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The International Accounting Standards Board (IASB) has issued IFRS 17 Insurance Contracts. This new international standard is meant to help investors better understand insurers’ risk exposure, profitability and financial position. IFRS 17 replaces IFRS 4, which was brought in as an interim Standard in 2004. IFRS 4 has given companies dispensation to carry on accounting for insurance contracts using national accounting standards, resulting in a multitude of different approaches. As a consequence, it is difficult for investors to compare and contrast the financial performance of otherwise similar companies. The Financial Stability Board noted in September 2015 the importance of the Board completing the project to replace IFRS 4 with a new Standard. IASB says the IFRS 17 solves the comparison problems created by IFRS 4 by requiring all insurance contracts to be accounted for in a consistent manner. Insurance obligations will be accounted for using current values instead of historical cost. This will be updated regularly, providing more useful information to users of financial statements. Hans Hoogervorst, IASB Chairman, “The insurance industry plays a vital role in the global economy; high-quality information to market participants on how insurers perform financially is therefore extremely important. IFRS 17 replaces the current myriad of accounting approaches with a single approach that will provide investors and others with comparable and updated information.” IFRS 17 has an effective date of 1 January 2021 but companies can apply it earlier.

The global ransomware cyber-attack on 12 May affected at least 250,000 computers across circa 150 countries by exploiting known vulnerabilities in older versions of Microsoft Windows operating systems. The fact that the attackers targeted mostly hospitals and government agencies may bring some misplaced comfort to the owners of Irish SMEs. The cyber-criminals took aim at large public entities so they clearly have no interest in the operations of mid-sized, Irish entities, right? Wrong. If cybercrime is a new family of crime, then ransomware is the latest terrifying addition to the clan. Barracuda, a leading technology security provider, see ransomware as the number one IT security challenge facing organisations in 2017. In real terms, the reported incidence of ransomware attacks increased by approximately 300% between 2015 and 2016. So, what exactly is ransomware? Put simply, it is a subset of malware which the criminals use to locate and encrypt your most critical data. They then offer to provide a key to unlock your data if a ransom is paid within a specified time frame. It’s a very simple business model. The FBI has indicated that over $200 million was paid in such ransoms in Q1 of 2016 alone, and this is probably only a fraction of a larger sum due to the understandable under-reporting of the crime. In an age where business is becoming increasingly dependent on technology, the likely disruption to customers, the potential financial cost, the possible reputational damage and the regulatory ramifications of a potential data breach (GDPR is on its way!) arising from such an attack has sparked a significant increase in information security spend by many organisations as they seek to defend themselves in the face of ever increasing cybercrime. Hence, we are locked in a new race where resourceful public and private entities try to stay one step ahead of the faceless cybercriminals who reinvest the ransoms paid to stage their next attack. In such a scenario, small and medium businesses who do not have the technical or financial resources to protect themselves, as effectively as their larger peers, become an easy, accessible target for those engaged in what is the scalable, profitable and borderless ransomware business. So, how does an Irish SME protect itself from becoming the next victim of ransomware? Here’s an eight-step checklist which SMEs can adopt to mitigate the risks posed by cybercrime: Keep software updated, since updates often include security patches. Last’s week’s attack, in common with almost all such instances, exploited known vulnerabilities; Educate all staff, on a recurring basis, regarding the risks and how to protect themselves and the business. Many cybercrimes are predicated on anticipating or influencing user behaviour; Force the use of strong passwords, which are regularly updated, for all applications, not just key applications such as banking or invoicing; Use up-to-date security solutions including anti-virus, firewalls, intrusion detection, and threat detection. Figures published by Osterman Research Inc. show that three sources combine to account for some 83% of all ransomware malware entering organisations being email (31%), email attachments (28%) and websites/web applications excluding email (24%); Never click on links to banking sites in emails or texts. If in doubt, call the bank directly; Treat mobile devices the same way you would treat computers; they are equally, if not more, vulnerable to attack; Ensure your files are backed up regularly and reliably. You may lose data at any time not only as a result of crime; and Get professional, external advice to improve your security. Conducting a risk assessment is a sensible first step. You cannot eradicate the risk of falling foul of a cyber attack but let’s all work to make it more difficult for the bad guys. Terry McAdam FCA is the Consulting Partner in RSM Ireland.

While global fintech investment decreased from €3.8 billion in Q4’16 to €2.8 billion in Q4’17, fintech investment in Europe grew in the first quarter of 2017 with €806 million invested across 89 deals, according to the latest quarterly report on fintech investment from KPMG. The global report, published in over 152 countries, says Ireland is gaining prominence internationally with numerous initiatives focused on showcasing the country as an alternative to London. In terms of volume, venture financing is now seeming to oscillate around early 2014 or full-year 2013 levels, having fallen from the peaks of 2015. VC investment, however, remains on the historically high end at €2 billion. Fintech venture activity in Europe has fluctuated at a historically higher level for several quarters now, yet thanks to several huge rounds, Q1’17’s total of capital invested soared to €548 million, the highest tally in years.   Anna Scally, partner at KPMG said, “The beginning of 2017 saw a number of mature fintech companies announce expansion plans here, including the client lifecycle management company, Fenego. Ireland has also successfully attracted a number of fintechs to set up regional offices here, including Kabbage, and we hope to see further growth as Ireland continues to market its ability to be a bridge to both the UK and Europe.   In addition, the deadline for implementing Payment Services Directive 2 (PSD2) is now fast approaching and as we move through 2017, new fintech business models will almost certainly evolve to make the most of open data and to capitalise on new opportunities." You can read KPMG’s full report here.

