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Managing employee capability

Navigating capability issues in the workplace demands both empathy and procedural diligence. Gemma O’Connor explores how to address poor performance fairly Your employees are human; just like anyone, their work performance may dip occasionally. If this becomes an ongoing issue, an informal chat with the employee can often help shed light on what may be affecting their ability to complete their duties. Once the cause is identified and the employee receives suitable support, their performance will hopefully improve. After this, no further action will be necessary. However, if this informal approach does not work, it may be time to address the employee’s capability to do their job. What is capability? Capability in the context of employment law refers to an employee's skill, aptitude, health or any other physical/mental quality that allows them to complete their duties. Employment law recognises that employers may need to dismiss staff who no longer have the capability to complete their work. To understand whether an employee's poor performance may be due to their capability, you must ascertain if it is the case that they cannot do the work versus will not do the work. The latter may fall under the category of conduct. Capability policy A capability dismissal may be lawful if an employee does not have the capability, competence or qualifications to perform the work they are employed to do. A capability policy clearly outlines how the business will address capability issues that arise in the workplace. To do this, you will need to take steps to support your employees in working effectively. An informal discussion with the employee will often prevent the need for formal disciplinary action. A mutually agreed performance management solution should be explored first to help the employee overcome any capability issues. Performance-related capability dismissal The procedure to establish the basis for the dismissal must comply with the rules of natural justice and the terms of your written disciplinary procedures. In competency cases, you must outline the nature of the performance issues you need the employee to improve on. To determine whether a dismissal related to employee competency is fair, management should ask themselves if the employee is incapable of carrying out the job, and if so, do they have reasonable grounds to support that belief? Before moving to dismiss on the grounds of competence, you must first highlight the performance issues to the employee and grant them an opportunity to improve. With the right training and support, the employee may turn things around. Medical capability dismissal In many cases, the incapability of an employee to continue performing their job may result from ill health. Even if the employer's conduct is caused by ill health, dismissal will not necessarily be unfair, although it may also mean that the employer should take greater steps to avoid dismissal than would otherwise be the case. Before dismissing someone on the grounds of medical capability, you should obtain detailed medical evidence confirming that the employee’s return to work or recovery is unlikely. A dismissal based on medical capability must follow the principles of natural justice. You should: make sure you fully possess all material facts concerning the employee’s condition; ensure the employee receives fair notice that the question of a medical capability dismissal is being considered; and provide the employee with an opportunity to prove their case; if the employee isn't capable after a medical expert deems them so, ensure you explore reasonable accommodations that could render the employee fully capable (for instance, changing hours of work, etc). Unfair dismissal laws and capability Most unfair dismissal claims arise when an employer fails to follow fair procedures prior to confirming a dismissal. The Workplace Relations Commission will examine the following questions in an unfair dismissal claim, which are also applicable in cases involving capability: Did the employer believe that the employee was guilty of misconduct as alleged? If so, did the employer have reasonable grounds to sustain that belief? Did the employer carry out as much investigation into the matter as was reasonable before dismissing the employee? If so, was the penalty of dismissal proportionate to the alleged misconduct? The best way to minimise the risk of unfair dismissal claims is to have thorough disciplinary policies and procedures in place and to follow them strictly before confirming a dismissal. Gemma O’Connor is Head of Service at Penisula Ireland

Apr 19, 2024
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The bigger picture: making time for business ideas

Businesses can only grow if owners are able to give time and attention to new ideas. Moira Dunne outlines how you can win back time to put towards developing your business In most businesses, the primary focus is on customer satisfaction and delivering products and services to the highest standard. To stay competitive and evolve, however, businesses must also continuously develop and improve their offerings. Coming up with new ideas to innovate isn’t a problem for many business owners who are able to carve out time to work on them – but for others, doing so can be a challenge. So, what is the best way to prioritise business ideas within the cut and thrust of a busy day, often while juggling urgent requests from important stakeholders? We know that, if we don’t develop the business, it can stagnate. This can lead to anxiety that makes us want to do everything at once, resulting in decreased productivity and little business growth. Win back time To include longer-term development activities in your schedule, you need to start working smarter to free up some time each week. There are three simple steps that can help you take back time to focus on bigger projects that can ultimately move the dial for your business. 1. Think Think about what you need to do to develop the business. Do you need a strategy? Do you need to improve your products? How can you innovate in new areas? Start capturing those great ideas that swirl around your head on paper. Then, review the list, prioritise and make a plan to deliver. 2. Understand Before you can win back time, you first need to understand where time is currently wasted. By using a simple time log template or any task tracker app, you can gain insights into your time usage. Popular apps include ToDoist.com, Monday.com or Zapier.com. This exercise can reveal patterns and trends that allow you to adjust your focus and activities to win back time – this time can then be redirected into higher-value business activities. 3. Identify Winning back time each week may require some hard decisions. Consider the following: What is the best use of your skill, knowledge and experience? Do you spend too much time on tasks that could be delegated? Do you focus on the operational work because the more strategic projects are harder to think about or work on? Are you reluctant to delegate because you don’t think tasks will be done to your standard? These are all common challenges when a business wants to grow and develop. You may decide to let go of tasks you enjoy working on. You may have to trust others within the team to step up and do the job. Be prepared to train some team members to achieve the long-term gain that benefits the business. Changes you can make today Actions you can take to win back time today will vary from business to business. Here are some for your consideration: Complete high-value tasks early in the week to give you momentum and motivation, which will also minimise the odds of getting pulled off track. Spend less time on low-value tasks by batching them together to complete at set times in the day. Leave the low-focus tasks until your low-focus time of day. Give yourself permission to say no. Protect time for high-value work by establishing routines, such as days without meetings or time blocks when you do not look at emails. Delegate or outsource what you can. Include regular reviews and feedback to ensure success. Share a document with the whole team to capture new ideas on an ongoing basis. Review this document at a set time, list and prioritise, then select the key ideas to progress. Moira Dunne is Founder of beproductive.ie

Apr 12, 2024
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Ireland’s R&D tax credit turns 20: room for a new voice?

The research and development tax credit encourages new ways of thinking… just not, as it seems, from everyone, writes Dr Brendan McCarthy The most recent Worldwide R&D Incentives Reference Guide from EY demonstrates how most of the 46 jurisdictions discussed in the guide give preferential tax treatment to business research and development (R&D) expenditure in broadly similar ways. Subject to maintaining detailed records, eligible companies can typically offset the credit against their other tax liabilities or claim a refund in the form of cold, hard cash. When we consider the amount of money large pharmaceutical, medical device and other similar companies are likely to invest in R&D on an ongoing basis, it should come as no surprise that this credit can often run into many hundreds of thousands of euros, facilitating even further investment in R&D by both multinational companies and SMEs year after year. Ireland remains an outlier, however, in two important respects. First, for accounting periods commencing on or after 1 January 2024, eligible companies in Ireland can now claim a credit of 30 percent (previously 25%) of qualifying R&D expenditure, payable in three annual instalments. This amount exceeds that offered by most Western countries (in some cases by double digits) and is twice that offered by New Zealand, a similarly sized economy. However, apart from the level of the credit itself, what sets the Irish regime even further apart from most other jurisdictions is the concept of ‘key employees’. Recognising the reality that it is not companies that have innovative ideas but rather the people working for them, eligible companies have a further option: they can choose to use the credit to reduce the income tax liabilities of their R&D workers. Not all workers are eligible. Irish legislation stipulates that they must spend at least half of their time working in R&D, cannot be company directors, and cannot hold more than a five percent stake in their company. In other words, they must be bona fide R&D workers and cannot have a vested interest in the idea's success. Opting to surrender the credit in this way presents a dual benefit – not only does the company stand to benefit from the R&D underway, but the wider workforce is also incentivised to continue their good work. Even the most well-meaning of provisions can have unfortunate consequences, however. Having satisfied the criteria of being a key employee, the legislation states that the individual’s effective tax rate, after claiming the credit, can be no lower than 23 percent. This stipulation inevitably favours those paying tax at the higher rates (predominantly, the more senior and thus higher-paid workers), effectively leaving those paying the lower rates (the lower-paid, junior staff) out in the cold. Research has shown that employee input, or ‘voice’, can make a positive contribution to an organisation through, amongst other things, increased innovation, the identification of new and more efficient work practices, and the early detection and prevention of problems. This is irrespective of the employee’s rank or tenure within the organisation. Yet, this same research has also shown that employees, particularly those at the most junior levels, frequently withhold their voice on a wide variety of matters. One of the primary reasons for this is an overwhelming sense of futility, fuelled by an awareness of their low rank or position and a sense of ‘it’s not my place’. The requirement that the R&D worker’s effective tax rate can be no lower than 23 percent arguably adds fuel to this fire. By favouring those on higher incomes, the message seems to be that innovative ideas from lower earners are not worth the company’s time or investment. This baffling provision is not only overtly managerially biased but is patently contra to the spirit of the legislation, the primary objective of which was the promotion of new ideas and new ways of thinking. Moreover, it is hopelessly out of date. The provisions governing the R&D tax credit were first introduced into Irish tax two decades ago. Together with one of the lowest corporation tax rates on trading profits in the world, it remains central to the country’s efforts in attracting foreign direct investment. By leading the way in championing the contribution of ‘key employees’ and recently increasing the amount of the credit from 25 to 30 percent, successive Irish governments have not only shown a continued commitment to the R&D tax credit regime but also a willingness to make adjustments to its provisions, in a more equitable pursuit of its overall objective. So, it is fair to say that the Irish R&D tax credit encourages new ways of thinking… just not, as it seems, from everyone. It’s time we gave this some thought. Dr Brendan McCarthy is Assistant Professor in Tax at the University of Limerick

Apr 12, 2024
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The role of tax in CSRD double materiality assessments

Tax must be considered as part of the Corporate Sustainability Reporting Directive’s double materiality assessment, explains Aidan Lucey The aim of the EU’s Corporate Sustainability Reporting Directive (CSRD) is to drive accountability and transparency by mandating companies operating in the EU to disclose information on material sustainability topics publicly. Even if companies have reported non-financial data in the past, they will likely need to expand the nature and extent of their disclosures. For some companies, tax could be considered a material sustainability topic, given the significance of tax contributions to society and heightened investor scrutiny. This means they will need to disclose information on tax publicly, too. Therefore, companies must understand the specific tax disclosures that may be required under CSRD. CSRD and double materiality Companies within the scope of CSRD are required to make disclosures on material sustainability topics in accordance with the European Sustainability Reporting Standards (ESRS). The ESRS covers sustainability topics across environmental, social and governance pillars and prescribe specific disclosure requirements. To determine the sustainability topics to be disclosed, companies must carry out a double materiality assessment. This involves assessing a company’s impact on the environment and society (“impact materiality”) and an assessment of how sustainability topics may affect the future performance of the company (“financial materiality”). If a sustainability topic is material to a company, but is not addressed by the ESRS, the company must still disclose information about it to enable readers to understand its sustainability-related impacts, risks and opportunities. Tax as a material topic Interestingly, the European Financial Reporting Advisory Group (EFRAG), which developed the CSRD standards, explicitly calls out tax as one of the topics on which organisations could make disclosures. In determining what sustainability topics are material for a business and its stakeholders, companies must consider many factors. While materiality considerations will differ for every organisation based on their specific sustainability and stakeholder profile, a range of factors could make tax a material consideration. These are outlined below. Social impact Tax is not just a cost of doing business, it is also a social responsibility. The taxes paid by an organisation, including those that it collects on behalf of governments, can represent its biggest monetary contribution to society. Those taxes fund public services, green infrastructure and community projects. Consequently, tax can be seen as a powerful indicator of a company’s societal impact. To assess this impact, stakeholders are demanding a greater level of tax transparency. They want to understand a company’s approach to tax, how tax matters are governed, and how much taxes are paid. Investors Tax is being factored into investor considerations when assessing the sustainability of a business. An organisation’s approach to tax can pose significant risks that affect investment returns in the medium and long term. To address these concerns, investors are taking steps to influence companies to make more comprehensive tax disclosures that will allow them to evaluate not only financial aspects but also governance and reputational risks associated with their approach to tax. Some investors have released codes of conduct encouraging transparency on tax from investee companies. Others have filed shareholder motions mandating tax disclosures under GRI 207, a specific tax standard released by the Global Reporting Initiative (GRI) to enable companies to disclose tax as part of their sustainability reporting. Tax disclosures under the CSRD can provide companies with an opportunity to build trust with investors, customers and society. Even where a company concludes that tax is not a material topic in its own right—possibly because other sustainability topics are viewed as higher priorities—tax disclosures could be considered under an existing ESRS. Tax disclosures required Where an organisation deems tax a material topic, EFRAG has indicated that GRI 207 could be used as the basis for its tax disclosures. GRI 207 consists of four categories of disclosures: Disclosure 207-1: Approach to tax. This requires an organisation to disclose details on its tax strategy, who oversees it, and how it aligns with its broader sustainability strategy. Disclosure 207-2: Tax governance, control, and risk management. This requires the disclosure of information about an organisation’s tax governance structure and how tax risks are identified, managed and monitored. Disclosure 207-3: Stakeholder engagement and management of concerns related to tax. This disclosure considers how an organisation engages with its stakeholders on tax matters. Disclosure 207-4: Country-by-country reporting. This disclosure requires an organisation to report on quantitative data, including its revenue, tax, and business activities on a country-by-country basis. A double materiality assessment is an essential step towards CSRD compliance. Full engagement between tax departments and sustainability teams will ensure that tax impacts, risks and opportunities are identified and considered in the double materiality assessment. Aidan Lucey is Tax Leader for CSRD at PwC Ireland

