Julia Rowan answers your management, leadership, and team development questions I manage a large team which is split into three functions, each with a Team Leader, but I end up doing a lot of the TLs’ work.  When there is an issue to be resolved, they will summarise it in an email and ask ‘what do you want me to do?’. I have spoken to them about this several times, but they keep doing it. There are words, and there are actions. And ‘actions speak louder than words.’ A lovely pattern has been established here: they ask you for guidance, you tell them they shouldn’t—but you give it anyway. And off we go again. The longer this has been going on, the longer it will take to change it. You may need to be patient while a new pattern is established. Email is a lovely place to avoid conversation, so the first step might be to reply to these messages with something like ‘Delighted to talk this through with you—when suits?’. Then have a few great questions ready: ‘what’s important in this situation?’, ‘what are your options here?’, ‘how can I support you with this?’. These questions encourage the TLs to think through the issue themselves, while you offer support. If this does not change the pattern, you could reflect on what might be sustaining their dependency on you and ask questions about that: ‘We’ve talked about this a few times, and I notice you are still coming to me for direction. I feel that your instincts are good and I’m wondering what’s preventing you from suggesting a way forward / tackling this yourself….?’. If you meet with your three TLs as a group—which I hope you do regularly—you could make this an agenda point, encouraging them to report in on successes and challenges, supporting them in advising each other, etc.  Remember, they need to create a new pattern with their team members too. Two members of my team have had a dispute and are refusing to talk to each other or work together. It arose out of a simple enough miscommunication with ‘fault’ on both sides. I have been acting as a go-between in the hope that the situation would resolve itself, but it hasn’t. Team meetings have become very difficult as nobody speaks. Often there is huge hurt behind conflict – so go tenderly in this space. You could begin by reflecting on ‘what is reasonable?’. Is it reasonable for two adults (in their roles, on their salaries) to refuse to engage with each other in a way that other people must pick up the pieces? I might also reflect—as you are—on whether I am colluding with them and keeping the dynamic going. You could talk to them about the impact their behaviour is having on you and the rest of the team. Have a reasonable ‘ask’ worked out in advance. Offer support, or to get support (e.g. from HR), but be led by the requirements of the role. Make sure to notice, and give feedback in response to, even small improvements. But, be prepared for one, or both, to move on. If you read one thing... Turn the Ship Around – A true story of turning followers into leaders  by  David Marquet. Marquet was made commander of a submarine he had not been trained to run and had to rely on his crew—a huge challenge in a ‘command and control’ culture. You can find him on YouTube—‘What is leadership with David Marquet’. I recommend the animated Mindspring version. Julia Rowan is Principal Consultant at Performance Matters, a leadership team and development consultancy. To send a question to Julia, email julia@performancematters.ie

The use of malicious software to extort small businesses is on the rise in Ireland as global criminals seek out easier prey. Arlene Harris reports Ransomware. At a time of rising awareness of cyberthreats and the need for adequate safeguards across all business functions, including finance, ransomware is emerging as a growing threat for even the smallest operators. And, according to Dr Richard Browne, Director of the National Cyber Security Centre (NCSC), ransomware is “here to stay”. A form of extortion “as old as the hills”, ransomware is a type of malicious software designed to block access to a computer system until a sum of money is paid, explained Browne. What is new in the field is a concerning rise in the number of ransomware attacks recently aimed at small- and medium-enterprises (SMEs), a segment of Irish business so far largely unaffected by this particular cyberthreat. Indeed, a statement issued in August by the NCSC in conjunction with the Garda National Cyber Crime Bureau warned SMEs that, in a noticeable shift in ransomware tactics, hackers were turning their attention away from big business and government entities to focus instead on smaller businesses. “This trend has been observed globally and Ireland is no exception, with several businesses becoming victims of these groups in the past number of weeks,” said Browne. “A number of different business models are typically used, which involve encryption of a victims data by a threat actor, whether that is a criminal gang or a lone individual.” Greater threat in newer tactics Cybersecurity has, by and large, kept pace with criminal activity online until now and experts are quite adept at dealing with established ransomware practices—which typically involve a threat actor making contact with a victim, and requesting a key to unlock or decrypt the victim’s information. The threat landscape is evolving, however, leading to newer ransomware tactics that are more difficult to defend against. “Recently, human-operated ransomware has been developed, which means there is a person in the loop with more advanced techniques,” Browne explained. “They hack into a system—or across it, in many cases—steal data and seek to encrypt an entire IT system. The old-fashioned ransomware ‘drive-by’ (often caused by clicking on a link) is not a massive threat as it can usually be stopped by anti-virus software, but human-operated ransomware is categorically a risk for businesses of any kind.” Behind the rise of human-operated ransomware are often established, integrated and organised criminal enterprises that operate “at scale and at speed” globally, Browne said. “This is very much a global market, with the ‘bad guys’ targeting IP addresses anywhere in the world,” he said. “Over the years, many have been heavily compromised, but, while their organisations have been broken up, the individuals involved are still criminals and they are still capable of conducting cyberattacks, so they tend to simply reform and go after smaller targets.” Criminals target smaller players While large corporations are more likely to have the financial means, technology and expertise to handle a sophisticated ransomware attack, the same cannot be said for many of their smaller counterparts. “Because of changes in the ecosystem, smaller companies are getting hit more often than bigger entities, which can afford to be prepared, are more resilient and much more able to deal with incidents when they occur,” Browne said. “So, [the hackers] are going after SMEs and individual companies, which might only net them a smaller ransom, but they are much more likely to be paid. “It is also easier. They don’t have to spend as much time navigating systems and don’t have to be as careful as they would with high-end security systems, so they can target more small companies. “Solicitors’ offices, for example, will often have sensitive data on file—so it is in their interest to pay not to have it released. “The criminals may also gain access to customer money sitting in a firm’s account over a weekend (for lodgement the following week), which makes them a target for other activities, such as fraud. “Of course, there have been some very high-profile attacks too, such as the Colonial Pipeline attack in the US, which took out a piece of physical infrastructure without actually damaging or physically affecting it. JBS Meats is another one and the HSE is probably the most well-known here in Ireland.” These ransomware attacks are happening “all the time”, said Browne, both in Ireland and elsewhere. “Just today, I’ve had reports of about 15 new ransomware attacks in Europe over a few days. We, in Ireland, are relatively lucky as we are something of a small player, but we are at risk nonetheless.” While criminal gangs are set to continue making money by hacking into IT systems, harvesting data and selling it on, or blackmailing companies into paying a ransom, Browne advises that there are steps SMEs can take to protect themselves from ransomware attacks. Effective security measures “We appreciate that many business owners are understandably nervous about the threat ransomware poses, but some straightforward security measures can be put in place to ensure that an organisation’s data and systems remain secure,” he said. “Some SMEs won’t have an IT system as it will be outsourced, so the first thing they need to do is to ask their vendor how prepared they are for dealing with this kind of thing.” At the very least, businesses should have two-factor identification on all of their online accounts—whether it be Facebook, Gmail or a financial services package. “It sounds simple, but, if everyone did this, it would dramatically reduce the amount of damage done,” said Browne. “After that, I would encourage firms to ensure their vendor has proper offline back-up and, internally, to decide that—on a specific day of the week—someone will be tasked with taking the external hard-drive, making a copy of it, and putting it away. “This way, they will have a secure offline system so, if they need to restore it after an incident, it can be done without taking down the company. “Beyond that, they should have an up-to-date antivirus system and ensure any vulnerabilities are patched up.” Making these provisions is becoming more essential for SMEs because ransomware, as Browne puts it, “isn’t going away”. “People need to be vigilant and governments need to do more to deal with it and ensure these guys don’t get paid, so that, eventually, it will become less prevalent,” he said. “That’s not going to happen overnight. It is going to continue to be an issue for some time. We all need to be aware and take steps to keep our systems secure.” For more advice and information, visit ncsc.gov.ie or garda.ie/en/crime/cyber-crime

