As we approach the final months of 2023, three Chartered Accountants take a moment to contemplate the hurdles Ireland has surmounted and share their aspirations for the remainder of the year Sinéad Nolan Financial Accountant AXA Insurance The economy is fine on paper (GDP and domestically); however, housing is a major issue, in both affordability and availability. The cost-of-living crisis is only exacerbating a problem that was already there for young professionals starting off their careers. Paying rent is a continuous challenge, as is looking for an affordable house to purchase. The interest rates keep rising, and house prices don’t seem to be reducing. Many in the country felt the challenge of paying bills in the wintertime. On top of that, there has been a lot of uncertainty with the war in Ukraine.  On the plus side, there has recently been slight moderation in the price of energy and in inflation, and the pleasant weather in June was a bonus! (Less pleasant in July, admittedly.) Also, the unemployment rate in the Republic of Ireland fell to a record low of 3.8 percent in May. To help, my employer has hosted many financial wellness webinars, which, given the current economic crisis, have been great.  We also received a well-being day off, not to mention personal interaction is happening in the office again – we are attending social events, which is brilliant.  As for the rest of the year, I hope the housing crisis settles, and there is more support given to first-time house buyers from the Government. I joined the Young Professionals Committee in July after attending the wonderful Pride BBQ in June. I am looking forward to organising and hosting events, and connecting with other members of the Institute. The Young Professionals Committee is a great networking platform, so I am very excited to get stuck in with it. Jim Stafford Consultant Friel Stafford I work every day at the coalface, advising companies and individuals who are dealing with financial challenges, and thus I appreciate the issues facing the economy.  While there is an economic brew of uncertainty caused by inflation, geopolitical issues, etc., the biggest impact we have seen this year has been the dramatic increase in interest rates, which has shaken some people to the core.  We have observed a noticeable increase in Members Voluntary Liquidations from businesspeople who are deciding to ‘cash in their chips’ now rather than face future uncertainty.   One of the positives that I have always enjoyed when working with people under financial pressure is recognising the levels of resilience people have. On the ‘resilience spectrum’, I am delighted to see some clients who bounce back stronger than ever.   The highlight for me personally this year was the sale of Friel Stafford to Ifac, which will enable us to provide restructuring services such as the Small Company Administrative Rescue Process (SCARP) across Ifac’s 30+ offices.  The association with Ifac has moved us into the top ten accountancy firms in Ireland, which has opened the doors to certain types of work, making it easier for us to attract and retain talent.  A big development during the year was the growth of artificial intelligence (AI). While there is great potential for generative AI to change the workplace, there is also huge scope for more sophisticated fraud.  Looking to the year ahead, a big challenge for some businesses will be the ending of the Revenue warehousing scheme, which was a valuable lifeline for many.  We expect to see an increased number of SCARPs next year.  Another big challenge for some firms will be the Companies Registration Office and the Corporate Enforcement Authority increasing their enforcement activity on companies that are struck off. Gordon Naughton  Chief Executive Officer Tactive   January represented a strange and uncertain time for the Irish and global economy. Many initiatives were placed on hiatus due to significant inflationary, economic and geopolitical concerns.  In January, it was startling to see how quickly the mood had shifted from November and December. Since then, the business community and consumers have learned to live with these concerns and are in a positive state of mind.  Currently, the Irish economy is showing tremendous resilience, with the overall tax intake and consumer spending being unexpectedly high. It seems the country is forging ahead. However, if the past three years are a barometer for future challenges, predicted and day-to-day issues tend to be easy to deal with. It’s the unpredicted challenges that can pose the most difficulty.  My key lesson from this period is that businesses need to be agile, efficient and have contingency plans for the three main ways an economy can move – up, down or steady on.  Luckily, I have great clients, a good support structure and network that has brought me through any uncertainty. I am so lucky to work from home and spend time with my wonderful family.  Continuous learning is a facet of my life, as I simply like reading and expanding my knowledge. This year I obtained a black belt in Lean, which has helped me professionally and personally.  As for the rest of 2023, I hope to continue to work with outstanding clients.   

In today’s rapidly changing world, organisations are embracing inclusive leadership. Karin Lanigan explores what it means, why it matters, and the essential traits of effective inclusive leaders As a result of recent seismic and lasting changes in the workplace, many organisations are now adopting an inclusive approach to leadership. What is inclusive leadership, and why does it matter? A complex and diverse world We are operating in an increasingly complex world that is constantly evolving. The pace and enormity of the changes taking place require a different approach to leadership: inclusive leadership. A new leadership style is required To be an effective leader now requires a move away from a traditional style of leadership to an inclusive leadership approach. This doesn’t mean that the conventional aspects of leadership are defunct. In fact, the core fundamentals of leadership still apply. However, moving to inclusive leadership involves a change from an autocratic, top-down, centralised leadership approach to a more decentralised, democratic, shared and participative process involving employees across all levels of the organisation. Traits of an inclusive leader An inclusive leader is aware of their own biases and proactively seeks out, encourages and considers different perspectives to facilitate better decision making and more effective collaboration. They strive to ensure that colleagues are treated equally, feel a sense of belonging and value, and work in a psychologically safe space where they can contribute and are supported to achieve their full potential. There is no doubt that inclusive leadership is now a critical capability. The core skills and competencies that are typically exhibited by inclusive leaders include: Self-awareness. Inclusive leaders have a strong awareness of their own biases and blind spots. Similarly, a high level of emotional intelligence enabling the effective management of emotions, their own and those of others, is fundamental.  Empathy. Being an inclusive leader requires having both the willingness and capacity to comprehend and acknowledge the emotions and viewpoints of others. Cultural intelligence. Inclusive leaders aim to establish a workplace that welcomes and values all cultures, allowing everyone to make meaningful contributions. This requires a sense of curiosity and a willingness to learn about different cultures and their traditions. Communication. Clear and effective communication supports an inclusive leadership style. Inclusive leaders look to understand and adapt their communication style to be understood by a diverse audience.  Collaboration. Inclusive leaders foster an environment that is psychologically safe, enabling every member to contribute their ideas and innovations to achieve better outcomes. Commitment and courage. Inclusive leaders are role models, challenge the status quo, and advocate for others.   Why does inclusive leadership matter? Much research has been conducted to assess the benefits of inclusive leadership. The results point to increased staff engagement, attraction and retention; improved workplace relations, communication and collaboration; enhanced transparency resulting in higher levels of trust; better decision-making and problem-solving arising from more varied insights and contributions; and increased innovation and creativity by bringing diverse skills and perspectives together. Ultimately, inclusive leaders significantly enhance employee engagement, performance and overall business results. There is no doubt that inclusive leadership is now a critical and unique capability and one that can support career progression and the achievement of personal and corporate potential.  Karin Lanigan is Head of Member Experience at Chartered Accountants Ireland

The Digital Services Act aims to better protect users in the online world, but its requirements will impose many new obligations on service providers, say Mary Loughney, Shane O’Neill and Filipa Sequeira The increased use of digital technology dramatically raises the chances of end users being exposed to illegal or harmful online content. Regulations and laws are catching up with the fast-paced world of emerging digital services and online platforms to ensure online services’ security, accountability and openness.  The Digital Services Act (DSA), an EU regulation, aims to modernise the digital landscape and defend users’ rights. What digital services does the DSA cover? The DSA encompasses a broad range of online intermediaries, including internet service providers, cloud services, messaging platforms, marketplaces and social networks.  Hosting services, such as online platforms (a hosting service provider that “stores and disseminates to the public information, unless that activity is a minor or purely secondary feature of another service”), social networks, content-sharing platforms, online marketplaces and travel/accommodation platforms, have specific due diligence obligations.  The DSA’s most significant regulations target very large online platforms, with a substantial societal and economic impact reaching a minimum of 45 million EU users, representing 10 percent of the population.  Similarly, very large online search engines with over 10 percent of the EU’s 450 million consumers will have greater responsibility for combating illegal content on the internet. Key provisions of the DSA The DSA outlines specific responsibilities for online platforms, including big platforms, intermediaries and hosting service providers.  Due to their significant societal impact, the Act introduces categories called Very Large Online Platforms (VLOP) and Very Large Online Search Engines (VLOSE), which are subject to stricter regulations and audit requirements.  An independent audit must cover all the obligations imposed on VLOPs and VLOSEs by the DSA, including the duties to remove illegal content, provide users with transparency about how their data is used and prevent the spread of disinformation.  The following focus areas are central to the DSA’s requirements: Due diligence around safety and content moderation: The DSA lays out guidelines to address illegal content, such as hate speech, terrorist propaganda and fake goods. Online platforms must set up efficient content moderation systems and offer ways for users to report unlawful content. This may involve using automated tools for detection and removal. User rights and transparency about terms of service, consent, algorithms and advertising practices: Companies must offer more transparency about how their platforms operate, including their terms of service, algorithms and advertising practices. This will help users to understand how their data is being used. Users’ ability to control their privacy settings and flag harmful content: Companies must provide users with tools to manage their privacy settings and flag harmful content. This will help users to protect their personal data and keep themselves safe online. Companies are also required to respond to flagged content within a reasonable timeframe. Measures to prevent the spread of disinformation: Companies must take steps to prevent the spread of disinformation, such as by labelling sponsored content and providing users with access to reliable information. This may involve working with fact-checking organisations or other companies to share information about disinformation. Accountability for the content hosted on platforms: Companies must be accountable for the content hosted on their platforms. This means they must be able to remove illegal content promptly and co-operate with law enforcement authorities. With these provisions in mind, a sensible place to begin your journey may involve conducting a maturity assessment using a risk-based approach so the organisation is aware of the risks that require mitigation: Maturity assessment: The risk assessment should consider a range of factors, such as the nature of the platform, the type of content hosted and the potential for harm to users. Address DSA requirement gaps: As a result of the risk assessment, organisations should identify their exposed risks and implement necessary measures, which include enhancing content moderation tooling, increasing transparency and enabling more robust end-user control mechanisms. Compliance reporting: Organisations would be required to comply with third-party external audits. While that audit would evaluate the platform’s systems and processes, compliance reporting may also include information on overall risk mitigation efforts. The challenging aspects of the DSA’s audit requirements To ensure compliance with the DSA’s provisions, digital service providers, predominantly VLOPs and VLOSEs, will be subject to independent audits. The audit must be conducted in accordance with the methodology and templates established in the delegated regulation, and the audit should review whether the VLOP or VLOSE: has a clear and transparent policy on how it addresses illegal content; has a system in place for detecting and removing illegal content and preventing the spread of disinformation; and provides users with adequate transparency about how their data is used. The audits will evaluate the platform’s efforts to deal with illegal content, the openness of content moderation procedures, adherence to DSA requirements, and the efficiency of user reporting mechanisms. The platform’s practices for data security and privacy will also be examined.  It will be challenging for online intermediaries to comply with some DSA requirements.  Accurate classification of digital services The DSA distinguishes between different types of digital services, such as intermediaries, hosting services and online platforms. Assigning the correct classification to a specific service can be complex, especially for hybrid platforms with multiple functionalities. Accurately defining the obligations and responsibilities associated with each classification requires careful analysis. Removing illegal content in a timely manner The DSA requires the removal of unlawful content in a timely manner after being made aware of its existence. Implementing effective content moderation mechanisms while respecting freedom of expression and avoiding over-removal or under-removal of content is a complex task. Developing sophisticated algorithms and human review processes to strike the right balance poses significant technical and operational challenges.  Further transparency about how content is moderated  The DSA requires more transparency about how online intermediaries moderate content. This includes providing information about the criteria used to moderate content, the processes used to make decisions and the appeals process available to users who flag moderation issues.  It can be difficult to require online intermediaries to disclose sensitive information about their internal operations. Additional steps to protect users’ privacy rights  The DSA requires additional steps to protect users’ privacy and enhance users’ rights. This includes transparency, user control over content and redress mechanisms.  These new provisions can be challenging to implement as they require online intermediaries to change their business practices significantly.  Implementing user-friendly interfaces and operative-complaint resolution mechanisms to ensure seamless user experiences can be technically complex and resource intensive. Compliance with new rules on targeted advertising  The DSA introduces new rules on targeted advertising. These rules prohibit online intermediaries from using sensitive personal data to target users with ads, and they require online intermediaries to give users more control over the ads they see.  Co-operation with authorities The DSA emphasises co-operation between platforms and regulatory authorities.  Ensuring information sharing, responding to legitimate requests and establishing effective communication channels with various national authorities across the EU pose many challenges. Maintaining confidentiality and data protection while complying with these requirements can be tricky. Interpretation of the DSA The interpretation of the DSA may evolve as it undergoes the legislative process. As such, there are themes associated with how one might expect an audit will be conducted: Transparency: The audits must be conducted transparently. Accountability: The audits are designed to ensure that VLOPs and VLOSEs are accountable for compliance with the DSA. Effectiveness: The audits must effectively identify and address any compliance gaps. Proportionality: The audits must be proportionate to the size and complexity of the VLOPS and VLOSEs. Flexibility: The delegated regulation allows auditors to adapt the audit methodology to the specific circumstances of the VLOP or the VLOSE. These are just some specific requirements that are tricky and complicated to implement. However, the DSA is essential to creating a safer and more accountable online environment. Best practice The table above displays exemplary and tactical actions that could be considered when enhancing users’ privacy rights and transparency about terms of service, consent, algorithms and advertising practices. In addition to these specific steps, companies should consider implementing several general best practices: A well-defined risk management framework: Establishing ongoing risk assessment activities will help companies identify and mitigate user risks. A culture of compliance: This will help ensure that all stakeholders are aware of the DSA requirements and committed to complying with them. A robust process for responding to incidents: This will help companies to respond quickly and effectively to any incidents that may arise. An oversight process for monitoring and reporting on compliance: This will help companies track their progress and identify areas where they may need to improve. A trustworthy online environment The DSA represents a significant step toward regulating online platforms and digital services within the EU. By introducing audit requirements, the DSA enhances transparency, accountability and user protection in the digital world. Independent audits will serve as a mechanism to ensure compliance with the DSA’s provisions, thereby fostering a safer, fairer and more trustworthy online environment. Mary Loughney is Director and Head of Technology Risk Consulting at Grant Thornton  Shane O’Neill is Partner and Head  of Technical Change, Financial Services Advisory at Grant Thornton  Filipa Sequeira is Senior Consultant of Financial Services Advisory at Grant Thornton