Apr 12, 2024
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The future of the accountancy profession

What will tomorrow bring for the role of the Chartered Accountant and what changes are already taking hold today? Accountancy Ireland talks to four members of ACA Professionals about their experiences and expectations The role of the accountant is evolving and with it the expectations and perceptions of younger generations building careers in the profession. Here, four members of the Institute’s ACA Professionals Committee tell us about their hopes and aspirations for the future and career experiences today. Brendan Brophy I grew up in Perth, Australia, and studied business and accounting at Edith Cowan University, later obtaining a master’s in finance from University College Dublin. I qualified as a Chartered Accountant in 2016 and have since worked in both accounting and taxation. I am currently Senior Cost Accountant with Square and Chair of the ACA Professionals Committee of Chartered Accountants Ireland. I started my university journey in 2010 with a general interest in business, carrying a nascent curiosity about companies and their financial workings. My exact career direction was unknown until I encountered my first accounting lecture, however. That introduction to the foundational principles of accounting really resonated. It was during my first year at university that I had the privilege of attending a presentation by Chartered Accountants Australia. The session explored the prestigious career path offered by the ACA qualification, highlighting its value as an international career passport. Continuous learning The journey to becoming a Chartered Accountant, while enjoyable, has also posed distinct challenges. It requires extensive commitment to ongoing study and capacity to get to grips with deep knowledge across all facets of the discipline. What has surprised me most hasn’t been the rigour of the qualification process, but the ongoing need for continuous learning and adaptation post-qualification. The field of accounting is continuously evolving across standards, business practices, regulatory frameworks and technology. Expertise considered cutting-edge five years ago may no longer suffice today, so staying ahead of the curve is not merely an option, but a necessity for Chartered Accountants. Right now, technology is one of the most significant drivers of change in our field, redefining the boundaries of what’s possible. Advances in technology are outpacing existing regulatory frameworks, presenting both challenges and opportunities,and requiring us to anticipate and adapt to changes rather than respond to them retrospectively. Prime examples include artificial intelligence and cryptocurrency. The imperative for accountants today is to have a proactive mindset, enabling us to foresee emerging trends and incorporate them into our practices. Agents of change Becoming a Chartered Accountant is not just about mastering the intricacies of finance and accounting; it is about earning a pivotal seat at the decision-making table within any organisation. This privileged position allows Chartered Accountants to influence key business decisions directly, facilitating change that extends beyond the confines of a single company to impact the broader industry and regulatory environment. The role we play in guiding financial strategy, ethical standards and sustainable practices enables us to be agents of change, influencing economic outcomes and contributing to the shaping of regulatory frameworks that govern our profession and the business world at large. Anne Carter I studied business and accountancy at Galway-Mayo Institute of Technology and went on to qualify as a Chartered Accountant with DHKN in Galway in 2017. In between, I worked in retail banking, travelled to Australia and New Zealand on a Working Holiday Visa and moved to London for two years, where I earned a diploma in sound engineering. My journey to becoming a Chartered Accountant was triggered by my curiosity to understand the nuts and bolts of how businesses operate, and by my interest in maths and accounting from a young age. The opportunities for professional development associated with the ACA qualification really attracted me; the scope for continued learning and career advancement. The qualification opens doors. I saw it as a pathway to hone my skills, gain valuable experience and continue to develop. During my training contract with DHKN, I worked across audit, accounts preparation, income tax and corporation tax and, after qualifying, I moved to Dublin to join the internal audit function at GameStop. I have been with CRH plc now since 2018 and currently work on our Strategic Projects Team. Potential of technology I think technology has a lot of potential to allow our profession to develop broader skillsets and move more into advisory work, strategic decision-making and the actual interpretation of financial data. Artificial intelligence, automation and data analytics are all transforming the way accountants work and the services we provide. This will only increase over the next decade as more of the time-consuming or manual tasks we do today become automated. My career advice to younger members and students is to be open to change and to exploring different areas or opportunity within the field of accounting – adopt a growth mindset, set career goals, take ownership of your professional development and seek out advice and feedback from managers and peers. Claire Doyle I grew up in a small village called Leitrim in Co. Down and studied accounting at Queen’s University Belfast. I am also currently studying for a post-graduate diploma in sustainable financial technology and innovation at Maynooth University. I qualified as a Chartered Accountant in 2019 with KPMG in Belfast and I am currently International Tax Manager with PTC Therapeutics at its international headquarters in Dublin. At 17, I really struggled to understand what I should do for my career. My mother was a teacher, my father had set up his own business and my older brothers either worked, or were pursuing careers, in construction. Having watched them having to emigrate during the recession, I knew I wanted to pursue a qualification that would deliver high-quality jobs, global reach and allow me to carve my own path. Turning point During my second year at university, tragedy struck our family when we lost my brother Ryan in Australia. This really became the turning point in my life and the direction of my career. In the following months, I decided to apply for a year-long work placement with KPMG in Dublin so I would have the experience to know that becoming a Chartered Accountant was definitely the right path for me. It was a real eye-opener and ultimately brought me one step closer to starting my training contract with KPMG in Belfast. After my training contract ended, I decided to move into industry and take up a position that would allow me to gain more practical in-depth experience in the life science sector. Childcare reform Right now, I think childcare reform is needed across the island of Ireland to support working parents and reduce the financial burden and stress associated with finding a place for children and keeping parents in the workforce. Key to the retention of working parents in our profession and others is ensuring that there are adequate provisions in place to allow for reduced working hours. If a working parent decides to reduce their hours, I don’t believe this should mean that they have to condense five days of work into four. Transformative role I believe that accounting as a profession has the power to promote financial transparency, accountability and sustainability. Chartered Accountants are seen as trusted advisors. We can help our companies to understand their impact and reporting obligations across the three pillars of environmental, social and governance (ESG) and educate them on important matters, such as the UN’s Sustainable Development Goals (SDGs). Our ability to influence policy and advocate on behalf of the public is vitally important to supporting the Government in determining realistic targets in support of Ireland’s Climate Action Plan. The Institute’s collaboration with Chartered Accountants Worldwide allows us to amplify our impact and drive progress towards the achievement of the SDGs. Sinéad Nolan I studied both business and accounting and finance at undergraduate level and then did a master’s in accounting at Maynooth University. I qualified as a Chartered Accountant in 2017 with RSM Farrell Grant Sparks, which merged with Grant Thornton during my training contract. I then worked with the National Transport Authority as a Rural Transport Finance and Governance Accountant for one year before joining AXA Insurance in the role of Financial Accountant and, for a time, worked on the planning and analysis team and on secondment to the strategy team. I knew from an early age that I wanted to become a Chartered Accountant. I gained invaluable experience during Transition Year through work experience with O’Brien & Co. in Rathmines. I will be forever grateful for the accounting experience Tom O’Brien gave me back then at just 16 years of age. From day one at college, it was communicated to us how highly regarded the Chartered Accountant qualification is. The international recognition and respect the ACA qualification is held in really appealed to me. The work opportunities that come with it are endless. Welcome change ESG and, in particular, sustainability are becoming more important, especially among younger generations starting their career. Chartered Accountants and companies today are actively working to achieve their sustainability goals. I believe Chartered Accountants can bring about powerful change, especially with regards to sustainability, by encouraging social responsibility and the adoption of sustainable practices among entities of all sizes. I also see positive change with regards to gender equality in our profession and beyond, which is very welcome, and I believe we will see more women in senior positions in the future. I am lucky enough to see this in action at AXA Ireland, where there is a culture that fosters inclusion and a better working world for women.

Apr 11, 2024
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The seven traits of a successful sustainability leader

Navigating the complexities of sustainability leadership demands a multifaceted approach, writes Catherine Duggan More companies are grappling with a rising regulatory burden and heightened stakeholder expectations regarding sustainability, presenting the need for a captain to lead the team. Here is a selection of the components that can help make this role successful. 1. Knowledge of the business The impacts, risks and opportunities sustainability presents for each business are unique. Understanding sustainability, along with intimate knowledge of your business operations, stakeholders and future strategic plans, is critical to ensuring the successful integration of the sustainability agenda. 2. Commercial mindset Perhaps more than other disciplines, sustainability tends to attract people who are passionate about the topic and driven by the need to be change-makers. While enthusiasm is certainly necessary, particularly on more challenging days, the ability to consider and incorporate commercial aspects into the wider conversation can prove more effective than passion alone. 3. Risk management While sustainability may be a developing area of expertise in companies, risk management is not. The risk posed by the transition – or failure to transition – to a more sustainable economy can and should be considered through existing risk management processes, enhanced skill sets and frameworks. Being familiar with the vocabulary and the approach that is being taken can help with the incorporation of sustainability considerations. 4. Communication management Many of the sustainability regulations that are being introduced focus on disclosing sustainability-related information to facilitate stakeholder decision-making. The implications of these disclosures must be understood in the wider context of any supervisory oversight. In addition, consistency of investor messaging and alignment with previous external disclosures, public commitments and marketing campaigns are crucial factors for the effective management of external communications. 5. Stakeholder management Getting internal stakeholders onside is the most fundamental skill required to develop and deliver a credible sustainability programme. The ultimate goal of a sustainability function is that it should become business as usual, part of everyone’s day job. Until that point, support is required from all parts of the business at a time when resources are often already at capacity. The ability to tailor messaging to specific functions, outlining the drivers, risks, opportunities and executive support, is critical. 6. Change management All parts of the business will eventually feel the impact of sustainability through the implementation of a new strategy, regulation, processes or responsibilities. Agnostic of sustainability, change management is required to embed this level of transformation and support into the culture of an organisation. 7. Resilience While sustainability aims to deliver long-term resilience for people, the planet and profit, a degree of personal resilience is required to chart the path. In a fluid regulatory environment, an organised and curious mind is needed to develop best practices. A support network is also important to ensure the workload is shared. Building a sustainable future together While the above list may seem unrealistic, it’s important to emphasise sustainability’s ‘team’ nature and the need for support from across the organisation. Identifying a resource proficient in all of the skills outlined above is a challenge. Securing someone with working knowledge of some or all of these areas – and who can upskill – is more achievable. Few people today began their career with the intention of becoming a sustainability professional, but there is now a growing community forging a new path for their companies, with the aim of highlighting the reality that we are all in the same boat and the water is rising. Catherine Duggan is Director of Sustainability at Grant Thornton

Apr 05, 2024
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Are CFOs doing enough to future-proof finance?

