Julia Rowan answers your management, leadership and team development questions. Question I work in HR in a large organisation. We put great store in supporting managers to select the best talent with job descriptions, interviews, onboarding, managing probation and so on. We stress the importance of feedback and tackle any issues that arise during probation. We often hear that everything is fine. Then, when things go wrong, managers call on us to sort out issues that were known about during probation. We have tried to tackle the issue in many ways, but the problem continues. Answer It is tough to work in HR. HR straddles the challenging divide between ensuring compliance—managing systems, procedures and policies to meet legal and organisational standards—and curating the culture that enables leaders to create an engaging, inclusive and high-performing environment. This dual responsibility requires HR to act as both the guardians of organisational integrity and the architects of a thriving workplace culture. Under pressure, compliance almost always wins. The question you have shared is very common, and there are several issues at play. First, the need to urgently ‘fill a gap’ caused by an impending departure or increased workload may take precedence over finding the right fit. Second, managers often wish to emphasise the positive and worry that developmental feedback will demotivate their team. They might not have established, whether at the interview or during induction, that sharing feedback is a normal practice. Under pressure, they may hesitate, hint or hope that instances of poor performance do not reoccur. Third, managers often lack the language to address subtle issues, such as high performance paired with poor behaviour (or vice versa), and they fear they do not possess sufficient ‘evidence’ to support any concerns they have. The plethora of policies, procedures and laws surrounding these issues can be daunting. Most importantly, managers often believe they are accountable for their team’s performance and that underperformance reflects poorly on them. This perception often drives them, leading them to overlook or conceal issues, even rejecting offers of assistance. HR can help managers realise that nobody can ‘own’ the performance of another person—people own their own performance. However, the manager owns the responsibility for setting appropriate goals, creating the right environment, sharing positive and developmental feedback and running great meetings. HR should assist managers in introducing the topic of feedback during both the interview and induction. This creates an expectation in the new hire that they will receive feedback, making it easier for the manager to access this space. My advice to you is to maintain close communication with managers during probation and avoid depending solely on the probation forms/procedure. Engage with managers about their new hires and reflect on the interview: Are the promised skills evident? What positive feedback has the manager provided to the new hire? What developmental areas are being worked on? Is the new hire the right fit? It may be smart for the senior manager to conduct this process with the hiring manager, as it predominantly concerns the organisational culture, which should be championed by senior leadership. Encouraging senior leadership to fulfil their ongoing role as shapers of organisational culture can be a challenge for HR, requiring consistent advocacy, a clear vision and deep commitment to the cause. If you read one thing... Flourishing: How to achieve a deeper sense of well-being, meaning and purpose—even when facing adversity by Dr Maureen Gaffney. This book helps individuals to build confidence and self-awareness, which is very helpful for leaders. Julia Rowan is Principal Consultant with Performance Matters Ltd, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie.

Special guest speaker and Tesco Group CEO Ken Murphy, FCA, shared his career insights and outlook for the future of business and the Irish economy at this year’s Annual Dinner As Tesco Group Chief Executive, Ken Murphy is at the helm of the UK’s largest grocery retailer with an annual turnover of £61.5 billion and over 4,500 stores in the UK and other markets employing some 330,000 people. Speaking on stage at the Chartered Accountants Ireland Annual Dinner in Dublin on Friday, 24 January, in conversation with MC Sarah McInerney, Murphy discussed his career, expectations for the Irish economy and shifting trends in the world of retail and business. “The most obvious change I’ve seen since taking on this role is the impact technology has on every decision you make today,” Murphy said. “When I joined Tesco, we had about 2,000 people in technology. Today, we have 5,000 and I wouldn’t be surprised if we have 10,000 by the end of the decade.  “It’s just such a critical part of any business today. Almost anything you want to do now has a technology dependency. “The opportunities are phenomenal. AI will absolutely turn everything we know on its head over the next five to ten years. Energy is the only real limiting step I can see at the moment.” Originally from Cork, Murphy studied commerce at UCC and trained as a Chartered Accountant with Coopers & Lybrand (now PwC), beginning his career with Procter & Gamble. By the time he had been appointed Finance Director with Alliance Unichem just a few short years after qualifying, it was clear to Murphy that his professional future lay in the world of business and retail. “I am bad at maths and even worse at physics, but I’m good on numbers. I hated auditing but numbers came easy. At the end of my training, my Audit Partner said to me, ‘Ken, you really enjoy business; auditing, not so much’, which was a gentle nudge to do something else.”  It was when he joined Procter & Gamble that, Murphy says, his career really “got into gear” and remaining open to opportunities has been the cornerstone of his success in the years since.  His advice to young accountants starting out today is to “open more doors than you close—and take risks”. “It doesn’t always work out,” he said, “but you definitely learn more from the failures than the successes and you have a lot of fun along the way, as long as you can take the knocks.” Murphy was appointed Managing Director of Health and Beauty, International and Brands, at Boots in 2013. He subsequently became Joint Chief Operating Officer at Boots UK & Ireland before rising to Executive Vice President, Chief Commercial Officer and President Global Brands at Walgreens Boots Alliance.  He was appointed to the Board of Tesco PLC as Group Chief Executive in October 2020.  Although the transition from health and beauty to food retail proved a steep learning curve, Murphy describes his current role as “the best job I’ve ever had”. “There is a much higher level of intensity in food retailing,” he said. “When you’re a high-street brand like Tesco, the public scrutiny is extraordinary. Nothing prepares you for that. “It is extraordinarily intense, and, at the same time, we are thinking very long term in some of our strategies. I love the business. I love what we do. I love the people I work with. “We have a lot of fun in an intensively competitive environment. We never have a day where we’re bored or thinking, ‘what will we do today?’” Tesco has a growing presence on the island of Ireland, where it operates 181 stores in the south and 50 in the North.  Last October, Tesco committed close to €200 million to the renewal and expansion of existing multi-year partnerships with Irish suppliers in the south.  The retailer is, Murphy said, the world’s leading purchaser of Irish food and drink, buying €1.6 billion of Irish food and drink annually—more than the value of Irish food and drink exported to any country in the European Union. “We have over 500 suppliers in Ireland and three quarters would be classified as SMEs employing 250 people or less,” Murphy said. “One of the things that really struck me when I started this job and went out visiting our suppliers, were the stories they would tell me about how they were basically working out of a shed 35 years ago, then they got a contract with Tesco and now they have a massive organisation. “That’s true of a number of our biggest Irish suppliers who have been extraordinarily successful in partnership with Tesco.  “We love working with our suppliers and helping their brands grow. We are fair and transparent, but we are quite tough. “If you’re successful with us, you tend to be successful with other people. “We like to think we reward real entrepreneurial spirit and innovation–particularly in Ireland where food is enormously important and something we’re famous for globally.” The future fortunes of the Irish economy will not be without challenge, however. “If I look at what Ireland has done in terms of its brand relative to other countries, I’d say we do a pretty good job. We could always do better but, with the work of some of our semi-state bodies, whether it be Enterprise Ireland or Bórd Bia, we punch above our weight,” Murphy said. “The challenge now is, ‘how do we really take that for a spin over the next five to 10 years in a global way?’ and I would be nervous of our dependency on US foreign direct investment.” With US President Donald Trump’s ‘America first’ trade policy starting to gather steam, Murphy cautioned against a cavalier approach to transatlantic relations. “I think Ireland punches above its weight in terms of our influence in the EU and in terms of the US, but we shouldn’t overplay our hand with the US.  “I am very encouraged by the fact that there is hugely deep investment in Ireland over a very long period of time, but I feel we shouldn’t assume our special relationship with the US will endure forever.  “There are competing interests, and we should be mindful of that but there is a lot of capability and competence in Ireland, so I feel like we have an opportunity. “Ireland has the most stable political environment in Europe. We still have one of the best educational standards in Europe. We have a lot of other challenges, but I believe it’s all to play for.”

The experiences of the first wave of entities preparing CSRD sustainability statements hold important lessons on the complexities of the double materiality assessment.  Gareth Martin, Jennie Kealey  and Luke Bisson delve into the details Some of the largest entities in Ireland are in the process of issuing their first mandatory sustainability statement under the EU’s Corporate Sustainability Reporting Directive (CSRD). They are part of the first wave of reporters following transposition of the CSRD into Irish law for accounting periods beginning on or after 1 January 2024.  To identify sustainability information for disclosure, an entity is first required to complete a double materiality assessment (DMA) to determine material impacts, risks and opportunities (IROs) in relation to environmental, social and governance (ESG) matters.   Double materiality is a new concept aimed at enhancing the existing understanding of financial materiality already familiar to accountants. It extends financial materiality considerations to encompass an understanding of both the entity’s impact on the environment and society, and the impact of sustainability matters on its own prospects, performance and position—i.e. double materiality considers both inside-out and outside-in perspectives.  The DMA process must comply with the requirements of the European Sustainability Reporting Standards (ESRS), as this is one of the components of a CSRD limited assurance report under International Standard on Assurance Engagements (Ireland) 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information - Assurance of Sustainability Reporting in Ireland (ISAE (Ireland) 3000). ISAE (Ireland) 3000 is the assurance standard that has been adopted in Ireland for sustainability statements prepared under the CSRD. An entity’s CSRD reporting is dependent on a robust DMA output. This is the foundation of the sustainability statement. Here, we offer some practical insights into completing an effective DMA, drawn from our experience supporting clients in this area. Overview of the DMA process  The ESRS do not mandate how to conduct a DMA and, accordingly, each entity should apply judgement to design a DMA process that complies with the ESRS. Figure 1. shows one potential approach to the DMA process. The DMA is comprised of the two interconnected assessments of impact materiality (ESRS 1 3.4) and financial materiality (ESRS 1 3.5). Figure 2 illustrates the double materiality concept. DMA: illustrative examples Some high-level illustrative examples of sustainability IROs are as follows: Impact (positive): Actual positive impact on the environment through adaptation of manufacturing facilities to use renewable energy sources. Impact (negative): Potential negative impact on the working conditions of workers in the value chain through contracting of suppliers in geographies with sub-standard labour laws. Risk: Risk of increased costs in the form of fines from non-compliance with wastewater disposal regulations. Opportunity: Opportunity to increase revenues from sustainability conscious customers through development of biodegradable products. Key practical DMA considerations Some practical considerations should be factored into the DMA process as required by the ESRS. 1. Disaggregation of the assessment The appropriate level of disaggregation must be determined before beginning the DMA process.  The assessment may be disaggregated by business division, country of operation, subsidiary, significant site or significant asset (depending on the nature of the entity) in order to effectively identify IROs at the correct level of granularity and assess their materiality.  For example, groups must consider whether the DMA should be performed centrally at the group level, or at a disaggregated level. 2. Stakeholder engagement approach Stakeholders include key actors in the value chain, such as suppliers, employees and customers, but can further comprise groups such as indigenous communities and silent stakeholders, such as nature. Therefore, while conventional methods of engagement like surveys, interviews and workshops are commonly used, it is also important to consider alternative approaches. This might include analyses of ecological, pollutant or geographical data. Engagement may also be indirect, through stakeholder representatives or subject matter experts. Stakeholders should only be engaged in the assessment of topics where they have the appropriate experience and/or expertise required to provide accurate and reliable input. They may be mapped to specific IROs on the longlist to facilitate the provision of IRO inputs, where appropriate, to their position in the value chain. 3. Value chain boundary When performing the value chain analysis step of the DMA process, management should determine the point or “boundary” in the value chain up to which information should be collected. If this boundary is not effectively defined during the DMA, there is a risk that IROs related to components of the value chain will not be identified. Consequently, value chain information may not be presented completely in the sustainability disclosures.  For example, if only first-tier suppliers are considered as part of the value chain, the impacts of second- or third-tier suppliers connected with the entity’s operations may be overlooked in the DMA, even though they are within the scope of impact materiality. 4. Material financial effects Sustainability risks and opportunities are often drafted without properly considering their material effects on financial position, financial performance, cash flows, access to finance or cost of capital—or evaluating their consistency with the information disclosed in the financial statements. Likewise, it is common for management to only consider and score the likelihood and magnitude of a risk or opportunity, even though ESRS 1 stipulates that it is the likelihood and magnitude of the financial effects that should be assessed. 5. Dependencies on natural, human and social resources Risks and opportunities derive not only from impacts, but also from an entity’s dependencies on natural, human and social resources. It is therefore important for management to consider dependencies as potential sources of risks and opportunities when assessing the financial effects triggered by sustainability matters. For example, a manufacturing entity should consider its dependencies on energy, raw materials, customer relationships and healthy and skilled workers, among others, when drafting and assessing the materiality of IROs on the longlist. Dependencies on biodiversity and ecosystems should also be identified and assessed under the ESRS 2 IRO-1 requirements of ESRS E4. This includes an assessment of sites located in or near biodiversity-sensitive areas.  6. IRO scoring approach The ESRS do not define an IRO scoring approach. However, the factors for scoring are outlined in ESRS 1 and elaborated on in European Financial Reporting Advisory Group Implementation Guidance 1 (EFRAG IG 1) Material Assessment. Scoring should also align with the entity’s existing risk management framework where possible. ESRS 1 does prescribe the use of an appropriate quantitative and/or qualitative threshold to determine which IROs are material.  EFRAG IG 1 provides graphical representations of such materiality thresholds in both columnar and matrix formats. It is important to note that this guidance is purely illustrative. Management should document the rationale supporting their choice of scoring scales and thresholds—and ensure that these decisions have undergone robust review and validation. 7. Entity-specific disclosures When an entity concludes that an IRO is either not covered or not covered with sufficient granularity by an ESRS—yet is material due to its specific facts and circumstances—additional entity-specific disclosures must be provided to enable users to understand the sustainability-related IROs. Given that sector-specific standards have not yet been incorporated into the ESRS, it is paramount that management implements robust processes to assess potential IROs to identify any that are not aligned to the ESRS topical standards. For such topics, entity-specific disclosures should be drafted which adhere to the general disclosure requirements set out in ESRS 2 and meet the qualitative characteristics of information in accordance with ESRS 1. DMA: useful insights Here are eight insights that can be applied to support the DMA process: 1. The DMA process requires detailed step-by-step planning. Often, input is needed from across the organisation, particularly where a materiality assessment of sustainability information is being carried out for the first time. 2. Before beginning the DMA, an entity’s organisational structure should be appropriate for management to effectively lead and oversee the DMA process, and sufficient training should be provided. Identifying key internal stakeholders, such as members of the sustainability, environmental and financial reporting functions, will facilitate an effective assessment, as will forming a working group to co-ordinate day-to-day aspects of the DMA. 3. Validation roles for key decisions at each stage of the DMA should be clearly defined and documented. A board level steering committee could be formed for the purpose of reviewing and validating key decisions before the working group proceeds to the next stage of the process. 4. Documentation of the DMA process should begin at the inception of the assessment. This documentation should be clear, specific and detailed enough to enable assurance practitioners to understand and assess each stage of the DMA process. A centralised change log should be maintained to provide a clear and traceable trail of amendments and judgements, including their supporting rationale, over the course of the DMA. 5. Methods of engagement likely to garner the most effective coverage of views across all affected stakeholder groups should be considered. These might include surveys, interviews and workshops. A first step here might involve mapping affected stakeholder categories to sustainability matters, and prioritising different categories for engagement purposes. 6. Management should gain an understanding of the ESRS disclosure requirements, datapoints and transitional reliefs early on in the DMA process so they can effectively map material IROs to disclosure requirements and implement interconnectivity between the DMA process and disclosures. 7. When drafting the longlist of IROs and determining material sustainability matters, it is important to benchmark against disclosures prepared by peers and early reporters. This is especially pertinent in the first year of reporting, in order to effectively compare the information that is being disclosed within sectors and industries. 8. A plan for the refresh of the DMA should be agreed on from the outset. Management should implement an annual review of the DMA, comprising procedures such as a landscape review and revalidation of the DMA results. The circumstances requiring a full refresh of the DMA should be defined in accordance with the requirements of ESRS 1 and EFRAG IG 1. The frequency at which a full refresh should be performed regardless of change events must also be considered. Planning for quality and efficiency The DMA is a complex exercise, and each organisation will encounter its own challenges when preparing for the first year of CSRD reporting.  Despite this, there are learning points that can be applied broadly to the DMA in order to improve the quality and efficiency of the process.  Planning each step of the DMA and establishing a process compliant with the requirements of the ESRS will allow entities to develop and perform a robust DMA. Gareth Martin is a Managing Director in  Deloitte’s Sustainability Reporting and Assurance team Jennie Kealey is a Manager in Deloitte’s Sustainability Reporting and Assurance team Luke Bisson is a Senior in Deloitte’s Sustainability Reporting and Assurance team  

