News

Peter Gillespie FCA has survived four postings abroad. Here he discusses some steps you should take before making the big move. Transfers abroad with your employer can be great professionally; they often push you far beyond your comfort zone and give you valuable hands-on experience of different cultures and ways of working. However, it won’t be all plain sailing. In fact, you might be taking some major personal and professional risks. Before committing to such a transfer, there are a few things you should think about, such as how well do you and your family cope with change, your partner’s working situation, any language barriers, the legality of your marriage in your destination country and, most importantly, is this something you really want? If you have thought through all these issues, here are a few steps you should take before transferring to another country. Research the offer fully   The offer might seem like a great opportunity first glance but you should do some deeper research before committing.  Take some time to visit the location with your partner and meet the people you could be working with. You and your partner’s happiness will depend greatly on both location and the company culture, so make sure it fits with your lifestyle. You should identify and weigh up the “issues” – learning curve gradient, personal health and safety, accommodation, schools (if you have kids), friendliness of the people, cuisine, culture and laws – and decide whether you’ll be able to (at least) cope those first few weeks after you make the move. Make sure to look into what options (work, leisure, educational) your partner will have in your new location.  When looking into the offer, be sure that the skills and responsibilities gained will really be worth the upheaval compared to other opportunities at home.  Set the right expectations When it comes to transferring abroad, getting decent terms is difficult. Unless you are indispensable, HR’s offer might not be that impressive. They’ll pay for you to get you there, a few a few nights in a hotel and maybe a some language lessons, but then they’ll expect you to be operational the next week. Forget thoughts of salary increases, cost-of-living adjustments, professional help with accommodation, contributions to loss of partner’s earnings, assistance with nursery or school fees, currency fluctuation guarantees or more than a few paid trips home. They’ll probably also insist you sign a local-country contract in place of your existing contract. There may be some warm words about re-employing you eventually in your home country, but this won’t give you any guarantee as to which job, where it will be, or on what basis.  Don’t expect HR in your home organisation to keep your personnel record up to date, nor to consider you for new positions until do you get back. Be sure to stay in contact with key people. Send these contacts a copy of your annual appraisal and keep notes of your achievements. However, you should remember that you’re moving for the experience and the possible opportunities when back home – they could be great. Prepare to come home You’ll have to come home eventually and sometimes it can be even tougher than going out. You’ll have to give up the lifestyle you’ve (at last!) come to enjoy, and the local friends you’ve made. Sometimes that can make all the effort you’ve put into acclimating to your adopted country seem like it wasn’t worth the effort. Give yourself the time to prepare for your return. Your international experience may not make you as marketable outside your organisation as you expect.  Recruiters won’t fully value your achievements abroad but with the right wording on your CV and some great networking, you can make the time away really work for you. Just remember that it’s possible many won’t know the country, nor understand the issues you’ve faced there, even if they think they know it well.  Conclusion Any transfer abroad will stretch you and your family, but it can be an ultimately positive experience for all of you if you’re willing to make the risk. Just make sure to it is the right move for you – professionally and personally before you go. Peter Gillespie FCA is founder of Meaningful Metrics.