With the launch of ‘The Garage’, Pfizer Global Business Services Dublin is helping accounting trainees discover how they can apply digital technology to make their work faster and easier It started with a conversation between colleagues about how their profession might evolve at a time of immense digital transformation, and how they might harness this transformative power to support their fast-growing Dublin enterprise. Aoife Allen, FCA and Senior Director with Pfizer Global Business Services Dublin (GBS Dublin) recalls: “It was three years ago, and we were thinking about how we would be working in the future. I remember the question was, ‘what will our future colleague look five or 10 years from now?’” At the time, Albert Bourla, Chair and CEO of Pfizer Inc, had set a challenge for the organisation globally to “win the digital race in pharma,” and Allen and her colleague John Anglim were overseeing a successful graduate programme for Pfizer GBS Dublin in association with Chartered Accountants Ireland. “Our graduate programme was really starting to ramp-up then, in terms of numbers—a cohort of younger colleagues who had grown up with digital technologies, and we wanted to find a way to help them explore how we could use digital technology to make our own processes more efficient and effective, with an enhanced control environment.” ‘The Garage’ – a digital innovation program So began ‘The Garage’, a one-hour weekly session, during which Chartered Accountant trainees were encouraged to explore how they might use digital technologies to make their work more efficient and easier to manage. “We challenged them to come up with a project idea, and then to build it. It was about teaching our graduates how to think differently and pass their learnings on to the wider organisation, so that we could harness the power of digital to improve how we worked together within the organisation,” John Anglim, Director, Pfizer GBS Dublin, explains. The Garage is an innovative applied learning program, developed and led by Pfizer GBS Dublin colleagues Colin Byrnes, Director of Global Process Transformation, and Lorna Flanagan, Director Statutory Reporting CoE. Nurturing the digital mindset “The idea behind the program was really about recognising a need to nurture and develop our graduates’ skill sets in working with digital tools and technologies as they progress through their accountancy training,” Colin Byrnes explains. “Our Garage sessions take our graduates through concepts such as design thinking, analytics and problem-solving, as well as introductions to some of the technologies we use, like Alteryx, Tableau, Dataiku and Power Automate.” As Lorna Flanagan sees it, The Garage is about equipping the accountant of today for their evolving role as the ‘accountant of the future’. “The role of the accountant has really moved on from repetitive tasks to providing higher value-add services,” she says. “Our hope is that The Garage will set our graduates up to support problem-solving at Pfizer GBS and also enhance their accountancy training experience, so that we can support them to become our ‘colleague of the future’.” Impressive results So far, The Garage has yielded impressive results, with participants using new technologies, like Robotic Process Automation, Visualisation and Predictive Analytics, to build innovative solutions for Pfizer GBS Dublin and the wider organisation. One such participant is Reza Shahrokhi, as Aoife Allen explains: “Reza’s project concerned an incredibly time-consuming process that was used by managers right across Pfizer to review Authorised Signature Limits (ASLs). “Every year, these managers had to coordinate the review of thousands of ASLs on large Excel files via email. It was an incredibly time-consuming and manual process and, through his participation in Garage, Reza found a solution that was adapted for use across the entire organisation.” Shahrokhi’s solution used Power Automate, a tool that integrates Microsoft applications such as Excel, Outlook, Teams and more, to simplify the ASL review process. “He effectively removed emails from the process, collating responses from managers in seconds and automatically updating files, reducing errors and time for follow-up,” explains Flanagan. “Reza presented his project to GBS Dublin leaders and departments, showcasing his work at a GBS Dublin Innovation Forum where he was awarded one of 10 Innovation Awards in 2021. Reza really exemplified the Pfizer goal to win the digital race in pharma by making our work faster and easier. He explored and defined the problem and leveraged technology to improve the efficiency and effectiveness of a manual process.” Automating journal entries Another successful Garage project by graduate trainee Kate Connell leveraged digital technology to automate the manual month-end journal entry process. “Kate’s project explored a recurring issue whereby a manual journal had to be booked monthly to reclass original banking entries in the SAP accounting system to certain division- or market-coded accounts,” Lorna Flanagan explains. “The process was taking two hours to post manually each month. By navigating and preparing a ‘process flow map’ and exploring the functionality of the Alteryx tool, Kate was able to apply a digital workflow to automate the preparation of the final journal.” Connell’s project was showcased to GBS Dublin leadership and, as a result, different departments were able to leverage the technology to automate repetitive manual journal entries. Digital workflow solution Ian Banahan, meanwhile, used his participation in Garage to identify a digital workflow solution for an important financial supply chain process. “Graduates who take part in The Garage are asked to identify a work activity they see as relatively simple but feel could be improved. The idea is to create a ‘focus’ for practical learning during the Garage sessions,” explains Colin Byrnes. “In his day-to-day work, Ian was involved in a process whereby the GBS Dublin team calculates and communicates critical financial information to country teams supporting the financial global supply chain and distribution of products. “While the process was robust and utilised the latest digital technologies to help calculate processes, Ian could see that there was still a lot of manual communication involved—via emails, for example.” As part of his Garage project, Banahan documented the flow of information exchange involved in the process, uncovering challenges with information tracking and management. “Ian used the Garage network to identify digital workflow tools that could potentially address these issues, assessed them and drafted recommendations. He presented his findings to GBS Dublin leadership and got approval to move ahead with the project,” says Byrnes. “Since then, the Global Process Lead responsible for this area has developed the proposal further and the plan is to start implementing Ian’s solution by the end of this year.” The future of Garage Originally introduced in 2021, the 12-week Garage programme is now entering its third cycle and, for the first time, will be open to all Dublin GBS colleagues in addition to graduate trainees. For Aoife Allen, the success of the initiatives is a point of pride. “I am very proud of The Garage. A lot of the projects that have come out of it have brought real value to the organisation, and to our day-to-day work as Chartered Accountants and financial professionals,” she says. “These accounting problems and projects are so specific to the activities we are involved in that, really, only we can fully understand and solve them. “By giving our graduates—and now our wider team—the tools they need, they are able to look at accounting processes and say with confidence, ‘I can automate this process, and then spend my working time using the information it’s giving me to carry out work that is far more valuable. “They are effectively solving day-to-day end-user problems and that is empowering, because it encourages them to think differently about how they, and how we as an organisation, approach our activities.” History of innovation Pfizer has a deeply rooted history of innovation in Ireland. One of the first pharmaceutical companies to establish a base in Ireland, the organisation celebrated its 50th anniversary here in 2019 and now employs 4,000 people at five locations