Ireland’s CFOs continue to prioritise cost control and efficiency over investment in AI but will they pay the price further down the road? asks Derarca Dennis As Ireland’s Chief Financial Officers (CFOs) step up to future-proof the finance function, their role in leveraging technology to improve efficiencies is becoming increasingly pivotal. According to the EY Ireland CFO Survey 2024, finance leaders are not just looking to elevate business performance, they are also actively seeking to tap into the potential of technology while simultaneously strengthening their collaborative alignment with Chief Technology Officers (CTOs). The continued focus on technology investment is unsurprising, considering that 47 percent of respondents identified manual processes and controls as an area where time is used least efficiently in the finance function. It is perplexing that such a high number of respondents continue to cite manual processes and controls as an area for improvement in the finance function. This suggests that organisations have some way to go in their automation efforts, and significant further investment in technology will be required over the coming years. AI and the finance function Despite the investment in technology, the survey results for artificial intelligence (AI) indicate that it is a low priority for organisations right now. Finance leaders in Ireland are still at the very early stages of Generative AI (GenAI) adoption and are firmly focused on using cost reduction and efficiency gains to realise growth. AI use remains modest, with just 26 percent claiming to have leveraged it for enhanced efficiency, automating manual tasks and risk detection, among other use cases. The uptake of GenAI is even lower at just 15 percent. This may come as a surprise to some. While GenAI has been commanding the headlines over the past 15 months, the technology is still not at the stage where it can be employed to carry out advanced functions in finance departments. CFOs are naturally exercising caution until they see some applications proving that GenAI can be trusted in terms of output and security. Just six percent of respondents say they will leverage advanced AI to enhance the finance function or acquire AI skills in the next two years. The figure for a longer five-year span is only moderately higher, with nine percent saying they will integrate AI and advanced AI into the finance function in that timeframe. The results of the survey indicate that organisations are still at the discovery and use case definition stage in relation to AI. Automation It is surprising that greater use has not been made of the technology for automation purposes, given the continued inefficiencies created by manual processes and controls in finance functions. Interestingly, the survey shows a fairly significant budget increase is anticipated, albeit from a low base, for advanced AI (including GenAI) from one to 3.2 percent in the next two years. This suggests an openness to applying the technology as soon as use cases are identified and better understood. Not all AI solutions are expensive or require custom development. To get their organisations to accelerate the AI journey, CFOs can recommend adopting pre-built AI solutions that drive cost efficiency. Cybersecurity In their role as strategic business partners, CFOs must do more than just comprehend the organisation’s risk tolerance; they are also responsible for steering the budget towards areas that need more attention. Just 39 percent of the respondents in the EY Ireland survey say they have ramped up investment in security tools, compared with 60 percent in 2023. This may indicate a degree of complacency regarding cybersecurity, or it could be that investments have begun to plateau following significant increases in recent years. In a very welcome finding, 31 percent of the respondents say they instituted a cybersecurity task force compared with the eight percent in 2023. CFOs’ north star The relatively low priority given to technology-driven transformation and the low rate of AI adoption in finance functions is surprising given current talent shortages. Right now, cost control and efficiency remain the north star for finance leaders in Ireland. Derarca Denis is Assurance Partner and Sustainability Services Lead at EY Ireland 

Apr 05, 2024
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The vital role of cybersecurity in business acquisitions

Amid rising cyber threats, integrating cybersecurity into the due diligence process for business acquisitions is becoming increasingly important, writes Mark Butler With the recent rise in digital data breaches, cybersecurity’s critical role in due diligence engagements during business acquisitions cannot be underestimated. Embedding a cybersecurity-focused lens into the due diligence framework is an essential part of helping accountants and their clients tackle and manage potential vulnerabilities before investing proactively. This approach can strengthen defence against cyber threats, support informed, strategic decision-making and enhance a company’s resilience in the face of digital-age risks while ensuring full visibility of the purchaser’s potential exposure. The urgency of prioritising cybersecurity due diligence hinges on four key considerations: Assessing the business’s technological framework In today’s digital-driven business environment, a company’s technological infrastructure is integral to its operational success. Cybersecurity due diligence offers a deep dive into the resilience of the business’s networks, systems and software, revealing potential vulnerabilities. This critical assessment aids in understanding the implications and costs associated with securing or upgrading technological assets post-acquisition, facilitating strategic planning and integration efforts. Ensuring the security of sensitive information The acquisition process provides access to sensitive data, from client details and intellectual property to financial records and employee information. A focused cybersecurity due diligence process is crucial for evaluating how robust the target company’s data protection measures are. Early identification of security gaps enables the implementation of stringent safeguards, thus securing the integrity and confidentiality of vital data assets against potential breaches. Mitigating financial and legal exposures Cybersecurity breaches carry operational risks and significant financial and legal ramifications. A thorough cybersecurity due diligence process can uncover potential liabilities arising from data breaches, regulatory non-compliance and other legal challenges. Forearmed with this knowledge, acquirers can better negotiate the terms of the acquisition, allocate resources for addressing identified risks, and adjust the purchase price to reflect any investments needed to improve cybersecurity. Safeguarding business continuity and brand reputation Maintaining business continuity and reputation is paramount for a successful acquisition. Cyber incidents can severely disrupt business activities, erode customer trust and damage brands. By incorporating cybersecurity due diligence, potential threats can be identified and mitigated through comprehensive incident response planning. This proactive strategy ensures that appropriate measures are in place to minimise the impact of cyber threats on the company’s operational integrity and reputation. Prioritising cybersecurity within the due diligence framework is not merely a precautionary measure; it is a strategic business imperative that gives the purchaser adequate visibility of the acquired business. It can support a thorough assessment of technology-related risks, fortify the protection of sensitive data, mitigate potential financial and legal consequences, and protect the viability and reputation of the business. Finding expertise in cybersecurity can be difficult, however. I advise seeking out recognised specialists offering comprehensive assessments that adhere to international standards. This approach during the due diligence process can help accountants and their clients to understand and proactively address the cybersecurity challenges that come with business acquisitions, laying the groundwork for long-term success. Mark Butler is Managing Partner at HLB Ireland

Apr 05, 2024
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The coach’s corner -- April/May 2024

Julia Rowan answers your management, leadership and team development questions Q. I manage a team of four people in a large organisation. Up until recently, we all got on and worked well together. However, the mood has changed. The work is getting done, and everyone is polite, but I am being shut out. I think this is in response to company-wide changes during which we lost a popular team member. I had no control over this. A. One of the key things leaders do is act as a buffer between the hard shell of the organisation – with its policies, structures and procedures – and the social and emotional needs of individuals. It is a tough gig.  Right now, it sounds like your team is angry with the organisation. Sadly, they are not going to tackle the CEO, so you are getting the flack. When change is perceived negatively, there is a lot of blame. Leaders often get sucked into explaining, defending and rationalising – which only makes things worse. In reality, people are frightened and worried. They are wondering, ‘Can I cope with the changes?’, ‘Will I be next?’ They are placing blame at your feet to hold those fears at bay. While you may be unable to control the changes your company decides to make, you can help your team to navigate them.  Allow people to air their fears – and listen without judgement. Underneath it all, your team does not blame you. They understand that changes need to be made to keep organisations competitive. When you listen, people will start talking about what is important to them, and this is where you can have a connected conversation. I suggest you raise this issue at a team meeting. Say that you have noticed a change in the team mood and feel it would be useful to discuss this in one-to-ones or at the next team meeting.  If people bring up the issues, connect with them where they are. Prepare to listen and absorb. You might have to listen to a rant – at the end of a rant, there is often an apology and an acceptance of the need to move on.  When the time is right, agreeing on how to move forward may be useful. Have some ‘connecting’ questions ready, for example: What is important for you/the team? What could I/we have done differently? What do you want from me/from each other at this time? What can I help you with?  How do we support each other? How do we want to move forward? Finally, it may be important to look at how your team member left. Did you and the team get a chance to mark that properly? If not, the team may like to fix that. Julia Rowan is Principal Consultant with Performance Matters Ltd, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie

Apr 04, 2024
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Measurement beyond KPIs

Three Chartered Accountants tell us how they use performance metrics to enhance organisational efficiency beyond traditional benchmarks Niamh McCarthy Finance Business Partner Primark Relying solely on Key Performance Indicators (KPIs) can mean ignoring the human elements that impact performance. Focusing only on a project’s outcomes might meet KPIs, but it can also make people feel that their wellbeing or personal development is not a priority. In my experience, the best way to ensure a balance between quantitative metrics and qualitative assessments is to set clear expectations when setting annual goals, provide feedback and coaching more regularly than in one-off annual reviews so that everyone is aligned, and add weighting to both quantitative and qualitative metrics based on their importance to the company.  Subjective factors such as employee behaviour, teamwork and communication skills are crucial in performance evaluations.  These measures can influence a company’s culture as employees feel heard and that they can collaborate with their peers. These positive behaviours drive a positive culture. The more positive employees feel, the more productive they tend to be.  Careful consideration is required before implementing alternative performance measures to ensure clear definitions of the metrics. Transparency is a must to ensure everyone understands the metrics that are being used.  A standardised approach is also needed for all employees. To achieve this, the managers setting these performance measures need adequate and uniform training to ensure consistency for everyone.  Employees should be involved in their goal-setting every year, of these goals must align with the company’s values and objectives. There should be a sense of ownership over these so that they are not just ‘given’ to the employee but they instead feel that they have created them, can drive them and ultimately achieve them.  These goals should be reviewed regularly – not just annually – to ensure that they are still relevant. Otherwise, you risk employees feeling disconnected from their own objectives or those of the business.  Unlike traditional performance metrics focused solely on quantitative outputs, alternative performance measurement methods often take a more holistic approach.  Various factors are considered, such as skills, behaviours, contribution to the team and alignment with company values. This comprehensive assessment provides employees with a more nuanced understanding of their strengths and potential areas for improvement, facilitating targeted development efforts.  Employees who feel they can grow and develop within a company are more likely to actively contribute to the business. The more you give back to employees in terms of recognising their development and wellbeing, the more they will give back in turn. Mark Riseley Strategic and Financial Consultant/Fractional CFO My lens is formed from a career working for high-growth scale-ups where change is constant, requiring systems, data, processes and (most importantly) people to flex as the company grows.  Traditional KPIs are often unsuited to measuring capacity to scale efficiently, for both people and companies, and do not capture a company’s true enterprise value along that path. Some alternate measures of performance include: Time management – In high-growth environments, time may be a team’s most valuable commodity. Does the company measure time, quantity and output generated by meetings?  Data – What is high-quality data, and what is just noise? Instead of just measuring data output, measure the speed and efficiency of decisions to determine which data is worth keeping. Adaptability to a culture of change – Identify, hire and measure based on key personality traits, such as decision-making capacity, adaptability/flexibility, resilience, trust, diligence and communication skills, rather than just the known skills of the profession. Effectiveness of organisational design – Is the organisation’s design scalable, or does it need to pivot to enable growth? Does it allow executives to delegate/empower decision-making? Check employee turnover to determine the effectiveness of your organisation’s outlay. Common goal – Is the common goal clear? Do companies measure the clarity of messaging, such as doing spot checks on the elevator pitch, for example? Do performance measures flow from the corporate to departmental and individual level? Make sure all messaging is aligned. Enterprise value – Is enterprise value (EV) clear, measured and reported? Is there a consequence to hitting forecasts? The ability to do this can mean the difference between a rear-view EV and a front-view EV. Are margins increasing, thereby demonstrating the effectiveness of scaling systems, processes and people? To ensure that alternative performance measures align with organisational goals and contribute to overall success, companies must clearly define their goals, objectives and values so that employees fully understand and can align them with their own goals, objectives and values.  Alignment and collaboration between different departments and teams within the organisation will ensure alternative performance measures are consistent and mutually reinforcing. Success is more likely if all employees feel they are working towards a common goal aligned with the company’s goals.  Yier Hu Senior Associate in Management Consulting KPMG   There are certain limitations to relying solely on KPIs for performance measurement. Although KPIs provide quantitative metrics to measure performance, they tend to overlook crucial perspectives essential for a comprehensive evaluation.  At KPMG, we recognise the importance of looking beyond KPIs to ensure a thorough approach to performance measurement. The quantitative matrix can fail to account for a series of subjective factors, such as employee behaviour and communication skills. These intangible elements offer valuable insights into employee performance and should be considered alongside quantitative measures. KPMG employs its own separate benchmark for performance measurement, analysing performance from six distinct perspectives: client, people, innovation, financial strength, public trust, quality and development. We advocate for measuring performance from multiple perspectives, recognising the importance of a holistic approach. These alternative measurements assess the benefits an employee brings to clients while also evaluating their contributions to the working environment.  From the people perspective, we focus on how the team studies and improves, how to be a strong mentor to the team, how to build internal communication and culture and how to make everyone feel like a part of the team.  From an innovation perspective, we prioritise building trust with the team and client, supporting the team to identify opportunities, and leading by example. This is crucial and creates long-term value while also enhancing overall satisfaction within the company.  By embracing a multi-dimensional approach to performance measurement, organisations can gain a more nuanced understanding of their employees’ contributions and foster a culture of continuous improvement and growth.

