How big should your board be? Is there an optimum size needed for a board to be effective? David W. Duffy shares three key points that will ensure board structure success. One of the most frequently asked questions by our clients is how large a board of directors should be. We can unequivocally say that there is no universal agreement on the optimum size as every board is unique. What’s important is getting the balance of the board right. Large numbers of board members makes it challenging to have meaningful individual participation. On the other hand, a small board may have few too few members to carry out all the work that is required of it. We’ve put together three key important points to help you decide on the size of your board. Stage of development of the company Small companies do not need large boards, but having a board meeting is best practice, even if all members are executive directors and shareholders. As the company grows, it may make sense to bring in certain skills and experience to support the ambition of the founders and to separate out the role of the board and the management team. This separation will build trust and confidence in the company with its bankers, shareholders, staff and donors (if it is a charity). It is essential to put careful thought into this, particularly where it concerns family-owned businesses and succession planning. Number of board committees required As a company develops and grows, it will need to bring in greater structure and establish board committees. Typical committees could be: audit; compensation; nomination; and risk. All board committees should be chaired by non-executive directors (NEDs) where possible. The more committees a company has, the more board members and NEDs are required. Sitting on more than one committee is acceptable provided it does not lead to a conflict of interest or too much of a workload for a director. However, it is important to ensure that the audit and compensation committees are made up of independent members. It would not be good practice to have an overlap of independent members serving on both the audit and compensation committees, as it may lead to conflicts of interest. Balance Ideal boards are where NEDs are in the majority, the Chair is not the CEO and terms do not exceed a nine-year maximum. Ultimately, the board should consist of the right combination of skills and experience required to support the achievement of the strategy. I believe boards that can accommodate the points above will succeed. For most companies, boards with more than 10 members will be hard to justify in terms of effort and cost to sustain them. David W. Duffy is the Founder of The Governance Company.

Nov 24, 2019

Decarbonising our economy to limit global warming is not a choice; it is a must-do. Féilim Harvey outlines three steps that should be taken to ensure sustainability is embedded in the strategic objectives of the organisation. Our ways of living have severe consequences for future generations. PwC’s Low Carbon Economy Index 2019 report highlights that the reduction in global carbon intensity continues to fall short of the rate needed to meet the targets pledged in the 2015 Paris Agreement. We must take measures to limit our carbon footprint. Organisations must embrace transformative changes around decarbonisation that are extensive and profound. This transformation will be delivered by portfolios, programmes and projects established by governments and businesses. We need to adapt our approach to sustainability, so it becomes an inherent part of change delivery. Supporting sustainability through strategic planning The term "sustainable development" has been used for decades. It is a "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". As responsible corporate citizens, we must keep future generations' needs in mind. We should incorporate sustainability targets within our strategic business planning. A robust integrated strategy will address complex regulations, maximise performance and reduce the environmental impact. That, in turn, will result in long-term growth, increased public trust and will protect brand value.  For example, some banks have set strategic targets in terms of “green” financing to support clients who wish to transition to a more sustainable business model. By financing their clients’ sustainable projects and, in some cases, incentivising them with preferential interest rates, banks are supporting them to achieve their goal of minimising their environmental impacts. This demonstrates how organisations' strategic goals can support both profitability, public trust and sustainability. So, if the vision is clear, what is stopping us from consistently integrating sustainability criteria within our business strategy? Developing and integrating a sustainability vision into a long-term plan is challenging. Often it is difficult to know where to start. Some would say that there is no robust method or typical structure to approach sustainability. Others may encounter a lack of tools to track, measure, quantify and interpret related indicators. The good news is there are more and more examples to follow, and some blueprints are becoming available.  As portfolios, programmes and projects deliver transformative change and achieve strategic objectives, we should leverage them to support our organisations' sustainability vision. We can easily set-up our portfolios, programmes and projects to support this change and adequately address our sustainability ambitions by covering the following three steps. Embed sustainability in projects’ requirements Projects that support sustainability are not as complicated as we might think. They are the same as traditional ones and have an additional requirement: to address environmental and social dimensions and goals. As with any other initiative, it is essential to define project requirements at the start.  Having defined environmental and social goals, conduct an impact analysis to consider their qualitative and quantitative importance. This analysis should encompass the whole lifecycle of the solution, service or product created by the project – environmental impacts should be looked at holistically, as some products may be efficient in their lifespan but become toxic at their end-of-life stage. Carrying out this analysis is crucial because it will prioritise pressing issues, long-lasting impacts and effective options to optimise the investment. In short, it will help us select the "low-hanging fruit" and most impactful solutions while discounting the "nice to have" options that might otherwise dissipate the attention of the team, dilute their efforts or significantly increase the cost of the initiative. Assign project roles to support sustainability In the same way that IT security experts are involved in the design and sign-off of IT solutions, stakeholders responsible for the sustainability agenda of the organisation should be appointed at the outset of the project. Their role is vital, as they will define the right requirements and that the products are delivered appropriately. They will also play a part in the User Acceptance Testing process and confirm that the environmental and social acceptance criteria, including compliance with regulations or industry standards, have been validated. They are the guardians of the sustainable development aspects of the project. In the final phase of the project, this group of stakeholders will develop comprehensive user manuals and ensure that new users are trained to sustain the long-lasting environmental and social benefits. Reviewing stakeholders through the sustainability lens Buyers are considering their carbon footprint when making purchase decisions. Directly engaging with customers and clients will help organisations understand the client’s needs and aspirations better and design the right products for them. This direct engagement will also allow companies to communicate on their sustainability vision, which may contribute to brand value and public trust. Decarbonising our economy to limit global warming is not a choice; it is something that we must do. As responsible corporate citizens, companies and organisations must play their part. Sustainability needs to be embedded in the strategic objectives through the projects that are selected and how they are delivered. Féilim Harvey is a Partner at PwC.

