Members of Chartered Accountants Ireland are annually required to confirm that they are aware of their “obligations as set out in the Code of Ethics for members”. A glance at the Regulation section of Accountancy Ireland reveals that non-compliance with the Code of Ethics is a frequent finding leading to disciplinary action against an individual member or a member firm (who are also required to ensure that all working for the firm fully comply with the Institute’s Code of Ethics for Members). So how do you ensure you and all in the firm are familiar with the obligations as set out in the Code of Ethics? While reading the Code of Ethics is a good starting point, the current version runs to 202 pages (261 if you include the obligations applying to insolvency practitioners). Recent research and engagement with accounting professionals on ethics has consistently identified training and illustrative case studies as the preferred supports for increasing familiarisation with the Code of Ethics. Professional accountants have expressed a preference for real-life examples and case studies which allow them to consider ethical dilemmas in a practical way, relevant to their own experience. The recent publication of five sets of ethical dilemmas case studies by the Consultative Committee of Accounting Bodies (CCAB), of which Chartered Accountants Ireland is a member, is a welcome response to this need.  Each set contains either six or seven case studies tailored to reflect ethical dilemmas that can arise in the course of their professional work in Ireland and UK. They are practical and explore common issues that can arise in professional life. They are designed to outline key principles and processes that can be considered when attempting to identify, evaluate and address ethical threats in line with the Code of Ethics. More than one set of case studies may be relevant to an individual member. The following sets are available: Professional accountants in business Professional accountants in public practice Professional accountants working as non-executive directors Professional accountants working in the not-for-profit sector Professional accountants working in the public sector Members are encouraged to use, read, and apply the learnings from these case studies. They can also be used as training material by firms, training providers, schools or colleges and universities provided they are appropriately referenced, and use abides by the publications copyright terms and conditions. The case studies and other resources that can assist members in considering ethical dilemmas can be found on the Chartered Accountants Ireland Ethics Resource Centre. Níall Fitzgerald FCA Head of Ethics and Governance at Chartered Accountants Ireland

Originally posted on Business Post 06 March 2022. In German the term “merkeln” is a somewhat backhanded compliment to the former German chancellor. It means to put off decisions until conditions improve. The EU response to the atrocious Russian invasion of Ukraine is showing that this attitude has had its day. An extreme development, even within a week of extremes, has been the decisiveness of the EU approach when responding to the Russian invasion. This wasn’t just a triumph over the labyrinthine EU process and bureaucracy. There has been a change in mindset. The EU is not a defence union, but it has decided to act like one. But then the EU wasn’t a healthcare union either until it was forced to become more organised following the onslaught of Covid-19. The EU response was disjointed during the early weeks and months of the pandemic because the mechanisms were not there to coordinate healthcare policy across the member countries. Remember the initial approach to vaccine purchases by the bloc? There has been no such dithering in response to the Ukraine crisis. The latest indication of the newfound appetite for rapid reaction is the use of the Temporary Protection Directive, a process that would give immediate permission for Ukrainians to live and work within the EU and have access to some social welfare benefits. Up to now controlling the freedom of movement of non-EU citizens has been a Brussels totem, unshaken across other humanitarian crises. This directive has existed since 2001, but was never used. If Covid-19 introduced bigger EU governance, one of the permanent outcomes of the Ukraine war is that future EU influence will extend even further. This is not merely a consequence of improved political decision-making at EU level. Nor can it be fully explained by the historical instincts of the EU Nato members to push back against unacceptable behaviour within the former Soviet bloc. The theatre of war has changed. Everyone knows that war is now waged with cyber-attacks and with disinformation spread on social media platforms. Conflict in the second decade of this century goes beyond the screens of computer hackers and onto the screens of the financial traders. An army still marches on its stomach and sanctions make those bellies harder to fill. Announcing sanctions is one thing, but enforcing them is quite another. Governments are reaching deep into their financial services sectors to ensure adherence with the “new normal” approach to Russian commerce. Britain has its own Office of Financial Sanctions Implementation. Ireland does not have a separate such office, but officials have not been slow in setting out the obligations on financial institutions and professionals. Here, the Central Bank is the lead agency for financial sanctions. The application of new financial sanctions inevitably spurs attempts by the people who are targeted to avoid them. At this point the existing anti money-laundering rules kick in. Money-laundering is a criminal activity to conceal the proceeds of crime, and rules already exist to check out unexplained funds or wealth. The financial affairs of politicians and public officials are also subject to scrutiny as they could be bribed or influenced. The decisiveness and rigour of government decisions across Europe will have consequences