Maria McHugh shares how she set boundaries, shed the notion that she “can do it all”, and that achieving a successful career while prioritising family is possible with the right mindset and support Growing up, I had a keen interest in business and enterprise. Because of this, I completed a BSc in Finance at University College Cork, and, after considering career options, I felt that becoming a Chartered Accountant was the best fit for me and a good start to my business career.  This, however, wasn’t without its challenges. Coming back after a break Like many women, I had to make a decision about having children and consider how my career would be impacted.  Between 2014 and 2021, my husband and I had three children, and during that time, we decided that I would be a full-time stay-at-home mum because of a lack of childcare availability.  This unplanned, seven-year break in my career had a much bigger impact on me mentally than I ever would have thought. I felt that I had lost my professional self. I didn’t realise how important that identity was to me.  I watched as my peers’ careers progressed and felt left behind.  After seven years at home, I started to consider what returning to work would look like; frankly, it was terrifying.  I suffered from post-natal depression after my second baby, and it left me with low confidence and self-belief. Thankfully, earlier in my career, I met Karin Lanigan in Member Services at Chartered Accountants Ireland, and I always remembered her openness and honesty.  Personal priorities While I wanted my career back on track, it was also important that I continue to be available for my children. I lost my mum at 13 years old, so it has always been especially important to me to be at home for my children. I had to consider what type of professional role I wanted and how to balance my work and home life.  I felt passionate about helping start-ups, sole traders and being involved in local enterprises. Having completed the Chartered Accountants Ireland Diploma in Tax in 2018, opening my accountancy and tax practice seemed the best fit for me and the family.  I was excited by the prospect, but I was also incredibly overwhelmed, daunted, and the self-doubt and fear were crippling.  I had three small children, was moving from Dublin back to my native Dungarvan, and was now opening my own practice. It seemed insurmountable. Karin guided me in breaking the tasks into manageable steps and helped me see that this was achievable. Professional Standards and Practice Consulting were also very supportive, and I was delighted that so much support was offered by Chartered Accountants Ireland.  While on my journey back into the workplace, I was really heartened by all the supports that were available through the Institute, and I hope these only grow and extend to more women.  In some ways, I think women put themselves under too much pressure with the social narrative that “we can do it all”. I think we are our own worst critics, and we can each have an expectation for ourselves that we should be doing everything, and when we don’t, we think we are failing.   This perception is false and needs to change. It is OK to choose to stay at home with young children, and that  decision should not feel detrimental to our career or be something we need to explain or justify.  For me, it is all about balance, and this is personal to every family. We are all just doing our best to have a career in whatever way possible to suit our family life.  Setting boundaries Since I started my business, I have always had the mindset that I am going at my own pace.  The aim of having my own practice was that I could balance both my career and my family life but I recognised early on that working in my practice full time was just not going to work for my family. As a result, I learned how to say no. I created boundaries around my work schedule, especially during school holidays, and I don’t apologise  for it.  I sometimes think that women feel they need to be singularly career-orientated and driven to succeed to be taken seriously or that admitting the kids come first is a weakness. I don’t agree at all.  At the start of the summer, I announced on social media that I was taking a step back from work for the school summer holidays. The support from peers and clients was fantastic. People told me that my being upfront about the summer break was refreshing and inspired other parents to do the same.  It’s like anything – if you don’t see it being done, you don’t realise you can do it. This doesn’t mean that I am not career-driven or don’t have aspirations for my own business. But this is a marathon, not a sprint, and I will do it in my own time. Building your tribe Networking is vital to sole practitioners for promoting themselves and, more importantly, building solid support. When I started my practice, I had no colleagues to bounce ideas off or to ask questions. I feel strongly that this kind of support is important for my personal development, so I reached out to a fellow mum in practice from my PwC days and asked how she would feel about coming together to set up a small group.  We now have a core group of four accountants (also mums) in practice. We support each other, answer technical questions and get opinions on issues we come across. This group has been vital to growing my confidence and has shown me that there are others also dealing with the same problems. In my experience, the most important qualities for women in business are self-belief and self-confidence.  I am a great champion of women and our abilities but I have struggled with self-confidence in the last few years. When left unchecked, this self-doubt can be very limiting.  I would love to see the topic of low self-confidence as ways to manage it spoken about more. My self-confidence has grown over time, but it is something I work on and still struggle with to this day.  The more it is discussed, the more women will realise, like me, that they are not alone in this mental battle.  I am also very lucky to be a member of the 2023 Chamber of the Year, Dungarvan and West Waterford Chamber. Through this membership I have found another group of like-minded women on their own business journey. We support each other, attend events together and help each other when we can.  Finding your tribe in business is so important and having that sense of community and support from different groups has had a positive impact on my own business and personal development. Maria McHugh is Founder Owner of McHugh Accounting and Consultancy

Recent European heatwaves have highlighted the impact climate change has on society and the economy. Susan Rossney explores the challenges facing Irish businesses when taking steps to tackle the crisis Recent severe heatwaves in continental Europe have shown how the effects of global warming are coming ever closer to home. Forced migration, drought, forest fires and biodiversity loss are some of the many ways climate change will impact Irish society.  Its impact on the economy will be acute, affecting everything from the health and wellness of employees to the cost of raw materials, scarcity of resources and supply chain disruption.  Ireland and climate change Climate change poses risks to humans, nature and Ireland as a nation.  Ireland is legally bound to meet ambitious national and international climate targets. According to the Climate Change Advisory Council (CCAC), an independent advisory body, Ireland will not meet the climate targets it has set for itself in the first and second carbon budget periods. The Environmental Protection Agency’s (EPA) provisional estimates on 2022 greenhouse gas emissions show that Ireland already used 47 percent of the carbon budget for 2021–2025 in the past two years.  An annual reduction of 12.4 percent is now required for each of the remaining years if Ireland is to stay within budget.  However, as emissions fell only 1.9 percent in 2022, this has been described as “extremely challenging” by the EPA.  It is clear that action is required across all sectors of the economy and society, including: Mitigation: reducing activity that causes climate change, like burning fossil fuels (coal, oil and gas); and Adaptation: making changes to deal with the effects of climate change, from operational changes to cope with rising summer temperatures or winter flooding to factoring in the risk of developing stranded assets and increased carbon tax liabilities. Ireland’s perception of climate change According to Climate Change in the Irish Mind, EPA research conducted in 2021, most Irish citizens share a desire for action on the climate crisis.  However, other EPA research has found that our emissions of greenhouse gases (GHGs) continue to rise.  Environmental Indicators Ireland 2022, published by the Central Statistics Office (CSO), shows that Ireland’s 2022 emissions were 11 percent higher than in 1990.  Enterprises contributed an estimated 12.7 percent to Ireland’s overall emissions in 2018, according to the Climate Action Plan 2023. Although this is less than the contributions of other sectors, there remains a need for Ireland’s enterprises to take action to reduce their emissions.  However, a 2022 national survey of 380 SMEs and larger enterprises across industry and service sectors by Microsoft and University College Cork found that Irish businesses are underprepared to make the necessary changes to transition to a net zero future. According to the study, 86 percent have no commitments or targets to decarbonise.  Barriers to action  In the face of evidence of climate change – and Ireland’s willingness to take action – what is preventing Irish businesses from responding to the crisis?  As an issue, climate change is complicated, abstract and overwhelming. Multiple interdependent factors cause it, and it is nearly impossible to avoid contributing to it in our daily lives. Buying products, driving a car or taking a flight for a foreign family holiday (full disclosure: I’m just back from one) all add to the overall problem. The solutions to the climate crisis are also interdependent and complicated. The positive changes we can make as individuals can feel insignificant, especially compared with large countries’ continued pollution.  The European Commission’s Annual Report on European SMEs 2021/22 – SMEs and environmental sustainability identified access to finance, limited expertise and skills, and regulatory and administrative barriers among the challenges facing SMEs in particular. Businesses that want to take climate action often have limited time, cash flow, resources and support (both financial and non-financial) to take action.  Knowledge is also a barrier. Many professionals qualified at a time when climate change was not identified as a business risk. They now find themselves having to skill up mid-career in an area that is famous for changing frequently.  Finally, many citizens and businesses are still struggling with crises related to COVID-19, inflationary pressure, supply chain disruption and high energy costs. Staying afloat is a crisis in itself.  Firms, particularly SMEs, focusing on the practicalities of running a business, paying staff and grappling with cash flow and costs are more likely to see climate action as the responsibility of governments or, at the very least, large corporations rather than them.  On top of that, climate discussions are often politicised. They are regularly reduced to a ‘them vs us’ polarised debate in mainstream media rather than discussing how everyone can work together to deliver solutions.  Threats and opportunities  For businesses, climate change presents both threats and opportunities.  Threats The threats have been categorised as physical risks (both ‘acute’ and ‘chronic’) and transitional risks.  Opportunities  Taking action on the climate crisis enables businesses to restore lost ecosystems, improve air quality, community health and well-being, and avail of the opportunity to make a lasting positive impact. There are additional advantages to consider: Reduced costs – the Sustainable Energy Authority of Ireland (SEAI) estimates that the average SME can save up to 30 percent on its energy bill by becoming more energy efficient (improved heating and lighting, lower maintenance of electric vehicles, efficient water and materials management and using recycled materials with a lower climate impact all contribute to lower costs);  Reduced reliance on exposure to fluctuating oil and gas prices from switching from fossil fuels (coal, oil and gas) to renewable energy sources; Reduced exposure to carbon tax, which is increasing €7.50 per tonne to €100 per tonne in 2030; Access to grants, allowances and tax reliefs; Improved access to capital and finance from investors and lending looking to ‘green’ their portfolios; and A competitive edge in attracting talent, clients and customers. Steps to climate action Businesses looking to take action on the climate crisis can take several steps: Build your knowledge. There are many resources out there, several provided by the Government and Chartered Accountants Ireland. Begin measuring emissions with tools like the Government’s Climate Toolkit for Business.  Consider an internal energy audit to find ways of reducing your carbon footprint. SEAI maintains a list of registered energy auditors and offers SMEs a €2,000 voucher towards the audit cost. Consider setting up an internal environment and climate impact team to devise a decarbonisation plan.  See also the Sustainability Glossary in the Sustainability Centre of the Chartered Accountants Ireland website.  For more, see www.charteredaccountants.ie/sustainability-centre/sustainability-home Susan Rossney is Sustainability Officer at Chartered Accountants Ireland Reporting and climate change The Corporate Sustainability Reporting Directive (CSRD) is an EU Directive requiring certain companies to disclose information on sustainability-related impacts. It proposes significant changes to how entities report on their business’s environmental, social and governance (ESG) impacts. These changes will affect many enterprises – directly and indirectly.  Businesses ‘in scope’ of the CSRD are required to consider their supply chain when reporting on sustainability matters. This will mean that companies not in scope that form part of a supply chain may be asked to provide climate-related information by companies in scope. Small companies should prepare for this and have a mechanism to measure and disclose their carbon emissions. For more on the CSRD, see the Chartered Accountants Ireland Technical Hub. Dee Moran is Professional Accountancy Lead at Chartered Accountants Ireland  