The AI revolution is well underway, driving unparalleled progress in business and finance. Microsoft Ireland CFO Áine Nolan shares her experiences and insights Artificial intelligence (AI) represents a valuable opportunity for Ireland to enhance our productivity and solidify our digital leadership in Europe.  This is according to Áine Nolan, FCA and Chief Financial Officer with Microsoft Ireland, who spoke at the recent Chartered Accountants Ireland Technology Conference, about how AI is revolutionising the finance function and driving unprecedented efficiencies.  “We have a thriving tech scene in Ireland, a highly educated workforce and really smart government policies. We can really become a hub for AI advancements,” Nolan said. The potential is significant, driven by the rapid emergence of AI as a commercial proposition and its popularity with users in both their lives and work. “The rate of AI adoption currently is somewhat unprecedented,” said Nolan. “Generative AI is capturing, distributing and democratising intelligence for everyone and that is a powerful concept.”  AI uptake in Ireland Microsoft Ireland recently partnered with Trinity College Dublin Business School to conduct research into the uptake of generative AI in the Irish market. Published in March 2024, the Generative AI in Ireland 2024 report found that 49 percent of respondents were already using the technology in some form in their organisation. “This research is less than a year old and already out of date, which just shows you how fast the rate of uptake is. We are due to release new research in March this year, which shows that adoption rates have since risen to about 70 percent,” Nolan said. Despite its proliferation in Irish workplaces, not all employers are, as yet, fully equipped to manage the implications of the AI age. “Through our research with Trinity, we have found that employees are bringing their own AI to work, with or without their employer’s consent. This ‘shadow’ gen AI culture creates risks for employers who really need to have guardrails in place,” Nolan said. “There is also sometimes a view that AI is just an add-on productivity tool you can slot into your existing workflows, but this fundamentally underestimates the magnitude of behavioural change and organisational transformation needed to unlock its value.” It will take time and a great deal of change management to integrate AI successfully as a new dimension of work, Nolan said. “People often make the mistake of simply asking how they can apply AI to their existing processes, but, fundamentally, they should be asking what they need AI to do and how it can make their processes more efficient or facilitate innovation—even creating a new service for our customers, for example.” The dawn of the AI agent Although many people currently use AI as a kind of “virtual assistant”, helping with everyday tasks, such as organising their work calendar or automating note-taking during meetings, the technology is set to assume a far more prominent and proactive role. “In the future, AI will operate on your behalf—as an agent—allowing you to eliminate tasks from your plate altogether,” Nolan explained. “This might mean making autonomous decisions for your IT helpdesk and, eventually, managing your full device refresh, from examining your POs right through to ordering new devices, checking your budgets and getting the necessary human approvals at the end of the process.  “A more complex example might involve AI looking after lead generation for your business by sourcing and emailing potential customers or acting as a customer support agent in a much more complex way than a chatbot, where it is actually making decisions on behalf of your organisation.” Microsoft and AI in finance Already, Nolan and her finance team at Microsoft Ireland are reaping the benefits of the organisation-wide implementation of the software giant’s AI technology. “Our global CFO Amy Hood consistently challenges our finance team to use our own technology to improve our processes. Her mantra is really clear—by adopting innovative technologies, finance will strengthen its business leadership through compliance, accuracy and efficiency.” And, as CFOs across all organisations assume an increasingly strategic business role, AI will become even more fundamental to their work day-to-day. “The role of the CFO is changing rapidly and, as finance leaders, we need to play a lead role in developing a clear AI strategy, ensuring our organisations have the necessary capability, technology and stakeholder buy-in. The rate of AI adoption is unprecedented and we need to be ready,” Nolan said. “In the last 12 months alone, I have seen big changes in how our own AI at Microsoft has been able to generate intelligent comments for us, as we work through our balance sheet and P&L variance analysis,” Nolan said. “We have had a big win in the efficiency of our contract review process, where we once had a full revenue recognition team analysing all of our contracts to account for them. “Now, we have AI reading 10,000 contracts a year and sorting them into low-, medium- and high-risk categories for us.” This means the revenue recognition team is only required to review high-risk contracts manually.  “We’ve had other big wins in journal entry anomaly detection, which has helped reduce risk on our financial statement—and our AI is now able to produce the first draft of the statement, reducing time spent on this work by about 15 percent.” Microsoft’s generative AI is creating models that recognise patterns in the financial planning and analysis data used to predict outcomes. “We’ve moved from bottom-up to top-down budgeting, reducing time spent on budgeting analysis from six months to six weeks,” Nolan said.  “This means we have much more time to think strategically and analytically—and to have a seat at the table in terms of our influence in the wider organisation. For us, AI is well and truly here.”

Ormsby & Rhodes Managing Partner David Marsh tells Barry McCall why one of Ireland’s oldest accountancy firms has embraced consolidation to future-proof its legacy In an announcement that took many by surprise, Ormsby & Rhodes, one of Ireland’s longest established accountancy firms, revealed in January that it had agreed to merge with AAB, a UK firm backed by private equity. Established in 1911 and consistently ranked in the top 20 firms in Ireland, Ormsby & Rhodes has revenues of over €7 million and provides audit, accounting, tax, payroll, company secretarial and business advisory support to a wide range of clients nationwide.  The merger strengthens the firm’s international presence and access to the European market while also propelling AAB past the €120 million revenue mark. “If you had asked me a year ago if a merger was on our agenda I would have said no,” says Ormsby & Rhodes Managing Partner David Marsh. “Ours is a 100-year-old firm doing very well, why would we sell?” Consolidation: the way forward Attendance at an event hosted by Chartered Accountants Ireland, at which one of the speakers spoke about his own firm’s merger, prompted a rethink.  “I spoke to him afterwards and he explained that consolidation is the future for the sector; that there is so much regulation and other new developments coming, firms cannot stand still, or they will fall behind. They need to grow and move forward,” Marsh explains. It is not a question of growing at the expense of others but rather positioning the firm to take full advantage of opportunities for growth.  “There is lots of work out there for everyone, but you need to be large enough, and have the necessary resources in terms of staff, technology and international reach, to service clients,” Marsh says.  “Consolidation is also good for the Institute as it means there are fewer firms to regulate in an increasingly complex world.” Protecting a legacy Before agreeing to any deal, Marsh was adamant that Ormsby & Rhodes’ core values and identity would be fully preserved. “I am passionate about Ormsby & Rhodes and the legacy we have to look after. That is very, very important to me. Following our merger with AAB, we still have the same identity and the same values.” Ormsby & Rhodes is the oldest accountancy firm in Ireland still trading under its original name. It was re-established in 1911 by Geoffrey Lewis, Neil Payne and Declan O’Luanaigh “We have clients who have been with us for over 50 years,” Marsh says. “The length of time clients stay with us is quite amazing. They don’t leave us. The average tenure of our top 10 clients is over 20 years.  “Some are large-scale businesses that could easily move to a Big Four firm, but they have chosen to stay with us because of the level of service we provide.  “We have the same partners and the same identity and ethos, and we will keep on doing what we did before; that’s what AAB wants us to do.” Succession and the next generation Marsh first joined Ormsby & Rhodes as an audit manager in 1991 having trained with EY and worked at it’s Jersey office for four years before returning to Ireland.  He subsequently left Ormsby & Rhodes in 1993 to set up his own firm, DJ Marsh & Associates.  “The business went really well,” Marsh recalls. “I started with seven clients and had more than 100 by the time I accepted the offer to merge the firm with Ormsby & Rhodes in 2000.” Three senior partners have retired from the firm in recent years, prompting Marsh to carefully consider its future leadership.  “I decided to bring young partners through. I am 64 but most of our partners are in their forties with some in their early thirties. It’s quite unusual to have an age-profile like this. Four of our 10 partners are female. The heart of the firm are these 10 partners.” The decision to explore a possible merger was taken following a meeting of the firm’s equity partners early in 2024.  “After that, we held meetings with others in the industry to get their views and opinions and we decided it was the right thing for us,” says Marsh.  “The priority for us was to form a partnership with a company we could grow with while also retaining our core identity. We didn’t want to just be subsumed into a larger organisation.” This is where AAB came in. “AAB is a Scottish firm that was the same as us five years ago when they decided to grow the business through consolidation with private equity backing,” Marsh says. “We had a number of meetings with them, and we found both sides liked what the other was doing.  “Chartered Accountants Ireland was great throughout the process. They were so quick at coming back whenever we had questions.” The benefits of the merger for Ormsby & Rhodes are significant, the first being the firm’s scope to service clients doing business in the UK.  “If one of our clients is doing business in the UK, we now have AAB to look after them and we can look after AAB clients here in Ireland,” says Marsh. Enhanced technology is another benefit: “We were about to spend a huge amount on new and upgraded systems. AAB had all of that and we are now able to access their platforms, creating efficiency and additional capacity to service clients.” Future of accountancy While he sees the advent of newer technologies such as artificial intelligence (AI) as important, Marsh believes the human touch will always be critical in the accounting profession and the wider business world. “AI is just another tool we will use. At the end of the day, it’s the accountant that makes the decisions and signs off on the accounts,” he says. Environmental, social and governance (ESG) principles are another key focus area for accountants currently.  “AAB is very big in ESG and has two partners and a team of four in this area. We have large clients who need this support. If a company has private equity investment, it needs to complete sustainability and ESG reports and the same applies to multinational firms,” Marsh says. “Transfer pricing is also huge, and AAB has a dedicated team for this, which is really important for us.  “For example, tax in the UK is changing very rapidly, and you have to be on the ball there. Corporation tax is 26 per cent in the UK and that’s where transfer pricing comes in. You need to get it right.” Marsh sees further potential for AAB’s Virtual Finance Service in the Irish market. “Mid-sized companies may not have the resources to pay a full-time chief financial officer (CFO),” he explains.  “Instead, they can outsource the CFO role to AAB on a cost-effective basis and get access to an experienced professional who will spend part of their time acting as CFO for them and the rest of their time looking after other clients.” Right now, Ormsby & Rhodes is preparing to host the Europe, Middle East and Africa conference of the BKR International association of independent accounting and advisory firms in Dublin in June.  “BKR International is a referral association, and we have been a member for 30 years. We have developed relationships with member firms in countries including France, Germany, America and Australia. It is a fantastic association for developing relationships and new business,” Marsh says. More than 200 delegates are expected to attend the conference. “It represents a huge opportunity to promote Ireland; to show what we can do here; and generate new business for ourselves and other member firms.” Marsh’s ultimate ambition for Ormsby & Prentice stretches much further into the future, however. “We want to be a very strong mid-tier partner led firm with a reputation for providing excellent service to clients,” he says.  “I believe we can double or treble in size over the next five years but, ultimately, I want to grow a practice that is sustainable for the next 100 years.  “That’s what this is about. I like to think Ormsby & Rhodes, with AAB, will grow for another century.”