in Cork, Dublin, and Kildare. GBS Dublin was established in 2003 and provides end-to-end financial accounting services, compliance oversight, and business transformation support to Pfizer operations spanning 150 markets worldwide. As such, says Allen, GBS Dublin acts as Pfizer’s own ‘in-house’ accounting firm with the same high-value capability and talent resource. “That is how we see ourselves, and what we have responsibility for are the complex, high-risk and knowledge-based accounting transactions that support Pfizer’s financial operations globally as well as regionally here in Ireland,” she says. GBS Dublin is also among the biggest employers of Chartered Accountants in the Irish market outside the Big Four accounting firms. “We are very fortunate to have access to such a big pool of very talented candidates who have a really good reputation internationally,” Allen says. “We have a young, qualified, educated, and diverse workforce. We have many different nationalities here; people who speak many different languages; who have experience in different local Generally Accepted Accounting Principles. “This means that we are able to provide an international organisation with financial support from here in Dublin, and we also now manage in-market colleagues responsible for statutory and fiduciary duties.” Evolving role of the accountant For Allen, who grew up in Wexford and trained as a Chartered Accountant with PwC, her time with GBS Dublin has allowed her to carve out a varied and satisfying career path. “I joined GBS Dublin 16 years ago as an accountant after living and working in Australia for a while after qualifying. Since joining, I’ve changed roles eight times. I have had so many opportunities. “After joining as an accountant, I became team lead, and then regional team lead, and progressed from there to a director role and, most recently, senior director, with colleagues from 41 countries reporting into my organisation.” In the years since she began her own career, Allen has also borne witness to the evolving role of accountants in all sectors. “How we do our job on a day-to-day basis now is very different to how it was when I trained. Great change is underway within the profession of accountancy and that change is being driven by digital technologies,” she says. “We have access now to digital tools—not just these big Enterprise Resource Planning systems like SAP and Oracle—but also end-user technologies like Alteryx, Dataiku and Power Automate. These tools are allowing accountants to carry out our work in new and different ways and creating the potential for real innovation.” Breakthroughs that change lives This innovation is at the heart of the GBS Dublin ethos and the driving motivation behind The Garage and other digital initiatives. “We have an amazing wealth of talent here in our own workforce in Dublin and, at the same time, access to these emerging digital tools that can really transform the way they work and add value to the wider organisation,” says Allen. “We reckon about 75 percent of the people working for Pfizer GBS Dublin have a qualification in accountancy, tax, or another high-value profession. Our colleagues are highly qualified and highly capable people, and we are part of Pfizer; a company whose purpose is to drive ‘breakthroughs that change patients’ lives’.” “Our own purpose and responsibility here at GBS Dublin, as I see it, is to employ that same ethos as an enabling function to the wider organisation and—just as our colleagues in science and manufacturing do—to use innovation to drive breakthroughs. “Being a truly innovative organisation involves learning to do things differently, being open to change, and being prepared for a future of constant change.” For Allen, meanwhile, how she approaches her leadership role as a Senior Director at Pfizer Dublin GBS is also changing. “What I’m learning is that, as a leader, you have to get out of the way. You have to give people the space to come up with ideas and to share them. You have to ask everyone to contribute, to listen and encourage all of their ideas. “That means listening equally to everyone in a meeting, from graduate right up to director level. I want to hear what the graduate has to say as much as I want to hear what the director has to say. You must listen, because absolutely everyone can bring something really valuable to the table.”

In a candidate-led market, how an organisation is perceived can be critical to its ability to attract the very best professionals. Although employers can’t create their own brand, they can do a lot to influence it. Dr Mary E. Collins explains how When recruiting, your reputation or ‘employer brand’—the stand-out differentiator for your organisation—has never been more important. This renewed focus on employer brand can be attributed, in part, to the expectations of the younger generations, who are influenced by an organisation’s reputation and peer reviews. These reviews—and the perception of an employer’s brand they help perpetuate—are a key disruptive element in recruitment, particularly with the growth in influence of review and recruiting websites, such as Glassdoor and Indeed. The Labour Force Survey results from the Central Statistics Office for the second quarter of 2022 put the employment rate in Ireland among 15- to 64-year olds at 73.5 percent – a record high. In this context, an organisation’s ability to attract and retain talented professionals in a market at near full employment—one in which people naturally have greater choice—does more than allow it to compete. It affects its reputation among all stakeholders, from customers and clients to potential employees. What is an employer brand? The term ‘employer brand’ was coined in 1996 by Professor Tim Ambler of the London Business School, who defined it as “the package of functional, economic and psychological benefits provided by employment and identified with the employing company.” The Chartered Institute of Personnel and Development (CIPD) defines an employer brand as “a set of attributes and qualities—often intangible—that makes an organisation distinctive, promises a particular kind of employment experience, and appeals to those people who will thrive and perform best in its culture.” It is important to note, however, that an employer brand is created by other people’s perceptions of an organisation. An employer cannot directly create its employer brand, it can only influence it. The power of employee review In the past, an employer brand (even if not described as such) was based mainly on the reputation of the employer, with very little influence from other sources. Now, with the growth of digital voices through social media and review websites, employees—past and present—are key players in the creation of employer brands. We have seen this particularly with employee reviews, which has been a major driver of change. People can post honest, anonymous reviews about their employers, describing the on-the-ground experience from an ‘insider’s perspective’. Faced with this, organisations must become more accountable for their behaviour—or risk being rejected by potential talent. Candidate-led recruitment In recent years, the approach to recruitment has shifted from ‘company-led’ to ‘candidate-led’, which is evident in the interview process alone. Employers are now reviewing their interview procedures, asking if they suit candidates, and asking recent hires what they would change about the experience. Company-led recruitment This is a top-down approach, where a position is advertised and candidates apply. The information shared about the advertised position is limited. The balance of power is with the hiring organisation. This approach is summed up by the interview question: “Now tell me, why should I hire you?” Candidate-led recruitment This flips the model by guiding potential candidates to make more informed decisions about whether to apply for a role. This approach encourages candidates to reflect on their ‘fit’ for the job by providing them with detailed information on the role and organisation prior to applying. Developing a strong employer brand There are eight key steps to developing a strong employer brand, which will give you a competitive advantage and set you apart in a crowded employment market. Step 1. Define your unique selling point Organisations invest resources in developing and promoting a unique selling point (USP) for their customers, clients and even potential employees. The USP is what makes an organisation distinct, setting it apart from its competitors. An employer’s USP will inform its employer brand, responding to candidates’ desires to join teams that share their priorities and values. This could be: “trusted advisor” “provider of excellent technical service” “friendly, responsive and flexible” “creative, cutting-edge and innovative” “award-winning agency” When defining or refining your employer brand, start by articulating your USP. Larger organisations may wish to engage specialist brand agencies, while SMEs can do this through insightful, exploratory conversations with their stakeholders. Ask your existing employees why they joined the organisation, for example, and what makes the business different to its competitors. You can also ask clients for testimonials which