Michael Diviney and Níall Fitzgerald explore the ethical challenges arising from artificial intelligence (AI), particularly ‘narrow’ AI, and highlight the importance of ethics and professional competence in its deployment Earlier this year, artificial intelligence (AI) industry leaders, leading researchers and influencers signed a succinct statement and warning: “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.” Was this a publicity stunt? Well, probably not, as the generative AI ChatGPT was already the fastest-adopted application in history.  Was this an over-the-top, alarmist statement by a group possibly trying to steal a march on self-regulation of a rapidly emerging technology and growing industry?  Again, this is unlikely if one considers the warnings of pioneer thinkers like Nick Bostrom, Max Tegmark, Stephen Hawking and Astronomer Royal Martin Rees. They concur that there is an existential threat to humankind if human-level or ‘general’ AI is developed and the ‘singularity’ is reached when AI surpasses human intelligence.  Autonomous weapons and targeting are a clear risk, but more broadly, unless we can ensure that the goals of a future superintelligence are aligned and remain aligned with our goals, we may be considered superfluous and dispensable by that superintelligence.  As well as the extinction threat, general AI presents other potential ethical challenges.  For example, if AI attains subjective consciousness and is capable of suffering, does it then acquire rights? Do we have the right to interfere with these, including the right to attempt to switch it off and end its digital life?  Will AI become a legal entity and have property rights? After all, much of our economy is owned by companies, another form of artificial ‘person’. Ethical challenges from ‘narrow’ AI Until general AI is here, however – and there is informed scepticism about its possibility – the AI tools currently in use are weak or ‘narrow’ AI. They are designed to perform a specific task or a group of related tasks and rely on algorithms to process data on which they have been trained.  Narrow AI presents various ethical challenges:  Unfairness arising from bias and opacity (e.g. AI used in the initial screening of job candidates include a gender bias based on historical data – in the past more men were hired); The right to privacy (AI trained with data without the consent of the data subjects); Threats to physical safety (e.g. self-driving vehicles); Intellectual property and moral rights, plagiarism and passing-off issues in the use of generative AI like ChatGPT and Bard; and Threats to human dignity from the hollowing out of work and loss of purpose. Regulation vs. ethics Such issues arising from the use of AI, particularly related to personal data, mean that regulation is inevitable.  We can see this, for example, with the EU’s landmark AI Act, due to apply by the end of 2025, which aims to regulate AI’s potential to cause harm and to hold companies accountable for how their systems are used. However, as Professor Pat Barker explained at a recent Consultative Committee of Accountancy Bodies (CCAB) webinar, until such laws are in place, and in the absence of clear rules, ethics are required for deciding on the right way to use AI.  Even when the regulation is in place, there are likely to be cases and dilemmas that it has not anticipated or about which it is unclear. Legal compliance should not be assumed to have all the ethical issues covered, and as AI is evolving so quickly, new ethical issues and choices will inevitably emerge.  Ethics involves the application of a decision-making framework to a dilemma or choice about the right thing to do. While such a framework or philosophy can reflect one’s values, it must also be objective, considered, universalisable and not just based on an instinctual response or what may be expedient. Established ethics frameworks include: the consequentialist or utilitarian approach – in the case of AI, does it maximise benefits for the greatest number of people?; and the deontological approach, which is based on first principles, such as the inalienable rights of the individual (an underlying philosophy of the EU’s AI Act). (The Institute’s Ethics Quick Reference Guide, found on the charteredaccountants.ie website, outlines five steps to prepare for ethical dilemmas and decision-making.)  A practical approach While such philosophical approaches are effective for questions like “Should we do this?” and “Is it good for society”, as Reid Blackman argues in Harvard Business Review, businesses and professionals may need a more practical approach, asking: “Given that we are going to [use AI], how can we do it without making ourselves vulnerable to ethical risks?”  Clear protocols, policies, due diligence and an emphasis on ethical risk management and mitigation are required, for example responsible AI clauses in agreements with suppliers. In this respect, accountants have an arguably competitive advantage in being members of a profession; they can access and apply an existing ethical framework, which is evolving and adapting as the technology, its opportunities and challenges change.  The Code of Ethics The International Ethics Standards Board for Accountants (IESBA) recently revised the Code of Ethics for Professional Accountants (Code) to reflect the impact of technology, including AI, on the profession. The Chartered Accountants Ireland Code of Ethics will ultimately reflect these revisions.  IESBA has identified the two types of AI likely to have the most impact on the ethical behaviour of accountants:  Assisted intelligence or robotic process automation (RPA) in which machines carry out tasks previously done by humans, who continue to make decisions; and  Augmented intelligence, which involves collaboration between human and machine in decision-making. The revisions also include guidance on how accountants might address the risks presented by AI to ethical behaviour and decision-making in performing their role and responsibilities.  Professional competence and due care The Code requires an accountant to ensure they have an appropriate level of understanding relevant to their role and responsibilities and the work they undertake. The revisions acknowledge that the accountant’s role is evolving and that many of the activities they undertake can be impacted by AI.  The degree of competency required in relation to AI will be commensurate with the extent of an accountant’s use of and/or reliance on it. While programming AI may be beyond the competency of many accountants, they have the skill set to:  identify and articulate the problem the AI is being used to solve;  understand the type, source and integrity of the data required; and assess the utility and reasonableness of the output.  This makes accountants well placed to advise on aspects of the use of AI. The Code provides some examples of risks and considerations to be managed by professional accountants using AI, including: The data available might not be sufficient for the effective use of the AI tool. The accountant needs to consider the appropriateness of the source data (e.g. relevance, completeness and integrity) and other inputs, such as the decisions and assumptions being used as inputs by the AI. This includes identifying any underlying bias so that it can be addressed in final decision-making. The AI might not be appropriate for the purpose for which the organisation intends to use it. Is it the right tool for the job and designed for that particular purpose? Are users of the AI tool authorised and trained in its correct use within the organisation’s control framework? (One chief technology officer has suggested not only considering the capabilities of the AI tool but also its limitations to be better aware of the risks of something going wrong or where its use may not be appropriate.) The accountant may not have the ability, or have access to an expert with that ability, to understand and explain the AI and its appropriate use.  If the AI has been appropriately tested and evaluated for the purpose intended. The controls relating to the source data and the AI’s design, implementation and use, including user access. So, how does the accountant apply their skills and expertise in this context?  It is expected that accountants will use many of the established skills for which the profession is known to assess the input and interpret the output of an AI tool, including interpersonal, communication and organisational skills, but also technical knowledge relevant to the activity they are performing, whether it is an accounting, tax, auditing, compliance, strategic or operational business decision that is being made.  Data and confidentiality According to the Code, when an accountant receives or acquires confidential information, their duty of confidentiality begins. AI requires data, usually lots of it, with which it is trained. It also requires decisions by individuals in relation to how the AI should work (programming), when it should be used, how its use should be controlled, etc.  The use of confidential information with AI presents several confidentiality challenges for accountants. The Code includes several considerations for accountants in this regard, including: Obtaining authorisation from the source (e.g. clients or customers) for the use of confidential information, whether anonymised or otherwise, for purposes other than those for which it was provided. This includes whether the information can be used for training AI tools.  Considering controls to safeguard confidentiality, including anonymising data, encryption and access controls, and security policies to protect against data leaks.  Ensuring controls are in place for the coding and updating of the AI used in the organisation. Outdated code, bugs and irregular updates to the software can pose a security risk. Reviewing the security certification of the AI tool and ensuring it is up to date can offer some comfort.  Many data breaches result from human error, e.g. inputting confidential information into an open-access web-based application is a confidentiality breach if that information is saved, stored and later used by that application. Staff need to be trained in the correct use and purpose of AI applications and the safeguarding of confidential information. Dealing with complexity The Code acknowledges that technology, including AI, can help manage complexity.  AI tools can be particularly useful for performing complex analysis or financial modelling to inform decision-making or alerting the accountant to any developments or changes that require a re-assessment of a situation. In doing so, vast amounts of data are collected and used by AI, and the ability to check and verify the integrity of the data introduces another level of complexity.  The Code makes frequent reference to “relevancy” in relation to the analysis of information, scenarios, variables, relationships, etc., and highlights the importance of ensuring that data is relevant to the problem or issue being addressed. IESBA was mindful, when revising the Code, that there are various conceivable ways AI tools can be designed and developed to use and interpret data.  For example, objectivity can be challenged when faced with the complexity of divergent views supported by data, making it difficult to come to a decision. AI can present additional complexity for accountants, but the considerations set out in the Code are useful reminders of the essential skills necessary to manage complexity. Changing how we work As well as its hugely beneficial applications in, for example, healthcare and science, AI is proving to be transformative as a source of business value.  With a range of significant new tools launched daily, from personal effectiveness to analysis and process optimisation, AI is changing how we work. These are powerful tools, but with power comes responsibility. For the professional accountant, certain skills will be brought to the fore, including adaptability, change and risk management, and leadership amidst rapidly evolving work practices and business models. Accountants are well placed to provide these skills and support the responsible and ethical use of AI.  Rather than fearing being replaced by AI, accountants can prepare to meet expectations to provide added value and be at the helm of using AI tools for finance, management, strategic decision-making and other opportunities. Michael Diviney is Executive Head of Thought Leadership at Chartered Accountants Ireland Níall Fitzgerald is Head of Ethics and Governance at Chartered Accountants Ireland

