Risk & Regulation, at Mazars.

Aug 03, 2017
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Master the art of influence at work

Increase your level of influence with these simple principles of persuasion, explains Joe Carroll. Nobody likes to be told what to do. Psychology studies show that when a person feels that someone or something is taking away their choices, or limiting the range of alternatives, they tend to resist. To avoid this scenario, we should seek to be the wind in people’s sails and not the helmsman. In other words, we should gently nudge or influence people in the preferred direction. Indeed, masters of influence employ a variety of techniques to inspire and motivate people. It isn’t luck or magic, it is science and we can learn to be more influential. We can also learn to recognise when we are being influenced by others. Knowledge is central to this learning process and as one of the leading thinkers on influence, Robert Cialdini, said: “People’s ability to understand the factors that affect their behaviour is surprisingly poor.” Authority As night fell, the infamous conman Frank Abagnale of Catch Me If You Can fame positioned himself in front of a bank’s night deposit safe and unfurled a sign which read “Night deposit vault out of order. Please make deposits with security officer.” Dressed as a security guard and armed with this sign, he collected deposits of cash and cheques from over 35 people and “not one of them said more than ‘good evening’ or ‘good night’”. How could so many people be duped in this way? Social scientist Stanley Milgram proposes that people have a “deep-seated sense of duty to authority” and that this was at play when the individuals deposited cash and cheques with the fake security officer. Meanwhile, Cialdini would refer to the concept of blind obedience, pointing out that “we are trained from birth to believe that obedience to proper authority is right and disobedience is wrong”. Authority is generally respected and expert advice is followed. Job titles, dress and even perceived car value have all been shown to influence an individual’s credibility. Simply assuming the appearance of authority increases the likelihood that others will comply with requests, even if one’s authority is illegitimate. This impulse can be abused by powerful figures and con-artists, however. A famous illustration of this is found in the 1973 Stanford prison experiment, set up to investigate how readily people would conform to the roles of guard and prisoner in a role-playing exercise that simulated prison life. In a very short time, both guards and prisoners settled into their new roles, with both groups adopting their roles quickly and easily. Within hours of beginning the experiment, some guards began to harass prisoners. They behaved in a brutal manner and seemed to enjoy it. The prisoners soon adopted prisoner-like behaviour too. Over the next few days, harassment degenerated into violence and a number of ‘prisoners’ showed signs of emotional disorder. The experiment was intended to run for a fortnight but it was terminated on the sixth day. The authority principle can, it seems, overrule morality and even our most basic survival instincts. In 1977, two Boeing 747 jumbo jets collided on the holiday island of Tenerife resulting in the deaths of 583 of the 644 passengers on board. It was a watershed moment which transformed how the aviation industry viewed safety. It also underscored the inherent danger of deference to authority. KLM captain, Jacob Van Zanten, was the airline’s top pilot and an industry celebrity who featured in KLM advertisements. His experience and confident demeanour exuded authority. While the tragic incident was the culmination of coincidences and errors, a critical factor identified in the aftermath was the failure or reticence of the flight crew to challenge Van Zanten. The dynamics of authority were considered by investigators to have been a critical factor in creating the circumstances that led to the collision. The power of this dynamic overrode the survival instinct and critically impacted the willingness of the first officer and flight engineers to openly challenge the charismatic captain’s errors, which ultimately resulted in disaster. Organisations and business leaders must be aware of this powerful force and can, of course, use authority to advance their goals and influence those around them. They must also be mindful, however, of the pitfalls and dangers that lurk within. Social norms We have all seen the signs in hotel bathrooms which encourage guests to re-use towels, but are you aware of the importance of the wording? Signs that draw on our concern for the environment are powerful, but what really drives action is reading about the number of other guests in the hotel who re-used their towels. By localising the message further to say that the majority of people who have stayed in your particular room re-used their towels, even more influence is exerted. In one study, considered wording resulted in almost 50% compliance – a 33% increase in towel re-use compared to the standard environmental appeal. By making the appeal more localised and personalised, it will be more likely to move people in a particular direction. How does localisation activate this enhanced rate of compliance? The research shows that we all want to feel normal, that we want to fit in and this is especially true when people are uncertain about a course of action. In this situation, they tend to look to those around them for guidance. In his ground-breaking work on influence, Cialdini identified six principles of persuasion. Principle two is ‘social proof’, which is sometimes referred to as herd behaviour. According to Cialdini, this powerful psychological phenomenon is the reason why comedy shows have laugh tracks. It also has potential applications in the workplace – when pitching a proposal or new product, for example, the more similar the person giving the testimonial is to your audience, the more persuasive the message becomes. So in deciding which testimonials to use, don’t simply choose the most impressive person or indeed your favourite. Instead, lead with someone whose circumstances are most comparable to those of your audience. Influencing change Change is constant, but difficult to effect. Inertia and resistance can make even relatively minor change painful while for many, change induces fear of the unknown. Moving people under these conditions is difficult; fearful of what they might lose, they freeze. If you wish to encourage real change, what can you do? Daniel Kahneman, the Nobel Prizewinning psychologist and author of the bestselling book Thinking, Fast and Slow suggests a strategy; against a backdrop of uncertainty, leaders should outline what people will lose if they fail to move. Kahneman’s research demonstrates that notions of loss are more powerful than notions of gain. Leaders should create a ‘push’ factor by speaking not just of what will be gained by moving, but also of what will be lost in a failure to move. Heuristics Heuristics are the mental shortcuts we all employ to make decisions. In Thinking, Fast and Slow, Kahneman explores their utility and their limitations. Heuristics are, according to Kahneman, grounded in our fast, automatic, emotionally-driven and subconscious brain. Heuristics employ simple, efficient rules to assist us in making judgements. For example, how many people are in a room? Is a product good value? Do we like someone? These mental shortcuts usually focus on one aspect of a complex question while ignoring others. Cialdini suggests that we can effect influence by taking advantage