Mentorship is key for young accountants transitioning to business development, offering guidance on effective networking, client engagement and relationship-building, says Mary Cloonan The challenge can feel significant for young accountants stepping into roles with business development targets for the first time. New responsibilities, particularly those requiring skills like networking and relationship-building, are often far removed from their previous technical focus. This is where mentorship can help, providing guidance and support to help them grow into the demands of their new role. Business development requires more than technical expertise. It involves cultivating relationships, strategic thinking and communicating value—skills not typically part of an accountant’s formal training. A mentor can: Provide practical guidance: Teach the mentee how to approach client engagement, network effectively and communicate persuasively. Build confidence: Support them as they tackle new challenges and unfamiliar scenarios. Set the example: Offer insights through real-world experiences and professional behaviour. Align efforts with strategy: Help them understand how their contributions support the firm’s broader goals. Effective mentoring: seven steps Here are seven steps experienced accountants can take to be a good mentor. 1. Simplify the starting point Break down business development into manageable steps. Help your mentee see this as relationship-building exercise rather than purely sales-focused. Concentrate on: Recognising potential opportunities in their network. Understanding the firm’s unique value proposition. Developing a genuine interest in client needs. 2. Set measurable goals Define clear and realistic targets. For example: Attend one networking event per month. Schedule two introductory meetings with prospective clients. Contribute to a team pitch or proposal. These bite-sized goals can help to build momentum without overwhelming them. 3. Practice through role-play Simulated scenarios are invaluable for building confidence. “Practice” situations with your mentee, such as: Introducing themselves at events. Explaining the firm’s services to a potential client. Handling objections effectively. Role-playing in a safe environment can help to prepare them for real-world challenges. 4. Encourage observation Let your mentee shadow experienced professionals. Whether it’s a client meeting, negotiation or event, watching mentors in action is a powerful learning tool. Follow up with discussions to reinforce key takeaways. 5. Emphasise listening Strong business development is rooted in active listening. Encourage them to: Ask open-ended questions. Pay close attention to what clients are really saying. Build trust by understanding challenges from the client’s perspective. 6. Give constructive feedback Feedback is essential. Review your mentee’s performance after meetings or pitches— highlight strengths and suggest improvements. Recognising small wins can boost confidence and foster growth. 7. Highlight the bigger picture Help your mentee to connect their efforts with your firm’s success. Discuss how building relationships can drive growth, create opportunities for cross-selling and enhance career prospects. Benefits for both mentors and mentees An effective mentorship programme benefits everyone. Firms gain future leaders with technical and business development skills, while clients will likely experience better service through improved relationship management. For young accountants, developing these skills early can boost their confidence and open up potential avenues to career advancement. Mary Cloonan is Founder of Marketing Clever

Amid political pushback and regional divides, investment in ESG remains a long-term bet driven by sustainability, transparency and innovation, writes Dan Byrne Publicly, the battle over Environmental, Social and Governance (ESG) principles is heating up, and 2025 will be a make-or-break year. US President Donald Trump’s 2024 victory, buoyed by agendas dedicated to combatting so-called “woke capitalism”, has thrown a wrench into the ESG movement in the United States. But while some parts of the world are doubling down on anti-ESG sentiment, others—like Europe and Asia—are charging ahead with ambitious sustainability plans, so far unfazed by angry rhetoric elsewhere.  The conundrum surrounding ESG is that, for many people, it is all about politics. Much of the media will reinforce this viewpoint because it provides the juiciest angle, filled with conflict and the makings of a good story.  ESG goes much deeper than politics, however. The real decisions are made at quieter levels, where investment patterns continue and corporate strategies align with investor priorities. Although it may not be as juicy, this is the main factor fuelling success or failure in ESG.  ESG investing in 2025 When it comes to investing, there is one main conclusion: ESG isn’t going anywhere.  You may have read many news articles—particularly over the last 18 months—discussing divestment from ESG assets and the dwindling popularity of ESG among stakeholders. These stories are true, signalling that ESG is taking a beating in some quarters. If we zoom out, however, the numbers tell a different story.  As of late 2024, the global value of ESG assets is still expected to hit somewhere between $35 and $50 trillion by 2030, according to University of Chicago lecturer and Impact Engine Chief Investment Officer Priya Parrish, writing for Fortune last October.  In other words, the recent setbacks for ESG investment are small backflows, but the much more significant wave of overall ESG investment still exists.  Why the continuing surge? Investors are likely convinced that ESG-related investments are smart, long-term bets. Many of today’s ESG pillars involve adaptation, essential in governance thinking and good news for investors who always want clarity on how a company will succeed in five, ten or twenty years.  Even as critics argue that ESG is overhyped, woke or restrictive, a colossal chunk of capital remains, especially in Europe and Asia, where ESG investments are firmly entrenched.  Investors in the US will be much more cautious about ESG under Donal Trump’s presidency, but again, this is on the public political side, which we’ll explain more about below. ESG and politics The other firm conclusion is that the debate over ESG will not simmer down soon. Trump’s return to power in the US means that everything related to ESG will face even more backlash and legal headaches. These can range from limiting ESG considerations in federal contracts to questioning corporate motivations. The critics are loud and emboldened, and they will motivate anti-ESG movements elsewhere.  Will they succeed? It’s very iffy.  You might have heard that the bulk of the world’s population went to the polls in 2024, including the UK, India and the European Union (EU)—as a whole and within certain member states such as France. New governments with fresh mandates now exist in these places. Many will remain until about 2030, and most remain committed to ESG-related principles in some form.  The EU is doubling down, rolling out regulations such as the Corporate Sustainability Reporting Directive (CSRD) that demand greater transparency and accountability than ever before. In Asia, governments are leaning into sustainability to future-proof their economies.  The result? A fragmented world in which ESG is thriving in some places and under siege in others. Five main expectations So, are we likely to see governance professionals making key strategic decisions regarding ESG? Unfortunately, there is no clear answer here because each company’s ESG strategy depends on factors including its goals, industry and national stakeholder mood. However, we can make a few more general predictions right now: Regional divides will deepen. Europe and Asia remain ambitious about ESG and new regulations are coming into force. Meanwhile, the US and some emerging markets are grappling with political resistance. Expect the gap between these regions to widen, which is bad news for the boards of trans-Atlantic companies. Suddenly, they must ensure their business pleases two very different political regimes.  Transparency will require upskilling. Many companies, particularly in Europe and Asia, will realise the need for new expertise on boards and executive teams. This is the only way they can hope to comply with the new reporting regulations they face. Because of this, ESG-related training will become more crucial.  Tech will lead the charge. Artificial intelligence and blockchain are set to revolutionise ESG reporting. Think real-time monitoring of supply chains and automated sustainability audits. The future is digital because digital can make massive tasks more manageable, enabling companies to report with great depth and confidence.  “Hushing” will be the new ESG language in the US. How does a company pursue ESG investment without angering its anti-ESG government? The answer is hushing, which means being quiet on a particular issue, no matter how devoted you are, for fear that being public will attract too much unnecessary criticism. Corporate activism will rise: Whether or not companies and politicians like it, the most polarised attitudes around ESG will mean more activism among investors. Boards must be prepared for this because aggressive activism can sometimes threaten their entire agenda. The story of ESG is being rewritten in real-time. The loud political pushback in the media starkly contrasts with the continuing investment in sustainability, accountability and transparency.  Navigating all this is a considerable challenge for businesses, but there is also an opportunity for those who adapt quickly, embrace innovation and stay ahead of evolving regulations. Dan Byrne is Content Manager at The Corporate Governance Institute

Liam Cotter charts the road ahead and critical importance of data for Irish organisations preparing for the AI revolution Right now, many organisations are experiencing caution, confusion—or both—in relation to artificial intelligence (AI). They are unsure about generative AI (GenAI), how it differs from previous AI iterations, and whether it can add value for them. With the first milestones of the European Union’s AI Act due to come into force in February 2025, focused on prohibiting AI systems posing unacceptable risk, organisations are concerned about falling foul of regulation. They are keen to ensure that any AI model introduced to help their business, undergoes rigorous testing to ensure it is fair and doesn’t have bias baked in. There are also more generalised fears regarding the cost of moving too quickly and developing the wrong solutions, however, as well as the “opportunity cost” of moving too slowly and thus failing to capture the benefits of the right opportunities. Data-based decisions Regardless of what stage an organisation has reached in its adoption of AI and GenAI, one thing holds true: the key to success is data. The only way to ensure quality AI outputs is to provide quality inputs. The way we manage and store data for the AI age differs from how we have done so in the past. Thus, even though the same fundamental rules apply, your data capture and entry systems may not be robust enough to handle AI demands and this could put you at a competitive disadvantage. Part of the problem with readying your data for AI transformation is the sheer amount of hard work involved, which may not appear not to offer a lot of value. This is because this work involves run-of-the-mill data generated from day-to-day operations. The key to the successful adoption of AI tomorrow is ensuring everybody in your organisation is aware of data management today. It is about ensuring everyone is measuring the quality of their data right across the organisation so they can stand over what it presents. For organisations that previously placed little value on the data they generate, this shift will require a culture change. It may also require different parts of the organisation to pool data—such as combining sales and stock databases rather than keeping them siloed, for example. In companies involved in mergers and acquisitions, it means ensuring you fully understand your data's lineage. The time to act is now The past 12 months have seen a growing realisation among organisations of the potential importance of AI as a lever for competitiveness. It is increasingly viewed as a valuable tool to drive digital transformation, enabling them to become more flexible, be faster to market, provide a better customer experience and more. Most of what AI will do has yet to be “dreamed up”. To put its scale in context, somewhere in the world, a data centre—the building block that powers the AI revolution—opens every two days. Organisations need to act to keep up. The first step is understanding the regulations and timeframes that are being rolled out under the EU AI Act. Next, identify use cases and develop them. Experiment—and if you are going to fail, fail fast. Get involved and discover the value in AI. People-powered data Understand the behavioural risks, too.  A lot of the work involved isn’t about technology at all. It’s about people. You can introduce the best technology in the world, but it's useless if staff don’t collect, curate and manage their data correctly. Everyone in your organisation must be able to stand by the accuracy of their data, which means good data practices must be applied to all business processes. In many organisations, this means investing in data capabilities, including staff training, and appointing a Chief Data Officer responsible for driving data literacy and good data management practices throughout the organisation, from the bottom to the top. To succeed, data management must be seen as a core, valuable component of what everyone does, regardless of their role. Break down the barriers Barriers to achieving effective AI readiness include an organisational culture that hasn’t yet caught up with the importance of data, allied to poor systems and processes that ensure people don’t understand the implications of getting it wrong. The real barrier is, however, that all of this takes work. Readying your data systems for AI is a pain, and sometimes, people can see no value in it. Once you can stand over your data, knowing it is of good quality and understanding its lineage, your organisation will likely be in pretty good shape because you can then move on and digitise your key business processes with confidence. The AI revolution starts and ends with data. Don’t underestimate the effort required to get good quality, well-managed data. It is the foundational work that cannot be avoided. Equally, don’t underestimate the impact. Once you have good data systems in place, you can confidently move forward and capture the full breadth of AI benefits that await.  Liam Cotter is Technology Practice Lead at KPMG

A strong organisational culture drives performance, retention and reputation. Laura Magahy outlines how to shape and sustain culture for competitive advantage Organisations ignore culture at their peril. We need only look back to the global financial crisis and recent controversies across several charity and public sector institutions to see the results of weak organisational culture. Peter Drucker may have never actually said, “Culture eats strategy for breakfast”, but Ford Motor Company President Mark Fields certainly did when he put it on his office wall in 2006. This is much more than a catchy slogan. It underlines a critical truth: no matter how well-crafted a strategy might be, it will fail if the culture in an organisation doesn’t actively encourage its people to live it. In short, without a coordinated framework for supporting a culture that will drive the company’s vision forward, achieving it will not be possible. Conversely, organisations with a strong, positive and supported culture enjoy significant benefits, including improved performance, enhanced employee recruitment and retention and better overall reputation. The cultural wake-up call The 2008 global financial crisis cast a spotlighted cultural failings in financial institutions as a key contributing factor. By 2012, corporate culture began to be seen as a key strategic element to prevent future crises. In 2018, the Central Bank of Ireland conducted a behaviour and culture review of Irish banks. What followed was the establishment of the Irish Banking Culture Board, which was set up to drive cultural change in financial institutions. More recently, other high-profile scandals have led a number of public sector authorities, agencies and charitable bodies to look seriously at organisational culture as part of essential governance oversight and reputation protection. Defining and assessing organisational culture The challenge facing organisations is how to determine if they have the right culture and, indeed, what that culture should be. There is no identity for setting the ideal or target organisational culture. The nature of the individual organisation and the circumstances in which it operates are of fundamental importance and must be considered. For example, the culture required for a commercial, sales-focused organisation may be different to that of a public service provider; where a number of organisations are merging, they may need to define a new culture for the new entity; when a new agency is being established or has an expanded remit, they may need to reset their target culture. In all cases, the target culture must be aligned with what the organisation and its leaders want to achieve to support their mission, vision and values. Organisational culture, if not actively supported and monitored, tends to grow and evolve organically and frequently in unintended and unexpected ways. It is created through the behaviours that are displayed by both the top management and local leaders through their day-to-day actions. Four common culture types Broadly speaking, organisational culture will often fall into one of four general categories. Each is based on different value drivers, which depend on various factors, including whether the organisation is more internally or externally focused, how flexible and innovative it needs to be to deliver on its mission and what its risk appetite should be. Clan culture: Internally focused, promoting long-term cohesion, with core values of commitment, communication and staff development. Hierarchical culture: Also internally focused, prioritising efficiency, consistency and structure in the pursuit of a common goal. Adhocracy culture: Externally oriented, with a long-term vision; competitive, driven by innovation, agility and transformation. Market culture: Also externally focused, with a sharp emphasis on customer service, goal achievement, market share and profitability. In reality, most organisations exhibit a blend of these types. What really matters is if it is the right target culture for what the organisation needs and, if not, what the right one would be. Characteristics of strong vs. weak cultures Strong organisational cultures typically exhibit traits such as: Honesty and transparency; Strategic and forward-thinking approaches; Respect and accountability; Adaptability and reliability; and A shared sense of purpose. In contrast, weak cultures are often characterised by: Siloed thinking; Short-term focus; Low employee morale; High staff turnover; Over-concentration of power; and Lack of trust and engagement Cultural variation across departments It should be emphasised that uniformity of culture across different parts of an organisation is not necessarily critical for mission delivery. As long as the people within the organisation are aligned with the same goals and values, then cultural variation or sub-cultures across departments and divisions can co-exist. For example, adhocracy may suit a research and development department, while the sales operation may find a market culture more appropriate. As long as they share the behaviours and values of a strong, positive culture, they can work together in harmony or at least in a mutually supportive environment. Laura Magahy is Head of Public Sector Consulting at Forvis Mazars