can be published online, thereby elevating your USP, not only to prospective clients, but also to future employees. Step 2. Communicate your purpose An organisation’s strategy is a core part of its employer brand and should be included in employer brand communications. Share strategy and purpose to attract the right people. For example, if the strategy is for growth, excellence and expertise, this needs to be represented in the offer to potential employees who are looking for new opportunities and a defined career trajectory. Step 3. Identify who you need to hire Define your recruitment needs. What are the skill sets you need to achieve your goals? Can they be introduced by training existing employees? Evidence of strong succession planning not only instils confidence in shareholders, but it also showcases your employer brand to current and prospective employees. Step 4. Understand your ideal candidates Find out as much as you can about your ideal candidates. What really motivates and excites them? What can you do to drive them to your organisation? The following can be used to source information on target and prospective candidates: LinkedIn Data can be captured on your target candidates’ education and qualifications, the professional bodies they are members of, and the LinkedIn groups they choose to join. Research Conduct research into new and existing workplace generations—what is the difference between Baby Boomers, Millennials and Generation Z? This will yield information on their motivators, drivers and values, which can inform your hiring strategy. Your team Talk to your existing high-performing employees to understand their interests, professional alignments, and networks. Your networks Use your own professional and social networks for further insights from outside your own organisation. Psychometric tools These can be used to track the personality traits and aptitudes of the best performers and can inform your thinking on ideal, as well as prospective, candidates. Step 5. Define your employer value proposition An organisation’s employer value proposition (EVP) is the distinct set of benefits (financial and otherwise) an employee receives in return for the skills, knowledge and experience they bring. The CIPD defines the EVP as “describ[ing] what an organisation stands for, requires and offers as an employer.” It provides greater consistency—to an organisation’s recruitment advertising, for example. Using the data gathering techniques described above at Step 4, you can develop a bespoke EVP for your ideal candidates. To create a successful EVP, consider the following: design around attributes that attract, engage and retain the talent you are seeking; be consistent with the strategic objectives of the organisation; identify what is unique to your organisation and distinct from your competitors’ offerings. The best EVPs involve synergies between the organisation’s corporate brand and its employer brand. Hubspot’s EVP, for example, states: “We believe the people we work with are our biggest perk. That’s why our people operations team works hard to create an amazing experience for candidates and employees, every step of the way.” As demonstrated by Hubspot’s EVP, it is important that current employees feel as much of a connection to the EVP as potential hires. Your current employees should feel aligned to your brand. Maintaining a strong employer brand demonstrates commitment to invest in talent, it builds trust, loyalty and credibility, and differentiates you from competitors. By making your EVP public and transparent, prospective employees are far more likely to trust what a company’s current employees say about it than what they read in recruitment advertising. To attract talent, employers must rely on employee engagement and advocacy from the ‘inside out.’ Employers cannot publicly offer what they do not privately provide. Step 6. Understand your employer brand As well as analysing feedback from current employees, a systematic way of evaluating your employer brand is to use a tool like the Employer Branding Measurement Dashboard, created by Elizabeth Lupfer of the Social Workplace (thesocialworkplace.com). It identifies key metrics for evaluating employer brand, such as: HR metrics, e.g. retention/attrition rates, number of applicants per position, cost per hire; awareness metrics, e.g. percentage of target audience who are aware of the organisation; differentiation metrics, e.g. employer brand value/effectiveness. Step 7. Enhance your employer brand There are some key areas of focus when enhancing your employer brand. It is particularly important when losing staff, or finding it hard to recruit new people, that each area is reviewed, and appropriate actions are taken. For example: Culture Consider a more ‘people-focused’ culture, e.g. offering flexible work arrangements. Presence in the marketplace Increase your visibility to ideal candidates: attend conferences, contribute to LinkedIn conversations, engage in expert positioning and thought leadership, enhance the organisation’s media presence. Candidates’ experience Improve response times to candidates, e.g. introduce a time limit to get back to candidates following an interview and stick to it. Step 8. Communicate your employer brand Communicating your EVP should be central to communicating your employer brand. This can be done through many channels, such as job advertisements, the organisation’s website, or its social media platforms, for example. The EVP should be obvious from the organisation’s website, which should clearly reflect the company’s culture. For example, if ‘technical excellence’ is one of the key aspects of the employer brand, show this with examples of technical projects and thought leadership. Ideally, the website should have a ‘Why work for us’ page, which is most effective when current employees share their positive experiences, highlighting the EVP. Clearly communicate the benefits you offer employees, for example: flexible working arrangements; training and development supports; annual and other leave schemes; pension schemes and employer contributions; health insurance group schemes and contributions. Conclusion For employers seeking to attract talented professionals, a clear employer brand, which is supported by the views of current employees, is a critical starting point. A strong employer brand gives you a competitive advantage, setting you apart in a competitive, candidate-led employment market. Dr Mary E. Collins is a Chartered Psychologist and Senior Executive Development Specialist at the RCSI Institute of Leadership, and author of Recruiting Talented People.

As Ulster Bank and KBC ramp up plans to exit the market, retail banking in Ireland has reached critical a juncture with far-reaching implications for the wider economy, writes Elaine O'Regan In mid-August, an article appeared in the Financial Times, heralding a “once in a generation” growth opportunity for Ireland’s banks. Irish lenders were primed for expansion, the article said, amid rising interest rates and the exit of both KBC and Ulster Bank from the market, leaving behind €30 billion in loan books and one million customers. While the exits may be good news for AIB, Bank of Ireland, and Permanent TSB—the three remaining full-service high street lenders in the Irish market—the contraction of the sector is of wider concern. “Industry stakeholders face fundamental questions about the sector’s sustainability and direction,” Brian Hayes, Chief Executive of the Banking and Payments Federation of Ireland, said. “As it stands, the profitability of the retail banking sector in Ireland is among the lowest in Europe, measured in terms of return on equity. Irish retail banks must hold back an estimated €2.5 billion in additional capital for mortgages, impacting the price of products and the share valuation of retail banks.” These banks need to be profitable to generate organic capital, which is lent back into the wider economy to support jobs, businesses, and economic activity, Hayes said, and “this will require new and diversified sources of income as well as further efficiencies in operational costs.” The biggest challenge facing Ireland’s retail banking system now is the need to continue running core functions while also meeting a diverse set of needs among competing stakeholders. “Financial regulators place a strong emphasis on strength and stability, while shareholders need to focus on sustainable profitability,” Hayes said. “These demands and expectations are not necessarily mutually exclusive. However, there is a need to acknowledge and seek a means to achieve balance between stakeholder demands.” Retail banking review As government officials prepare to present the draft report on the Retail Banking Review to Minister for Finance Paschal Donohoe, TD, in the weeks ahead, Hayes called for an informed and open conversation between all stakeholders and “meaningful and effective dialogue”. “We need a viable, safe, innovative, and purpose-led retail banking system, which serves its customers, the economy and society. A stable and viable retail banking sector is a fundamental prerequisite to a well-functioning modern economy and society,” he said. A new discussion paper on consumer protection, published at the start of the