of these automated responses. Cialdini presents an example where salespeople influence purchasing decisions by presenting a more expensive item (such as a business suit) before offering less expensive items (such as a shirt or tie). The reason? After making the commitment to purchase the expensive item, the other items now appear cheap by comparison to our automated decision-making system. This in turn influences our perception and likelihood to ‘spend up’. Awareness is our first line of defence, but even awareness may not be enough to counter these powerful psychological forces. We may need to, for example, insist on viewing smaller items before moving on to more expensive items. However, this leads us to another principle of influence identified by Cialdini, which is ‘liking’. Liking We are more influenced by those we like or who are similar to us and in his research, Cialdini identified a number of factors that influence who we like. For example, physical attractiveness – we automatically assign favourable traits such as talent, kindness, honesty, and intelligence to those we perceive as attractive. We are also predisposed to like those who are similar to us in personality, interests, opinions or background. Cialdini also highlights a mechanism that has important implications for leaders seeking to build and enhance teams – contact and cooperation. Increased contact and familiarity between individuals and groups typically breeds friendship, with one important exception. When people are placed in competitive environments where there can be only one or limited winners, we see increased enmity instead of friendship. Where people must “pull together for mutual benefit”, friendship and respect tends to result. The implication for leaders when setting goals is clear. Interestingly, research shows that ‘liking’ is also impacted by gender. The same traits or behaviours may be perceived as more or less desirable depending on whether the person is male or female. In salary negotiations, for example, when women talk up their achievements, it has been shown to be more harmful to them than when men do. Both are perceived as braggarts but when women are anything other than modest, it can hinder them while it can actually benefit men. Cialdini suggests that women could seek to neutralise this by engaging an agent or broker to conduct salary negotiations and that progressive organisations should require managers to advance the case for their staff, thereby nullifying the discriminatory impact on women. Reciprocation This principle focuses on the feeling of indebtedness you experience towards someone who does something for you or gives something to you. This is the nagging impulse to repay them, to rebalance the equation. The so-called “rule of reciprocation” states that we are all bound, even driven, to repay debts of all kinds. It is an almost automatic reaction. This is a powerful force and in his first book, Cialdini highlights some examples where “compliance professionals”, such as marketers or salespeople, use reciprocation to induce the automated response of compliance. Hare Krishnas are masters of this rule – they give little flowers to passing strangers on the street knowing that even this small, unsolicited ‘gift’ can be enough to invoke the ‘rule’ and greatly enhance their chances of receiving a donation in return. And have you ever wondered why restaurants place mints alongside the bill? Once again these small ‘gifts’ press a button deep in our subconscious and we are statistically likely to tip much more generously than we might have in the absence of the mint. The research shows that we are hardwired to balance the scales again as soon as possible; you instinctively want to give something back. This helps you feel better about yourself and the situation you find yourself in. What can you do to resist? You can of course refuse the Hare Krishna’s gift or avoid them on the street, but it is harder to refuse the mints in a restaurant as this again runs straight into Cialdini’s principle of ‘liking’. We are programmed to engage in this reciprocal behaviour or ritual for very good societal and cultural reasons. Much of humanity’s success is down to our ability to cooperate, to share resources and information. Reciprocation is the catalyst for this; it allows someone to start the process, to share something in the expectation that they will receive something in return. Without this backdrop, cooperation would be virtually impossible. We can use reciprocation in the workplace to positive ends. For example, giving small gifts to staff not only shows appreciation but increases staff loyalty and may, in fact, reduce staff turnover. And if seeking to build a sense of togetherness, reciprocation can be a powerful ally. When we provide help to another person in the team, we should avoid the impulse to be modest and say: “It was nothing”. Instead, trigger the reciprocation button and say: “That’s what team members do”. In doing so, the scene is best set for colleagues to reciprocate, sowing the seeds for a positive spiral of cooperation. Just one word… It is well-known that when asking someone for a favour, success is more likely when we provide a reason. However, a 1989 study by Harvard social psychologist, Ellen Langer, demonstrated something remarkable about how we ask. Langer and her team approached people waiting in line to use a library copying machine and asked for a small favour: “Excuse me, I have five pages. May I use the Xerox machine?” 60% of those asked allowed the researcher jump ahead in the queue. Langer’s team then used the word “because” but added nothing new, merely restating the original ask: “Excuse me, I have five pages. May I use the Xerox machine because I have to make some copies?” This request resulted in a 93% positive response rate from those approached even though no real reason or no new information was provided. So don’t forget to include the word “because” when making a request, as this can nearly double the odds of receiving a positive response. Empathy Another key to influence is to first understand people’s motivations and their world view. To do this effectively, you will need a well-developed sense of empathy. According to Kevin Dutton, author of Split-Second Persuasion: The Ancient Art and New Science of Changing Minds, a highly developed sense of empathy is a key tool of influence. It allows us to diagnose someone’s motivations, which can then be used to influence them. If, for example, you are trying to convince someone to invest in your new restaurant, you should go beyond a compelling business plan. To win both hearts and minds, you should think hard about why the potential investor would be interested beyond making money. Are they a foodie who is frustrated with the quality of local cuisine? Then let them know that, by supporting your restaurant, they could become a gourmet superhero and play a part in bringing top-notch ingredients and flavours to the area. Conclusion People are constantly seeking to exert influence upon us and awareness of this – and of the techniques commonly employed – is critical if we are to remain master of own destiny. That said, the many forces at play can be difficult to manage. There is, as we have seen, a science behind influence and while some may be naturals, we can learn about the tools and techniques and put them to use. But a word of caution: act with care when seeking to activate automated responses. Otherwise, our successes may be pyrrhic victories that come at the cost of long-term trust. Joe Carroll is Manager of Operations, Specialist & Executive Education, at Chartered Accountants Ireland.

