Recent multi-million euro fines for breaches of GDPR have reconfirmed the need for a watertight data management strategy. By Angela Craigan Just over a year ago, one of the main concerns for businesses and organisations operating in the European Union was the impending implementation of the General Data Protection Regulation (GDPR). Its introduction in May last year brought major changes to the way personal data could be handled. The run-up to its implementation saw an influx of email requests from organisations requesting permission to hold data. GDPR increased the obligations on those holding data to protect it and gave individuals more control over how their information is collected, used and stored. Businesses must ensure that all reasonable steps are taken to secure data, train staff and disclose breaches. They must be clear about how they use personal data. Individuals can demand to see what data is held on them and can also request that this data is deleted at any time. Now one year down the line, with our GDPR policies embedded into our businesses, the recent news that British Airways has been fined £183 million by the Information Commissioner’s Office (ICO), closely followed by a notice of intent for almost £100 million for the hotel group, Marriott, reminds us all of the importance of making sure we are not falling foul of the regulations. While the fines are huge, neither are the maximum amount that could have been levied by the ICO, which can fine up to 4% of annual global turnover or €20 million (£18 million) – whichever is greater. Security arrangements With British Airways, the breach was caused when hackers diverted users to a fraudulent website and harvested information such as login, payment card, name, address and travel booking information. With Marriott, personal data including credit card details, passport numbers and dates of birth had been stolen in a hack of guest records. There was no issue in relation to reporting the breach; both were reported within the mandatory 72 hours of discovery. With British Airways, the problem was the fact that hackers were able to gain access to the information. The ICO reported that the data breach occurred because British Airways had “poor security arrangements” in place to protect customer information. This again highlights the importance of protecting the data we hold on individuals; it needs to be protected through its lifecycle. This will require working closely with IT departments or external IT suppliers to make sure the systems are water-tight. We also need to be very careful about the disposal of data and IT equipment that has held data. Achieving compliance The simplest way to ensure compliance is to have a data management strategy. This should set out what information you need, how long you need it for and where it is stored. It is understood that with Marriott, the breach had already occurred in a hotel group it purchased prior to the sale, although it was only discovered last year. When considering the acquisition of another company, it is essential to make sure sufficient due diligence is carried out to ensure the company being acquired is GDPR-compliant. Although these recent cases involve large global companies, the legislation applies to all businesses and organisations regardless of size. The data-rich information age that we all now inhabit has been the trigger for GDPR. As members of Chartered Accountants Ireland, the role we play in the organisations in which we work has always been built on a foundation of ethical behaviour and trust in all matters – including that of data protection. As a result, the foundation of our profession continues to be relevant in the midst of an ever-evolving business landscape. Angela Craigan FCA is a Partner with Harbinson Mulholland, the accountancy and business advisory firm.

Directors faced with a court application to restrict them  as a director must be able to demonstrate clearly that they acted responsibly at all times to avoid restriction.  By Claire Lord A liquidator of a company that is unable to pay its debts is required to apply to court for a declaration that any director of that company, either at the time of commencement of its winding up or during the period of 12 months before that date, cannot be appointed or act as a director of a company or be concerned in or take part in the formation or promotion of a company, for a period of five years. This requirement does not apply where the Director of Corporate Enforcement relieves the liquidator of the obligation, or the company in question meets certain share capital requirements. In addition, the court is not required to make a declaration of restriction where it is satisfied that the director in question acted honestly and responsibly in relation to the conduct of the affairs of the company, whether before or after it became unable to pay its debts. The concept of “acting responsibly” was recently considered by the Irish High Court in connection with an application made by the liquidator of IQ Content Limited for a declaration of restriction against two of its directors. One of these directors was Morgan McKeagney, the founder and former managing director of IQ Content Limited.  