Apr 04, 2024
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Why the European Parliament elections matter

Growing support for extremist and smaller parties across Europe could change the fundamental composition of the new European Parliament, writes Judy Dempsey Elections to the European Parliament (EP) take place every five years. Until recently, the outcomes were predictable. The conservative European People’s Party has dominated with the Progressive Alliance of Socialists, albeit with declining numbers, and Democrats (S&D) coming in second.  Their decline reflects waning support for mainstream parties and an increasing fragmentation of European party systems at national and European levels.  This time round, the EP election is about how the growing support for extremist and smaller parties across Europe could change the composition of the parliament and the EU. Integration is taking a back seat. The European Council on Foreign Relations (ECFR) reckons the major winner in the EP elections will be the radical right Identity and Democracy (ID) group.  “We expect it to gain 40 seats and, with almost 100 MEPs, to emerge as the third largest group in the new parliament,” states ECFR.  The political elites across Europe are nervous as far-right parties in France, Germany, Austria, Portugal, Hungary, Italy and other countries are campaigning hard to strengthen their presence in the EP. And, despite backroom deals and trade-offs taking place inside the EP regarding which countries will become EU commissioners, a different political constellation could upset the way things have been done in the past. The political status quo across Europe is changing. The 2009 global financial crisis dented the belief that the EU was on a permanent trajectory towards prosperity. The wars in Syria that led to well over a million people seeking refuge in Europe in 2015 created divisions inside the EU regarding identity and values. COVID-19 and Russia’s war in Ukraine dented the unity and self-confidence of the EU even further.  More importantly, as EU leaders grapple with these global issues, they must respond to their electorates back home.  Citizens want security, affordable housing, better access to good schools, healthcare and other public services. These services are under pressure as governments, struggling with inflation, weigh up the cost of spending or saving more.  The far-right, nationalist and far-left parties, from the comfort of not being in office, exploit these crises. They want their governments to stop sending weapons to Ukraine; to stop the inflows of asylum seeks or refugees fleeing wars, famine and the effects of climate change. They question the costs of protecting the environment.  In short, the sense of security that characterised most of (Western) Europe after 1945, and even after the reunification of Germany after 1991, is being replaced with an uncertainty that populist and far-right and far-left parties are tapping into.  They challenge the status quo that oversaw the establishment of today’s EU.    If they gain many seats in the EP, they will not want to leave the EU. The financial benefits are too big and support for the EU is still high across the bloc. Instead, they want to change the EU from within.  The issue for these parties is sovereignty. Like Brexit, they want to ‘regain’ their national sovereignty but remain in the EU.  Yet EU membership requires ceding some sovereignty in return for certain benefits. With few exceptions, EU leaders shy from selling those benefits to their citizens. Their reluctance plays into the hands of the far right and the far left.   Judy Dempsey is a Non-Resident Senior Fellow at Carnegie Europe and Editor-in-Chief of Strategic Europe

Apr 04, 2024
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EU audit reform: 10 years on

Patrick Gorry delves into the findings of the European Commission’s Market Monitoring Report and revisits the broader context and impact of EU audit reform On 5 March 2024, the European Commission published its triennial Market Monitoring Report, analysing Public Interest Entity (PIE) audit data from 2019 to 2021 across 27 Member States as well as Norway.  A decade after the enactment of European Union (EU) audit reform legislation, the report underscores the persistent market dominance of the main firms in PIE audits, resulting in limited choices for auditors. Background and objectives of EU audit reform The introduction of EU audit reform stemmed from several key drivers and broader contextual factors.  Amidst the global financial crisis of 2008, weaknesses in financial reporting and corporate governance practices were exposed, prompting the EU to prioritise enhancing the integrity and transparency of audit processes.  In 2014, the EU adopted two legislative instruments: Directive 2014/56/EU, which amended Directive 2006/43/EC on the statutory audits of annual accounts and consolidated accounts (the Audit Directive), and Regulation No. 537/2014 on specific requirements regarding the statutory audit of PIEs (the Audit Regulation).  The legislation was led by several key EU institutions, including the EU Commission, EU Parliament, EU Council, European Securities and Marketing Authority (ESMA) and national regulatory authorities in EU Member States.  While the overarching goal was to increase the quality of statutory audits, the four primary objectives set out for the reform were to: Reinforce auditor independence; Promote market competition; Enhance transparency for investors; and Strengthen pan-European supervision. Measurement of success  To evaluate the legislation’s effectiveness, we must examine each objective. Reinforcing auditor independence The legislation mandates the rotation of audit firms for PIEs after a specified period to help address familiarity and independence issues, promote fresh perspectives and improve audit objectivity.  It also restricts audit firms from providing certain non-audit services to their audit clients and imposed limits on fees for such services.  These measures aim to promote independence, prevent conflicts of interest and uphold audit integrity. The legislation has strengthened auditor independence by enforcing mandatory rotation for auditors of PIEs. This has reduced conflicts of interest and enhanced audit objectivity.  Stricter rules regarding non-audit service provision have further bolstered auditor independence, ensuring a focus on high-quality audit services. Mandatory rotation has, however, faced criticism for potential unintended consequences, such as increased costs for companies and concerns about the disruption of longstanding audit relationships.  The Market Monitoring Report revealed limited choice in tenders within the EU audit sector: 16 percent of the tenders had just one bid and 59 percent left PIEs with a limited choice of two to three bids.   In the same report, 51 percent of surveyed audit committees that had undergone auditor changes indicated that it was too early to evaluate the impact of auditor rotation or that no assessment had been made at the time the Commission issued the questionnaire.  Furthermore, 22 percent of audit committees rated the impact of auditor rotation as ‘neutral’, while 12 percent rated it ‘positive’. Promoting market competition The legislation aims to promote market competition and diversity in the audit sector by encouraging smaller audit firms to participate in PIE audits. It is meant to drive innovation, enhance audit quality and offer clients a broader selection of service providers. To achieve this, the legislation mandates regular rotation or tendering of audit engagements to stimulate competition.  It also promotes joint audits to facilitate smaller firms’ involvement and enhance market competition.  Additionally, the legislation aims to increase transparency in the audit market by publishing data on audit firm market share and concentration. Despite these efforts, market concentration remains a challenge. Larger firms continue to dominate, limiting the entry of smaller firms and hindering diversity among service providers.  While the largest firms’ dominance in the number of PIE audits has fallen slightly, they still control a significant portion of the market from a fee perspective.  Interestingly, a growing demand for joint audits indicates a potential shift in the market landscape toward increased diversity. The Market Monitoring Report highlighted the continuing imbalance: In terms of total turnover among audit firms, the largest four firms collectively accounted for approximately 80 percent of the market, consistent with previous reports from the European Commission. Despite a decline in their share of PIE audits, these firms still hold a dominant position, capturing 86 percent of revenue from this source.   Joint audits now account for 16 percent of the PIE market, up from nine percent in 2018. This trend is evident across an increasing number of Member States, with five additional countries adopting joint audits since 2018, bringing the total to 13. Among the six Member States with the most diversified PIE audit markets, joint audits are prevalent in five: France, Romania, Bulgaria, Poland and Greece. The findings relating to European market concentration are replicated in the Irish market. The Irish Auditing and Accounting Supervisory Authority’s most recently published Annual Audit Programme and Activity Report put the market share of the four largest firms at 87 percent.  Enhancing transparency for investors The legislation mandates increased audit reporting transparency, requiring additional information disclosure.  This increased transparency aims to improve communication between auditors, clients and stakeholders, providing a more comprehensive view of the audit process. The new rules have significantly improved the informational value of audit reports, which is a key success of the legislation.  The mandates have improved communication between auditors, clients and stakeholders, ensuring investors can access relevant information to make informed decisions.  However, challenges remain in effectively communicating audit findings to investors. Discussions are ongoing concerning further enhancements to meet the investors’ evolving needs.  Strengthening pan-European supervision The reform introduced measures to enhance governance and oversight of audit firms, including establishing regulatory bodies and oversight mechanisms to monitor compliance with audit standards. The objective was to improve the consistency and effectiveness of audit supervision across Europe. The legislation has undoubtedly increased cross-border cooperation and information sharing among national competent authorities.  Harmonising audit standards and practices across Member States has aligned regulatory requirements, fostering a unified framework for audit supervision while improving quality and consistency at the European level. However, one of the main challenges of strengthening pan-European supervision is the divergence in implementation of the audit regulation and oversight practices across Member States. Future audit reform EU audit reform represents progress, but there’s still work ahead. While successes are evident, challenges persist, notably the dominance of major audit firms. The 2022 EU Commission study on the impact of the audit reform highlights improvements in harmonising national frameworks. However, it underscores lingering disparities in the transposition, implementation and enforcement of EU audit legislation across countries. The legislation has profoundly impacted audit firms and the profession by reshaping regulatory requirements and enhancing independence, quality standards and transparency within the EU.  Yet, ongoing evaluation is necessary to ensure continued progress in the improvement audit quality, transparency and governance. Recent high-profile accounting scandals, such as the Wirecard bankruptcy in Germany, underscore the need for further reform, especially amid increasing demand for sustainability reporting and digital audits.  With a new EU Commission and Parliament taking office imminently, however, further legislative developments are unlikely in the near term.  On the other hand, the Market Monitoring Report identifies potential challenges, including inflationary pressures, rising interest rates, geopolitical instability and the growing use of data analysis tools and artificial intelligence, which will require attention sooner or later.  One thing appears certain – what audit will look like in another 10 years will dramatically differ from what it looks like today. Whether an EU Audit Reform 2.0 is one of key change drivers remains to be seen. Patrick Gorry is a Partner in the Audit and Assurance Financial Services Group of Mazars Ireland

Apr 04, 2024
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“Operate with integrity at all times – your reputation is everything”

John Hansen talks us through his career as a Chartered Accountant and new role as Chair of the Institute of Directors in Northern Ireland John Hansen is the newly appointed Non-Executive Chair of the Institute of Directors in Northern Ireland. Formerly Partner in Charge at KPMG in Belfast and KPMG’s international representative to KPMG Greece for two years, Hansen is also currently Non-Executive Chair of Titanic Quarter Limited. He sits on the business funding committee of Invest NI and holds directorships in several other companies. Tell us a bit about yourself and why you became a Chartered Accountant?  I grew up in Belfast. My father worked at the Ulster Museum and my mother at the Royal Victoria Hospital. I am married to Linda and have two daughters and four grandchildren. I studied economics with accountancy at Queen’s University but wasn’t really sure at that time what I wanted to do after graduating. I drifted towards accountancy because people told me it was a versatile qualification that could provide a solid grounding for lots of different business-related careers and would give me options. They were right!  I took part in the graduate recruitment process in my final year at university and opted to join Coopers and Lybrand, which would eventually morph into PwC.  I started out working in insolvency for a year or so, which I really enjoyed. Then I requested a move so I could gain more accounts experience and was sent to Omagh for a year – another great experience. After that, I returned to insolvency and stuck with it for the rest of my career, eventually moving into forensic work, which became my greatest interest. I went on to head up Coopers and Lybrand’s Insolvency Division before joining the Industrial Development Board for Northern Ireland (now Invest NI) on secondment. The secondment opportunity gave me fantastic consultancy and commercial experience and became a real turning point for me professionally.  I was able to expand my skill set significantly, learning so much about business and what makes companies ‘tick’. I also met some wonderful people during that time, some I still count as friends today.  Did you have a career plan starting out? Has your career unfolded as you anticipated? I wouldn’t say I had a career plan as such. I wanted to pass my exams – and I did, apart from one small hiccup, which I put down to too much partying! – and then see where opportunities might take me. Work life led me down the insolvency and forensics path, and my career sort of developed from there. I recall when I was approached with an offer to join McClure Watters by the firm’s two partners. The idea of moving from a safe environment to a start-up division was daunting, but I decided to accept and believe it was from there I developed a reputation as a leading insolvency practitioner. Due to the firm’s relatively small size (compared with the Big Four), the really big jobs didn’t tend to come my way. So, when I was approached to join KPMG in Belfast to head up its restructuring and forensics division, I again opted to make the move.  It wasn’t an easy decision from a personal perspective. I had a wonderful time working with McClure Watters, but my time with KPMG turned out to be equally fulfilling, and I ultimately became Partner in Charge of KPMG in Northern Ireland. On retirement from that position, I was approached to take on the role of KPMG International’s representative to KPMG Greece for two-and-a-half years during the Covid pandemic. Some of the biggest challenges for me in my career have been the difficult decisions to leave existing roles and move to new organisations. It wasn’t easy. Every move involved serious soul-searching, but with hindsight, each move propelled my career forward.  What is your proudest achievement during your tenure as Partner in Charge of KPMG in Northern Ireland? I was Partner in Charge at KPMG in Northern Ireland from 2015 to 2019 and, during that time, we moved the business to fantastic new premises in the Soloist Building at Lanyon Place while also delivering business growth of over 30 percent.  Relocating to the new office really reinvigorated our people and allowed me, in part, to leave a legacy for those who continue to work with KPMG in Northern Ireland now and in the future. Among the people you have worked with, who has been your biggest inspiration?  I remember my first meeting with John Ross, my boss at Coopers and Lybrand. He asked me a technical question, I answered it and he then enquired as to whether I had checked all relevant legislation, guidance notes and checklists before arriving at my response. There was just one technical note I had overlooked. John told me to go away and research the subject matter “properly”.  My answer to the issue remained unchanged, but this time around, John accepted it because I had done the research “properly”! Never again in my time with him did I make the same mistake. Since then, my approach has always been to leave no stone unturned in arriving at any decision. Is there any career advice you would offer your younger self if you could? Do whatever you can to surround yourself with good people, whether you are starting out (which can be challenging, as you tend to inherit people at this point in your career) or when building a team.  I have been very fortunate to have had the opportunity to work with fantastic people and that has only ever benefited me.  It is important to be transparent and open in your work and to operate with integrity at all times. Your reputation is everything.  I have always worked hard to build lasting relationships and have always picked up the phone to answer calls – you just never know who might be calling!  What I’ve learned is that the smallest leads can develop into the biggest assignments. I have also tended to deal with what I can see in front of me – viewing each ask as a number of small, manageable tasks, even when others may have viewed it as a major challenge. As a result, throughout the years, I hope I have developed a reputation as someone who can solve difficult problems and who is honest, trustworthy and direct. I consider myself commercially minded and have always had a reasonable amount of common sense (I hope!).   The experience I gained in my career, together with the esteem in which the Chartered Accountant brand is held, are the reasons I believe I’ve been approached to take on non-executive roles in the years since leaving KPMG.  In your experience, how has the role of the accountant evolved since you first joined the profession? The accountancy profession has become more regulated over the years and accountants today tend to work in silos more than might have been the case when I started my career, driven by considerably more lines of business. With the emergence of new service lines and increasing public and professional accountability, the role of the accountant – in Northern Ireland, in particular – has become more challenging. I would view the whole area of risk management for accountants in a very different light today than I did when I started out. What prompted you to become involved in non-executive directorships? My first directorship was with Wilsanco Plastics in Dungannon, Co. Tyrone. I had worked with the owner previously and he got in touch.  I remember the conversation well. I said, “You want me to help you and you will pay me for something I have never done before?” and he said, ‘I trust you,’ – end of conversation!” I have been Non-Executive Chair of Titanic Quarter Limited for close to three years, working with two great executive directors pioneering sustainable development at Belfast’s Maritime Mile. We have an ambition to increase investment to over £2 billion. I am now also taking on the role of Chair of the Institute of Directors (IoD) in Northern Ireland. I have been on the committee of the IoD in Northern Ireland for four years and I am looking forward to my new role. I find non-executive work very enjoyable. I don’t need to be ‘full time’, and I enjoy the interaction with executive teams.  I can focus on strategy, relationships and the bigger picture – knowing the detail, but without having to get into the execution of that detail.  Being able to advise and challenge based on the experiences I have gained over the years really allows me to add value.  Tell us about the work of the Institute of Directors in Northern Ireland? The Institute of Directors in Northern Ireland has a small team of great people delivering big things, led by Kirsty McManus and Heather White who are fantastic.  We represent our members’ views on policy, economic and business activity in Northern Ireland.  We offer great networking opportunities covering topics like governance, legislative and governmental developments, which are essential to ensuring that those who hold directorships do the best job possible.  We take ‘the pulse’ of our membership and represent their views, needs and priorities in the political arena.  We also offer professional development opportunities and a pathway to achieving Chartered Director status.  Gordon Milligan, the outgoing Chair of the Institute of Directors in Northern Ireland, carried out fantastic work in developing the organisation during his tenure.  I want to continue to grow our membership and continue to develop the fantastic training and certification opportunities we offer our members. Ultimately, we are all about connecting, influencing and developing. 