Aug 02, 2017
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My life in academia...

While a niche choice for Chartered Accountants, academia offers unique opportunities for career fulfilment. A role in academia after your training contract is not the typical route for most newly qualified Chartered Accountants. However, it does have its attractions. While many Chartered Accountants will seek job satisfaction from closing deals, winning new clients or helping to grow their own or their client’s business, the job satisfaction associated with a role in academia is of a different nature. The ability to follow the development of students from their early days in third level to the completion of their professional exams and onto a broad variety of roles brings a great sense of accomplishment. Add to this the opportunity to engage in research that can provide an input into policy development and make a practical contribution to the business world, and you have a role that provides its holder with a unique sense of contribution and achievement. Creating an appreciation of accounting Although the career path offers a different structure and set of challenges to the more traditional practice and industry-based roles, the training received as a Chartered Accountant in terms of technical, commercial and communication skills remains very relevant. The lecturing aspect of the role involves a variety of accounting topics and student profiles, from introducing basic accounting concepts to first years to focusing on practical accounting methods and tools for experienced managers on Executive MBA programmes. While many students will not specialise in accounting, creating an appreciation of the value that accounting information can bring to an organisation and the role Chartered Accountants play in the broader business environment is an important insight for their development as future business professionals. Rigorous research Another significant part of the role is focused on research and, in the initial years of your academic career in particular, on your PhD. This is one of the unique attractions of a role in academia for many who see the inherent value in undertaking a significant research project that allows you to stand back from the usual task-based nature of the business world to examine in detail how and why certain phenomena occur. For many PhD students, the topic of their research will emerge from their own real world experiences, some of which they may wish to examine more rigorously. The beauty of a PhD is the freedom it gives the student to focus on topics and issues of particular interest to them, which of course is an important point considering many part-time PhDs can run for five or six years in duration. The focus of my own research has allowed me to bring together my experiences in accounting education and agriculture to examine the area of financial literacy in farming enterprises in collaboration with Teagasc. The PhD aims to provide an insight into financial practices at a farm level and will contribute to an evidence-based approach to designing future financial education programmes for farmers. This is an important issue in the agriculture sector with an increased focus on low farm incomes, uncertainty around future EU supports given the forthcoming CAP reform, and increased price volatility all drawing attention to the financial management and viability of farming enterprises. The next generation Accountancy academics also play a key role in the development of the next generation of Chartered Accountants. A significant cohort of students will seek career advice in the first instance from their accountancy lecturers at third level. Talking to students about choosing firms, departments and roles is very much a regular part of this job. Developing a student’s technical skillset is an important objective during their time in third level, but it is not the only objective. The role of the modern professional accountant encompasses a much broader range of competencies than mere technical knowledge. It includes areas such as communication skills, teamwork and commercial awareness, and we focus on developing these skills in all students throughout their studies at third level. Gatekeepers to new areas of knowledge The rapidly changing nature of today’s business world and the adaptive nature of the accounting profession to the needs of business means we must continue to update our course and programme offerings to prepare our students for the demands of 21st century commerce. Emerging areas such as data analytics, social and environmental performance measurement, and tax morality are just some of the new topics that the next generation of Chartered Accountants will be dealing with and where demand is increasing for accountants with such skills. Academics in many ways can be seen as the gatekeepers to these new areas for the next generation of the profession. The hybrid nature of our role as both researchers and teachers places us in a highly influential position as an important conduit of knowledge between the latest research impacting the accounting profession and the current and future generations of the profession. A symbiotic relationship Maintaining strong links between the academic community and the broader profession in practice and industry should be an important objective for the continued development of our profession. The regular dissemination of the latest research in the field to the broader population of Chartered Accountants (for example, via Accountancy Ireland), the incorporation of this research into the educational offerings at both pre- and post-qualification levels, and the active promotion of practice and industry-focused collaborative academic research projects (such as those supported by the Chartered Accountants Ireland Educational Trust, for example) are all avenues to further strengthen this important symbiotic relationship. Pushing the boundaries of knowledge A career path in academia is undoubtedly a niche one in the context of the broad range of accountancy-based roles available. It does, however, offer a unique set of opportunities to a Chartered Accountant in terms of playing a role in developing the next generation of the profession while also making a contribution to policy development and practice in areas of business and society of interest to you. Pushing the boundaries of knowledge in the discipline of accounting and ensuring the effective transfer of this new knowledge to the broader population of Chartered Accountants is an important role within the profession. To borrow a line from Benjamin Franklin, “An investment in knowledge pays the best interest”. While Franklin may have been focused on the individual, his words also hold true for the accountancy profession as a whole. John Nolan is a Lecturer at Dublin City University Business School and Chartered Accountants Ireland.

Aug 02, 2017
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A public service?

Shedding light on the dark art of lobbying the public sector could illustrate the value and purpose of member organisations. It must be great to be a public servant… at least that’s what I told an acquaintance of mine when she was promoted a few months ago to the upper echelons. So many staff, an amazing corner office, all that authority, the ear of the Minister, security of tenure, a comfortable retirement and so on and so on. She was quick to dismiss my theory, pointing out that the lot of the senior public servant is a continual and grinding process of brokering conflicting interests while protecting the public purse and generally just trying to do the right thing. Public servants are often accused of being uncommercial but in my experience, this is far from the truth. They have a degree of market awareness that many businesses would do well to emulate. They also have a keen sense of a bargain and know exactly what their purchasing power is. When it comes to lobbying, they are slow to accept any suggestion or proposal that ultimately cannot be leveraged to advance their own department’s agenda. Public consultations The way in which civil society interacts with government has changed substantially in Ireland over the last few years. One area of change is in the increasing use of public consultations to inform policy. I have heard cynical descriptions of public consultations: that they are merely processes which enable people to pool their ignorance. This may not be entirely fair. Many civil society organisations, Chartered Accountants Ireland included, regard public consultations as an opportunity both to advance a particular view of how the world should work to the advantage of their membership, coupled with a desire for systemic improvement. Just because a point of view is obviously biased, it doesn’t automatically follow that it is not right. Public consultations have been a feature of the UK government landscape for many years and codes of best conduct and practice have developed around them. In particular, the UK authorities are very good at providing detailed feedback on the conclusion of the consultation process. The Irish process is not as comprehensive, at least not yet. Often, there is little sign of the effect of consultation responses beyond the government department concerned. For example, it is well over a year ago since a consultation was conducted on PRSI collection issues and employment structures. While a report was to be published at the start of this year, nothing has emerged in the public domain and the 23 respondents to this particular consultation might well feel that they were whistling in the wind. A more robust feedback loop is critical to successful consultations. Regulating lobbyists The other area of changed interaction between government and the society which pays for it is lobbying regulation. Under Standards in Public Office legislation, almost every individual and organisation that contacts an arm of government to promote their own interests must note the contact in a public register. Perhaps because the obligation to maintain the register is on the part of the citizen or organisation, the rules are sometimes portrayed as a way of keeping the lobbyist honest. However, the key to the real purpose is in the title – Standards in Public Office. While the regulatory burden may not fall on the public service, the consequences of mal-administration which the register could highlight might well land on an individual public servant. The register of lobbying activity also serves another important purpose. It allows civil society organisations to promote their activities on a formal basis to their own membership and to claim credit for policy outcomes. It is a route for members of industry associations, chambers of commerce and (dare I say it) accountancy bodies to check if they are getting value for their membership subscription. In light of all of this, my recently promoted public service friend may have been right about being under a continual and grinding obligation to broker conflicting interests. But she couldn’t dispute that a career in the public service is a great thing. Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland.

Jul 31, 2017
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Will the UK’s customs computer system be ready for Brexit?