Governments may opt for more quantitative easing to prevent global inflation from turning into a recession, writes Cormac Lucey Speaking about the Republic’s budgetary position in 1979, Charles Haughey famously declared that “as a community, we are living beyond our means”. But his remarks might just as well be applied today to Western world democracies.  An article in a June issue of The Economist proclaimed that “Fiscal policy in the rich world is mind-bogglingly reckless”. Global fiscal policy is unsuited to today’s economic circumstances. “High inflation and low unemployment mean the world needs tight policy, not loose,” it said.  Last month, the Department of Finance’s chief economist indicated that between 2019–2070, annual age-related expenditure is projected to increase from 21.4 to 31.5 percent of Irish national output. With a projected 2023 modified gross national income of €284 billion this year, that rise would cost €28.4 billion today. That’s over €10,000 annually for every person working, more than the budgetary damage done by the financial crash 15 years ago and roughly equal to one-third of total budgeted tax revenues this year.  The situation in the UK isn’t much better.  A report on “Fiscal Risks and Sustainability” from the Office for Budget Responsibility in July, projected an increase in primary spending between 2022–23 and 2072–73 of 8.6 percent of UK GDP. That’s equivalent to roughly £2.2 trillion in terms of today’s GDP, or around £6,000 annually per person working. Faced with inexorable spending pressures on one hand and political resistance to tax rises on the other, there is a structural risk that our political leaders will opt for greater borrowing as the way out.  The USA may be the forerunner in this regard.  It began running enormous budget deficits under President Trump even though the US economy was operating at near full capacity. It has continued this practice under President Biden. There has been no discernible political cost to be paid by either administration. And, as the issuer of the world’s largest reserve currency, it has seen precious little economic cost so far.  Fiscal dominance is shorthand for the fiscal needs of the central government dominating monetary policy set by central banks and occurs when central banks create fresh money (via quantitative easing) to prop up the prices of government debt securities and , thereby, contain the consequent interest rates.  Between 2009–2021, the share of their government’s issued debt held by central banks grew by about 15 percent in the USA and around 30 percent in the UK and the Eurozone. In essence, central banks were able to do something inflationary (create a lot of fresh money) because external circumstances were already very deflationary.  A justification can always be found: economies must be sustained through the financial crisis; we must not let a pandemic morph into a depression. The political cost was negligible. We can, therefore, expect more of the same in the future when fiscal push comes to monetary shove.  The constraint on fiscal dominance will not be rules or laws governing what is right or wrong but expedience: what can policymakers get away with?  The practical constraints will be financial market reactions and any inflationary effects of monetary loosening. But there may not be any noticeable market reaction: the Bank of Japan owns an estimated 45 percent of all Japanese government debt without any allergic market reaction.  The key question is whether inflationary pressures are stoked by aggressive fiscal dominance. The return of inflation explains why monetary restriction has replaced monetary exuberance.  But once inflation is out of the way, expect fiscal dominance (and more money-printing) to resume. That would be bullish for real assets (such as property and commodities) and bearish for paper assets.   Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland

Accountancy Ireland sits down with Carol Phelan, CFO of Dalata Hotel Group. From her journey at one of the Big Four to private equity, Phelan shares her insights into the business side of the hospitality industry and Dalata’s people-centric approach to success A lifelong interest in business took Carol Phelan on a career path that has seen her work in a Big Four firm, an Irish private equity house and, ultimately, become CFO of Dalata Hotel Group – Ireland’s largest hotel operator. Speaking to Accountancy Ireland  in Dalata’s new state-of-the-art headquarters in Sandyford in south Dublin, Phelan explains how she grew up on a farm in County Laois and was always interested in business.   “At school, I gravitated towards business success stories, particularly Irish ones. I was always strong with numbers – they made sense to me, but it wasn’t just about balancing the books. It’s what people are doing with the business. I did a broad Business degree at the University of Limerick. I specialised in accounting and finance and did a Master’s in Accounting. I knew it was a qualification that would stand to me whatever I did.” Her undergraduate degree included an internship component, and in a forerunner of her future career, it took her to work in a hotel in France for nine months. “I got to work with numbers in a real business and found I could bring some skill to that.” After college, she joined KPMG and qualified as a Chartered Accountant.  “I wanted to develop my skills and build my professional and business network,” she says. “I worked in the financial services and transaction services divisions. That allowed me to work with companies doing deals and making strategic acquisitions. I was able to go into businesses of different sizes in various sectors and work with leading advisors. I enjoyed my time with KPMG.” She also learned something about herself. “I realised I didn’t want to be an advisor. I wanted to be the one making the decisions and living with them.” Moving on from the Big Four Phelan joined private equity house Ion Equity in 2007, just before the global financial crash hit. It could hardly have been a more challenging time for that sector.  “It took me out of my comfort zone,” she says with no little understatement. “It was about going in, putting deals together, and putting money behind them. It was also about helping finance teams in investee companies deal with the challenges presented by the crash.” Given her qualifications and experience, she was often asked why she didn’t go to one of the major international private equity firms. “I wanted to be where the leadership was,” she explains. “I wanted to be close to the decisions. No matter how small a role I had, I wanted to be part of the decision making.” Her next move saw her join Dalata in 2014.  “I wanted to get into the finance function of a large Irish company,” Phelan explains. “The Dalata opportunity came up, and it ticked all the boxes. The people leading the company shared my values – ambition, a desire to grow and challenge oneself, and always wanting to do better. Dalata has that in spades.  “The company has always been led by people very concerned about building a business that works for everyone and not just about generating higher numbers and profits. They want a business that creates opportunities for everybody. I knew the people in Dalata before I joined, so I knew it was all true.” The company was on the cusp of significant change when she joined. “It was just after the IPO. All the structures had to be built to accommodate it. I was able to use my skills for that. It was great to have that challenge.” A people-centric business The culture of the business is very important to Phelan.  “Hospitality is a very people-centric business. It’s about more than numbers and the bottom line. That sits well with me and my background. Dalata has always said it wants people with ambition: ambition to grow and develop themselves but to bring others with them, as well.” Dalata places great store by training and development, with over 113,00 training courses completed by its staff in 2022.  “The company is growing and ambitious. I can’t tell you the opportunities that will exist in three years, but we will put everything behind people who want to grow and develop.  “People who joined the company in 2015 are now working in roles that didn’t exist back then. We give people support to get the experience and skills and take on those roles. We opened seven hotels in 2022, and the majority of the leadership teams in them is made up of people developed in Dalata. That creates opportunities for those following behind them.”  Career mobility is also important. “You can join the finance team here, but who knows where you will end up. We have operations people who ended up in finance and operations people who started in finance. You can’t pigeonhole people. As a major plc, we also have all the finance strands here so someone can build a full suite of experience.” There is a need to look beyond functional skills, she adds. “You can develop skills for a role in finance, but it has never been just about the numbers. I can tell by sitting across the table from someone if targets will be met without looking at numbers on a page. We all have that ability if we work on it.” The people-centric approach delivers real business benefits. “We see ourselves as an employer of choice. That’s very important in the hospitality industry. We are not as challenged as others in the industry regarding recruitment. We are now back at 2019 job vacancy rates. We will always have several vacancies. That’s the nature of the business.” “The only way was up” She was appointed Group CFO on 1 July 2021. “The only way was up, having been shut down for most of the previous two years [during the pandemic],” she says with a smile. “It was easy coming in after that. Anyone can look like a hero in those circumstances.” Looking back on COVID-19, she believes it showed Dalata at its best.  “We never panicked. We stood back and said it would resolve itself. That was based on a genuine belief that science would get there. That was our underlying expectation, and we had to be ready when we came out the other side. We looked at it through a longer lens. Everyone stepped in to do whatever needed to be done. Our bottom line was to protect our people. They represent our biggest asset. The accounting standards haven’t figured out a way to measure the strategic value of people yet, but we know what it is.” The aim was to keep people employed during COVID-19.  “Our focus was on everyone doing the right things in the right ways to keep people on. That’s the Dalata way of doing things. We ensured all our people had full access to the Dalata Online Academy. Even at home, they could continue to grow and develop.” The operations software platform also proved its worth. “We use it in the hotels for people management, rostering, onboarding, as a communications tool, and for pushing out video updates,” Phelan explains. “We have a lot of young people in the industry, and the ability to access information over the phone is so important to them, particularly when they can’t get together physically. We ensured people remained connected to the business even when apart.” That approach was extended to customers, landlords, suppliers, bankers and other stakeholders.  “We gave refunds to customers when they asked for them. We never even considered not paying rent. All our decisions were taken with a view to the long term. That will stand to us in the future.” Growth Having delivered record profits in 2022, there will be no let-up in the growth and development of Dalata Hotel Group, Phelan says.  “We now have 52 hotels in Ireland, the UK and continental Europe, and another five in the pipeline in London, Brighton, Manchester and Dublin. Forty percent of our rooms are in Dublin, 40 percent in the UK, and the balance is in regional Ireland and continental Europe.  “We have great ambitions for continental Europe, but our priority growth focus is the UK. There is a gap in the four-star hotel market, and we are in a great position to fill it. Dalata is a very ambitious company. The focus is always on what’s next. I love that attitude. But there is strong discipline. There will never be trophy assets in Dalata. Everything must make sense for the broader business and deliver a return for our shareholders.”  She concludes by pointing out that her own role reflects the core values of Dalata.  “I am an executive director and sit on the board as well as leading the finance team. I must be able to contribute to Dalata strategically, not just in my own expert area. Board members need to be able to challenge each other. We may approach it from slightly different angles, but it’s important to hear everyone’s views. That’s the Dalata culture overall. People are encouraged to bring their individuality to work. Everyone is encouraged to have a voice and to speak up. Who we are and where we’ve come from shapes that. We all bring different perspectives to the debate.”

Start-ups looking to grow have a range of options but carefully considering accounting standards is one way to reduce complexity, write Wuraola Raheem and Paddy McGhee For many Irish high-growth start-ups, the early years are consumed by the cash burn of developing a new product, followed by the cost of growing the market. The nuances of accounting standards are often a secondary consideration.  However, not being aware of some of the accounting standards considerations can have a negative impact on investor confidence and regulatory compliance. Here are nine areas of complexity that often arise for high-growth companies at the start of their journey. IFRS or FRS 102? If an organisation has an international shareholder base and international customers and suppliers, should it use IFRS?  While IFRS is a complete standard recognised globally, its measurement and valuation criteria, together with its disclosure requirements, are burdensome for a small company.  FRS 102 was written with small companies in mind, and in most cases, for a growing company, it will work as well as IFRS.  The decision to move to IFRS will be better taken when the company matures. For example, if a firm acquires other businesses along the way, the requirements for assessing the purchase price allocation are more onerous under IFRS than FRS 102.  Similarly, disclosure requirements are more onerous under IFRS. Revenue recognition There are very few modern businesses for which revenue recognition arises when the invoice is issued. Many companies provide multiple services and warranties, give a right of return or provide a service over a period of time or – increasingly in the tech sector – based on consumption.  This will give rise to the possibility of accrued revenue in which the service is provided in advance of billing or deferred revenue if billing has occurred, but the service or good has not been fully delivered. IFRS, US GAAP and FRS 102 are mainly consistent in their treatment of when revenue is recognised. Many growing companies enter into tailored contracts in order to make those first few sales often giving rise to additional free services or warranties that may lead to revenue deferrals.  Many other firms enter into agreements with large platform companies to sell their products or services, and the lines between marketing and delivery costs and net revenue can become blurred. Accounting for venture capital As companies begin to raise equity, the type of financing used is often not ordinary shares. Common forms of investing include: convertible loan notes; preferential loan notes; preference shares; and shares with a liquidation preference. Today, few investments are in the form of a loan or equity as investors look to protect their investment by having some form of preference. There is often a level of negotiation in these, so funding instruments will almost always have some individual nuances. The impact is that some convertible instruments include a hybrid instrument that needs to be assessed or, in other instances, while something may be called a ‘share’, if it has a fixed return, it may be accounted for as debt. Many companies also overlook the fact that the direct costs of raising equity are recognised in equity, or direct costs relating to debt are capitalised and amortised using an effective interest rate method. It’s not to say that many costs leading up to a finance raise are expensed, such as due diligence fees. Share-based payments There has been much valid criticism in Ireland that share-based remuneration has not received more tax concessions. For a young company, a popular route to attract staff is to offer share options, reducing the cash outlay.  In theory, share options are provided in lieu of a cash salary. Because of this, accounting standards require the intrinsic value of share options at the date they are issued to be recognised as an expense over the service period. Depending on the perceived volatility of the shares and the rights attached to them, this can result in a sizeable non-cash charge to the income statement and one that often does not appear in management accounts. Investing in cloud infrastructure The treatment of expenditure linking a business to cloud-based software has recently been a hot topic for large companies.  The reason for this is that IFRS accounting standard setters recently reminded companies that where they invest in linkages to a cloud-based infrastructure, the related costs should be expensed rather than capitalised on the basis that the firms do not own or control the cloud-based software. This meant that several multi-million Euro enterprise resource planning (ERP) implementation projects were expensed rather than capitalised.  It is easy to see the frustration that some reporters faced as they will receive the benefit of those costs over several years. With many companies reliant on cloud-based infrastructure, it can be a shock to learn that not all the related costs meet the criteria for capitalisation. Capitalised development expenditure “Our enterprise value is €XX million so how come we cannot recognise that value on our balance sheet?” is a common question, followed by: “Given we have spent €XX million on product development, can we capitalise that?” Accounting standards are very detailed on what can be capitalised and what is expensed. Generally, costs relating to internally generated brands, start-up costs, training activities, research, advertising and internally generated goodwill are expensed. The one area in which companies may capitalise costs is where such costs relate to the development of a product or process that can be shown to bring future economic benefit.  There are, however, concise rules on what may be capitalised. While costs can be, it does not mean such costs meet the criteria for claiming research and development (R&D) tax credits.  While the costs can be closely aligned, they are not mutually inclusive. International expansion Given the size of Ireland’s indigenous market, most companies look to international expansion early on. Initially, companies need to assess how they will expand: Do they use foreign subsidiaries to make sales? Is a foreign subsidiary used for providing services to the parent company in sales and marketing, local maintenance or R&D? Regardless of the role played by the foreign subsidiary, from a tax perspective, the share of the taxable profit each country will get will need to be determined. This is where the concept of transfer pricing comes in, and companies need to determine where the profit would reside if the various companies were unrelated. Increasingly with foreign expansion, companies have to deal with employee taxes for foreign employees or employees who move to a new market to help set up a presence. Consolidation requirement As companies grow, they reach a stage where there is a requirement to prepare consolidated statutory financial statements. At a basic level, if a company is defined as a small company under Irish law, it is not required to prepare consolidated accounts. The requirement for consolidated accounts kicks in when a company exceeds two of the following criteria two years in a row: Third-party turnover of €20 million; Gross assets of €10 million; and/or 250 employees. Given the relatively high-level criteria for employee numbers, companies generally meet the requirement when they reach the turnover limit. Other regulatory requirements Irish company law and accounting requirements are generally well legislated for, ensuring that small companies are not overly regulated.  Having reached the consolidation requirement at €20 million turnover, a private company’s next legislative bar is the requirement to have a directors’ compliance statement if it reaches €25 million turnover. Having reached a consolidated turnover of €50 million, a company is required to put an audit committee in place or explain why one is not required. Wuraola Raheem is Audit Manager in Consumer Technology Business at Deloitte Paddy McGhee is Audit Manager in Consumer Technology Business at Deloitte

