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Economists may have a plethora of letter-named predictions for the post-pandemic recovery, but Chartered Accountants are depending on a ‘B-shaped’ comeback. Dr Brian Keegan thinks we need to look to Brexit and the US general election for any real answers.Professions are notorious for using jargon, and different professions have preferred styles for their jargon. Doctors tend to abbreviate the ailments they treat, like the “flu”. Accountants tend to prefer acronyms such as IAASA, IFRS and FRC. Economists, on the other hand, use labels, often with reference to the chief protagonist within the economic phenomenon, hence “Laffer curve”, “Keynesianism” and, even at a stretch, “Pope’s children”.Creeping into the commentary at present is an alphabet soup of labels to describe the nature of the post-pandemic recovery. At the outset, we all hoped for a “V-shaped” recovery, denoting a rapid fall-off in activity matched by an equally rapid recovery. Then, more creative economic types, possibly channelling medical concerns over a second surge of the pandemic, started talking about a “W-shaped” recovery. This way, things will start to get better, lapse again and then recover more fully. The latest commentary talks about a “K-shaped” recovery, whereby some sectors of the economy will recover quite quickly, but others will continue to decline. However, judging from our most recent members survey, there is an expectation among Chartered Accountants of what could be termed a “B shaped” recovery, whereby over time most sectors will loop back to their level of activity post-pandemic. Almost all of our respondents thought that business activity would eventually get back to something resembling pre-COVID-19 days. The main area of disagreement was the amount of time this might take, with our members in the Republic of Ireland expecting a quicker recovery than our members in Northern Ireland. The expected difference in recovery time between the north and south of the island is borne out by the ultimate truth serum of economic status, which is the analysis of tax receipts published each month. Counting money will always give a more accurate picture than counting questionnaire responses. Not only that, because of the recurring nature of tax payments, it is possible to trace a coherent and reliable set of comparisons. Tax receipts in Ireland overall have remained remarkably stable, despite the impact of the pandemic. Yet, tax receipts in the UK are showing a serious decline year-on-year. One reason for the difference is down to timing. Ireland counts tax receipts from 1 January; the UK from 6 April by which time, of course, the pandemic was in full surge. However, the differing financial years do not fully explain the disparity. Consumption has fallen in both countries, as evidenced primarily by VAT receipts, but production, as evidenced by income tax and corporation tax receipts, has not shown the same decline in Ireland as in the UK.Resilience in production over consumption could prove to be critical in the coming months since coronavirus is only the first international crisis of 2020. Despite the behaviour of the respective governments, we are all paying too little attention to the impact the end of the UK’s transition period with the EU in December will have on Irish business. There is also insufficient attention being paid to the economic policies of the two main contenders in the US presidential election, nor much being discussed on how the outcome of that election could shape US trade, international corporation tax policy and foreign direct investment because of the focus on the country’s civil discord.The recovery prospects on the island of Ireland will indeed be B-shaped in 2021, but not because of the shape of the economic trajectory. Think instead about the impact of Brexit, and whether or not there is a Biden presidency. Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.

Sep 29, 2020
News

In a new world where change is so fast-paced, how can businesses avoid rash decision-making? By adopting a flexible and holistic approach to working, we can move smoothly to the 'next normal', says Melíosa O'Caoimh. The journey to the ‘future of work’ has no definitive end as we are in a constant state of change. However, there are points of inflection where the change either alters course or is greatly accelerated. The Business in the Community Ireland (BITCI) Worker of the Future Sub-Group was established in 2018 to develop a view on the responsible business approach to the challenges presented by future-of-work scenarios.These challenges were accentuated when the COVID-19 pandemic struck, accelerating change beyond our expectations. However, this speed of change now could lead to risks of rushed decision-making and groupthink. The Sub-Group sees the need to reflect on the change that has occurred and on what needs to be retained and developed as we transition to the ‘next normal’.As with many other countries, digital channels became, for a while, the primary source of engagement in the retail and education sectors in Ireland. In every sector, workers were called on to be agile – to move from one part of the business to another, to take on extra responsibilities and to envisage how their roles could be fulfilled in a much-altered environment.For many office workers, the most disruptive development in recent months has been the scaling of remote working at a pace never envisaged in most future-of-work scenarios. For some companies, remote working was already core to their way of working and announcements have been made indicating no return to offices in the coming year, perhaps longer. For many more, remote working has meant scaling on an ad hoc approach, which has effectively meant home working, regardless of circumstances.These changes will have lasting impacts and will potentially trigger the next wave of innovation around workplace design and practices. Many decisions are currently being made in Ireland as some offices re-open, and while there are risks, there is also great opportunity if the worker experience is put at the heart of decision-making. It is worth reflecting on where we want to be in the coming months – what challenges have we faced and what guiding principles will underpin our wanted state? What examples of best practice are emerging? What businesses should ultimately be asking themselves is this: what is our vision and how is this reflected in our work culture, in the evolution to a learning organisation, an inclusive workplace, and an environment where the physical and mental wellbeing of all is core to how we do business?The challenge now for responsible business is to take the holistic approach in moving to new ways of working and ensure that what is good for business is good for the worker and for society. At this time of uncertainty, the challenge is to keep looking outward and not become too insular. Questioning the future impact of decisions now being made is essential. Melíosa O’Caoimh is Country Head, Northern Trust Ireland and Chair of the BITCI Leader Sub-Group on The Worker of the Future. You can download BITC’s Shaping the Future of Work publication here.