With the UK’s current negotiating position being to leave the EU Customs Union, one of the most important pieces of infrastructure for Irish business exporting to the UK (and the EU) post-Brexit will be the UK’s national customs computer system.   After Brexit, the UK’s customs system will handle inward declarations of Irish exports to the UK in addition to the transit of Irish goods travelling overland in the UK to an eventual destination in mainland Europe.   The UK’s National Audit Office recently published a report on the readiness of the UK Customs’ computer system for Brexit. In 2013, arising from planned changes to EU customs law, HMRC in the UK began work to replace its current computer system, CHIEF, with a new one, the Customs Declaration Service (CDS). The new system is due to launch in January 2019 – just two months before the UK is scheduled to leave the EU. The National Audit Office review found that “there is still a significant amount of work to complete, and there is a risk that HMRC will not have the full functionality and scope of CDS in place by March 2019 when the UK plans to leave the EU.”   Despite a year having passed since the Brexit vote, the National Audit Office has said that no changes to the scope of the new CDS project have been made, citing uncertainty surrounding Britain’s relationship with the EU post-Brexit. The current CHIEF system deals with 55 million customs declarations per year. After Brexit, HMRC estimates that the new system will need to be capable of dealing with 255 million declarations – a five-fold increase. It is also estimated that 180,000 traders will, for the first time, be using the UK’s customs declaration system after Brexit. These are big numbers.   The preparedness of the UK customs authority for Brexit is set to be one of the main reasons for a transitional period (or, as some Brexiteers call it, an implementation period) between the UK leaving the EU and, in fact, leaving the EU Customs Union. However, political opinion in the UK appears, at present, to be split on whether or not such a transitional period ought to be negotiated and, if so, how long any such transitional period should last. International trade secretary, Liam Fox, recently stated that obtaining a trade deal with the EU would be “the easiest in human history”. On the other hand, Brexit secretary David Davis said certain aspects of his job involved steering the UK out of the EU, telling a business conference that “half of my task is running a set of projects that make the NASA moon shot look quite simple”.   Work on the UK’s customs computer system will be an important one to watch over the next year or so.   Eoin O’Shea FCA is a practising barrister, specialising in commercial and tax law.

Jul 28, 2017
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Companies (Accounting) Act 2017

The Companies (Accounting) Act 2017 (CA 2017) was enacted and commenced (with the exception of one section) before the summer. CA 2017 introduces a wide range of amendments to the Companies Act 2014 (CA 2014). It simplifies the company law financial reporting requirements for small and micro companies (establishing the Small Companies Regime and Micro Companies Regime respectively), while also making a series of amendments to the company law accounting and disclosure requirements for other companies not adopting either regime. It introduces a new requirement on certain large and public-interest companies involved in the mining, extractive or logging industries, to prepare and file a report annually on payments made to governments. The law on filing requirements has also been amended - for example, by introducing new filing requirements for certain unlimited companies and investment companies. Chartered Accountants up and down the country are continuing to familiarise themselves with the new and amended requirements and have the task of reflecting them in their work.This month’s edition of Accountancy Ireland includes an article by Mark Kenny, the Institute’s Director of Representation & Technical Policy, providing an overview of key reporting and filing-related changes introduced by CA 2017.To read the article in full, click here.

Jul 28, 2017
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Three ways to tackle the problem of presenteeism

Rebecca Kelly, Director of Glandore, explains how workplaces can battle the problem of presenteeism – employees soldiering into work when they should really be recovering. What is presenteeism? Presenteeism has been defined as people going to work when sick and not operating to their usual level of productivity. We’ve all been there, feeling poorly and unwell but coming into work regardless. We sit at our desks and only get half the amount of work done that we would have gotten through on a normal day. This is ‘presenteeism’ and it’s becoming more and more common for companies. Why is it an issue? Presenteeism is an issue as it promotes a workplace culture that believes work is more important than employees’ wellbeing. Research has found that presenteeism can cut productivity by one-third or even more. Working while unwell will always affect both the quantity and the quality of your work. At Glandore, we believe it’s very simple: a workplace that is well, works well. Is it a major bugbear for employees? Some employees may simply feel obligated to turn up for work or perhaps they have run out of sick days and can’t take another day off. Others may be highly driven and feel guilty about, perhaps, letting the team down by not going into work. This leads to employees with a number of ailments still showing up for work when we know they should stay at home and recover. How do companies in other countries approach the issue?  We have hosted international companies from many industries – Facebook, Twitter, Eaton Corporation and EY, for example – and have seen a variety of company cultures and ways to approach presenteeism. Some have implemented specific workplace policies as well as informing and educating their teams. Others have provided employees with workplace flexibility. Whether it be working flexi-hours or the ability to get your lunch time workout in, providing flexibility can help those struggling to manage a healthy work-life balance. In any country or culture, the promotion of health and wellbeing leads to a more productive workplace. What should employers do about it? Employers need to create and encourage a workplace culture that puts an emphasis on the health and wellbeing of its staff. This must be done from the top down with managers leading by example. At Glandore, we have a culture of caring for the members and staff working within our flexible office spaces. We have created a working environment that encourages collaboration, innovation and healthy living through our Glandore Wellness Programme, leading to an enjoyable employee experience for both staff and members.   Here are our top three tips on how employers can reduce presenteeism: 1. Recognise the problem In some companies, employees who come to work when unwell are viewed as dedicated and held in high esteem as they soldier through. If you spot this happening in your company, recognising that there is an issue is the first step. By doing this, an employee can return to work refreshed and healthy, ready to tackle their work. 2. Recognise causes and symptoms High workloads, mental pressures and multiple work demands can cause employees to avoid taking time off when they really need it. They can feel guilt or fear that if they take time off, they won’t meet their deadlines and are putting pressure on co-workers to pick up the slack. It’s important for managers or colleagues to recognise these signs and offer help when needed.   3. Examine your company’s wellbeing programme You need to ask yourself if your company’s policy takes into consideration the stresses your employees may be dealing with, both in and outside of work. Make sure your policy takes social, physical, mental and financial stresses into consideration and offers appropriate support, and flexibility where possible. This will go a long way in reducing presenteeism in the workplace.   Rebecca Kelly is Director of Glandore, an Irish family-run business and leading provider of flexible workspace in Ireland.