The case IQ Content Limited was an IT consulting and web design firm that had enjoyed considerable success until 2014, when an unfortunate coincidence of events caused it to suffer an unprecedented collapse in revenues. As a consequence, in July 2014, a decision was made to wind up the company. At that time, Morgan McKeagney remained as a director of the company but was no longer involved in its day-to-day operations. Representing himself, and assisted by a successful application for an order of discovery of documents held by the company, Morgan McKeagney presented evidence of “a story of intrigue” to the court. The evidence presented by Mr McKeagney demonstrated that his colleagues had acted in a coordinated and calculated manner to drive the company into liquidation while at the same time, establishing a new company into which they planned to move all of the company’s assets. Mr McKeagney was also able to show the court that throughout this period of crisis, he had been deliberately removed from decisions that were made and otherwise isolated within the company. The judgment The application for Morgan McKeagney to be declared by the court as being restricted from acting as a director was declined. The presiding judge instead declared that Mr McKeagney had acted responsibly and with integrity throughout the process. The judgment notes that the court was highly impressed with Mr McKeagney’s actions in his role as a director of IQ Content Limited and in opposing the restriction application. In this regard, it is stated in the judgment that Mr McKeagney had presented his case in a clear and articulate manner and had presented clear evidence that he had acted in the best interests of the company at all times. This case demonstrates that the court will decline to make an order for restriction in circumstances where a director has acted responsibly in relation to the conduct of the affairs of a company in liquidation. However, a director in this situation needs to be able to clearly demonstrate to the court that this was the case. Morgan McKeagney went to impressive lengths to contest the application being made to restrict him as a director, and he was successful in demonstrating that he had truly acted responsibly in relation to the conduct of the affairs of IQ Content Limited. These lengths are indicative of the burden of proof placed on directors that find themselves in a similar position to successfully argue a positive outcome.   Claire Lord is a Corporate Partner and Head of Governance and Compliance at Mason Hayes & Curran.

Des Peelo explains why a trust or an overseas holding company is rarely a good idea. The ownership of wealth and related capital taxes go together, and there are lessons to be learned in trying to distance one from the other. Nothing stands still over time, except the Great Pyramid and similar edifices. This simple fact can escape legal and financial advisors when it comes to wealth and capital taxes. First, let us consider the history of capital taxes briefly. The 1970s brought a slew of capital taxes, much of it modelled on UK precedents. The government of the day introduced capital gains tax, capital acquisitions tax replaced estate duties, and there was a short-lived wealth tax. A wide range of tax measures involving the relationships between companies and the individuals who owned them also came along in successive Finance Acts, while 1988 saw the introduction of self-assessment on income and capital taxes. There was relatively little personal wealth in Ireland at that time, and it was the mid-1980s before the capital taxes realised much revenue, with the result that planned tax avoidance (and illegal tax evasion) became an unstated industry in itself. Schemes were thought up by legal and tax advisors until a Finance Act caught up with them. Even so, on occasion, the combatting legislation itself created another loophole, and so on. The use of trusts (usually through what is known as a discretionary trust) and overseas holding companies became fairly widespread, the repercussions of which were not always wisely thought through – a resonance that is still valid today. The ownership of businesses, properties and investments were held in companies and trusts in places like Jersey and the Isle of Man. Others were based further afield in Bermuda, Cyprus and the Cayman Islands. It was not unusual to have pyramids of ownership across several jurisdictions. Revenue probes, the Ansbacher Enquiry, tribunals, several tax amnesties and the Panama Papers subsequently revealed the widespread use of overseas structures. Fast forward from those earlier years and the anxiety to avoid capital taxes, or to keep control after the demise of the founder or owner of a business, overwhelmed common sense as to what was likely to happen in the long run. Subsequent legislative and practice changes, in Ireland and overseas, were not always known or understood. The rigidities in the original tax schemes, over time, frequently created obstacles to addressing subsequent tax challenges and change. As to the designated beneficiaries of the underlying wealth, the elapse of time created its own dysfunctions. Sibling rivalry and inter-generational fighting continue to be common outcomes; not to mention the complications of divorce and remarriage, poor behaviour within a family and possible inadequate management performance as to the underlying business or assets. Trustees also pass on in time, being usually older than the intended beneficiaries, and