Since the outbreak of the COVID-19 pandemic, Chartered Accountants Ireland has worked with training firms, regulators, CASSI (the student representative body) and other stakeholders to consider all options, to ensure that the 2020 examinations take place.   In the current circumstances, Chartered Accountants Ireland, in partnership with our training firms, has announced its intention to move to remote “live” proctored (invigilated) E-Assessment for the 2020 examinations for CAP1, CAP2 and FAE. This decision was communicated to all students earlier this week, as well as the supports to be made available to students in transitioning to E-Assessments and key exam dates.     Director of Education & Training with Chartered Accountants Ireland, Ronan O’Loughlin, said:  “The Institute’s aim throughout has been and remains to provide training firms and students with the certainty of examinations in 2020, while putting the health and well-being of students, staff and other parties at the core of the issue.   The Institute acknowledges the support and assistance we have received to date from all firms, in carefully assessing the options available. Indeed, this cooperation and support has enabled the progress made to date.”  More information on the workings of E-Assessments, supports for students and key dates is available here: EAssessment May 2020. 

May 22, 2020
Tax

  This week, in Irish stories, take a look at the latest statistics on the Temporary Wage Subsidy Scheme. In UK developments, visit our self-employed income support scheme page. In International news, the public consultation meeting held by the OECD on the 2020 CbCR review is available to watch online.     Ireland Take a look at the latest statistics on the Temporary Wage Subsidy Scheme Close company surcharge 18-month distribution period to be extended by a further 9 months. Read more UK Check out our dedicated SEISS page and download our factsheet on the scheme now.  Read the latest COVID-19 tidbits of news. International The public consultation meeting held by the OECD on the 2020 CbCR review is available to watch online

May 22, 2020
Public Policy

  In a series of developments, Brexit negotiations have picked up speed once again. Starting with the announcement of the UK’s new Global Tariff System, the UK have also published the legal texts of their draft negotiation documents, and the much-awaited proposal outlining their approach to implementing the Northern Ireland Protocol. With the fourth round of negotiations set to take place on 1 June 2020, read today’s bulletin to find out more.   UK publish approach to implementing the Northern Ireland Protocol The UK government has published its approach to implementing the Northern Ireland Protocol on Wednesday 20 May, as part of meeting in full its obligations under the Withdrawal Agreement with the European Union. The command paper outlines how the protocol can be implemented in a pragmatic manner: one that protects the interests of the people and economy of Northern Ireland, recognises Northern Ireland’s integral place in the United Kingdom and its internal market, provides appropriate protection for the EU Single Market, and respects the unique circumstances of Northern Ireland. The paper also sets out four key commitments that will underpin the UK Government’s approach to implementing the Protocol: Deliver unfettered access for Northern Ireland businesses to the whole of the UK market Ensure there are no tariffs on goods remaining within the UK customs territory Discharge obligations without the need for any new customs infrastructure in Northern Ireland Guarantee that Northern Ireland businesses benefit from the lower tariffs delivered through our new Free Trade Agreements with third countries   As a background to the implementation of the Protocol - The solution for Northern Ireland in the Protocol was designed as a practical way forward to prevent a hard border on the island of Ireland. The Protocol will only remain in force as long as the people of Northern Ireland want it to. Democratically elected institutions in Northern Ireland will decide whether to extend or end the arrangements in a consent vote that can take place every four years, with the first vote set to take place in 2024   UK publish draft negotiation documents outlining approach to Future Relationship with the EU As per the outcome of the third round of negotiations between the UK and the EU, the UK have published the legal texts of their draft negotiation documents. As outlined below, “The Future Relationship with the EU” document lays out a suite of proposals for the UK’s negotiations with the EU. The draft legal texts are the legal articulation of this approach and have formed the basis of discussions with the EU. The main element of the UK’s approach is the comprehensive Free Trade Agreement, or FTA, covering substantially all trade. They have also proposed a separate agreement on fisheries, an agreement on law enforcement and judicial cooperation in criminal matters, and agreements in technical areas covering aviation, energy and civil nuclear cooperation. The document suite also includes correspondence from UK chief negotiator, David Frost, to his EU counterpart, Michel Barnier. Some important documents are highlighted below: Letter from David Frost to Michel Barnier: 19.05.20 The Future Relationship with the EU DRAFT UK-EU Comprehensive Free Trade Agreement (CFTA) DRAFT UK-EU CFTA Annexes DRAFT Fisheries Framework Agreement DRAFT Energy Agreement DRAFT Social Security Coordination Agreement DRAFT Agreement on Law Enforcement and Judicial Cooperation in Criminal Matters For the complete suite of documents, visit the page: UK’s approach to the Future Relationship with the EU.   UK unveils new post-Brexit tariff regime From 1 January 2021, the UK will apply a UK-specific tariff to imported goods, which will replace the current EU Common External Tariff. The new bespoke UK Global Tariff (“UKGT”) will apply to goods imported into the UK (including Northern Ireland) irrespective of their source unless an exception such as a preferential arrangement, tariff suspension, or Free Trade Agreement applies. It is the first time the UK has set its own tariff regime for almost 50 years. As per the new system, the UK will slash import tariffs on certain products and scrap the EU calculation system to determine food levies. The UK will also round tariffs down to their nearest 2 per cent, 5 per cent, or 10 per cent, depending on their existing level, to simplify the regime, and will cut tariffs on environmental products such as LED bulbs. You can read the Institute’s response to the government’s consultation process to develop this regime. Readers can also use the UK Global Tariff tool to check the tariffs that will apply to goods they import from 1 January 2021.  Read the summary of public responses and government response for full details.   Read further updates on our Brexit web centre.

