Without much guidance from Revenue, business owners often struggle with completing their annual Return of Trading Details, at great impact to the business. Alan Kilmartin explains RTD, how it can affect a business and the best way to simplify the process. All VAT-registered persons are required to file a Return of Trading Details (RTD) following the end of their accounting period (which is usually aligned to the financial year). The RTD is a statistical return summarising actual sales and purchase figures, the VAT on which was included in the less detailed periodic VAT returns during the accounting period. The return gathers the information through four key questions: Have you made supplies of goods or services? Did you acquire any goods or services from the European Union, including Northern Ireland? Did you purchase goods or services for resale? Did you purchase goods or services that are not for resale but where VAT paid on them can be claimed as an input credit?      The fields on the return are completed using the net sales or purchase figures at the various VAT rates applicable to the relevant transactions. For example, the net total sales of goods and services supplied for question 1 would be broken down into the various VAT rate categories (9%, 13.5%, 23%, etc.) and included in the return based on the total for each rate. The potential impact of the RTD The RTD must be filed on the 23rd of the month following the end of the accounting period. Therefore, if a business has an accounting period which ended on 31 December 2019, the RTD is due to be filed by 23 January 2020. The return is, as mentioned, a statistical return and, as such, does not carry an obligation to pay any VAT liability. Essentially, the RTD is used as an audit tool to assist Revenue in verifying the accuracy of periodic VAT returns filled during the accounting period. Revenue have stated in recent guidance that when a nil RTD is filled, it will be rejected when there have been positive values in the VAT returns for the accounting period, so it is important to ensure that the RTD reconciles with the VAT returns made to Revenue in the period which it covers. It is recommended to carry out a reconciliation of the RTD with the VAT returns because it is quite likely that one will be carried out by Revenue and if there are discrepancies, Revenue may choose to audit your client’s business. In contrast to VAT returns, there is no option to complete a Revenue Online Service (ROS) offline file in respect of the RTD and, therefore, the return must be completed ‘live’ on ROS. Failure to file an RTD can affect the cash flow of a business as tax refunds, under any tax head, can be withheld until the RTD has been filled. Also, Revenue may refuse to issue tax clearance certificates until the RTD has been filed. How to simplify the process In order to ensure that the information provided to Revenue is correct, it is recommended that businesses fully utilise the functionality of their ERP/accounting systems and ensure the tax and VAT codes within those systems take account of the data required to be declared in RTDs. In addition, preparing the RTD on a periodic basis when preparing the periodic VAT return will alleviate pressure during the “year-end” process. Despite an overhaul in recent years, the RTD still contains obvious flaws and its completion, in parts, is certainly open to interpretation by the taxpayer. Furthermore, in the absence of definitive guidance from Revenue, it is not surprising that taxpayers often have difficulty completing this return. So, are you RTD ready? Alan Kilmartin is a Director of Indirect Tax in Deloitte.

Sarah Daly explains how introducing some new time management methods into your day can help you manage your time more efficiently. In business, time is definitely money. Yet, while learning to prioritise competing demands is a skill that I have tried to develop over the years, like many business owners and managers, I find that unless I consciously manage time, there is always a risk of spending too many hours working ‘in’ the business and not enough hours working ‘on’ it. Talking to other accountants, I know that I’m not alone with this problem. In a busy office where clients phone in with urgent requests throughout the day, it is easy to fall into a pattern of running from one crisis to another. While some of these demands are genuinely urgent and have to be dealt with there and then, others are less urgent, and some – like spending too much time on email – can be a habit that, although neither urgent nor important, can take up a significant chunk of time. The key to good time management is learning to understand how you and your team spend your time each day so that you can identify opportunities to improve efficiency. The idea of analysing tasks and learning how to allocate time appropriately is not new. In his book, The Seven Habits of Highly Effective People, management guru Stephen Covey explains that by categorising tasks into those that are ‘important and urgent’, ‘important but not urgent’, ‘urgent but not important’, and ‘not urgent and not important’ can help you get ahead of the game. Categorise First thing is to decide what tasks go in which category. Where does your daily check-in with staff go on the list? How about returning client calls? Tasks that are both urgent and important should be done first (obviously) while those that are in the ‘not urgent and not important’ category may not need to be done at all. At least not by you. Tools to help Today, there are tools that can help analyse how you and your team allocate your time, from monitoring time spent on social media to analysing time spent on particular projects or clients. One that I particularly like is the MyHours time tracking solution which has helped me to identify my most valuable work and eliminate time-wasting activities. Dedicated email time Another technique I find useful is having two slots a day for email — one in the morning and one toward the end of the day — rather than allowing email to constantly interrupt me. For me, email is usually in the ‘important but not urgent’ category, but your emails might be important and urgent, so adjust your email time as needed. Outsourcing It is worth reminding yourself – and your clients – that time-consuming administrative tasks can often be outsourced to specialist service providers, freeing business owners and managers to spend more time working 'on' rather than 'in' the business. What means the most to you? Finally, at this time of the year, it is worth reflecting on whether the things that mean most to us – like spending time with family and friends or looking after our health and wellbeing – are sufficiently high priorities on our ‘to do’ list, falling into the ‘important and urgent category’. If not, now is the time to get them on to our list of priorities for the coming year. Sarah Daly is Founder and CEO of GroForth.

What better way to start a new year than with a new career opportunity? Fiona Richardson explains how you can make a career change this year. January can often be a catalyst to making changes in your life, whether it’s hitting the gym, tailoring your eating habits or making those all-important New Year's resolutions. It comes as no surprise that changing job is a common theme during this time of self-reflection. If making a career move is a serious consideration for you in 2020, these key steps will ensure a successful transition  Consider why you want to make a move  Before you consider changing jobs, it’s important that you are clear in your own mind why you want to make a career move. Don’t move on an impulse. Analyse what you like in your current role and what you would change if given the opportunity. Ask yourself: What do you want to see in your next role? Is there a way for you to achieve this in your current organisation? We advise candidates to have these discussions internally before looking externally. This will hopefully avoid the sticky situation of  considering a counteroffer after going through the interview process with a prospective future employer. Write your CV or update the one you have This is often an intimidating task, but just do it. It takes time to get right, but it is so worthwhile once you get it done. Focus on your skills, key deliverables and achievements rather than just your operational outputs. Remember your skills and experience are transferable to other industries, so don’t undersell or limit yourself. Make sure to review job descriptions to familiarise yourself with the language being used and get a sense of what employers are looking for. Your CV should include a short and succinct personal profile/statement focusing on experience, skills and key successes. Once you complete a final draft, it is much easier to re-edit it for different roles that may come your way. You will usually have to adjust your CV for each role to emphasise what is important and highlight your suitability for the position. Your CV should be a working document that you update on an ongoing basis as your role and responsibilities evolve. Once completed, seek feedback from a mentor or your recruitment partner. Put yourself out there Once you have decided that you want to move, you must put a plan in place to ensure that you are positioned in the way of potential opportunities. Update your LinkedIn profile to reflect your most recent position and partner with a recruitment specialist and meet with them so they fully understand your background and what you want to achieve in your next move. Take their advice. As industry specialists, they should manage expectations and provide insights into the job market. Finally, the most important part of the plan is one around your personal brand and broadening your networking activity. Have you joined relevant institutes? Are you attending industry events? Is your company a member of a local chamber of commerce and if so, are you attending events? How you present yourself to the market, your CV, your LinkedIn profile, your attitude, your communication skills, dressing appropriately – all these things matter. Changing careers is exciting, and the decision to do so will dictate the foreseeable future of your professional life. Take time with it, be considered and when you are offered the role you like, be decisive. Fiona Richardson is an Associate Director of Accounting, Finance & Legal in Morgan McKinley.

Like our personal New Year resolutions, work-related goals will slip unless they become embedded in our daily routine, writes Teresa Campbell. At the start of a new year, it is natural to think about what you want to achieve over the coming 12 months, both personally and professionally. We set goals for ourselves and our teams, often investing much time in the process. However, even with the best of intentions, we often slip back into familiar routines, missing out on opportunities to make the most of the year ahead. Getting into the habit When setting out to achieve new goals, it can be useful to focus on developing new habits that can help us succeed. In 2009, Phillippa Lally and her colleagues at London’s UCL defined habits as behaviours that are performed automatically because they have been performed frequently in the past. Their research found that it can take much longer than many people think to form a habit, and perseverance is the key to success. According to Lally and her colleagues, to form a habit, one should be very clear with themselves about what action they will adopt and in what situation, and then carry out that action consistently. Lally says that, over time, it will require less effort. Likewise, in the workplace, when managers are encouraging teams to form new habits (be it good time management, better organisation or to adopt a more independent working style), they need to be clear about what they want the team to achieve, encourage the group along the way and have regular check-ins to be sure these new behaviours are happening consistently. Do as I do Managers also need to reflect on how their work habits impact on team members. Do you lead by example? Do you make time to get to know your team members? Do you give credit where credit is due? Do you take regular breaks, manage your stress and prioritise your health and wellbeing? Do you communicate your expectations clearly and set realistic goals and deadlines? These are essential habits, which all persons should develop to become a productive team member – but your team will struggle to embed them into their lifestyle if they don’t see you doing the same. Consistency is key I suspect that if you were to ask each of your team members and managers about the good habits they would like to nurture in 2020, you would end up with a long list of aspirations covering everything from better time management to cutting back on social media to giving higher priority to health, wellbeing and community involvement. Whatever their goals for the coming year, remind them that persistence is vital. While they may slip for a day here or there, they should try to be consistent and prioritise getting back on track. That way, there’s a good chance their new habit will continue to benefit them throughout the coming year and beyond. Teresa Campbell FCA is the People and Culture Director at PKF-FPM Accountants Limited.