for a long time. Adding to the existing impetus behind the anti money-laundering regulations, new powers to control and regulate data are on the EU agenda. Similarly, moves to counter climate change at EU level, though slipping on the agenda because of current events, will eventually gain new impetus. They won’t perhaps be driven by the worry of global warming, but by the fear of energy dependence. Though it is the least of our worries just now, businesses operating in the EU will in future be dealing permanently with more scrutiny and regulation over what they deal in and who they deal with. It is difficult for governments to impose tough sanctions and obligations when these have a severe impact on their own citizens. The price increases at the fuel pumps are an early sign that sanctions cut two ways. This is only the start of a phase of higher prices with some goods and services increasingly in short supply. As they deal with Covid restrictions in their capital cities, the Canadian and New Zealand prime ministers are finding that voters dislike being backed into a corner. Our response to the Ukraine disaster has to be different. Whatever the outcome of the illegal invasion, and even if the invasion were to end tomorrow, the European political climate has changed. It is not so much that the centre is holding, but that the centre has resolved to take decisions quickly and ensure they are enforced. The way the EU will conduct its affairs in future has been permanently changed, not by Brexit, nor by the EU Council or Commission or Parliament, but by the evil, though natural, action of the coronavirus and the evil and unnatural action of Vladimir Putin. Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland

The Consultative Committee of Accountancy Bodies in Ireland (CCAB-I) and in the UK (CCAB) have issued statements to the accountancy profession following recent and ongoing developments in Ukraine. The statements: remind accountants of their legal and professional obligations, including ethical considerations, relating to the sanctions regimes and in managing their duties to clients, employers, and other stakeholders to cope with consequent disruptions; collate links to sanction lists, guidance and government advice in the UK, Ireland and the EU; highlight risks presented by current developments in the context of compliance with anti-money laundering legislation, the potential impact on professional indemnity insurance for members in practice, and the fast-moving nature and complexity of the situation and need to obtain specialist advice; refer to requirements in the Code of Ethics for Professional Accountants of particular relevance when an accountant is confronted with a dilemma or difficult situation concerning compliance with financial and trade sanctions and other restrictions. As people across the world condemn the attack by Russia on Ukraine, they also want to show their support through donations and using their influence for humanitarian intervention. Professional accountants will find themselves in positions of influence with many stakeholders including clients, employers, employees, and local communities.  The following are some considerations for accountants in this context: Fundraising for humanitarian or other reliefs People and organisations are looking to help the millions of Ukrainians displaced by the invasion by donating directly or running fundraiser events. Be aware of fraud risk and recommend controls that ensure the safeguard of any monies raised and that they are used for the purpose for which they were raised. Ensure the necessary licences are obtained for any public fundraising activity. Be clear on the purpose for the funds and how they will be channelled to the beneficiaries. Ensure compliance with charity law and check that charitable donations are only made to a properly registered charity (Register of Charities: Charities Regulator (Republic of Ireland) and The Charity Commission for Northern Ireland).   Social Media Understandably, many people and corporates are sharing their views on Russia's invasion of Ukraine via social media. The distinction between when a view is a personal view or that of the organisation where a person works is not always clear. If you are an officer of a company, e.g. a director, chief executive, or the public relations officer, and you are commenting on a matter related to your area of responsibility, then it is very difficult to separate your view from the corporate view. For this reason, many organisations will have clear corporate social media policies in place and that is the first reference point if in doubt. However, before reacting to a colleague's personal post, it is important to also consider their right to hold and express an opinion. There can be a cultural aspect to this within an organisation, especially where respect, tolerance, diversity and inclusion, and psychological safety are highly valued. The specific circumstances of the person expressing the view might also be taken into account, for example their emotional proximity to the issue.   Developing Corporate Positions Many organisations are using their influence for good by publicly denouncing the invasion of Ukraine, with some going further to withdraw from investments and business operations in Russia, and any dealings with Russian state-owned entities. These decisions are not always the most straightforward to implement. Legal and other expert advice should be sought to consider how an organisation can address contractual obligations, restructure, and relocate operations. Many Russian citizens are against the actions of the Russian Government, and Russian employees, contractors, etc., should receive fair treatment and not be discriminated against. Reporting progress and being transparent on these positions, including any setbacks, is very important as corporates will be held to account by stakeholders and members of the public to honour their commitments. Careful thought should be given before making any wide-sweeping statements. The global economy, with its complex interconnected markets, creates practical difficulties when seeking to divest of everything connected to Russia.   