May 22, 2020
Tax

Further guidance on the operational phase of the scheme was published by Revenue this week.  The updates to the FAQs, now at version 12, include guidance on employers ceasing the scheme (FAQ 2.3),  the treatment of re-hired employees (FAQ 2.8), additional gross payments (FAQ 2.1), and the ROS Statement of Account (FAQ 5.7).  As a reminder, to include employees re-hired post 1 May in the Employer CSV file, employers should ensure that the rehired employees are on the Payroll and an RPN has been received by the Friday evening prior to first payroll payment.   Revenue tell us that the CSV file will be refreshed at least once a week to include new re-hired employees and later more regularly.    We understand that further guidance is expected over the coming days which will bring the FAQs to version 13. 

May 21, 2020
News

After lockdown eases, will the economy face ‘revenge spenders’ or ‘tentative consumers’? Either way, warns Andrew Webb, ‘business as usual’ is going to look very different and businesses will need to adapt hard and fast. As lockdown restrictions begin to ease across the island of Ireland, it is natural that we start to think about the shape of the economy into which we are emerging. Will the various measures taken to protect jobs and businesses succeed in cocooning the economy from a sharp and protracted downturn, or are we facing into a long decline? The hope as we entered lockdown was that the economy would go into a deep freeze and then would pick straight back up from where it left off after the thaw. This is the much hoped for V shape decline and immediate bounce back. While that remains the hope, there is a growing body of emerging data to suggest that some lasting damage is being inflicted, and a longer recovery might be more likely. Astounding decreases in employment and vacancies, coupled with reduced consumer and business confidence, is leading economists to think about whether the path over the next couple of years is a U-shape, where output wallows in a trough before climbing back to pre-pandemic trends. While not an ideal scenario, it would be a much better outcome than the feared L-shape which sees output declining and remaining permanently below where it would have otherwise been. Regardless of the path the economy takes, the pandemic and subsequent lockdown have prompted consumers and businesses to make dramatic changes in behaviours and practices. Consumer behaviour will now go one of two ways – ‘revenge spend’ for all the leisure and socialising that we missed would be a considerable economic boost, whereas the opposing ‘tentative consumer’, fearful about job security, will likely save more, thus reducing demand and prolong the recovery. For businesses, there is much to consider. That dangerous phrase which can hold new and better processes back – ‘we’ve always done it this way’ – can surely never be uttered again without robust challenge. We recently had to try new things at a pace, and we pushed our technology hard. In most cases, it held up and should now embed into ‘business as usual’. At a more macro level, business (and indeed country) resilience and contingency planning will come to the fore like never before, and I would expect this will lead to fundamental shifts. There is increasing talk of the end of globalisation as firms that were reliant on suppliers from thousands of kilometres away faced massive disruption, and countries without key capabilities in certain manufacturing sectors experienced difficulty in obtaining PPE, ventilators and testing capability. A quickening of the pace on automation across the economy is likely to follow, building in efficiency gains and more resilience to any future lockdowns.    Of course, it isn’t just consumers and businesses that drive the economy. The Government’s role, particularly around providing job/income support, has come into particularly sharp focus. How we pay for the large public spending increases will come to the fore in due course. Given the austerity and public sector cuts that remain in our collective memories, I sense no appetite that an austerity agenda will fly again. That’s a discussion for another time. For now, the consensus view accepts that the economic and social cost of mass unemployment far outweighs the financial cost of supporting people to remain in work and supporting businesses remain viable. Andrew Webb is the Chief Economist at Grant Thornton NI.