By Neil Gibson While the economic outlook for Ireland is slightly cooler than the last two buoyant years, it is not entirely unwelcome as the pressures of fast growth are beginning to become more visible. Here are 12 predictions for the economy in 2020. Prediction 1: GDP will rise by 3.2% Strength in the domestic economy resulting from a combination of job growth, real wage growth and government spending is projected to compensate for weakening global conditions. GDP is expected to be above trend at 3.2% in 2020. Modified domestic demand, which strips out the main distortions in Irish GDP, is forecast to grow at a similar rate (3.1%). Ireland will, therefore, remain near the top of the European growth charts. Biggest forecast risk: A global slow-down. Prediction 2: Employment to rise by 1.7% Job growth is expected to remain robust in 2020 with 40,000 net jobs for Ireland projected, a slight reduction on the 56,000 in 2019. Consumer and government spending will boost domestic businesses and strong migration will allow firms to keep recruiting. Biggest forecast risk: Skills gap and housing shortages prevent firms getting the talent they need. Prediction 3: Wage growth at 3.5% Wage growth has picked up over the last 18 months as labour supply tightens and skills gaps emerge in key sectors. The growth is also partly compositional with more hiring at the senior level, pushing up the overall average wage. Overall, average wage growth is projected to slip back very slightly from its 2019 level to 3.5% in 2020. Biggest forecast risk: Wage inflation accelerates as firms struggle to get the labour they need. Prediction 4: Consumer spending growth of 2.4% Despite signs of ebbing confidence in consumer surveys, the rate of job and wage growth should support a healthy 2.4% growth in consumer spending in 2020. With the national savings ratio at a healthy level and confidence largely restored in the property markets, fears over Brexit and the global economy appear to be only having a modest effect on consumer behaviour. Biggest forecast risk: Consumers’ confidence, which is already fragile, finally impacts behaviour and people choose to spend less. Prediction 5: Net migration of 40,000 Ireland remains a very open economy with fluid labour movements both in and out of the country. Net migration is projected to reach 40,000 in 2020 with Ireland’s economic strength and improved relative attractiveness as an English-speaking, cosmopolitan location further boosting inflows. This flow will continue to drive demand in the economy but will add to the pressure on public services and Ireland’s infrastructure. Biggest forecast risk: Insufficient housing supply leads to further rent appreciation which, in turn, deters migrants from coming to Ireland. Prediction 6: Inflation of 1.6% It is one of the great economic puzzles – how has inflation remained so low? With rising wages and a strong economy, most economic models would project a rise in headline inflation. A depreciation in sterling has helped keep Irish inflation down but high levels of competition may also have mitigated against firms increasing their prices. It may also reflect the application of new technology and data analytics as cost control measures. The twin conditions of healthy job/wage growth and low inflation has made it a very strong 18 months for domestic businesses. Biggest forecast risk: Inflation picks up sharply as wage increases lead businesses to feel confident about price increases and a wage/price spiral begins. Prediction 7: House prices to increase by 3.2% House price growth has slowed markedly in the last 12 months. Unusually, this is in not in response to a weakening economy but partly because of the lending rules that have placed a harder ceiling on borrowing. This has been a welcome outturn for the Irish economy overall, though it has not been helpful in accelerating the development of much needed additional housing supply. Our forecast is for prices to pick up slightly from the current growth rates, reflecting demand and affordability in the wider economy. Biggest forecast risk: Despite lending rules, increased cash investment triggers a rapid step up in prices. Prediction 8: Construction inflation of 7% Because of the strong overall economy, construction will continue to perform well with domestic and commercial demand remaining strong. In addition, increased levels of government capital spending are providing a further boost and, consequently, inflation in the sector is very high. Cooling global conditions may take a little heat out of the input and material prices but wages look set to continue to increase. Biggest forecast risk: An uptick in domestic building, coupled with infrastructure spending and further commercial development, creates a ‘perfect storm’, pushing construction cost up even further. Prediction 9: Housing completions: 24,000 Despite net migration of 34,000 into Ireland in the year to mid-2019 and a long-standing stock shortage, housing completion levels remained well below the required level at the end of last year. A moderation in house price growth, opportunities elsewhere in the construction sector and a challenging planning and regulation environment continue to work against a more marked acceleration in house building. Fortunately, the constrained supply has not resulted in an unwelcome sharp pick-up in prices. Biggest forecast risk: Sluggishness in granting permissions and significant opportunities elsewhere in construction lead to lower completion levels. Prediction 10: Tax receipts: 4% Tax receipts have been very robust across all major categories. Though corporation tax increases have made the headlines, income tax and VAT have also grown strongly, reflecting the broad-based economic growth under way in Ireland. It remains hard to predict tax receipts as Ireland’s fortunes have considerable exposure to a very small number of firms, but the forecast for continued job growth and healthy wage increases mean a very healthy 4% is our central forecast for 2020. Biggest forecast risk: Adverse global conditions impact the small group of firms that contribute a large proportion of corporation tax receipts. Prediction 11: Government balance at 0.1% of GDP That the Irish economy is back into general government surplus is both a cause for celebration but also somewhat concerning. The €175 billion debt mountain remains almost untouched, despite the sustained period of fast growth, making the rather cautious Budget set by the Minister for Finance both understandable and advisable. The forecast of a very modest surplus this year reflects uncertainty over the volatile corporation tax receipts and the long list of calls on government budgets across most areas of public service. Biggest forecast risk: Demand for investment in public services, partly driven by population growth, leads to higher levels of government spending. Prediction 12: Unemployment rate of 4.6% Unemployment has been falling steadily for seven years since its peak of over 15%. Employers are finding labour harder to find, though even at the 4.6% rate projected for 2020, it is still some way from being considered full employment. The steady flow of migration and demographic factors mean that the strong job forecasts will not translate into an equivalent fall in unemployment. Nevertheless, we project it will continue to fall to its lowest rate since 2005. Biggest forecast risk: A global slowdown eases hiring and with strong migration flows, unemployment levels move into reverse and start to rise again. (The predictions assume the avoidance of a no-deal Brexit in 2020.) Neil Gibson is the Chief Economist in EY Ireland.

The failure to anticipate fraud risks can leave us open to significant financial and brand loss, explains Maureen Kelly. As businesses internationalise and move into new, potentially unknown markets and jurisdictions, the risk of fraud, both internal and external, is increasing. Furthermore, recent developments in anti-bribery and corruption legislation in Ireland means that businesses need to exercise even higher degrees of caution and due diligence as they navigate and explore new opportunities in 2020.    Recent Irish business research undertaken by Mazars Ireland shows that businesses are experiencing financial loss due to occupational fraud and abuse. Of those senior business leaders surveyed, approximately 50% had experienced a loss due to occupational fraud and abuse over the past two years.  The average financial loss was between €10,000 and €20,000, but 12% of respondents suffered losses greater than €500,000. The research shows that the principal causes of this financial loss relate to theft of cash and goods, but businesses also experienced losses due to expense fraud, payroll, invoice fraud and conflict-of-interest issues. The good news is that 33% of the fraud was detected via internal audits, with 25% detected via whistle-blowing/speak-up channels. An internal audit or concerns raised by whistle-blowers are invaluable for detecting fraud and the information provided to businesses by these two channels can then inform the improvement of their internal controls. However, the importance of robust internal controls cannot be overlooked.  What can be done to prepare for – and, therefore, prevent – fraud from happening in the first place? Five critical steps to managing fraud risk Step 1: Ensure the existence of a robust and mature control anti-risk environment   You can do this by: leading with a strong ethics culture and attitude displayed and communicated by those in charge; assigning authority, responsibility and reporting lines for all areas; openly displaying and enforcing policy statements and codes of conduct, particularly the whistle-blowing channels; and ensuring all staff have the knowledge and skill level required to accomplish tasks. Step 2: Carry out a focused risk assessment Identify the areas of fraud risk to your business, estimate the significance, assess the likelihood of the risks occurrence, and decide actions to address those areas of risks. By classifying your specific fraud risks, you can then put systems in place to eliminate or reduce them. Step 3: Ensure adequate controls, technology and due diligence processes are in place and in use Policies and procedures, segregation of duties, physical controls of assets and documents, appropriate authorisation levels and reconciliations remain integral elements of a robust internal control environment. However, organisations need to better leverage technology, systems and data to identify, anticipate and respond to potential fraud patterns and schemes in 2020. Furthermore, due to the anti-bribery and corruption legislation, the importance of relevant training and adequate due diligence on employees, agents, distributors or joint venture partners cannot be overlooked. Step 4: Review the security of your communication and information systems External fraud, including cybercrime and identity theft, can be costly both in the initial impact and the clean up afterwards. Phishing, invoice fraud, identity theft and denial of service attacks can all be financially devastating to a business. Adequate cybersecurity systems and increasing levels of Board and staff training and awareness are vital in its prevention. Step 5: Monitor, review and react If there is no monitoring of the system, you can have no assurance that it is effective, the controls are working, or potential fraud or misstatement is being avoided. A focused review by internal audit, or a more in-depth forensic style audit if your organisation doesn’t have the scale to have a dedicated internal audit team, must be considered. What will be the result? As your business grows and increases its cross-border footprint, by following the above steps your business can prepare for and prevent fraud in order to protect your business and brand. Maureen Kelly is a Senior Manager in Forensic and Investigation Services at Mazars.

By Moira Dunne December is a hectic time of year in work with the parties and end-of-year attitude, so to ensure you have a relaxing break and a head-start on 2020,   here are 12 productivity tips to get you through the holiday season. Set your priorities In December, there are lots of things to get done, especially in these last few weeks. If you don’t have time for everything, be clear about your priorities. Agree this with important stakeholders to avoid any conflict or disappointment. Protect your time Right now, time in work is more limited than usual. Our days are often shorter due to traffic congestion, late nights, and early finishes for Christmas events, lunches with clients, etc. Be ruthless with your time. Spend it on your priority tasks and people. Catch up with key clients Connect with important people before the year-end. Try to find productive ways to do this. Make a quick phone call or send a charity Christmas Card. A quick check-in can really strengthen a relationship for continued collaboration in 2020. Push some events to January There is a lot of pressure to do everything before Christmas. Start asking if some things can be moved to January. This frees up some time now while also energising January, a month when it can be hard to get motivated. Keep meetings short Going into the third week in December, everyone’s time is limited. Now is the time to use productive meetings skills: keep them short and stay on track, have a clear agenda and make decisions and decide actions. Your colleagues will appreciate it, too! Say no sometimes Saying no is one of the hardest skills in business, but it can be the right decision if the request is a low priority. Explain in business terms the reason you are saying no and suggest an alternative if you can. Batch up tasks to save time Our brains work more efficiently when doing the same task repeatedly. Be smart: if you have multiple meetings in town, can you schedule them all for one morning? If you have three client phone calls to make, can you block out an hour to make them all? Similarly, try processing your email responses in bulk at specific times of the day. Avoid commuting Traffic congestion continues to increase as Christmas shopping reaches its peak. Avoid it by working from home some days. Even a few hours at home first thing before travelling into the office later can enhance your focus and productivity. Make a to-don’t list To-do lists are great to provide focus, but it can be frustrating if tasks are not getting done. What stops you, what distracts you? Make a to-don’t list – a list of things you are determined not to spend your time on. It will be easier to notice and avoid them when they do crop up. (And they will.) Stay healthy This is a hard one! Our good habits can go out the window in leading up to the break. Try to include exercise, even on your busiest days: walk to a meeting or the shopping centre, pick reasonably healthy restaurants for get-togethers, and avoid the corner of the office with the tin of Cadbury’s Roses (for as long as possible, anyway…). Eliminate non-essential tasks Push non-essential tasks to January or don’t do them at all. This includes social requests. Do you need to go to everything and meet everyone? Take control, embrace JOMO – the joy of missing out! Make a plan for January On your last day in the office, plan out the first few days back in January. This will give you a clear plan to get you going as soon as you’re back in the office.  A productive December can lead to a restful Christmas period. Enjoy your break, you will have earned it. You can download a free December productivity checklist from beproductive.ie here. Moira Dunne is the Founder of BeProductive.ie.