Chartered Accountant David Malone, Chief Executive of the Irish League of Credit Unions, believes that credit unions are uniquely positioned to fill the gaps left by the departure of major banks and cater to the needs of small businesses and individuals, offering a personalised and community-focused approach Having recently achieved the top ranking in the Ireland RepTrak 2023 study of corporate reputation, credit unions are now poised to provide a real alternative to traditional retail banks for the full range of financial services products.  The credit union sector’s strong local presence with over 500 locations across the island of Ireland demonstrates a clear community focus now combined with soon-to-be-enacted new legislation, which will see credit unions unlock their full potential to become the country’s primary financial services institution of choice. David Malone, Chief Executive of the Irish League of Credit Unions (ILCU), an advocacy body for credit unions in Ireland, believes the unique ethos and DNA of credit unions place them in a strong position to fill the void left by the departure of KBC and Ulster Bank, as well as other service gaps. “There have been significant changes in the financial services sector since the global financial crisis,” he says. “Twelve retail banks were operating in Ireland back then. It’s down to three now. That has led to a lack of customer choice, particularly in the mortgage and SME lending markets, where competition is highly concentrated between the three pillar banks.  “Along with that, we have seen bank branch closures, decimating Irish towns and even where branches remain, decision-making has migrated from the local branch to the centre.” That centralisation has created problems for customers, says Malone.  “For example, small businesses have a real challenge trying to get loans from banks,” he notes. “There is limited interaction with local bank branch managers. Many such loans are turned down. A small business owner can visit their local credit union and sit with staff to explain their business and its needs. Our staff have that vital local knowledge and will understand the specific needs of the business that, in many cases, can help in providing the appropriate loan finance.”  Building relationships Malone joined the ILCU as Head of Finance and Deputy CEO seven years ago, after spending over ten years in audit and assurance with PwC.  “I trained as a Chartered Accountant with PwC after doing my degree in Accounting and Finance and Masters in Accounting at DCU,” he says. “I am now a Fellow of the Institute. It’s a great qualification, providing a real platform for your career. “At PwC, I worked with a wide range of clients, from large Irish plcs to SMEs to Irish subsidiaries of multinationals. Going into different businesses and seeing how they are run was fascinating.” Auditing is much more than a numbers game, he explains. “You have to build relationships with audit clients. You are there to add value and recommend improvements to the client’s financial processes.” He was drawn to the business world as a student during his summer job. “I worked for five summers in my aunt’s business, which was a busy tour operator during the 90s. I learned all about customer service and how the true value of timely and reliable financial information is key to decision-making and strategic direction.” Malone was appointed ILCU CEO in July 2022.  “In conjunction with our board, I had been leading the transformation programme for the organisation prior to that,” he says. “The programme aims to deliver on our new purpose to lead, support and sustain the development of credit unions on the island of Ireland. “Our areas of focus include facilitating collaboration of credit unions, repositioning the credit union brand, and effective advocacy to government and regulators. We also provide a significant suite of professional services to member credit unions in areas such as risk and compliance, legal, human resources and training.” The evolution of credit unions “Our transformation has brought significant additional expertise into the organisation with a number of new skill sets adding huge value as we deliver our purpose,” Malone notes. Malone is excited by the evolution of credit unions. “Credit unions have a 42 percent share of the personal lending market. They have issued close to half a million loans in the last year. In addition, credit unions in over 200 locations across the country are now providing current accounts that are potentially accessible by over two million credit union members. These can be accessed through an app and support Apple Pay and Google Pay. Credit unions now account for over 10 percent of new current accounts opened.” The new legislation, the Credit Union Amendment Bill, is a game changer, Malone says. It allows for the establishment of Credit Union Service Organisations (CUSOs) by groups of credit unions. These CUSOs enable credit unions to pool resources to invest in back-office infrastructure that will enable more credit unions to provide a wider range of financial services, particularly SME lending and mortgages. The new legislation also allow credit unions to provide services to members of other credit unions where the credit unions agree and allows credit unions to pool loans and risk between each other. “Credit unions have significant funds to lend,” says Malone. “They are not relying on the wholesale money markets for their funding. Instead, members continue showing confidence and trust in credit unions by depositing their savings.  “A number of credit unions now offer some of the lowest interest rates in the mortgage market. Credit union mortgage lending has increased by 25 percent in the last year. There is circa €11 billion of funds in credit unions that is available to be lent and can be used to fund small businesses, help people buy their homes, and support community organisations. The new legislation will help credit unions significantly increase their footprint in these areas. “Digitalisation presents great opportunities,” he explains. “Credit unions embrace technology by providing online payments, digital membership and loan applications. However, there is an important difference: credit unions are not digital only; they are digital with the essential human touch. Credit unions are omnichannel, so you can go into a branch or call on the phone and get an answer in real-time.” There is also the issue of financial exclusion. “People still need access to cash, and with banks closing branches and removing ATMs around the country, credit unions have an important role to play in providing that access.” Trusted organisations Malone believes that personal service is the chief reason for credit unions’ top ranking in the Ireland RepTrak 2023 study of corporate reputation.  “We got under the bonnet of that ranking, and we found the key contributors are our human, friendly and authentic service. The study emphasises attributes such as trust and respect, which are core to the ethos of credit unions which are locally owned and managed. We are proud to be at the heart of communities nationwide working towards a more inclusive society, where no one is left behind.” That contrasts sharply with some of the other lenders in the market. Malone is concerned about the impact of ‘buy now pay later’ (BNPL) and personal contract purchase (PCP) products on borrowers. “People don’t realise they are accumulating significant amounts of small debts with these products,” he says. “When people get a loan from the credit union, it’s very transparent and open. We want a lifetime relationship with members. It’s not short-term. Credit unions have helped members consolidate debts to deal with issues created by those products.” He explains that credit union loans are very different to other loans.  “For example, credit union loans provide flexibility, including no early repayment penalties. There is also loan protection insurance that effectively repays the loan in the event of a member’s death. This is a unique credit union benefit that you won’t get with the bank.  “I recently learned about a young person in their twenties whose parents had died. The parents had bank and credit union loans. The credit union loans were paid off automatically as they were covered by the insurance. The bank offered a repayment plan. Our approach is so different to other credit providers. We genuinely care about our members.” That membership is ultimately the critical point of difference, he believes.  “Our members are much more than customers; they are part owners of their credit union. They have a say in how it’s run. Members can volunteer to be on the board and committees. The boards are made up of community volunteers who have the locality’s best interests at heart. They selflessly give their time to credit unions. I would encourage any Chartered Accountant to consider becoming a credit union director, as it is enormously rewarding. “We see credit unions becoming primary financial institutions of choice migrating from the periphery to the front and centre of the financial services landscape,” he continues. “We are building on over sixty years of service to communities around Ireland. We are here to stay, not retrenching or closing – quite the opposite. We are growing and moving forward. We are building on a great reputation and great customer experience. We are offering a much wider range of products and services across the country, and that’s great news for members and the people of Ireland.”