replacement trustees may have different attitudes. Indeed, some were not replaced in a timely or legally permitted manner. As stated at the outset of this article, nothing stands still and what started as a tax-planning decision is now a tangled legal, financial and tax imbroglio. There are instances of ‘orphan assets’, which arise from the failure to address legislative or practice changes over time. This failure can lead to paralysis or an inability to access the underlying assets. A particular problem with trusts – as identified in several UK court cases – was the continuity of trustees, meaning that overseas trustee companies went out of business without any succession or replacement structures in place. Similarly, individuals acting as directors of holding companies in foreign jurisdictions became incapacitated or died. What is not always readily understood is that if something goes wrong, such as an unexpected event or a dispute of some kind, the Irish courts are unlikely to have any jurisdiction. Trust and/or company law can be opaque or vague in foreign jurisdictions. For example, it may be the case that the shareholders in an overseas holding company have not been filed in the local equivalent of the Irish Companies Registration Office, or indeed disclosed or accessed in any other way. This failure may lead to uncertainty as to actual ownership, and the articles or constitution are likely to diverge from what is set out in Irish company law. In any event, the point is that the use of trusts and overseas companies will often fall foul – and usually do – in the long run. This reality keeps accountants and lawyers busy all over again in trying to sort it out; usually with significant legal and tax bills to follow. In summary, a trust or an overseas holding company is rarely a good idea. Des Peelo FCA is the author of The Valuation of Businesses and Shares, which is published by Chartered Accountants Ireland and now in its second edition.

Welcome to a special 50th anniversary edition of Accountancy Ireland. As this is my first comment piece in the magazine since our AGM, I’d like to say what a tremendous honour it is to follow in the footsteps of a long list of remarkable Presidents. I would also like to congratulate my predecessor, Feargal McCormack, for a tremendously successful year. The audit challenge As a member who has spent his career working in audit, it will come as no surprise that I am keen to address the challenge that currently faces the audit profession. I have been looking to our nearest neighbour in the UK and reflecting on the fractured relationship with the regulator, the Financial Reporting Council, and with politicians. Many of the reforms recommended by Sir John Kingman’s recent independent review have now been accepted. However, the wider review by the Competition and Markets Authority and also the independent review into ‘The Quality and Effectiveness of Audit’ being conducted by Lord Brydon will be fundamental to our future, and the future of business more broadly. We must remember that what may be required to work in the UK is not necessarily or automatically right for Ireland. We must work hard to ensure good communication between the profession, politicians and regulators to ensure that the very particular strengths we have in Ireland are protected and nurtured. Routes to our profession My second area of focus will be around access to the profession. I see this as having three different strands. Firstly at graduate level, secondly by facilitating more graduates to train in industry and public sector, and thirdly by opening up a route to non-graduate entry. Over many years, the Institute’s dependence on the audit functions of the big accounting firms has become more and more accentuated. I believe there is real opportunity both to widen our graduate pool, but also to work with Ireland’s largest corporates – and, indeed, our influential senior members – to revitalise and enhance the ‘training in business’ route to the qualification. The other thing we need to get right is our school-leaver route. It is inevitable that college fees for university education will be reintroduced at some stage, making third-level education inaccessible to many. Through Accounting Technicians Ireland, we already have a ready-made route for school-leavers to Chartered Accountancy, which presents a fantastic opportunity. Strategy My third area of focus will be strategy. We are now working with our Strategy Board to make sure that by the end of the year, we have progressed a new strategy up to 2025. In doing this, we will engage with the full spread of our membership. We have so many business leaders who are Chartered Accountants and who play a very significant role in Irish business life – creating value, creating opportunities for careers, and sustaining families. With your help, we will deliver a strategy that secures our reputation and delivers important services to members. I am very confident that together, we can deliver on our themes and strategy for all of our membership. Conall O’Halloran President