month by the Central Bank, noted that structural changes in retail banking, including the withdrawal of Ulster Bank and KBC and branch closures by other retail banks, was impacting “availability and choice” for both consumers and small businesses in Ireland. The discussion paper is the first stage of the Central Bank’s review of the Consumer Protection Code. The Irish financial system has “extensive scale and reach” at both retail and SME level, it noted, including 5.4 million current accounts, €101 billion in credit to households, €22 billion to SMEs, and €2.64 billion payment transactions in 2021. As KBC and Ulster bank continue to progress market withdrawal plans announced last year, some one million customers will need to move their current and deposit accounts to new providers. The Central Bank was, it said, “closely monitoring” this mass account migration process, including assessing ongoing implementation plans at an individual firm and sectoral level to ensure the protection of affected consumers. CCPC submission In its submission to the public consultation for the Retail Banking Review first announced in July 2021, the Competition and Consumer Protection Commission (CCPC) expressed its own concerns about the impending increase in concentration levels in retail banking in Ireland. “With KBC and Ulster Bank closing, small businesses here will have access to just two full-service banks, while for consumers, there will be just three,” CCPC member Brian McHugh said. “When you have just two or three players in any market, you would generally have competition concerns, because the evidence shows that customers in these situations tend to be worse off, not just in terms of price, but also quality and innovation.” While there had been some entry into the market at product level—in mortgages and business lending, for example— the CCPC noted that much of this was being provided by non-bank lenders, and that there had been no entry into the market by a full-service provider and no indications that such entry was likely in the near future. It was therefore vital that public policy and regulation facilitate entry into market, the CCPC said; that the mandate of the Central Bank of Ireland be amended to include competition objectives; and that its revised Consumer Protection Code promote fair competition in financial services. The CCPC also called for an evaluation of the operation of the Bank Switching Code as part of the Central Bank review of the Consumer Protection Code, and that the Government engage at an early stage with the proposal for a European Digital Identity Wallet to maximise consumer engagement and protection. “What we want to see, ultimately, is a more competitive landscape for banking in Ireland where we have new entry into the market. We are not specific about exactly what that might mean. We don’t know what the right solution is, but what we do want is to have lots of different providers coming into Ireland, offering consumers and businesses a variety of products,” McHugh said. “We have to ask why we are not seeing more European players moving into the Irish market and competing here as they do in lots of other markets. There is a need for Ireland to be at the forefront of any efforts to promote the European banking market and make it easier for other players in Europe to move into the market here under common EU rules. “I don’t know if we’ll ever see another full-service provider coming into the market here and opening a full branch network, but ultimately, we need to have competition for both pricing and innovation.” Jobs in banking Central to the continued viability of the retail banking sector at a time of “evolving consumer and regulatory demands”, would be its ability to attract the skills needed with competitive pay and career opportunities, Brian Hayes said. “Retail bank employees and potential recruits are subject, under both Irish legislation and administrative orders, to the most restrictive remuneration conditions in the EU. They are clear outliers when compared with graduates and employees in financial services and a range of other sectors. This places Ireland’s retail banks at a considerable and growing disadvantage,” he said. “The skills composition within banks is evolving rapidly, and the normalisation of pay and employment conditions is needed in the sector to attract the skills and employees necessary for the provision of services expected by Irish consumers.” The Financial Services Union (FSU), meanwhile, wants an “open transparent model of engagement on the future of banking” involving all relevant stakeholders. “Stakeholder banking is common across the EU. A new governance framework involving workers and consumer directors on the boards of banks would put the voices of customers, business, and staff, at the centre of decision-making,” FSU General Secretary John O’Connell said. “This is a big strategic focus now for the FSU—and it isn’t just a trade union matter, it is something the Financial Conduct Authority in the UK has identified in its own regulatory approach, identifying ‘worker directors’ as one option for providers. “It is about having a sustainable banking sector that doesn’t trample over people for profit and the race for digital. That’s not to say that change won’t, or shouldn’t, occur. It is about how this change will occur. We don’t want to see announcements of sudden branch closures in the future and all that entails for staff and customers.” Digital challengers According to the results of a survey published in May by the Department of Finance, just one percent of people in Ireland have their main current account with a digital bank. Carried out as part of the Retail Banking Review, the survey of 1,500 consumers found that 97 percent conducted their main current account banking activities through a traditional retail bank. Despite this, however, close to one-in-five said they were using a digital provider for banking or payments at least occasionally. The main appeal of fintech providers compared to traditional retail banks is that they offer instant money transfers, free banking, and allow customers to split bills as well as providing a user-friendly app, the survey found. Fifty-eight per cent of fintech customers strongly believe that the services offered by fintech providers are a very good substitute for the services offered by more traditional banks, it said. “Speed, convenience, and simplicity are at the core of positive customer response to digital banking, and we can’t ignore the new players joining the market,” said Billy O’Connell, Head of Accenture’s financial services business in Ireland. Revolut, the UK-headquartered digital bank, officially launched as a bank in Ireland earlier this year, operationalising its European specialised banking licence here, while N26 is licensed by the German Central Bank, operating in Ireland on a European Passport. Dutch neobank Bunq has, meanwhile, secured Central Bank authorisation to launch an Irish IBAN, and also recently acquired Capitalflow, a specialist digital lender to businesses in Ireland. “Early traction in this market has been based around highly frictionless, digital-first experiences for payments, money transfers and features like money management across demographics in Ireland, but new digital players continue to face challenges for providing complex lending and highly regulated products,” Billy O’Connell said. “New players are driving enhanced and innovative propositions—shaping customer expectations in the market and tapping into this need for new ideas, but they aren’t necessarily replacing banking services. Most people retain traditional bank accounts for core activities, like receiving salaries and taking out loans, so incumbents locally still retain a large market share despite disruption.” At the same time, O’Connell said, traditional retail banks are investing in new digital offerings and capabilities, releasing high-end apps, and improving online banking services, to compete with neobank challengers. According to the BPFI, Irish retail banks have collectively spent more than €3 billion in the last five years on technology and innovation projects to deliver new digital services for customers. Synch payments Synch Payments, a mobile money app joint venture involving AIB, Bank of Ireland and Permanent TSB secured CCPC approval earlier this year. “The ability to make instant peer-to peer-payments, without the need for complex payee addition journeys, is a key customer need, and it is envisaged that Synch Payments will address this need, with all Irish customers being ‘auto-enrolled’, so that they can make payments using just their phone number,” Accenture’s Billy O’Connell said. To continue to be competitive in the future, however—particularly among younger demographics—he added that traditional retail banks would need to commit further investment to more advanced services, such as end-to-end digital account opening, digital accounts aimed specifically at “juniors”, share dealing, and cryptocurrencies. “Decades from now, the banks that will be successful will be those that shape their businesses continuously to the needs of customers, employees, and other stakeholders, honing their abilities to identify opportunity and innovate efficiently,” O’Connell said.

With the end of summer fast approaching, September marks a return to the books for many students. To keep track of the upcoming events, Bryan Rankin has compiled a breakdown of what students should expect in the coming months New student information For new students, September marks the first step they take with Chartered Accountants Ireland. And while the prospect of a new term can be daunting, the Education Team has numerous resources on hand to assist. The first place to visit is the dedicated Student FAQ page on the Institute’s website, which provides the answers to the most common student queries and worries. The Education Team is also on hand to offer assistance and direct support via email.  Students can also ask questions via discussion forums on the Institute’s online learning platform, and during live webinars throughout the year.  With a busy year ahead, students will have packed schedules and will need to balance their subjects and workloads accordingly.  To make this easier, students should check the key dates, outlining the most important milestones of the academic year.  Students should also follow their webinar timetable and plan their work in advance by building a study routine that caters to their schedule and capacity.  Students can also begin the journey of documenting their academic progress through the CA Diary, which acts as a record of students’ growing skills and capability throughout the academic year. Students are advised to begin the CA Diary at the earliest opportunity and keep it updated on a regular basis. Book distribution September also marks the beginning of the Institute’s book delivery to students.  For those at CAP1 and CAP2, book delivery will begin from the middle of September, while those moving into FAE will be contacted in November.  Chartered Accountants Ireland’s book distribution partner, Shanahan’s, will reach out to each student to confirm contact details and a registered home address, so be sure all records are up-to-date.  Students should check that they have received the correct books on receipt of their order to ensure any changes and amendments can be made quickly.  However, online textbooks can also be accessed via the Institute website.  All students should note that book distribution for the academic year will close in January. Students are urged to take care of their books when they receive them.  For those who are applying for or sitting the autumn examinations, books will be delivered following the release of their exam results. However, please contact textbookqueries@charteredaccountants.ie if you have any concerns or queries. E-assessment preparation New students should be aware that the Institute’s exams are now all online.  While exams may feel very far away, it’s never too early to start getting prepared. In the academic year ahead, there will be plenty of opportunities to sit online practice papers, mock examinations and utilise sample papers before the final exams. By utilising the materials available, students can familiarise themselves with the online platform and ensure their technology is fully functional before they sit any online exam while gauging their strengths and weaknesses as the academic year progresses.  Ensure your competency and comfort working online before you get stuck into lectures and exams to create a healthy, efficient study environment. Remember – a good start is half the work! Autumn examinations and results Finally, the best of luck to students at CAP1 and CAP2 who may be re-sitting exams in September (CAP1 Autumn), October (CAP2 Autumn) or receiving results at FAE.  For many, this can be a stressful period. If you are struggling, please reach out for support from the Education Team, or from the Institute’s CA Support Team, who provide emotional and practical supports to anyone who needs them.   For students preparing for resits, make sure to use the resources available, such as the practice papers, sample papers and all the content on the Learning Hub.  Bryan Rankin is the Head of Student Operations at Chartered Accountants Ireland

Businesses in Northern Ireland are facing unprecedented levels of change as they continue to adjust to the new normal in the aftermath of the pandemic, writes Zara Duffy  The war in Ukraine and supply-chain challenges have led to inflation in the costs of fuel, materials and components. This means that businesses in Northern Ireland now need to review their pricing on a quarterly, if not monthly, basis.  Facing changing financing and cost structures, these businesses need professional advice on how to adapt and plan – advice they often see as another cost. Business and financial planning grant To help these SMEs, Chartered Accountants Ireland would like to see Invest Northern Ireland (Invest NI) reintroduce a Business and Financial Planning Grant similar to the scheme launched in October 2020 in response to the pandemic, which remained open for only a few months.  This scheme offered businesses up to £8,000 towards 80 percent of the eligible cost of engaging an external consultant to undertake a business and financial review to plan for their recovery.  If the scheme is reopened, we recommend that it be 100 percent funded up to the limit, and that it also be extended to non-Invest NI clients in a broader range of sectors across the economy.  We also recommend that the scheme be established on a permanent basis—particularly for micro and small businesses—and funded to include a follow-up review 12 months into the roll-out of the financial plan, with quarterly check-ins thereafter for up to three years.  The goal would be to ensure that financial plans do not just ‘sit on the shelf’, but become dynamic benchmarks, which are updated and adapted over time.  System of funding for SMEs As the positive effect of COVID-19 support schemes wanes, a longer-term, sustainable and mature system of funding is needed for SMEs in Northern Ireland—one that involves an appropriate mix of grants, loans and equity investment.  We want the Northern Ireland Government to prioritise SMEs and make more money available for funding, while also moving away from a ‘grants culture’ and towards the support of a vibrant business debt and equity market.  More private equity investors will be encouraged to enter the Northern Ireland market if they see the commitment of the Government and its agencies through the provision of part-funding.  This will create a self-sustaining ecosystem, as both investors and the State will get their money back and more, such as the creation of jobs. The hiatus with the Northern Ireland Assembly and Government has brought uncertainty to the three-year budget, including the allocation to Invest NI, a key agency for the region’s SMEs.  The indications are that the budget for Invest NI’s programme of supports and initiatives has been reduced from its previous level of £200 million.  Given Northern Ireland’s immense business potential, driven by its innovative start-ups and growing SMEs, it could be argued that at least £300 million should be made available from government sources for a ‘fund of funds’ for SMEs in the region. Chartered Accountants Ireland would like to see clarity on the quantum and focus of the budget allocation for Invest NI, for important programmes like Co-Fund NI, Tech start NI and the Small Business Loan Fund (SBLF).  We are concerned about the large gaps that are currently emerging in available funding, particularly given that money from the European Regional Development Find (ERDF) will begin to fall away from March 2023.  The business model for banks, the traditional source of SME finance, has changed. Low interest rates mean that margins are not there to take on risk, or at least not all of it. Government schemes are dwindling and even grants are not forthcoming.  This scenario is not ideal for an economy trying to recover from a pandemic, but it is good news that British Business Bank (BBB) has earmarked a £70 million fund for SMEs in Northern Ireland. We understand that more funding could be made available if the UK Government-owned BBB were to receive an appropriate proposal for an Enterprise Capital Fund. The Northern Ireland Government should at least match this commitment from BBB, if not exceed it to meet the potential of its business community.  With the right funding approach and leverage, there is an opportunity to create a more vibrant and self-sustaining SME sector in Northern Ireland.  We suggest benchmarking with other devolved nations and regions of the UK where this approach has worked—the Northeast and Midlands, for example. Equity investment & non-executive directors Northern Ireland accounts for just one percent of SME equity investment activity in the UK. There is potential for much more equity investment in the region, which would enable businesses to scale and grow.  As well as good corporate finance advice for SMEs, an awareness campaign using real-life case studies is needed to inform both business owners/managers, and their trusted advisors, about the benefits of equity as a source of finance. Equity investment provides more than just cash to a business. The investor also brings valuable expertise and experience, a new network of contacts, and strategic input, typically joining the board of the company as a non-executive director (NED). The perception that this involves unwanted cost and loss of control needs to be overcome. Chartered Accountants Ireland sees value in Invest NI’s Non-Executive Director Scheme and we believe its funding should be continued.  The scheme is designed to help SMEs strengthen their leadership capability, by supporting the appointment of an experienced independent NED. It also offers advice on the engagement of a suitable NED, and financial support of up to £15,000 or 49 percent of eligible costs, whichever is the lesser. There is some cost to the SME, but this serves to focus understanding of the value a NED will bring and the full buy-in of the business. More proposals by Chartered Accountants Ireland to create a better environment for businesses in Northern Ireland are presented in our annual position paper The Next Financial Year, published in July and available at www.charteredaccountants.ie