Whistleblowing and Speaking Up Clearly defined and well-communicated whistleblowing and speaking-up policies and procedures can increase an organisation’s awareness of how it may be exposed to the issues highlighted in the CCAB/CCAB–I statements referred to above. Communicating to employees the organisation’s position in relation to this crisis and reminding them about whistleblowing and speaking-up policies and procedures, promotes a safe environment in which individuals feel comfortable to raise any concerns about the organisation’s actions, or inactions.   Corporate Reporting While the scale of the impact of this crisis on organisations will differ, it will be dwarfed by the impact on millions of Ukrainians. Organisations have important social obligations and responsibilities to corporate stakeholders. Accountants should ensure transparency and accountability in corporate reporting by highlighting the impact of the crisis on the organisation’s operations, asset valuations and exposure to liabilities. Examples of the sources of this impact include: supply-chain disruption; the cost of ceasing operations in Russia or the conflict/invasion zones; rising commodity prices; inaccessibility of certain markets due to trade or travel restrictions; difficulty maintaining required levels of capital reserves; and loss of key customers. Accountants will have a central role in collecting, measuring, and reporting the necessary information and ensuring it is reported in accordance with legal and regulatory requirements and relevant reporting frameworks. They should also understand the limitations to their expertise and call for the involvement of experts where necessary. Directors and senior management will need to consider expert advice when making highly judgemental decisions on values and estimates and in determining the future implications for the organisation.   Boundaries between Personal Life and Professional Life Negative emotions, such as anger and fear, increase the risk of self-defeating behaviours. The developing situation in Ukraine will understandably evoke such emotions in many. In this context, it is useful to refer to guidance issued by the CCAB bodies, in July 2021, to help accountants consider and distinguish if their personal behaviour could be viewed as conduct that might discredit the profession. While the facts and circumstances of every situation will differ, the CCAB guidance provides some examples of such behaviours, including the use of seriously offensive or threatening language causing distress, or threatening behaviour, towards a client or a member of the public outside of the work environment. This non-exhaustive list of considerations may need to be reconsidered as the crisis in Ukraine develops. In many situations, increasing ethical awareness or the ability to address an ethical dilemma requires reflection. Professional accountants may find it useful to refer to, or circulate to professional accountancy staff, the Chartered Accountants Ireland Ethics Quick Reference Guide available from our Ethics Resource Centre. Níall Fitzgerald FCA, Head of Ethics and Corporate Governance Update: Chartered Accountants Ireland have created a dedicated page collating key information on sanctions in response to the crisis in Ukraine.

Originally posted on Business Post 06 February 2022. There is no evidence to support the status quo, so why are politicians still waiting to make a decision? The clearest signal yet that Irish politics has moved on from the emergency phase of the pandemic came from the Oireachtas Committee on social protection last Wednesday. In its comments on recommended increases to the state retirement age by the recent Commission on Pensions, the committee essentially contradicted the findings of that very commission. The committee said that the qualifying age for the state pension should remain at 66, with additional flexibility for long serving employees. This jars because Ireland has become accustomed to following the recommendations of experts. Guidance from public health experts has largely shaped our response to the pandemic for the best part of two years. By and large, the technocracy of public health has dictated the political decisions made since the pandemic began, perhaps to an excessive degree according to some. Nevertheless, when compared to other countries, and this is in no way to diminish the terrible loss and sadness of the pandemic, Ireland has fared reasonably well. Success came from sticking to the advice from the scientists, and this may also help explain why the harsh restrictions and measures were more acceptable to the majority of the public. We have a tradition in this country that respects knowledge, and few enough Irish people suffer from a Michael Gove-style fatigue from having to listen to experts. Whatever else can be said about the pensions commission, it did not lack for expertise, having experienced business people, public servants and academics on board. It is almost unimaginable that a recommendation from the National Public Health Emergency Team (Nphet) to the Minister for Health could have been, at any stage over the past two years, referred back to an Oireachtas committee to be contradicted. So, what has happened here? Are medical doctors in some way more expert than economists and welfare analysts? Is the political system simply trying to reassert its sovereignty? Or is the pensions issue simply less critical or urgent than the pandemic crisis, leaving expert opinion on the issue fair game for challenge? Considerations of political primacy and the perceived severity of voter pushback may have informed the committee’s report. Nevertheless, shouldn’t our politicians be more amenable to guidance from expert groups established to provide advice to the state? Politicians must of course represent the views of their constituents, if only to preserve their