  You can't be an innovative organisation without fostering an innovative culture. Katie Scott outlines three key elements needed to create the right ecosystem of innovation.  In the current climate of political uncertainty, changing market demands, skills shortage and a changing workforce, businesses of all sizes are seeking to maintain competitiveness, evolve and grow, while managing their day-to-day business demands. ‘Innovation’ has become the mantra for many, and while this is simply a process of focused change, putting creative ideas into effective use to improve products, services and business processes, many organisations fail to realise this opportunity. This is largely due to fear of failure, resistance to change, aversion to risk-taking and a lack of support for creating a culture of innovation. Innovative culture It is not as simple as asking employees to contribute more innovative ideas, creating an innovation strategy or deploying new systems. In order to embrace innovation, it is necessary to check your organisation’s ecosystem is ready. Moreover, you must be prepared that, as with any cultural change, it will not happen overnight. Peter Drucker states, “If you want something new, you have to stop doing something old”. While we cannot argue with that, it is easier said than done, particularly if you are a large organisation that has a long history of adding new initiative after new initiative! Therefore, how can you begin to build a culture of innovation and move away from the ‘that’s the way we always do it’ attitude? There are three key areas where organisations can focus to build their innovation culture: Create a clear strategic rationale for innovation  In order to get employee buy-in, it is important to understand where you are now and determine where you want to be in the future. Understanding your current areas of strength and weakness and getting a sense of staff appetite for innovation can help you to focus on key areas and identify the potential enablers or blockers. Lead by example To foster and fuel innovation at the individual and team level, it needs to be visibly embraced and actioned by leadership. Leadership is responsible for creating and aligning teams around a culture that is open, collaborative and focused on continuous improvement. Appreciate that innovation will require new behaviours, skills and knowledge, so support your people by giving them the confidence, training and resources they need to embrace innovation at all levels. Empower your people Decision-makers at the top are busy running the business, so they should expect the teams below to help drive innovation. Employees at all levels can see opportunities in their own areas that others will miss. Staff should be given permission and feel empowered to challenge the norm and the confidence to fail, learn and improve within clearly defined parameters. In these uncertain times, taking a risk feels counter-intuitive. However, to quote Bene Brown, “Vulnerability is the birthplace of innovation, creativity and change.” Instead of fearing our vulnerability, let’s get comfortable with failing fast, learning and improving, in order to innovate, thrive and ultimately survive. Katie Scott is a Manager of People and Change Consulting in Grant Thornton NI.

When Marie Claire McDonnell noticed that Irish Chartered Accountants in Toronto were left out in the cold, she started the Toronto Chapter. Now, she wants the new group, and her career in recruitment, to gain momentum. Tell us about your current role. I recruit mid-senior level accountants in mining, real estate, energy and technology industries in Toronto, Canada. Describe your typical day.  No two days are the same in recruitment. The focus of my role is relationship building both on the client and candidate side. I have control and influence over people’s career choices, which is very gratifying. How did your involvement with the Toronto Chapter come about? I have had a lot of success placing Irish Chartered Accountants in Toronto. In a city that networks significantly, I noticed there was no formal networking group for all the Irish Chartered Accountants I meet. When Fergal McCormack and Brian Keegan visited Toronto in March, I jumped at the opportunity to work with the Institute to set up a committee here and kick-start the Toronto Chapter. Our first event in July 2019 was a great success. We had four Irish Chartered Accountants in a panel discussion about their experiences living and working in Toronto.  What are the best and worst aspects of living in Canada? Best: the quality of life, diversity and there is always something fun going on in the city.  Worst: the winter. We get a lot of snow. I like to ski so I enjoy that side of it, but when it is still snowing mid-April, the novelty has well and truly worn off! What are your goals/plans for 2020? I would like to host three successful events with the Irish Chartered Accountants in Toronto Chapter in 2020. Career-wise, I am hoping to gain momentum in the technology industry in Toronto, which has become a major hub for talent. I recently visited the Robert Walters office in San Francisco and realised there are cross-border relationships which can be developed through our partnerships in California.  What’s the best piece of advice you’ve ever received? The early bird catches the worm! I wake up every day at 5.30am, start work at 7am. I feel those golden hours pre-9am are crucial in providing clarity and structure around the productivity of my day. It is challenging to stay organised in recruitment, so if I have that quiet time in the morning to set my goals for the day, it allows me to be more focused. Marie Claire McDonnell is Senior Consultant at Robert Walters, Canada.

Chartered Accountant, John Morgan, explains his five steps to becoming a trusted finance business partner. On 22 September 2002, I was in Croke Park to witness my home county, Armagh, win its first All-Ireland Senior Football Championship Final. Two years into my Corporate Finance career with EY in London, it got me thinking: it’d be great to get home to witness Armagh’s inevitable decade of domination! Having completed my Chartered Accountancy training with EY in Belfast, I was given the opportunity to join a newl y formed team in London that focused on pre-acquisition due diligence for private equity clients. I spent two years in that team, working with amazing people on fascinating deals. My favourite aspect of the role was getting underneath the forecasts in the information memo and working with operational management to understand and challenge revenue and cost forecast assumptions. Getting beyond the numbers and dealing with operational management was something I relished, but it was frustrating to never see whether forecast assumptions materialised. I wanted to not only review and challenge such assumptions, but also work with the management team on implementing the plan. Lesson 1: understand the business I then returned home to Northern Ireland to join BT as a Finance Business Partner, which gave me the opportunity to work with the Operational Director to manage a budget and drive business performance. I immediately got stuck into the detail and came up with money-saving opportunities. BT in the early noughties perhaps still had low hanging fruit, but I immersed myself in understanding the business – both from an operational and strategic perspective. In 2003, the Ireland CEO stood on stage at the company’s annual management conference and spoke about the difference broadband would make to both BT and the country. He seemed convinced that this was a game changer, so I took time out of my day job to spend some time with engineers understanding the network. This taught me lesson number one – to be an effective business partner, you must understand the business from an operational and strategic perspective. This helps on two fronts: first, you gain credibility with the senior operational managers you are attempting to influence; and second, you can become more than a number-cruncher and begin to add value. Lesson 2: build relationships A key lesson for me in the early stages was how to manage key stakeholders with different priorities. Learning to balance conflicting interests is crucial, and this manifested itself with my Operational Director and Finance Director. My first Financial Director wrote on my annual performance report: “has a healthy disrespect for traditional views in BT”. However, my Operational Director did not consider my disrespect “healthy”. He felt that I was not working in partnership with him, so be conscious that your stakeholders may have different priorities and react to your recommendations in different ways. So, lesson number two taught me that unless you can constructively work in partnership with operational management, you won’t succeed. What helps in this respect is objective alignment – you should be on the same side; both striving to drive the business forward. Lesson 3: simplify complex financial data Perhaps one of my first successes was working with my operational Managing Director on driving a material improvement in the cost of installing telegraph poles. The key was being able to distil complex data in a user-friendly manner, which helped drive operational decision-making. My superior felt we were inefficient, so I armed him with some simple unitary analysis that articulated clearly these inefficiencies for both the trade unions and our procurement team. This was critical in negotiating better third-party rates and gaining union agreement to outsource the function. So, lesson number three was the importance of translating complex data into simple, operational language that supported decision-making. I’ve always found unitary analysis really useful in this respect. Lesson 4: be relentless and resilient The bigger the decisions you get involved in, the higher the stakes – and in the early noughties, I learned that you don’t always get it right. Mistakes happen and when they do, the best thing you can do is pick yourself up, brush yourself down and move on. So, lesson four centres around the need to be both relentless and resilient. Lesson 5: do less, coach more As the teens progressed, I started to manage bigger teams, and this leads me to my next key lesson: being an effective leader is the key to success in a senior business partner role. In the noughties, I had more of a solitary role. Now, leading teams of up to 30 people, the balance of time changes significantly as I have evolved from a ‘doer’ into a ‘leader’. It is perhaps my biggest challenge, but unquestionably the most rewarding experience of all. So, lesson number five is that, to excel in senior finance business partnering roles, you need to become an effective leader. Conclusion If you master these five points, you will become a trusted finance business partner. This is what separates a good business partner and a great business partner – moving from merely commentating and recommending, to leading and driving decisions, playing a leading role on some key commercial and strategic decisions, building the business case, and being part of the sign-off on big investment decisions. The line between being a finance business partner and an operational manager can get a bit blurred, which is perhaps when it works best – when you are being asked by the business to step in and do things that you feel is a bit over and above the day job. In the mid-2000s, I led a significant acquisition in Northern Ireland. In the late 2000s, I led the fibre broadband investment business case. And over the last decade, I have signed off on BT’s largest public sector customer bids. When I joined BT in 2003, I never envisaged the fascinating work I would get involved in – from the broadband revolution to leading on some of BT’s largest public sector long-term contracts. But perhaps the most rewarding was building, and being a part of a high-performing team. It all worked out perfectly. Well, almost. What ever happened to that second All-Ireland for Armagh?   John Morgan FCA is Local Government & Health Finance Director at BT Enterprise.