May 21, 2020
News

How can SMEs prepare for the severe economic shock that is going to hit? Ger Foley outlines how businesses can adapt and continue in a different way. I will not pretend to be an advisor who has all the answers for business owners on this. I absolutely don't. However, as a business owner myself, I can relate to all the uncertainty that business owners are facing. Short-term actions Things are clearer when viewed in front of you – on a spreadsheet or even just on paper – it doesn't matter what you use, but it is essential for business owners to make the financial state of their business visible. This will help with the decision-making process and will continue to be critical in the future. You should approach this by: Determining the cash reserves of the business. Finding out how much is owed to you from customers, and what exposure you have to debtors that are unable to pay in the short-term. Finding out the sales pipeline or order book for the short-term (three to six months). Risk profile this pipeline based on the customer, their industry and how their business might be impacted. Determining what the profit margin will be on certain sales. Finding out the current fixed weekly/monthly costs of the business – rent, lighting and heating, insurance, etc. Ignore wages/loan repayments for now. Establishing your payroll cost on a weekly/monthly basis. Determining business loan repayments on a weekly/monthly basis. You are now armed with data to allow you to make decisions. It may be possible to defer or get some extension from suppliers concerning the fixed costs mentioned. The banks will help, although this situation is evolving clarity is needed on exactly what this help will look like. Contact your bank and tell them you are trying to understand your position and will need support. Request a holiday or some other short-term reprieve from your loan repayments. Have a very transparent and open conversation with your team regarding payroll. Allow them to look at the numbers and ask for suggestions or input to the discussion. Longer-term actions We are in for a severe economic shock in the short-term. We are all in the same boat. All we can do in the immediate term is to survive but, more importantly, help each other and our communities. Business owners need to have practical positivity and approach the next chapter with the same level of enthusiasm they had when they started their business. Businesses have been built to where they were pre-COVID-19 so they can be built again. Will they look the same? Possibly not, but the SME sector is excellent at being agile. There are certain approaches that can be followed by the business community: Show leadership as business owners in following HSE advice and return to work protocols. Support their local economy where possible by using local products and services. Local businesses able to operate also need to support the community, e.g. ease of access, quality of service, coming up with innovative ways of ensuring the community has access to the products and services they want. How do you make your product or service relevant in these new circumstances? Businesses that remain strong have a responsibility not to take advantage at this time. They need to pay suppliers quicker than they have previously. Local and national government need to continue to help business owners with whatever supports are needed. We need a period where SME owners can focus on reinventing and adapting their business without the immediate pressure of cash flow and liquidity concerns. Over the coming weeks, as we understand more about what the medium-term future environment will look like, all business owners are going to have to consider their business models and how they can adapt to a new environment. Ger Foley is a Partner at Comerford Foley.