seats. They may not always read these views accurately or be swayed either by a vocal minority of their own support or an opportunistic opposition challenge. The Oireachtas committee came up with 13 recommendations on the pensions issue. Not one offers any concrete solution to the fundamental problem of retirement age – namely that we cannot afford the status quo. Their recommendation instead is to wait for the advice of the current Commission on Taxation and Social Welfare to give the funding answer. The Commission on Taxation and Social Welfare is another expert group. Will its report fall foul of yet another Oireachtas committee, which will recommend waiting for . . . what? In a post-pandemic era, voters may well be less tolerant of poorly informed policies. It will be interesting to see what they think of Norma Foley the Education Minister’s determination to run this year’s Leaving Certificate in the traditional format. Political noise from the opposition was inevitable. This time, however, many voters may conclude that the decision based on expert advice to go with written exams was the correct one. In the outcome of the Portuguese general elections this week, it seems that voters recognised, and then rejected, the ill-advised manoeuvres of the smaller parties supporting the previous Portuguese coalition. Those parties had not supported the fiscally prudent budget being promoted by the larger Socialist Party within the coalition, and this triggered the election. Now prime minister Antonio Costa, leader of the Socialist Party, will have an overall majority. One interpretation of this outcome is that when push came to shove, the Portuguese electorate recognised what needed to be done to govern their country well. Over the course of the pandemic, both the 2020 caretaker government and the current coalition had the good sense not to treat the population as fools. People realised that restrictions were necessary, and then got on with it. Wobbles in adherence to the pandemic restrictions only happened when government advice was conflicting or unclear, as was the case with the approach to schools reopening towards the back end of last year. Our government needs to continue the good habits of implementing policy based on expert evidence. The report of the Oireachtas Committee on social welfare flies in the face of this. If the results of the Portuguese election are anything to go by, politicians will bear the cost of getting it wrong.   Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland

Originally posted on Business Post 09 January 2022. Emmanuel Macron aims to have the 15 per cent corporate tax proposals in force by this time next year, and that’s not the half of it. The publication in the days before Christmas of a proposed EU directive to give effect to a 15 per cent rate of corporation tax across the bloc had a particular Irish hue to it – Paschal Donohoe’s sticking point of a “minimum tax rate means 15 per cent and not ‘at least’ 15 per cent” is in the text. If this Irish imprint came at the expense of surrendering a totem of our economic policy, the 12.5 per cent corporation tax rate, it also came at the expense of an EU totem that all companies must be taxed the same way. It was Brussels’ adherence to that principle, and its consequences for the EU state aid rules, that gave rise to the €13 billion Apple tax case which is still grinding its way through the European legal process. In future bigger companies will pay at different rates to their smaller counterparts. It will be up to the French presidency of the EU Council to push this draft corporation tax directive through the European political system during the next six months of its tenure. The effectiveness of an EU Council presidency is a factor of the size of the country which holds it. Put simply, the bigger the country, the more civil servants it has to throw at its pet European projects and thus the greater the likelihood of success. As the second largest economy in the EU, France has plenty of resources to direct during its six-month tenure in the hot-seat. There is no lack of ambition in the 76-page programme for the French presidency of the EU. It is not surprising that the programme commits to taking forward work on the 15 per cent proposals and aims to have them brought into force by this time next year. The French have long been suspicious of any country which, like Ireland, used low tax rates as part of their foreign direct investment offering. Ironically, the last time France held the presidency in 2008, there was some back-pedalling on EU tax reform because Irish voters had just rejected the Lisbon treaty. What is surprising, though, is that the promotion of the 15 per cent regime across the EU seems not to be the priority of the French economic and financial affairs agenda. Instead, the key project is the promotion of a “carbon border adjustment mechanism”. A carbon border adjustment mechanism is of course a tax by another name. The idea is that by levying additional duties on carbon intensive products coming into the EU, EU-based businesses will be deterred from outsourcing emissions-heavy manufacturing beyond the EU borders to avoid emissions quotas. A carbon border adjustment mechanism is a solidly “green” idea, in so far as it would cost businesses rather than individuals and is likely to play well with voters – a prime concern in an election year in France. Perhaps, though, the key to understanding this French emphasis lies in where that new tax money might go. The institutions of the EU are part funded by what are known as “own resources”. Own resources come from the excise duties collected by all the member countries on dutiable goods coming into the EU. The EU also receives a share of Vat receipts. These sources make up only one-third of the EU budget, and the shortfall comes from direct contributions from the member countries. This shortfall is now becoming a major problem because the EU budget is mushrooming from providing grants and cheap debt to countries to tackle the pandemic