Apr 04, 2024
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Riding the wave of digital transformation

New technologies are transforming the way accountants work and the profession must adapt to and embrace this sea change to foster future success, writes Conor Flanagan How people interact with technology is changing as it becomes increasingly powerful, and our expectations of what it can and should deliver continue to rise.  In our profession, the risk does not come down to a lack of technological literacy or the complexity of new accounting technologies; the risk is that we might ignore the wave of change sweeping through the profession.  If you ride the wave, however small, you will grow and develop with the changing industry. But ignore the wave, and you risk being left behind in the shallow waters of a pre-digital world. Investing in the future Digital transformation should not be viewed as a cost, but rather an investment in the future of your business – an investment that can improve processes and ensure your business is at the cutting edge of technology and the benefits that come with it.  A successful digital transformation can unleash the potential of your business and your team by freeing your time to focus on strategic and value-added tasks, ultimately driving growth. We are all aware of digital transformations that have gone wrong, however, costing some organisations dearly, so what measures can companies take to ensure success? The key to success starts long before the implementation itself begins and relies on: Successful system selection;  A clear understanding of existing business processes;  Key user/management buy-in;  Selecting the correct partner;  A willingness to embrace change; and Understanding your data. Taking time before implementation to focus on the above will help ensure you enter the transformation prepared for an optimal outcome.  This will not only result in a smooth implementation, but by understanding your data and your business requirements, you will also be able to see the true potential of your new solution and help drive your business forward. At the recent Chartered Accountants Technology Conference, held in January 2024, we had the pleasure of hearing from two Irish organisations that recently underwent significant digital transformations.  We heard their stories, alongside the lessons they learned from their own implementation projects and the benefits each delivered. Glanbia’s HANA solution First, we heard from Eoin Butler, Finance Systems Centre of Excellence Lead with Glanbia plc, who shared the global nutrition group’s experience implementing the SAP S/4HANA solution.  S/4HANA is a ready-to-run cloud-based enterprise resource planning (ERP) system. With operations in 32 countries and annual group revenue exceeding $5.4 billion, Glanbia needed a scalable solution with proven capacity to handle the needs of a complex global business.  The vision at the outset, Butler explained, was to “digitise the Glanbia business to drive value”.  It was agreed early on that a brownfield approach would be used for the engagement. This is usually the case if the existing system has been in use for some time and may require significant modifications or integrations during the migration.  In Glanbia’s case, Butler noted that the brownfield approach was one of the key reasons for the project’s success. Although a complex global business, Glanbia opted to work with just one single global instance of SAP ERP Central Component (ECC).  Because the project involved significant customisations and integrations with Glanbia’s existing system, these requirements were considered as a key aspect of the solution selection process.  Already a SAP customer for over 20 years, Glanbia opted to stay within the SAP ecosystem and migrate to a newer version of its existing solution. A significant challenge that emerged at an early stage in the project was the data already held on the existing system. An engagement was required to cleanse and fully understand this data before migration could take place.  Understanding your master data, and multiple data sources, is key to ensuring a successful migration or implementation. Taking time to understand and cleanse this data put Glanbia in a much better position to be able to improve reporting and efficiency.  Finally, Butler pointed out that any implementation on this scale cannot be done alone. A strong internal team, hardware and software partners, as well as helpful buy-in from SAP resulted in a successful implementation for Glanbia. Although there were benefits in finance, such as upgrades to the credit function, the new general ledger module within the SAP solution and profitability analysis, most of the benefits were technological and under the hood, laying the foundation to make Glanbia tech-ready for years to come. Cullen Cleaning Services Cullen Cleaning Services (CCS) is a commercial contract cleaning company operating across Europe. Headquartered in Dublin, its clients include household names such as Primark, River Island and H&M.  At this year’s Chartered Accountants Ireland Technology Conference, Brian Flannery, Chief Financial Officer with CCS, outlined the company’s experience implementing a Dynamics 365 Business Central solution with a business intelligence (BI) warehouse reporting solution on top. Flannery covered the evolving role of today’s finance leader in such a project, which involves leading people through digital change.  In the case of CCS, Flannery noted that the implementation had “accelerated the digital transformation in [the] business”.  Pivotal role of finance leaders The top priorities for CFOs set out in a 2024 Executive Priorities Survey by management consultancy Gartner included: transformation; improving finance metrics; leading change management; and  improving the finance function.  As accountants and finance leaders, we have the skillset to deliver on these priorities. More than that, there is an expectation that we play a central role in leading digital transformation and driving high standards in systems and reporting. Before its migration, CCS had a mainly paper-based solution, requiring team members to enter the same data multiple times while also relying heavily on Microsoft Excel for data manipulation and reporting. It was identified that the move to the cloud would help reduce manual labour by integrating with other solutions. Ultimately, integration improved the accuracy of the company’s data, thereby facilitating greater collaboration between departments. Integrating previously isolated data sources and reducing data entry time provided deeper insight to company management, improving the speed and quality of decision-making. Flannery emphasised the importance of treating system selection and partner selection as two distinct processes.  Although the first partner you speak with may have the solution that meets your needs, it is still worth talking to additional partners.  The partner you choose will become a key player in your implementation journey and, as Flannery put it during his presentation, “becomes an additional employee”.   Like a disruptive employee, a disruptive implementation partner can cause damage that no amount of planning or preparation can help you recover from. Finally, after ‘go live’, Brian stressed the importance of taking time to conduct a review: has the project been a success, and have your goals been met? It is quite often the case that system implementations go live even though parts of the team using it still have unmet requirements.  Review and improve It is important to track additional requirement gaps that arise during the implementation and address them after the new system has gone live as ‘phase two’ of the project.  Scope creep is a looming risk for every digital project; focusing on the key deliverables and timelines is paramount.  The additional scope should be noted and readdressed after the go-live date, if not business critical, because you are never truly finished with digital transformation. So, where is CCS? The company has a fully integrated solution using modern Application Programming Interface (API) integrations. It relies heavily on Optical Character Recognition to automate the accounts payable and data entry processes.  In addition to a Business Central solution, CCS has implemented a full BI reporting solution, sitting on top of the ERP solution and assisting with the preparation of management accounts.  This has taken one day off the month-end close process – an additional day for finance staff to focus on other value-added tasks. Focus on people After reviewing the project, Flannery noted some key takeaways he would keep in mind for any future transformation projects.  The key point to note here is that all these takeaways are people-focused – not technical-focused. For a transformation to be successful, it will be entirely dependent on people.  These systems work. There are thousands of references and case studies worldwide attesting to this, but whether your solution works for you depends entirely on how you approach soft skills and the implementation process itself. The four key points to remember are: Do not under-resource; Communicate clearly and thoroughly; Remember, change does not equal transformation; and Celebrate the wins. To finish, Flannery shared a quote from Albert Einstein: “The important thing is not to stop questioning. Curiosity has its own reason for existence.” Reluctance to embrace technology and change will be the number one occupational hazard facing accountants over the next decade, but it will be people and relationships that drive the successful implementation of new technology.  Future leaders may not intimately understand this technology, but they do understand the importance of embracing a change mindset and working with their colleagues and partners to achieve it.    Conor Flanagan is ERP Lead with Storm Technology and a member of the Technology Committee of Chartered Accountants Ireland

Apr 04, 2024
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The case for a pro-business agenda in the local elections

Cormac Lucey outlines his suggestions for an election manifesto that, he believes, would protect and sustain the Irish economy into the future  This June, voters in the Republic will go to the polls to vote in local and European elections. What would represent a sensible pro-business agenda to promote in these elections? Here are my ideas: 1. Tackling skewed public debate While media debate understandably focuses on public questions that often revolve around public spending, the simple fact of the matter is that far more people work in the private sector than in the public sector.  CSO data indicates that, at the end of 2023, just 20 percent of employees worked in the public sector. Given that the private sector generates our income and our wealth, why are its concerns so overlooked in public debate?  2. Cutting down on public spending High public spending, even through the exchequer, is heavily dependent on tax revenues from the multinational sector. My estimates suggest that in 2022, just over half of Ireland’s total tax take came directly (corporation tax) and indirectly (PAYE, VAT, etc.) from the foreign direct investment (FDI) sector.  Even though some of these FDI tax revenue streams may prove temporary, the Irish State has entered ongoing spending commitments based on the assumption that they will continue indefinitely.  3. Promoting indigenous business Economic and commercial policy should be primarily directed at promoting the indigenous sector. Our current national prosperity depends on revenue streams from FDI that are ultimately controlled by people outside the State. We should use those streams to invest in our future and build up our economic capacity.  4. Holding public officials to account The primary job of elected political officials is to hold unelected public officials to account. The recent RTÉ saga has, at its heart, been a story about the failure of those who were supposedly directing the organisation to adequately hold executive management to account. Was the lack of managerial accountability at RTÉ an exception or the rule? I fear it was the rule. 5. Improving State performance Why is State performance so lamentably weak across so many important areas? When we examine the public management of key national issues – such as housing, health, crime and immigration – our leaders demonstrate powerlessness and ineffectiveness.  Confronted by a complex web of constraints – managerial, legal, administrative and economic – public service leaders have repeatedly displayed a worrying incapacity. 6. Reducing public sector pay Why are Irish public servants paid so much? In the fourth quarter of 2023, public sector workers were paid, on average, €35.08 per hour. This was 32.6 percent more per hour than the €26.45 their private sector counterparts received.  These figures are before we take into account the gold-plated pensions public sector workers get. 7. Curbing inflated costs Ireland was named the most expensive country in the EU for goods and services by Eurostat in June 2023, with prices a staggering 46 percent higher than the average across the bloc. How can the State address the high costs of the Irish economy if it is the direct cause of high costs? The focus of Irish politics needs to change. It seems to me that our political class is looking in the wrong direction. Rather than investing in the future, it is focused on short-term results. A new approach is needed. *Disclaimer: The views expressed in this column published in the April/May 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

Apr 04, 2024
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Turning the dial on gender inequality