Jul 28, 2017
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IAASA survey on disclosures of new accounting standards

The Irish Auditing and Accounting Supervisory Authority (IAASA) has published the results of a desktop survey into the disclosures provided by selected Irish companies of the impact of the new accounting standards that are due to be adopted in the next two years.   The new standards are IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, and IFRS 16 Leases.   IAASA’s document is available here. Background These three Standards have the potential to significantly impact the reported results of companies, to make large impacts on companies’ balance sheets, and to require additional disclosures in companies’ financial statements.   The transition from existing Standards to the new Standards may have a significant impact on, for example, banks when they measure expected impairment losses on their loan books or on technology companies and companies providing services when they measure revenues.   IFRS 9 incorporates a new expected loss impairment model for recognising impairment provisions and replaces the current incurred loss impairment model in IAS 39.   IFRS 15 specifies how and when a company will recognise revenue as well as requiring more disclosures to be given to the users of financial statements. The Standard provides a single, principles-based model to be applied to all contracts with customers.   IFRS 16 specifies how a company recognises, measures, presents and discloses leases. The Standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for substantially all leases.   The survey examined the 2016 annual financial statements of all 28 equity issuers listed on the main market of the Irish Stock Exchange and Allied Irish Banks plc, a debt issuer. Survey results The key results of the desktop survey are as follows:   IFRS 9 Financial Instruments The three Irish banks have provided detailed qualitative descriptions of the key concepts and expected impacts of the transition to IFRS 9 that is of a good quality in their 2016 annual financial statements; and The banks expect IFRS 9 to result in higher impairment provisions and more volatile impairment charges. However, banks did not quantify the possible impact of IFRS 9 on impairment provisions, prudential ratios, regulatory capital or key performance measures in their 2016 financial statements. IFRS 15 Revenue from Contracts with Customers Most companies that will be impacted by IFRS 15 did not highlight important differences to current practises arising from their initial application of IFRS 15; Many companies provided little or no disclosure of the key concepts of IFRS 15; and Disclosures of the expected impact of IFRS 15 presented by a small number of companies was of good quality and indicative of the type of information that is useful to users of financial statements. IFRS 16 Leases 62% of companies are still evaluating the impact of IFRS 16 and a further 17% expect the new Standard to have a significant impact in the period of initial application; There is room for improvement in the disclosure of the key differences from current accounting practices. Disclosures made by companies lacked sufficient detail of the key changes to accounting for leases, or the descriptions were incomplete, or companies were silent on the key changes arising from IFRS 16; and Disclosures of the expected impact of IFRS 16 presented by a small number of companies was of good quality and indicative of the type of information that is useful to users of financial statements. Source: The Irish Auditing and Accounting Supervisory Authority (IAASA).

Jul 28, 2017
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FRC notes evidence of improving audit quality

Leadership of audit firms’ focus on, and investment in, improving audit quality, together with promoting a culture of continuous improvement, is beginning to pay off – particularly for audits of larger companies where the Financial Reporting Council (FRC) has targeted improvement. In the audit regulator’s second annual Developments in Audit report, the FRC sets out evidence from its own and delegated audit quality reviews, thematic reviews and from audit committee and investor feedback.   However, the picture is not consistent across all firms, market sectors and audit procedures. High profile accounting failures, as well as the results of audit monitoring, continue to highlight cases where auditors have not met expectations. While there is evidence of greater professional scepticism, this is also the area where the FRC finds the greatest number of issues.   Setting out what is being done to drive improvements to audit quality, the report includes an overview of the FRC’s work in setting auditing policy and standards, how the FRC is working to enhance the effectiveness of audit committees, its oversight of the profession, and its audit monitoring and enforcement activity.   The audit market and confidence in it in the UK is changing significantly, with the impact of audit tendering and rotation requirements seeing greater competition on quality between the biggest firms. Greater transparency of audit has been achieved through extended reporting, now being rolled out for more audits. Meanwhile, broadened perspectives on audit quality through the challenge and support of independent non-executives at the larger audit firms ensure a focus on sustained improvement.   According to the FRC, investor and public confidence in audit quality remains vulnerable where circumstances indicate a failure by auditors to be sufficiently independent or to provide robust challenge. The FRC has enhanced its enforcement procedures and is working to improve the speed of action. The FRC has issued more than £14.2 million of sanctions on auditors and audit firms in 2016/17 and sets out the outcomes and lessons to be learnt from concluded investigations.   The FRC will now focus on promoting scepticism through standards and practice; quality control standards; auditors’ adherence to the spirit as well as the letter of independence requirements; the impact of mandatory rotation on quality and fees as it is adopted across the market; harnessing technology; and the culture of the audit firms in support of audit quality.   Melanie McLaren, the FRC’s Executive Director for Audit and Actuarial Regulation, said: “In our monitoring of audit quality, we have yet to see overwhelming evidence of improvement in all sections of the market or the consistency of performance we want between different firms. Firms are, though, investing in improvement measures and those audit committees surveyed report that they are seeing evidence of good quality audit.   “Firms are focused on areas including their leadership, governance and culture, better use of technology and quality management systems,” she added. “This year, we will focus on how we can enhance the speed and effectiveness of our enforcement role underpinning justifiable confidence in audit.”   Developments in Audit 2016/17 – Summary Report   Developments in Audit 2016/17 – Full Report   Source: Financial Reporting Council.

Jul 28, 2017
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FRC publishes Non-Financial Reporting Directive factsheet

The Financial Reporting Council (FRC) has published a factsheet on non-financial reporting, which provides an overview of the new regulations implementing the EU Directive on non-financial and diversity information.   The regulations apply to companies and qualifying partnerships with financial years beginning on or after 1 January 2017. The scope As a first step, companies will need to consider whether they fall within the scope of the new non-financial regulations.   The new regulations only apply to a sub-set of companies that are required to provide a Strategic Report. Those companies that are not within the scope of the new regulations will continue to apply the pre-existing non-financial reporting requirements in the Strategic Report.   The new non-financial reporting regulations apply to certain large companies and qualifying partnerships with more than 500 employees. The entities that fall within scope, if they have more than 500 employees, are:   Traded companies; Banking companies; Authorised insurance companies; and Companies carrying on insurance market activity. To download the full factsheet, click here.   Source: Financial Reporting Council.

Jul 28, 2017
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FSB urges insurers to begin implementation of IFRS 17 as soon as possible

The Financial Stability Board (FSB) has urged insurers to begin the process of implementing the new insurance contracts Standard, IFRS 17, as soon as possible while remaining cognisant of the significance of proper application.   The completion of IFRS 17 was identified by the FSB as a high priority at its September 2015 Plenary meeting.   Insurers have until 2021 to implement the new standard, which requires all insurance contracts to be accounted for in a consistent manner. A better understanding IFRS 17 will help investors and others better understand insurers’ risk exposure, profitability and financial position.   According to Hans Hoogervorst, Chairman of the IASB, “IFRS 17 will provide important insight into insurance companies’ risk exposure and performance, which in turn will contribute to financial stability. It is therefore an important contribution to the FSB’s mission of strengthening the stability in the financial sector.   The IASB is a member of the FSB, and IFRS Standards are among the Key Standards for Sound Financial Systems defined by the FSB.   Read the full FSB statement here.   Source: Financial Stability Board.