and deliver on the green agenda. The problem with cheap money is that someone, somewhere must pay for it. Proceeds from the carbon border adjustment mechanism are to be treated as “own resources” and are to go directly towards the EU budget. The mechanism is estimated at bringing in some €10 billion a year, which is no small amount until compared with the EU’s €750 billion pandemic recovery fund. Nevertheless, the contribution reinforces the notion that the EU must get better at paying its own way. Own resources are the new EU totem. Though not explicitly mentioned in the French programme, there are EU plans to further expand these by staking a claim on part of the corporation tax paid by companies with a €20 billion turnover. The pandemic has brought bigger government both at national and EU level – 15 per cent and global corporation tax are last year’s debates, with just some Is and Ts to be dotted and crossed. Managing and funding a bigger EU machine seems to be the priority for this French presidency. Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland

Originally posted on Business Post 05 December 2021. We need more information on the opportunities and challenges that a 32-county regime would bring for businesses as well as individuals The Red C opinion poll in this newspaper last week highlighted the jarring reality that while many of us might aspire to the notion of a united Ireland, our views might change dramatically if it comes to paying for it. There is precedent for this reaction. The most prominent reunification in recent memory was that of East and West Germany. To fund that particular initiative, a solidarity surcharge was introduced which put a few additional percentage points on most existing taxes. The levy still exists today in many cases and suggests a solidarity surcharge may need to feature in debates over a united Ireland too. The travails of the Irish economy and the levels of indebtedness are well known, but the private sector is thriving. By contrast, the Northern Ireland economy is unbalanced. The proportion of public-sector to private-sector activity in Northern Ireland is considerably higher than usual – 27 per cent of workers in Northern Ireland are employed in the public sector. In the Republic, the Department of Public Expenditure and Reform reports 350,000 public sector jobs, suggesting that only 14 per cent of workers in the South are paid out of public funds. In terms of tax collected, Northern Ireland typically accounts for approximately 2 per cent of all British tax receipts, or just over £15 billion (€17.6 billion). The Revenue Commissioners in the South will collect something in the order of €90 billion in gross receipts this year. A block grant is paid from Westminster to bridge the gap between what taxpayers in Northern Ireland pay and the cost of providing all the jobs and public services in the region. This subvention runs at the rate of approximately £1 billion a month, a British funding hydrant that would surely dwindle, if not get turned off entirely, in the event of unification. The political players in Northern Ireland are wedded to their Westminster block grant, as is shown in their approach to how Northern Ireland companies are taxed. Stormont has had the power to set its own corporation tax rate since 2015, but adjusting the rate would come at the cost of reducing the block grant subvention from Westminster, so it hasn’t happened. We need some better perspective on the opportunities and the challenges that businesses, and not just individuals, would have within a putative 32-county regime. A united Ireland will surely mean some move towards harmonised income and corporation tax rates across the island, if only because Brussels would insist on it as a condition of re-admitting Northern Ireland to the EU. A harmonised corporation tax rate might be unlikely to rest at 12.5 per cent for most industry, but the all-island rate could be lower than the 19 per cent rate currently paid in Northern Ireland and which is due to increase for larger businesses to 25 per cent from 2023. Businesses would also need to factor in the costs of employment under a harmonised income tax and national insurance regime. According to recent OECD comparisons, the typical tax cost of employing a person on the average wage is remarkably similar North and South of the border. While the tax wedge – PAYE and National Insurance or PRSI combined – is around 31 per cent on average in both jurisdictions, this can change dramatically depending on family circumstances and different wage rates. Tax considerations aside, government and employers alike would have to wrestle with the significant differences in labour law which currently exist on the island. One of the biggest challenges for a truly all-island economy could come from losing Northern Ireland's privileged trade status under the Northern Ireland protocol. Despite the wrinkles in the protocol (and I do not discount the practical difficulties in its operation), the opportunity now available to Northern Ireland business to sell goods into both the EU and British markets without hindrance is a unique benefit. Neither the EU nor Britain would see any advantage in allowing one EU member country or region of the remaining 27 countries to have any form of privileged access to their respective markets. While undoubtedly there would be transitional arrangements and sunset clauses established were the political accommodation ever to come to pass, these could not be prolonged indefinitely. It is not only individuals that might be asked to pay more tax in a united Ireland; businesses in both the North and South would have to as well. Some form of solidarity surcharge would be an unavoidable consequence. Brexit has shown us what can happen when political decisions on sovereignty are taken without care for the legitimate concerns of industry. If the concerns of business are left out of the debate about a united Ireland, everyone will be worse off. Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland