The implementation of the Corporate Sustainability Reporting Directive will introduce new challenges in business reporting, not least the tricky concept of double materiality, writes Mike O’Halloran In 2024, a new era of corporate reporting has kicked off. The Corporate Sustainability Reporting Directive (CSRD) began to apply to some of the largest entities in Ireland for financial periods commencing on or after 1 January 2024.   The cohort of entities applying the CSRD will increase significantly in the years ahead as the numbers in scope rise in 2025, 2026 and 2028.  Under the European Green Deal, the European Commission aims to transform the EU into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050, economic growth decoupled from resource use and no person or place left behind.  In seeking to achieve this goal as part of the deal, the CSRD will not be without its implementation challenges. One of the challenges that preparers will have to navigate is double materiality. The CSRD requires the assessment of the materiality of impacts, risks and opportunities relating to sustainability matters via a double materiality assessment. This will be new to most preparers of sustainability statements and those providing assurance on the information.  Double materiality is a unique concept of reporting under the European Sustainability Reporting Standards (ESRS).  It is the most notable difference between these standards and the International Sustainability Standards Board’s standards (IFRS S1 and IFRS S2), which will be adopted in other jurisdictions outside Europe. This will most likely include the UK where the Department for Business and Trade has indicated that it may be endorsed in 2024 as part of its Sustainability Disclosure Standards. Materiality – two perspectives As the name might suggest, a double materiality assessment is performed from two perspectives – financial and impact. The result forms the basis for what should be disclosed in a sustainability statement.  The use of two perspectives differs significantly from the “traditional” materiality assessments accountants will be familiar with. This is because a double materiality assessment focuses not just on matters that are financially relevant, but also on those that impact stakeholders, both internal and external, and the environment.  Without a double materiality assessment, an entity could simply focus on sustainability matters that are financially relevant to itself and ignore what is important to the wider society it affects. A double materiality assessment involves consideration of the entity’s direct and indirect impact. This means that it covers the entity’s own operations as well as its upstream (e.g. suppliers and pre-production activities) and downstream (e.g. post-production activities and end customers) value chain, when considering its material impacts, risks and opportunities.  The output from a double materiality assessment identifies impacts, risks and opportunities related to sustainability matters that are considered to be material for the entity, its stakeholders and the environment, and therefore must be reported on in its sustainability statement. Financial materiality For a sustainability matter to be material from a financial perspective, it must trigger (or must reasonably be expected to trigger) material financial effects on the undertaking. In assessing this, an entity must consider whether sustainability matters generate risks or opportunities that materially influence its development, financial position, financial performance, cash flows, access to finance or cost of capital over the short-, medium- or long-term. The materiality of risks and opportunities should be assessed based on a combination of the likelihood of occurrence and the magnitude of financial effects. Impact materiality Impact materiality looks at how an entity may have an impact on its stakeholders from an environmental, social and governance (ESG) point of view. For a matter to be material from an impact perspective, it must generate (or have the potential to generate) positive or negative impacts on people or the environment. The relevant person affected is the stakeholder and impact materiality is viewed through the eyes of the stakeholder to identify sustainability impacts. When an entity is considering impact materiality, then, it must consider actual or potential impacts, positive and negative impacts and impacts covering the short-, medium- or long-term. The assessment of the severity of its impacts, and therefore whether they are material, is based on three factors: • Scale – how grave or beneficial the impact is; • Scope – how widespread the impact is; and • Irremediability – whether or not the impact can be mitigated or resolved. Furthermore, if an entity is addressing potential impacts, it is required to consider the likelihood that the issue will occur. Engagement with stakeholders is a key consideration when reviewing impact materiality and it will help to inform the entity about its material sustainability impacts, risks and opportunities.  The ESRS do not set out how an entity should engage with its stakeholders and the engagement process should be determined by the reporting entity.  Some of the stakeholder categories an entity may consider as part of its materiality assessment include employees, suppliers, customers, consumers, end users, regulators, local communities and nature. Double materiality sets the reporting boundary When an entity determines that impacts, risks and opportunities related to a sustainability matter are material because of a double materiality assessment, then it is required to disclose information required by the disclosure requirements related to that sustainability matter in the corresponding topical and sector-specific ESRS.  In addition, it is required to disclose any additional entity-specific information when an ESRS does not sufficiently cover this matter. As a result, a double materiality assessment sets the entity’s sustainability reporting boundary. If a matter is material from a financial perspective, an impact perspective or both, then it must be disclosed in a sustainability statement.  The challenges There are several challenges that entities performing a double materiality assessment may struggle with, particularly in the initial years of implementation. These include: Understanding and applying the concept While preparers will already be familiar with materiality, double materiality introduces some new parameters they will need time to become comfortable with. The ESRS do not specify a process to follow when carrying out a double materiality assessment. The reason for this is that no one process would meet the requirements of all the entities reporting under the standards. Therefore, an entity that performs a materiality assessment must design and apply a process tailored to its circumstances, while remaining within the requirements set out in ESRS 1. While such an approach allows entities to tailor their processes accordingly, the lack of a rules-based system may prove difficult for some entities to adapt to, particularly in the earlier years as practices and precedent are being established. In the absence of a strict rules-based approach, entities will need supplementary material to guide their methodologies. Currently the European Financial Reporting Advisory Group is drafting implementation guidelines to assist with this. The assurance requirement A key requirement of the CSRD is external assurance on an entity’s sustainability statement. This will initially require limited assurance before being upgraded to reasonable assurance at some point in the future. While assurance will help to ensure that the integrity and reliability of sustainability information reported on will be enhanced, it will also bring with it a level of complexity whereby the judgements made by preparers will be assessed by assurance providers. This may introduce differing opinions on what should be deemed as material from an impact or financial perspective. All eyes on the first reporters The number of reporters in the first wave of CSRD adopters in Ireland will be low in number but high in terms of market capitalisation.  