Moira Cronin explains how the Digital Operational Resilience Act will impact Irish-based financial services providers, enhancing ICT risk management and digital resilience The Digital Operational Resilience Act (DORA) came into effect on 17 January 2025. Designed to consolidate and upgrade information and communications technology (ICT) risk requirements in the financial sector, DORA applies common standards to all financial system participants. Its aim is to mitigate ICT and cyber risks across providers’ operations. So, what does this Act mean for financial services providers based in Ireland? Legal basis DORA removes obstacles to—and improves the establishment and functioning of the internal market for—financial services, by harmonising the rules applicable in ICT risk management, reporting, security control testing and ICT third-party risk. Subsidiarity The proposal harmonises the digital operational component of a deeply integrated and interconnected sector already benefitting from a single set of rules and supervision in most other key areas. For ICT-related incident reporting, only EU harmonised rules could reduce administrative burdens and financial costs associated with reporting the same ICT-related incident to different EU and national authorities. Proportionality Proportionality is designed in terms of scope and intensity through qualitative and quantitative assessment criteria. While the new rules cover all financial entities, they are also tailored to the risks and needs of their specific characteristics in terms of their size and business profiles. Proportionality is also embedded in the ICT and cyber-risk management rules, digital resilience testing, reporting major ICT-related incidents and oversight of critical ICT and cyber third-party service providers. Choice of instrument The measures needed to govern ICT and cyber risk management, ICT and cyber-related incident reporting, testing and oversight of critical ICT and cyber third-party service providers must be contained in the regulation to ensure that the detailed requirements are effectively and directly applicable in a uniform manner, without prejudice to proportionality and specific rules foreseen by this regulation. Three DORA requirements businesses should aim to achieve are: 1. ICT-related incident reporting One of the main requirements for financial entities is to establish and implement a management process to monitor and log ICT and cyber-related incidents, followed by an obligation to classify them based on criteria detailed in the regulation and further developed by the European Supervisory Authorities (ESAs) to specify materiality thresholds. Only ICT-related incidents deemed significant must be reported to the competent authorities. 2. Cyber operational resilience testing The capabilities and functions included in the ICT risk management framework need to be periodically tested for preparedness, identification of weaknesses, deficiencies or gaps and prompt implementation of corrective measures. This regulation allows for a proportionate application of digital operational resilience testing requirements depending on financial entities' size, business and risk profiles. 3. ICT and cyber third-party risk The regulation is designed to ensure a sound monitoring of ICT and cyber third-party risk; financial entities shall be required to observe several key elements in their relationship with ICT and cyber third-party providers, remaining fully responsible for complying with and discharging all obligations. To this end, contracts governing this relationship will be required to include: At least a complete description of services; An indication of locations where data is processed; Full-service level descriptions accompanied by quantitative and qualitative performance targets; Relevant provisions on accessibility, availability, integrity, security and protection of personal data; Inspection and audit by the financial entity or an appointed third-party; Clear termination rights; and Dedicated exit strategies. As such, DORA should be taken into consideration in close coordination with NIS Directive version 2, CBI Operational Resilience Guidelines and the EU Critical Infrastructure Directive. DORA is part a package of digital finance measures designed to further enable and support the potential of digital finance in terms of innovation and competition while mitigating the risks arising from it. It aligns with the European Commission's priorities to make Europe fit for the digital age and build a future-ready economy that works for the people. Moira Cronin is Digital Risk Partner at PwC Ireland

Two distinctly opposing leadership ideologies now exist, but could one damage your organisation? Michael O'Leary explores the current state of leadership Thirty years ago, the late Colin Powell, former US Secretary of State, listed 18 lessons for leaders in a presentation titled A Leadership Primer. He talked about authenticity, optimism, challenging others and not being afraid to be challenged back. Fast forward to 2025. A friend with a successful track record as a leader and entrepreneur says he fears the examples young people are now exposed to by political leaders around the world –namely, their values, naked self-interest and fervent intolerance for people different from themselves. Beyond Powell’s single set of leadership principles, we now have two diametrically opposing “successful” leadership ideologies – one which engages others around common goals, innovation and adaptability and the other around a populist, narcissistic personality, sewing divisiveness and confrontation. Growth in disinformation on social media and in vested print media has spurred an undesirable social contagion of the latter, meaning organisations now need to consider how to combat these external influences on their internal leadership behaviours. As the global economy stumbles, having a positive, optimistic and thriving organisation culture is essential. Who you recruit as a leader determines your culture. Here are the three leadership traits we see too often in geopolitics and how to avoid hiring them. Trait 1: Strict dogma and rigid perspective Even leaders who deliver results occasionally believe that to get things done, they need to do it themselves. The consequences include a feeling of exclusion for employees and that their opinions are not wanted. This erodes collaboration and disengages the team over time. Hire leaders who can give examples of adapting on the move and can describe in detail how they brought their teams on a new journey. Look for leaders who have recognised when to pivot and have engaged with their teams to work out a new direction or multi-pronged approach. Trait 2: Intense control and single-mindedness In extreme cases of dictatorial leadership, curiosity is deliberately stifled. The leader seeks to control matters tightly to their agenda. Curiosity has deep riches; it is the key to continuous improvement, innovation and building connections between people. Leaders should inspire their teams to be open-minded and look for new ways of achieving outcomes. Ask your potential leadership hires to outline examples of where they have completely let go of an issue and had it worked through by a team or team member to the point of resolution. Look for leaders who can respond quickly when asked to give an example of inquisitiveness. Trait 3: Investing only in self Fear of the unknown can drive irrational levels of support for geopolitical leaders, even in the face of their aberrant conduct. Within the context of organisational leadership, self-absorbed leaders are dangerous to team or group morale. Their staff turnover will often be higher as their lack of authenticity undermines their credibility. How self-aware is the leader you are interviewing? Are they attuned to their emotions and impact on others? Can they give examples of areas in which they need development? Do they rely too heavily on their charisma? While it can be useful in motivating others, it can also suggest a potential for arrogance and the need to be at the centre of attention. Though the world and our organisations currently face an unusual number of difficulties, organisation leaders with the right traits understand how to insulate against malign influences and navigate challenges. Their ability to bind intellectual agility to practical demonstration is what makes them outstanding leaders. They do this by behaving in a diametrically opposing manner to those political leaders who seek personal gain at an extreme cost to their citizens. Michael O'Leary is Chairperson at HRM Search Partners

Emma Broderick explains how suppliers of virtual events must account for VAT where customers are located, complicating compliance The EU VAT treatment of live streaming and virtual events services has changed with effect from 1 January 2025. Suppliers of such events will need to consider whether it will be necessary to account for VAT in multiple EU jurisdictions and how to efficiently manage any associated registration ‘footprint’. A virtual event isn’t defined in VAT law, but could include live-streamed events or other online events that involve people interacting in a virtual environment rather than meeting in a physical location.  The change is intended to apply VAT where the service is consumed, in line with the normal place of supply rules for business-to-business (B2B) services and similar rules for electronically supplied services provided on a business-to-consumer (B2C) basis. New measures Currently, VAT is levied on live-streamed events, including virtual events, where that event takes place. This means that live-streamed events are subject to VAT in the country in which the event is taking place, even if the viewers are located in a different jurisdiction. This is the case regardless of the business or non-business status of the customer. From 1 January 2025, EU law applies VAT to such events where the viewer, or customer, is located. This operates as follows: For B2B supplies, the EU business recipient may be required to self-account for reverse charge VAT in their EU country of establishment. For B2C supplies, the supplier will be responsible for collecting and remitting VAT in the EU country where the customer is located. This is intended to bring the VAT treatment of virtual events into alignment with that of other telecommunication, broadcasting and electronically supplied services (including streaming services or the delivery of other pre-recorded content). A pan-European €10,000 threshold applies for EU and NI businesses, and a nil threshold applies for non-EU established businesses. This change follows an amendment to the VAT place of supply rules for certain events services in Directive 2022/542. Irish law has not yet been amended to implement these changes, but we anticipate a statutory instrument to this effect will be issued in the coming weeks. Going forward The VAT treatment of events provided on a B2C basis will change considerably and bring about increased costs of compliance for businesses providing such B2C virtual services. The provider of the online events may need to register and charge VAT in each EU country where their final customers reside. Suppliers of live-streamed and virtual events will need to think about how to identify the location of their consumers and understand the impact of being subject to VAT in another EU jurisdiction. There is a VAT registration simplification available, known as the VAT One Stop Shop, to facilitate one single-EU-wide registration to remit output VAT on supplies, but there remains a challenge of monitoring differing VAT rates across the EU and pricing, contracting and invoicing decisions associated with this. The impact on cross-border B2B supplies should be less significant, as business customers should be able to self-assess for VAT on the reverse charge basis in their country of establishment, but suppliers will still need to consider invoicing and relevant VAT reporting requirements. Emma Broderick is a tax partner at Grant Thornton

As 2024 breaks temperature records, Derarca Dennis explores how businesses are advancing net zero strategies and why urgent climate action is essential In November, the EU climate monitor Copernicus reported that 2024 was "virtually certain" to be the hottest year on record, with warming above 1.5C, highlighting that the world was passing a "new milestone" in temperature records. These statistics, among countless others, highlight the critical need for immediate and sustained action to reduce emissions and mitigate the impacts of climate change. As the global climate crisis intensifies, the urgency for businesses to commit to and achieve net zero carbon emissions has never been more critical. The EY State of Sustainability 2024 report sheds light on the progress organisations are making towards sustainability. However, as events of recent weeks and months have shown us, every business, person and country need to do more. The global climate crisis is arguably the most pressing challenge of our time. Rising temperatures, extreme weather events and the degradation of natural ecosystems are just a few of the devastating impacts of climate change. A revision of National Defined Contributions (NDCs) is an absolute requirement as we know already that we will surpass 1.5C if we continue on current NDCs. As major contributors to global emissions, the actions businesses take to reduce their carbon footprint can have a profound impact on the overall trajectory of climate change. While part of a much bigger and very complex picture, by committing to net zero targets, businesses can help drive the systemic changes needed to transition to a low-carbon economy, protect natural resources and ensure a sustainable future for all. The EY State of Sustainability report shows that increased focus on sustainability is evident in the high rate of adoption of formal sustainability strategies among businesses. According to the report, 70 percent of respondents have approved and implemented a sustainability strategy, with the same number reporting alignment between that strategy and the overall business strategy. This alignment is crucial as it ensures that sustainability is integrated into the core operations and decision-making processes of the organisation. However, 35 percent of respondents feel their organisation is not doing enough, a notable rise from 17 percent in 2022. While it’s positive to see the overall trajectory of sustainability in business in Ireland moving in the right direction, it’s equally heartening to see that organisations are beginning to understand that there is much more to do. One of the most encouraging findings from the report is that 55 percent of organisations are aiming for net zero science-based targets, with 40 percent having established a clear roadmap towards achieving net zero. Leadership plays a crucial role in driving sustainability efforts, with 53 percent of organisations assigning C-suite responsibility for sustainability. In 67 percent of these cases, the CEO or managing director leads the initiative, while in 22 percent, the responsibility falls to the chief sustainability officer or head of sustainability. The assignment of sustainability responsibilities to senior leaders underscores the high priority businesses place on achieving their net zero targets. This commitment from the top is a clear signal to employees, customers and stakeholders of an organisation’s dedication to sustainability. And we need more leaders to follow suit to set the tone from the top if we, as a collective business community, are to play our part in halting the climate crisis. Why business emissions reductions matter Businesses are significant sources of greenhouse gas emissions, creating emissions through electricity and other energy use, manufacturing, transportation, agriculture and food waste, among others. By reducing their emissions, businesses can: Mitigate climate change: Lowering emissions helps to slow the rate of global warming, reducing the frequency and severity of climate-related disasters such as hurricanes, floods, and wildfires. Protect ecosystems: Reducing emissions can help preserve biodiversity and protect ecosystems that are vital for maintaining the planet's health and resilience. Drive innovation: The pursuit of net zero can spur innovation in clean technologies and sustainable practices, creating new business opportunities and driving economic growth. Enhance reputation: Companies that lead in sustainability can enhance their brand reputation, attract environmentally conscious consumers, and gain a competitive edge. Ensure regulatory compliance: As governments worldwide implement stricter environmental regulations, businesses that proactively reduce their emissions will be better positioned to comply with new laws and avoid penalties. The adoption of formal sustainability strategies, risk and materiality assessments, clear KPIs, and accountability, along with a strong commitment to science-based targets, are all essential steps towards achieving net zero. While there is more to do, it is very encouraging to see all the progress made in the past two years and great to see business leaders continuing to commit to building a better future for all. Derarca Dennis is Assurance Partner and Sustainability Services Lead at EY

When considering the trajectory of artificial intelligence, it’s worth looking back to see forward, writes Tania Kuklina Though it’s hard to believe now, following the invention of the World Wide Web in 1989, it took several years for businesses to realise its potential and value.   That journey began, slowly and tentatively, with ‘portals’ providing information for investors and the curious public. Next came sites assisting job applicants or helping customers to make purchasing decisions. With Web 2.0, businesses moved towards self-service models, enhancing customer engagement and user experience. In a clear case of back to the future, what we are currently witnessing in relation to artificial intelligence (AI) is similar, as businesses are only gradually beginning to understand its potential. Of course, it is already here and in a variety of guises. It provides enhanced search capabilities and supports learning and teaching. It can write, summarise and analyse large documents. In the realm of computer vision, AI is already being used for context-specific focus tracking in digital cameras. Despite these advancements, we are still waiting for AI’s first “killer app”, the groundbreaking application that will revolutionise and disrupt the world like the first internet browser on the World Wide Web.   We do not know if this application will be a job killer or a job creator, but what we do know is that, when it comes, it will shape the thinking of employers and employees about AI within their own organisations.   Productivity challenge At present, we believe AI will replace humans in low-stakes tasks. It is increasingly being used for customer engagement tasks, such as the pop-up web chat screens that sometimes launch when we visit websites. But as AI becomes more widespread and demystified, and the large language models that power them are cheaper to build, businesses are returning to a fundamental question – what is its value to them?   For businesses ready to look at their processes in a new way, the best way to assess AI’s value is the old-fashioned way – through business case assessment and return on investment.   Opportunities for improvement need to be quantified, processes may need to be redesigned and specific AI applications need to be developed. Total costs, including regulatory compliance, must be measured against potential benefits. People power People have a key role to play in assessing AI’s value proposition and making the technology work. As part of this work, several trends have emerged. First, workers still struggle with basic AI concepts and applications. Many do not grasp what AI implies for their roles, nor question why they should master a technology that might eventually take their jobs. This uncertainty underscores the need for clear communication and education about AI's personal benefits and potential. It is also increasingly clear that the success of generative AI (GenAI) technologies and the ability to realise their value depends on the ability of the workforce to adopt and apply them effectively. Despite this, many organisations are pushing for rapid adoption before their teams are fully equipped. As GenAI features evolve constantly, providing employees with consistent, stable and coherent learning experiences will prove difficult. With an ever-changing curriculum, Gen AI learning must be broad-based and continue to keep pace with change. Employees also need abundant structured opportunities to apply and practice what they are learning. Yet AI is not well enough democratised – not every employee has access to it, or support. This could lead to the ‘Matthew effect’, which is the phenomenon wherein those with pre-existing advantages accumulate more advantages over time. If access to GenAI is unevenly distributed, it could exacerbate existing disparities. AI has already started to extend our cognitive abilities, enabling us to access, understand and process more information than ever before. Highly skilled individuals find that when they explore and figure out how to use AI to support their work, it enhances and extends their capabilities without diminishing their hard-earned skills. However, for novices, an over-reliance on AI tools may limit their ability to develop essential skills such as problem-solving and subject matter expertise. So, while Gen AI requires traditional methods of evaluating investment and return on investment, in the training and people space, we need to reconsider learning approaches. This includes incorporating data-driven measurements such as tracking understanding and perceptions of GenAI, engagement levels and sustained versus lapsed adoption. KPMG has been actively developing and supporting these initiatives for clients, including through our GenAI Academy. Get it right, now Recognising the central role people play in the AI journey is crucial. It is also important to consider the medium and long-term impacts on skills, roles, learning, and culture. Investing in workforce upskilling is the cornerstone of how organisations show their commitment to putting humans at the centre of AI transformations. We may reach a point in the future where AI can be trusted to work autonomously. We may see a digital workforce of bots emerge as our co-workers. For now, however, AI adoption is a journey in which employee engagement, participation and support are vital. Tania Kuklina is a Director at KPMG

With some organisations initiating a return-to-office mandate, what impact will this have on workers’ productivity and work quality? Ian Brinkley explores Few recent changes in the labour market have been so dramatic over such a short period as the rise in working at home during the pandemic. And much of that change has persisted in the post-pandemic period. In 2019, just four percent of employees in Ireland usually worked at home, while just over 11 percent reported doing some work remotely. By 2023, these figures had risen to 19 percent and 15 percent respectively, meaning about a third of all employees were involved in remote work, according to Eurostat. These percentages are relatively high compared to the overall standards in the EU. It is often argued that home-working makes workers more productive, improves job retention and increases job quality, such as work-life balance. It has certainly proved popular with workers, and there is some unmet demand from people who would like to work at home but cannot. However, the evidence to support these claims is not as clear-cut as we would like. Productivity While some studies have confirmed a positive impact on productivity, others have suggested it has no impact either way, and some find negative impacts. A 2023 survey from the CIPD found that while more employers reported a positive impact than a negative one, nearly half reported no impact one way or the other. Unsurprisingly, employers were much more enthusiastic about the potential positive impact on retention and recruitment than productivity. Many studies rely on self-assessment by individuals and employers as to whether they think employees are more productive at home, but do not measure actual output when working in the office versus remote work. We should not dismiss self-assessments, but they do make it hard to know just how big any positive or negative impact might be. What we can say is that in both Ireland and the UK, the rise in homeworking is not associated with better productivity performance across the whole economy. According to the Central Statistics Office, productivity performance since 2019 has been poor in both countries. It might be that any positive impacts of home working are being swamped by other changes in the economy, hampering productivity growth. Home working and work quality Homeworking may deliver more significant benefits as a flexible work option which employees value. However, the CIPD’s large-scale Good Work Index survey of workers in the UK does not show much change in most indicators of job quality between 2019 and 2024, despite the big rise in home working.  This is a bit of a puzzle. It could be that many of the people who shifted to homeworking since 2019 – mostly those in managerial, professional and technical occupations –already had good jobs, so moving to a different location did not greatly change their response.  For example, those who did work at home occasionally reported much higher levels of autonomy over how they did their work than those who did not, but it is likely that they would have said the same even if they had been working in the office.  These headline comparisons are instructive but not conclusive. We need to look at reported work quality for workers in similar jobs, with a mix of some working at home and some working in the office. It may also be that the standard work quality questions do not fully capture all the benefits of home-working to employees. The future of home-working There have been high-profile reports that some major employers – often in the US – are either insisting their workers return to the office or limit the number of days they can work at home. In the UK, civil servants working at home have also attracted criticism, albeit without much evidence of any detrimental impacts. The 2023 CIPD survey found that senior managers expressed concern about home working in about 40 percent of all employers surveyed. However, concerns about getting people back into the office when needed, managing teams, and reduced opportunities for communication, collaboration and innovation were more common than concerns that employees either could not be trusted or were less productive at home. On balance, home-working probably does have positive impacts on both productivity and work quality, but to date they have been modest. The shift to homeworking is here to stay despite attempts in some organisations to reign it back. The CIPD 2023 survey found that 20 percent of employers were putting in active steps for more hybrid working over the next 12 months. For many organisations, a better option will be to manage home-working more effectively rather than risk making themselves less competitive in labour markets by limiting a flexible work option that many employees have come to see as an expected and valued part of the work offer. As more organisations learn how to get the best out of home-working employees, perhaps homeworking will eventually start to move the dial on aggregate labour productivity. Ian Brinkley is a labour market economist and commentator

CFOs in Ireland are cautious about the year ahead but remain focused on balanced investment in business growth and innovation, writes Tom Hynes The biggest priorities for Ireland’s Chief Financial Officers (CFOs) in the 12 months ahead will include digitalisation and technological transformation, supply chain efficiencies, organic growth and the introduction of new products and services. Our Autumn Deloitte European CFO Survey has found a decline in business sentiment among CFOs in Ireland, however, with just 19 percent feeling more optimistic about the financial prospects of their companies compared with 61 percent in the Spring of this year. The figure is down from 63 percent in Autumn 2023 and comes as the proportion of CFOs who now feel less optimistic about their companies’ financial outlook has tripled, from eight percent in Spring 2024 to 28 percent in Autumn 2024.  Our survey results clearly show an increased wariness among CFOs in Ireland when it comes to financial risk.  Several factors are likely contributing to this, including the uncertain economic outlook and tight financing conditions. Geopolitical uncertainties, with fears over protectionism, trade disruption and high costs around labour and energy will also add to this.  Asked to select the factors likely to pose a significant risk to their business in 2025, 89 percent cited retaining and attracting skilled and qualified talent, with 76 percent raising concerns about the economic outlook and growth risks. A total of 76 percent identified cybersecurity risks, and 74 percent selected increasing regulations. The data for our Autumn Deloitte European CFO Survey was collected in September and October 2024 and reflects responses from 1,893 CFOs in 27 countries, including 54 in Ireland. The survey shows that the outlook for capital expenditure (CAPEX) among CFOs in Ireland remains positive, with 42 percent planning to increase their CAPEX over the next 12 months, reflecting a measured investment approach.  CFOs are acknowledging that they need to adapt to evolving regulations by maintaining robust compliance systems and proactively managing regulatory risks. A balanced approach is being applied to the business priorities identified by CFOs. Asked about the priorities for their business in 2025, 48 percent of the CFOs surveyed selected digitalisation and technological transformation. A total of 44 percent said they planned to review supply chain efficiencies, 37 percent selected organic growth, and 35 percent cited the introduction of new products and services. It is encouraging to see Ireland’s CFOs combining defensive strategies, such as reviewing supply chain efficiencies and fostering economic growth, with expansionary strategies, such as digitalisation and technological transformation.  Leveraging advanced technologies, like generative artificial intelligence, can assist companies in driving efficiency and innovation, providing them with a competitive advantage.  Combining investment in this area with enhanced operational resilience and sustainable development is a prudent approach that should position companies well for future success. The number of Irish CFOs planning to increase hiring has dropped significantly by almost half in the last year, down from 58 percent in Autumn 2023 to 31 percent in Autumn 2024.  The majority (81%) believe it is not an opportune time to take on greater risk on their balance sheet, up from 71 percent in Spring 2024. The proportion of CFOs anticipating revenue growth over the next 12 months has also fallen from 74 percent in Spring 2024 to 59 percent in Autumn 2024.  The proportion of those optimistic about an increase in operating margins has fallen from 53 percent in Spring to 37 percent in Autumn.  While they are right to be cautious, it is positive that the majority remain hopeful about revenue growth over the next 12 months and over a third still expect an increase in operating margins.  Tom Hynes is a Partner with Deloitte Ireland

With research revealing strong demand for accountants in Ireland, now could be the time to make your next career move supported by a careful exit strategy, writes Sinéad Brady Accountants were the second most sought-after professionals in the Irish market in 2024, according to new findings published by IrishJobs.  Based on data from TalentBank, the hiring platform’s CV database of over 1.4 million job candidates, this year’s findings ranked accountants as the second most in-demand professionals in the Irish market, behind site managers in the top spot and site engineers in third.  This is good news for accountants preparing to progress their careers in 2025, but if you are considering a move to a fresh role with a different organisation, remember that the decision to quit your current job will likely bring mixed emotions. This is where a clear and carefully crafted exit strategy can help you move on positively and without burning bridges.  Here are five recommended steps to strategically managing your move to a new role: 1. Get clear – why are you leaving your job? Clearly, understanding why you want to leave your current role is the first step in creating your exit strategy. You need this clarity for yourself – this is your career, and it is up to you to take the lead. These prompts should help you get a better handle on why you are choosing to leave your job. Are you happy in your job but feel the need to leave to grow professionally, learn a new aspect of your role or get the promotion you want? Would you like to work at an international organisation with global or European headquarters in Ireland offering opportunities to travel? Do you want to move to an organisation with a comprehensive remote working policy that might allow you to relocate? Do you want more money or the same money with less responsibility? Is there a cultural or environmental issue with your current job you feel uncomfortable with? This might include a toxic work environment, biased treatment, bullying or other forms of workplace ill-treatment. Do you dislike your boss, colleagues, your work, organisation or the sector you work in? As you answer these questions, you are likely to think of other reasons for leaving your current role. The priority here is to identify the reason or reasons why you are making this decision, as this will inform the rest of your exit strategy. 2. Establish your exit timeline Your reason for leaving will impact the duration of your exit timeline. For example, if you are leaving because of a toxic work environment or poor workplace behaviour, your timeline should be much shorter than if you are leaving but still enjoy your role.  If the former is the reason, seek support and advice – no job is worth your health. Otherwise, your timeline can span anything from weeks to several months or a year. 3. Allocate time to your job search Each week, allocate a block of time across the course of your timeline for functional tasks. Break your time allowance into weekly slots to tackle tasks, both short- and long-term.  Basic short-term tasks might include: Updating your CV; Developing your interview technique; Getting to grips with the job market; Setting up job alerts and professional profiles on job sites; and Researching companies and sectors with potential opportunities for you. More complex, long-term tasks might include: Preparing for job interviews by learning to tell the story of your career; Starting or intensifying your networking within your industry or professional bodies; and Connecting with people who may be in a position to open doors for you. These more evidence-focused aspects of your job search are very important. Ideally, each of the short-term tasks should be completed before you start to submit applications or make contact with recruiters. The more complex long-term tasks should be started and remain ongoing throughout your job search. 4. Remain focused in your current role It is very easy to take your eye off the ball in your current role when searching for a new job, but this is a big mistake. Staying motivated and engaged despite your intention to leave will be much better for you in the long run. You can do this by looking for opportunities in your current role you may not have considered before. Do you need/want to upskill, reskill or retrain and is this possible to do in your current workplace? What opportunities are open to you? Are there ways to build your professional profile you may not have thought about before? Can you put yourself forward for speaking opportunities, begin to coach or mentor or attend networking events? You may need help refining this part of your plan. If you do, don’t be afraid to ask for help. Getting this part right is vital as it will help to keep you motivated. You might also consider creating a handover file of what you do and how you do it, including workflows etc. This will make a massive difference to the person taking over in your role and most employers really appreciate it. 5. Decide who to tell you are quitting and when The timing here really depends on the reason you are leaving your role. If you are leaving due to unresolved issues at work, you may decide to only work your notice and tell your boss first (assuming the issue does not lie with your boss). If you are open to staying and happy to explore potential opportunities in your current organisation, the best time to talk is at the start. This helps keep lines of communication open, clear and transparent.  It will give you and your employer a chance to look at all options, and if you do decide to leave for another role elsewhere, it will give your employer sufficient time to replace you with minimum disruption. The benefits of an exit strategy Thinking carefully about your exit strategy is very important if you are in the market for a new job, but it is also important even when you are not currently looking for a new role.  A work exit strategy can help you avoid the trap of staying in a job that no longer serves you and may well be the key to setting you on a better career path in 2025. After all, that is the very least you deserve. Sinéad Brady is founder of The Career Psychologist