Nov 24, 2019

Trade conflict, weak business investment and persistent political uncertainty are weighing on the world economy and raising the risk of long-term stagnation, according to the OECD’s latest Economic Outlook.   World GDP growth is expected to be 2.9% this year – its lowest annual rate since the financial crisis – and remain at  2.9–3.0% in 2020 and 2021. Global GDP expanded 3.5% in 2018.   Presenting the Outlook in Paris, OECD Chief Economist, Laurence Boone said, “It would be a mistake to consider that low growth is due to temporary factors that can be addressed with monetary or fiscal policy; the issues are structural. Without coordination for trade and global taxation, clear policy directions for the energy transition, uncertainty will continue to loom large and damage growth prospects.”   The slowdown involves advanced and emerging-market economies alike, although its severity varies according to the importance of trade in individual countries. Growth in the US is forecast to slow to 2% in 2020 and 2021. In the euro area and Japan, growth is expected at around 1% and .75%, respectively, while the deceleration in China’s expansion is set to reach 5.5% in 2021, compared with 6.6% last year. Two years of escalating conflict over tariffs, principally between the US and China, has hit trade, is undermining business investment and is putting jobs at risk. Although household spending has been holding up, signs of it weakening are emerging. Car sales have declined sharply over the past year.   While the fragility of the world economy can be blamed in large part on deliberate policy decisions, it also reflects deeper, structural changes, says the Outlook. Digitalisation is transforming business models while climate and demographic changes are already disrupting existing patterns of activity. China, meanwhile, is rebalancing away from a reliance on exports and manufacturing towards consumption and services. (Source: OECD)

Nov 22, 2019

Following the recent Autumn 2019 Economic Forecast and consultations with the member states, the Commission has adopted its opinions on the Draft Budgetary Plans of all euro area countries. It has found that no draft budgetary plan for 2020 shows particularly serious non-compliance with the requirements of the Stability and Growth Pact. The plans of Germany, Ireland, Greece, Cyprus, Lithuania, Luxembourg, Malta, the Netherlands and Austria are found to be compliant with the Stability and Growth Pact in 2020. The plans of Estonia and Latvia are found to be broadly compliant with the Stability and Growth Pact in 2020. The implementation of the draft budgetary plans might result in some deviation from the country's medium-term budgetary objective for Latvia and from the adjustment path towards this objective in the case of Estonia. For Belgium, Spain, France, Italy, Portugal, Slovenia, Slovakia and Finland, the plans pose a risk of non-compliance with the Stability and Growth Pact in 2020. The implementation of the plans of these member states might result in a significant deviation from the adjustment paths towards the respective medium-term budgetary objective. In the cases of Belgium, Spain, France and Italy, non-compliance with the debt reduction benchmark is also projected. Overall, between 2019 and 2020, the number of member states at or above their medium-term budgetary objectives is estimated to increase from six to nine. The Commission projects the euro area aggregate structural deficit to increase by 0.2% of potential GDP in 2020 (to -1.1%), thus showing a broadly neutral fiscal stance. That increase in the structural balance is driven in particular by projected expansionary fiscal policies in member states with fiscal space, particularly the Netherlands and to a lesser extent Germany (0.6% and 0.4% of potential GDP, respectively) and the projected increase in the structural deficit of Italy (0.3% of potential GDP). Overall, fiscal policies continue to be insufficiently differentiated across the euro area. Member states with fiscal space are implementing expansionary fiscal policies and should stand ready to continue using their fiscal space. By contrast, the lack of consolidation in countries with sustainability problems remains a concern. (Source: EU Commission)