Sep 25, 2020
News

Rebuilding your business can seem daunting, but with a well-equipped business plan, you can be sure to bounce back stronger than ever before, says Siobhan McCreesh.In business, it is often said that the comeback is stronger than the setback.While the last six months have been difficult, lockdown has shown what businesses can achieve when they take control of a situation. Already, the world around us is adapting to the ‘new normal’. Health, wellbeing, physical, emotional and mental fitness have all come to the fore in the fight against COVID-19 and more people than ever are working remotely.Many of the changes forced on us are here to stay. Many of us are looking at further restrictions of our movements and businesses. As businesses plan their road to recovery, none will be too big or too small to respond smarter, rebound stronger and reflect clearer in the months ahead.Focus on the positiveWhile overcoming road-blocks on the path to recovery will test emotional and mental fitness, it is important to prepare for this and avoid being consumed by the challenges that arise. As each challenge emerges, try to ‘flip’ it by switching your focus from what you have lost to what you need to do to survive. Focus on identifying and planning how you can:diversify and rebuild; deploy staff into new, exciting roles; and source new opportunities for customers, suppliers and markets.Stay true to your ‘why’When plotting your road ahead, it is crucial to remain true to your business’s reason for being – your ‘why’. Keeping this why at the core of the business recovery plan will help established businesses refocus on their original purpose and give younger businesses a clear path to follow. Communication is also important. If you allow your ‘why’ to be miscommunicated, this can isolate loyal staff, customers and suppliers which, in turn, can have a damaging ripple effect across your business.Be realisticYour recovery plan needs to be achievable, focusing both on your personal goals and your business aspirations. It also needs to be flexible so that it can adapt quickly to the rapidly changing environment we are in. Bill Gates famously said most people overestimate what they can do in one year and underestimate what they can do in ten years. Make sure that your projections are realistic and that your recovery plan is split out into measurable phases. Short-term goals are important but mid- and long-term goals also need to be accommodated.Remember to ensure that you have the correct staff mix, systems, processes and financial resources in place to drive your business forward. Currently, various supports are available to help businesses recover from the impact of the COVID-19 pandemic.As lockdown restrictions come and go, and businesses adapt to the reality of trading with COVID-19, this is the time to make the connections you need to help your business, recover, survive and thrive. Siobhan McCreesh is an Associate Director at PKF FPM.