May 21, 2020
News

The hospitality sector has been hit hard by the COVID-19 pandemic. Adrian Crean explains how, with innovation and forward-planning, this sector can overcome the challenges it faces. As a well-known boxer once said, “Everyone has a plan until they get punched in the face”. March’s lockdown announcement saw the hospitality and food service sectors decimated, a sector that employs 260,000 people, over 10% of total employment, and significantly supports regional employment. According to the CSO, 70% of these businesses ceased trading temporarily or permanently. Protecting staff, minimising ‘cash burn’ and managing liquidity became the immediate priorities. Even with the phased re-emergence from lockdown, it’s clear that things will be much different to before. The health crisis has become an economic crisis, and many businesses will not see a return to their 2019 levels until 2022, at earliest. Others will not return at all. Businesses are having to think, plan, adapt and act fast. The impact of COVID-19 Higher unemployment, less disposable income, reducing consumer confidence and much lower overseas tourism numbers will have a significant impact on the hospitality and food service sectors in the months ahead. If our own domestic travel restrictions could be safely lifted during June rather than July, it could provide a meaningful and much needed domestic tourist season. As it stands, however, significant planning and investment is being invested to give customers and staff the reassurance needed that the sector will be employing the highest operating standards in a safe, hygienic and welcoming environment – even if it comes at a cost. For example, the implications of social distancing on businesses are enormous. Michelin starred chef, JP McMahon, recently highlighted that at his Aniar restaurant in Galway, setting a two-metre distancing rule in the restaurant will see capacity reduced by approximately two-thirds. Even a one-metre distance will see capacity reduced by one-third. Social distancing in restaurant kitchens and back of house will result in simpler menus and reduced staff numbers. These SMEs will have accumulated four months of debts without any trade and face many more months at subdued levels. Businesses will not be financially viable without burden-sharing on fixed costs, especially rent and rates. Landlords, local authorities, government, and business will all need to participate. Innovating In times of great crisis, we also see great innovation. Customers will need to see a renewed emphasis on value for money. People will be more careful where and how they spend their discretionary income. All businesses should be considering three tiers to their offer – value, mid-tier and premium. The adoption of click ‘n’ collect, curbside collection, grocery and delivery are great examples of channels that hospitality and food service businesses have opened to allow them to reach their customers, but partnering with delivery aggregators is expensive. Charges typically range between 20% and 30% of sales value. This might be manageable of it’s 10% of your business but not at 50% of it, as businesses are now facing. Home working is here to stay. With office capacities reduced by 30% to 40%, expect businesses to rethink their location strategies. This will benefit more suburban and regional locations. Also expect to see leases with rents pegged to turnover becoming the norm. They are a far more equitable solution. Lastly, businesses must invest in their brands. Authentic and memorable storytelling that excites and engages their customers communicated across the right platforms has never been as important. As CS Lewis said, “You can’t go back and change the beginning but you can start where you are and change the ending.” Adrian Crean is a non-executive director with LEON Ireland.