From education and the next generation, advances in technology and the evolving role of the accountant, to business and the economy, what can we expect in the New Year? As we look ahead to 2025 and the opportunities and challenges it will bring for our profession, the economy, business and wider society, our Society Chairs in Ireland and overseas give us their take on what we can expect in the 12 months ahead. Damien Carr, Chair, Chartered Accountants Ireland Leinster Society The new Corporate Sustainability Reporting Directive (CSRD) is set to have a major impact on our profession in 2025 and beyond. The CSRD is a significant regulatory framework introduced by the European Commission with the aim of enhancing transparency and accountability in sustainability reporting across the European Union (EU). This Directive was transposed into Irish law in July 2024, requiring a limited number of companies to report for periods ending on or after 31 December 2024, followed by large companies on or after 31 December 2025, and a gradual expansion to all entities meeting certain revenue thresholds by 2028. While some companies will not be required to implement the standard directly in 2025, they will nevertheless need to consider more than 1,000 data points to ensure compliance with the CSRD’s disclosure requirements. A lot of time and effort will be needed to gather this data in time to report, and I expect this to be high on the agenda for our members in 2025. The implementation of the CSRD presents both challenges and opportunities for companies in Ireland. Many of the data points incorporate information companies will not have reported on prior to its introduction. In some cases, they will need to start collecting data from scratch, both from internal sources and external sources in their value chain, such as suppliers and customers. Investment in environmental, sustainability and governance (ESG) resources will also be needed – upskilling teams, for example, new processes and controls to capture the required data points and new systems to access and present this data. All companies will need to make the effort, but smaller companies will really feel it as they will have further to go to create the necessary infrastructure. Expect to hear a lot more about the CSRD in the months ahead as ESG continues to move up the leadership agenda. Damien Carr is a Director in Audit and Assurance at Deloitte Ireland. Lynda Deane, Chair, Chartered Accountants Ireland Western Society Chartered Accountants operating in the today’s business world are no longer “just accountants.” Our role has evolved profoundly. Our focus is no longer purely on reporting, but on advising, guiding and directing. Radical developments in technology, including the advent of artificial intelligence (AI), mean we can now spend less time on repetitive, mundane and input-orientated tasks, and more on valuable strategic work and building trust with stakeholders. AI means colossal amounts of data can be transformed into useful insights at rapid speeds. It is up to us as Chartered Accountants to use these meaningful insights as a foundation to inform better business decisions – offering sound strategic advice that improves productivity, reduces costs and delivers stronger financial results. This is the era of real-time accounting and we, as a profession, must deliver on our potential to provide all stakeholders with better information, faster and more cost-effectively. The outdated perception of accountants as “number-crunchers” is no more. Today, we are valued business advisors and anchors for seamless integration with other areas of business. While some may see risk in this technology-driven shift, and its potential to disrupt career paths in accounting, I would argue that the new “input – process – output” model AI and automation enable will only ever be as good as the data we feed in at the outset, and how well we analyse and interpret the information generated. Chartered Accountants, and our profession’s in-depth financial knowledge and understanding, will play a crucial role at both ends of the process – inputting the right data, and understanding and applying the results to best effect. We may need to rethink how we train the Chartered Accountants of tomorrow, preparing them for the new reality of AI and automation, but the core building blocks and basic understanding of business operations will remain critical. It is an exciting time to be a Chartered Accountant. We, as a profession, have the capacity to drive positive and far-reaching change in the nature of the work we do in 2025 and beyond. Lynda Deane is a Director with Grant Thornton in Galway Maura Ginty, Chair, Chartered Accountants Ireland Northwest Society I think we all need to see a renewed Government focus in 2025 on strengthening Ireland’s indigenous SME and start-up sector as a counterweight to multinationals. From a tax perspective, we have valuable early-stage tax reliefs, but they are complex and often close to unworkable for start-ups without the resources to implement them. The policy objectives are fine; they are targeted – but the rules need to be simpler and less onerous. At the opposite end of the spectrum, for entrepreneurs exiting a business, I would like to see the current limits on capital gains tax reliefs lifted in recognition of the important role entrepreneurs play in Irish society. They take on risk and, in doing so, they create jobs. The regime applying to these individuals should recognise this by being more clearly distinguishable from that applying to purely passive investors. The default limit for the retirement relief exemption has not increased for close to 20 years, for example, leaving one to question whether this relief is being left to “wither on the vine.” For advisors, the good news is that two behemoths of tax complexity – interest relief and funds – are actively under review. There appears to be a desire on all sides to simplify interest relief rules, but this will take time. A review of the tax regime applying to the funds industry in Ireland is complete and recommendations have been presented to Government. The headline policy issue here is the tax regime for Irish investors, with proposals in place to align the applicable tax rates with capital gains tax and remove the controversial eight-year deemed disposal rule for Irish-domiciled funds and life products. This would represent a major change, but some development is needed as it is currently extremely difficult for casual retail investors to comply with the regime. On a more general level, I would welcome more Government consultation with tax practitioners ahead of the proposed introduction of any significant tax policy changes. Such consultations have worked well in relation to the implementation of global tax changes and, more recently, the newly introduced participation exemption for foreign dividends. Looking beyond tax, we are seeing a lot of change and consolidation in the accounting sector, with M&A activity among practices nationwide continuing at pace. I believe there will always be a niche role for independent practices, however – in this market, specialism is key. On the talent front, attracting and retaining staff remains critical for firms across the board – and the much-vaunted culture of long hours is definitely coming to an end. Younger entrants are placing greater value on work-life balance and their time and life outside work, and this is a positive development. There will always be those drawn to long hours and the “daily grind,” but this should never be a baseline expectation for talented and capable individuals who want to succeed in our profession. Maura Ginty is the founder of tax advisory firm Gintax. Profession poised to take centre-stage on critical issues in Australia As we wrap up another year and look to the months ahead, Chartered Accountants are primed to take centre-stage on the “big issues” in business, practice and the wider economy, writes Cliff Wilson, Chair of Chartered Accountants Ireland Australian Society. In 2025, I expect to see greater demand for Chartered Accountants to take the lead, as governments and businesses grapple with economic, regulatory and societal challenges, such as inflation and climate change. In particular, environmental, social and governance (ESG) reporting is becoming incredibly important because it helps businesses be more transparent and accountable. The rules and regulations underpinning ESG are undergoing constant change, however, so it is crucial for Chartered Accountants to keep up. We need to ensure we are up-to-date at all times and learning continuously about new regulations to ensure compliance. Looking beyond sustainability, we are really starting to see just how powerful advanced technologies like artificial intelligence (AI) and machine learning can be in allowing Chartered Accountants to focus more on the “big picture” strategic stuff. Investing in this technology can effectively automate boring tasks and make financial reporting and analysis super-efficient and accurate – but it also means we need to change how we work and think. As AI and automation become ever-more prevalent, we will need strong leaders willing to let go of the “busywork” and make time to allow us to learn the new skills of the future. As businesses face greater complexity and competition, demand for the advisory and consulting services offered by Chartered Accountants is skyrocketing. To paraphrase Warren Buffett, “Accounting is the language of business,” and this is perhaps truer today than ever before. More and more businesses need our expertise in financial planning, risk management and strategic decision-making and – in response – we need to prioritise our analytical and communication skills to stay ahead of the game. The accounting profession is evolving rapidly, and this means continuous learning is essential. We need to know about new technologies, regulations and best practice to maintain efficiency, accuracy and strategic insight at all times. It is an exciting time to be a Chartered Accountant, with plenty of opportunities to make a real impact. Embrace change and invest in continuous learning, and you will thrive in 2025 and beyond. Cliff Wilson is Director of Wilson Select. Joseph Grant, Chair, ACA Professionals 2025 is shaping up to be an important year for the future of the accountancy profession with significant change on the way, shaped by new regulations, advancing technology and the evolving expectations of the workforce. From the CSRD to the increasing prevalence of AI and shifting workforce dynamics, Chartered Accountants in both business and practice will need to navigate fast-emerging trends. One major area of development will undoubtedly be the CSRD. As business leaders, accountants will play a central role in ensuring our employers and clients meet their sustainability reporting obligations. This may prove challenging as we learn to shift our mindset to integrate sustainability metrics with traditional financial reporting. As CSRD requirements take effect, I expect many of us will be more exposed to this work in 2025 as a larger number of organisations prepare to begin mandatory reporting in 2026. This Directive also provides an opportunity for Chartered Accountants to lead the charge in sustainable business as well as demonstrating our versatility as a profession. AI as a technology promises greater efficiency and a sea change in how important data for decision-making is gathered and processed. For Chartered Accountants, AI promises to cut down the time we spend on repetitive routine tasks, freeing us up to concentrate on more valuable complex and strategic work. While this is welcomed by many, my own prediction is that the AI shift will also bring greater focus on intellectual property rights and cybersecurity risks, particularly concerning the datasets used by AI systems. As AI becomes more widely used, I think businesses will need to pay more attention to the security of the data they are feeding into these models, the reliability of the outputs and the need to establish clear and comprehensive internal workplace policies to mitigate risk and misuse. On the workforce front, I believe we will continue to see greater mobility among younger Chartered Accountants willing and eager to move abroad to seek global opportunities. Even as some employers are pushing for a return to an office-first working model, I think younger professionals will also continue to prioritise work-life balance over the need for a prescribed presence in traditional office environments. The majority of employers will support this, but I would also hope to see greater Government investment in the infrastructure needed to facilitate successful remote and hybrid working, both in terms of the digital infrastructure and commuter links that would facilitate the decentralisation of Ireland’s workforce in locations outside our major cities. Joseph Grant is Financial Accountant External Reporting and Compliance, Primark. Rachel McCann, Chair, Chartered Accountants Ireland Cork Society As we approach 2025, Chartered Accountants working in business are at the centre of transformation driven by technological advancements, regulatory developments and evolving business dynamics. Our role is fast evolving beyond traditional bookkeeping and financial reporting towards more strategic functions. In particular, I see four key priority areas for today’s Chartered Accountant. AI and data analytics In 2025, we can expect the widespread adoption of AI-powered tools that can handle routine tasks, such as data entry, reconciliations and even complex financial forecasting. This shift will allow accountants to move away from time-consuming transactional duties and focus on more value-added services, such as strategic advising, decision support and risk management. AI will also assist in fraud detection, using predictive analytics to identify irregularities humans might overlook. This proactive approach will not only streamline internal controls, but also reduce errors, facilitating more accurate financial reporting. Data analytics now gives Chartered Accountants access to real-time data that is easy to interpret. In 2025, we will likely begin to work more closely with data scientists, IT teams and business analysts to leverage machine learning and AI for predictive analytics, customer insights and trend forecasting. Accountants will also play a central role in ensuring data quality and governance, as businesses generate more data than ever before. ESG reporting Chartered Accountants will be expected to ensure the accuracy and transparency of ESG reports, as well as advising on strategies for meeting sustainability goals. This shift reflects the growing demand for businesses to demonstrate responsible practices, which is becoming a critical consideration for investors, consumers and regulators alike. Businesses now need to begin putting the necessary plans in place to ensure they are fully prepared when their time comes to report. Digital tax and e-invoicing Although delayed in several countries, e-invoicing will soon apply across Europe. Now is the time for businesses to prepare by ensuring they are registered on jurisdictional portals, have digital signatures and the right software ready for their business needs. The global shift toward digital tax compliance will require accountants to navigate complex tax rules, including VAT/GST requirements for digital services, transfer pricing and cross-border tax compliance. Leadership skills While much of the focus on change and transformation in our profession continues to centre on technology, we can never forget the critical importance of the “human element.” Technology can, and does, fail and we then need to be able to rely on client relationships to overcome any issues or challenges that may arise as we introduce, and adapt to, new technologies. Being able to pick up the phone to a client will always be a key requirement for Chartered Accountants. Making time to organise a coffee, lunch or social outing with clients will always be at the core of developing solid business relationships and generating opportunities. We, as leaders, need to ensure that the next generation of our profession has the communication skills needed to forge and maintain strong relationships as they look to progress and develop in their own careers. Rachel McCann is a Director with Grant Thornton in Cork. The view from Northern Ireland Northern Ireland’s unique position as a bridge between Britain and the EU opens up exciting pathways for growth in key sectors in the year ahead, writes Gillian Sadlier, Chair of Chartered Accountants Ireland Ulster Society. As Ulster Society members have identified in our surveys, this unique position presents a great deal of opportunity, both for our region and profession, across sectors including clean energy, health sciences, cyber security and data analytics. Through challenging times – from Brexit to the pandemic, and the ups and downs of local politics – Chartered Accountants have been crucial, helping businesses navigate uncertainty and plan for the future. Demand for Chartered Accountants in Northern Ireland is stronger than ever, fuelled not just by our financial know-how, but by the broader strategic insight we offer. Our members hold many critical roles and their advice shapes major decisions, helping businesses grow and, ultimately, boosting the local economy. All of this places great emphasis on the need to continue developing our skills to respond to the needs of the world around us, as well as the need to continue attracting fresh talent to the profession. Today’s Chartered Accountant needs to be adept at communicating, leading teams and understanding complex regulatory issues. Northern Ireland’s access to both the UK and EU markets also opens up niche opportunities in cross-border trade, data compliance and risk management. Chartered Accountants who dive into these areas will not only enhance their careers but will also bring huge value to local businesses and organisations seeking to expand. With skills shortages a real issue, there is also a great opportunity to showcase just how dynamic a career as a Chartered Accountant can be. Young professionals need to see that this is a field filled with possibilities – you can expect to make an impact, influence strategy and work across many industries. For those of us already in the profession, investing in personal development and leadership skills will ensure we can seize the many opportunities ahead and play an even bigger role in Northern Ireland’s future. Chartered Accountants are vital to Northern Ireland’s economic story. By helping businesses thrive, advocating for good governance and guiding strategic decisions, we are building the foundations of a resilient economy. With the right focus on skill-building, recruitment and showcasing the real value of the profession, Chartered Accountants in Northern Ireland can continue to lead the way in 2025 and beyond, making a positive, genuine and tangible difference to the prosperity of our region. Gillian Sadlier is a Senior Manager with Bank of Ireland UK. Shane O’Neill, Chair, Chartered Accountants Ireland Midwest Society The role of the Chartered Accountant has undergone significant transformation in recent years, influenced in no small part by advances in technology – in particular, AI and automation. Traditionally, Chartered Accountants were tasked with manual bookkeeping and journal entry, financial reporting and compliance auditing. With the rise of digital tools and intelligent software, however, many routine functions have now been automated, shifting the focus of our work to more strategic and analytical responsibilities. In the year ahead and beyond, we can expect this trend to deepen as AI and machine learning continue to redefine, not only the accounting landscape but also how people in many professions perform their roles. These technologies are already adept at performing tasks such as data entry, invoice processing and even complex financial forecasting. Automation will allow accountants to focus less on routine data processing and more on interpreting financial data to provide valuable insights for decision-making. In this evolving environment, Chartered Accountants will become advisors, translating complex data into actionable strategies for business. Our focus will be on adding value, rather than solely ensuring regulatory compliance. AI will also enhance our ability to detect and prevent fraud. Machine learning algorithms can analyse patterns and detect anomalies far more efficiently than manual processes. Many accounting firms and finance departments have already begun to integrate such AI-powered tools to safeguard against financial discrepancies and fraud, making the risk management and compliance element of the Chartered Accountant’s role more robust. I expect this trend to continue in 2025 and beyond, requiring Chartered Accountants to develop a solid understanding of how these AI models work so we can audit and validate our results effectively. Data analytics and visualisation tools are also changing how financial data is communicated. The Chartered Accountant of the future will need to be proficient in data analytics so that we can generate deeper insights and present these findings in a way that stakeholders can easily understand. This shift will require a new skillset, pushing our profession to develop a stronger grasp of technology, analytics and digital communication. While AI and automation may streamline many accounting functions, the demand for ethical judgment, strategic insight and adaptability will remain solely the preserve of the human workforce. In 2025 and beyond, the Chartered Accountant will be seen as a strategic partner in business planning, combining technological fluency with core accounting principles to drive growth and innovation. Embracing this shift, while upholding our traditional values of accuracy, integrity and professionalism, will define the Chartered Accountant’s role in the rapidly evolving business world – and continuous learning and adaptability will be crucial. Shane O’Neill is Financial Reporting Manager at H&MV Engineering. UK businesses sound positive note for the economy in 2025 The last 12 months have been eventful, featuring the UK general election in July and the ongoing conflict in Ukraine and the Middle East, writes Greg McAnenly, Chair of Chartered Accountants Ireland London Society. In October, the UK endured a much-anticipated post-election budget – one which sought to solve deficits in public services, but arguably lacked incentives to drive growth and investment in business. That said, there was some relief that capital gains and income tax hikes struck a softer note than had been predicted in some quarters. The ongoing sluggishness in the general economy, coupled with geopolitical uncertainty, compounded the market challenges facing UK businesses in 2024. Striking a more positive note as we look towards 2025, businesses are broadly optimistic that the economy is entering a more stabilised phase and, especially in the so-called “London bubble,” there is a sense that the UK economy may be entering a phase of sustained economic growth. Supported by inflation dropping back to the much-targeted two percent level and interest rates finally falling, the City is looking to overseas and domestic investors to deploy capital and trigger a more buoyant market – so far, the signals are promising. As Chartered Accountants, we are all well-versed in the need to keep up with ever-evolving regulatory requirements. However, as the UK begins to move on from the economic fall-out of Brexit, it will be interesting to see whether the government seeks to carve out paths to the de-regulation promised pre- and post-election in areas such as the finance, housing and energy. Developments in this space will almost certainly require the involvement of Chartered Accountants to ensure change is both measured and appropriate. As with Ireland, the profession in the UK is experiencing challenges attracting new talent and maintaining the important role and relevance of the work we do. As much as this is a potential threat, it also presents opportunity. Right now, the opportunities for our profession to evolve, through upskilling and investment in new technologies such as Artificial Technology (AI), are endless. Already, we are seeing AI automation delivering valuable efficiencies in both professional services and industry – through solutions for preparing statutory accounts, tax computations and smart research tools, for example. Continued investment in this area is not only necessary, but also unlocks opportunities for skilled Chartered Accountants to become more strategically effective and create exciting new roles aligning technology with the valuable skillset of the Chartered Accountant. Showcasing our profession’s dynamic competencies is a valuable tool we can, and should, use to attract younger candidates to a profession with a bright future. Greg McAnenly is a Senior Tax Manager with Related Argent.