Jul 28, 2017
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ESMA recommends improvements in financial information enforcement

The European Securities Markets Authority (ESMA) has published the results of its peer review conducted into how national accounting enforcers examine IFRS financial information according to the ESMA guidelines on enforcement of financial information. According to IAASA, the report identifies areas where national accounting enforcers can improve their enforcement and makes recommendations to support these improvements.   The peer review was carried out on the basis of a questionnaire sent to all national accounting enforcers, including IAASA, supplemented by on-site visits to seven jurisdictions: Germany, Italy, Malta, Norway, Portugal, Romania, and the UK.   The report identifies that further improvements are needed in relation to:    The basis on which issuer reports are selected for examination; The depth of inquiries into financial statements going beyond disclosure of information; and The level of financial and human resources allocated by national accounting enforcers to enforcement activities. The report also makes a number of recommendations where national accounting enforcers and/or ESMA should consider further action:   Enforcement of financial information should not be an ancillary function. National accounting enforcers should ensure that sufficiently skilled and dedicated staff are available for this activity; A list of common risk factors should be created to be used by all national accounting enforcers in the selection of issuers for examination; National accounting enforcers should use a common approach for the selection model, providing for the use of rotation and random selection in addition to selection based on identified risks; National accounting enforcers should ensure that the selection models allow the coverage of the whole population of issuers in a member state over a 10-15 year cycle; The default type of examination should be unlimited in scope. This examination should cover all relevant areas of the accounting framework (i.e. recognition, measurement, presentation and disclosure) and all relevant documents published by an issuer (e.g. the management report, consolidated and separate financial statements); and National accounting enforcers are encouraged to ask issuers questions even where there is no suspicion of misstatement. The ESMA report can be accessed here.

Jul 21, 2017
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FRC revisions to International Standards on Auditing (UK)

The Financial Reporting Council (FRC) has issued a revision of ISA (UK) 250 Section A – Consideration of Laws and Regulations in an Audit of Financial Statements, and conforming amendments to other ISAs (UK), effective for audits of financial statements for periods commencing on or after 15 December 2017. The revisions, which are limited in scope, reflect changes made to the International Code of Ethics issued by the International Ethics Standards Board for Accountants (IESBA). These changes provide a framework to support reporting by accountants where they identify non-compliance with laws or regulations in the course of their work. The International Auditing and Assurance Standards Board (IAASB) made minor changes to align ISA 250 with the requirements of the revised Code. The changes help to improve the clarity of the ISA (UK). For example, the definition of non-compliance has been amended to cover a broader range of instances that are contrary to the prevailing laws or regulations. This is supported by application material on laws and regulations that deal with fraud, corruption and bribery and money laundering, terrorist financing and proceeds of crime. The FRC has also issued revised ISA (UK) 330 The Auditor’s Responses to Assessed Risks, with conforming amendments to ISA (UK) 505 External Confirmations, also effective for audits of financial statements for periods commencing on or after 15 December 2017. The revisions have the effect of streamlining and integrating the guidance relating to obtaining bank reports for audit purposes into the auditing standards. Consequently, the FRC has withdrawn Practice Note 16 Bank reports for audit purposes in the United Kingdom from the date the revised standard is effective from. The templates for requesting bank reports will remain available for use on the British Bankers’ Association website (now UK Finance), where an auditor wishes to obtain such a report. For more information, visit www.frc.org.uk.

Jul 21, 2017
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HMRC nets more than £4bn from tax avoiders

HM Revenue & Customs (HMRC) has collected more than £4 billion through the ‘pay now, dispute later’ rules for people who have used a tax avoidance scheme.   More than 75,000 accelerated payment notices (APNs) have been issued to people under enquiry for tax avoidance since rules were introduced in 2014. And HMRC has now issued APNs on all the schemes that were already under investigation when the new rules came in.   The High Court has also confirmed that HMRC recently won another judicial review of the APN regime – the department has now won six out of six Judicial Reviews.   HMRC collected an average of £38,400 each day by requiring people in avoidance schemes to pay their disputed tax upfront. The average bill for large companies trying to avoid tax is £6 million while for individuals and small corporates, it is £74,000. In comparison, the worker on an average salary who doesn’t try to avoid tax pays less than £6,000 in national insurance and income tax in a year.   David Richardson, Director General for Customer Compliance Group in HMRC, said: “The vast majority of people play by the rules and pay their taxes on time – people who try to do otherwise place an undue burden on everyone else.   “APNs have helped level the playing field by changing the economics of avoidance,” he added. “We are pleased that the High Court has again supported HMRC’s operation of the accelerated payments regime. This is our sixth win out of six judicial reviews of APNs.”   People who receive an APN have 90 days to pay or make representation to HMRC if they think it is incorrect. HMRC has upheld 90% of decisions to date.   HMRC challenges every tax avoidance scheme they become aware of and currently have more than 600 schemes and 80,000 users under investigation. The tax authority wins around eight out of 10 cases taken to court, with many more settling before litigation.   HMRC has recommended that anyone who anticipates problems paying their tax bill should contact HMRC, as they may be able to offer extra time to pay based on individual circumstances.   Source: HMRC.

Jul 21, 2017
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Brexit negotiations: Round 1