Nov 22, 2019

The International Federation of Accountants (IFAC) has announced its first-ever female-majority board. The approval of eight board members, including five women, occurred at IFAC’s annual council meeting in Vancouver. 12 of IFAC’s 23-member Board are now women. New IFAC board members and their nominating member organisations are: Yeong Kyun Ahn, Korean Institute of Certified Public Accountants; Joan Curry, Chartered Accountants Ireland; Caroline Gardner, Chartered Institute of Public Finance and Accountancy; Winnie Nyamute, Institute of Certified Public Accountants of Kenya; Fiona Wilkinson, Consultative Committee of Accountancy Bodies; and Ismaila Zakari, Institute of Chartered Accountants of Nigeria. Returning members re-appointed for a second term of service to IFAC’s Board are: Tommye Barie, Association of International Certified Professional Accountants; and Idésio da Silva Coelho, Jr., Instituto dos Auditores Independentes do Brasil and Conselho Federal de Contabilidade. Dr. In-Ki Joo, IFAC President, said, “On behalf of IFAC, I congratulate and welcome all of our new and returning board members. Each of these individuals was nominated and approved on the basis of their leadership qualities, business acumen, and passion for the future of our profession. We are particularly pleased that, as a result of our deliberate focus on gender diversity, the majority of these well-qualified Board members are women.” (Source: IFAC)

Nov 22, 2019

HM Revenue and Customs (HMRC) is warning millions of self assessment customers to be aware of fraudsters in the run-up to the 31 January 2020 deadline. Over the last year, HMRC received nearly 900,000 reports from the public about suspicious HMRC contact – phone calls, texts or emails. More than 100,000 of these were phone scams, while over 620,000 reports from the public were about bogus tax rebates. Some of the most common techniques fraudsters use include phoning taxpayers offering a fake tax refund, or pretending to be HMRC by texting or emailing a link which will take customers to a false page, where their bank details and money will be stolen. Fraudsters are also known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately. HMRC operates a dedicated Customer Protection team to identify and close down scams but is advising customers to recognise the signs to avoid becoming victims themselves. Genuine organisations like HMRC and banks will never contact customers asking for their PIN, password or bank details. Customers should never give out private information, reply to text messages, download attachments or click on links in texts or emails which they are not expecting. Customers can find out more information on GOV.UK on how to avoid and report scams and recognise genuine HMRC contact. If customers think they have received an HMRC-related phishing email or text message, they can check it against examples on GOV.UK. Tax is automatically deducted from most UK taxpayers’ wages, pensions or savings. Where tax is not automatically deducted, or when people or businesses have earned additional untaxed income, they are required to complete a Self Assessment tax return each year. (Source: HMRC)

Nov 22, 2019

In an age where there is so much information on different leadership styles, it’s hard to know where to begin when managing a team. Aidan Kearney gives four simple tips on how to lead your team more effectively.  Have you noticed how much information there is on leadership? An influx of publications, academics, podcasts, studies, surveys, TED talks and stories of leaders can make it hard to figure out what the right approach to leadership actually is. Here are four simple methods to help you get started on one of the most important aspects of leadership: how to lead your team more effectively. Lead by example Not only is this an effective method of leadership, but it will also earn you respect. Don’t ask someone to do something that you as a leader are not prepared to do. Exhibit the behaviour that you ask and expect of others. Where possible, ‘roll up your sleeves’ and get into the work yourself. If you need to delegate, take time to explain and share your knowledge and experiences; be meticulous with details. Show up early for work and meetings. Stay committed to tasks and decisions. Help your employees embody your firm’s values by demonstrating them daily in everything you do. Remember, whether it’s your work ethic, attitude or the way in which you interact and communicate with colleagues and clients – your employees take their cues from you. Be the blueprint for your organisation. Set an example of excellence and don’t let it falter. Inclusiveness and empowerment An inclusive, motivated, empowered and happy team generates a positive environment and boosts performance. You can foster this by inviting team members to meetings, sharing information, being open to feedback and asking for input. Empower them by letting the team take more responsibility and accountability – a good team will relish the challenge and go the extra mile. Recognition Recognise and appreciate your team. Acknowledging their successes with a simple “well done” can go a long way. Say “thank you” more often. Check in with them to see where they’re at in terms of professional and personal progression. Are they open to new challenges? How can you help them? Lead with integrity Integrity means being honest and always committed to doing the right thing. You can't be an effective leader, a trusted colleague or adviser without integrity. If you take all of the above into account – leading by example, involving and empowering your team, acting with integrity – you will find that this encourages and inspires others to do the same. This, in turn, leads to happier, motivated and effective teams, which is a hallmark of excellent leadership. Aidan Kearney is a Partner and leads the Advisory and Audit/Accounting teams in Baker Tilly Ireland.

Nov 17, 2019

The modern workplace has led to the end of the centralised office. Often, a manager can have team members all over the globe. It’s important that these team leaders know how to connect with their remote workers as if they were at the next desk over, says Anne Phillipson. With the increase in remote working, globalisation and flexi-time, there is every chance that if you are not currently leading a remote team, you will be in the near future. This means that managers need new skills to engage parts of their team that they don’t see face-to-face; to make their remote workers feel as connected as the person sitting at the desk beside them. The employee experience Let’s start with awareness and mind-set. The single biggest factor in the ‘employee experience’ is their relationship with their direct line manager. It is critical that remote team members don’t feel disadvantaged because of where they happen to work. Whether that’s across the world or three floors away in the same building, it is easy to fall into the trap ‘out of sight, out of mind’. This means managers must consciously go out of their way to include remote team members in daily chats –whether that is using a messaging service, phone, Skype, or social networking apps – to check-in, update, offer support or challenge. The leader must initiate these interactions at first, and hopefully, in time, the team members will also make the effort to connect daily. Otherwise, you run the risk of a team member feeling isolated and disconnected from the priorities of the team. Awareness of circumstances Awareness of the time zones of remote workers is also important. Don’t greet them with a ‘good morning’ when it’s already afternoon or evening where they are. Check your world clock when scheduling your daily check-ins as not to catch them when they are just arriving into or leaving the office. Little things like this make a big difference, and as you don’t have the opportunity to engage often, it is even more important that you get it right every time. Cultural competence Once you have adopted an inclusive approach, it is important to consider the leadership skills that are critical to leading a remote team. Top of that list is cultural competence, which is the ability to understand or find out how the execution of certain universal practices translates from one culture to another. A manager of a global team must be adaptable and exhibit cultural sensitivity, with the ability to modify behaviour for different situations, localities, or audiences. While there are lots of books and resources to help with this, nothing compares to actually visiting the remote team members on their home turf. A visit will help you appreciate the cultural norms and working environment of your remote worker. This investment of time and travel may cost initially, but the dividends in the enhanced relationship will generate returns for years to come. And don’t forget to invite the remote team members to visit the home office, too. Find the extra energy Leading at a distance requires extra energy. A global leader must possess extra capacity for focus, productivity and the ability to turn up the energy in a fast-paced, always-on environment. Global leaders must be extremely self-aware, make extra effort to engage, and need to be sensitive to adapting their messages for different audiences. They need to work smarter and leverage technology to enable them to spread their leadership influence wider. It can be difficult to manage valued employees from afar, but to get the very best out of your team, you have to give them the very best in leadership. Anne Phillipson is the Director of People and Change Consulting at Grant Thornton Northern Ireland.

Nov 17, 2019

A lot of people have big ideas about what innovation means, but a lot of those ideas are just holding people back from being innovative themselves. Anne Byrne and Grace Cunningham discuss the five biggest myths about innovation. Myth #1: Innovation is just a buzzword We know that ‘innovation’ gets its fair share of eye-rolls, but it’s not because innovation is just a buzzword – it’s that the word ‘innovation’ is often misused or used without understanding what it is. There are many definitions of innovation out there. The one I use is “the creation of a new, viable offering that adds value”. It’s the last part of the definition that differentiates what is meant by ‘innovation’ and what people often mean when they use the word liberally. Innovation that isn’t viable – that isn’t working in the real world – isn’t innovation; it’s just an idea. Innovation isn’t just a cool new thing, it’s something which must add value to the lives of the citizen, employee or member of the public. Innovation can mean something as simple as turning ideas into a policy or process, delivering new or better services, or building on solutions that already exist. Myth #2: Innovation means technology A common misconception is that innovation must involve complex technology or that technology itself is innovation. Technology is a huge enabler of innovation but is not necessarily innovative. What’s really innovative is when a user's need is met or a social problem is solved in a new way. It can be high-tech (such as eTolls instead of queuing at a toll booth) but it can also be low-tech (like Dublin City Council’s tea and chat sessions to engage with local community groups). Myth #3: It’s got to be the next iPhone to “count” as innovation Innovation doesn’t have to be new – some of the best innovations are where existing processes or technologies are adapted to meet a new need. Innovation at its finest is when seemingly unconnected things are joined together to make a really impactful solution. Mosquito-borne diseases cause hundreds of thousands of deaths each year. Mosquito repellents exist, but one of the challenges faced is how to distribute and dispel the repellents across large spaces. In Bangkok, social entrepreneurs looked around their city and found the answer in the ubiquitous mopeds and motorbikes. They fitted a device to the exhaust pipes of the bikes that releases natural mosquito repellents around the vehicle. The developers claim that they have protected 80,000 people so far. Neither mopeds nor mosquito repellent were “new” technologies, but with a bit of creativity and modification, the developers brought these existing elements together to create a powerful innovation. Myth #4: I’m not an innovator Everyone can be an innovator, and everyone is creative – you just need to be equipped with the skills and knowledge. There isn’t one type of person who is an innovator. Innovation does need big thinkers and tech whizzes – but it also needs the small thinkers who will work on the detail to make the big idea work. It also needs people whizzes, who make sure that technology can meet the users’ need. There are some common innovator traits – curiosity, an experimental mindset, and empathy – but these can be developed in all of us with the right training, tools and culture. Myth #5: The public service isn’t innovative There are many ways we see innovation in the private sector, but the public sector can be innovative, as well. We’ve seen truly inspiring innovations developed by the public service across the world. For example, a public servant in Portland, Oregon was instrumental in the development of Google Transit; similarly hospitals across the world are being re-designed to better meet the needs of patients. There are great examples close to home, too. The Department of Employment Affairs and Social Protection are rolling out digital services, through mywelfare.ie, that have been designed in a truly user-centred way. Dublin City Council have implemented innovations from painted traffic light boxes to brighten the city and reduce graffiti. Become an innovator No matter who you are, or what sector you are in, you can be innovative. If you are creative (you are!) and recognise a need in your business or community, try to solve the problem with the tools already available. Anne Byrne and Grace Cunningham are part of the GovLab team in Deloitte.