The Irish Corporate Governance Code represents a progressive approach to ensuring best practice among companies listed on Euronext Dublin and enhances the reputation of ‘Ireland Inc’ globally. Níall Fitzgerald and Louise Gorman explain why Did you know that Ireland hosts one of the most extensive corporate governance infrastructures in Europe?  In Ireland, there are specific governance codes applicable to listed companies, charities, state bodies, financial services institutions, funds and sports organisations.  This is in addition to other entity-specific requirements that may also apply – charities may have to comply with multiple governance requirements as a condition of receiving state funding, for example.  Yet, until recently, Irish listed companies have relied on the best practice principles of the UK Corporate Governance Code (UK Code).  It is therefore worth considering the extent to which the recent publication of the Irish Corporate Governance Code 2024 (Irish Code) presents a new opportunity to tailor best practice in corporate governance to Irish listed companies. The Irish Code will apply initially to a small number of companies listed on Euronext Dublin, the Irish Stock Exchange, for financial years commencing 1 January 2025. Those dual-listed in both Ireland and the UK have the option to either follow the Irish Code or the UK Code in respect of their Irish listing.  The introduction of the Irish Corporate Governance Code is nonetheless significant.  Four years on from the UK’s departure from the European Union (EU), the Irish Code signals that the time has come for Irish companies to follow a path aligned with EU policy and practice, while remaining loyal to the overarching best practice principles established by the UK. It also reflects welcome proactivity in protecting and enhancing the reputation of ‘Ireland Inc’ on the global stage.  Historically, many corporate governance codes and laws internationally have been introduced in response to corporate failings.  By contrast, the Irish Code has emerged out of a desire to ensure that best practice is suitably tailored to the specific circumstances of Irish listed companies.  This comes at no cost to our competitiveness. We retain our well-established ‘comply or explain’ principles-based approach, while also remaining globally connected via our EU membership. Further, we host a US Public Company Accounting Oversight Board presence relating to both Irish companies listed on US Stock Exchanges and US listed companies operating in Ireland. What does this mean for Irish companies? Irish companies already complying with the UK Code will, for the most part, maintain their existing governance practices. They will need to address some specific Irish Code requirements, however. The extent of any differences here will vary depending on each company’s governance policies and structures.  Some companies may find the adjustment process less challenging, particularly those already preparing for the new UK Code applying from 1 January 2025 (apart from Provision 29, which applies from 1 January 2026).  The UK Code served as the basis for developing the Irish Code. Euronext Dublin has made changes only where necessary to ensure proportionality and relevance.  To enhance the principle-based approach, Euronext Dublin has also taken the decision not to include some of the more prescriptive requirements driven largely by the UK regulatory environment.  Maintaining close alignment makes sense as the UK Code is highly regarded and sets a high standard for corporate governance that is emulated internationally.  Our table illustrates some of the key differences between the Irish and the UK Code. Some of these differences, and what they mean for Irish companies, are further explained below. Internal control and risk management: A significant new requirement in the UK Code is included within Provision 29. This requires boards to provide a “declaration of effectiveness” on internal controls, identifying any ineffective controls as of the balance sheet date. Compliance will require boards to establish an independent framework to monitor and assess their internal control and risk management systems. The Irish Code also requires boards to review and report on the effectiveness of these systems, but it is less detailed, not requiring specific declarations or publication of ineffective controls at the balance sheet date. Audit committees: The UK Code requires audit committees to adhere to the Financial Reporting Council’s (FRC) “Audit Committees and the External Audit: Minimum Standard.” In contrast, the Irish Code outlines the roles and responsibilities of audit committees, which are consistent with Companies Act 2014 (Section 167) requirements, without reference to an additional standard, specifying that their work should be detailed in the annual report. Maintaining the principle-based approach in this area is practical, as best practices for audit committees are evolving in accordance with emerging recommendations on audit tendering oversight and sustainability reporting coming from bodies such as the FRC and Accountancy Europe. Less prescriptive and more proportionate: The Irish Code retains core principles, such as workforce engagement, but leaves it to boards to choose the most appropriate methods for their companies’ needs. This facilitates greater flexibility relative to equivalent parts of the UK Code which specify detailed considerations or criteria. The Irish Code aligns some provisions with those in smaller EU capital markets, enabling a proportionate governance approach. For example, while one of the criteria for assessing non-executive directors’ independence in the UK Code requires a five-year employee cooling-off period to be considered, the Irish Code sets this at three years, balancing market size and available talent. Regulatory oversight and enforcement: Like the UK, the Irish Code relies on the market mechanism. It aims to promote high standards of integrity, transparency and accountability. Investors and stakeholders can evaluate disclosures and make comparisons across companies in assessing corporate governance quality. These assessments then inform decisions and actions taken in the markets, such as the decision to buy or sell shares. The implication of this in the UK experience is that the FRC has no sanctioning authority in instances of weak compliance; sanctioning is left to the market mechanism. The FRC does, however, conduct thematic reviews to guide improvements in corporate reporting and governance. Ireland currently has no equivalent body for corporate governance assessment. However, the Irish Auditing and Accounting Supervisory Authority reviews annual reports for EU Transparency Directive compliance, without a specific corporate governance focus. While sanctions do not apply for weak governance compliance, Euronext Dublin can impose sanctions or suspend listings for violations of the listing rules. The Financial Conduct Authority in the UK has a similar approach.   The Irish Code and the UK Code: key differences Workforce engagement  The Irish Code requires boards to explain workforce engagement methods and their effectiveness, without mandating a specific method as in the UK Code. Additionally, it requires a board review of policies for raising concerns. This requirement aligns with the OECD Corporate Governance Principles 2023.  Threshold for addressing shareholder dissent The threshold for consulting with shareholders on a dissenting vote against a board recommendation is set at 25 percent under the Irish Code (20% in the UK Code). Unlike the UK, there is no requirement to provide a six-month shareholder update on the consultation, but it should be addressed in the next annual report. Non-executive director independence  When considering the independence of a non-executive director (NED), the criteria relating to previous employment by the company is whether they have been an employee of the company within the last three years (compared to five years in the UK Code). Board appointments The Irish Code does not include the UK Code restriction on the number of appointments a non-executive director has in a FTSE 100 or other significant undertaking. The Irish Code requires all commitments to be considered when determining whether the NED has the capacity to fully commit to the board. Company Secretary The Irish Code further elaborates on the role of the Company Secretary in ensuring a good information flow within the board, its committees and between management and non-executive directors – recording accurate minutes, facilitating induction and assisting with professional development of non-executive directors. Board evaluation The Irish Code replaces the UK Code reference to FTSE 350 companies with “companies with a market capitalisation in excess of €750 million” in the requirement to conduct an external board evaluation at least once every three years. Board skills and expertise The Irish Code includes an additional requirement for the nomination committee to use the results of a board evaluation to identify the board’s skills, knowledge and expertise requirements. This should be reflected in board succession plans, professional development plans and steps taken to ensure the board has access to the skills, knowledge and expertise it requires. This requirement is consistent with good governance practices in other EU countries, e.g. the 2020 Belgium Code on Corporate Governance. Diversity and inclusion Whereas the UK Code includes reference to UK equality legislation for diversity characteristics, the Irish Code requires companies to have a diversity and inclusion policy regarding gender and other aspects of diversity of relevance to the company and includes measurable objectives for implementing such a policy. The Irish Code requires this policy to be reviewed annually. Audit Committee To ensure consistency with the Companies Act 2014, the requirement for one member of the Audit Committee to have “recent and relevant financial experience” is changed to “competence in accounting or auditing”. Reference to “financial reporting process” is replaced with “corporate reporting process” to better reflect the audit committee’s role in monitoring financial and non-financial reporting, e.g. sustainability reporting. Reference to the UK specific Financial Reporting Council guidance on “Audit Committees and the External Audit: Minimum Standard” is also removed. Internal controls and risk management systems The Irish Code does not include the UK Code provision for the board to include a declaration of effectiveness of material controls, but the requirement to monitor the company’s internal control and risk management systems and review their effectiveness remains.  Remuneration Under the Irish Code, share awards in long-term incentive plans must vest over at least three years, unlike the UK’s five-year minimum. Malus and clawback provisions should be described generally in annual reports, and executive pensions require thoughtful comparison to workforce pensions, with less prescriptive rules than the UK Code. What next for the Irish Code?  Euronext Dublin is in the process of revising the Listing Rules to give effect to the new Irish Code and is further streamlining the requirements.  An Irish Corporate Governance Panel will be established, with responsibility for reviewing and advising on changes to the Irish Code in the context of the evolving corporate governance landscape in Ireland, the UK and Europe alongside other factors.  What impact the Irish Code will have remains to be seen. It represents a sensible approach to building on the reputation and quality of the UK Code, and while there are some differences between the Irish and UK Code, they are mostly aligned.  We have been careful to note that the Irish Code initially applies only to a small number of companies, so one may be forgiven for questioning its true significance. Nonetheless, key issues on the European regulatory horizon suggest that it may mark the start of a greater departure from the UK’s approach to governance.  The recent transposition of the Corporate Sustainability Reporting Directive into Irish law provides another example of this as the CSRD’s required disclosures on governance introduce an EU influence into governance in Irish companies.  Future revisions to the Irish Code may further reflect this newly established autonomy in governance in Ireland, particularly as we adopt the Corporate Sustainability Due Diligence Directive and other directives the European Commission will inevitably introduce over time.  Currently, best practice principles for Irish private companies are limited to voluntarily following the UK’s Wates Corporate Governance Principles for Large Private Companies. Just as the UK Code has influenced these principles, the Irish Code may provide a basis for further extension to large private entities.  There is also a strong argument that any evolution in corporate governance guidance deserves due consideration, particularly as boards deal with increasing risks and opportunities from environmental, social, economic and technological developments.  As it happens, there are no immediate plans to draft guidance to support the Irish Code, and the FRC’s Corporate Governance Code Guidance should, in the short term, be sufficient to fill the gap.  Experts in the area have long noted that attention tends be paid to corporate governance only when a failure occurs.  Given the level of public scrutiny such failures attract, and the associated reputational costs borne by board members, any Irish listed company director should be asking themselves if they can really afford not to pay attention to the new Irish Corporate Governance Code. Níall Fitzgerald, FCA, is Head of Ethics and Governance at Chartered Accountants Ireland Louise Gorman is Assistant Professor at Trinity Business School

