Elaine Coughlan, one of Ireland’s most successful venture capital investors, tells us how her experience in accountancy and audit led to a high-flying career in technology Since qualifying as a Chartered Accountant and cutting her teeth in audit in the 1990s, just as the first wave of tech entrepreneurs in Ireland were beginning to access US capital markets, Elaine Coughlan has carved out an illustrious career in venture capital. Dublin-born Coughlan is the co-founder and joint Managing Partner of Atlantic Bridge, the global growth technology fund with more than €1 billion in assets under management across nine funds. For Coughlan, her career is a testament to both her training in finance and the power of human connection in business the world over. “Atlantic Bridge has over 35 companies we have successfully sold or ‘IPOed’ and I am immensely proud of that,” she says. “The wins drive you on because you can see what’s possible and those Irish entrepreneurs become role models for the next generation. I’m proud of the assets we have under management, and that Atlantic Bridge now has people in Dublin, London, Paris, Munich and Palo Alto in Silicon Valley. That is a truly global footprint, and it really helps us to scale our companies.” Early connections Coughlan credits the professional connections she made at an early stage in her career at Ernst & Young with setting her on the path to professional success. “Some of the people I met back in the nineties, our clients at the time, were hugely influential on me,” she says. Among those clients was Smurfit (now Smurfit Kappa), already a long-established industry leader in paper packaging production. “I was seconded from Ernst & Young to work with Smurfit when it was probably the number one Irish company in terms of market capitalisation and really blazing a trail in Irish business,” she says. “It is still a phenomenal company today, but for me at that time, Smurfit was just so ambitious and far-reaching in its approach to mergers and acquisitions, and the capital markets. I worked on fundraising and acquisitions with them and had early exposure to some of their senior executives—people like Gerry Fagan, their then-CFO.” Coughlan forged other crucial connections at the time with Bill McCabe, founder of CBT, the e-learning group, and Iona Technologies’ Chris Horn. “Bill and Chris were the first entrepreneurs in Ireland to float tech companies on the Nasdaq and, if you look at what they had in common with Smurfit, it was really that they were all entrepreneurial,” she says now. Coughlan would leave Ernst & Young to join Iona ahead of the company’s Initial Public Offering. “I knew then that practice probably wasn’t for me. That’s not to say that you can’t be entrepreneurial in practice, but the cut and thrust of the tech business pulled me in,” she says. “I remember traveling over to the US with CBT back in 1993 and that was it for me. There was such a sense of possibility.” Coughlan went on to join Parthus, the semiconductor IP company co-founded by Brian Long, and the pair formed an abiding partnership, co-founding both Atlantic Bridge and GloNav, the GPS company acquired in 2007 for $110 million. “All these years later, I am still in business with the same people, and they were the people that had an impact on me starting out. They were the people I learned from and the people who were generous with their time and their knowledge, and willing to give me experience and opportunities,” she says. For young Chartered Accountants starting out in their career, Coughlan has this advice: “Above all else, nurture your connections. These young professionals will already be well-qualified and proven in their ability and resilience, because training to become a Chartered Accountant is challenging in itself,” she says. “The question they have to ask themselves is ‘what differentiates me beyond that?’ It comes down to being able to combine your knowledge with strong relationships in ways that bring about better outcomes.” As Coughlan sees it, building solid sustainable relationships in business isn’t simply a case of networking and ‘transactional interactions’. “It’s about finding people who share your values and ethics, whose accomplishments and abilities you admire, and who have the ability to lead and inspire. You always have to be thinking long-term, not just about your next connection on LinkedIn,” she says. Supporting start-ups Coughlan’s commitment to supporting start-ups and advancing Ireland as a leading hub for technology development was recognised at this year’s Irish Accountancy Awards, at which she won the prize for outstanding contribution to the profession. “When we started Atlantic Bridge in 2004, we wanted to help tech companies in Ireland to scale successfully. Ireland is a small island and a small economy, so there are two things tech companies here need to scale—they need to move beyond the island to reach customers and they need access to capital,” she says. “We wanted to cross the Atlantic to the US, because it is the largest market in the world in terms of customers and capital markets. At the time, Ireland had a VC market of less than €100 million. It’s 10 times that size now, but back then, it was really small.” The primary focus for Atlantic Bridge today continues to be “deep tech” innovators in the business-to-business (B2B) space. “We’re not after instant gratification or overnight success. These are businesses with defensible research-intensive technologies that are primed to scale when the time is right,” says Coughlan. “Our investors are patient. They are looking for strong long-term returns, and we are very proud to have reached the stage where we have raised nine funds, because that is not an easy thing to do in this industry.” Coughlan warns, however, that we are entering a “new investment cycle”, in which surging inflation, rising interest rates, and