As SMEs grapple with tough trading conditions, spiralling costs and mounting uncertainty, Michael Diviney looks at what they will need in The Next Financial Year The exit of Ulster Bank and KBC from the Irish banking market has reduced competition in business lending considerably. For too many SME owners and their advisors, this lack of competition is having a detrimental effect—a point made by Chartered Accountants Ireland in The Next Financial Year: Creating a Better Business Environment, our most recent annual position paper, published in July.  If a business is not granted a loan by one of the two remaining pillar banks in the Irish market, it may have no option but to go to the other and accept its terms. Is this good for business? Most would agree that it is not. What went wrong? Among the 50-plus recommendations we have outlined in The Next Financial Year is the suggestion that the Irish Government carry out a review examining the reasons why Ireland has lost both Ulster Bank and KBC. These reasons are likely to include the capital asset requirements of the Central Bank, regulatory costs associated with banking in Ireland, and the legal complexity of repossessing properties. So, what can we do? We believe that there is widespread support for creating a third pillar bank and this role could be fulfilled by Permanent TSB, given the apparent lack of interest by foreign institutions in the Irish banking market.  Permanent TSB announced a new €1 billion SME-lending fund earlier this year. Further investment is required to achieve the scale necessary to deliver the financial products and services needed by the SME sector, however.  This is particularly important for the short- to medium-term as the economy emerges from the pandemic. For the long term, we recommend that the State continues its policy of reducing its ownership in the private banking sector.  Supporting alternative lenders As well as supporting competition in business banking, the Government also needs to recognise the importance of next-tier alternative lenders, which provide much-needed funding to SMEs.  As it is, the non-bank funding market in Ireland is too small and requires state support to grow. In particular, the Strategic Banking Corporation of Ireland (SBCI) must continue to grow and develop its partnerships. There has been some progress here with the announcement of the SBCI’s risk-sharing partnership with Metamo Credit Unions, and a separate agreement with Finance Ireland to provide €75 million in low-cost lending. Now, the SBCI must continue to encourage niche asset financiers and non-bank lenders into the under-€1 million lending market, fuelling the competition needed to better benefit and support SMEs. Grants and other supports In addition to strengthening sources of SME funding, grant-aid and other supports also play a crucial role.  Enterprise Ireland and the Local Enterprise Offices (LEOs) offer both. The problem is that they are aimed mainly at the manufacturing or internationally traded services sectors. We suggest that the Government and its agencies consider widening the eligibility criteria for such grants to include the more ‘traditional’ industries and service sectors that are so important to local economies and communities. We also ask if it is time to adapt the policies under which many grants and supports are offered—and on which the success of Enterprise Ireland and the LEOs is measured, i.e. the creation of new employment.  In such a tight labour market, in which many people are working in the ‘gig economy’, are SMEs being excluded from important supports simply because they are not adding full-time equivalents?  Adapting policy to the reality of Ireland’s 21st-century economy, we believe that performance measurement should be more balanced and include money spent domestically by State-supported businesses, for example on professional advice to help them grow. Business financial planning grant We have been consistent in our praise for the COVID-19 Business Financial Planning Grant administered by Enterprise Ireland.  This scheme provides a grant to businesses of up to €5,000 towards the cost of engaging an approved external consultant to help them overcome challenges posed by the pandemic—but its design holds potential value beyond that. The scheme helps a business to understand its immediate liquidity needs, create a financial plan to secure the external finance required for business continuity, and avail of a framework to manage the finances of the business. We propose that the scheme be given a more permanent status, beyond COVID-19, to become the Business Financial Planning Grant, and extended to include a follow-up review after 12 months, and quarterly check-ins thereafter for up to three years. This would serve to improve levels of financial literacy among business owners and managers, and address gaps in the financial management knowledge and skills of Irish businesses.  Also administered by Enterprise Ireland, the Sustaining Enterprise Fund and Sustaining Enterprise Fund for Small Enterprises were both introduced to help businesses rebuild after the impact of the COVID-19 outbreak.  No sooner had the pandemic begun to recede, however, then Irish businesses were hit by the effects of cost inflation caused by a global supply-chain crisis and the war in Ukraine.  In the context of such geopolitical uncertainty, we propose that a Sustaining Enterprise Fund or similar be made available on a permanent rolling basis for companies impacted by current or future shocks outside their control—though with eligibility decided on a case-by-case basis.  Again, we suggest here that the eligibility criteria be expanded to broader sectors of the economy beyond manufacturing or internationally traded services companies. Capital tax reliefs The SME sector relies heavily on capital tax reliefs such as Retirement Relief and Revised Entrepreneur Relief.  Both tax incentives encourage entrepreneurs to invest time and money in their businesses—and both could be improved if the recommendations outlined in the external review, carried out by Indecon in 2019, were implemented. The report recommended that Revised Entrepreneur Relief be retained as a valuable entrepreneurial support; that the requirement for the claimant to hold a minimum of five percent of ordinary shares be reformed; and that the lifetime cap of €1 million be increased to €12 million for entrepreneurs reinvesting in a new business. Lowering capital tax rates Though asset values have recovered since the financial crisis of 2008, capital gains tax (CGT) and capital acquisitions tax (CAT) rates have increased, and the high yields from capital taxes that flowed into the Exchequer during the ‘Celtic Tiger’ boom years have not been matched in recent years. Is it time to consider lowering CGT and CAT rates? We think so, because this would likely lead to more private and commercial transactions, resulting in much-needed tax revenues.  A lower rate of CGT could incentivise innovation and risk-taking, which would drive investment activity, thereby improving returns for entrepreneurs. Chartered Accountants Ireland believes that a headline capital tax rate of 20 percent would be a more reasonable level of taxation on gains, gifts, and inheritances. Measures introduced in Finance Act 2019 to enhance the R&D Tax Credit, particularly for small and micro enterprises, continue to await approval subject to Ministerial Order.  These include: increasing the R&D Tax Credit rate from 25 to 30 percent; raising the limit applying to cash-refundable tax credits to double the payroll tax liabilities for relevant accounting periods; and extending availability of this tax credit to companies engaging in research and development before trading commences. Michael Diviney is Executive Head of Thought Leadership at Chartered Accountants Ireland

Social enterprises can empower ordinary people to bring positive change to their communities and society, but what are the options  and where do you start? Chris MM Gordon outlines what’s involved, and the invaluable support accountants can provide If the COVID-19 pandemic has taught us anything, it is the importance to society of the power and resilience of ordinary people and local organisations providing community services.  Some of our busiest times at the Irish Social Enterprise Network were in the opening stages of the crisis when it seemed that for every private profit-making business that shut its doors, a social enterprise was opening theirs.  Communities formed groups to raise money for meals on wheels or to manufacture personal protective equipment for front-line workers. All of this was organic and determined—and because ordinary people felt empowered to make a difference. Throughout that time, more people became interested in setting up social enterprises, to better manage volunteers or oversee any money that is being raised and spent.  There was an increased drive from communities to form social enterprises, make them sustainable and retain goodwill—and they turned to their professional advisors to help them set up these new entities.  What is a social enterprise? A social enterprise is the original ‘business for good’. Social enterprises sell products and/or services for a profit, which is reinvested for a social and/or environmental cause. The National Social Enterprise Policy for Ireland 2019–2022 provides a more detailed definition:  A Social Enterprise is an enterprise whose objective is to achieve a social, societal, or environmental impact, rather than maximising profit for its owners or shareholders.  It pursues its objectives by trading on an ongoing basis through the provision of goods and/or services, and by reinvesting surpluses into achieving social objectives.  It is governed in a fully accountable and transparent manner and is independent of the public sector. If dissolved, it should transfer its assets to another organisation with a similar mission.” Social enterprises differentiate themselves in several ways. I find it useful to think of a social enterprises in terms of its ownership, funding and social impact. Ownership: Social enterprises are generally held by, or in trust for, the people they aim to serve. Social enterprises might be democratically owned, as in a co-operative where one person has one vote. More commonly, they might be structured as a company limited by guarantee, the idea being that no-one can sell the organisation for their personal gain. (Social Enterprises in Ireland: Legal Structures Guide, published by the Thomson Reuters Foundation and Mason Hayes & Curran, discusses the legal structures available for social enterprises in Ireland.) Funding: While social enterprises must generate income by selling products and/or services, it is common for them to receive grants or other public or philanthropic funding to supplement their income and allow them to function fully. Funding can come in many forms, but some funding streams are available to social enterprises only if they are set up as a specific type of company.  