What happened in the first week of the Brexit negotiations? Eoin O’Shea takes a look.   Last week’s Brexit talks in Brussels were formally called the second round of negotiations. With the first round in June being only to agree the timetable for talks, it is perhaps apt to describe what went on last week as being the real first round of engagement between the parties.   Since the UK’s recent general election, there has been speculation (fuelled by none other than the UK’s Chancellor of the Exchequer) that the UK would change its negotiating stance from a hard Brexit to a soft Brexit (i.e. by the UK starting to argue that the UK should remain within the EU Single Market, like Norway, and/or the EU Customs Union, like Turkey. None of these possibilities were dealt with in last week’s negotiations because, as was evident last week, it is still the case that the UK will continue on its inevitable negotiating course towards a hard Brexit.   In preparation for last week’s negotiations, the EU published 24 position papers. The UK side was not so forthcoming. While there may potentially be a good deal of agreement between the parties on some items, it is the case that the sides left Brussels last Thursday with no real agreement/engagement on the substantial issues arising in this part of the Brexit negotiation process.   Before delving into the minutiae of what the EU/UK disagreed on in last week’s talks, it is worth pointing out that, if there will be no deal between EU/UK before Brexit happens, the UK will crash out of the EU without a trade deal in place. That would cause severe difficulties for the UK and for Ireland. Therefore, these talks between the UK and the EU (in which Ireland does not have direct involvement) are absolutely crucial for Ireland.   The EU has, with the agreement of the UK, divided the negotiation process into a couple of phases. The first phase (where we are now) concerns the rights of EU citizens present in the UK on Brexit day, the amount of money the UK must pay the EU on exit, and other matters. The ‘other matters’ bit is a moveable feast but includes issues relating to the Irish border and the preservation of the Common Travel Area between the UK and Ireland.   To sum up the first phase of the talks, it is my view that, not only was there no agreement, but there was no agreement on the possibility of there being an agreement. In lawyers’ parlance, the parties are headed for trial which, in these circumstances, is the worst possible outcome for Ireland.   On the most contentious issue in last week’s talks, which was the ‘financial settlement’ (i.e. what monies the UK will owe the EU on Brexit day), Michel Barnier, the EU’s chief negotiator, last week publicly welcomed that the UK had stated openly during the previous week that at least some monies were due from the UK to the EU on exit. At last Thursday’s press conference, however, David Davis, the UK’s chief negotiator, failed to confirm same by way of real words. In relation to citizenship rights on Brexit day, Barnier was asked by a journalist whether the European Court of Justice should still be involved post-Brexit in deciding on issues relating to EU citizens present in the UK on Brexit day. Barnier confirmed, in effect, that the involvement of the EU courts represented a red line for the EU negotiators. On that issue, Barnier’s position could not be further than that of the UK.   So the Brexit negotiations have not got off to a good start for Ireland. The possibility of there being no deal at all between the UK and the EU has increased. It is evident that the parties are still divided by ideological rather than practical considerations and, in truth, there was little from last week’s talks which would give one hope that the sides will eventually be drawn together.   Eoin O’Shea FCA is a practising barrister, specialising in commercial and tax law. Eoin is a former member of the European Court of Auditors.

Jul 21, 2017
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The blockchain revolution

Deloitte’s David Dalton explains the concept and value of blockchain to the financial services sector and beyond. What is blockchain in layman’s terms? Blockchain technology is a peer-to-peer shared online ledger where transactions are recorded, validated, stored and accessible to anyone who is part of the computer network. All transactions are timestamped and stored in chronological order, providing users with a complete audit trail of the transactions on the blockchain. The combination of cryptography along with its decentralised structure makes it very difficult for any party to tamper with the data in comparison to a traditional database. Recently, CEOs have been praising disruptive technology like blockchain – is this good for the industry? It is normal currently for accountants to manage and maintain separate financial records. Alternatively, they could write their transactions directly into a shared repository, creating an interlocking system of accounting records. All entries would be distributed and encrypted on the immutable platform, making it practically impossible for an unauthorised party to access the secured data. Accountants could use this either as a back-up/shadow system or effectively monitor the decentralised database system themselves thereby replacing the existing bookkeeping system, saving time and shifting their focus to more complex accounting related activities. How can/will organisations use blockchain? Blockchain technology has huge potential to revolutionise the way in which we exchange and record value today. A blockchain makes sense when there is a need for a shared data source, multiple people writing to the data source, and the need for an absence of trust. In most instances, blockchain creates the opportunity to disintermediate trusted third parties. Popular areas in financial services include payments, regulatory reporting/compliance, trade finance and settlement to name but a few. There is the potential for organisations to come together and operate in industry utilities powered by a blockchain, where data is shared in a safe and permissioned way between parties. How is blockchain important to the financial services sector? Blockchain has the potential to replace a number of inefficient aspects of the financial services market. For example, cross-border payment is a lengthy and costly process due to the need to involve a number of financial intermediaries. Blockchain has the potential to act as a quicker, cheaper alternative by connecting parties directly to transact with each other on the platform. Many other areas may also see disruption, such as post-trade settlement, fund and financial instrument distribution and the client on-boarding process. How will cryptocurrencies impact the industry? Cryptocurrencies are an emerging asset class and are fast becoming a mainstream tradable asset. Given the infancy of the asset class, a number of issues remain associated with cryptocurrencies. Firstly, it is not a regulated market and liquidity has therefore proved to be a problem at times. Second, similar to how derivatives were difficult to value in recent times, how to value a cryptocurrency for your balance sheet is still an issue. There are a number of issues around governance and regulation which need to be addressed before cryptocurrencies become a widely used and supported asset class. David Dalton is Consulting Partner at Deloitte and the firm's Financial Services Industry Leader in Ireland.

Jul 21, 2017
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Delivering the infrastructure Ireland needs

The stop start nature of infrastructural development has been a feature of the economy since the foundation of the state. Resistance to well-structured and thought out capital planning is counterintuitive and only serves to slow down future economic growth, explains Michele Connolly. After several years of recession, we have entered a period of sustained but fragile growth. However, with fiscal policy mainly focused on current spending, there is a need to promote the benefits of a more planned approach to infrastructural development. The extent of the challenge is heightened by the fact that, while we perform well in many global indices, it's infrastructure that often lets us down. The most recent edition of the IMD Global Competitiveness Report ranked Ireland 23rd out of 138 countries. However, an inadequate supply of infrastructure was identified by respondents as a problematic factor in doing business in Ireland. One of the most obvious challenges has been the fact that the economic cycle and infrastructural investment appear to be almost counter cyclical. Following a peak of 5.2 % of GDP in 2008, public investment collapsed to a low of 1.8 % of GDP in 2013 before slightly recovering to 1.9% in 2014 and it remains well below the EU average. The benefits to be gained from refining our approach are significant. It stands to reason that there is a better way to deliver large scale infrastructure that is not dependant on fiscal, economic and electoral cycles. It’s not just business that suffers when there is a lack of planning or investment in infrastructure. Our economic recovery has been overshadowed to a large extent by significant issues in areas such as housing and health. However these issues did not arise overnight and gaps in our infrastructural development are obvious.  Capacity planning and funding To avoid repeating the mistakes of the past, we need to be far more rigorous in our approach to planning for future infrastructure needs, and when funds become available, we need a suite of prioritised projects that can move to construction immediately. In determining where we should prioritise our spend, we need to develop the concept of long-term strategic planning on a cross-sectoral basis as distinct from the current funding envelope allocated by Government departments. This would require us to succinctly define and understand the problems the Government is trying to solve and the suite of solutions available. The scale of these projects and the need to get it right also requires us to prioritise projects that will deliver measurable social and economic benefits. Demographic assessment, growth in student numbers, an ageing population, pressure on water quality and supply, and increasing congestion are all examples of predictable challenges. There is also the housing crisis, which has developed due to years of inaction and lack of proper planning. Such an approach to planning could, for example, focus on addressing current and future bottlenecks, assessing the economic benefits, ensuring a positive impact on equality and social inclusion and being consistent with the achievement of climate and energy goals. Meanwhile, there are funding solutions that can help mitigate against challenges to short-term spending constraints. Low cost funding that does not count as part of Government debt is available. What we are missing is a scaled-up programme of projects ready to spend it on. Recent changes announced last week are still just a drop in the ocean compared to we need to do and could achieve. In addition to central Government funding, the European Investment Bank (EIB), private investors and pension funds are all potential sources of funding that can be accessed without adding significant risk to the Exchequer. Despite these options, resistance to using private capital remains. This is typically on the premise that the government can borrow cheaper themselves. That is technically correct (although it does ignore all the benefits of transferring risk to the private sector). So, why isn’t Government doing this if we so badly need infrastructure investment to protect and enhance our competitiveness? Because we are currently choosing to pay off our debt burden rather than investing in capital for our future. However, Conor Kelly, CEO of the NTMA, recently commented that investors in Ireland’s debt burden are ambivalent on whether we pay down debt or invest in infrastructure. The critical point is we can do both. Technology Technology also has a role where it can be embedded in current infrastructure and/or manage a suite of infrastructure assets to drive efficiency. It also means introducing greater competition to the delivery of public services to increase performance and drive efficiencies. Limitations I do recognise that there are limitations on how fast and how much new infrastructure we can build but we are a long way from that being a problem at present. I do believe Government should be balancing its attention between building new infrastructure and driving efficiency across all aspects of the infrastructure life-cycle to drive incremental and valuable improvements. Governments increasingly recognise that they can’t increase national productivity without improving infrastructure. The only way to do this is to think strategically now to plan for the long-term, prioritise projects and open the mindset to all available funding options – whether additional government investment or private sector funding. Michele Connolly is Head of Corporate Finance at KPMG