the risk of recession, are all making investors more risk averse. “The outlook for Atlantic Bridge in the short-term will be cautious and tactical, but beyond that, we are optimistic and deeply committed to the technology trends we are seeing today that will make a difference in the future,” she says. “A lot of the technologies we’re investing in now are in climate change action—low-power, low-carbon enablers—and in medical technology and the digitisation of health, where we can meet unmet needs. We’re focusing on technologies like Artificial Intelligence and semiconductors—the fundamental building blocks that will be built into new products over the next three to five years.” Research and development As the economy enters uncertain terrain, Coughlan is urging the Government to continue investing in research and development (R&D). “Ireland has to continue to invest in R&D. We need to hold our nerve in continuing to invest in the best and brightest people and start-ups, because they will drive the next generation of growth,” she says. “Today, we are investing about 1.25 percent of GDP in R&D. We need to get that up to between 2.5 percent and three percent. The future economy will be knowledge-intensive and that requires knowledge-intensive people.” Coughlan is equally committed to the advancement of her profession, and proud of her own achievements as a Chartered Accountant. “The ‘bean counter’ perception is one too many people have of accountants, but I would probably be the last person you’d ask to do a P&L statement,” she says. “I can tell you if it is right or wrong though, because I understand the numbers and what they mean. I can interrogate and interpret any set of numbers and that is because I am a Chartered Accountant. All business now is run on data and our profession gives us a really strong grounding in using data to make decisions—and that is the future. “There are doors that are opened to you when you train as an accountant. You learn about process, structure, deadlines, and relationships. All of these skills are incredibly important. “You come out of it battle-hardened and resilient, and with all these options: to stay in practice; to focus on technical work; to go into consultancy; financial services; or business and entrepreneurship. The opportunities are phenomenal.” Growing up in Beaumont in north Dublin in the recession-hit 1980s, however, Coughlan had envisaged a different career for herself. It was a chance encounter that set her on the path to accountancy and a high-flying career in venture capital. Early career path “I was good at numbers at school and I studied accountancy for the Leaving Cert, but I wouldn’t say I was destined to be an accountant. I fully recognise now that it was my accountancy and audit experience that led me into the technology industry, but my real interest growing up was people,” she says. “I wanted to work in a people-focused environment, so I applied to study marketing and languages at DCU and went for a summer job at a small accountancy firm to keep me going in the meantime.” Coughlan didn’t get the summer job, but she was contacted by her interviewer and urged instead to consider accountancy as a full-time career. “It was 1989, unemployment in Ireland was something like 15 percent and so many people were emigrating to find work in the UK and the US,” she says. “I didn’t know anything about becoming a Chartered Accountant, but I wrote to the Institute and was offered a training contract with Ernst & Young. Here was this opportunity to have my fees paid and earn a wage with guaranteed work in a really tough economy. It was a great deal. That’s why I always say to this day, ‘what’s meant for you won’t pass you by’.”

Dawn Leane examines the main barriers to success experienced by women and what organisations can do to break the career inhibitors down In workshops organised after the publication of the research study carried out by Fiona Dent and Viki Holton for their book Women in Business: Navigating Career Success, women were asked to identify factors they believed had hindered their progress. Their responses are broadly categorised as follows: Limiting beliefs; Family issues; Work colleagues; Personal style and skills; Lack of organisational support; Gender issues; Taking the wrong career path; and Politics and bureaucracy. The most frequently mentioned issues focus on self-doubt and limiting beliefs. As this is a nuanced subject, it is important to distinguish between limiting beliefs and confidence.  Limiting beliefs vs confidence Beliefs are assumed truths developed over time from our direct experiences and observations. They usually don’t exist as explicit propositions. We may barely be aware of them, but they influence what we think, say, and do.  When they manifest self-doubt, they become limiting beliefs. An example of a limiting belief may be ‘I can’t handle conflict’, which could lead to a lack of assertiveness or the tendency to give in to others. Limiting beliefs can have a significantly negative impact on our ability to achieve our full potential. Confidence, however, can be significantly influenced by workplace culture. Women are regularly told that they should be more confident, which is particularly unhelpful as it puts the responsibility firmly back on women, as opposed to examining the environment as a contributing factor. One way in which the office environment can impact confidence is ‘backlash avoidance mechanism’, whereby women feel uncomfortable self-promoting due to perceived social consequences. Feedback and career development In the workshop, 59 percent of participants believed that men and women are judged unequally, particularly when it comes to feedback and development in the workplace. This is supported by the Women in the Workplace study—a study of US women in the workplace conducted by LeanIn.Org and McKinsey & Company—which found