May 21, 2020

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Key Stakeholder Updates for both ROI and NI / UK in response to COVID-19.  UK The Financial Reporting Council (FRC) has updated its guidance for companies on corporate reporting to explain how they should report exceptional items and alternative performance measures (APMs) in their reports and accounts, in the context of the Covid-19 crisis. The UK Government has now introduced the Corporate and Insolvency Bill to put in place a series of measures to amend insolvency and company law to support businesses impacted by COVID-19. To provide companies with additional information upon which to plan activities over the coming months. in respect of Company filings, AGMs and other general meetings during Covid-19 a further Q&A has been jointly produced by BEIS and the FRC.  The quality of corporate governance and stewardship activity by companies and investors is inevitably of heightened importance during the Covid-19 crisis detailed in a recently issued Corporate Governance Update by the FRC. Europe The European Financial Reporting Advisory Group (EFRAG) has published its 2019 annual review. International The International Auditing and Assurance Board (IAASB) has released their Revised Work Plan Table for 2020-2021. The International Accounting Standards Board (IASB) has issued the second in a series of webcasts related to the Request for In­for­ma­tion: Com­pre­hen­sive Review of the IFRS for SMEs Standard issued on 28 January 2020. On 14 May 2020, a web-based outreach event on primary financial state­ments co-hosted by FSR – Danish Auditors and the Con­fed­er­a­tion of Danish Industry (DI) with par­tic­i­pa­tion of IASB and EFRAG rep­re­sen­ta­tives drew a wide international audience. A recording of the event is now available. The International Ethics Standards Board for Accountants (IESBA) Staff have released COVID-19 Q&As Highlighting Ethics & Independence Considerations.

May 21, 2020

Thousands of shops, businesses and construction sites have reopened as part of the first phase of the easing of COVID-19 restrictions. In terms of bringing staff back to work, employers should put in place a number of measures, as set out in The Government’s Return to Work Safely Protocol.  Many businesses are now able to re-engage their staff that had previously been placed on layoff. If an employer would like to place an employee back on the payroll and this employee was laid off and their employment ceased as a result of COVID-19, they will qualify for the Temporary Wage Subsidy Scheme (TWSS) if their Department of Employment Affairs and Social Protection claim is ceased. However, employees must have had a pay date in February and been included in submissions between 1 February 2020 and 30 March 2020 under the same PPS number to qualify.  Rehired employees & TWSS files During the operational phase of the Temporary Wage Subsidy Scheme, Revenue are providing all employers with details of the maximum subsidy and maximum top-up for all their employees. This Revenue instruction is in the form of a TWSS file, which was made available to employers on Revenue Online Service (ROS) from 4 May 2020.  Where an employee was rehired after 1 May 2020, they were not included in the initial TWSS file, and so J9 submissions for employees rehired after 1 May were processed but rejected for refunding.  From 18 May, the TWSS file now includes rehired employees that were included in an RPN between 2 May 2020 and 17 May 2020, provided the employee was on the employer's payroll on 29 February 2020 with the same PPS number. From 21 May, Revenue will refresh the TWSS files daily to include rehired employees that have been notified to Revenue and to update the date on the file to reflect when it was refreshed. To be included in this refresh, employers must ensure that the rehired employees are on the payroll and an Revenue Payroll Notification has been received the day before the employer calculates and submits the first payroll payment to Revenue for the rehired employees. Revenue are currently developing a notification process that will inform employers when a refreshed TWSS file is available to download. Additional Resource: BrightPay has created a template letter that employers can use for employees who are returning from layoff or short-time working.  Interested in finding out more about the Temporary Wage Subsidy Scheme? Click here to watch BrightPay’s COVID-19 and Payroll webinar on-demand. (Sponsored by BrightPay. Please note that although the information above is correct at the time of writing, circumstances may change. It is therefore advisable to seek professional advice on such issues.)

May 20, 2020

All members are invited to virtually attend the 2020 Annual General Meeting, taking place online on Monday 8th June. Details of how to join will be issued to all members who register to attend (see below) The meeting will commence at 1.00 pm.  Members can register to attend here  Apologies can be emailed to Karen Hewitt [email] The Ulster Society Annual Report and Accounts for 2019 will be available to download via this page soon. AGM Minutes 2019 AGM Agenda 2020