While Finance Bill 2019 may have seemed to cater to SMEs, Peter Vale highlights where it includes significant measures for international businesses. The headlines surrounding Budget 2020 and Finance Bill 2019 may have left the impression that most of the legislative changes have been focused on domestic small- and medium-sized enterprises (SME), with less focus on foreign direct investment (FDI) and Irish companies with international operations (which may, of course, include SMEs). The reality is that the Finance Bill was packed with provisions of interest for groups with international operations, either inbound or outbound, albeit many of these were expected and hence didn’t attract the same headlines. Here are some of the key Finance Bill measures for international businesses, some of which were expected, and others which came as a surprise. Mandatory reporting As expected, the Finance Bill saw the introduction of  Council Directive 2011/16/EU (DAC6), which covers the mandatory reporting of certain cross-border transactions to home country tax authorities, to be subsequently exchanged between EU Member States. The DAC6 provisions reflect the ever changing global tax environment and follows on from the Common Reporting Standard (CRS), which was a game-changer in terms of providing for a new level of reporting and transparency. Irish taxpayers might feel relaxed about the new provisions on the basis that Ireland already has domestic mandatory reporting rules, although these haven’t had much bite in practice.  The new DAC6 provisions, however, are much wider in reach, covering not just tax-motivated transactions, but also transactions that may have a “potential tax effect”, but aren’t themselves driven by tax avoidance motives. While the new rules only require reporting from August 2020, they apply retrospectively to transactions from 25 June 2018. Intermediaries and taxpayers need to be aware of the scope of the new rules and have measures in place to track and report such arrangements. Anti-hybrid rules The Finance Bill also saw the expected introduction of anti-hybrid rules, effective for payments made after 1 January 2020, and follow on foot of the binding EU Anti-Tax Avoidance Directive (ATAD1). It is worth noting that the anti-hybrid rules apply to payments made post-1 January 2020 – the actual accounting period of a company is not relevant. So, who needs to be concerned about anti-hybrids? Minority sport? The first thing to note is that there is not a de minimis threshold, therefore all companies irrespective of size are potentially within the scope of the new provisions. The rules target a number of arrangements, in particular where there is a “deduction without inclusion” or a “double deduction” as a result of hybrid mismatches, such as a payment being treated as tax deductible interest by the payor country but as a tax-exempt dividend in the recipient country. It is worth noting that just because a country does not tax a payment does not mean that there is a hybrid mismatch. Thus, the payment of interest by an Irish company to a jurisdiction that does not tax interest income will not be a hybrid mismatch, although interest withholding tax may need to be considered. The anti-hybrid rules are complex. While Revenue guidance (due to be published in 2020) is critical, equally critical is that this guidance is drafted in consultation with relevant industry stakeholders so Ireland’s attractiveness is not adversely impacted vis-a-vis other EU countries. Transfer pricing As expected, the Finance Bill introduced 2017 OECD transfer pricing guidelines into Irish legislation. Other important provisions were also introduced, including the introduction of transfer pricing to non-trading transactions (with limited exceptions), the abolition of pre-2010 grandfathering arrangements and the extension of transfer pricing rules to both capital transactions and to SMEs. The extension to SMEs is significant as it will, at a minimum, add an administrative burden to smaller companies. It is, however, subject to a Ministerial Order. The Minister was reluctant to add to the administrative burden of the SME sector with Brexit looming. Bringing Irish transfer pricing requirements in line with 2017 OECD guidelines will introduce some additional reporting requirements for many companies, with master file and local file requirements now in place.   Of note is that the thresholds for master file and local file introduced in the Bill, €250m and €50m respectively, are much lower than in many other countries. This could trigger additional documentation requirements for some large groups. Many Irish groups will also have intra group financing arrangements in place that may not be arm’s length compliant, and these will now need to be reviewed in light of the Finance Bill changes, which come into effect for accounting periods beginning on or after 1 January 2020. Financial Services/property fund changes There were several changes in the Bill to provisions governing the taxation of Irish real estate funds and section 110 securitisation vehicles. The changes for property funds as initially drafted were unexpected. They were wide-ranging and impacted on funds that only had third party debt. At the time of writing, Committee Stage amendments were expected to correct this anomaly and other provisions that could have inadvertently created a double tax charge for some funds. Additional anti-avoidance provisions have been added for section 110 companies, including the broadening of the control test used in determining whether certain profit participating interest payments are tax deductible, and placing the bona fide commercial purposes test on an objective basis, thereby giving Irish Revenue more scope to challenge aggressive securitisation arrangements.   Interest deductibility limitations Under ATAD1, Ireland is obliged to introduce new rules which broadly restrict interest deductions to 30% of earnings before interest taxes and amortization (EBITA). The Finance Bill did not contain any provisions in respect of these new rules, which are now likely to apply from 1 January 2021 onwards.   In summary, Finance Bill 2019 was one of the most significant in recent years, with new anti-hybrid and transfer pricing provisions, and the introduction of DAC6 reporting requirements. These fulfil Ireland’s commitment to being at the forefront in the adoption of international tax changes and bring our tax regime into compliance with international best practice and relevant EU Tax Directives. Undoubtedly, however, these will add further complexity to the lives of tax professionals and in-house tax teams.  Peter Vale FCA is Tax Partner at Grant Thornton.

Kimberley Rowan highlights the key elements of Finance Bill 2019.  Most of the measures contained in Finance Bill 2019 (the Bill) were expected. It consisted mainly of legislative provisions for the tax changes announced by the Minister for Finance as part of Budget 2020. But some measures were not expected. The change to the general rule on tax deduction for any taxes on income, for example, was not expected by most tax practitioners. A handful of other measures contained in the Bill were also surprising. In this article, I will explore the unexpected measures and provide an overview of the key anticipated measures, focusing on those that affect the domestic taxpayer. Peter Vales write about the key Finance Bill measures for international businesses in his article on page 68. Tax-deductible expenditure The Finance Bill includes two changes to the general rules applying to tax-deductible expenditure. First, a tax deduction is not available for “any taxes on income”. This matter has been before the Tax Appeals Commission in a number of cases and now puts Revenue’s view on a legislative footing. This will be relevant in the context of Irish companies that suffer foreign withholding tax on their business profits. The second amendment aligns the tax deduction for doubtful debts with impairment losses under the relevant accounting standards. KEEP The Bill confirms the welcome enhancements to the Key Employee Engagement Programme, as announced on Budget Day. However, new complex conditions seem likely to limit the practical application of the enhancements. For example, the definition of a qualifying group includes only a qualifying holding company, its qualifying subsidiary/subsidiaries and its relevant subsidiary/subsidiaries. The qualifying group (excluding the holding company) must be wholly or mainly carrying on a qualifying trade, must have at least one qualifying subsidiary and all the companies in the group must be unquoted. It seems that the definition does not extend to scenarios where the parent company in a group is a trading company with multiple subsidiaries or where a holding company holds cash or undertakes certain activities. Income tax payments The Bill introduces exemptions for certain income tax payments. The exemptions introduced cover: The reimbursement of expenses by the HSE to an individual for the donation of a kidney for transplantation (under conditions defined by the Minister for Health); Certain foster care-related payments made by TUSLA; Certain training allowances paid by, or on behalf of, the Minister for Education and Skills; and Certain student support payments awarded by SUSI, education and training boards, or local authorities. The Bill also introduces an amendment to clarify the availability of the income tax exemption on a range of payments made by the Minister for Employment and Social Protection, including payments made under the Magdalen Laundry ex-gratia scheme. The amendment is to clarify that a qualifying person for the relief must, in all circumstances, have received a payment under the Magdalen Restorative Justice Ex-Gratia Scheme. Food supplements  The change in the VAT treatment of food supplements was widely expected. The Bill introduces a provision that, with effect from 1 January 2020, food supplements will be subject to VAT at 13.5%. A concessionary zero rating had applied to these products. The change from zero to 13.5% VAT rate follows a comprehensive review by Revenue of the VAT treatment of food supplements, engagement with the Department of Finance in 2018 concerning policy options, the publication of Revenue guidance in December 2018 and a public consultation in May of this year. Revenue will not, as previously announced, apply a 23% VAT rate to these products. There was no change to the rate in last year’s Finance Bill, but Revenue did issue guidance in December 2018 which removed the concessionary zero-rating of various food supplement products with effect from 1 March 2019. However, the withdrawal of Revenue’s concessionary zero-rating of food supplement products was delayed until 1 November 2019 to allow time for the Department of Finance’s public consultation on the taxation of food supplement products in summer 2019. The zero rate continues until 31 December 2019. From 1 January 2020, the 13.5% rate will apply. The change introduced in Finance Bill 2019 will not impact certain products. These are: Well-established and defined categories of food that are essential for vulnerable groups of the population such as infant formula, baby food, food for special medical purposes and total diet replacement for weight control; Human oral medicines that are licensed or authorised by the HPRA are zero-rated for VAT purposes under a different provision. This includes certain folic acid and other vitamin and mineral products for oral use. Once such products are licensed/authorised by the HPRA as medicines, they are zero-rated for VAT purposes; and Fortified foods (i.e. foods enriched with vitamins and/or minerals). Dwelling house exemption  An exemption from Capital Acquisitions Tax may be available in respect of inheritances of certain dwelling houses. One of the conditions to avail of the dwelling house exemption is that the person receiving the inheritance doesn’t have a beneficial interest in any other residential property at the date of the inheritance. Any dwelling house that is subject to a discretionary trust where the taxpayer is the settlor and a potential beneficiary must also be considered. The Bill amends the exemption following the High Court decision in the Deane case in 2018. The conditions of the relief are amended such that all properties inherited from the same estate are to be considered. A clawback is provided for where a beneficiary subsequently inherits an interest in any other dwelling house from the same disponer. R&D tax credit The Bill details the measures announced as part of Budget 2020 while also introducing several new measures. A summary of the key legislative amendments is as follows: Grants funded by any state and/or by the European Union must be deducted when calculating the amount of qualifying research and development (R&D) expenditure; A company that outsources to third parties must now notify in advance of, or on the day of, payment if that company intends to claim the R&D tax credit. Revenue has said that the purpose of this amendment is to ensure that the sub-contractors do not receive such notifications after their R&D claims have been filed. How this notification by the company will work in practice needs further consideration and guidance from Revenue; The application of a penalty for an over-claim of the R&D tax credit has been aligned with the procedure for over-claims of other credits; Where a payable amount or amount surrendered to a key employee is later withdrawn, any offset of losses or credits cannot be used to shelter the clawback on this amount; and Amendment to capital expenditure on scientific research to ensure that relief for capital expenditure on buildings or structures cannot be claimed in respect of the same expenditure. Pension deduction The Bill provides for tax relief for pension contributions made by a company to occupational pension schemes set up for employees of another company in certain defined circumstances. This amendment is to accommodate cases of a merger, division, joint venture, reconstruction or amalgamation where an issue could arise as to whether contributions are being made in respect of an employer’s employees. Specific conditions apply. A few words on the expected The Bill confirms the Minister’s announcement as part of Budget 2020 that there will be no significant income tax cuts for 2020. The Bill provides the legislation for the tax measures announced in Budget 2020 and the ones worth noting are: Extension of both the Special Assignee Relief Programme and Foreign Earnings Deduction to 31 December 2022; Enhancement of the operation of the Employment and Investment Incentive (EII), although a few technical points were not expected; Minor increases in the Home Carers Credit and the Earned Income Credit (up €100 and €150 respectively); The reduced Universal Social Charge (USC) rate for medical cardholders is extended; Extension of the 0% benefit-in-kind (BIK) rate on electric vehicles; Changes to the overall BIK treatment of employer-provided cars (not vans) from 2023; Capital Acquisitions Tax threshold increase from €320,000 to €335,000. The Bill confirms that the increase applies to gifts or inheritances taken from 9 October 2019; Increase in the rate of Dividend Withholding Tax from 20% to 25% with effect from 1 January 2020. Additional information gathering requirements are proposed at Committee Stage on the ultimate payer of a dividend before the payment of a dividend; Increase in the rate of stamp duty on non-residential property from 6% to 7.5% with effect from 9 October 2019; The ‘Help to Buy’ scheme and the living city centre initiative are extended for a further two years; and The R&D tax credit rate for small and micro companies has been increased from 25% to 30%. What’s next? The Bill is scheduled to move to Report Stage at the end of November and after that, as is the customary legislative process, to the Seanad. Under the requirements of the European Union’s two-pack budgetary schedule, a common budgetary timeline applies to all EU member states. As a result, the Bill will complete passage through the Oireachtas and be enacted as Finance Act 2019 by 31 December. More unexpected measures are unlikely at this stage of the Finance Act process. As this is likely to be the last Finance Act before Brexit, and the last before a general election in the Republic of Ireland, any legislative changes to the tax legislation will have to wait until the new government is formed and the next Finance Act.   Kimberley Rowan ACA AITI Chartered Tax Advisor, is a Tax Manager at Chartered Accountants Ireland.