Trainees are the lifeblood of the profession and rather than expect conformance, accountancy firms must  continually evolve to meet their needs. By Sinead Donovan In today’s environment, the role and route to becoming an accountant has changed compared to when I initially started my training contract. I don’t mean in respect to the professional exams or length of training contracts, but more the expectation of the future accountant in their day-to-day work environment and, likewise, in the expectation we have from them. In fact, the question I am asking is: what is the primary role of an accountant? Wikipedia defines an accountant as “a practitioner of accounting or accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources”. The rounded accountant Technically, as accountants, we need to be able to provide the above services – but this is no longer our sole role. Today, we need to be experts in project management, forensic accounting, cybersecurity, fintech, negotiation settlements – the list  goes on. To service these needs, it is becoming increasingly critical that we train very rounded and evolved accountants, and that we arm ourselves in our teams with skillsets to build a sustainable relationship with the client, have the foresight to envisage what they need, and be able to address their needs. An evolving industry We are all aware that the professional service environment is changing at rapid speed. To meet these changes, there is a high expectation from the future generation of accountants. This future generation of accountants will be key to the evolution of the professional services industry. We want and need our accountants to have vast experience and other interests, and we want to see how this can be used and applied in our changing environment. This requirement is well served by trainee accountants who come through the non-traditional accounting route and often have a primary degree in something completely different – science, arts, engineering or marketing. Their unique skill will add to the learning experience they will encounter and give a different perspective on the work being performed for clients. Trainees’ concerns Trainees want to learn, but they also want to be supported throughout their career to ultimately achieve the goals and targets they set for themselves. They are not afraid to address issues or concerns they may have. Sometimes we may bemoan this as a millennial or Gen X requirement. However, it should be welcomed and embraced. These students are headstrong, determined and not afraid to voice their opinion. They want a fully rounded experience and the opportunity to get involved in other aspects of the business. We as training firms need to be positioned to address their needs – and there is no doubt that we are being interviewed by the students. A number of things are important to them, not least company polices in respect of CSR, career progression, the different service offerings we provide as professional services firms and how we keep up-to-date with change and technology. They are also keenly driven by the work-life conundrum, which can be difficult to navigate as a trainee accountant. Our responsibility And indeed, accountancy firms must simultaneously pivot their own expectations of trainees. We need to: Help them set stretch goals and put supports in place to enable the achievement of these goals; Keep pace with changes in technology and develop our service offerings to support our clients and our trainees; Communicate and share our strategies and objectives with them – they need to understand what their investment can reap; and Be open to being challenged and questioned. Most importantly, we need to do all this while remembering that ethics is the cornerstone of our profession – a fact that, thankfully, hasn’t changed. Sinead Donovan FCA is a Partner in Financial Accounting and Advisory Services at Grant Thornton.

The FAE Core curriculum is undergoing significant changes in order to maintain the Irish  ACA’s global reputation for excellence. By Ronan O'Loughlin   Members and students will be aware of the significant technological changes impacting on the work and careers of Chartered Accountants. It isn’t just the technological changes that are significant, but the increasing pace of change. Against this backdrop, the Institute’s Education Training and Lifelong Learning Board (Education Board) and Exam Committees have been adapting and enhancing the ACA curriculum to meet these challenges. This article outlines the changes to the FAE Core examination, which will be rolled out from autumn 2019. From a practical perspective, this can be viewed as a first step and will be further enhanced in the years ahead. The journey At a global level, the profession is paying significant attention to the impact of technology on the education needs of students and qualified accountants. Technology is impacting what we learn, how we learn and how we are assessed. The skillsets of Chartered Accountants must be further developed to cope with these changes. The Institute launched a new syllabus in 2018, which featured new FAE electives. These are: the Public Sector elective, which is aimed at students working or advising in this sector; the Financial Services elective, which is targeted at students training in the Financial Services sector; and the Advisory elective. With the other existing Audit and Tax electives, students now have a choice of five electives. This innovative structure recognises the changing nature of the work of the profession and in the case of those working in practice, the increasing importance of Advisory in particular. The 2018/9 