Nov 17, 2019

As part of measures to tackle white collar crime and money laundering, the vast majority of companies incorporated in Ireland are required to submit information on their beneficial owners to the Register of Beneficial Ownership of Companies (RBO) by 22 November or risk significant fines. However, based on figures released by the Registrar, only about 21% of companies have done so, according to law firm Mason Hayes and Curran. Under the regulations, companies and certain other types of bodies corporate which were incorporated on or before 22 June 2019 have until 22 November 2019 to submit information on their beneficial owners to the new central register. Newer bodies have five months from incorporation. Fines for companies failing to properly keep a register, or to comply with requests from authorities, will be up to a maximum of €500,000 and there is provision for custodial sentencing of up to 12 months for knowingly or recklessly providing false information to the Registrar. These punishments will also apply to an officer of a company in breach, where those breaches are with the officer’s consent or connivance. The Beneficial Ownership Register opened for filing on 29 July 2019. All filings should be made online at www.rbo.gov.ie. Source: Mason Hayes & Curran.

Nov 17, 2019

The Central Bank of Ireland has published a new guide to sanctions imposed under the Administrative Sanctions Procedure (ASP) for the financial services sector. This ASP Sanctions Guidance increases transparency by providing greater clarity on the Central Bank’s general approach to sanctioning of firms and individuals. It provides guidance on the application of a variety of factors relevant to sanctioning under the ASP, including cooperation, self-reporting and remediation. The Guidance intends to help to promote an improved culture of compliance in financial firms by clarifying the behaviours which may aggravate or mitigate a breach of financial services law. You can find further information on the ASP here. Source: Central Bank of Ireland.

Nov 15, 2019

The trustees of the IFRS Foundation invite applications from suitable candidates to fill a new vacancy on the IFRS Interpretations Committee. For this specific vacancy, when considering candidates, trustees will look across all geographic regions for individuals who are currently practising within a non-Big Four accounting firm. The Interpretations Committee is the interpretative body of the International Accounting Standards Board. It consists of fourteen voting members under the non-voting chairmanship of Sue Lloyd. The role of the Interpretations Committee is to interpret the application of, and to support the consistent application of, IFRS Standards throughout the world and to provide timely guidance on financial reporting issues that are not specifically addressed in IFRS Standards, within the context of the Board's Conceptual Framework. The closing date for applications is 9 December. You can read more information at ifrs.org. Source: IFRS.

Nov 14, 2019

The Irish Auditing and Accounting Supervisory Authority (IAASA) has published revised procedures governing the conduct of statutory Enquiries under Section 933 of the Companies Act 2014. The revised procedures, which have been developed following the enactment of the Companies Act 2018, will apply to all Enquiries initiated from 13 November 2019. The procedures can be downloaded here. IAASA conducted a public consultation process prior to making the procedures. The feedback from the consultation is also available for download here.   Source: IAASA.

Nov 14, 2019

The public trust in charities and not-for-profit organisations had been in decline, but the work of accountants as trustees and volunteers has assisted the charities sector in regaining the trust Irish society once had in them, says Liz Hughes. We build our personal and professional relationships on a foundation of mutual trust. Where trust is present, relationships can survive difficult times; where it is lost, it can be incredibly difficult to regain. In Irish society, trust has been significantly challenged in recent years. Like many other pillars of Irish society – politics, banks, the church – public trust in charities has seen a decline. Several high-profile failings in the charity sector have had a seriously damaging effect on public trust in this area. Charitable engagement is part of the Irish psyche. Ireland is currently ranked the 5th most charitable nation in the world in a survey carried out by the Charities Aid Foundation. However, charities depend on trust to effectively do their job. If the public doesn’t trust the charities sector, donations of time and money decrease, often resulting in the decline of these charitable services to the people that need them most. A good deed done In order to regain and maintain public trust and confidence in the work of Ireland’s 10,000 charities, high governance standards are key. The new Governance Code is a welcome addition to the codes and standards that the sector has developed in recent years and because of this, confidence in charities rose to 31% – up 7% from 2017, according to Amárach for Charities Institute Ireland research. However, navigating a host of unique regulatory, financial and operational barriers while the regulatory framework undergoes significant change can be incredibly difficult for charities, and an area where accountants step in to help, but how do they play a part in further rebuilding trust in the charity sector? Accountants can make a real difference to charities as auditors, trustees and chairs. For example, without accountants, the Charities VAT Compensation Scheme would not have been such a huge success. The initiative resulted in over 1,100 charities submitting qualifying claims under the scheme. These claims amounted to almost €40 million, close to eight times more than the scheme cap of €5 million per year. Accountants also receive professional training and CPD throughout their careers and, as such, are sought after as charity trustees who bring a wealth of governance, strategy and financial reporting experience. Accountants are also bound by professional standards and obliged to behave ethically, not only on behalf of their clients but also for the public good. Working towards SORP compliance We know that transparency goes a long way towards rebuilding trust so clear, concise information is essential to support any decision making by management and donors. The most obvious source of information that is accessible to everyone is a charity’s financial statements. The adoption of FRS 102 and the charity SORP has long been considered best practice for charities in Ireland, and many of Charities Institute Ireland’s members produce SORP compliant accounts. However, adopting SORP is not yet mandatory and, as a result, charities are producing financial statements that are more appropriate for a commercial entity, and when a donor, volunteer or member of the public wants to find out how a charity uses their resources to deliver the objectives of a charity, they access a version of the accounts that omits detailed information on income and expenditure. The public good would be best served by charities preparing SORP financial statements and filing these full financial statements with the Companies Registration Office.  I encourage those working with charities to check what type of financial statements are filed and, if they are abridged, ask why. We want everyone to work towards SORP compliant accounts for 2020. Lending your expertise As we come to the end of 2019, we are calling on accountants to consider volunteering with a charity or not-for-profit to bring their knowledge to a charity that needs it. By doing so, you could be help build the public trust once again. Liz Hughes is the CEO of Charities Institute Ireland. You can learn more about leadership in the charities sector at Charities Institute Ireland’s Bolder Board Training event in Dublin on 12 November.