The Gender Balance Working Group, a sub group of the Diversity & Inclusion Committee, focuses on issues related to gender equality, advocates for and supports the female members of Chartered Accountants Ireland The need for advocates for women in the Irish workforce stretches right back to the marriage bar in the Republic of Ireland.  The marriage bar required women to leave the labour force once they were married and the consequences of this legislation have lived long in the Irish psyche, affecting all women.  As Ireland strives to achieve greater equality for women, the Gender Balance Working Group is ideally placed to advocate for female Chartered Accountants in the profession. As a voluntary member-led working group, our personal and professional experience plays a central role in shaping our ongoing dialogue.  Raising awareness of the need for equitable opportunities for women – including equitable access to employment, compensation and development opportunities – comes at a pivotal moment, following the Government’s introduction of gender pay reporting metrics designed to close the gender pay gap in Ireland.  The Gender Balance Working Group supports Chartered Accountants Ireland’s recognition of International Women’s Day (IWD), celebrated annually on 8 March both nationally and internationally.  This year’s IWD celebrations marked the launch of the Women’s Mentoring Circle, an exciting new career support service, providing a space for women in the Chartered Accountancy profession to connect and collaborate. The first Mentoring Circle will take place at Chartered Accountants House, 47–49 Pearse Street, Dublin 2, at 5pm on Thursday, 18 April. The Gender Balance Working Group also seeks to address issues ranging from the need to break down biases impeding women’s ability to climb the career ladder, to the challenges women face when trying to balance professional and personal responsibilities and ambitions. Ultimately, we want to do all we can to improve the representation of female diversity in the Irish workforce.  Our working group has run a series of events, both in-person and virtual, inviting female Chartered Accountants to share their experiences: why they have chosen the profession; the career challenges they have faced; and their advice for the next generation coming behind them.  A recurring series in Accountancy Ireland called ‘My Story So Far’ continues to feature the stories and insights of a range of established and successful female Chartered Accountants. Its aim is to demonstrate to others that they should never feel as if they are taking on challenges in isolation.  The Gender Balance Working Group will continue to listen, and respond to, the needs, views and priorities of the female members of Chartered Accountants Ireland.  Equality is a journey, not a destination. It is important that the work this group is doing today sets a precedent for the next group of advocates to take on and advance further.  To find out more about the Gender Balance Working Group and other D&I resources, visit: charteredaccountants.ie/diversity-and-inclusion  

Apr 04, 2024
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“I remind myself routinely that I can do anything I put my mind to”

Maria O’Connell talks to Accountancy Ireland about how, through resilience, adaptability and the support of a strong female network, she has achieved career success I decided to become a Chartered Accountant when I was 16 after reading an accountancy career brochure. I didn’t know any Chartered Accountants at that stage and my school didn’t teach business subjects.  When I was growing up in Cork in the 1980s, career opportunities were scarce and often viewed through the lens of emigration. Qualifying as a Chartered Accountant seemed to offer an exciting career path with many opportunities, travel options and income security.  I qualified with PwC in 1989. The foundational skills underpinning my career – business management, communication, problem solving and technical knowledge – were laid during these years.  The Chartered Accountants Ireland training programme nurtured a highly transferable and versatile skillset, which has been integral to my career success.  Drawing on my bank of achievements  Keen to travel, I moved to PwC in Milan, Italy, in 1989. I learned to speak and work in Italian, integrated into a new working environment and experienced a beautiful country, people and culture. Then, in 1992, I interviewed for a junior finance role with JP Morgan in Milan but was offered the role of Bond Settlements Manager. I had no experience working in the Italian government bond market – a prerequisite for such a role.  However, the Director of Operations at JP Morgan in Milan was a Chartered Accountant and understood the value of my training and related skills. He could see an alternative approach to filling the position.  I took a chance and moved into this entirely unknown world. The job was exciting, challenging, fascinating and demanding. I loved every minute of it. My role at JP Morgan was the start of an exciting career journey, leading me to other incredibly fulfilling financial services roles in Italy and Ireland – roles that rarely followed the traditional accountancy career pathway. When I returned to Dublin in 1994, I focused my job search on companies in the developing International Financial Services Centre (IFSC) and that took me into the asset management industry. Always curious and genuinely interested in people, I continually seek new challenges and opportunities to add value and learn. These traits have propelled me to leadership positions covering strategic, business-critical, transformational and governance initiatives in global-facing organisations, such as Bank of Ireland Securities Services, Bank of Ireland Asset Management, Irish Funds and State Street Global Advisors. I have also been extremely privileged to work with highly talented people with vision and foresight who have always focused on my abilities, experience and potential. These role models provided me with precious opportunities for further development. Of course, I also encountered hurdles as I navigated my way, but every hard-earned success added to my internal bank of achievements, which I draw on to this day when my confidence falters or a challenge seems insurmountable. I remind myself routinely that I can do anything I put my mind to. As women, I think we often tend to focus on what we can’t do rather than what we can. Drawing strength from our bank of achievements will always direct us to our ‘can-dos’. Aligning my career with my life priorities  By 2004, I had three children aged six, eight and 10, and a fourth on the way. I decided to take a career break to focus on my family.  This decision was tough as I had invested so much in my career. Despite having a husband who shared the family workload and a flexible employer, I felt I was always letting someone down – my children, colleagues or clients.  Every family is different and we make our choices based on our unique set of circumstances. My decision to take a career break at that time was the choice that worked best for my family and me. Throughout my career, I have always tried to align my career with my life priorities. This choice was one of many steps on that alignment pathway.  Rebooting my career When I decided to return to work in 2013, my first port of call was Karin Lanigan, Head of Members Experience at Chartered Accountants Ireland, who gave me practical advice and guidance. I was lucky to secure a place on the first Reboot Your Career Programme, run by the Institute to support those returning to the workplace.  The course was invaluable in providing me with the confidence, toolkit and ready-made network to kick off my job search and set me on the next stage of my career journey.  It was not easy to return to the workplace after a nine-year break. Colleagues had passed me out on the promotion ladder, and the world of financial services had changed significantly following the financial crisis of 2008. I faced a very steep learning curve.  I was determined to learn as much as possible, however, concentrating on what I could achieve rather than on others who had moved ahead of me.  All the traits that had propelled my career forward in the past, resurfaced and I was able to move forward again in a senior leadership role at the EU headquarters of one of the largest asset managers in the world.  My advice to anyone rebooting their career would be to leverage the supports available from Chartered Accountants Ireland, your own network and to tap into your existing bank of achievements.  Don’t compare your career with others; focus on your own motivations, what you want to achieve and then go for it. The power of the female network As a trainee Chartered Accountant, many of my new female friendships evolved quickly into a highly supportive and powerful network in which experiences, challenges and solutions were openly shared.  This precious network of women, built up over many years, now extends to diverse roles and disciplines beyond the accountancy profession as well as different generations and geographies.  Building positive relationships as we move throughout our lives ensures that we stay connected with each other – and that we are not merely connections on a list.  None of us signed up to this network ‘overtly’, but we all understand the unwritten rule that anytime we reach out for advice, we will find support. Our natural empathy as women, innate ability to connect with and learn from each other and openness to share experiences are powerful tools in driving and embedding change. More women are holding senior decision-making roles, yet we are still navigating structures designed to cater to a single gender order.  Our networks are critical in harnessing our collective strengths as we and our male colleagues reimagine more equitable, diverse and inclusive structures.  I am grateful to be part of a network of diverse, insightful, talented and kind women. Our networks are intrinsic drivers of positive change and sustain us through tough times. Key lessons as a Chartered Accountant My career as a Chartered Accountant has far surpassed anything my 16-year-old self could have dreamed of. A kaleidoscope of experiences has gifted me these key lessons: Seek out those exciting, diverse, non-traditional roles. Don’t let others discourage you.  Stay curious, always looking for new challenges and new things to learn. Draw strength from your bank of achievements. You can do anything you want to.  Periodically assess how your career aligns with your life priorities. Don’t be afraid to make changes when they fall out of sync. Focus on what you want to achieve and what motivates you. Don’t compare your career with those of others. Value, nurture and leverage your female network. It is a precious resource.  Enjoy the journey. It will take you to amazing places. Maria O’Connell  B.Comm., DPA, FCA, is a consultant specialising in board governance and business strategy. She was formerly Vice President of Business Strategy and Governance at State Street Global Advisors Europe Limited

Apr 04, 2024
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Stemming the tide of greenwashing lies