that women report receiving feedback much less frequently than their male co-workers. In fact, women are more than 20 percent less likely than men to receive difficult feedback, which is essential to improving performance. One reason cited by managers is their fear of an emotional response, which is less of a concern when giving feedback to male employees. Further, the feedback that women receive is often vague and non-specific. In their Harvard Business Review article, ‘Research: Vague Feedback is Holding Women Back’, Shelly J. Correll and Caroline Simard advised that “women are systematically less likely to receive specific feedback tied to outcomes, both when they receive praise and when the feedback is developmental.” They also found that when women did receive feedback, it was largely focused on their style of communication. Family issues While it is widely accepted that family issues can be a barrier to success, most participants in Dent and Holton’s research recognised that decisions made in relation to family life require compromise—and that it was typically the woman in the relationship who compromised out of personal choice. Many women accepted this as an inevitable consequence of motherhood and feel obliged to take responsibility and be available for their children. Managing employee long-term success The overarching message from these pieces of research is that what happens early in a woman's career significantly impacts her long-term success. It is important that both the career accelerators and inhibitors discussed in this series are considered by organisations when developing talent management and career development programmes. You can read the first two articles in this series: Empowering women for better balance in the workplace Four success factors for women in the workplace Dawn Leane is Founder of Leane Leaders and Leane Empower. 

Technology is shaping the future of financial services and creating exciting opportunities for innovative professionals at the heart of the fintech revolution As Chief Executive of Swoop Funding, Andrea Reynolds occupies a unique position at the nexus of fast-changing trends in financial services, emerging technologies, and the evolving role of the financial professional. The Chartered Accountant established Swoop in 2017 with Ciarán Burke, the company’s co-founder, to develop software that could help accountants identify the best funding options for SMEs. “The platform has been used now by 75,000 businesses to access funding, ranging from equity and grants to loans and tax credits. That’s given us an interesting overview of how much technology is changing the world of finance,” said Reynolds. Headquartered in Dublin, Swoop was founded in the UK where Reynolds had been working as a management consultant with KPMG in London before deciding to go into business with Burke. “At the time, everyone was moving to cloud accounting and open banking was coming down the line with the EU’s Revised Payment Services Directive (PSD2). We were seeing these new fintech lenders emerging, offering alternative funding to businesses and consumers,” she said. “In accountancy, you are trained to solve a problem by breaking it down into smaller elements, and that’s basically what I did with Swoop. I built a platform that could bring all of these funding options together in one place and do the heavy lifting for accountants advising SMEs.” Five years on, Swoop is on course for expansion in North America and other markets, having recently raised €6.3 million in Series A funding. “Finance is increasingly data-driven and borderless and that creates opportunities for fintechs like us, but different markets also have different strengths and weaknesses,” said Reynolds, pointing to her experience launching her own start-up in Ireland and the UK. “The idea for Swoop originally came from my experience navigating the funding system for SMEs in the UK, which is a lot more fragmented than the Irish system,” she said.  “The flipside is that the UK has been much more open to alternative finance, as have other European countries. That’s meant a lot more activity in non-bank lending, whether that’s crowdfunding, or loan finance from the likes of Wayflyer, Clearco or Youlend.” By comparison, Ireland is in ‘catch-up mode’, but it is catching up fast, said Reynolds. “Wayflyer is a huge fintech success story and there are other alternative lenders in the Irish market, like Linked Finance, Flender, and Accelerated Payments.  “Ireland already has a very strong fintech base in regulatory technology, anti-money laundering, ID verification, and Know Your Customer (KYC) technology. Where we still have to build up momentum is in the area of open banking.”  Automating auditing For David Heath, FCA, it was his early experience training as an auditor that sparked the idea for Circit, the fintech venture he co-founded in Dublin in 2015. “I trained with Grant Thornton, and it was a really great experience because the firm was so ambitious and the clients so varied, but as an entrepreneur, your starting point is always ‘what is the problem and how can we solve it?’  “For me, it was a case of thinking back to those early years in my career and digging into the processes that were the most challenging,” said Heath. “Auditors typically have a good relationship with their clients but getting the information they need from third party evidence providers is a big pain point.  “You have to verify the information your client gives you with an independent source—usually a bank, law firm or broker—and that process can take anywhere from three to six weeks.” Heath saw an opportunity to solve this problem with the advent of PSD2, using the EU’s open banking regulation to create a digital verification platform for auditors.  A cloud-based open banking platform, Circit connects auditors to their clients’ banks, solicitors, and brokers, allowing them to verify information within seconds.  Circit is approved by the Central Bank of Ireland as an Account Information Service Provider (AISP) under PSD2. It works with more than 300 accounting firms in Ireland and overseas and recently closed a €6.5 million funding round. “The funding will help us to increase our footprint and build out our open banking and regulated products, leveraging the license we have from the Central Bank of Ireland,” said Heath. “The problem we’re addressing may be niche, but it has global application.” Global ambition This global ambition is a common trait among Ireland’s most promising fintechs, according to Matt Ryan, a director in the Financial Services Consulting Group at Deloitte Ireland. “The ones to watch—the ones that do well quickly—tend to be thinking globally from day one. They have the talent and the funding, but they also know that Ireland is a very small market, so they are thinking in cross-border terms from the get-go,” said Ryan. Ryan points to Transfermate and Wayflyer as two such Irish fintech ventures whose global vision is paying dividends. A business payments infrastructure company founded in 2010, Transfermate closed a $70 million funding round in May, valuing the Kilkenny fintech at $1 billion. Wayflyer secured $300 million in debt financing in the same month following a $150 million Series B funding round, closed in February, which earned the Dublin start-up a $1.6 billion valuation and coveted ‘unicorn’ status. The pandemic effect The speed with which Wayflyer’s revenue-based financing and e-commerce platform succeeded globally reflects a wider trend in fintech. “The pandemic really accelerated the development of the sector as businesses and consumers suddenly moved online en masse,” said Ryan.  “Fintech was already a fast-growing market, but COVID-19 has made digital and contactless payments the norm and that has catapulted financial technology into a new era of growth.” While fintech awareness among consumers tends to centre on high-profile digital banks like Revolut and N26, the fintech sector globally, and in Ireland, is far more diverse.  “People usually think of full stack providers like Stripe and Revolut when they think of fintech, but that’s really not the whole story,” said Ryan. “Equally relevant are the technology companies selling services and solutions to financial institutions. “There are some very successful Irish companies in this space, such as TansferMate and Fenergo, which specialises in KYC technology for banks.” Fintech in Northern Ireland The established financial services sector is equally important to the fintech ecosystem in Northern Ireland, according to Alex Lee, Executive Chair of Fintech Northern Ireland (Invest NI). Figures published last year by Fintech NI found that there were 74 fintech companies in the region and 7,000 people employed in fintech jobs. “The financial services sector here has a good track record of attracting foreign direct investment (FDI), particularly over the last 15 to 20 years,” said Lee. “Large institutions like Citi, Allstate, CME, TP ICAP and Liberty Mutual have all established a meaningful presence here.” Together, these US multinationals form ‘the foundation’ on which Northern Ireland’s fintech sector has continued to build, Lee said.  “Attracting big international players has helped to grow out our fintech expertise and talent pool, because most of these companies have global technology development centres running out of Northern Ireland, and that has contributed to the rise of some really successful homegrown fintechs,” he said. FinTrU is one such success story. Founded in 2013, FinTrU develops regulatory technology for investment banks, ranging from legal, risk and compliance, to Know Your Customer (KYC). The Belfast-headquartered company employs 1,000 people and, in July, announced plans to create a further 300 jobs at a European Delivery Centre in Letterkenny, Co. Donegal. Another scaling success story in Northern Ireland is FD Technologies (formerly First Derivatives).  Founded in 1996, the Newry-headquartered data firm employs 3,000 people at 13 offices in Ireland and globally and recently announced plans to create 500 jobs at a new technology hub in Dublin. Northern Ireland is also continuing to attract FDI. In June, the Bank of London announced plans to establish a Centre of Excellence in Belfast, creating 230 jobs by 2026.  “We are making strides now and my hope is for a homegrown fintech ‘unicorn’ to come out of Northern Ireland. We’re not quite there yet, but I would like to see this ‘poster child’ for the sector emerge soon,” said Lee. Decline of the unicorn Such is the pace of growth in the fintech sector globally, however, that even the much sought-after ‘unicorn’ moniker is losing its lustre.  “In developed markets at least, I think there is a view that ‘unicorn’ status has lost some of its cachet,” said Ian Nelson, FCA, Head of Financial Services and Regulatory at KPMG Ireland, and a member of the board of the Fintech and Payments Association of Ireland. Even Stripe—perhaps the best-known ‘unicorn’ with Irish origins—has outgrown the label.  Established in Silicon Valley in 2010 by Limerick brothers Patrick and John Collison, the online payments giant’s $95 billion market capitalisation has soared beyond the $1 billion unicorn requisite. “Stripe is really now a ‘centicorn’, if you like, and there are numerous other fintechs in the same sphere, and ‘decacorns’ valued at $10 billion coming up behind them,” said Nelson. “At $1 billion, becoming a ‘unicorn’ has less meaning for fintech start-ups in developed markets, but it will continue to be an important building block for start-ups in emerging markets and less mature fintech hubs.” Among the other trends Nelson is keeping an eye on is the role technology will play in supporting environmental, social, and governance (ESG) capabilities in business. “Since COP26, we have seen a lot of attention directed towards fintechs with ESG capabilities,” he said.  “This really reflects the growing prioritisation of ESG in financial reporting and financial services generally. ESG is going to be a really important play in fintech. “We can expect to see more fintech companies focused on climate change, decarbonisation and the circular economy, and more jurisdictions setting up incubators specifically focused on ESG solutions.” Digital innovation in financial services Already a leader in payments globally, Ireland is now shaping the business environment for digital finance, writes Seán Fleming TD, Minister of State at the Department of Finance As Minister of State with responsibility for financial services, I lead the whole-of-government strategy for developing international financial services in Ireland, titled Ireland for Finance. I very much welcome this timely report on fintech.  In recent years, new entrants and long-standing financial institutions have looked to capture the opportunities presented by digital technologies.  Ireland is well-placed to benefit from the application of new technologies in the financial services industry. We have both a well-developed financial centre and a renowned technology sector.  This makes Ireland a centre of excellence for start-ups and big-name companies that want to establish operations in the European Union.  Ireland has shown leadership in shaping the business environment for digital finance. Important to this is Ireland’s education system, which has produced some of the finest innovators in the world. These graduates are leading the development of cutting-edge technologies.  The Government has an ambitious agenda for education. Two out of 15 Cabinet Ministers are dedicated to education and skills. Consecutive Governments have invested substantially in education, making it a cornerstone of Ireland’s economic strategy.   This economic strategy has created a strong mix of multinationals that have chosen Ireland as a place to do business. We have been very successful in supporting high-potential start-ups, with over 200 Irish fintech firms at various stages of development. Ireland is a leader in payments, and a number of firms have substantial development operations here. The digital finance ecosystem has expanded in recent years to include institutional financial services providers that have chosen Ireland to help them develop their fintech capability. The importance of fintech is reflected in the Ireland for Finance strategy. I identified Fintech and Digital Finance as one of the five themes in Action Plan 2022.  The Department of Finance’s Fintech Steering Group leads the cross-government approach with other departments and state agencies, and with representatives of the financial services and information technologies industries, and third-level researchers. Financial Services Ireland, the Ibec sector representing financial services companies, recently identified the future talent pipeline as being critically important. Particular areas they identify are fintech, digital finance and the environmental, social and governance agenda. I will shortly be publishing the updated Ireland for Finance strategy and fintech will be a key theme, and it will be at the centre of our work in the coming years.

Russia’s War in Ukraine changed many assumptions held by European governments, but Judy Dempsey asks is Europe prepared to embrace significant strategic issues that will change the status quo? Russia’s full-scale invasion of Ukraine in February could radically re-shape the European Union.  And it’s about time.  For too long, the EU and most member states were content in the comfort zone that did not have to deal with issues that would fundamentally change their way of doing things. These included energy, security, the future of enlargement and Russia. Until Russia’s second invasion of Ukraine, there was a tactic consensus that Europe could continue along the path of perceiving Eastern Europe through the prism of Russia and depending on Russian energy. The EU accepted the independence of Ukraine, Moldova and Georgia, not to mention Belarus. However, among many big member states, their sovereignty and independence were ambiguous.  While it was never publicly stated, this part of Europe, whose history and culture are unknown to many EU member states, was considered in Russia’s sphere of influence. In several ways, Russia’s all-out attack on Ukraine has changed that perception. First is the energy issue. It is only a matter of time before Europe will wean itself off Russian gas and oil. This dependence had given President Vladimir Putin immense leverage and blackmail over several EU countries, particularly Germany.  The EU, and German Chancellor Scholz’s Green coalition partners, say they now want to become independent from Russian energy as soon as possible. Despite the considerable pressure from German industry and its business lobbies tied to Russia, who wish to retain the status quo with Moscow, don’t underestimate this goal.  The reality is that Russia’s war in Ukraine has become the catalyst for speeding up Europe’s transition to renewable energy and alternative sources of supplies. As dependence on Russian gas decreases, so will the Kremlin’s geopolitical influence. Another impact of Russia’s aggression is security. Neutral Finland and Sweden are poised to join NATO. These two countries that have long cherished their neutrality now recognise that their security needs to be boosted. Joining NATO would fill a big security vacuum in Northern Europe, where Denmark and Norway are members of the US-led military alliance. The Baltic (NATO member) States will be more than reassured with Finland and Sweden on board. In short, Putin’s aggression in Ukraine has given NATO and the transatlantic alliance a new lease of life. It is changing the geo-security architecture of Europe. It will be interesting to see how Ireland deals with its long-standing neutrality stance.  