All eyes will be on the sustainability statements prepared by these entities in early 2025 as users, preparers and other interested parties will be keen to see how they have approached double materiality.  Despite the low number of reporters for 2024 year-ends, many entities will be indirectly impacted as they will be part of the supply chain of reporters. They will therefore be providing information to entities preparing their sustainability statement.  Furthermore, many entities that will be subject to the requirements of the CSRD in future years will be keen to learn from the challenges encountered by the first adopters. Despite the onerous requirements of the new suite of standards and in particular double materiality, it is important for entities and their stakeholders to remember the reasons for their introduction and the underlying cause they seek to remedy.  The EU’s goals under the European Green Deal are ambitious, but they need the full support and backing of businesses to be successful. Mike O’Halloran is Technical Manager in the Advocacy and Voice Department of Chartered Accountants Ireland Double materiality: brewery example Consider an entity operating a brewery in Ireland. In carrying out a double materiality assessment it may, among other things, consider the following matters to be material, from one or both perspectives: Energy (financial perspective) – due to the energy intensiveness of the production process and the financial risk of increased energy prices; Pollution of water (impact perspective) – due to the large amount of water discharged during the production process and the impact that this may have on water quality locally; Water consumption (financial perspective) – due to the cost involved and the availability of sufficiently clean water; Land-use change as a direct impact driver of biodiversity loss (impact perspective) – due to the large amount of malt, barley and other crops used in the production process; Sustainability matters under the heading of “own workforce” including health and safety of employees (impact perspective) – due to the large workforce an entity has employed in its factory; Resource inflows and outflows (impact and financial perspectives) – given the amount and cost of packaging and storage materials used, particularly in an entity’s downstream activities; Personal safety of consumers and end users (impact and financial perspectives) – given the health implications of a breach of food safety regulations on consumers as well as the financial implications that it would bring; and Responsible marketing practices (impact perspective) – given the addictive and age-restricted nature of the product being produced by the brewery. This example is for illustrative purposes only and is not intended to be a complete list, nor a list of the matters that are mandatorily material for a similar entity. Individual judgment must be applied in each instance.

The foundations for a common polity are eroding as increasingly polarised views and influences continue to flourish, writes Cormac Lucey It looks like voters in the United States will have to decide between Joe Biden and Donald Trump in November’s presidential election. It is symptomatic of how polarised American politics have become that the strongest argument for voting for Joe Biden is that he isn’t Donald Trump and vice versa.  Why have politics in the developed world become so opposite? And what is the likely future direction of travel? In my opinion, several secular factors are eroding the political centre and promoting the rise in political extremes.  Narrowcasting has replaced broadcasting. In the past, TV and radio channels were limited in number and had to cater for a large audience. The result was broadcasting that was jointly watched or listened to by large sections of the community. Today, it is viable to create media and social media offerings that cater for very narrow and specialised audiences. Broadcasting has been replaced by narrowcasting. Sectional views are being promoted. A common, integrated view is being relegated. Social media algorithms seek to maximise their audiences even if it means promoting a one-sided view of what’s happening. Just look at the US where the difference in political perspectives offered by Fox News and MSNBC is such that, even when covering the same story, they often appear to be reporting on different events. The commercial imperative to maximise audiences means that people are increasingly being told what they want to hear resulting in an echo chamber effect where contrary views are downplayed or ignored. Division is promoted – unity is structurally disadvantaged. The growth of technology has turbo-charged the division of labour. The essence of the Industrial Revolution is that people ceased to be farmers and moved off the land to earn their living by doing increasingly specialised tasks. While specialisation has promoted greater efficiencies and higher economic growth, it has come with the cost that we now have a reduced understanding of what others do and of how the entire system hangs together.  Society has become more politically polarised around socio-economic differences. In his book The Road to Somewhere, David Goodhart explained the shock of the Brexit and Trump 2016 votes. He described a UK society that was divided between “Somewheres” and “Anywheres”.  “Somewheres” are firmly rooted in a specific community and Goodhart reckons that this group constitute about half of the UK population. “Anywheres” are typically socially liberal, well-educated and generally living in cities – they could live and work anywhere (as the pandemic illustrated).  Goodhart reckons that they comprise just 20 to 25 percent of the population but dominate politics and the media. “Inbetweeners” oscillate between these two groups. Brexit and Trump represented a shock victory for the “Somewheres” over the “Anywheres”. Recent protests in Ireland against immigration by asylum seekers are probably being carried out by “Somewheres,” angry at the immigration policies of Dublin’s “Anywhere” political establishment.   In the future, the challenge will be that each of the drivers of political fragmentation listed above seem likely to continue to grow. If the foundations for a common polity are eroding, reaching political agreement is likely to be increasingly difficult in the future.   *Disclaimer: The views expressed in this column published in the February/March 2024 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland

Charlotte Rose Keating reflects on her path from a law graduate to achieving FCA status, highlighting the transformative power of stepping out of your comfort zone so you can achieve more in work and life I was awarded FCA status in January. Reflecting on my career journey so far, with its twists and turns, I am grateful for the chain of events that led me to become a Chartered Accountant and excited to see what being a Fellow will bring.  At school, I never imagined it would be possible for me to be a member of the accountancy profession. Maths was my Achilles heel. I believed I wasn’t numerical. Being a fan of debating and problem-solving through words, I got my law degree from Trinity College Dublin.  I graduated in 2008, but with the uncertainty of the financial crisis, it was not the ideal time to apply for graduate jobs. This, combined with uncertainty in my personal life, drove my need to secure a good role.  One evening, while applying for law firm training contracts, an advertisement for Deloitte popped up on my screen. Intrigued, I clicked to learn more and was pleased to see that the firm encouraged applications from individuals of varied backgrounds, not just those with accounting and finance-related degrees.  “I’ll take the risk” As I selected the Enterprise Risk Services Department, I thought, “I’ll take the risk,” and applied. Like magic, things started to fall into place.  While on holiday, I got called for an interview and as it turned out, one of my travel companions had trained with Deloitte and specialised in risk. She and her partner sat me down around a campfire to give me advice and conduct a mock interview.  Sure enough, it ended up being a fantastic interview experience.   When I was offered the role, I couldn’t wait to get started, seeing it as an opportunity to diversify, understand the business world and overcome a long-held fear of numbers.  Working mainly in internal audit and regulatory compliance for various public and private sector clients, I leveraged my law degree while developing new skills and confidence.  Training and qualifying as a Chartered Accountant involved stepping out of my comfort zone, but it is one of the best decisions I’ve made. Yes, it gave me security, but it provided me with so much more, including the opportunity to travel and fulfil a lifelong dream of living and working in New York City.  The qualification was an invaluable asset when I pursued professional acting, not a fallback. Being a member of the profession provided me with the tools and the self-belief I needed to set up my own coaching and training business – Act On It Coaching – where I work with individuals and companies to support personal and professional development.  Despite taking my qualification in a different direction, I still use it daily to support and add value to my clients. My membership is something I treasure and I value the support of the Institute. The bias challenge Since my training days and throughout my career, I have been fortunate to have had wonderful role models and mentors who reflected my strengths and encouraged me, guiding me on where to improve and imparting advice drawn from their own career journeys.  I’ve had the privilege of working with many inspiring, strong women. Having female camaraderie and confidantes is extremely beneficial at any stage in one’s career.  Bias, both conscious and unconscious, is still a challenge in the workplace, and there remains a lack of female representation in key decision-making roles. As the saying goes, “If I can see it, I can be it”, and female role models at the partner and senior executive levels are essential in enabling junior-level women to envision their own career pathways. Mutual respect and people accepting one another’s unique qualities and differences naturally fosters inclusion and encourages individuals to play to their strengths to make a positive impact and contribution in what they do. Take responsibility for your career  When it comes to navigating career advancement, the most effective strategy, in my opinion, is to start with you. Take responsibility for your career.  I have asked myself what I want to achieve as I have learned that self-reflection is so important to set short- and long-term goals. I have reflected on my strengths, achievements and the aspects of work I enjoy to build confidence in the present that can propel me towards future achievements.  To keep focused, on track and in charge of my career, I check in regularly and ask myself questions like: • What do I need to do more of? • What do I need to do less of? • What do I need to start doing? • What do I need to do differently? • What do I need to stop doing altogether? This practice helps me to identify professional opportunities and be prepared to put myself forward confidently.  It’s also highly beneficial to get clarity from others. Asking a senior colleague the simple question, “how am I getting on?” can help you to understand whether or not you are meeting expectations.  Seeking feedback from clients and junior staff is also fundamental to growth and career progression.  Good and timely communication prevents conflicts and misunderstandings and dramatically reduces anxiety. It’s important to be technically strong, of course, but we need to hone our soft skills, especially in this era of artificial intelligence. As I was in a small but growing department when I started with Deloitte, I was fortunate to have ample opportunities to develop leadership skills early on.  An aspect of my work that I particularly enjoyed was coaching and mentoring junior staff members and designing and delivering training for them.  This led to me developing the Trainee Toolkit, a programme I have been rolling out across different firms to support the next generation of Chartered Accountants in succeeding in their exams and training contracts, assisting the efforts to plug the talent gap and future-proof the profession.  Tap into your professional community  Being part of the family of Chartered Accountants provides us with community, whatever stage of our career we are in. It’s vital to tap into this community and make the most of the support available to advance our careers.  Collectively, we give ourselves a sense of purpose, an appreciation of our individuality and health and wellbeing benefits.   Nurturing relationships and building connections within this community can be particularly beneficial for women, who face various unique challenges in the profession.  Mentoring and networking allows women to brainstorm collectively, share solutions to challenges, professional and personal experiences, to thrive, build confidence, take control of their careers and ultimately experience greater fulfilment in all that they do. Managing work-life balance As a self-confessed adrenaline junkie, I love saying yes to new challenges. This is my biggest issue when it comes to work-life balance. I take on a lot because I don’t want to say no to opportunities to grow. Being mindful and focusing on each task to the best of my ability helps me to avoid feeling overwhelmed.  Good time management is also key; anticipating unforeseen events and factoring buffer time into my projects reduces pressure. A non-negotiable is my daily walk. It’s my chance to reflect, exercise and clear the cobwebs. I often go out with a problem and come home with a solution. Living a more holistic life where we can be at our best involves recognising that nothing is wasted, all experiences in and out of the workplace, all the successes and setbacks shape us into who we are, and it’s good to take stock of this daily. Cultivating personal and professional relationships helps us perform at our best and feel good in the process. Charlotte Rose Keating, FCA, is CEO of Act On It Coaching  My Story So Far: Women's Career Series Last year, Accountancy Ireland introduced a new series in collaboration with the Gender Working Group of the Institute’s Diversity Equity and Inclusion Committee. Focused on the women in our membership, we are relaunching this series this year under the new banner ‘My Story So Far: Women’s Career Series’. It follows the 2022 publication of a global Chartered Accountants Worldwide survey which explored opportunities for women in the profession. The survey found no obvious gender-related barriers to entry into the profession but revealed that a growing number of women were making the decision to leave or pivot within the profession mid-career. ‘My Story So Far: Women’s Career Series’ seeks to highlight the experiences of the women in our membership and provide a forum to share their insights into how they have managed their careers in tandem with their lives and overcome the challenges and obstacles they have encountered along the way.