Sustainability credentials are big business in 2024, but not all are genuine. Dee Moran looks at ongoing EU efforts to curb greenwashing through regulation Over the last number of years, investors, consumers and regulators have put companies under increasing pressure to be ‘green’.  Being green is big business. Consumers will pay a premium for sustainable products and investors are increasingly looking to invest in companies that are perceived as sustainable. Banks also want to lend to businesses showing green credentials.   This desire to be ‘green’ has, unfortunately, led to some entities not being wholly truthful about, or exaggerating, their green credentials. So-called ‘greenwashing’ has become so widespread that many stakeholders – including investors, regulators, consumers and company directors – are calling for action to curb it.  The latest PwC Investor Survey, published in January 2024, included responses from 345 investors and analysts in 30 countries – including 38 who invested in, or covered, companies in Ireland.   Ninety-seven percent of this 38-strong cohort believe that corporate reporting on sustainability performance contains unsupported claims. Globally, the corresponding figure stands at 94 percent.  The characteristics of greenwashing So, what is greenwashing? There is no global definition of ‘greenwashing’ but, in essence, it involves misleading consumers by giving a false impression of a product’s environmental impact or benefits.  It can be unintentional. One example is the use of vague and unspecific language, such as describing a product as ‘eco-friendly’ due to its use of recycled packaging while not conducting any actual research into the sustainability, or otherwise, of the raw materials used in that product.  Or, it can be intentional greenwashing, such as the Volkswagen scandal, whereby the German car manufacturer was found to have intentionally rigged its emissions testing to deliver greener results.  When this came to light in 2015, Volkswagen’s share price fell by 20 percent, wiping more than €13 billion off its capitalisation.  Greenwashing has become so prevalent that Planet Tracker, the UK-based sustainable finance think tank, has identified six distinct types: greencrowding; greenhushing; greenlabelling; greenlighting; greenrinsing; and greenshifting. Greencrowding is where an entity adopts a group initiative, such as forming an alliance, and then progresses at the pace of the slowest participant. While collaboration with other entities in a similar industry to create goals for sustainability initiatives can be beneficial, joint statements need to be clear about what will be achieved. Otherwise, tracking progress can become challenging. Greenhushing is where entities deliberately underplay, under-report or hide their environmental, social and governance (ESG) or green credentials to evade scrutiny because, for example, their sustainability practice might not be as impressive as claimed. Greenlabelling is where entities call a product or service ‘green’ or ‘sustainable’ but there is no evidence to support the assertion. Greenlighting is where an entity focuses its marketing on a particularly green feature of its operations or products, diverting attention from other damaging environmental practices. Greenrinsing is where entities modify their ESG targets before they are achieved, thereby avoiding being held accountable for, or actually achieving, their goals. Greenshifting is when entities imply that the consumer is at fault and shift the blame on to them. The potential effects of greenwashing The effects of greenwashing vary from fairly harmless to potentially very serious.  The more consumers hear about greenwashing, the less likely they are to believe any green claims made by companies and organisations as is evidenced in the PwC Investor Survey, outlined above.  Consumers purchase sustainable goods and services to play their part in protecting the environment, but greenwashing disrupts this, and consumers become cynical.  Furthermore, entities engaging in greenwashing tactics potentially harm not just themselves, but all other entities engaging with sustainable practices and particularly those companies with genuine green products or operations. Once trust is lost, it is hard to regain.   EU actions to mitigate greenwashing Regulation to prevent greenwashing has, until recently, been limited. Much of the enforcement has been performed by advertising regulators who have moved to ban misleading greenwashing ads, for example.  In the UK, Unilever placed an advertisement claiming that Persil laundry detergent was ‘kinder to our planet’ but didn’t explain how and, consequently, it was banned by the Advertising Standards Authority on the basis that the claim was unsubstantiated.  The Advertising Standards Authority of Ireland (ASAI) received 28 complaints about a sponsored article in which a celebrity referred to the use of the Land Rover Defender as “planting the seeds of a more sustainable life”.  This was held to be in breach of the ASAI Code on the basis that “evidence demonstrating that the vehicle justified being associated with sustainability claims, albeit qualified, has not been submitted.”   Where the article asserted that “mild hybrid tech cuts down on the amount of fuel,” the ASAI found that this was likely to mislead consumers due to the omission of a comparison with any other mode of transport. The ASAI then concluded that the claim should not be used again in its current format. The European Union (EU) is very focused on reducing greenwashing and lending transparency to corporate behaviour. Some of the regulations that have been – or are in the process of being – approved are outlined below. Sustainable Finance Disclosure Regulation The EU’s Sustainable Finance Disclosure Regulation (SFDR), introduced in 2021, requires financial market participants and financial advisors to evaluate and disclose sustainability-related data and policies at entity, service and product level.   The aim is to provide standardisation of the language used and to categorise investment products by how sustainable they are. Disclosure requirements are applied to each category.    Under the SFDR, all funds are classified into one of three categories: Article 6 Funds need not incorporate any sustainability information into the investment process (for example, oil producers). Article 8 Funds should promote environmental characteristics and have good governance practices.   Article 9 Funds should make a positive impact on society or the environment through sustainable investment and have a non-financial objective at the core of their offering.  In its February 2024 Regulatory and Supervisory Outlook Report, the Central Bank of Ireland (CBI) referred to “a new phenomenon of understating how green a product is, known as ‘green bleaching’”.  Green bleaching can occur where a fund management company does not want to risk non-compliance with the more onerous requirements of Article 9.  Therefore, it categorises a fund under a category with less onerous requirements, which results in inaccurate disclosures.   The CBI report also highlighted one of the priority initiatives in addressing climate change and net-zero transition as “scrutinising and mitigating the risk of greenwashing in the promotion and sale of financial products to investors”. The EU Taxonomy Regulation The EU Taxonomy Regulation is a classification system establishing a list of environmentally sustainable economic activities; essentially, a common language for everyone.  It establishes six environmental objectives: Climate change mitigation; Climate change adaptation; Sustainable use and protection of water and marine resources; Transition to a circular economy; Pollution prevention and control; and Protection and restoration of biodiversity and ecosystems.  In order to be considered aligned with the taxonomy, an entity must adhere to at least one of the environmental objectives and the related technical criteria, do no significant harm to the other objectives and meet minimum safeguards regarding human and labour rights. Disclosure obligations will apply from 1 January 2024 with respect to the 2023 financial year. In theory, this should create security for investors and help companies become more climate friendly. It should also prevent market fragmentation – something that has caused issues in the past. Corporate Sustainability Reporting Directive In terms of reporting, the Corporate Sustainability Reporting Directive (CSRD) – which commenced on 1 January 2024 for certain companies – is focused on improving transparency, particularly with the disclosures required to be made under the directive.  While it has not been stated that the CSRD will specifically prevent greenwashing, it will make greenwashing more difficult, given the significant requirements of the directive. These include the following: The framework underpinning the CSRD is the European Sustainability Reporting Standards (ESRS), which is a set of 12 standards covering ESG metrics. Entities will have to report on their ESG metrics, as will their competitors, making information more comparable and therefore more transparent and less prone to exaggeration, omission or suppression. The requirement to complete a double materiality assessment whereby a company must consider its impact, not only from a financial perspective, but also from the perspective of its impact on people and the environment. • There are a significant number of additional requirements over and above those required under the Non-Financial Reporting Directive or the voluntary frameworks, both quantitative and qualitative, which will leave less room for ambiguity and the individual interpretation of sustainability information. Mandatory independent assurance of company ESG information will be required under the CSRD. Initially, this will be limited assurance, but it is expected that reasonable assurance will be required by 2028. Therefore, companies will need to ensure that they have in place appropriate processes and controls – similar to financial reporting – so that they are in a position to comply with the new regulatory obligations. The requirement for external assurance should, above all, bring with it the trust investors have been looking for. As a single framework, the CSRD will bring increased comparability to ESG reporting, greatly assisted by the mandatory electronic XBRL tagging of the report. Investors will now be able to compare information provided by companies and make investment decisions based on this information, which will be more granular in nature, thereby offering a higher level of detail.  Draft Green Claims Directive The Green Claims Directive is the latest piece of regulation introduced by the EU to tackle greenwashing and is an important step in increasing transparency and trust in relation to environmental claims.  The European Commission first proposed this directive in March 2023 following the publication of a joint report by the European Parliament’s environment and internal market committees.  The report followed a European study in 2020, which found that more than 53 percent of environmental claims in the EU were misleading, vague or unfounded. The proposals for the Green Claims Directive include: Setting out detailed rules on substantiating and communicating explicit environmental claims; Ensuring that companies carry out an assessment to substantiate environmental claims on a host of requirements – if the claim concerns the whole product or a part of it, for example, reporting greenhouse gases offsets in a transparent way and looking at all significant environmental aspects and impacts; Potential penalties, such as a temporary exclusion from public procurement tenders or fines of at least four percent of annual turnover. The directive is due to come into force on a gradual basis, depending on company size, from 1 January 2026. Proactive approach All of these developments are very positive and demonstrate the EU’s proactive approach to regulating against greenwashing. The European Parliament’s rapporteur for the Environment Committee, Cyrus Engerer, has said, “it is time to put an end to greenwashing. Our agreement on this (Green Claims) text ends the proliferation of deceitful green claims which have tricked consumers for far too long.”   Regulation will work only if there is enforcement, however. Individual countries need to ensure that they have the processes in place to punish those who do not adhere to the regulations. Dee Moran is Professional Accountancy Lead with Chartered Accountants Ireland

Apr 04, 2024
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RSM Ireland poised for accelerated growth

Niall May, the new Managing Partner of RSM Ireland, outlines his strategic plans for the firm at a pivotal point in its evolution Niall May, FCA, was appointed Managing Partner of RSM Ireland in January following the recent announcement of a strategic investment in the firm by RSM UK. A partner and Head of Audit at RSM Ireland for close to 10 years, May has more than 25 years’ experience in professional services. He succeeds John Glennon, one of RSM Ireland’s founding partners, who will remain with the firm as a board member and Head of Strategy. Here, May talks to Accountancy Ireland about RSM Ireland’s plans to accelerate investment in service offerings and increase its share of the middle market. Can you give us an overview of RSM Ireland as it stands currently? We have 200 employees and ambitions to grow our headcount significantly in the short term.  We are an independent member of RSM International, the world’s sixth largest network of assurance, tax and consulting firms, and our business is centred on three key service lines – audit, tax and consulting, with a particular focus on middle market businesses, both locally and globally.  We work with domestic and international clients across a range of sectors, particularly life sciences, financial services, public sector, technology and media and telecommunications.  More than 65 percent of our audit and tax clients are active globally. Key for us is delivering innovative services to help them achieve their business goals.  The strength of RSM globally means we can work with member firms in other countries to serve our global clients with a presence here in Ireland and our domestic clients active in overseas markets. Our consultancy business spans a wide range of solutions, which include transformation, HR and change, finance support solutions, forensic investigations, restructuring advisory, technology and corporate finance services.  It is my ambition as Managing Partner to position RSM Ireland as the advisor of choice to the middle market and drive competition in the professional services sector. Talk us through the firm’s evolution since it was established in 1987 as Ryan Glennon & Company. The firm was established nearly 40 years ago by John Glennon and Liam Ryan and continues to have deep roots in the Irish business community.  We made the strategic decision to join the RSM International network in 2016 and that has been a game-changer in the firm’s evolution.  The RSM International network spans 120 countries with over 64,000 people in more than 800 offices. It has a very wide reach, particularly in the key markets we serve globally. Since 2016, RSM Ireland has doubled in size in both turnover and headcount and we have significantly increased the strength and depth of our services.  Our view is that all business now is essentially global and Ireland, in particular, is a very open economy. RSM is also very integrated and collaborative across borders, so we benefit from sharing skills, insights and resources.  RSM International saw record year-on-year growth in revenue of 16 percent with global revenues of US$9.4 billion for the 12 months to December 2023, and a 13 percent increase in global headcount.  Over the same period, RSM Ireland achieved revenue and people growth of 19 percent and 21 percent respectively. Tell us about RSM UK’s recent investment in RSM Ireland. We announced the strategic investment from RSM UK in November 2023. It is very significant for us because it will drive greater access to talent, technology, support and the services we can offer the corporate market. It will accelerate our ability to create long-term growth and drive increased competition in the professional services sector in Ireland. It also underlines the wider confidence in Ireland’s economy and the opportunities that exist in this market.  As well as increasing our physical footprint, the investment gives us access to greater resources, while better positioning the firm to target investments, invest in talent and technology and offer new services.  It will also allow us to create more opportunities for our staff, both new and existing. We aim to increase our graduate intake this year to over 50 while also creating exciting opportunities for experienced hires. What are the biggest changes you have seen in your market since joining RSM Ireland?  While Ireland remains an attractive destination for global companies to locate, build and grow their businesses, we are facing challenges right now relating to our infrastructural capacity, housing and energy supply.  We need to accelerate our response to overcoming these challenges so that Ireland can remain competitive.  Within the accountancy market, we are seeing a definite trend towards consolidation. For RSM Ireland, we could see that the investment from RSM UK offered a natural route to supporting and accelerating our next phase of the growth of our business. What will your strategic priorities be in your new role?  Looking first at developments in the global economy, I see opportunities to further grow our international client base.  A key ambition is to expand our teams across all service lines and develop new services, particularly in response to rising demand for environmental, social and governance, cybersecurity and artificial intelligence services.   We will be looking to develop our sector expertise further across financial services, life sciences, technology and media and telecoms.  Building strength in our global network will also be key though the RSM International network and expanding our International Desk Programme in key markets including the US. For the accountants you employ, what emerging skills are you focusing on now to future-proof their roles?  Embracing technology and adapting to ongoing changes in the world of work is key for all professionals.  Accountants, in particular, are very good at understanding the latest changes and developments and, more importantly, understanding the wider developments in business operations and the related risks.  We invest quite significantly in supporting our people as they adopt new technologies, and we will continue to do so. This is key for our business, because we absolutely must be able to understand our clients’ needs, and support and bring value to their business through meaningful, in-depth knowledge. I anticipate greater sustained spend on technologies to support further process automation and data analytics. This will be key to enabling our people to deliver rich insights to help clients improve business performance and stay ahead of developments in their markets.  What are your expectations for the economy in Ireland and globally in the months ahead?  On a positive note, current trends and projections point to calming inflation. There is now an expectation in Europe and beyond that interest rates will start to come down as soon as June.  I think we can expect to see a loosening of Central Bank fiscal policy and improved GDP forecasts, which will be positive for business. Business resilience will be tested in other ways, however. The war for talent will continue to rage and global tax developments – for example, Pillar Two tax reform and other initiatives – will bring their own challenges. We will also potentially have a new US administration, which may see changes in certain US policies. Despite all of this, I genuinely do believe that business leaders have good reason to feel more optimistic as they look ahead following a particularly turbulent period.

Apr 04, 2024
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Meta takes the lead on AI in finance