Another big issue is enlargement that is tied to the future direction of Europe. President Emmanuel Macron’s speech at the conclusion of the Future of Europe conference set out how to make the EU more efficient by having a qualified majority voting system for certain policy issues and having a much closer, structural relationship with Eastern Europe.  But what about making the EU more politically integrated? This would require a treaty change that several member states oppose. However, this is where the war in Ukraine comes into play. European governments cannot retain the status quo when its own security and that of its eastern neighbours are at stake.  For a union with ambitions to be a global player, muddling through is no longer an option. It’s going to require a major shift in the mindset of EU countries to end Europe’s comfort zone that, until now, didn’t take its – nor Eastern Europe’s – security vulnerability seriously.  If it doesn’t make that shift, Europe will fail to use the war in Ukraine to develop a strong, integrated and secure Europe – with Eastern Europe as part of that house.  Judy Dempsey is a Non-Resident Senior Fellow at Carnegie Europe and Editor-in-Chief of Strategic Europe.

The Russian invasion of Ukraine has given rise to potentially complex financial reporting considerations for Irish companies with a presence in one or both territories. David Drought delves into the details of two areas of concern. The ongoing conflict in Ukraine, and resulting sanctions and counter sanctions imposed globally on and by Russia, have impacted certain companies.  Although the conflict is first and foremost an immense human tragedy for those involved, companies whose operations have been affected will need to consider the financial reporting implications.  Here, we consider two potential issues—the first being whether control of subsidiaries located in Russia has been lost, and the second being whether impairment tests of non-financial assets in the affected territories should be carried out. Do you continue to control your subsidiary?  Under IFRS 10 Consolidated Financial Statements, a company (investor) controls a subsidiary (investee) when it has power over the subsidiary, is exposed to variable returns from its involvement with the subsidiary, and can also affect those returns by exercising its power. Control requires power, exposure to the variability of returns, and a linkage between the two. Continuous control assessment  Suppose the facts and circumstances indicate that there are changes to one or more of the elements of the control model. In this scenario, an investor must reassess whether it continues to have control over the investee.  Here, companies will need to consider whether the consequences of the ongoing conflict lead to changes in investors’ relationships with investees in Russia. As a result of the effects of the ongoing conflict, for example, foreign investors may: face difficulties in repatriating funds from investees; exit or cease operations in these markets, either by choice or by being forced to do so because of sanctions imposed; or be impacted by potential new restrictions imposed on foreign owners – e.g. nationalisation of local operations. The hurdle for losing control of an existing subsidiary is generally high, but the loss of control of subsidiaries in the conflict-affected countries or regions should not be immediately presumed.  There is, for example, no exclusion from consolidation due to difficulties alone in repatriating funds from the subsidiary to the parent or the lack of exchangeability of currencies.  In considering the impact of these ongoing conflicts, management must consider these two critical elements of control: power and returns. Power When assessing power over the investee, an investor considers only substantive rights relating to an investee – i.e. rights that it has the practical ability to exercise.  Determining whether rights are substantive requires judgement. Whether there are any barriers due to the consequences of the ongoing conflict preventing the holder from exercising these rights should be considered (e.g. due to current sanctions a company may no longer be able to exercise rights previously available to it.) Returns When assessing returns, an investor evaluates if they are exposed to variable returns from involvement with an investee. The sources of these returns may be very broad and may include both positive and negative returns.  Sources might include dividend or other economic benefits, for example, remuneration for services provided to the investee, tax benefits or certain residual interests.  Management should consider whether the company’s exposure to the variability of returns has been impacted and needs to be reassessed. IFRS 10 does not establish a minimum level of exposure to returns to have control.  Where there has not been a loss of control, there may be other impacts to consider. These might include: possible impairment of the investment in the subsidiary; presentation of the subsidiary as held-for-sale or as a discontinued operation; or  possible impairment of the assets held by the subsidiary. Do I need to test my non-financial assets for impairment? Control in relation to other assets  Before considering impairment for companies with assets on the ground in Russia or Ukraine, it is necessary to assess whether they have, in substance, lost control of those assets.  Control in the context of assets generally means the practical ability to control the use of the underlying asset. If control has been lost, the asset is derecognised in its entirety, and no impairment is carried out. IAS 36 Impairment of assets  The standard requires management to assess whether there is any indication of impairment at the end of each reporting period.  