Chartered Accountants have a unique set of skills that can help guide and support the valuable work of Ireland’s charities and not-for-profits Orla Roche, FCA, TMITI, has been volunteering in the not-for-profit sector since childhood and began to carve out a career in charity after qualifying as a Chartered Accountant with KPMG in Dublin and returning to live in her native Galway in 2002. “I volunteered for charities from a young age and became involved in the sector because I find the objectives of charities very interesting; they make a difference,” explains Roche, who is currently co-Chair of the Institute’s Charity and Not-for-Profit Special Interest Group.  After returning to Galway, Roche also qualified as a tax technician with the Institute of Taxation and established Roche Chartered Accountants, her own business, offering tax and business consultancy services. “I’ve worked in both the corporate and not-for-profit sector for the likes of Galway Simon Community, Pobal, Connacht Rugby, St Vincent de Paul, GAA, Trócaire and Goal in Sudan,” she says. “Because profit is not the objective of a charity, my roles have been more varied and rewarding; it is not just about ‘doing the numbers’.” Roche is currently Finance and Governance Manager with First Fortnight, a mental health charity, which recently hosted its annual arts festival at locations nationwide in January. “First Fortnight challenges mental health stigma through arts and cultural action. We offer creative art therapy to children, adolescents and adults who are homeless or at risk of homelessness and we’ll be expanding this service to new locations around the country this year,” Roche explains. First Fortnight is one of more than 11,500 charities registered in Ireland ranging from small, local and volunteer-only to large, national or international organisations with thousands of employees, according to the Charities Regulator. Although all charities are classed as not-for-profit organisations, not all not-for-profit organisations are charities. Under the Charities Act 2009, a charity must be set up to promote one or more charitable purposes, promote only that charitable purpose and deliver a public benefit. “Ireland’s strong charity sector plays a central role in our society. The diversity of the sector’s activities is reflected in the Register of Charities, which includes over 3,600 schools as well as libraries, museums, youth clubs, daycare centres and much more,” explains Helen Martin, Chief Executive of The Charities Regulator. Aside from their societal impact, charities have a significant financial impact on the Irish economy. About 281,250 people are employed by registered charities, according to the Report on the Social and Economic Impact of Registered Charities in Ireland published last year by the regulator. “That’s equivalent to almost one-in-eight workers. Total direct expenditure by Irish charities was estimated in our report at €18.6 billion in 2022, an increase of 28 percent over 2018. The overall financial impact of the charity sector was estimated at €32.1 billion in 2021, when the indirect and induced effects of activity are also included,” Martin says.   Personal motivation  Tony Ward, FCA, has worked in both voluntary and professional roles within Ireland’s charity and not-for-profit sector, prompted initially by his personal experience. “My introduction to the sector came through my diagnosis with a degenerative eye condition in the early nineties, which led me to become involved with Fighting Blindness as a board member while working in practice, consultancy and the private sector,” he says. “I would go on to become an employee of Fighting Blindness and then Director of Finance with The Wheel – Ireland’s national association of community and voluntary organisations, charities and social enterprises – until May 2022 when I went into consultancy, largely in the charity sector.” Ward is currently co-Chair of the Institute’s Charity and Not-for-Profit Special Interest Group and sits on the board of several charities and not-for-profit organisations. He has firsthand experience of the benefits they can bring to individuals who need supports and services. “I have benefited personally from continuing to be involved with charities working in the area of blindness and sight loss while learning about many others and the great work they do. They often fill gaps left by the State in the provision of essential services or enhancing aspects of society that are important to all, such as arts and sports,” he says. “I think it is very important that we give back and what easier way to do it than in an area where we all have existing competencies, which probably fit with the skills charities desperately need?” Chartered Accountants, in particular, have skills of great potential value to charities and not-for-profits, Ward believes.  “I would urge Chartered Accountants to give back by helping the charity and not-for-profit sector. Many are already involved and, the more I’ve become involved myself, the more I understood how complex and important the ‘business’ of running a charity is.  “Charities are all subject to the same or similar governance controls, business metrics and operational concerns as other organisations. It is very important that they have people with suitable skills involved,” he says. Valuable professional skills Orla Roche agrees that Chartered Accountants have a lot to offer Ireland’s charity and not-for-profit sector. Even if they don’t work full-time in the sector, they can bring valuable professional skills to the table on a voluntary basis. “I feel my qualification has brought a much-needed function to the charities I have worked with. Governance and accountability are vitally important to charities,” Roche says.  “Since the establishment of the Charities Regulator in Ireland and the impending Charity Amendment Bill, charities have to be more transparent and I welcome these changes.”  For those Chartered Accountants who may be interested in volunteering, Roche says that there are safeguards in place to protect them from potential risks. “Pitfalls might exist in very small charities with very few or no staff and few financial controls where the onus might lie with the directors,” she says, advising that these risks can be mitigated by:   • Using the Charities Statement of Recommended Practice (SORP); • Keeping up to date records; • Working closely with an auditor; and  • Complying with the relevant Companies Registration Office and Charities Regulator rules.   “The way I see it, Chartered Accountants have a vital role to play by joining the boards of charities in a voluntary capacity,” Roche says. “Our analytical, financial and people skills can increase the transparency and accountability of the sector and you will find many Chartered Accountants sitting on the finance sub-committee of charity boards around the country. “They can also help in producing accounts and ensuring financial controls and best practice are adhered to. This increases the transparency and accountability of the charities they volunteer with.” For those interested in volunteering their skills for the first time, Tony Ward advises reaching out to their family, friends and local community or logging on to Boardmatch.ie, an Irish charity specialising in not-for-profit board recruitment, or Volunteer Ireland at volunteer.ie. “There can be a lot of work involved, less so perhaps in organisations that have their own dedicated staff, but in my experience, a Chartered Accountant who understands how systems work can fairly easily slot into a charity board or committee,” he says. Áine Crotty, ACA, first became involved in charity and not-for-profit volunteering while completing her training contract with KPMG in Dublin. “I trained in financial services audit and then moved into risk consulting and then the insurance industry, but it was initially through my involvement in some of KPMG’s fantastic Corporate Social Responsibility (CSR) initiatives that I realised the benefits and rewards that could come from using my skillset to help charities as a Charity Trustee,” Crotty explains. Role of trustees The Charities Regulator defines Charity Trustees as the volunteers that sit on the boards of charities (or committees in the case of associations).  “They are the people who ultimately exercise control over, and are legally responsible for, a charity,” Helen Martin explains.  Her advice to existing trustees and Chartered Accountants who may be thinking of becoming a trustee is to familiarise themselves with the responsibilities of the role. “I would advise them to check the charity’s entry on the Register of Charities to ensure that it has filed its annual report with the regulator and that key details, such as the names of the charity’s trustees, are up to date,” says Martin. Through Boardmatch.ie, Áine Crotty secured her first role with a charity on the Audit and Risk Committee of the Board of Paralympics Ireland. She now also sits on the board of Gerri’s Place. “Gerri’s Place is a not-for-profit, social enterprise that provides wellbeing breaks for people who need time and space to focus on their emotional and mental wellbeing,” she says. “I have volunteered with and supported various mental health charities from a young age, as I had seen the effects of poor access to mental health services in my community. Joining the Board of Gerri’s Place has allowed me to continue contributing to a cause that is close to me. The skillset of a Chartered Accountant is invaluable to organisations like Gerri’s Place, Crotty says. “I see my Chartered Accountancy qualification and the skillset that comes with it as a privilege; it’s an even bigger privilege to be able to use that skillset to give back to those in need.”  For other Chartered Accountants keen to explore trustee roles in Ireland’s charity and not-for-profit sector, Crotty has this advice: “If you are confident in your skills and ready to give back some of your time, there is a place for you. With the charity sector becoming more and more regulated, there is a real need for professionals such as Chartered Accountants to get involved.” Regulatory environment Like all legal entities, not-for-profit organisations are subject to general laws and regulations dependent on a number of factors, explains Níall Fitzgerald, Head of Ethics and Governance at Chartered Accountants Ireland, a board member of Age Action Ireland and co-founder of non-profit Chapter Zero Ireland. These include:   • How they are established (e.g. Companies Acts applying to companies); • Their purpose or cause (e.g. Charities Act applying to charities); • Their responsibilities (e.g. safeguarding legislation if caring for vulnerable people); • Their activities (e.g. licencing or permit conditions for fundraising or events); • Their governance structure (e.g. constitution, trust deed, etc.); and  • How they operate (e.g. employment legislation/health and safety legislation).    “In addition, the non-profit organisation may be subject to regulations or conditions because of where they source funding from,” Fitzgerald says. A sporting organisation receiving funding from Sports Ireland, for example, will be required to comply with the Governance Code for Sport. A charity receiving government funding, meanwhile, may be required to comply, in full or in part, with governance requirements for state organisations. “The financial reporting requirements for not-for-profit organisations also vary according to considerations similar to those outlined above,” Fitzgerald says. In Northern Ireland, requirements are defined for charities as a category of non-profit organisations by the Charities (Accounts and Reports) Regulations 2015. Under these regulations, the Charities Statement of Recommended Practice (FRS 102) (Charities SORP FRS 102) applies to charities with income exceeding £250,000.  In the Republic of Ireland, the Charities Governance Code requires charities to produce full unabridged financial accounts, and to make sure these are made publicly available. The Charities (Amendment) Bill 2023, meanwhile, provides for a number of amendments to the Charities Act 2009. The bill, currently under scrutiny in the Dáil, aims to provide greater transparency for the public in relation to the finances and operations of registered charities.  “The amendments proposed will facilitate the introduction – for the first time – of much-needed financial accounting regulations for registered charities in Ireland,” Helen Martin explains. “This will introduce greater transparency in the way charities report on their finances and ensure that all charities are treated equally regardless of whether they operate as a company or an unincorporated entity such as an association or charitable trust.” This in turn will ensure that the financial statements of charities are more informative and more comparable than is currently the case.  