Apr 16, 2018
News

Developing a high performing board takes time, energy and, most of all, a strategic focus to increase the chances of organisational sustainability. David W. Duffy explains. When trying to develop a high-performing board, there are some of the key governance challenges that need to be addressed before you get started. Here are some things you should look keep in mind when assembling an effective board. Leadership from the top on ethics and values The Italians say that “a fish rots from the head”. Well, organisation do too. If the Board is not taking a leadership position on developing the ethics and value of an organisation, there will be no moral compass to help guide the behaviours of management and staff. It's the board’s responsibility to document the ethics and values of the organisation and identify the associated behaviours that are appearing in the organisation. Implementation should be done at induction for new staff, embodied in all communication and training materials and, of course, espoused by the board and senior management at all times. Fit for purpose governance structures Governance structures should be appropriate and proportionate to the size and stage of development of an organisation. Key factors in determining these will include the size of the board, the amount of executive and non-executive members, the rotation policy, and committees. It is the role of the chair, with input from the board and the company secretary, to map out how the governance structures should evolve over time. Good governance should enhance company performance. Strategic board renewal Unless a company has the skills and experience around the table to support the strategic direction of the organisation, then it is unlikely to succeed. The most important function of a board is to ensure that it recruits the talent to enable the company to succeed. This will mean careful attention to succession planning at board and senior management level. As a company grows and develops, it will need different skills, such as scaling, capital-raising, experience in entering new markets, etc. Board renewal and the timing of it will be of paramount importance to ensure a seamless transition at board and senior management level. Increased diversity broadens perspectives The evidence strongly suggests that diverse boards are better boards and are more likely to create greater shareholder value. In McKinsey’s latest report, Diversity Matters, it found that companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians. A key factor in board renewal is ensuring that the diversity of the board and senior management is appropriate to the business of the organisation. An organisation selling female fashion with an all-male board in ethnically diverse country is unlikely to succeed compared to a more diverse board. Diversity takes many forms, including gender, ethnicity, geography, age, skill sets etc. Increasing the quality of information for the board A board cannot perform its role unless it gets the right information. The information reported to the board should enable it to assess performance against its strategic plan, its annual business plan and budget. Without this basic information, a board will be at sea. The board should assess annually the information its gets to ensure it is getting what it needs to perform its role. David W. Duffy is the author of A Practical Guide for Company Directors published by Chartered Accountants Ireland and the founder of www.Governance-Online.Com

Apr 16, 2018
News

The two legislative proposals put forward by the EU Commission could be economically damaging to Ireland. Peter Vale explains. The EU Commission's recent digital proposals provide for both a short-term, interim solution and a longer-term plan in respect of the tax treatment of digital transactions. The EU Commission's short term plan is a 3% tax on the gross revenues of certain digital transactions, broadly based on where target customers are located. For example, if a company in Ireland receives €100 in advertising revenue in respect to advertising targeted at French customers, €3 digital tax would be payable to the French authorities, the rationale being that the French customer data is regarded as creating value for the Irish company. These short-term measures will only apply to large groups, with global turnover in excess of €750 million and EU turnover in excess of €50 million. The longer term plans, however, will apply to a much wider group of companies. Benefit to Ireland? The digital tax is a turnover-based tax posing as a digital/corporation tax and is, importantly, based on gross revenues. Whether or not the Irish company is profit making doesn't impact on the digital tax charge.  The proposals arguably run contrary to general tax principles, which look at where the value creation takes place, as opposed to where customers are located. There is considerable work to do to convert customer data into something that can be profitably exploited – an activity that would not necessarily take place in the country of the customer.  The digital tax payable is deductible against corporation tax profits, similar to irrecoverable VAT. It is not available as a direct credit against corporation tax payable. However, it could potentially have a significant adverse impact on Irish corporation tax revenues, which have increased substantially in recent years. It also dilutes the benefit of our 12.5% tax rate as the digital tax element becomes a material tax cost for Irish-based multinational groups, potentially dwarfing the tax benefits of our regime. A quick fix In my view, the interim proposals pose a risk to the competitiveness of companies based in Europe and could be economically damaging. The Commission itself acknowledges the limitations of its interim proposals but is keen to implement a "quick fix" while it continues its work on a longer-term solution. As a longer-term solution will likely take some time to develop, there is the danger that the interim solution stays with us for longer than expected. The Commission should await the output of the significant work undertaken at OECD level on the taxation of digital transactions rather than implement what could be a damaging solution for Europe. The optimal solution is one that focuses on where the value is created, not simply where target customers are based. Commission’s Common Consolidated Corporate Tax Base plans Aspects of the digital tax proposals could form part of the Commission’s Common Consolidated Corporate Tax Base (CCCTB) plans, which is a separate set of proposed tax changes that seek to tax all companies, not just digital, based on the location of sales, employees and fixed assets. While the CCCTB plans are at a less advanced stage, they too pose a risk to the Irish offering. It is difficult to reconcile the direction of much of the OECD work on tax reform with the Commission’s CCCTB proposals, which would broadly penalise smaller countries while rewarding larger economies. It is important to note that all countries retain a right to veto the proposed EU tax changes. While there is the possibility of a group of countries in favour of the digital tax proposals proceeding regardless under the 'enhanced cooperation mechanism', that is not the Commission’s objective. However, the possibility of some countries 'going it alone' can’t be ruled out, which would also adversely impact on Ireland’s attractiveness, as well as our corporate tax revenues. A possible threat In summary, the digital tax proposals, if implemented, pose a threat to Ireland, arguably a significantly greater threat than the recent US tax reform package. In my opinion, the OECD work on digital tax should be allowed develop further rather than implement a potentially damaging EU only interim solution. Where things go from here is difficult to predict, given that there are countries massed on both sides on the issue. Peter Vale is a Tax Partner at Grant Thornton.