May 20, 2020

By Fergal McManus, Account Manager, Ireland & Channel Islands at Confirmation COVID-19 has pushed many audit firms into working remotely and completely online. This unexpected shift has accelerated the adoption of new technologies at these firms. What firms had once seen as desirable now proves a necessity. Staff have recognised the value of remote working and their ability to maintain human connections through videoconferencing tools. Cloud-based software platforms offer greater ease of interaction and collaboration between multiple people such as when working on shared files. This kind of online communication has become routine and can be used going forward for greater collaboration between auditors and their clients, building relationships based on mutual trust. Many auditors have enthusiastically embraced change, particularly when that means automating routine tasks and enhancing communication. So, what else does the tech future hold for auditors? As clients produce increasing volumes of data in ever-larger datasets, auditors can deploy advanced analytics to use this data effectively. In their recent webinar on the Future of the Audit, Confirmation’s founder Brian Fox discussed tools such as Inflo, and their ability to seamlessly integrate with client systems to analyse and manipulate transaction-level data. He compared this with junior auditors manually riffling through a stack of journal entries, struggling to do more than scratch the surface. Systems using AI techniques, such as machine learning and data mining, can rapidly trawl through a company’s financial data to flag up areas of concern and any outliers that merit further investigation, and natural language processing applications can read through hundreds of pages of documents and reduce the time it takes for auditors to review, say, a client’s lease contracts. With the introduction of 5G device-to-device communication, the output from these complex tasks can be presented to clients in real-time, enabling auditing to take place throughout the year, not just at year-end.  As Inflo’s CEO, Mark Edmonson said, “If we can shift the value of audit to something that gives real-time insights and helps grow the business, it will become a much more interesting proposition.” The growth of online working has also led auditors to reflect on how many site visits are actually necessary. Do they need to be present in-person to check inventory, for example?  In a 2018 Journal of Accountancy podcast, EY’s Hermann Sidhu discussed the growing use of drones to check warehouse inventory or inspect sites such as mines or timber yards. The process can be done outside working hours and at greater speed by a machine than a human being. These are among the many innovative tools that auditors will have at their disposal in the future, sitting alongside digital platforms like Confirmation that serve to enhance security and drive efficiency. Confirmation pioneered the idea of digital confirmations in 2000 and still leads the industry today. More than 16,000 audit firms, 4,000 banks and departments, and 5,000 law firms have put their platform to work. They span 170 countries and process more than one trillion dollars in confirmations each year. (This article is sponsored by Confirmation.)

May 20, 2020

Given the speed at which the current landscape has forced businesses across Ireland to adapt, supporting your employees to upskill and advance their careers has never been so crucial. The Accounting Technicians Ireland Apprenticeship is a two-year, work-based programme which enables participants to work in the office for four days a week during the academic year, and study in their local college one day a week.   The qualification equips participants with the skills to progress both within their role and organisation, bringing real value to business functions such as accounts preparation, recording receipts and payments, processing invoices, payroll, and budgeting, which are more critical than ever. With the programme currently accepting applications for this autumn, organisations benefit from their employee gaining an in-demand accountancy QQI Level 6 award, while having the college tuition fully funded by the State. This year, the course will be offered in seven regions across Ireland – Dublin, Cork, Limerick, Monaghan, Galway, Wicklow, and Waterford – making it easier for participants to balance work, study and personal commitments. Modules studied include Taxation, Financial Accounting, Business Law, and Financial Data Management, with graduates enjoying exemptions from professional accountancy bodies, including Chartered Accountants Ireland. Employers currently supporting the programme range from large professional services firms, such as Grant Thornton, BDO, and Mazars, to smaller practices and businesses. Industry and the public sector are also strong supporters of the Accounting Technicians Ireland Apprenticeship.   Dave McGarry, Audit Partner at PFK O’Connor, Leddy & Holmes, says it is an excellent means of engaging with driven employees. Dave is the Chair of the Apprenticeship Consortium and has hired apprentices since the programme was launched in 2017. “We would highly recommend the Accounting Technicians Apprenticeship programme to all businesses as a great way to attract or retain talented professionals in their organisations.” Accounting Technicians Ireland are currently accepting employer applications to their Apprenticeship programme which commences this autumn. To speak to a member of the ATI team, call 01 649 8191 or email apprenticeship@accountingtechniciansireland.ie Visit ATI’s website here. (This article is sponsored by Accounting Technicians Ireland.)

May 20, 2020

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