Nov 10, 2019

Who can believe we are nearly done with 2019? It’s easy to get caught up in a holidays-are-coming feeling, but if you want to end 2019 on a productive high, you must focus on what is achievable in this small timeframe, says Moira Dunne. What are the key things you planned to do this year? Have you even started them? What should you prioritise for the next six weeks? With a little planning, this can be your most productive time of the year. You can finish the year on a high and move into 2020 feeling motivated. What do you want to achieve? You must first evaluate any existing goals. Are they still relevant? Then ask yourself these questions: What will it look or feel like to achieve the goal? What work do I have to do? Do I need help or input from anyone else? Make a plan The only way to get going is to make a plan for what you need to do. Start by thinking about what goal you’re trying to achieve. Break the goal into sub-goals if required, and brainstorm each sub-goal to create a list of tasks needed to complete your them. From here, make a plan by looking at the tasks and deciding when each task needs to be done. Are some tasks inter-related? Can you identify milestones or achievements along the way so you can keep yourself on track? Work that into the plan. Don’t overbook yourself It’s essential that you are realistic about how much time you have to work on your goal. You are already busy, so think about how to ‘create’ extra time. What in your daily work schedule doesn’t need as much attention before 2020, and can you complete your goal in that allocated time? Remember to be practical when looking at your schedule. You can’t treat December like a typical month because of all the holiday activities. Aim to finish your plan by mid-December. Measure and track progress You’ll want to stay on track, so be sure to have targets to hit on the way to achieving your goal. Create a target time for each task completed and compare it to the actual time each task takes along the way. If you miss a target date, does it have a knock-on effect on the remaining targets? Readjust your plan as required to be sure you hit your goal. Acknowledge what you achieve By prioritising and planning out your goals, you have a higher chance of achieving them. Celebrate if you do end 2019 on a productive high! And, even if all the work does not get done, you will have completed more than if you had no plan at all. Because of your detailed plan, you know what tasks you must complete first thing in 2020 – and that is a great way to start a new year. Moira Dunne is the Founder of BeProductive.ie.

Nov 10, 2019

Creating an ethical workplace isn't just about punishment when things go wrong – it's essential to foster an ethical outlook within the organisation. Stephanie Casey explains how to give employees the tools to deal with ethical dilemmas. When corporate scandals arise, the senior leader is often reprimanded, but the issue of ethical misconduct cannot simply be solved by firing the manager. Award-winning research from Amanda Shantz and Catherine Baily indicates that while managers are key to cultivating an ethically strong environment, organisations must invest in ‘distributed’ ethical leadership in order to ensure lasting change. In other words, they must hire and cultivate leaders at all levels who promote ethical behaviour. According to the study: “an ethically strong situation is one in which people understand events in the same way, where there is clear information about the consequences of behaving (un)ethically, and where employees have the skills and motivation to do the right thing.” By contrast: “an ethically weak situation is one in which employees respond idiosyncratically, where the appropriate ethical response is unclear, and where there are few incentives to behave ethically.” Fostering ethics So, how do managers foster ethically strong situations? Shantz and Bailey sought to address this question by conducting in-depth case studies of five organisations, as well as surveying a representative sample of over 1,300 workers, across the UK. Their research reveals some important recommendations for managers. Acknowledge ethical ambiguity Many organisations fail to discuss ethical challenges their employees may face. This drives individuals to internalise their decision-making processes with potentially negative consequences.  Instead, managers should encourage open discussion on ethical issues and possible solutions. This gives employees a clear understanding of the organisation’s ethical values and the confidence to seek support from their managers without fear of judgement. Clarify ethical trade-offs In 1950, Johnson and Johnson founder, Robert Wood Johnson, identified four stakeholder groups that he saw as vital to the success of any corporate endeavour: employees, customers, the community and shareholders. He maintained that if a company looked after the first three groups, then the shareholders would be the beneficiaries. Although the needs of all stakeholders can sometimes be met, trade-offs are usually necessary. When employees are unsure of how to manage this tension, unethical approaches can develop. In these scenarios, managers should establish a consistent ethical framework with guidelines for balancing stakeholder interests to help employees weigh up competing concerns and make appropriate decisions. Ensure role-modelling from the top down Employees pay more attention to how leaders behave than what they say about ethics. The key is for leaders to not only be ethical but to also be seen as ethical by championing ethics and values at every opportunity. It’s clear that no organisation is immune to ethical breaches, but by equipping employees to deal with daily ethical dilemmas and enabling them to raise any concerns they may have in the knowledge that they will be protected from any form of penalisation or retaliation, the next corporate scandal could be prevented. Stephanie Casey is the Programme Manager of Integrity at Work at Transparency International Ireland. Amanda Shantz will address the Integrity at Work Conference at the Radisson Blu Royal Hotel, Dublin on 20 November 2019.