Níall Fitzgerald recommends that not-for-profit organisations undertake a regulatory mapping exercise to determine the extent of the legislation and regulation each is subject to. “This can be a useful process for a not-for-profit organisation of any size, enabling it to better design a fit-for-purpose governance structure that facilitates effective compliance and reporting, while the organisation mainly focuses on achieving its purpose and objectives,” Fitzgerald says. Crucial role of accountants Public trust and confidence is the bedrock of a charity’s existence and this applies whether it is a large organisation or one of Ireland’s smaller charities, writes Helen Martin.  Close to 50 percent of charities, excluding schools, have an annual income of less than €100,000.  Accountants can help support and enhance governance standards within charities. We know from our engagement with charities that many use accountants on a voluntary or professional basis to provide support on a wide range of financial matters, such as:   • Developing internal financial controls; • Preparing financial reports, including management accounts; and • Advising on and assisting with transactions and investments.    Promoting and supporting the principals of good governance helps ensure Ireland has a vibrant charity sector that is valued for the public benefit it provides across many facets of society.  This ranges from ensuring a robust risk management system is in place to making certain a charity’s details on the Register of Charities are correct and it is up to date with its filings. Another key area in which accountants can play a role is in supporting transparency and accountability. We know from research that there is a strong link between greater transparency and accountability and public trust. Accountants are accustomed to the requirement to comply with regulations and professional standards. Whether working on a professional or voluntary basis, as a charity trustee or a service provider, they can help charities by being familiar with their key regulatory obligations and making sure they are in a position to comply.  For example, it is essential to know when the charity’s annual report is due to be filed with the Charities Regulator and what your obligations are, as a charity trustee, if you receive a statutory direction to provide information under the Charities Act 2009.  Failure to file an annual report on time or respond to a statutory direction is a criminal offence and could also put a charity at risk of being removed from the Register of Charities. Getting started: three-step checklist for new trustees Níall Fitzgerald, Head of Ethics and Governance at Chartered Accountants Ireland, outlines three steps he recommends members take before agreeing to volunteer for a charity or not-for-profit. 1. Reflect on your personal motivation and the cause or purpose that matters most to you This passion will be a key source of the energy required for any commitment you make, but it will also be an important filter when choosing which not-for-profit organisation to get involved with. For some members, the motivation will be clear from the outset. For others, you will know it when you see it—perhaps when you hear about the impact a certain charity is having or as you come across examples of its work. 2. Think about the skills, experience and level of commitment you can bring to a not-for-profit This can be about much more than your financial or compliance acumen as a professional accountant, also taking into account any of the skills and abilities attained in your life and career. It is also useful to have an idea of the amount of time you can give to an organisation as this may be one of the key factors determining the extent to which you get involved. 3. Invest time and effort in identifying the right opportunity Whether you are searching for a voluntary position or approached about a vacancy, it is recommended that you carry out some form of due diligence on the organisation. This includes getting a clear understanding of its vision, mission and values, and how these fit with your own. One tip here is to consider the ‘SPF factor’ – Strategy, People and Finance – and ask these three questions: • What is the organisation’s strategy and what resources/capacity does it have to achieve this? • What is the profile and skillset of the people leading and running the organisation? • What is the state of the organisation’s financial position and performance?  In addition, consider the organisation’s expectations of you and your ability to deliver on them. Many of these matters are considered further in the Chartered Accountants Ireland Concise Guide for Ethics and Governance in the Charity and Not-for-profit Sector, available in the Ethics Resource Centre online at charteredaccountants.ie. Produced in 2018, the guide will be revised later this year to reflect more recent developments in the sector.

The Department for the Economy unveiled an ambitious plan to boost the Northern Ireland economy in 2021, but will it be up to scratch? Professor Anne Marie Ward, Dr Esmond Birnie and Dr Stuart Henderson crunch the numbers to find out if the 10x Economy vision can deliver. Some argue that the Northern Ireland (NI) economy has strong potential given its apparent unique trade position as a halfway house between Europe and Britain, combined with the Department for the Economy’s (DfE) ‘10x Economy’ policy, which targets innovation, inclusion and sustainability. Yet, despite experiencing 25 years of peace, NI continues to suffer from political uncertainty and lower economic productivity relative to Britain and the Republic of Ireland (ROI). Moreover, ongoing uncertainties associated with Brexit continue to dampen potential foreign direct investment, which has been vital to the strong economy in ROI. It is against this backdrop that the DfE introduced a new growth policy in May 2021 aimed at achieving a 10-times better economy (‘10x economy’) by 2030.  The 10x vision is underpinned by objectives grouped into three pillars—innovation, inclusive growth and sustainability—and focuses on six priority sectors:  1. Agricultural technology (agritech); 2. Life and health sciences; 3. Advanced manufacturing and engineering; 4. Financial services and financial technology (fintech); 5. Software (including cybersecurity); and 6. Screen and low carbon.   