Irrespective of any indicator of impairment, the standard requires goodwill, and intangible assets with indefinite useful lives (and those not yet available for use) to be tested for impairment at least annually. An annual test is required alongside any impairment tests performed as a result of a triggering event. Triggering events  The likelihood that a triggering event has occurred for non-current assets has increased significantly for companies that: have significant assets or operations in Russia or Ukraine; are significantly affected by the sanctions imposed and/or Russia’s counter-measures; are adversely affected by increases in the price of commodities; and/or are significantly affected by supply chain disruption. Impairment indicators  Indicators of impairment may come from internal or external sources, but the likelihood of some impairment indicators existing has increased for companies impacted by the Russia-Ukraine war. Some indicators that may arise include: the obsolescence or physical damage of an asset. For example, plants and operations in Ukraine may be subject to physical damage; significant changes in the extent or manner in which an asset is (or is expected to be) used which has (or will have) an adverse effect on the entity.  a significant and unexpected decline in market value; significant adverse effects in the technological, market, economic or legal environment, including the impact of sanctions on the entity’s ability to operate in a market; a rise in market interest rates, which will increase the discount rate used to determine an asset’s value in use; and the carrying amount of the net assets of an entity exceeding its market capitalisation. Falling stock prices may result in an entity’s net assets being greater than its market capitalisation. Abandonment or idle assets  Companies may have abandoned—or have considered a plan to abandon—certain operations or properties in Russia or Ukraine.  Some companies may have been forced to abandon owned or leased facilities in Ukraine as a result of the war, for example. In such cases, the company needs to accelerate or impair the depreciation of the property based on the revised anticipated usage or residual value. Assets lefts temporarily idle are not regarded as abandoned—for example, when a company temporarily shuts a manufacturing facility but intends to resume operations after military activities in the area abate.  Although temporarily idling a facility may trigger an impairment of that item (or the CGU to which it belongs), a company does not stop depreciating the item while it is idle—unless it is fully depreciated or is classified as held-for-sale. Companies should, however, consider the most appropriate depreciation method in this situation.  Disclosures When reporting in uncertain times, it is essential to provide the users of financial statements with appropriate insight into the key assumptions and judgements made by the company when preparing financial information. Depending on an entity’s specific circumstances, each area above may be a source of material judgement and uncertainty requiring disclosure. David Drought is a director in the Accounting Advisory team at KPMG in Ireland

Accountancy was well on its way to digital transformation long before COVID-19, but it can’t be denied that post-pandemic, the digitalisation of the profession has come a long way. Five members discuss their firm’s digital transformation and their role within it. David O’Connor Director Sheil Kinnear Our organisation operated, as many practices, did with an on-premises server and that worked well to a point but as demand for more flexibility grew as a response to the pandemic, it became an obvious option for us to take. In partnership with Datapac, moving to the cloud has futureproofed the business. We have learned to be more flexible and conscious of the risks around us. It has become more and more apparent that cyber security is a concern as we move toward a more paperless, digital environment. As a firm that does statutory audits, the ability to securely access our various software tools from anywhere was a huge incentive for us. I think there is an improvement in terms of what can get done no matter where you are. We are also benefitting from superior processing speeds both in the office and remotely. A challenge in our sector now is the transfer of knowledge. It’s huge in our business and people who work remotely still have to pass on that knowledge to trainees and other team members. This takes a lot more structure and scheduling.  I think there is a change towards more flexible working, but we do like to get together as a team and share knowledge and, because of that, it’s going to be hybrid going forward. Emer McCarthy  Group Strategy and Ecommerce Director Kilkenny Group We set up a “Go Digital” initiative a few years ago to transform as a company and become a true omnichannel retailer.  We defined a range of important steps and investments around channels, technology, and organisational restructuring to realise the omnichannel strategy.  We are one of the first to market with our VR store experience, giving potential shoppers worldwide an immersive, in-store experience from the comfort of their own homes. It allows our customers to engage with the Kilkenny Design brand in a completely new and unique way when the way we shop has undergone such a dramatic shift. COVID-19 has driven dramatic change in the digital space, and consumers have adapted accordingly. We have seen a decade of change over the last two years, and businesses need to continuously invest in experiences or processes via digital to meet and exceed the needs of the evolving omnichannel consumer.  Thankfully, we had commenced this journey before the pandemic, which allowed us to navigate an otherwise tricky trading period for bricks and mortar during the pandemic.   