Nov 10, 2019

According to new figures released by Deloitte on the latest insolvency statistics, there has been a drop in corporate insolvencies. In Q3 YTD 2019 the level of insolvencies stood at 439. When compared with Q3 YTD 2018 (557) this represents a decrease of 21%, a marginally higher decrease than the 18% decrease recorded on Q3 YTD 2017 figures.  78% (343) of insolvent companies were incorporated more than five years ago and this suggests that the majority do not relate to ‘start-ups’, which entities are generally considered to be less than five years in business.  A little over a fifth of companies (22% or 96 companies) that became insolvent during the nine month period relate to companies less than five years old, 23% (100) are in the 5-10 years bracket, 25% (112) are in the 10-20 years bracket, 16% (72) are in the 20-30 years bracket, 7% (29) are in the 30-40 years bracket and 7% (30) are over 40 years old.  Types of Insolvencies A more detailed analysis of the figures recorded show: Creditors’ voluntary liquidation (CVLs) accounted for the majority of insolvencies, with 280 CVL insolvencies recorded in the period (64%). In the comparable period in 2018, creditors’ voluntary liquidations accounted for 379 (68%) of all incidences recorded.  The Court liquidation (CL) process has increased with 50 court appointments or wind up petitions recorded in the period. In Q3 YTD 2019, the CL process represented 11% of total insolvencies and is a significant increase on Q3 2018 YTD figures when 39 court appointments or wind up petitions were recorded representing 7% of overall insolvencies in that period.  Receivership appointments over corporates and corporate assets (84) have remained broadly consistent with the same period last year (106) when analysed as a percentage of overall insolvencies (19%). The figures suggest that the decline in Receivership activity recorded in recent years has now levelled out and a further decline in corporate Receivership activity over the next year is not generally anticipated as acquirers of loan books in 2018 and 2019 work through non-performing loans and enforce over company assets on foot of charges held. Most of the activity has continued to develop in the personally held real estate sector, which includes all property segments, such as industrial, office spaces, retail and residential.  Examinership as a percentage of overall Corporate insolvencies has remained consistent with the same period for 2018 with 25 appointments (6%) recorded in Q3 YTD 2019 versus 33 (6%) recorded in Q3 YTD 2018. The persistent low levels of examinership appointments recorded may reflect, amongst a variety of other factors, an unwillingness of management to take early action to restructure a business in difficulty. (Source: Deloitte)

Nov 08, 2019

The IFRS Foundation has appointed Alexsandro Broedel, Joanna Perry and Maria Theofilaktidis as new trustees and re-appointed three of the current trustees. The IFRS Foundation trustees are responsible for the governance and oversight of the International Accounting Standards Board, which sets IFRS Standards. The trustees have been appointed for a three-year term starting 1 January 2020: Alexsandro Broedel is Group Executive Finance Director and Investor Relations Head at Itau Unibanco in Brazil – the largest private financial institution in Latin America. He will take up one of the Americas seats as Maria Helena Santana steps down, having come to the end of her second term. Joanna Perry holds a variety of senior non-executive positions for both public and private organisations in New Zealand, and is serving the last few weeks of her second term as Chair of the IFRS Advisory Council, a position she has held since 2014. She will take up the Asia-Oceania seat as Lynn Wood steps down. Maria Theofilaktidis is Executive Vice-President, Chief Compliance Officer and Head of Enterprise Risk for The Bank of Nova Scotia (Scotiabank), one of Canada’s largest multinational banks. She will take up another Americas seat as Sheila Fraser steps down. Else Bos, Su-Keun Kwak and Guangyao Zhu have been re-appointed for a second and final three-year term, effective 1 January 2020. The Trustee appointments are approved by the trustees and the IFRS Foundation Monitoring Board, the group of capital market authorities that reinforces the public interest oversight of the IFRS Foundation. (Source: IFRS)