The FRC has issued a paper inviting stakeholder comments on proposed revisions to Practice Note 11: The audit of charities in the United Kingdom. The Practice Note has been revised to reflect the updated regulatory landscape, the implementation of FRS 102 and a new Charities SORP, and the implementation of revised ISAs (UK) in 2016.  Charities have been the subject of extensive press, public and Parliamentary interest recently. The FRC says this revision of the Practice Note seeks to incorporate "lessons learned", particularly with respect to going concern and the auditor’s responsibility to report to charity regulators. The changes are summarised in the Invitation to Comment document. The FRC says the proposed changes will help ensure that the Practice Note will continue to support the delivery of high quality audit for charities. Subject to stakeholder comments, the FRC will issue a final version of the revised Practice Note later in 2017. The FRC welcomes comments on all aspects of the revised Practice Note by 5pm, Friday, 25 August 2017. Comments are invited in writing and should be sent to Kate Acott at aat@frc.org.uk. The changes are summarised in the Invitation to Comment document and you can read Practice Note 11: The audit of charities in the United Kingdom here.

A recent study commissioned by Fugitsu shows leaders in the financial services industry are overwhelmingly positive about the impact of “digital disruption” with more than two thirds (68%) believing that digital disruption presents exciting opportunities for them and more than three quarters (77%) agreeing that digital disruption is a positive force. The findings underline that disruption is seen as the ‘new normal’ for businesses across all sectors today, and is fundamentally redefining the way that organizations operate. The financial industry, in particular, has seen a great deal of increased competition, including the rapid rise of fintech firms and, so-called, ‘challenger’ banks. Consequently, 98% of finance executives surveyed said they believe their businesses have already been directly affected by this competition and 72% anticipate a fundamental change in the industry by 2021.  Anita Burke, Financial Services Sector Lead at Fujitsu Ireland, commented, “This is a very interesting survey as it provides an insight in to the thoughts of senior leaders who in the past would not necessarily have been concerned by the requirements around digital transformation. Indeed, we are seeing similar trends to those reported among business leaders in the financial services here in Ireland. Issues around security, accessibility, customer service and future proofing front end and back end systems are no longer the sole remit of the CTO or IT department, but fundamental business decisions.” Such ongoing, significant change has led to financial services leaders expressing concern about the impact of digital disruption and is causing anxiety in 64% of leaders. Almost half (47%) stated that disruption impairs long-term business decision-making. However, 62% stated that they feel more confident in making the right decisions on digitalization than they were two years ago, while 89% believe they will thrive in a digitally-disrupted world. You can read the full study here.

Katharine Byrne FCA, Partner in BDO and the Chairperson of The Friends of St Luke's Charity, talks to Accountancy Ireland about Ireland's Brexit challenges and her future goals. What's your typical day as a Partner at BDO? Thankfully, there’s no such thing as a typical day in corporate finance, which is the reason I enjoy the role so much. As an adviser to entrepreneurial clients, no two transactions are ever the same. Whether we are buying or selling a business or raising finance to support expansion plans, my principal role is to maximise value for our clients by managing the process as effectively as possible and supporting them through what often can be described as a roller coaster ride. Our team and partner meetings are generally scheduled first thing in the morning, and after that it’s plenty of coffee to keep me going! You're on the 'Brexit Taskforce' in BDO - what do you think is the biggest Brexit challenge coming up for Ireland in the next two years? While no one knows what Brexit will ultimately look like, but what we do know is that Irish businesses need to start preparing now. At present, one key element that businesses can plan for is the potential impact of a customs border on their day-to-day operations. Business plans are constantly evolving, so scenario planning and obtaining advice from indirect tax experts will assist management in considering their strategic options. The challenge for most companies is not to stagnate and await the final outcome but to maintain growth throughout the period of uncertainty. You're also the Chairperson The Friends of St Luke’s Charity. What inspired your participation? I was invited to meet with the Chairman in 2012 due to my involvement in the healthcare sector. While I hadn't previously considered getting involved with a charity, I was convinced to take on the role of Honorary Treasurer at a time when the charity sector was experiencing significant changes. From the outset it was clear that The Friends of St Luke’s was very well run, with a professional voluntary board representing a variety of disciplines. It only took one meeting and a walk through the hospital to see the direct benefits of the charity’s fundraising for me to be inspired to join the board. How has being involved in The Friends of St Luke’s Charity benefited your life? Over the last five years I have learned that the success of the Friends is attributable to the dedicated support of its nationwide volunteers. We have all lost friends or loved ones to cancer, and we can often feel helpless as to what to do. It has been really humbling to witness the fundraising initiatives of those families whose lives have been directly affected by the wonderful staff at St. Luke's Hospital and the network. What are some of your long-term goals? With four young kids and a (very!) supportive husband, I don’t get too much time to plan long-term personal goals. I do however stick to my motto of “enjoy your job and enjoy life”. In terms of business goals, last year I commenced a leadership development program with the BDO international network which has helped me to build on the critical elements required of me in my role. Technology, such as AI, will inevitably force change in the world of corporate finance. This will present challenges for me in my career, as well as opportunities. I am fortunate in that I frequently get a sense of real achievement from completing a deal. The diversity of our clients keeps it interesting for me and I am meeting new and interesting people all of the time. Who had the greatest influence on your career? My Dad always referred to the Covey principal of “win-win”, which has been a core principal in my dealings with clients, as greed is the death of a good deal!    I’ve been lucky to have worked with a number of great mentors in BDO. Hugh Cooney in particular taught me that (i) a solution can always be found if the deal makes business sense; and (ii) the keys to landing successful deals are continuous networking and developing client relationships (over a good pint where possible!).