Our culture is very open to technology and the benefits that it brings. Embedding technology and new processes bring a level of change management but collectively, our culture has embraced the same by bringing our teams on the journey with us. Our environment has changed the need to adapt quickly to trends. COVID-19 has driven dramatic change in customers’ digital knowledge and use, which expedites the need to roll out pipeline projects sooner and plan to meet consumer needs three years in advance, at least. Louise Heffernan  Audit and Practice Manager Hugh McCarthy & Associates The pandemic exposed a weakness many firms weren’t prepared for and are now forced to adapt to, highlighting how behind some of us were in the digital age, primarily facilitating working remotely and having a strong online and digital presence.  We took this opportunity to begin a rebrand of the firm, working towards moving all systems online and providing additional training where needed.  We understand Rome wasn’t built in a day, but we are in the final stage of an online rebrand, transitioning to a paperless office and entirely cloud-based within four years.  My role in this has been writing and redesigning the website, developing a strategy with the marketing team, working with the IT team to develop a future cloud-based infrastructure, securing software that is online while ensuring GDPR compliance and setting out a four-year plan to go paperless while upskilling the team to ease with the gradual transition. The company has changed in so many ways. While our team chose to come back into the office, there is an option to work from home, providing a higher level of trust amongst the team and strengthening team communication. Giving the option to work from home also shows we value our employees and understand and appreciate the importance of life outside the office. Because of our digital focus, I have changed how I train the team, making sure all resources are available online while developing the team’s IT literacy. And my role has evolved – I now work with marketing and focus on long-term strategic planning while heavily analysing future costs. Bill O’Leary  Director  Goldbay Consulting Four years ago, I introduced accounting software to offshore wind energy consultants, delivering user-friendly automated features. Its reporting capability significantly enhanced the quality, relevance, and timeliness of our management information, which supported profitable business growth.  In March 2020, the pandemic forced us to change how we worked and the so-called “paperless office” had finally arrived.  My organisation implemented video conferencing software. Weekly and operational review meetings, and bi-monthly revenue assurance meetings with directors and senior fee earners were critical in managing revenue and cash flow during the pandemic.  More recently, our focus is on improving operating margin by using data management tools to extract, process and present project margin information in a graphical format to the leadership team. Collaboratively, we review project information, seek to understand the past better and work to agree on actions to modify future behaviour and increase performance.  Leveraging modern software and related digital processes have enabled me to provide the tools, coupled with knowledge, to empower our project leaders to make better informed financial decisions.  The benefits of digitisation and automation of processes are not always linear. As more simple and repetitive tasks are automated, the remaining work becomes more complex – which creates several challenges, such as increasing demands being placed on senior fee earners and the training and development staff becoming more complex.  The answer, which is nothing new, lies in how we use the wealth of digital information available today. How we extract, analyse, synthesise, present, communicate, discuss, understand, and act on the fruits of digital transformation is critical to unlocking the benefits of the digital revolution.  David Heath  CEO Circit At Circit, we have tried to create a culture of digital transformation from the company’s very beginning. With the assumption that technology will continue to evolve at pace, our team is encouraged to be tuned in to what is available in the market and trial services that they believe our organisation and people can benefit from.  This does not mean we implement every new tool we are aware of, but we do become better at monitoring the market, assessing the potential positive benefits of a new cloud service, and getting the timing right for making a change. By having a mentality of being adaptive, we can more easily advise and be an example for our customers who are also on their own digital transformation journey. Lockdowns and viruses have accelerated business trends already underway for companies, like moving to the cloud and modernising their IT departments, but it has also made them think about how their employees can work more efficiently. We’re moving from it being about ‘work from home’ to it being about entirely new ways of doing work.  For example, in the past few weeks, I’ve held investor meetings over video conference instead of in person, with the same – if not better – results.  Instead of thinking about who’s in an office, I’ve also been broadening the scope of who I chat with and when. On an average day, I’m probably talking to five times the number of people from different time zones than when I worked at the office. After all, anyone I want to communicate with is only a chat bubble and video call away. I think we will be forever changed, but now the challenge is to get the balance and team culture correct – one that is digital-first, security risk averse, being personable and willing to travel to in-person meetings to maintain a deeper connection with customers.