While it’s easy to see that climate-related corporate reporting is important, companies are finding it difficult to know where to begin. Hannah Armitage outlines the suggestions made by the FRC Financial Reporting Lab. Understanding of climate change has grown in recent years and society, business, government and regulators are responding. It has become clear that investors, companies and accountants are seen as part of the solution. In response, the Financial Reporting Council’s Financial Reporting Lab (the Lab) has recently released a report, Climate-related corporate reporting: where to next?, looking at the developing practice of climate-related corporate reporting. This project sought to understand the challenges companies face in reporting on climate change, and what investors want to understand from company reporting. This project received an unprecedented amount of investor involvement, and those investors saw climate change as being material to a wide range of businesses and want reporting to reflect this. Reporting on climate change? Reporting itself can’t solve climate change, but it plays a key role in providing information to investors and other stakeholders. Unfortunately, companies grapple with how best to report on climate-related issues. To help companies, the Lab’s report sets out what investors expect from reporting on climate change and assesses what best practice reporting looks like from an investor’s viewpoint. The Lab found that reporting in this area is a developing practice. Investor expectations are high and there is a need for company reporting to develop further to meet their needs. To help fill this gap, the Lab’s report outlines what investors seek to see articulated by companies and what companies should try to answer for themselves: How boards consider and assess the topic of climate change; Whether, and how, the business model may be affected by climate change, whether it remains sustainable, and how the company may respond to the challenge posed by climate change; What the opportunities and risks are, including the prioritisation of risks and their likelihood and impact; What strategic changes the company might need to make to capitalise on a changing climate and related opportunities; What scenarios might affect the company’s sustainability and viability, and how; and How the company measures the impact of climate-related challenges and the success of its strategy through reliable, transparent metrics and financially-relevant information. While many of these disclosures may be more on the narrative end of reporting, companies will also face financial statement impacts. Auditors have an important role to play. The IASB recently issued a useful briefing paper on IFRS Standards and climate-related disclosures.  This sets out how existing accounting standards address issues that relate to climate-change risks and other emerging risks. The Lab’s report also provides more detail on participants’ views and a range of examples of the developing reporting. Both companies and investors are building experience, capability and tools, but there is not a lot of time. The Lab’s report aims to help move this reporting practice forward. Hannah Armitage is a Project Manager in the Financial Reporting Council’s Financial Reporting Lab.

Economic indicators suggest a global recession is unlikely. However, Charles Hepworth believes there is one country that might be moving closer to recession territory. With Brexit looming and all its attendant uncertainty, a declining domestic GDP and large-scale layoffs which have contributed to the general public’s concern over the state of the British economy, the UK could be close to entering a technical recession. A recession is traditionally defined as the economy contracting for at least two consecutive quarters. Considering a full business cycle is approximately 4.7 years and that the last global recession ended in 2009, it could be argued one is overdue. Fears in the UK have been further magnified by the fact domestic GDP growth was negative in the second quarter of 2019, making Q2 the first contraction since the fourth quarter of 2012. Based on the technical definition, the UK would have been one bad quarter away from a full-blown recession if Q3 didn't see GDP growth of 0.3%. We can look to the floundering services industry as a key indicator of the current economic state. The sector makes up about 80% of the UK economy and, in August, it stalled uncharacteristically. Given the current political environment, it seems corporates are unwilling to make significant investment decisions given the lack of clarity around Brexit and the potential for restrictions on imports and exports. The overall uncertainty surrounding Brexit and the UK’s relationship with Europe has also contributed to falls in domestic construction and manufacturing sectors. Globally, central banks are treading a fine line of avoiding investor panic, in my view. The US economy remains strong, even as key European economies are in contractionary phases. We have seen stimulus packages in the US and across Europe, as both the Federal Reserve and the European Central Bank utilise quantitative easing to aid their respective economies. In the case of the US, GDP growth has remained strong, up 2.1% in the second quarter of this year and 1.9% in Q3. The consumer price index, often used as a recession indicator, showed a 1.8% core increase in the 12 months through October. Based on these numbers, we do not anticipate the US will enter a recession any time in the near future and that while certain markets might arguably have recessionary attributes, a global recession is unlikely, as well. Alongside the generally optimistic data, I feel investor sentiment is broadly positive outside of the UK. A resolution of the US-China trade war could provide some additional relief and rally the markets, particularly in regard to the US’s briefly inverted yield curve. Although, historically, an inverted yield curve has often served as the harbinger of a recession, this time around it is being somewhat contradicted by record high employment rates in the US and Europe (the UK included). Furthermore, an inverted yield curve tends to precede a recession by anywhere from 14 to 36 months, making an imminent economic fall unlikely. The international climate is ambiguous, but I believe that the UK is the primary economy at immediate risk of entering a recession. The world’s largest economies (US, China and Japan) have remained strong so far but the UK, on the other hand, has the particular issue of the Brexit paralysis. Consumers have become more risk averse, while businesses are reluctant to invest heavily when surrounded by such ambiguity lack of clarity over the outcome. Charles Hepworth is the Investment Director, Managed Portfolios at GAM. This article was originally published in The FM Report.

Recruiting and HR in Ireland are continually evolving, but with a new decade just around the corner, change is in the air more than ever before as companies strive to provide a more fulfilling workspace for employees. Orla Doyle explains. Ireland is continuing to build its reputation abroad as a place to work or live. With the unemployment rate dipping to under 5% for the first time since the Irish financial crisis in 2008, Ireland’s labour market is now essentially at full employment – simply speaking, there is a job available for anybody that is seeking one. At the heart of this change is Ireland’s ongoing expansion in a thriving labour market, with 425,000 new jobs created since 2012, and 38,000 in 2019 alone. New research from Lincoln Recruitment specialist’s A New Decade of Work Salary and Employment Insights Survey in association with Alan Ahearne, Professor of Economics & Director of the Whitaker Institute at NUIG, brings together the thoughts of over 1,400 employers and professionals across Ireland and presents a broad insight into the latest employment trends we will see next year. Here are some of the trends we expect to see in 2020. Employers brace for a potential recession We may currently be in the midst of an extended period of economic growth, but as the saying goes, what goes up must come down. Indeed, there have been several different warning signs than a recession may be around the corner. Despite steady economic growth and commercial optimism, the labour market remains troubled by uncertainty on the Brexit front. Nearly two thirds (61%) expect Brexit to have a negative impact on investment in the Irish market in 2020. Furthermore, nearly a third of those surveyed (30%) believe a post-Brexit outlook will be negative for Ireland when it comes to employment. Some companies have even paused recruitment or recruited fewer staff (12%) over the past year as a direct result of Brexit. And so, today’s most forward-thinking companies have already begun to develop recession-proof hiring strategies. Many employers assume that hiring will become easier in a recession – but while candidate pools are typically bigger during an economic slowdown, many companies find themselves overwhelmed by an influx of low-quality applications. As a result, companies will likely have to identify which recruiting channels deliver the highest quality candidates and double down on investment in these hiring channels. Employees quick to leave if passed over for promotion We can see from our survey that many employees seek fast-track promotions, with 36% of employees expecting one within two to three years of being in a new job. While professionals are slow to ask for a promotion, if they were passed over for one, they are quick to exit, with 40% stating they would start a job hunt, either immediately or as a passive job seeker. This indicates a need for employers to produce competitive career advancement plans if they are to attract talent and retain staff. Employees seek progression While the focus for many employers in a skills-short market is on attraction, employers must not lose sight of retention of current staff. In general, apart from focusing on salary, employees seek recognition for a job well done, and one of the most visible forms of recognition is a promotion. Unfortunately, according to the survey, many organisations are not doing an adequate job of creating clear advancement opportunities for professionals. Nearly two thirds (62%) of respondents who did not get a promotion within the last 12 months cited “a bottleneck”, “nowhere to go”, or “unwillingness by a company to offer one” as the main reason. To retain talent, organisational leaders must set expectations of constant learning, and this means career plans at all levels so that employees see a path for broadening, deepening, or advancement. Flexibility The drive to embrace flexibility, both to compete in the market using flexible talent and as a means of engaging employees by offering flexible working options, continues to increase. Getting the best out of workers requires some understanding of what motivates them, and puts them in the best positions to succeed. From our data, we can see flexible working continues to top the list as the most important benefit for employees seeking a new role (70%), up from 60% last year. Aside from their salary, it’s the next most import factor that engages professionals personally with over half of employees (54%) stating that this was of the highest importance to them, even ahead of career progression (41%). Orla Doyle is the Group Marketing Manager in Lincoln Recruitment.

Boards increasingly need to show how they measure their organisation’s culture, but the key information is likely already available within the business, writes Ros O’Shea. The South Sea Islanders have a word, “mokita”, which translates as “the truth that everyone knows, but nobody speaks”. Other notable definitions of culture include “a system of beliefs, shared values and behavioural norms”, “the way to do things around here” or even the “mood music” or “resting heart-rate” of an organisation. Whatever the definition, stakeholders, still shaken by a litany of corporate scandals including endemic ethical failures in financial markets, now recognise that, as Peter Drucker said, culture does indeed eat strategy for breakfast – and arguably for lunch and dinner too. Their demands have led to concerted efforts in recent years to rebuild trust and restore integrity to the heart of the enterprise. Figure 1 highlights some of these welcome developments, which go way beyond extending the rule book or adopting a tick-the-box approach to compliance. It seems everyone has seemingly landed on the same page, which says: you can have all the rules in the world but there is no substitute for character. Much has been written already about how to cultivate character and foster a values-based culture. Indeed, Chartered Accountants Ireland published my book on the topic, Leading with Integrity, in 2016 and has issued several related guides and research papers since. As organisations seek to embed cultural change, the question everyone is now grappling with is: how do you measure it? How can those charged with governance determine if the tone from the top is being cascaded through the ‘muddle in the middle’ and reflected via the ‘echo from the bottom’? Is it possible, with any degree of accuracy, to properly calibrate an organisation’s mood music or gauge its steady-state operating rhythm?  The answer is yes. My ‘5 Organisational Culture Caps’ (5OCC) approach aims to do just that. Loosely based on Edward de Bono’s ‘Six Thinking Hats’ system (where coloured hats represent different modes of thinking), with 5OCC, each cap is assigned to one of five different stakeholders. By donning each cap in turn and thinking about culture from each of these perspectives, a holistic view is developed of how your espoused values align with how your organisation behaves towards these key constituencies in practice. Four caps are pre-assigned – your customers, staff, shareholders and community all deserve their own headgear. You get to pick who wears the last cap, and your choice is likely to be heavily influenced by the sector in which you operate. For example, financial services firms may well pick the regulator; key vendors may be a valid choice for those downstream in the supply chain; whereas for other organisations, agents or brokers, or other business partners on whom they rely to deliver products or services, may get to wear a cap. Once you determine the full suite of stakeholders, the next step is to select key metrics that best capture their unique expectations of your organisation’s culture. Let’s don each cap in turn. The customer Arguably the single best way to actively test the consistency of stated values with the customer experience to attempt to buy the product or the service. Or you could try to make a complaint and follow what happens. Other key cultural indicators from the customer perspective include: Customer surveys; Net promoter scores; Complaints statistics; Feedback from customer focus groups; Social media and press coverage; Litigation and claims; and Awards and ratings. The staff Here, staff is defined in its broadest sense (i.e. from the boardroom to front-line employees). Again, boards should recognise that only so much governing can be done within the confines of the boardroom, and one of the most effective means of assessing the organisation’s tempo and temperament is to get out and about and engage with staff at all levels. Ideally, this should be done in informal ways and settings (such as townhalls or listening lunches, for example) so that site visits don’t become ‘state visits’. The HR department will be a deep reservoir of information to help you understand and monitor the extent to which values are truly lived across the organisation. There are many possible metrics under this heading, some of which are set out below: Staff surveys, engagement indices and culture audits; 360 reviews of senior management and board evaluation surveys; Remuneration and incentive policies; Ethics training and communication strategies, and their effectiveness; Statistics on staff turnover, absenteeism, safety and disciplinary actions; Whistleblowing and grievance reports, and relationships with unions; Diversity and inclusion data; Recruitment processes, succession plans and promotion decisions; Integrity awards or similar; and Online employee feedback (e.g. via Glassdoor and exit interview notes). The shareholder The nature and extent of shareholder engagement will very much depend on the type of organisation, and metrics will need to be calibrated accordingly. For private, charitable or state-owned firms, it may be a relatively straightforward process to monitor the strength and success of the relationship with the organisation’s owners, trustees or relevant government department – most likely by being party to regular discussions. Some of the following metrics may also be relevant and will certainly be pertinent for companies with a larger and more dispersed share register: Governance structures and board performance; Correspondence and engagement with key shareholders; The AGM experience; Internal and external audit reports; Independence and competence of risk, compliance, audit and legal personnel; Investor or analyst reports; Industry benchmarks; and Transparency and disclosures of financial and other reports. The community Here again the relevant community may be local or global, or somewhere in between, and metrics will need to be commensurate with the organisation’s scale and footprint. Particulars will differ but overall, they will aim to measure the extent to which the business is contributing to – and valued by – the communities in which it does business. Specific metrics are more elusive under this heading, but assessment of culture wearing a community cap will include discussions around: CSR activity in the community; In-house ‘green’ initiatives; CSR ratings and ESG credentials; Sustainability reporting; Progress towards committed UN Sustainable Development goals; Carbon footprint, water use and waste; and Local press coverage. A.N. Other As outlined earlier, you get to pick who wears the fifth cap. If, for example, suppliers are an important stakeholder group for you, measures such as promptness of payment, supplier audits and feedback from key vendors would be important to consider. If the regulator is to wear the cap, relevant areas of focus could include the number of fines, regulatory breaches, risk appetite exceptions, inspection reports and the general tone of correspondence. Metrics can also be devised for any other stakeholders by considering what aspects of your culture are likely to matter most to them. Such metrics may best be ascertained by directly canvassing their opinions. The most helpful aspect of the 5OCC approach is its practicality. Most, if not all, of the information required for the various measures will already exist in your organisation. It is simply a matter of collating and synthesising these valuable, but currently disparate, sources of data to provide a five-way mirror back to the organisation showing how the espoused values are truly living and breathing. There is no doubt that what gets measured gets done. Metrics matter. Boards and directors will increasingly need to prove and publish how they measure and monitor their organisation’s culture and I hope this model is a helpful aide in that endeavour. But again, we must remember that there is no substitute for character. All the KPIs in the world won’t displace the board’s most important role, which is to ensure they have the right leadership team who will do the right things for the right reasons. You can’t cap that.   Ros O’Shea FCA is an independent director and governance consultant.

Dr Annette Clancy explains why the granting or withholding of control over employees’ working conditions has a knock-on effect on their physical and mental wellbeing. Do you go to work in an office? Or, perhaps you sit behind a desk in a large space divided up into cubicles. Do you have a large desk or a small one? Is there a window in your office? Or, perhaps an air conditioning unit? Do you display photographs of your family or does management supply posters with pithy quotes such as “the only way to guarantee failure is to never try”? You might wonder why these questions matter, but in recent years psychologists have become interested in why some office  designs make workers happy and others do not. Organisational psychologists are increasingly interested in how work environments affect performance. Research suggests that the size of our desks, how we decorate our workspace and the amount of privacy we have or, if we have a desk at all, contribute to contentment, comfort and productivity. Office optimisation Office design is not a new concept. In the early 20th century, an American engineer named Frederick Taylor conducted a study of efficiency at the Bethlehem Iron and Steel Company. His published study, The Principles of Scientific Management, has become so influential in management studies that it is still widely practised and cited today. He invented the concepts of piece rates, assembly lines and time and motion studies. He was also a proponent of optimising workplaces for efficiency – extraneous equipment, people and furniture had to be moved out of the manufacturing or work area in order to achieve maximum productivity. These principles have been adopted for today’s work environment, in which large spaces can be quickly reorganised by partitions into cubicles or dispensed with completely through hot-desk systems. In 2010, two researchers at the University of Exeter – Alex Haslam and Craig Knight – became interested in office design. They focused specifically on cubicles, investigating how much freedom workers had to design their own spaces and whether the look of the cubicle influenced the work that got done. To conduct the research, they designed four different layouts and asked people to do an hour’s worth of work in each. The layouts were as follows: The first was the ‘lean’ office – a spartan space with a bare desk, swivel chair, pencil and paper; The second was ‘enriched’, which had all of the basics and was decorated with plants and art; The third was ‘empowered’, in which people could rearrange the plants and art any way they wished; and The fourth was ‘disempowered’, in which the respondents were allowed to decorate, and then researchers undid all the personal touches. Office customisation The findings from the research are interesting. A pleasant work environment is important, but on its own it is not enough. People in the ‘enriched’ office worked about 15% faster than those in the ‘lean’ office. Productivity and wellbeing increased by about 30% in the workspaces that people customised themselves. When people’s choices were overridden (in the disempowered office), their performance and wellbeing dropped to the same levels as those in the lean office. The findings from the study show that autonomy to customise the work environment is even more important than the physical environment itself. The bigger issue highlighted in the study is one of control. Granting or withholding control over employees’ working conditions has a knock-on effect on the physical and mental wellbeing of employees. Whether it is shared offices, cubicles or hot-desking, what appears to be a simple exercise in space-saving or cost reduction may also result in productivity issues if not considered collaboratively with employees. Dr Annette Clancy is Assistant Professor at UCD School of Art, History and Cultural Policy. Annette’s research focuses on emotions in organisations.

Visualisation tools and techniques can help Chartered Accountants unlock the value in a company’s data. By Richard Day and Alannah Comerford Excel has been the tool of choice for Chartered Accountants for the last two decades. While it has served us well so far, the capabilities of newer tools and the proliferation of data requires us all to look beyond our love/hate relationship with Excel. We have all experienced Excel hell in the form of crashing spreadsheets, combing through countless rows of data in the search for an anomaly or the seemingly endless wait to refresh pivots or charts created on large datasets for management reporting. The importance of data and the vital part it plays in the role of a modern-day accountant has been recognised by Chartered Accountants Ireland through the inclusion of data analytics in the new FAE syllabus. This is an acknowledgement that engagement with data is essential if Chartered Accountants are to keep pace with technological advancements in business. It also ensures that accountants maintain their central role in the business community. This syllabus will bring the new crop of qualified Chartered Accountants into contact with Tableau, Alteryx and UiPath. It is fitting that this series of articles begins with the visualisation opportunities provided by tools such as Tableau. Beyond Excel Companies are gathering more data than before, and the need to consume and analyse this data is changing the business landscape. As a result, accountants need to adapt. Proficiency in Excel is no longer enough to derive value from data. The concept of data visualisation has the power to overcome some of the challenges in handling large volumes of data and can have a transformative effect when applied successfully. Many accountants fear that data analytics and visualisation are relevant only to IT or data professionals, and that advanced technical skills are required. This is not the case. Many of the market-leading tools are user-centric to allow citizen-led development. The interface is easy to understand and there is a large library of default charts, allowing users to quickly develop interactive dashboards. Data visualisation tools make possible, with a few clicks of a mouse, what previously would have required advanced knowledge of coding in Excel. A relatively modest amount of digital upskilling and time commitment can unlock significant gains. A game-changer There are countless benefits to using data visualisation, but it essentially facilitates the focused and targeted analysis of information by allowing the user to customise what they see. The power of data visualisation is such that a user can create an analysis using a simple dataset – a list of invoices, for example – and visualise this information using any attribute present in the data. One could view the data by period, day, product, customer, approver, or any other characteristic present. Some of this is possible in Excel, using charts or your favourite pivot table. The difference with using a visualisation tool is that if you pick a specific period or approver, for example, all of the other data as visualised would update dynamically to show the information for that period or approver. The knock-on effect is that unusual trends or items tend to be relatively easy to find. In a data-rich world with countless reports, where we may not know specifically what we’re looking for, these analyses really do change the game. Unlocking value Data visualisation can be used to re-invent management reporting and capture insights visually, thereby enhancing the stakeholder experience. It also brings the benefit of repeatability, allowing delivery of reports in a consistent and efficient way using template dashboards that are refreshed with new data. Interactive dashboards provide the ability to drill down into the data and facilitate root cause analysis. From an audit perspective, it has a clear use in enabling full populations rather than sample-based approach to testing. It also allows the user to generate insights and take a more proactive role in suggesting meaningful improvements or courses of action. Chartered Accountants are valued in the workplace as problem-solvers with an ability to analyse business problems and produce effective solutions; this can now be achieved through visualisation using a data-led approach. While visualisations can unlock the value in a company’s data, the quality of a dashboard is only as good as the data used to create it. An awareness of data quality and data governance is therefore essential, and this should align well to the skills and training of Chartered Accountants.   Richard Day is Partner, Data Analytics & Assurance, at PwC Ireland. Alannah Comerford is Senior Manager, Data Analytics & Assurance, at PwC Ireland.