Jul 20, 2017
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NCC publishes Ireland’s Competitiveness Scorecard 2017

The National Competitiveness Council (NCC) has published Ireland’s Competitiveness Scorecard 2017, its annual benchmarking report, which provides a statistical assessment of the country’s competitiveness performance with regard to a range of countries with which we compete for trade and investment.   The findings show that many facets of Ireland’s competitive performance continued to improve over the last year. Economic growth, improved public finances, trade performance and a strong labour market performance have all contributed to Ireland’s improved international competitiveness. The economy’s exporting sectors continue to perform strongly and many of Ireland’s traditional strengths (such as our competitive taxation regime, highly educated, young, labour force, and supportive environment in which to do business) remain. Reflecting this strong economic performance, Ireland moved from seventh to sixth in the IMD’s annual World Competitiveness Yearbook 2017. Masked weaknesses The Council, however, is concerned that Ireland’s strong performance from a macroeconomic perspective is overstating the country’s overall competitiveness position and masking weakness in the underlying drivers of future competitiveness performance and sector-specific challenges, particularly related to costs and productivity. Furthermore, the Council has warned that while the overall economic outlook for Ireland is positive, the economy faces significant downside threats including Brexit, a potential shift in trade and taxation policy in the US, and the uncertain nature of global growth, particularly the potential for slower than projected growth in the UK and US.   Speaking at the launch of the report, Professor Peter Clinch, Chair of the Council said, “The competitiveness and consistency of our tax offering, legal, regulatory and administrative environment, cost base, the availability of talent, technology and property solutions will remain vital to our ability to withstand the ebb and flow of global economic developments and external economic shocks.   “While Ireland’s overall economic performance is strong… we are at a critical juncture in terms of ensuring the foundations for future competitiveness are in place,” he added. “We face major competiveness challenges in developing the resilience of the enterprise base, particularly in light of Brexit, and ensuring the environment in which to do business remains competitive, particularly in terms of costs, skills availability, infrastructure capacity and productivity.” Key targets To ensure sustainable growth, Ireland must ensure that its fiscal position remains sustainable according to the Council. While Ireland must continue to compete from a taxation perspective, any narrowing of the tax base should be avoided and the tax system must support and reward employment, enterprise, investment and innovation.   Developing the country’s infrastructure base, while complying with the EU’s fiscal rules, is a fundamental challenge to enhancing competitiveness. In that context, measures to reduce infrastructure bottlenecks – by improving and prioritising public investment, particularly the capacity to deliver regionally connected projects in line with the National Planning Framework, for example – are essential.   Related to infrastructure prioritisation, meeting Ireland’s climate change commitments and transitioning to a low emissions economy also presents significant challenges and opportunities at sectoral level and will be central to the direction of long-term economic growth prospects.   In an international context, Ireland ranks strongly when it comes to developing, attracting and retaining talent. However, a rapidly improving labour market and positive inflation is likely to pose challenges for competitiveness in terms of sector skill shortages and costs. The return to sustained levels of growth has resulted in upward cost pressures at sectoral level (e.g. labour) and property costs. Ireland’s labour productivity performance is strong in an international context. However, Ireland’s performance has been greatly affected by shifts in the composition of employment and the influence of a number of high value added sectors on output. As a small open economy, any deterioration in Ireland’s cost competitiveness will have a major negative impact upon growth, employment and our standard of living. Brexit Brexit has underlined the importance of generating uplift in enterprise competitiveness to secure future jobs and growth. A more diverse export base can reduce exposure to external demand shocks, exchange rate fluctuations and instability in export earnings.   Policies to facilitate enterprise evolve into new products, markets and sectors while maintaining the competitive advantages we currently enjoy in existing sectors are critical at this time.   Bridging the productivity gap that exists between the most productive firms and lagging firms is a major challenge to sustainable growth prospects. Facilitating workplace innovation and delivering uplift in management skills and labour force quality at all levels is particularly vital.   Furthermore, ensuring Irish enterprise stays at the forefront of technology and innovative activity, and is able to access competitively-priced finance from a variety of sources remains an important challenge. From a competitiveness perspective, the returns from innovation are a vital component in securing productivity growth, diversifying and broadening the enterprise and exports base, growing FDI and creating competitive advantage in intellectual property and commercial products and services. Renewed focus on competitiveness According to Prof. Clinch, “The scale of the challenges which confront us have magnified over the past year since the Brexit referendum result. It brings into sharp focus the need for Ireland to maintain and improve our competitiveness performance across a range of areas such as infrastructure, ease of starting a business, talent, tax and innovation.”   He added, “Only a renewed focus on competitiveness will enable us to achieve sustainable improvements in living standards and help us withstand external shocks and factors beyond our control.” Source: National Competitiveness Council.  

Jul 19, 2017
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