The Pre-Budget Submission 2024 tackles challenges in Ireland, from the ‘green’ transition to inflation and housing supply, offering recommendations to benefit businesses, says Gearóid O’Sullivan Each year, Pre-Budget Submission is prepared under the auspices of the Consultative Committee of Accountancy Bodies – Ireland (CCAB-I).  It is a particularly influential document as it represents not only the views of Chartered Accountants but also our peers in other professional accountancy organisations. The Pre-Budget Submission is overseen by the CCAB-I’s Tax Committee South, of which the membership is predominantly Chartered Accountants. Pre-Budget Submission 2024 This year’s Pre-Budget Submission addresses several key issues impacting business in Ireland, from the so-called ‘green’ transition to the impact of inflationary pressures and, of course, ongoing supply issues on all sides of the residential property market.  The aim of any tax measure is ultimately to support the economy and wider society. Therefore, to the extent a measure represents an initial cost to the Exchequer, the hope and intention is that there is a corresponding benefit that exceeds the cost.  In some instances, the benefit is purely financial, e.g. our recommendation to permanently legislate for the Special Assignee Relief Program (SARP) and, in others, the benefit is a desired change in behaviour, e.g. our recommendation to introduce a ‘Help-to-Insulate’ scheme. Measures to alleviate capacity issues in the residential property market The residential property market faces issues on both the rental and retail sides.  On the rental side, we continue to advocate for measures to make renting more attractive, particularly for small-scale and accidental landlords.  Despite tax legislation recognising taxable profits in many cases, often small-scale and accidental landlords find themselves in a cash-flow negative position when the tax bill and any loans on the property are taken into account.  While it is reasonable to mention the economic benefit achieved through property ownership over the longer term, the cash-flow impact is often driving these small-scale and accidental landlords out of the rental market.  If this cohort of landlords were, in turn, selling their investment properties, there could be a sound basis from a policy perspective in maintaining the rules in their current iteration.  However, landlords will often have to first seek to evict and then sell. As such, vacancy represents a key policy issue for government when designing appropriate taxation rules for landlords. With the above in mind, CCAB-I has made several recommendations that we suggest will make letting sufficiently attractive for smaller-scale and accidental landlords: Local property tax should be available as a deduction against rental income. Expenses deductible under section 97 TCA 1997 should be aligned with Case I/II principles. Expenses that are revenue in nature and incurred wholly and exclusively for the purpose of the rental business should be deductible, and rental losses should be available for offset against other income. Capital allowance rates for fixtures and fittings should be increased from 12.5 percent to 25 percent per annum to facilitate landlords investing in the maintenance of properties, providing the works do not result in the termination of an existing tenancy. Landlords who retrofit a property to enhance the property’s energy rating should be able to claim a 100 percent capital allowance where the renovations do not result in the termination of an existing tenancy. The Government should introduce measures to bring parity to the taxation of corporate and individual professional landlords by introducing a flat rate of 25 percent on Case V income for small landlords who opted to become ‘professional landlords’ by waiving their rights under Section 34 of the Residential Tenancy Act (2014), giving additional security to their tenants. We have also suggested a reasonable capital gains tax (CGT) relief to incentivise property sales with tenants in-situ: Professional landlords should be given access to succession reliefs (e.g. CGT retirement relief) to improve the long-term investment proposition of the residential rental business. To encourage landlords to remain in the private rental market, CGT relief of four percent per annum should accrue for the length of time the asset remains a rental property. (This was specifically examined in a 2017 Report of the Working Group on the Tax and Fiscal Treatment of Rental Accommodation Providers.) In addition to the above, we are also recommending that Government increases ‘Rent-a-Room’ relief to match standardised average rents and to remove the ‘cliff-edge’ over which relief is completely removed. Measures to combat inflationary pressures The level of inflation in the Irish economy is putting significant pressure on households.  The European Central Bank began increasing interest rates in a bid to dampen inflation. There is a balance to be struck between tax measures to combat inflation and the policy aim of reducing spending capacity. With that said, there is scope for a reasonable change in the personal tax regime, which should not be incongruent with the policy objectives of the European Central Bank.  Earlier this year, CCAB-I responded to the Department of Finance’s consultation on Ireland’s personal tax system. The Pre-Budget Submission includes many of the points raised in that earlier submission, including a recommendation to move to indexation of the income tax bands and credits.  In Ireland, a taxpayer begins to pay tax at the higher rate from €40,000, although the average industrial wage is €46,800. Therefore, the application of an indexed approach to increasing bands and credits should ensure that tax bands and credits remain valuable year to year. Otherwise, while the Government may not raise bands and credits in a particular year, the real value of after-tax wage is likely to have decreased due to the impact of inflation. We also recommend changes to other areas of the personal tax system, including several changes to the CGT and capital acquisition tax (CAT) regimes. These include: The CGT annual exempt amount available under section 601 TCA 1997 should be increased to €5,000.  The CGT indexation tables in section 556 TCA 1997 should be extended beyond 2003 to the present day. The rates of CGT and CAT should be reduced to 20 percent. The lifetime limit for claiming revised entrepreneur relief under section 597AA TCA 1997 should be increased to €5 million. The category A threshold for CAT should be increased to €350,000 in line with a rate reduction. The CAT small gift exemption should be increased to €5,000. Employers’ PRSI should not be increased at this time. As in 2022, we are also recommending that further consideration is given to an intermediate rate of income tax. This is a longer-term ambition.  However, the current system is complicated by the fact that we have three separate taxes on personal income (income tax, USC and PRSI). As such, all these taxes could be redesigned into a single tax, and in this scenario, an intermediate rate of tax becomes a key tool. Further recommendations Pre-Budget Submission includes further recommendations on measures to assist climate change, support foreign direct investment, SMEs and entrepreneurs, and enhance the tax system generally.  The document is a key feature of the tax department’s annual output. It reflects the views of professional accountants across the country and is presented directly to the Department of Finance each year.  While the Government faces several challenges in this year’s Budget as it balances a substantial surplus with increasing societal needs, it is hoped that our recommendations will be considered in terms of the benefit we believe they will bring to businesses in Ireland. Gearóid O’Sullivan is a Tax Manager at Chartered Accountants Ireland 

Imelda Hurley, CEO at Coillte, the semi-state forestry company, talks about her passion for sustainability and the importance of Ireland’s climate action and biodiversity agenda for the Irish economy and society  Imelda Hurley knew from an early age that she was destined for a career in business. Hurley tells Accountancy Ireland about her career path and how Coillte’s strategic vision will further support its contribution to Ireland’s climate targets, optimising the multiple benefits from forestry.  Tell us about yourself and the start of your career. I grew up on a family dairy farm just outside Clonakilty in West Cork. My first job was with Clonakilty Black Pudding, a little-known brand back then, but now a very successful and entrepreneurial operation. I completed a Business Studies degree at the University of Limerick. Following that I joined Arthur Andersen and became a Chartered Accountant. During that time, I had the opportunity to engage with multinationals and indigenous companies. That gave me a great lens into how organisations successfully operate, develop and implement strategy. How has your career evolved since you qualified as a Chartered Accountant? A: I always had an ambition to become a CFO and eventually a CEO. My career experience has been from farm to fork to forestry, working in the food, agribusiness and agriservices businesses across a variety of ownership structures.  During my role as CFO and Head of Corporate Sustainability at PCH International in China, I had the opportunity to learn more about sustainable product development and supply chain management.  That was over 10 years ago, when few organisations were talking about sustainability. I’m left reflecting on how times have changed over those 10 years and how there is an increased focus on sustainability today.  You were appointed as CEO of Coillte in November 2019. Tell us about your role and what attracted you to the position. I really enjoy the outdoors and nature. Coillte gave me a great opportunity to work in a business with a commercial focus, but also a business delivering social good. I joined Coillte in November 2019 and I spent much of the first two years navigating the pandemic. I wanted to ensure that Coillte emerged from the pandemic as a sustainable, viable and vibrant organisation. I am pleased to say that when we reported our 2021 results, we delivered record revenues, record profitability and a record dividend to the State.  Coillte manages 440,000 hectares of primarily forested land, circa seven percent of Ireland’s land, with about 6,000 individual properties. We have just over 800 employees and 1,200 contractors working across three divisions: Coillte Forest, Land Solutions and Medite Smartply.  Coillte is the nation’s largest forester and producer of certified wood, a natural, renewable and sustainable resource and the largest provider of outdoor recreation space in Ireland. It enables wind-energy on the estate, processes forestry by-products and undertakes nature rehabilitation projects of scale. When you were presented with your Businessperson of the Year Award in December, you were described as an “advocate for sustainable business practices and a leader in sustainability discussions”. Why is sustainability important to you? We are on a journey that requires us to leave the planet in a better place than we found it. There is a financial balance sheet but also an environmental and social balance sheet. Good business brings these together. From my perspective, I accepted the award on behalf of Team Coillte, all of whom work every day to balance and deliver the multiple benefits of forestry.  Tell us about the strategic vision you launched last year and Coillte’s plans for the next 12 months and beyond. In April 2022, we launched a new forest strategic vision focusing on four pillars – Forests for Climate, Wood, Nature and People. This vision sees us, as an example, enabling the creation of 100,000 hectares of new forests by 2050. Those forests will sink approximately 18 million tonnes of CO2.  We are also working on how we manage our existing forests to capture an additional 10 million tonnes of CO2 by 2050.  We have an ambition to redesign approximately 30,000 hectares of peatland forests through a programme of rewetting or rewilding for climate and ecological benefits and also aiming to enable the generation of one gigawatt of renewable wind energy by 2030.  From a people and recreational perspective, we are targeting to enable €100 million of investment to create world-class visitor destinations by 2030.  In July 2022, we launched Beyond The Trees, Avondale at Avondale Forest Park in County Wicklow and in June of this year, we opened the newly refurbished Avondale House, further adding to Avondale Forest Park experience, which has had over 300,000 visitors since June 2022. Our ongoing focus is to continue to ensure a strong, viable, vibrant Coillte that focuses on optimising our contribution to Ireland’s Climate Action plan, while continuing to deliver sustainably certified timber to support the decarbonisation of the built environment.  Our strategic vision also involves increasing from 20 percent of the estate being primarily managed for nature and biodiversity to 30 percent by 2025 and to 50 percent in the long-term. Another major focus for us is workforce capacity, planning for our organisation and the industry more broadly. We have 440,000 hectares under management and between now and 2050 the State has an ambition to increase forest cover from 11.6 percent to 18 percent. As such there will be a requirement to attract more people into our sector going forward. Are you glad you made the decision to qualify as a Chartered Accountant and what career advice would you offer your younger self? A: In the early years of my career, I looked up to others. Ultimately, I realised what was much more important was to follow my own path and enjoy the journey. You have to do what makes you happy and if you work hard and are determined, good things will come.  

 Employee well-being is vital for business success. Moira Grassick explores the biggest people risks, from stress to diversity, and outlines how you can strengthen your organisation’s resilience A business is only as successful as its employees. People are both the most important asset a business has and, on the other hand, a source of risk if they’re not properly managed. After a stressful number of years in which health and well-being were primary concerns for everyone, the workplace has changed irreversibly, and it’s up to business owners to adapt to ensure their people stay happy and, in turn, deliver business growth. Some business risks are outside the control of Irish employers. Global geopolitical tensions and interest rates continue to impact the cost of doing business, but it’s different when it comes to your people. Employee risks are within your control. Here are some risks your organisation can minimise, ensuring happier and more productive employees. Stress and burnout After a challenging number of years, your employees may be suffering from anxiety, stress or burnout symptoms. These psychosocial issues can have a direct impact on productivity and potentially on the reputation of your business. Employees are more focused than ever on work-life balance and well-being. Taking steps to help employees achieve their goals in these areas helps reduce errors, minimise staff turnover and avoid dips in productivity. Remote Health & Safety  A remote worker’s home workstation is an extension of the workplace, and employers need to consider their Health & Safety obligations in this regard. The main responsibility for Health & Safety at work rests with the employer regardless of whether an employee works remotely or onsite. A risk assessment of the employee’s home workspace should be carried out. Work-related injuries (both physical and psychosocial), whether they happen onsite or in a remote location, could lead to penalties, brand damage and a deterioration in employee relations. Recruitment and retention Although the labour market shows signs of turning back in favour of employers, it’s crucial for business owners to figure out what will help staff build long-term careers with them. High staff turnover is bad for business, so engaging with employees and responding to their feedback on what could help them build a long-term future with you will pay dividends. Workplace culture Serious misconduct like bullying and harassment or theft and fraud can derail a business. It’s vital to manage these risks through the effective operation of appropriate policies and procedures. Staff should be aware of the values they are expected to uphold. Likewise, if employers don’t deal with grievances in the correct manner, they risk demoralising staff who won’t want to work within an uncaring culture. Preventing grievances in the first place should be the aim, but failing to manage employee grievances properly will distract your management team from their main tasks, demotivate staff who think colleagues have not received fair treatment and ultimately hurt your business. Diversity, equity and inclusion As the Irish population continues to diversify, it’s important to develop an inclusive and diverse working environment. Failing to address this area will limit your access to the broadest possible talent pool and potentially have reputational consequences that hurt relationships with employees, customers and other stakeholders. Legal and compliance As well as the challenge of managing the transition away from pandemic-related work practices, employers also have a wide range of new employment laws to consider. The statutory sick pay scheme came into force in January and affects all employers. The transparent and predictable working conditions regulations impact probation periods, employment contracts and documentation. Most recently, employers will need to act upon various new work-life balance rights, including the right to request remote work. It’s a major challenge for employers and employment law practitioners to keep pace with the volume of recent employment regulations. The cost of ineffective management The costs associated with these risks are multiple. Management spends too much time firefighting, employees take their talents elsewhere, and the bottom line suffers. With the right approach, however, business owners can turn all these risks into strengths that will make their business more resilient to setbacks and more productive when trade is brisk. Moira Grassick is Chief Operating Officer at Peninsula Ireland