Apr 16, 2018
News

With less than one year to Brexit, PwC lists its 10 ‘no risk actions’ for businesses to consider. While recent progress on the draft Withdrawal Agreement and the proposed EU-UK agreement on a transition period are welcome news, nothing is guaranteed at this point in the process and a hard Brexit remains the most likely outcome. This is according to PwC’s Brexit: Spring 2018 Update report, which was published last week. The draft Withdrawal Agreement, the Treaty covering the UK’s exit from the EU, along with its accompanying political declaration ‘Framework of Future Relations’ (FFR) which outlines the proposed shape of future EU-UK trade relations, must be agreed by March 2019 for the transition period to proceed. To achieve this, the full legal text of the draft Withdrawal Agreement must be agreed by October 2018. Significant uncertainties remain concerning the draft Withdrawal Agreement, including the border between Northern Ireland and the Republic of Ireland and issues over governance, specifically around the role of the European Court of Justice, all of which must be resolved by October 2018. The toughest parts of the negotiations are probably still to come. Considering these issues, as well as the tight negotiation timeline and the uncertain political climate in the UK, PwC Ireland’s view remains the same as last year – namely, that a hard Brexit is the most likely outcome. Such a hard Brexit would mean that the UK would leave the EU at the end of March 2019 with no future trade agreement, World Trade Organisation tariffs and possible lengthy customs checks at ports/airports. PwC consequently advises businesses to prepare immediately for such an outcome. Launching the report, Feargal O’Rourke, PwC Ireland’s Managing Partner, said: “As I meet with clients, one thing they want is clarity on the post-Brexit trading relationships. The UK’s current unwillingness to consider a Customs Union, and continuing talk of ‘cherry-picking’ which arrangements it does or does not want to retain, means that a hard Brexit remains too likely for businesses to ignore. “The only thing we can be sure of is that disruption and change is inevitable – firms need to prepare now for additional costs, border issues, disruption to supply chains and people mobility issues. We therefore strongly advise Irish businesses to plan for a hard Brexit scenario taking effect at the end of March 2019.” With less than one year to go, PwC has listed its 10 Brexit ‘no risk actions’ for businesses to consider:   Assess which customs and trade registrations, authorisations and reliefs are required to enable customs clearance; Map and validate supply chain models to understand direct and indirect exposure; Invest in customs experience; Obtain Authorised Economic Operator (AEO) status; Assess the ‘Brexit readiness’ of appropriate contracts; Ensure adequate cash flow for VAT and additional inventory; Develop a contingency plan to mitigate the risk of delay at borders; Monitor your workforce; Monitor your intellectual property as in many cases, European trademarks and designs may lapse after Brexit; and Consider applying for Government/Enterprise Ireland funding to support diversification of business models, including exploring new markets. Source: PwC.

Apr 13, 2018
News

EU financial regulators have issued a warning on the risks associated with EU financial markets, Brexit, asset repricing and cyber-attacks. The securities, banking and insurance sectors in the European Union (EU) face multiple risks, according to the latest report on risks and vulnerabilities by the Joint Committee of the European Supervisory Authorities (ESAs). The ESA report for the second half of 2017 outlines the following risks as potential sources of instability:   Sudden repricing of risk premia, as witnessed by the recent spike in volatility and associated market corrections; Uncertainties around the terms of the UK’s withdrawal from the EU; and Cyber-attacks.  The ESA report also reiterates its warning to retail investors investing in virtual currencies and raises awareness for risks related to climate change and the transition to a lower-carbon economy. In light of the ongoing risks and uncertainties, especially those around Brexit, supervisory vigilance and cooperation across all sectors remains key. The ESAs therefore advise the following policy actions by European and national competent authorities as well as financial institutions: Against the backdrop of the potential for sudden risk premia reversals, supervisory stress testing remains a crucial tool for the management of systemic risk. These tests ensure that systemically relevant sectors and players are safe to withstand market shocks such as insurance and occupational pensions sectors, central counterparties (CCP), banks and asset managers; In the context of Brexit, the ESAs recommends that EU financial institutions and their counterparties, as well as investors and retail consumers, consider timely mitigation actions to prepare for the UK’s withdrawal from the EU including possible relocations and actions to address contract continuity risks; As cyber security remains a key concern, the ESAs encourage financial institutions to improve fragile IT systems and explore inherent risks to information security, connectivity, and outsourcing. To support this, the ESAs will continue to address cyber risks for securities, banking and insurance markets and monitor firms’ use of cloud computing and the potential build-up of cyber risks; and On the subject of climate change, the ESAs recommend that financial institutions consider sustainability risk in their governance and risk management frameworks and develop responsible, sustainable financial products. Moreover, supervisors should enhance their analysis of potential risks related to climate change for the financial sector and financial stability. Source: European Securities and Markets Authority.  

Apr 13, 2018
News

The International Ethics Standards Board for Accountants (IESBA) has released a completely rewritten Code of Ethics for Professional Accountants that is easier to navigate, use and enforce. Beyond the new structure, the Code brings together key ethics advances over the past four years and is clearer about how accountants should deal with ethics and independence issues. While the fundamental principles of ethics have not changed, major revisions have been made to the unifying conceptual framework – the approach used by all professional accountants to identify, evaluate and address threats to compliance with the fundamental principles and, where applicable, independence. New highlights include:  Revised “safeguards” provisions better aligned to threats to compliance with the fundamental principles; While the fundamental principles of ethics have not changed, major revisions have been made to the unifying conceptual framework – the approach used by all professional accountants to identify, evaluate and address threats to compliance with the fundamental principles and, where applicable, independence. New highlights include:  Revised “safeguards” provisions better aligned to threats to compliance with the fundamental principles; Stronger independence provisions regarding long association of personnel with audit clients; New and revised sections dedicated to professional accountants in business (PAIBs) relating to preparing and presenting information, and pressure to breach the fundamental principles; Clear guidance for accountants in public practice that relevant PAIB provisions are applicable to them; New guidance to emphasise the importance of understanding facts and circumstances when exercising professional judgment; and New guidance to explain how compliance with the fundamental principles supports the exercise of professional skepticism in an audit or other assurance engagements. “This is a ground-breaking moment in the public interest. The Code is now a significantly strengthened platform, re-engineered for greater usability while maintaining global applicability. It underscores the importance of the fundamental principles for all professional accountants,” said IESBA Chairman, Dr Stavros Thomadakis. “Critical work begins now within firms, national standards setters, regulators and audit oversight bodies, educators, IFAC member bodies and others to promote awareness of the Code, and support its adoption and implementation.” According to Kristian Koktvedgaard, Chair of IESBA’s multi-stakeholder Consultative Advisory Group (CAG), a strong international Code of Ethics is one of the defining characteristics of the global accountancy profession. “Clearer, more usable and enforceable independence and ethics standards are essential to public trust in the profession. The new Code establishes a solid base for ‘future-ready’ ethics standards and I am pleased that the CAG contributed to its development.” Renamed the International Code of Ethics for Professional Accountants (including International Independence Standards), the new Code will become effective in June 2019. It is the culmination of extensive research and global stakeholder consultation. Stakeholders can now access the new Code on the IESBA website, where implementation resources and other supporting materials will be released throughout the period leading up to the effective date. Source: International Ethics Standards Board for Accountants.

Apr 11, 2018