structure is summarised in Table 1. Students completing FAE must complete FAE Core and one elective. This structure is unique amongst our reciprocity partners and supports a level of pre-qualification specialisation. All electives can be completed at the time of qualification and additional electives can be completed post-qualification to support career changes. The Education Board and the relevant examination committees are also mindful of the work currently underway with our reciprocity partners in the Global Accounting Alliance, which will frame the skillsets and requirements that will be necessary for Chartered Accountants in the future. This work will conclude in 2019 and will inform the new reciprocity agreements, which will be rolled out in the years ahead. In the meantime, the FAE Core syllabus will be further developed in anticipation of likely reciprocity developments and emerging technological developments. This will be rolled out in 2019/20. Changes to the FAE Core syllabus The Core syllabus is being restructured, with a reduction in modules from five to four (see Table 2). This new structure reflects a desire to create ‘space’ for the new material and to better reflect the changes in our key training firms and organisations. These changes include an increased focus on advisory work and the re-framing of audit practice. There are a number of reasons for these changes: Financial Reporting in terms of syllabus requirements remains as before; it is a key skill for all Chartered Accountants. The slight change in weighting reflects its importance. Assessment will take place within the Core exam and, separately, in an interim Advanced Application of Financial Reporting Principles (AAFRP) assessment; Strategic Management and Leadership contains the areas of strategy (analysis, choice and implementation), as before, with the addition of the Strategic Finance Management Accounting (SFMA) topics previously examined under a separate heading. In terms of the SFMA topics, the focus will be on dealing with the key strategic aspects of these topics; Data Analytics, Artificial Intelligence and Emerging Technologies represent new material, which reflects the current and emerging technological developments that will impact businesses and clients of Chartered Accountants. The topic covers data analytics, with particular reference to determining the data set and its integrity and the interpretation of the outcome of the data analysis. Artificial intelligence will be explored, given its significant impact on business processes. The Emerging Technologies focus specifically on blockchain and cryptocurrency developments, which are creating significant new opportunities for the processing of financial information. The aim is to ensure that newly qualified Chartered Accountants are equipped to understand these developments and their impact on their clients and employers; and Risk Management and Sustainability focuses on the area of audit process, risk management and internal control rather than the traditional external audit focus. Extended coverage of audit and assurance will occur in the Audit Elective. Other new topics include professional scepticism, sustainability and integrated reporting. This rebalancing reflects the evolving nature of audit and the emergence of topics that are altering the role of today’s Chartered Accountant. Feedback received We shared these developments recently with our students and other stakeholders, and the feedback was fully supportive. Students recognise that these developments will future-proof their careers and enhance their career prospects. One recently admitted member said: “I wish I was completing the FAE in 2020”. These changes are just the first step in the planned evolution of our syllabus to reflect the ongoing rapid changes in technology. The education programme in 2019/20 will be supported by a suite of new learning materials. Other changes In addition to the FAE Core changes, a new e-assessment platform will be launched on a pilot basis at CAP1 level. The initial pilot will be conducted in 2019/20 and will be limited to the CAP1 interim assessments and Law. If successful, it will be expanded to all of CAP1 and all interim assessments from CAP1, CAP2 and FAE in 2020/21 and to all CAP1, CAP2 and FAE assessments in 2021/22.  The new platform allows students to complete their exam in an appropriate environment (including their home) with an online live moderation of their exam by an invigilator supported by artificial intelligence. This replaces the current online double entry examination and will include a new CAP1 Law paper and the Management Accounting interim assessment on the same platform. The new platform will not only facilitate increased security and efficiencies, but enhanced student and customer service – and it is fully GDPR compliant. It will also lay the foundation for future enhancements to the Institute’s examination offering. Conclusion The enhanced syllabus and planned developments in FAE Core and e-assessments are significant developments that seek to retain the Irish ACA’s standing in the global business landscape. This output reflects significant work and investment on the part of Chartered Accountants Ireland and forms part of a plan of continuous enhancement. Ronan O’Loughlin FCA is Director of Education and Training at Chartered Accountants Ireland.