Michael Kavanagh summarises the key points in ESMA’s recently published statement on European common enforcement priorities for 2019 IFRS financial statements. As we reach the end of 2019, it is timely that the European Securities and Markets Authority (ESMA) has issued its annual public statement highlighting the common areas that European national accounting enforcers will focus on when reviewing listed companies’ 2019 IFRS financial statements. Why should I care? Financial reporting plays an essential role in securing and maintaining investors’ confidence in financial markets. Effective financial reporting depends on appropriate and consistent enforcement of high-quality financial reporting standards. Within the EU, individual national accounting enforcers – such as the Irish Auditing and Accounting Supervisory Authority (IAASA) in Ireland and the Financial Reporting Council (FRC) in the UK – enforce financial reporting standards. European accounting enforcers are required to include ESMA topics in their examination of companies’ 2019 year-end financial statements. As such, the ESMA statement is essential reading for those within the remit of an EU accounting enforcement regime. It will also be of interest to others involved in any aspect of financial reporting. The priorities The common enforcement priorities related to 2019 IFRS financial statements include: Specific issues related to IFRS 16 Leases, especially the need to exercise significant judgement in its application, particularly in determining the lease term and the discount rate; Specific issues related to the application of IFRS 9 Financial Instruments for credit institutions relating to expected credit losses and assessing a significant increase in credit risk, and IFRS 15 Revenue from Contracts with Customers for corporate issuers, which should be in focus when revenue recognition is subject to significant assumptions and judgements; and The application of IAS 12 Income Taxes regarding deferred tax assets arising from unused tax losses (including the application of IFRIC 23 Uncertainty over Income Tax Treatments). The statement also highlights topics related to other parts of the annual report outside the financial statements. These include key non-financial information issues and alternative performance measures (APMs), the new European Single Reporting Format (ESEF) and disclosures around Brexit. Application of IFRS 16 Leases 2019 is the first year in which all entities mandatorily apply IFRS 16. To foster its consistent application, ESMA recommends that issuers monitor the discussions at the IFRS Interpretations Committee (IFRS IC) closely and highlights some of the recent IFRS IC agenda decisions. ESMA encourages issuers to assess whether these decisions have any impact on their application of IFRS 16 and, where applicable and relevant, provide specific information in their accounting policies, increase the level of transparency of the significant judgements made, and/or disclose the potential impacts. The statement goes on to discuss recent IFRS IC tentative decisions and discussions on lease terms and discount rates, and the impact they may have on financial reporting. ESMA also outlines its expectations concerning presentation and disclosure aspects of IFRS 16. The statement outlines that disclosable judgements may include, in particular, determining the lease liability (e.g. lease term, the discount rate used) as well as assessing whether a contract meets the definition of a lease under IFRS 16. Application of IFRS 15 and IFRS 9 The 2018 financial period was the first time IFRS 15 and IFRS 9 became applicable. IFRS 15 Revenue from Contracts with Customers led to major changes in the methodology used by companies in recognising revenue. ESMA states clearly that, in its view, the disclosures provided by entities need to be further improved. This is of importance in industries where revenue recognition is subject to significant assumptions and judgements. In particular, ESMA feels that: The disclosure on accounting policies needs to be detailed, entity-specific and consistent with the information provided in the other parts of the annual financial report; Financial reports should provide adequate information on the significant judgements and estimates made – such as regarding the identification of performance obligations and the timing of their satisfaction, whether the issuer is a principal or an agent under the contract, the determination of the transaction price (including the judgements related to variable consideration) and the allocation to the performance obligations identified (and notably the amount allocated to the remaining performance obligation); and Disclosure of disaggregated revenue could be improved and should take into account both their activities and the needs of users. The introduction of the new impairment model under IFRS 9 Financial Instruments had a significant impact on the financial statements of credit institutions. ESMA reiterates that the estimate of credit losses should be unbiased and probability-weighted based on a range of possible outcomes. Furthermore, this estimate should take into account forward-looking information that is reasonable, supportable and available without undue cost or effort. The statement outlines various messages around the requirements relating to the assessment of whether the credit risk has increased significantly since initial recognition, the disclosure requirements concerning the expected credit losses, disaggregation, sensitivity analysis etc. Accounting for taxation The statement provides certain messages around accounting for deferred tax assets arising from the carry-forward of unused tax losses and the application of the IFRIC 23 Uncertainty over Income Tax Treatments, which is applicable for the first time in 2019. Readers should note the recently published ESMA Public Statement on the deferred tax for such losses carried forward and ESMA’s expectation in this regard. Other matters The statement also highlights topics related to other parts of the annual report outside the financial statements. These include key non-financial information issues and APMs. ESMA also highlights the principles of materiality and completeness of disclosures, which should guide the reporting of non-financial information, including the importance of reporting information in a balanced and accessible fashion. This should include disclosures of non-financial information focusing on environmental and climate change-related matters, key performance indicators, and the use of disclosure frameworks and supply chains. Also, ESMA highlights specific aspects related to the application of the ESMA Guidelines on Alternative Performance Measures. In particular, companies are reminded of the importance of providing adequate disclosures to enable users to understand the rationale for, and usefulness of, any changes to their disclosed APMs, especially regarding changes due to the implementation of IFRS 16. New European harmonised electronic format ESMA expects issuers to take all necessary steps to comply with the new European Single Reporting Format (ESRF) for requirements that will be applicable for 2020 annual financial statements. Brexit Finally, ESMA once again highlights the importance of disclosures analysing the possible impacts of the decision of the UK to leave the EU. Conclusion ESMA and European national accounting enforcers will monitor and supervise the application of the IFRS requirements, as well as any other relevant provisions outlined in the statement, with national authorities incorporating them into their reviews and taking corrective actions where appropriate. ESMA will collect data on how EU-listed entities have applied the priorities and will report on findings regarding these priorities in its report on the 2020 enforcement activities. The ESMA public statement is available at www.esma.europa.eu   Michael Kavanagh is CEO of the Association of Compliance Officers in Ireland (ACOI) and a member of the Consultative Working Group, which advises the European Securities and Markets Authority’s Corporate Reporting Standing Committee.