Sep 25, 2020
News

Innovation is essential for a company’s development and growth. How, then, can this be achieved? Taking advantage of R&D tax credits and incentives will go a long way to boost RD&I, write Ken Hardy and Eoin McCarthy from KPMG’s R&D Incentives Practice.It is well established that the creation and exploitation of new ideas are critical to a company’s development and growth. A clear example of this is in the tech industry, where the persistent development of new ideas is a core element of the business, very much built into their day to day culture. This strive for innovation has seen many of the tech giants of today make rapid ascents to the top in a relatively short period of time. In a broader sense, innovation is a key economic driver across most industries, enhancing commercial profitability and improving the landscape for consumers. So, how is innovation assessed, measured and compared?The Global Innovation IndexMeasuring innovation within global economies is led by the World Intellectual Property Organisation (WIPO), who publish the Global Innovation Index (GII) annually. The GII provides detailed metrics about the innovation performance of 131 countries across roughly 80 indicators including research & development (R&D), infrastructure, market and business sophistication, political environment, and education, as well as the impact and diffusion of knowledge and technology outputs.Ireland’s performancePublished in September this year, the 2020 assessment has Ireland at number 15 in the global rankings, slipping two places from last year. Although this may appear concerning at first, Ireland remains an innovation leader and scores highly in multiple critical economic drivers. For example, we rank first for FDI outflows, ICT services exports, knowledge impact and knowledge diffusion. This shows our strength in translating innovation investment into realisable, tangible returns, which is in part a reflection of the national support mechanisms from the IDA, Enterprise Ireland (EI), Knowledge Transfer Ireland (KTI) and R&D Tax Credits. Indeed, the KTI is highlighted within the GII 2020 report for developing a successful model to assist businesses in handling their intellectual property (IP) within complex situations.Opportunities to maximise innovationInnovation and R&D are very much complementary. The precursor to innovation is commonly R&D, of which Ireland is ranked in the top twenty globally. Our high ranking is a result of extensive FDI from large multinationals in the pharma and tech space, in addition to strong investment in highly skilled researchers. Companies based in Ireland can maximise the benefit from their R&D activity through the R&D Tax Credit, a valuable tax based incentive of 25% credit on qualifying R&D expenditure in the science and technology areas. Although not specifically captured in the GII report, SMEs are a key stakeholder in our economy, and represent 54% of the R&D Tax Credit claimed in Revenue’s latest report. Introduced in Finance Act 2019, SMEs may claim an R&D Tax Credit of 30% on qualifying R&D expenditure. (These measures are subject to a commencement order.)Within the rankings, Ireland’s strength in knowledge and technology outputs is marked by ranking first in both knowledge impact and knowledge diffusion. IP generation is a key indicator that feeds into these metrics and is commonly born from R&D activity. In generating IP from qualifying R&D activity, a company can claim the Knowledge Development Box (KDB) incentive, which provides a 6.25% corporate tax rate for income generated from commercialising certain IP. However, in general, the KDB is underutilised, with only a small number of companies availing of it. This does not reflect Ireland’s high ranking in knowledge and technology outputs, and companies may be missing an opportunity to claim the KDB.The path from an innovative idea to profitable exploitation can be extremely challenging. Industry sectors such as semiconductors, biopharma/pharma, and medical devices require significant investment in physical infrastructure, as well as highly skilled personnel before an idea can be realised. It can also take a long time to move through the stage gates of development, especially in highly regulated industries. For example, it takes on average 10 years to develop a new drug. For SMEs, there is the dreaded ‘valley of death’ in the development cycle, a critical period where the probability of failure is highest and attracting funding can be hard to come by. RD&I Grants can be leveraged from the IDA and EI to support companies during this phase.What does the future look like?In the current environment, many companies are focused on short- to medium-term sustainability and, in some cases, survival. This will be reflected in the cadence of innovative activity. For example, the pharmaceuticals and biotech sector will likely experience growth in R&D because of the renewed focus on health. In the medical devices sector, there may be a shift in developments towards respiratory applications and remote diagnostics. Generally, companies will seek to diversify their supply chains to de-risk future unpredictable events. Moreover, accelerated development of Industry 4.0 (the Fourth Industrial Revolution) is likely to enable remote or autonomous control capabilities.When considering the future, we learn from events in the past. Historically, business R&D expenditure moved in parallel with GDP, slowing during economic downturns. Although this may not be the case across all sectors (pharma, med-tech and ICT being the exceptions), there is an expected contraction in expenditure on innovation, and as business innovation expenditure declines, government may strive to counteract that effect through expenditure boosts to innovation, via mechanisms such as the R&D Tax Credit, KDB and RD&I Grants.Ken Hardy is a Partner and Eoin McCarthy is a Scientific Consultant in KPMG.