At Meta’s International Headquarters in Dublin, Majella Mungovan’s finance team is already reaping the rewards of using artificial intelligence in day-to-day operations The hype surrounding artificial intelligence (AI) continues to gather pace, as professionals across all sectors consider its potential impact on our future working lives. While many accountants grapple with the scope and reach of this emerging technology, however, Meta – the US-headquartered social media giant – is already several years into using AI in finance processes at its International Headquarters in Dublin.  “Five years ago, we decided we were going to really focus on using machine learning to drive efficiency across our finance team,” explains Meta’s Majella Mungovan, FCA. As Vice President of Financial Operations with Meta in Dublin, Mungovan leads a 150-strong global finance team. “Meta has four large finance operations around the world, one of which is in Dublin, where we serve people globally supported by several hundred people at our outsourcing partner,” Mungovan explains. “We are responsible for all activities relating to revenue as well as everything from accounting and reporting to financial operations, and risk and operational assessments to collections.  “Running a very large-scale operations team means we deal with many millions of transactions every year and doing this in a really efficient and scaled way is very important.” Growth, speed and efficiency The move to incorporate AI into processes at Meta’s financial operation in Dublin coincided with a period of intense growth for the company globally, Mungovan explains. “Meta achieved revenue of $100 billion faster than any other company in history, so we have gone through an enormous growth phase over the past 10 years,” she says. “When your company is undergoing explosive growth like this, speed, efficiency and scale are essential. Tasks you might be able to do manually in a slower moving environment have to be done faster and, for us, this meant looking at new technology to help us reach our goals.” Founded in February 2004, originally under the name Facebook, Meta opened its first Irish office in Dublin in 2009 with a team of just 25.  Now, with over 2,000 employees across 80 teams, the company’s new International Headquarters opened in Ballsbridge in Dublin in October 2023. It has additional sites in Co. Meath, where its data centre is located, and in Co. Cork, home to Meta’s Reality Labs.   Since its launch in Ireland, Meta has also undergone rapid growth globally, acquiring Instagram in 2012 followed by WhatsApp two years later. Employing over 66,000 people around the world, the tech giant continues to record milestones, with Facebook’s daily active users reaching a mammoth two billion in February 2024. Automation: first steps “When our global finance team in Dublin started looking at how we might use technology to help manage the sheer volume of work we were dealing with, our first step was to consider very basic automation rules,” Mungovan says. “We built some fairly rudimentary machine learning models that could make some decisions on our behalf. Each machine learning model is essentially an algorithm.  “You ‘plug in’ a large number of criteria to assess whether or not a decision needs to be made and the model learns and improves over time.  “Our first use case was the credit decisioning process, using internal and external data related to customer-recommended decisions. Over time, our machine learning models have become increasingly sophisticated to the point now where they can reliably cover the vast majority of our decisions where they have been rolled out.”  Mungovan’s team has also been exploring how natural language processing might be used to automate some parts of the revenue processes used in customer support. “We are operating in a very heavily automated world. In the last year in particular, we’ve been able to explore new technology Gen AI and this has allowed us to really accelerate the progress we’ve been making in automation over the last five years,” she says. “We can now move to touchless processes and transactions in a much more complete and efficient way – for example, with the helpdesk for our finance team.  “When a customer gets in touch and says, ‘I need help with my invoice,’ we can plug in different AI agents so we can see who the customer is and what kind of problem they are facing with their invoice.  “The agents can read the customer’s messages and communicate with them, in many cases resolving the issue and, in others, ensuring the query reaches the right people so it can be resolved and the ticket closed out quickly.” Accuracy and speed are essential when it comes to customer care. “Our priority is that the customer gets the answer they need as quickly as possible and that, at the same time, we are operating as efficiently as we can in resolving issues before they escalate or cause friction internally,” Mungovan says. Her team is also now using machine learning for cash flow forecasting. “This helps us to understand the customer’s payment behaviour,” Mungovan explains. “If there is any deviation from that, we can very quickly and accurately predict what free cash flow will look like across the company.” What to expect Based on her experience working with AI and machine learning for the first time, Mungovan says that careful preparation is a must at the outset. “It’s a huge learning curve for everyone involved, particularly those of us from a finance background who have to get to grips with a new technology that, in turn, can have a big impact on how we do our work, and on our capabilities,” she says. “My advice is to get out there and find out what other professionals and organisations are doing. Attend conferences and other events, read papers and case studies. Keep an eye on what people are sharing and reach out and ask questions.” Preparing to introduce AI for the first time will likely take “a lot longer” than you expect, she adds.  “You’re going to have to bring a lot of people through the process and everyone will want to make sure that the new model is working and fit-for-purpose before it’s introduced into the ‘live’ working environment. You’re looking at a learning phase of at least 12 months before you can expect to see any kind of return-on-investment.” Machine learning models need to learn and that takes time, Mungovan says. “They tend to generate a lot of false positives at the outset. It probably took us two years to get to a place where our models were really starting to generate a decent return-on-investment, but once we had some traction, they evolved very quickly after that.  “Now, we regard the project beyond its ability to deliver greater efficiencies; we also think about it from an assurance perspective. We have monitoring programmes running continuously in the background, looking for anomalies, exceptions and errors.  Now that Meta’s finance team in Dublin is using AI day-to-day, Mungovan is confident that the technology will play an even bigger role in the years ahead. “Our large language models are becoming more and more helpful to us. The technology environment continues to evolve all the time. What we have now, we didn’t have six months ago. It’s quite extraordinary.” North Star Mungovan’s North Star is, she says, that all finance processes become “as ‘touch pointless’ as possible”. “I want my team examining anomalies and fixing issues at root, rather than having to deal individually with problems as they arise – right across the board from calculation and booking accounting entries to reconciliations, preparing commentary, analysing the movement on a general ledger account or managing expense categories.” Based on her own experience implementing AI, Mungovan believes the technology has great potential to elevate the role of Chartered Accountants and other financial professionals in the future. “I think the way we’re using technology in our own finance team at Meta really convinces me that AI and technological advancements will create more senior and sophisticated roles across finance and other functions,” she says.  “Meta is a very large company with ambitions to become an even larger company. We are growing so rapidly that we need to figure out efficient ways of scaling. AI and machine learning is delivering these efficiencies for our finance team. It is making us faster and improving our capabilities.”  Opportunity for the profession Mungovan believes the use of AI in accounting will become “the norm” in the years ahead as more and more organisations and professionals adopt the technology to support and enhance the finance function. “I remember when I was training to become a Chartered Accountant, people then were asking the same questions about technology and how it would affect the future of the profession, the jobs we do and the way we work. At that time, the big focus was Microsoft Excel and how it was going to reshape accounting norms,” she says. “I view AI in a similar light today. Over time, AI as a tool will fundamentally change the role of the accountant in the same way Excel transformed how things were done 20 or 30 years ago.  “AI will have the same kind of impact. It won’t replace the role of the accountant, but it will become a widely used tool, which will allow us to be more effective in our jobs.  “Ultimately, I think AI is something to be embraced rather than feared. I am really excited about the possibilities this technology will offer our profession. Rather than be frightened, people should see opportunity – and I think this opportunity will be immense.”

Apr 04, 2024
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“Most company directors are trying to do the right thing; we know that”

Ian Drennan, CEO of the Corporate Enforcement Authority, outlines the State agency’s plans and priorities for 2024 and beyond Collaboration between State regulators, statutory bodies and professional membership organisations, such as Chartered Accountants Ireland, is set to deepen as Government efforts to crack down on white collar crime and corporate corruption continue in the years ahead. “There is very significant work ongoing at State level seeking to further enhance Ireland’s capacity to tackle economic crime,” Ian Drennan, Chief Executive of the Corporate Enforcement Authority (CEA), explains. “The Advisory Council against Economic Crime and Corruption is developing a national strategy and the CEA is heavily involved in the formulation of that draft strategy for consideration by Government.” Dealing with economic crime into the future and ensuring that Ireland is “at the vanguard” of the highest standards in business regulation will require a significant level of State collaboration with the private sector and bodies such as Chartered Accountants Ireland, Drennan says. Corporate Enforcement Authority The CEA was established in July 2022 with the commencement of the Companies (Corporate Enforcement Authority) Act 2021, replacing the Office of the Director of Corporate Enforcement. Leo Varadkar, who was then Tánaiste and Minister for Enterprise, Trade and Employment, said the new agency would have “real teeth” with the autonomy and resources needed to thoroughly investigate suspected wrongdoing, such as fraudulent trading and more complex company law breaches. The Act invested the CEA with the autonomy to appoint its own staff and structure itself to meet evolving demands in the future.  The CEA’s budget has been increased by 30 percent and its approved civilian staff complement by 14 additional officers. The Government has also increased the number of members of An Garda Síochána seconded to the CEA from seven to 16.  “This increased level of resourcing gives us capacity to deal with a greater caseload of suspected non-compliance with company law, be it civil or criminal in nature,” Drennan says. “The investigations that we conduct can be document-heavy and complex, with indications of wrongdoing regularly involving suspected serious offences under company law as well as crossing over into other codes of legislation, such as theft, fraud and money laundering,” Drennan explains. “One of the strengths of the CEA is its multi-disciplinary structure. In addition to having at our disposal both accounting and legal professionals, the Gardaí embedded within the organisation bring with them the full suite of powers that they enjoy as sworn police officers.  “This means that, when we are conducting investigations, they can apply to the District Court for warrants under other codes of legislation where the need arises. As a consequence of this organisational capability, it is commonplace for us at this stage to submit files to the Office of the Director of Public Prosecutions with recommendations for charges under both company law and other legislation.” Scope and remit The CEA’s remit spans investigation, prosecution and supervision of the corporate insolvency process as well as advocacy.  “While we investigate potential breaches of company law, that is only one side of the equation. We also place great importance on promoting compliance with company law, which we seek to do by providing accessible guidance to company directors and through our outreach activities,” Drennan explains.  The “vast majority” of companies will never have any kind of direct engagement with the CEA, he adds. “Most company directors are trying to do the right thing; we know that. They have a raft of challenges to deal with at the moment – high interest rates, inflation, rising energy costs and tight labour markets. “They must manage a wide range of legal and regulatory obligations, ranging from tax and health and safety to company law. In our experience, most company directors try to meet those obligations on an ongoing basis and to a high standard.” It is important that the CEA acts in a proportionate and resource-efficient manner and that the enforcement action chosen is commensurate with the underlying issues, Drennan adds.  “Where appropriate, we try to resolve issues of non-compliance on an administrative basis and without recourse to statutory powers. In other instances, that approach will not be appropriate and a more formal, or robust, approach will be warranted,” he says. The CEA also provides guidance to assist company directors in discharging their responsibilities under company law in what Drennan terms a “relatively non-technical and easy-to-understand forum”. “Prevention is better than cure and, in that context, the CEA’s website hosts a range of information and guidance materials that seek to assist company directors in understanding their duties and obligations and shareholders, creditors and the wider public in understanding their rights,” he says. “It is much more cost-effective from our perspective to assist people in complying with the law in the first instance.” Company law amendments Drennan welcomes the recent publication of the General Scheme of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 by Minister of State for Trade Promotion, Digital and Company Regulation, Dara Calleary, TD. Announcing its publication on 15 March, Calleary said the Act would introduce “practical, pro-enterprise” reforms in support of a competitive economy while also maintaining a robust company law framework.  Amendments proposed in the Bill include allowing companies and industrial and provident societies to hold virtual general meetings when the current COVID-related interim legislation expires at the end of the year. It also proposes removing the automatic loss of the audit exemption in respect of the first instance of late filing with the Companies Registration Office by small and micro companies. Drennan particularly welcomes proposals to create new offences regarding the obstruction and intimidation of CEA officials.  “These proposals send out the very clear signal that obstructing or threatening a CEA officer will not be tolerated and that anyone who does so risks facing a lengthy term of imprisonment,” he says. “Balance is important. Company law is crucial, but it must support business as well as safeguarding responsible ways of doing business. “Company directors can forget to file an annual return; they can forget to hold an AGM. These oversights can be rectified relatively easily.   “Their interaction with us in these instances could amount to just one or two letters to close the whole thing out. Generally speaking, the more co-operation we get, the more positive our disposition; the more people are willing to work with us, the less painful the exercise will be.” Beyond correspondence, the “next level up” in the CEA’s enforcement activity tends to involve civil enforcement, Drennan explains. “Our remit extends to the close to 300,000 businesses registered in Ireland. We deal with everything from ‘mom and pop’ operations, SMEs, charities and not-for-profits, all the way up to companies whose securities are publicly listed,” he says. Civil enforcement can involve director restrictions and disqualifications, as well as court applications for the purpose of seeking orders compelling companies, directors and other relevant parties, such as liquidators, to comply with their statutory obligations as regards restrictions and disqualifications. “We receive approximately 700 liquidators’ reports every year, so the process that flows from those reports, which includes scrutinising director behaviour and offering undertakings, accounts for a sizeable portion of our work,” Drennan says.  “Where directors choose to accept undertakings, they can avoid going to the High Court with the time and financial outlay that tends to involve. “Beyond this, the most invasive work we do involves investigations into serious suspected wrongdoing.”  This work tends to be complex, protracted in nature and frequently involves litigation, Drennan says.  The CEA has significant enforcement powers, including scope to issue directions, to enter and search premises under warrant, to arrest (a power conferred upon CEA officers who are also members of An Garda Síochána), and to bring summary criminal prosecutions in the CEA’s own name as well as to refer files to the DPP. “This is the part of our work that might involve a knock on the door at 6am but this is not, thankfully, required in the vast majority of cases we deal with,” Drennan says. Complaints, reports and referrals The CEA receives hundreds of complaints from members of the public each year as well as statutory reports from auditors and liquidators and statutory referrals from other State bodies, such as the CRO, the Revenue Commissioners, An Garda Síochána and the Central Bank of Ireland. “We also open investigations on our own initiative – as a result of media reports or our own analyses, for example,” says Drennan. Emerging trends The number of liquidator reports the CEA is responding to has risen markedly in 2024.  “They dropped during COVID because of businesses being closed and debt warehousing. Now, they are returning to pre-COVID levels, which in turn is driving up the numbers of restrictions and disqualifications,” says Drennan.   “At the same time, the Companies Registration Office has recommenced the involuntary strike-off of non-compliant companies deferred during COVID.   “A subset of these entities fall within our enforcement remit where directors have simply ‘walked away’ from insolvent companies owing debts rather than putting them into liquidation. “Those directors face the likelihood of being disqualified from acting as company directors, as that is not an appropriate or responsible manner in which to behave.” Looking to the future, Drennan concludes: “Our vision for the future is to continue to build the CEA’s presence, to continue to enhance operational capability, and to assist the vast majority of directors who are trying to do the right things by continuing to provide high quality, and accessible, information and guidance resources.  “By doing this and working with other stakeholders in the public and private sectors, the objective is to enhance Ireland’s reputation as a safe and well-regulated economy in which to do business and create employment.”

Apr 04, 2024
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