Nov 08, 2019

Companies applying the new standard on lease accounting need to provide more information on its effects, according to a new report by the Financial Reporting Council (FRC).   The FRC has reviewed the interim reports of 20 companies applying International Financial Reporting Standard 16 (IFRS) Leases for the first time.   The FRC found a number of examples of better practices, which tended to be those disclosures that were tailored to the company’s circumstances and provided more than the minimum requirements.   As required by IFRS, companies are expected to provide more information in their annual reports and accounts to help stakeholders better understand the effect of the new standard. This should include:   information about key accounting judgments made; for example on the identification of lease, or on assessing their length; clearer explanations of the specific transition choices made; a detailed reconciliation between the operating lease commitment under the previous standard and the new lease liability, with clear explanations for reconciling items; and where companies use alternative performance measures to help users of the accounts to understand the effect, these measures should be properly labelled, reconciled and explained, and not give more prominence than the IFRS measures. A link to the review can be found here.  (Source: FRC)

Nov 08, 2019

While the European economy is now in its seventh consecutive year of growth and is forecast to continue expanding in 2020 and 2021, the external environment has become much less supportive and uncertainty is running high, according to the European Commission's Autumn 2019 Economic Forecast. This is particularly affecting the manufacturing sector, which is also experiencing structural shifts. As a result, the European economy looks to be heading towards a protracted period of more subdued growth and muted inflation. Euro area gross domestic product (GDP) is now forecast to expand by 1.1% in 2019 and by 1.2% in 2020 and 2021. Compared to the Summer 2019 Economic Forecast (published in July), the growth forecast has been downgraded by 0.1 percentage point in 2019 (from 1.2%) and 0.2 percentage points in 2020 (from 1.4%). For the EU as a whole, GDP is forecast to rise by 1.4% in 2019, 2020 and 2021. The forecast for 2020 was also revised down compared to the summer (from 1.6%). Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said, “So far, the European economy has shown resilience amid a less supportive external environment: economic growth has continued, job creation has been robust, and domestic demand strong. However, we could be facing troubled waters ahead: a period of high uncertainty related to trade conflicts, rising geopolitical tensions, persistent weakness in the manufacturing sector and Brexit. I urge all EU countries with high levels of public debt to pursue prudent fiscal policies and put their debt levels on a downward path. On the other hand, those Member States that have fiscal space should use it now.” You can read the full Autumn 2019 Forecast here. (Source: European Commission)

Nov 08, 2019

Tilly Downes, trainee in PwC in Cork, is moving on to her FAE after grabbing the top spot in her CAP 2 exams. Tilly answered some questions about exam preparation and her future as a Chartered Accountant. Can you bring us through your preparation process for the CAP 2 exams? I began my study leave ten weeks before the exams were due to commence. At the beginning, I spent some time preparing my folders and dividing them into sections so that when it came to study and the exams, I knew where everything was. Following this, I focused on completing the exam papers in the fastest time I could which helped me during the actual exam; I knew how much time to allocate to each question and learned how to work against the clock.  What was the most challenging part of your preparation? Ten weeks of study leave is a long time, and it can be hard to motivate yourself to keep going, so this is definitely what I found the most challenging. What is one tip you would give to someone going into their CAP 2 exams in the next year? My advice would be just to give your best shot at the interim exams. These exams will really set you up for the final exam if you have a steady mark going in. It gives you that bit of extra confidence.   What do you plan on doing with your career once you qualify? At the moment, I have no definite plans on what I want to do after I qualify. I have toyed with the idea of moving abroad; I feel living in another country and meeting new people from different cultures would be a great experience.  If I do move abroad, I hope to work in the financial industry. The idea of getting insight into how businesses operate, the different challenges they face and, ultimately, what makes these businesses successful appeals to me. I also believe this could be an invaluable opportunity to develop myself both personally and professionally. For the time being, my main goal is to obtain my ACA qualification so that I will be able to reap the rewards it offers to its graduates.  In third year, I chose to go to PwC for my six-month placement. PwC has always come across as a progressive firm, and anytime I spoke to someone who had done an internship in their offices, the feedback was always positive. Given its global recognition, I felt it was a good place to work that will hopefully stand to me later in life if I end up moving abroad.  Why do you want to qualify as a Chartered Accountant? From a young age I had an interest in numbers. As a child, I used to count all the change for my mother’s newsagent and bring it to the bank. This passion continued throughout my life. In secondary school I knew I wanted to pursue a career as a Chartered Accountant which is why I opted to study BSc Accounting in UCC. I have always been someone who enjoys learning, and the fact that the BSc Accounting offers a broad range of modules appealed to me. I liked the idea of discovering new areas of interest and developing skills in a variety of areas. I believe studying accounting, and now pursuing the ACA qualification, has allowed me to continuously build on what I already know and to further develop my skills.

Nov 05, 2019
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