In this era of multi-GAAP, it was particularly useful for Irish accountants to hear the latest from both the FRC and the IASB. By Terry O'Rourke & Barbara McCormack Chartered Accountants Ireland recently hosted presentations by representatives from the UK Financial Reporting Council (FRC) and the International Accounting Standards Board (IASB) on current developments in their respective accounting standards – UK/Irish GAAP and IFRS. Given that Irish and EU listed groups are required to use IFRS, and many other Irish companies (particularly Irish subsidiaries of EU listed groups), also do so, while most other Irish companies use UK/Irish GAAP as required by Irish company law, these developments will affect a significant number of Irish accountants. The FRC presenters were Anthony Appleton, Director of Accounting and Reporting Policy; Jenny Carter, Director of UK Accounting Standards; and Phil Fitz-Gerald, Director of the Financial Reporting Lab. The IASB presenter was Board member, Gary Kabureck. FRC and UK/Irish GAAP The FRC presentation reminded us of the most recent overhaul of the accounting aspects of FRS 102, which is mandatory for 2019 but was permitted to be adopted in advance of 2019. The main changes made by the FRC to FRS 102 in that Triennial Review arose from requests by stakeholders for simplifications and clarifications in several areas. The areas amended are set out in Table 1. Unsurprisingly, two of the main changes resulted in a relaxation of accounting for loans and financial instruments as these were aspects of FRS 102 that many companies, particularly SMEs, found quite challenging. The FRC noted too that FRS 102 and FRS 105 had also been amended to reflect the enactment in Irish company law of the small and micro companies regimes for financial reporting respectively. The FRC confirmed that the question of whether the more recent IFRS Standards should be incorporated into UK/Irish GAAP will be a topic for future consideration but is not on the immediate agenda. FRC monitoring of compliance with relevant regulatory reporting requirements In addition to its role as the accounting standard setter for both the UK and the Republic of Ireland, the FRC also monitors the financial statements of UK listed companies for compliance with relevant regulatory reporting requirements, including IFRS and UK GAAP, and engages with UK companies when it identifies concerns in this regard. Accordingly, the FRC presentation included pointers on the areas of most frequent concern in the reports of IFRS reporters identified by the FRC in this monitoring activity. These areas are set out in Table 2. It is notable that the top two areas relate to narrative aspects of the annual report – the information provided on judgments and estimates underlying the financial statements, and the strategic report provided by the board of directors. The FRC noted that a greater level of sensitivity analysis was desirable in providing adequate information on accounting estimates. Alternative Performance Measures (APMs) was the next area of concern and, as noted later in this article, the IASB plans to introduce greater discipline in relation to the inclusion of non-GAAP numbers by management. Impairment of assets continued to be a concern, as did accounting for income taxes. The FRC presentation noted basic errors in cash flow statements, often tending to overstate the amount of cash generated by the entity’s operating activities. In relation to the use by companies of reverse factoring or supplier finance, the FRC noted that insufficient detail and explanations were provided on this source of finance. The FRC also noted inconsistencies between the information provided by the directors in the front half of the annual report and the financial information provided in the financial statements. The FRC also reviewed compliance with the more recent IFRS Standards, IFRS 9 with its expected loss approach to loan impairment and IFRS 15 on revenue recognition. The FRC considered there was generally high-quality disclosure on impairment among the larger banks with a more mixed level of information being provided by non-banking corporates. On IFRS 15, the FRC found disclosure generally good, but with some accounting policy descriptions not sufficiently specific and often not easily matched to discussions of activity in the narrative reports. For 2019, compliance with IFRS 16 and the inclusion of all leases on the balance sheet for the first time is the main new challenge for many IFRS users. The FRC examined a number of 2019 interim accounts for the transitional disclosures on IFRS 16. Among the weaknesses it identified was a need for clearer descriptions of the key judgments made and better reconciliations of IFRS 16 lease liabilities and the previous IAS 17 operating lease commitments information. The FRC also suggested that care is needed in discussing year-on-year performance where prior year lease numbers have not been fully restated. Brexit and IFRS In relation to the accounting standards to be used by UK listed companies after Brexit, the FRC explained that the existing IFRS Standards would continue to be used and any new or amended IFRS Standards would be considered for adoption in the UK by a new UK Endorsement Board, using criteria very similar to those used by the EU for endorsing IFRS. FRC Financial Reporting Lab The FRC took the opportunity to outline the work of its Financial Reporting Lab, as this is an area of relatively less awareness in Ireland. The Lab was launched in 2011 and aims to help improve the effectiveness of corporate reporting. It is intended to provide a safe environment for companies and investors to work on improving disclosure issues. Areas on which the Lab had previously issued reports include business model reporting and risk and viability reporting. It recently issued a report on climate-related corporate reporting and is currently working on a workforce reporting project, looking particularly at the information companies might provide to show how the board is engaging with these critical areas. The FRC encouraged interested executives to look out for calls to participate or indeed, to contact the Lab for a discussion on its activities. The FRC reminded us of the requirements of the EU Regulation that most listed companies in the EU will be required to make their annual financial reports available in xHTML from 2021, with annual financial reports containing consolidated IFRS financial statements needing to be marked up using XBRL tags. The relevant EU Regulation is the European Single Electronic Format (ESEF) Regulation. IASB presentation Primary financial statements project The IASB presenter explained that a key issue being considered in this project relates to the statements of financial performance, particularly the income statement/profit and loss account, having regard to the concerns expressed by users and the possible means of remedying those concerns. First, users consider that the statements of financial performance are not sufficiently comparable between different companies. The IASB will propose the introduction of required and defined subtotals in those statements. The proposed changes would also provide users with more precise information through a better disaggregation of income and expenses. Users also consider that non-GAAP measures such as adjusted profit can provide useful company-specific information, but their transparency and discipline need to be improved. The IASB will propose specific disclosures on Management Performance Measures (MPMs), including a reconciliation to the relevant IFRS measure. MPMs are those that complement IFRS-defined totals or subtotals, and that management consider communicate the entity’s performance. These proposals will also require MPMs presented to be those that are used by the entity in communications with users outside the financial statements and that they must faithfully represent the financial performance of the entity to users. Goodwill and impairment The IASB has been exploring whether companies can provide more useful information about business combinations in order to enable users to hold management to account for their acquisition decisions at a reasonable cost. Users have commented that the information provided about the subsequent performance of acquisitions is inadequate, that goodwill impairments are often recognised too late, and that reintroducing amortisation should be considered. Preparers contend that impairment tests are costly and complex, and that the requirement to identify and measure separate intangible assets can be challenging. The IASB plans to issue a discussion paper in the coming months. Its tentative views to date are that amortisation should not be introduced, that it is not feasible to make impairment tests significantly more effective, and that separately identifiable intangible assets should continue to be recognised. However, the IASB considers that additional disclosures should be required about acquisitions and their subsequent performance, and that an amount for total equity before goodwill should be presented. It may also propose some simplifications in impairment testing. IBOR reform The IASB noted that it recently finalised a revision to IFRS 9 and IAS 39 on the potential discontinuance of interest rate benchmarks (IBOR reform) in order to facilitate the continuation of hedge accounting. (The FRC also plans to amend UK/Irish GAAP in this regard.) Amendments to IFRS 17 Insurance Contracts The IASB has proposed amendments to IFRS 17, particularly a one-year deferral of its effective date to 2022, as well as amendments to respond to concerns and challenges raised by stakeholders as IFRS 17 is being implemented. Other topics The IASB has taken on board the concerns raised about its discussion paper on accounting for financial instruments with characteristics of equity, and is considering refocusing that project to clarify aspects of IAS 32 as well as providing examples on applying the debt and equity classification principles of IAS 32. Given the diversity of views on how deferred tax relating to leases and decommissioning obligations should be accounted for, and the potential increase in differences arising due to the inclusion of all leases on the balance sheet under IFRS 16, the IASB has issued an exposure draft proposing to amend IAS 12. The IASB plans to respond to the absence of IFRS requirements on accounting for business combinations under common control by issuing a discussion paper in 2020, probably specifying a form of predecessor accounting. Conclusion A key feature of the presentations by both the FRC and the IASB on amendments to their accounting standards was the level of diligence applied by both standard setters in listening to the views and concerns of their various stakeholders and considering the most balanced and appropriate response to those concerns. This emphasis by the accounting standard setters on carefully considering the views of stakeholders while developing high-quality accounting standards is most reassuring and bodes well for the future of accounting standards. Terry O’Rourke FCA is Chairperson of the Accounting Committee of Chartered Accountants Ireland. Barbara McCormack FCA is Manager, Advocacy and Voice, at Chartered Accountants Ireland. 

Martina Keane explains how new technologies are helping auditors work better, smarter and faster than ever before. New technologies have always changed the way that companies do business, exposing them to new risks and opportunities. Not so long ago, the auditor’s role involved scrutinising stacks of ledgers and communicating by fax or post. Yet today, we are moving towards digital reporting and a paperless profession. When I started my career, the use of robots in the workplace would have seemed like science fiction. Now robotic process automation (RPA) – the use of software robots to simplify business process delivery – is widely used in our clients’ businesses and within the audit process itself. These changes have altered how we work, how we audit and the skills we need to recruit for. What’s different about the next wave of innovation is the growing sophistication of technology, the proliferation of data and the escalating pace and appetite for change. If futurists such as Ray Kurzweil and Gerd Leonhard are correct, we can expect to witness more change in the next 20 years than in the previous 300. For auditors, new technologies, tools and techniques are helping us to work better, smarter and faster than ever before. Our ability to capture and mine data more effectively allows us to provide more depth of challenge, richer insights and even greater levels of assurance within an increasingly complex world.  Data analytics has transformed audits across the financial services industry, allowing audit professionals to analyse larger or even entire datasets. Testing data across a full population presents a more comprehensive story than might otherwise have been achieved through sampling. This in turn leads to greater insights and a deeper understanding of our clients’ businesses, making it easier to identify risks and deliver enhanced quality. Robotic process automation RPA utilises software robots (programs) designed to replicate the actions and behaviour of a human working on a computer in a business environment. RPA is a rule-based system that executes processes without the need for constant human supervision. It can be used to automate some audit procedures that do not include judgement and are data intensive, repetitive in nature, high frequency and rule driven. The main benefits of RPA are that it reduces the time spent by the audit team on repetitive high-volume, low-risk audit procedures, thereby allowing them to focus on areas that really matter. It also helps to eliminate human error and reduce the administrative burden for both clients and audit teams due to fewer data and evidence requests. Data analytics audit tools EY has developed a global suite of data analytics tools, which are quickly becoming an integral element in the delivery of audits. Along with general ledger analysers, a suite of industry-specific technology solutions has been developed to support our financial services clients. Within Asset Management, for example, EY’s pioneering global data analytics platform captures data from multiple clients and sources (regardless of the geography of the underlying systems). Once data has been captured, it is then transformed within the platform into a standardised data format. This in turn enables a large-scale automation process that produces an audit-ready suite of work papers and client dashboards. Meanwhile, across our banking and insurance clients, a variety of analysers support the audit of mortgages, consumer loans, corporate loans, investments and claims. In many cases, this has allowed EY to embed predictive analytics within its audits. The ability to deploy data analytics tools on larger populations of data provides greater confidence in financial reporting, revealing more patterns and trends in clients’ financial data. Analysis of larger or full populations of audit-relevant data presents a fuller picture of the business activities and helps direct our investigative effort in the right areas, while relevant feedback and insights help clients improve their business processes and controls. Artificial intelligence and the audit of financial services EY is beginning to embed emerging technologies such as artificial intelligence (AI) in the audit process. Seen as the next big disruptor, AI tools provide consistent reasoning with high precision, objectivity and accuracy. When applied to the audit, the chances of human error are decreased while quality and value are increased. AI covers a range of technologies including data mining, speech/image recognition and machine learning. These technologies — particularly machine learning — enhance the audit by allowing us to analyse data with advanced pattern recognition, identifying exceptions and anomalies. Machine learning can be used to assess the internal control framework and data integrity relating to trading activity and related income. It helps us understand transaction statistics, assess data quality in front office systems and perform a critical review of key processes and controls. It can also be used to automatically code accounting entries and detect anomalies in journal entries, analyse a larger number of payment transactions, lending contracts and invoices, which in turn improves fraud detection. Deep learning technology – a form of AI that can analyse unstructured data including emails, social media posts and conference call audio files – is also impacting the audit. Mining this data provides supplementary audit evidence on a scale that was impossible to gather in the past. New skills  The impact of these new technologies will change much more than the way we audit. To fully harness the power of this next wave of innovation, we must rethink the skills we require from the next generation of auditors. Traditional accounting and auditing skills will not suffice – they must be combined with a deep understanding of AI, predictive analytics, machine learning, smart automation and blockchain. These tools are all about data and, consequently, auditors must be able to interrogate that data, understand what it is telling us and use that information to enhance audit quality. As audit professionals become more proficient in utilising the technological tools at their disposal, they must also develop the ability to interpret the data and tell the data’s story. Furthermore, audit committees must understand how these tools and technologies can be used to enhance transparency, minimise risk and provide unrivalled insights. They need to ask the right questions and have the necessary knowledge to understand the answers. Soft skills are increasingly important, too. As automation removes labour-intensive, routine tasks like account reconciliation and report generation, audit professionals can instead focus on providing insights into company performance, devoting more time to shaping business strategy and providing added value. By combining a more strategic approach with the traditional values of our profession – integrity, independence and professional scepticism – we can expect the role of audit professionals to evolve to that of a trusted business advisor. Interpersonal and influencing skills will be critical to such a business partner-style approach. As the business landscape continues to transform, the auditor of the future will be increasingly required to look beyond the numbers and provide a clear and concise narrative for clients, the audit team, audit committees and other stakeholders. Martina Keane FCA is Head of Assurance at EY Financial Services.