The data The Northern Ireland Economic Trade Statistics (NIETS) is a new dataset that provides details on trade between NI and Britain for the first time. We have analysed this dataset, which covers the period 2014–2020 and comprises a sample of enterprises that are VAT or PAYE registered and trade in NI.  Approximately 5,000 to 7,000 enterprises respond to the survey annually. As part of our research, we examined the 10x priority sectors over the period 2014–2020.  Data on financial services and fintech are not included in the dataset and due to GDPR issues, we had to merge some of the 10x priority areas, ending up with four 10x sectors:  • Agritech;  • Health and life sciences; • Advanced manufacturing (including low carbon); and  • Software and screen.  Approximately 11.4 percent of the total sample is classified as being 10x. Here is a summary of our findings. Growth in sales and gross value added (GVA) As shown in Table 1, the 10x sectors of the NI economy were relatively resilient from 2014–2020 as total Gross Value Added (GVA) increased over the period, though agritech was negatively impacted by COVID-19.  Performance of the non-10x sectors improved over the period 2014–2019, as evidenced by increased total GVA (except traditional manufacturing, which declined by 20.35%). Most non-10x sectors were adversely impacted by COVID-19, however, except manufacturing and ‘other’ production.  Productivity Productivity is measured by the ratio sales per employment and GVA per employment. As illustrated in Figure 1, for 2014–2020, the wholesale and retail sector had the highest sales per employment, followed by agritech and other production. Other production has the highest GVA per employment, followed by construction, health and life sciences and software and screen. Agritech has the second lowest GVA per employment. External sales behaviour A country’s wealth is influenced by its ability to attract funds from external markets. To determine how NI is doing, we investigated the trade behaviour of NI enterprises using four ratios, which reflect the percentage of overall sales each business undertakes with Britain, ROI, the rest of the European Union (REU) and the rest of the World (ROW). The average percentage for each year (2014–2020) for the whole sample is provided in Table 2.  The most important external market is Britain, accounting for on average 11.75 percent of sales, followed by ROI (6.18%), ROW (2.69%) and REU (1.74%). Generally, the percentage of total sales to these external markets increased steadily over the period 2014–2019 and declined in 2020, coinciding with COVID-19. Patterns in the percentage of total sales to the four markets are further analysed by sector over the period 2014–2020 in Figures 2 to 5. Sectoral differences are evident. Generally, non-10x enterprises (the six to the left-hand side of each figure) are less engaged with external markets relative to 10x enterprises (the four to the right-hand side of each figure).   Differences in the relative importance of markets is also observed across sectors. For example, the ROI market is most important to the agritech sector (Figure 3), and the ROW market is most important to the health and life sciences sector (Figure 5), probably indicative of sales to the US. This sector is also very active in markets in the REU (Figure 4).  Note: When interpreting these results, be aware that the data is based on the largest enterprises in NI and the authors had to design their own 10x categories based on Standard Industrial Classification codes.   Will it work? The number of enterprises in NI that can be classed as ‘10x’ increased over the period from 619 in 2014 to 723 in 2020. They are contributing GVA to the economy and, importantly, most of their turnover is to external markets, which is beneficial for a small regional economy where local demand is limited.  These enterprises seem to be resilient, with little change in behaviour observed in the period after Brexit, and, with the exception of agritech, they continued to grow despite COVID-19 (though the data was only available for 2020).  In theory, the DfE’s ambitions are laudable. Cluster approaches have proven successful in other countries, including ROI, where foreign-owned high-tech enterprises pay higher wages, invest in R&D for future growth and have high exports.  Moreover, the vision of sustainable growth and prosperity for all (levelling up) aligns with more holistic concepts of economic growth that account for social and environmental concerns alongside economic prosperity.  There are concerns, however. This is an ambitious undertaking that will take time to implement. The 2030 target set by the DfE is tight, the support structures to fuel 10x growth are not yet fully established, ‘10x’ is not yet fully defined, ‘place’ is not yet fully defined and hence the data are not (yet) available to enable 10x to be identified and analysed by place.  This will hinder the ability to foster clusters and build networks, which are important for innovation. Also, change will be difficult due to existing established structures.  For example, most policy and government action is managed through Local Government Department (LGD) level structures. However, clusters of enterprises may cross LGD boundaries, complicating a joined-up approach.  In addition, economic and social development is not only managed by the DfE; many other bodies such as central government and local government departments, business networks and educational establishments, are involved. Role for accountants Accountants can play an important role in the success of the DfE’s policy and the future of the NI economy. Accountancy firms are present in most towns across the region. Accountants are part of local business networks and have first-hand knowledge of entrepreneurship and innovation within communities.  Moreover, accountants are well-equipped to facilitate the creation of priority clusters and expanding networks that enable local businesses to connect and grow both within and beyond their communities. This will be good for communities and for the accountancy profession.   *Note: The tables and diagrams in this article are from the authors’ full report, available on the Northern Ireland Statistics and Research Agency website. Professor Anne Marie Ward, FCA, is Professor of Accounting at Ulster University; Dr Esmond Birnie is Senior Economist at Ulster University; and Dr Stuart Henderson is a Lecturer in Financial Services at Ulster University.