COP29 concluded in late November with uneasy agreement on the controversial Baku Finance Goal pledging $300 billion in climate funding to developing countries, writes Susan Rossney COP29, the global climate summit, concluded in the early hours of 24 November in Baku, Azerbaijan. There were some positive developments, such as the deal reached on Article 6 of the Paris Agreement to finally allow countries to trade carbon credits with each other. Most significantly, though, for this ‘climate COP’, was the final agreement called the Baku Finance Goal. In 2009, at COP15 in Copenhagen, parties agreed a collective goal for developed nations to provide $100 billion annually in climate financing to developing countries. The new goal agreed at COP29 ups the annual financial target to $300 billion, to be funded from public sources, with provision for the shortfall to be made up of funding from private sources. To say opinion was divided on this new goal is an understatement. While some parties are cautiously optimistic that the agreement would at least keep the core principles of the Paris Agreement alive, many more were outraged by how much the new goal falls short of what is actually needed. It is generally agreed that $1 trillion per year by 2030 (rising to $1.3tn per year by 2035) is needed to help developing countries build resilience, prepare for disasters and cut emissions of planet-warming greenhouse gases. While this figure is enormous, it’s worth noting for context that $2.4 trillion was spent on weapons in 2023, and at least $1 trillion was spent in 2022 on subsidies to keep fossil fuel prices artificially low. Also worth noting is that the provision of financial support to developing countries for climate action serves both a moral and economic purpose for wealthier countries. The chaos caused by the climate and biodiversity crises to societies and economies is not limited to developing countries alone. This was demonstrated most recently by the 224 lives lost in Spain as a result of flooding linked to rising temperatures in the Mediterranean Sea. On 28 November, Spain’s government approved a new “paid climate leave” entitlement of up to four days to allow workers take time off if unable to travel to their place of work in the event of official warnings of extreme weather conditions. The Institute for Economics and Peace further predicts that one billion people face being displaced within 30 years due to the climate crisis, with huge impacts for both the developed and developing worlds. COP30 will take place in Belém, Brazil in 2025. Its focus will centre on efforts by each country to reduce national emissions and adapt to the impacts of climate change (the so-called ‘NDCs’ or ‘nationally determined contributions’). It remains to be seen if COP30 will achieve what G20 leaders have said it should – i.e. to be “our last chance to avoid an irreversible rupture in the climate system”. Susan Rossney is Sustainability Advocacy Manager at Chartered Accountants Ireland. Check out Chartered Accountants Ireland’s sustainability centre for signposts to a variety of resources available to businesses. Also, subscribe to the Institute’s fortnightly Technical Round Up and weekly Sustainability/ESG Bulletins, both in the weekly Chartered Accountants Ireland newsletter, and on LinkedIn.

Amendments to FRS 102: are you ready for change? Aimed at improving financial reporting practices, the latest FRS 102 amendments introduce important changes finance teams must begin preparing for today. Emer Fitzpatrick and Cayetano Bautista III delve into the details. FRS 102 is the predominant accounting standard used by small and medium businesses (SMEs) and private family businesses across the island of Ireland. It was introduced in 2013, applying to accounting periods commencing on or after 1 January 2015, with early adoption permitted. The UK Financial Reporting Council (FRC) is the standard setter for FRS 102 and performs periodic reviews of the accounting standard, at least every five years. The aim of these reviews is to take account of changes in global accounting standards – such as changes to the International Accounting Standards Board (IASB) accounting standards, and to respond to specific issues as they arise, such as regulatory decisions and stakeholder feedback. Amendments are then developed and proposed after feedback has been sought from the relevant stakeholders. The first periodic review of FRS 102 was completed in December 2017, coming into effect on 1 January 2019, and the FRC recently completed another periodic review in March 2024. This most recent review has taken several years to complete due to the need for extensive consultations with stakeholders. The effective date of the amendments arising from this review will be applicable for accounting periods on or after 1 January 2026. (Earlier effective dates apply to new disclosures about supplier finance arrangements, starting from 1 January 2025, with early application permitted). Early application is, however, permitted where all amendments are applied simultaneously. So, what are the key amendments arising from this review, and how can you prepare for these changes? FRS 102 review: key amendments Single lease accounting approach for lessees (Section 20) Under the current model, lessees classify leases as either finance or operating, depending on whether the lease transfers substantially all the risks and rewards of ownership from the lessor to the lessee. This approach is similar to the model used under old Irish Generally Accepted Accounting Principles (GAAP) and IAS 17 – “Leases”. The FRS 102 amendments will largely align Section 20 with IFRS 16 – “Leases”, eliminating the distinction between finance and operating leases for lessees. This will require lessees to recognise right-of-use assets (ROU) and lease liabilities on the Statement of Financial Position (SOFP) for all leases, apart from short-term leases and low-value assets. Subsequently, the ROU is depreciated over the lease term on a straight-line basis, while the lease liabilities are amortised using the effective interest method, which results in a frontloading of the lease expense, reflecting the underlying financing nature of leases. Let’s illustrate this with an example. Lease term   3 years  Annual payment payable at the end of the year  €50,000  Discount rate (annual)  5% SOFP – lease commencement (rounded to the nearest €000)   ROU / lease liability   €136,000*   *The initial ROU/lease liability is for illustrative purposes only. These should be calculated using the following formula: Present value (PV) of lease payments not paid at that date and discounted using the appropriate discount rate. [PV of €50,000 × 3 years at 5%] In most cases, the ROU and lease liability will be equal to each other on the inception of the lease. Statement of Comprehensive Income (SOCI) – Year 1   ROU depreciation (operating profit)  €45,333 [€136,000 ÷ 3]  Interest on lease liability (finance cost)  €6,800 [€136,000 × 5%] SOFP – Year -1    ROU   €90,667 [€136,000 – €45,333]  Lease liability  €92,800 [€136,000 – €50,000 + €6,800] The amendments provide guidance on what constitutes a lease, how to determine the lease term, how to account for modifications and remeasurements and other practical expedients. It is important not to underestimate the complexity of this new lease model. Consideration must be given to several factors, such as whether an arrangement meets the definition of a lease and how to calculate an appropriate discount rate for every lease. Five-step revenue recognition model (Section 23) The FRS 102 amendments also introduce a comprehensive five-step model for revenue recognition aligning Section 23 of FRS 102 with IFRS 15 – “Revenue from contracts with customers.” The five steps are as follows: Identify the contract(s) with a customer. Identify the performance obligations in the contract. Determine the transaction price. Allocate the transaction price to the performance obligations in the contract. Recognise revenue when (or as) the entity satisfies a performance obligation. The core principle is to align revenue recognition with the transfer of control of goods or services to customers which may either be over time or at a point in time. This also aligns revenue recognition with the contractual terms in relation to the enforceable rights and obligations of the customer and supplier. The five-step model aims to address the challenges in accounting for bundled goods and services by introducing the concept of allocating the consideration from the customer to the separate and distinct performance obligations, representing the promised goods or services within the contract. The amendments also provide guidance on several topics, such as combining two or more contracts entered into, at or near the same time with the same customers, contract modifications and some practical expedients. It is important to note that the new five-step revenue recognition model could alter the timing of revenue recognition, especially for complex contracts with bundled goods and variable consideration. Other important amendments to note The amendments to FRS 102 also contain several incremental improvements and clarifications including, but not limited to, the following: IAS 39 option removal: Entities not already applying IAS 39 recognition and measurement principles for financial instruments can no longer adopt such policies under Section 11 and 12 of FRS 102. Supplier financing: Section 7 of FRS 102 will now require additional disclosures about supplier finance arrangements and their impact on SOFP and cash flows. Fair Value measurement: A new Section 2A (Fair Value Measurement) replaces the Appendix to Section 2 of FRS 102, incorporating the principles of IFRS 13 – “Fair value measurement.” Going concern disclosures: Section 3 of FRS 102 has new requirements for management to affirm consideration of future information and to disclose significant judgments on going concerns. Business combinations: Section 19 of FRS 102 has been updated to include guidance on the identification of an acquirer in a business combination similar to the principles of IFRS 3 – “Business combinations.” Share based payments (SBP): Section 26 of FRS 102 includes enhanced guidance on accounting for vesting conditions, fair value determination and SBPs with cash alternatives. Uncertain tax treatments: Section 29 of FRS 102 includes guidance for uncertain tax treatments, which aligns with IFRIC 23 – “Uncertainty over Income Tax Treatments” principles. FRS 102 amendments: next steps We have outlined some practical steps you can take to help prepare for these changes. Assess the impact on your financial statements and business metrics As discussed above, the changes to Leases and Revenue may have a significant impact on financial statements (FS). The new lease accounting model may affect your company’s financial metrics or key performance indicators (KPIs) such as EBITDA, net profit and net debt, to name a few. Not only will the changes to KPIs have an impact on the FS but they may also impact your lending arrangements or covenants. For the new revenue model, consideration must be given to how any potential changes to the timing of revenue recognition may impact both reported and forecasted revenue and profits. You will also need to consider how the other amendments listed above will impact the FS and whether you have the necessary in-house expertise on your finance team to carry out the work required to comply with these amendments. Increased disclosure will be required in the notes to the FS, and this may include some new and previously undisclosed information. Understanding these requirements will help guide your accounting processes and the preparation of the FS. Being well-prepared will ensure compliance and transparency in your financial reporting. Consider whether operational changes are required The new lease accounting and revenue recognition models are closely tied to contractual terms and conditions. This will require additional information and financial modelling from contracts. An early assessment of your current accounting processes, systems and controls is essential to identify the necessary operational changes. Other considerations, such as the number of lease agreements and revenue contracts a company may have, will determine the amount of work involved, especially with regard to preparing an amortisation table and the potential need for external valuation expertise to determine an appropriate discount rate for every lease agreement. Determine the best game plan for the transition It is critical to ensure that your finance team is ready for these changes. Engaging your finance team through training courses, workshops and other methods – before and during the transition phase – will be important in ensuring your team fully understands the upcoming changes. Preparing for change: act now The aim of these FRS 102 amendments is to improve financial reporting by aligning FRS 102 more closely with IFRS. Although most of the amendments will not take effect until 2026, early application is allowed if all amendments are adopted simultaneously. Thus, it is critical that companies put a game plan in place today to determine the optimal timing, scope and method for adopting the FRS 102 amendments. The time to act is now. Emer Fitzpatrick is a Senior Manager in PwC Corporate Reporting Services and a member of the Financial Reporting Technical Committee of Chartered Accountants Ireland. Cayetano Bautista III is a Senior Manager in PwC Capital Markets and Accounting Advisory Services.