In the modern business landscape, fostering a culture of accountability is paramount for organisational success and ethical behaviour. Yvonne Kelleher and Conor McCarthy discuss the crucial connection between culture and accountability Culture and accountability are not new concepts. However, for many organisations, driving a culture of accountability seems like an intangible feat, with many organisations leaping to enhance the operating model without recognising the need to manage the human factors. This can be a costly oversight, and without considering a unified approach and mindset to drive accountability, the desired benefit and return will not be realised. Executives must set a leading example in this time of increased public and regulatory scrutiny and change in Ireland and globally. They need to exhibit accountability and maintain trust with both stakeholders and employees. Culture and accountability are not static ideas, nor do they impact one industry. In fact, in Ireland, we have seen over the last 12 months a lack of accountability underpinned by poor behavioural drivers across a range of industries such as financial services, public bodies and broadcasting has resulted in computational damage and a loss of stakeholder and employee trust. Time is of the essence for organisations to conduct a stocktake, reassess their culture journey and address any gaps to promote and embed an effective and resilient culture to drive and enforce accountability. Organisations should look at this as not only a necessity but also an opportunity that will support their success in the long run.  Organisational accountability – what is it? Organisational accountability occurs when all employees behave in a way that promotes the successful and timely completion of their responsibilities. It involves the organisation being answerable for its actions, decisions and impact on stakeholders, including employees, customers, shareholders, communities and, of course, the environment. A poor culture of accountability can present itself in several ways. Lack of transparency There is often a lack of transparency in decision-making processes, communication and reporting. Information may also be withheld, buried, distorted or not shared openly with stakeholders.  Lack of clarity in roles and responsibilities When there is a lack of clarity regarding roles, responsibilities and expectations, it becomes challenging to establish accountability. Unclear lines of authority, ambiguous decision-making processes, and overlapping responsibilities can contribute to a culture where no one feels truly responsible or accountable for outcomes. Lack of leadership Leadership plays a crucial role in shaping the culture of an organisation. In a poor culture of accountability, leaders may fail to model and uphold the principles of accountability. Leaders evading responsibility or engaging in unethical behaviour without facing the consequences sets a negative example for others.  Lack of trust There may be an environment of distrust and scepticism. This can lead to a lack of collaboration, communication and willingness to report issues and mistakes.  Low consequences for misconduct In organisations with a poor culture of accountability, there may be a lack of appropriate consequences for unethical behaviour or poor performance. This can lead individuals to believe they can engage in misconduct without facing significant repercussions.  Fear of retaliation Conversely, a poor culture of accountability may foster an environment where individuals fear retaliation for speaking up, reporting wrongdoing or challenging the status quo. This fear can deter individuals from holding themselves or others accountable, leading to a lack of transparency and the perpetuation of negative behaviours. It is crucial, therefore, to get a balance between consequences and a fear of retaliation.  Low morale A lack of organisational accountability can diminish an employee’s sense of purpose. This results in a lack of motivation to do your job and impacts the quality of employees’ work.  The link between culture and accountability Today, an organisation’s success is no longer just about the bottom line; qualitative inputs like transparency, trust and employee performance, productivity, collaboration and engagement also determine success. Therefore, an organisation’s cultural norms, values and practices can significantly influence the expected, accepted and enforced accountability level to ensure sustainable change. 1. Trust and transparency   Culture affects the level of trust and transparency within an organisation. In cultures where trust is high, and transparency is valued, accountability tends to be emphasised more. Employees tend to hold themselves accountable for their actions as they believe in the importance of integrity and honesty.  2. Consequences and enforcement Cultural attitudes towards consequences and enforcement also play a role in accountability. In some cultures, the fear of reputation, trial by the media or social stigma may serve as a powerful deterrent leading individuals to be more accountable for their actions. In other cultures, legal frameworks and regulatory systems play a key role in enforcing accountability (like the new individual accountability regime currently being implemented by the Central Bank in regulated institutions within Ireland).  Cultural influences Cultural influences on accountability can vary significantly across different societies and organisations, particularly as the operating and workforce landscape evolves. While some cultures may prioritise individual accountability, others may emphasise collective responsibility more. Understanding and addressing these cultural dynamics, including behavioural drivers, are essential for promoting a sustainable culture of accountability and ethical behaviour. Yvonne Kelleher is Managing Director in Risk Consulting at KPMG Conor McCarthy is Partner, Head of People and Change at KPMG

Derarca Dennis explains how CFOs and finance functions are evolving and how organisations need to concentrate on talent management and diverse skillsets for sustained growth The EY Ireland CFO Survey 2023 has found that CFOs are playing an increasingly strategic role in their organisations. The role of the CFO has expanded, as has that of the finance function. It has evolved to become much more engaged with other areas of the business. This has brought with it a requirement for new skills as well as an increased focus on talent management. That need is reflected in the survey results, with developing future leaders, people management and talent retention continuing to be key areas of focus for the next two years for 60 percent of respondents. Reducing costs and compliance with sustainability regulations are also high on the agenda for most CFOs. While technology in the form of automation and advanced data analytics capabilities will undoubtedly be critically important in supporting the evolving role of the finance function, talent must remain a key area of focus if it is to fulfil its potential. Forty percent of the respondents said their priority for driving growth in the coming year is investing in upskilling existing talent in their organisations, while a further 34 percent said investing in new talent would be a priority. CFOs are focused on optimising the skillsets and talent they already have. This is particularly important in a very tight talent market where organisations of all sizes are experiencing significant levels of talent churn. That, in turn, leads to a loss of knowledge and skills, which are not easily replaced. A continuous learning curve A culture of continuous learning that empowers employees to work at their best and realise their potential is a proven talent retention strategy. Not only does it deliver increased job satisfaction, but it also opens new career opportunities within the organisation. However, organisations must also seek to automate the dull, repetitive tasks that have traditionally been undertaken by the finance function. Some of those tasks can also be shared with other areas of the organisation, such as treasury. Closer interaction between the treasury and finance functions can allow certain tasks to be shared, allowing finance professionals to focus on more value-added work. That work includes preparation for upcoming regulations and reporting requirements in areas such as sustainability. Finance leaders may also need to look at hybrid models to access the capability required to meet the finance function’s expanded role. One option is to fill capability gaps by co-sourcing the required skillsets through professional services partners. These organisations can offer a range of services from basic accounting activities, record-to-report activities, control monitoring and testing, through to day-to-day treasury operations, typically on a managed service basis. Need to invest in diverse talent At a higher level, the changing nature of finance reporting requires CFOs to master a diversity of skills, especially a deep understanding of non-financial factors. It is also leading to profound changes in the composition of finance teams. Future finance teams will be very different from those of today. Finance professionals will, of course, be at their core, but  finance teams will also draw upon a diverse talent pool to enable the function to play its full role as a strategic partner in the overall business and to embrace the potential of technology and data. Future finance teams will augment the traditional skills of finance professions with those of environmental, social and governance (ESG), and have data analysts, supply chain experts and process engineers. Having that wider expertise within the team will make it much more effective when it comes to creating greater efficiencies across the business and delivering long-term value to the organisation. Continued investment in diverse talent will, therefore, be imperative given the evolving and increasingly business-critical role of the finance function. Future-fit CFOs need to focus on: rethinking current operating models and mapping future touch points with other parts of the business, such as the treasury and ESG teams; talent management strategies aimed at upskilling existing employees and attracting and retaining new recruits; acquiring the diverse skills that will make the finance function fit for its increasingly strategic role in the organisation; leveraging existing capability within other departments to support the finance function; outsourcing or co-sourcing elements of the finance function to external partners on a managed service basis; and stemming employee turnover by ensuring that processes are future-ready and efficient enough to retain talent interest and engagement. The evolving role of CFOs and finance leaders in Ireland and of the teams they lead makes it imperative to focus on people management and the acquisition and retention of diverse skillsets. To ensure success, acquiring and retaining talent from both internal and external sources is crucial. Finance functions of the future will encompass a wide array of professionals whose skillsets will contribute to the organisation’s strategic growth. Ultimately, driving greater value for the organisation hinges upon empowering talented individuals with efficient, automated and data-driven processes across both financial and non-financial domains. Derarca Dennis is Assurance Partner at EY Ireland

Your firm’s brand visibility and reputation are critical when competing for skills in a tight labour market, says Mary Cloonan For accountancy firms, recruitment at all levels can be a challenge. With good candidates in short supply, firms need to be able to show that they are a great place to work. A robust and well-designed branding strategy is an excellent investment in your firm’s future success and sustainability. It builds credibility, enhances your reputation, supports growth, and strengthens your ability to attract and retain employees. In my experience, while progressive accounting firms often value marketing as a tool for practice development, many do not always fully leverage their brand in their recruitment strategy. This is a missed opportunity, as getting great candidates to view your firm as an environment where they can thrive is the first step to having teams in place to do the work that will drive your firm forward.  Your brand must show that you are a great choice for accountants and support staff who want to build a successful and satisfying career. Experienced hires It is worth thinking about what experienced candidates consider before submitting a CV. Just like prospective clients, many will start by researching your firm. They’ll probably Google your firm’s name and the names of your senior partners. They’ll look for online reviews and news stories that give a sense of your firm’s values. They’ll check your website and see how your thought leadership articles reflect your values and ambition. They’ll look for any articles you have contributed to the business and professional media and your social and community engagement coverage. They’ll review your social media accounts, especially your LinkedIn firm page and the profiles of your senior leadership and team members. If this research throws up anyone they know on your team, they’ll probably ask this person what it’s like to work for you. The stronger your digital presence, the better your chances of attracting good candidates. Your website and social media platforms should be designed with employer branding in mind. They should showcase your culture, values and benefits in a way that engages potential employees. Crucially, they should be up-to-date and user-friendly. If not, you could lose out on the most talented candidates. Entry-level candidates The first step towards effective graduate recruitment is understanding your target candidates. The typical upcoming graduate is in their early to mid-20s, making them part of Gen Z. Gen Z looks for specific employer qualities. They want to feel challenged and need to know that their entry-level role will enable them to grow as a professional. They tend to have big, out-of-the-box ideas and want to work somewhere that appreciates them.  They think highly of organisations offering workplace flexibility and will often consider this when comparing firms.  Stand out to get talent in Many firms are struggling to find good candidates in the current market, and both graduates and experienced hires can often choose from a pool of potential suitors. The stronger your brand and messaging, the more you will stand out from your competitors. Mary Cloonan is Founder of Marketing Clever

Adopting Lean principles and tools is a practical approach that transcends industries and workplaces. Gordon Naughton explores the benefits of Lean, its impact on organisational culture and provides practical tips for implementing Lean practices in an organisation A recent global PwC survey listed the top three reasons for employees leaving: financial, fulfilment and the ability to be themselves. At the core of Lean is the principle of respect for people. This principle emphasises the importance of treating employees with unconditional respect and providing them with meaningful work. By recognising the value of employees’ contributions to its genuine purpose, organisations can mitigate issues such as burnout and high turnover rates. Respecting employees as people and aligning actions with stated values and purpose is crucial to creating a positive workplace culture. Reducing headcount as a last resort Organisations must live up to their outward values by genuinely valuing their staff. Lean thinking discourages reducing headcount as an immediate cost-cutting measure. Lean was created and perfected by Toyota in Japan. In 1950, Toyota encountered financial difficulty. It had to reduce its headcount and introduce other painful reforms to save the company. In a country and company famed for “a job for life”, the President of Toyota, Kiichiro Toyoda, recognised the breach of the social contract and dire consequences for exiting and remaining staff. He duly resigned. Within crises, there is opportunity. Recognising the opportunity that reduced activity brings, companies should actively consider using spare capacity and capabilities to reposition themselves for new challenges. Seeking efficiency beyond staff reduction Encouraging employee engagement and participation is critical for successful implementation of Lean. Organisations need to ensure that efficiency initiatives genuinely align with the staff’s best interests. Otherwise, expecting the initiatives to be implemented effectively is somewhat naïve. Furthermore, the negative impact on culture and engagement of executing nefarious initiatives can be severely problematic to the morale and culture of the organisation. Starting small and celebrating success A key aspect of Lean implementation is starting small and celebrating success at every opportunity. This approach builds confidence, knowledge and momentum for tackling more extensive and complex challenges. Incremental improvements, when compounded, can yield substantial rewards. Focusing on impactful improvements To maximise the benefits of Lean, organisations should focus their efforts on the areas that will truly move the dial. By concentrating on the right priorities, organisations can drive substantial efficiency and cost-reduction improvements. Leveraging team knowledge and empowerment Efficiency gains require a collective effort and the utilisation of the team’s knowledge and wisdom. Relying solely on top-down decision making is a fallacy. Taking the time to engage with impacted teams, empower employees and gain insights from their experiences fosters a culture of advocacy and continuous improvement. Accountancy and Lean The time has come for accountants and their clients to embark on a Lean journey to drive cost reduction and enhance efficiency. By embracing Lean principles, respecting employees and focusing on impactful improvements, organisations can achieve tangible financial gains while cultivating a culture of continuous improvement. Gordon Naughton is Founder and CEO of Tactive and a Lean Black Belt