Sep 25, 2020
News

In a world that is getting more complex, how can leaders navigate the constant changes? Managing our responses and developing our thinking and learning is integral to overcoming these challenges, says Patrick Gallen.We live in a time when change and disruption are constant and being able to navigate change is an indispensable leadership trait.There is a fundamental difference between seeing the challenges posed by change as one of navigating the complicated versus navigating the complex.Complicated challenges may be demanding but, with enough information, we can leverage experience and expertise, observe patterns of cause and effect, apply rules and processes and then solve them. This approach is probably no different from the many challenges you face as an accountant in business or practice. As one of my old bosses used to say, we often over-complicate business problems and then must simplify things to solve them.Complexity, on the other hand, should be navigated differently, because complex systems and environments are made up of a mosaic of diverse yet interdependent elements that interact in unexpected ways. When we look at mechanics and engineering, we find highly complicated systems, like a jet engine.  When we look at nature, we can see highly complex systems, like a coral reef or a natural woodland.Some of our work may be complicated, but we do that work in a complex environment.Complex systems do not always follow patterns, and so past behaviour of a complex system may not predict its future behaviour. In a complex system, there is no centre or top from which to direct.  Empowered and self-directed teams ideally can resolve challenges in different parts of a complex system, almost akin to what the various university and pharma teams are doing around the world in the search for a vaccine for COVID-19. When you look at the biggest change challenges you are facing in business or practice, do they resemble the complicated or the complex?  We know that we cannot exercise complete control in a complex world – the environment is always changing, and we cannot lead people back to the way things were before. We can, however, manage our own response, develop our own thinking, and learn. Under stress, it can be tempting to fall back on our experience and expertise – to get consumed with the details and to narrow our focus.  Leading in a complex system requires us to take a wider view of our firms, our roles, our service lines and our teams, and to see them as part of a much bigger system.  This then has implications for the way we lead as a profession and as accountants, in whatever field we operate.Patrick Gallen is a Partner in People and Change Consulting in Grant Thornton.

Sep 18, 2020
News

2020 has been difficult for everyone. Business and personal plans have gone awry and we're constantly readjusting to accommodate everything. Moira Dunne offers some tips to reset and refocus for the end of the year.September is a great time to reset and refocus after the summer months. With schools reopening, it is a chance to draw breath and set priorities for the last four months of the year. This year, we need to reset more than ever. 2020 has been a time of huge change and uncertainty due to the COVID-19 pandemic. Business plans created in January were suddenly paused in March. Day-to-day operations stopped for many businesses. And, as companies pivoted to survive, plans from January may be irrelevant in Q4. Here are some tips to reset and refocus for the end of the year.Even though we are still living with COVID-19, this September brings hope as we see the reopening of schools around the world. The virus is still here, but we are all getting on with our lives and our business. How great would it feel to achieve some important goals and finish your year on a high?1. Reset your prioritiesStart by looking at the goals you set in January and assess what has been completed and what needs to be added. Identify the most important things you want to achieve by the end of 2020. Then ask the following questions:What are the goals?What work needs to be done to achieve those goals?Is help or input required from anyone else?2. Make a planHaving a plan helps you achieve more as it provides structure, focus and motivation. To figure out the work to be done, it helps to break large goals into smaller sub-goals. Then brainstorm each sub-goal to identify the tasks or actions required.Using a flipchart or whiteboard really helps the brainstorming process as space frees up your mind. If you work with others, you can arrange an online session over Zoom or Teams and use the whiteboarding feature to help spark ideas.Once you have a list of tasks, start looking at the following:What needs to be done when?Do some tasks depend on the completion of others?What are the milestones to be achieved along the way?Then transfer all the tasks into a planner. 3. Be realisticYou are probably already busy, so be realistic about how much time you have. It is better to under-plan than over-plan. Start small, complete some tasks to achieve a sub-goal. This will motivate you to keep going.Build in some contingency time, some “slippage” for the unexpected. Because if 2020 has taught us anything, we know that we need to expect the unexpected!4. Track your progressAs you work through your tasks, track your progress by capturing the date each one is completed. If you miss a target date, readjust any remaining dates that may be affected.Rework the plan if you find you are not getting enough time to work on your goals. Extend your timeline if necessary.5. CelebrateIf you achieve your goal, then you will want to celebrate. If you reach the end of Q4 without completing all the work, you still have a plan and you know exactly what needs to be done in 2021.And by following this process, you have also gained some valuable project management skills. What an achievement in these uncertain times!Moira Dunne is Founder of beproductive.ie.

Sep 18, 2020