The inaugural Chartered Accountants Worldwide Global Young Leaders Think Tank has set the stage for a shared vision for the future of the profession The drive to attract and retain talent is not news for anyone in the trenches of day-to-day recruitment and retention, but for the accountancy profession, the challenge of attracting new entrants is a global one – and a global problem requires global thinking. To foster exactly this, the Institute was delighted to facilitate the inaugural Chartered Accountants Worldwide (CAW) Global Young Leaders Think Tank in early January.   The session saw representatives from the next generation of leading professional accountancy organisations come together to discuss their shared vision for the profession. Present at the inaugural Think Tank in Dublin last month were representatives of: • The Institute of Chartered Accountants in England and Wales (ICAEW) • The South African Institute of Chartered Accountants (SAICA) • The Institute of Singapore Chartered Accountants (ISCA) • Chartered Accountants Australia and New Zealand (CAANZ) • The Institute of Chartered Accountants Scotland (ICAS); and  • Chartered Accountants Ireland.  The CAW Global Young Leaders Think Tank initiative is the brainchild of Sinead Donovan, President of Chartered Accountants Ireland. After meeting the global delegation representing CAW at last September’s One Young World summit in Belfast, Donovan saw an opportunity to further strengthen the connections forged between members of the CAW delegation at the conference and give these young leaders a lasting platform.  You can view photos from the event here. Community of difference makers “Seeing the energy, enthusiasm and appetite for tangible collaboration amongst the CAW delegation in Belfast, we recognised the opportunity for CAW and its member institutes to derive substantial value from establishing a think tank,” Donovan explains.  “CAW is more than just a worldwide network, we are a community of difference makers and we need to embrace the opportunity to build stronger connections within the global Chartered Accountancy community and amongst our leaders of tomorrow.”  Facilitated by Donovan and Sinead Fox-Hamilton, FCA, Relationship and Professional Development Manager with Chartered Accountants Ireland (and herself a former Chartered Star), the inaugural CAW Global Young Leaders Think Tank took place at Grant Thornton’s Dublin office on Friday, 19 January. During the session, representatives shared their ideas on how best to communicate with the next generation, how to tackle myths surrounding accountancy careers and potential barriers to entering the profession. Also on the agenda was their shared insights into what they most value as a member of their respective Institute and the importance they place on their own professional development, now and in the future.  Platform for future strategies Focused on giving the profession’s young leaders a platform to express their insights freely, the goal of the Think Tank’s first session was to discuss strategies to evolve the profession and engage Gen Z and Gen Alpha to ensure a strong talent pipeline.  Despite differences in paths to qualifications and entry requirements across the jurisdictions, representatives universally agreed that one of the biggest barriers to recruiting the next generation of accountants were the misconceptions that persist about the profession.  These include the mistaken belief that the profession is dull, overly focused on numbers and suitable only for introverted personalities naturally skilled at maths. Combined with a narrow understanding of the various career paths and roles available to Chartered Accountants, these perceptions are limiting the appeal of the profession. While those in the profession know this couldn’t be further from the truth – with the Think Tank delegation being the very embodiment of the diversity of industries and career paths the qualification opens up – dispelling these outdated myths for the wider public, those not already ‘in the tent’, is key.  The Think Tank participants discussed the need to reposition Chartered Accountancy as the exciting, purpose-driven profession it truly is, emphasising its role in enabling business leadership and fostering innovation. They also highlighted the teamwork inherent in the profession and multitude of potential career paths it offers. Also highlighted was the ability to travel with the qualification to work overseas and avail of visas in locations not as readily available to other professions and in sectors outside accountancy.  Global opportunities for profession Think Tank participants identified the mobility of the qualification as a key attraction, particularly in the context of third level students who may have had their key university years curtailed somewhat by COVID-19 restrictions.  Other key areas of discussion included how representatives viewed the value of their membership and what they saw as priorities for lifelong learning.  The group advocated for an increased focus on qualitative skills to reflect the increasingly advisory or consultative nature of the role of the Chartered Accountant in business.  Soft skills identified include communication and presentation skills that could better enable them to articulate the ‘narrative behind the numbers’ and convey their strategic insights and recommendations to businesses and clients.  Among their many recommendations, the group also discussed the importance of fostering skills in relationship management, teamwork, leadership and conflict resolution and the need to include these more in professional development programmes.  Developing these skills in a hybrid or remote work setting was put forward as a big challenge, particularly for students in the post-COVID-19 landscape for whom hybrid working may be their predominant experience of working today.  CAW white paper The findings and perspectives gathered at the inaugural Think Tank will be summarised in a CAW white paper analysing key trends. This white paper will be circulated to each Institute in its global network to inform their own strategies. The energy and enthusiasm garnered for this pilot event further cements the need for future Think Tanks, where issues affecting the global accounting community, such as sustainability and technological change, will be discussed and progressed. The success of the inaugural session has set out a template and vision for a continued series of annual Think Tanks event, hosted by each Institute in the CAW network in turn, all aimed at building stronger connections within the global community of Chartered Accountants and giving future leaders a platform to help shape the profession for future generations.  Among this year’s inaugural delegation were several of Chartered Accountant Ireland’s past Chartered Stars. These included:  • Michael Walls, Associate Director, Management Consulting, KPMG Ireland;  • Aisling McCaffrey, Director, Sustainability and Financial Services Advisory, Grant Thornton;  • Caroline McGroary, Assistant Professor, DCU, Research Fellow and Fullbright Scholar, Boston College; and  • Patrycja Jurkowska, Global Programme Finance Lead, Self Help Africa.  The international delegation comprised Chartered Accountants working across Ireland and the UK, each representing their own respective Institutes. They included: • Jane Carroll, Client Relations Associate with AllianceBernstein in London (but originally from Brisbane representing CAANZ); • ISCA representative Joanna Chung, now based in Berlin as a junior consultant with Boston Consulting Group; • ICAEW’s James Skilton, Client Manager with London’s Cooper Parry; • Lisa Blum, ICAS, Finance Manager at Lloyds Banking Group in Edinburgh; • Louise Chunnett, IT Internal Audit Manager, Bidvest Group, based in Dublin and representing SAICA; and  • Mishka Hajee, Vice President of Internal Audit and Integrated Risk at Citi Bank, also based in Dublin and representing SAICA.