Contrary to the misconceptions of awkward social encounters, networking is a fundamental and invaluable skill that everyone should cultivate, says Jean Evans Businesses, organisations and most people deem networking to be a soft skill, but it’s not. It’s a power skill. People think that networking is an awkward social moment or an icky sales conversation. They mistakenly think that networking is about schmoozing and being sleazy. That it’s about going to the odd event, handing out business cards and expecting something to happen. However, networking is one of the most fundamental, valuable and necessary skills you’ll ever develop. It makes you powerful. The foundation of success Networking is like the foundations you put down for a house. You cannot build a house without solid foundations. Similarly, you cannot build a successful business or stellar career without networking because no one is successful by themselves or achieves success without the support and help of others. Networking to win Networking enables you to become more self-aware and develop emotional intelligence, which will assist you in using your voice while helping you understand your personal brand and what you bring to the table in your organisation. You’ll grow a community and tribe of people who’ll support you and your career and who will be your sponsors and advocates while allowing you to become a problem solver and trouble shooter within your professional career. A personal journey How we connect with others is deeply intimate, so learning to network is highly personal and nuanced. There isn’t a right way or a wrong way for you to do it, but you have to learn how you want to do it. We all have different backgrounds that influence how we connect with others, whether it’s the environment in which we grew up, our education, our friends and family or our work. Confidence You might have noticed that I haven’t mentioned anything about more business or promotions. They are also wins when it comes to networking, but none of the tactical and technical stuff comes before you develop your confidence and self-awareness. Confidence is the name of the game. Understanding yourself and what you stand for allows you to make intelligent and conscious decisions about what aligns with your values, your priorities, and this allows you to make good choices and set appropriate boundaries. Jean Evans is a Networking Architect and founder at NetworkMe

As cyber threats continue to evolve, businesses must prioritise proactive measures to safeguard their operations. Eleanor Barlow highlights four critical cyber-attacks organisations should be prepared for this summer Given the scope of cyber threats over the past several years, it is more important than ever for businesses to take proactive measures to protect themselves. Here are the four cyber-attacks I feel organisations should be aware of and ready to protect themselves against this summer. AI-powered social engineering attacks  Artificial intelligence (AI) has entered almost all spheres of the business world. While AI brings numerous benefits and advancements, it also introduces new cybersecurity risks, such as social engineering attacks. These attacks use manipulative tactics to deceive the victims into revealing sensitive information or trespassing security structures of the organisations. To execute these attacks, cybercriminals rely on AI-based natural language processing (NLP) algorithms to generate more realistic and human-like phishing emails, chatbot interactions or voice calls. Detecting these malicious campaigns is getting harder for the average employee, which is why significant training is required to know what to look for and how to prevent escalation. Cloud-based breaches Cloud computing has become a norm in today’s digital landscape, offering scalability, flexibility and cost-efficiency to businesses. Nevertheless, the widespread adoption of cloud services exposes organisations to new cybersecurity threats, making them a major concern in 2023. Cybercriminals target cloud environments to exploit misconfigurations, weak access controls or insecure APIs. A recent example of the consequences of cloud misconfigurations is the Toyota data leak, in which the personal information of over two million customers was exposed after an access key was leaked on GitHub for almost five years.  Enhanced phishing attacks  Phishing attacks involve cybercriminals posing as trustworthy entities with the intention of deceiving individuals into divulging sensitive information or performing malicious actions. With over 500 million phishing attacks reported in 2022, the number is expected to rise further this year. In fact, threat actors continuously refine their techniques to make phishing emails and messages appear more genuine and convincing, which takes a trained eye to spot. Zero-day vulnerabilities in supply chain attacks With the increasing complexity of supply chains and the interconnectivity of various systems, zero-day vulnerabilities are anticipated to be a significant cybersecurity threat during the summer of 2023. A zero-day attack is a strategic exploitation that involves using previously unknown vulnerabilities in the supply chain and has no available patches or fixes. These vulnerabilities in the supply chain can have severe consequences, allowing attackers to compromise the integrity and security of products and services. They can lead to data breaches, unauthorised access and the potential for sabotage or manipulation of systems. Awareness is key By being aware of these possible threats, organisations can arm themselves appropriately to prevent them. To effectively deal with the cybersecurity challenges of 2023, organisations need to adopt a customised and agile cybersecurity strategy. Eleanor Barlow is Head of Content at SecurityHQ  

Quality breaks in the workday play a crucial role in boosting productivity and enticing employees back to the office, says Deirdre O’Neill Napoleon established 200 years ago that an army marches on its stomach. Now employers who encourage longer, better quality, more frequent breaks are key to unlocking productivity, improving employee well-being and enticing people back to work. New research by Compass Ireland and Mintel found that the time workers spend on their main lunch break varies worldwide.  It averages 54 minutes in China, one of the world’s fastest-growing economies, but just over 20 minutes in Poland. In Ireland, though, lunch breaks average 33 minutes. Analysing insights from 35,000 workers across 26 countries, the Compass Global Eating at Work Survey 2023 shows that, on average, workers take just 35 minutes daily for their main lunch break if they have one.   Full-time employees (working five days a week) were found to skip one lunch break a week, including those surveyed in Ireland, while a third of workers eat their lunch alone, reducing opportunities for socialising. One percent of Irish workers report taking no breaks during their working week, risking burnout. However, this figure is considerably below the global average of 5 percent. Better breaks equal better results The research indicates that employers who invest in good breakout areas and better-quality food and drink offerings can significantly increase productivity, well-being and colleague collaboration and reduce feelings of isolation among employees.   Eighty-one percent of Irish workers said taking a lunch break makes them more productive, while 88 percent agree that regular breaks throughout a workday improve their overall productivity.   Generational differences Globally, Gen Z and Baby Boomers take the shortest lunch breaks, and how employees spend their personal time varies across different age groups. This indicates employers should tailor breakout areas to match unique workforce demographics. While eating and drinking during a break is the top priority for every age group (Baby Boomers, most of all), younger Gen Z and Millennial workers want the time for things that support their mental health. These include socialising with colleagues, relaxing, hobbies and personal interests. The research also found that employees are significantly more likely to socialise and network with colleagues during breaks if they have food and drink facilities at work. The more advanced the food offer provided, the stronger this trend becomes. In workplaces with a restaurant, cafeteria, canteen or coffee shop, 70 percent of workers eat lunch with colleagues, with only 23 percent eating alone. In contrast, when no food and drink facilities are provided, just 38 percent spend their main break with colleagues, while nearly half (48 percent) choose to eat alone. Competing with home While the length of main breaks is largely consistent across home-based, hybrid and work-based employees, those working from home report having more frequent and higher quality breaks than when in the workplace. This presents a considerable challenge for employers trying to encourage workers back to the office. In Ireland, 50 percent of hybrid workers say they take more breaks when working from home. With recruitment and productivity a key challenge facing businesses today, employees taking time out of the working day to relax and recharge with colleagues can make a huge difference. It may seem counterintuitive, but good quality breaks are a win-win for employees and employers, enhancing productivity, collaboration and mental health. Taking a lunch break is no longer a routine event at a set time of day either, our research shows. With the rise of flexible working, employees now expect to refuel when and where suits them best. They want convenient, good-quality food and drink to boost energy and comfortable places to relax and socialise with colleagues. Employers looking to motivate their teams, attract new talent and encourage hybrid workers back into the workplace are investing in what is known as the ‘hotelisation’ of workspaces. Comfortable breakout areas and some form of entertainment, such as ping-pong or TVs, are becoming much more common, as are rooftop gardens and patios for coffee breaks. Employers are conscious of meeting the needs of workers by providing food and refreshments, combined with social interaction, that people can’t replicate at home. Wise employers are creating a workplace culture where breaks are encouraged, not frowned on. Deirdre O’Neill is Managing Director at Compass Ireland 

The latest KPMG Enterprise Barometer reveals a positive outlook among Ireland's indigenous businesses, with over a third planning workforce expansion. These entrepreneurial firms prioritise sustainability but seek clarity on costs and benefits, says Alan Bromell KPMG Enterprise Barometer 2023 highlights confidence among Ireland’s indigenous businesses, with over half (55 percent) expecting to increase turnover in the next 12 months.  The majority of survey respondents, 83 percent, support the need for more action on climate change, and 7 out of 10 are actively pursuing sustainable measures, demonstrating the proactive approach these entrepreneurial businesses are taking to incorporate environmentally friendly practices into their operations.   The research reveals overall optimism among Irish businesses, with over half (55 percent) expecting to increase turnover in the next 12 months and 38 percent expecting to expand their workforce, demonstrating a belief in their growth potential and job creation. Balancing the costs and benefits of sustainability While the majority of survey respondents support more action on climate change, two-thirds express concern about the need for more clarity on the costs and benefits of these measures, and three-quarters say no stakeholder groups are exerting pressure on them to develop decarbonisation strategies. This poses a significant challenge for companies as they strive to make informed decisions on sustainability measures and allocate resources effectively. The survey showed resilience and measured confidence in the future amongst Irish businesses and entrepreneurs. Notwithstanding the challenges in areas such as costs and interest rates, Irish entrepreneurs are resourceful and robust. Private Irish business and entrepreneurship are critical pillars of the Irish economy, providing employment, sustaining tax revenues and acting as role models for future entrepreneurs. In addition, their ingenuity and innovation can be instrumental in solving various challenges, from technology, health and nutrition to sustainability and environmental protection. The survey also shows that sustainability has become a fundamental aspect of business operations, and it’s encouraging to see businesses in Ireland actively pursuing sustainability measures. However, they need help understanding the costs and benefits of decarbonisation. Tax suggestions for Budget 2024 When asked for their views on the current tax regime, less than a quarter (24 percent) said they believe it encourages entrepreneurship and growth. At the same time, three-quarters feel that the Irish tax regime is more challenging for domestic businesses.  The top three tax changes businesses would like to see in Budget 2024 are introducing tax measures to encourage sustainable behaviour (83 percent), amending capital gains tax rates or rules to encourage investment in Irish companies (79 percent) and introducing a reduced tax rate for dividends for entrepreneurs (74 percent ). These highlight a desire for tax incentives and reforms that promote sustainable business practices, stimulate investment and reward entrepreneurship. Recruiting challenges Sixty percent of private Irish businesses and entrepreneurs face difficulties recruiting the right individuals to fill key company positions. Nearly half (45 percent) consider the current tax regime in Ireland a disadvantage to recruiting and retaining skilled employees. The availability of residential accommodation is another primary concern; over three-quarters (77 percent) say lack of accommodation is an issue, suggesting that the housing situation in Ireland could impact recruitment and competitiveness. Alan Bromell is Head of Private Enterprise at KPMG