Social impact: There must be some measured social (and/or environmental) impact – for example, reducing homelessness – and the money raised or spent by the social enterprise needs to positively affect that impact.  ‘Work integration social enterprises’ are organisations that employ those that are furthest from the labour market. These could be people with physical disabilities or mild, moderate, or severe learning difficulties. Such social enterprises are providing employment and opportunities that may not otherwise be available. Setting up a social enterprise The best approach to setting up a social enterprise will depend on the context and a variety of other factors, including the nature of the problem the community or individual is trying to solve. For the professional advisor, the first step is to understand this, ask the right questions, and to listen. Community or individual?  Is the social enterprise being set up for and by a community or an individual? While it often takes a single individual to get things started, having the support and buy-in of a wider group of people shows there is a real need for the enterprise. It also increases the diversity of opinion and expertise needed to make a social enterprise successful. An issue seeking an enterprise? Someone wanting to set up a social enterprise may want to solve a specific problem that is close to them. They may have a sibling with a learning difficulty for whom they want to create a full-time job, for example. Their sibling loves making coffee, so they set up a café. This is an issue (finding employment for those distant from the labour market) that is looking for a business model to make it sustainable (a café). An enterprise seeking an issue?   The same could be true for someone with specific skills, such as a business-minded barista, who would like to do more than simply sell coffee. They are also looking for a social purpose to invest in and decide to employ people that are distant from the labour market—in this case, people with learning difficulties. This is an enterprise (a café) seeking an issue (employment for those distant from the labour market). Legal structure There is no specific legal structure required for social enterprises in Ireland. However, in my experience, people setting up a social enterprise for the first time often think that it must be a charity, without being aware of what that entails.  Gaining and maintaining charitable status can be onerous for a start-up and may not be necessary, or even relevant, in all cases. Some sources of funding may require charitable status, however. Knowing the sources and requirements of initial funding is important for choosing the right company type for a social enterprise. It may be tempting to advise a client to set up a social enterprise as a private company limited by shares and to spend its profits on whatever social cause they choose. This company type does not suit all circumstances, however.  Social enterprises come in a variety of forms. The use of each type of legal structure should be suitable, considered on its merits and aligned with the aims of the enterprise.  Again, the source of the entity’s funding and related requirements often determine the choice of structure. Here is an outline of the types of company set-up available to social enterprises: Company Limited by Guarantee (CLG)   This company type is the one most often chosen for social enterprises and comes close to company types in countries that have specific legal structures for social enterprises. CLG with Charitable Status   While charitable status (by application to the Charities Regulator) can apply to several types of legal structure, it most commonly applies to CLGs, subject to certain changes made to the constitution of the company, such as directors not being paid. There are advantages and disadvantages to having charitable status. Caution should be exercised as to whether it is necessary. Co-operative   A co-operative is an enterprise that is owned and controlled by its members and operates for the benefit of its members. A minimum of seven members are required to register a co-operative. The law governing co-operatives is currently being reviewed and updated. It is hoped that more co-operatives will appear as their benefits become more apparent. Private Company Limited by Shares (LTD)   Although this is the most common company type in Ireland, social enterprises tend not to be structured as private companies limited by shares. Designated Activity Company (DAC)  While the designated activity company structure has been applied to some social enterprises, it is more generally associated with financial institutions. There are relatively few DACs in Ireland that are considered social enterprises. The role of the accountant Working with social enterprises as they succeed in making a difference is inspiring. Accountants are in a unique position to advise individuals and communities from start-up, setting them on a path for sustainable impact.  Accountants can help social enterprises choose the first door they walk through. Picking the right door is the challenge.  People setting up a social enterprise often focus on the type of company that is being formed. Having taken time to listen to the client and understand the problem they are aiming to solve, the accountant can ensure that all of the available options (and the pros and cons of each) have been considered, the finance requirements planned for and aligned, and ownership and governance issues anticipated before a legal structure is chosen. Chris MM Gordon is Chief Executive of The Irish Social Enterprise Network Useful resources The Social Enterprise Toolkit is a resource for communities and individuals setting up a social enterprise in Ireland. It is available to download for free at socialenterprisetoolkit.ie The Irish Social Enterprise Network is the national body for social enterprise in Ireland. It provides information on the sector and useful pointers for people setting up a social enterprise online at socent.ie Social Enterprises in Ireland: Legal Structures Guide (Thomson Reuters Foundation and Mason Hayes & Curran, November 2020) is available to download at trust.org BuySocial.ie is a growing online directory of social enterprises operating in Ireland: buysocial.ie. The Charities Regulator provides guides to setting up a company with charity status: charitiesregulator.ie The Irish Co-operative Organisation Society (ICOS) provides information on setting up as a co-operative: icos.ie/starting-a-co-op/intro.

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

Over the duration of a successful career as a Chartered Accountant, Suliyat Olalekan has learned the value of hard work, commitment and, above all, kindness From as far back as she can remember, Suliyat Olalekan wanted to become a Chartered Accountant. “I was really good at maths from a very young age and I was always very certain that I wanted to have a career as an accountant,” says Olalekan.  “I didn’t want to be an academic, studying mathematics or statistics in a university. I wanted to apply my skills in the real world. Accountancy seemed to me to offer a lot of possibilities, but I can’t say I had any real sense back then of what the role would actually involve day-to-day.” Born in southwestern Nigeria, Olalekan was raised in a tight-knit family in Ibadan, the capital of Oyo State. One of five siblings, she moved to Ireland as a teenager, settling in south Dublin, and went on to study Leaving Cert Accounting.   Though Olalekan had “absolute conviction” about her career aspirations, acclimatising to the Irish way of life after relocating from Ibadan as a young teen came as a culture shock. “I found the education system in Ireland fantastic, but it was very different to the education I had experienced in Nigeria, which was highly academic,” she says.  “When I started secondary school in Ireland, I was ahead of the syllabus so it was an easy transition starting out. I was able to focus instead on integrating socially and learning about the culture and way of life in this new country that was so different.” Learning to adapt at a young age has stood to Olalekan over the course of an accomplished career as a Chartered Accountant that has taken her from practice to industry, and from Dublin to London. “It is so important to do your research in any profession. This is my go-to approach when I am considering a potential new role, or finding my feet in a new job, and it’s the reason I think I’ve been able to adapt well to new roles and responsibilities,” she says. “I reach out to people and lean into my network, so that I can find out as much as I can about a new role on offer—and not just the role itself, but the organisation, and the wider industry. The same goes for how I approach my work day-to-day. I always try to learn from other people who are experts in their role, their field, or sector.  “If I need advice on a tax issue, for example, I will go to a tax expert—and I never jump into anything. When I start a new job, I stand back and take stock of what is happening around me; what the dynamics are; how things work. I never dive in. I take my time and I do my research. This balanced approach has worked well for me in my career.” Now Chief Accountant at SFL Corporation, an international NYSE-listed maritime company, Olalekan manages a team in London and Oslo responsible for accounting and reporting on US Generally Accepted Accounting Principles (US GAAP).  She began her career in practice, training with Deloitte in Ireland after graduating from Dublin Business School in 2007 with a first-class honours degree in accounting and finance. “I knew I wanted to train with a ‘Big Four’ firm and I really enjoyed my time with Deloitte. Joining their Audit Graduate Programme was a really wonderful start to my career and they sponsored my Master of Accounting at UCD Michael Smurfit Graduate School of Business. “From there, I went straight into the Final Admitting Examination (FAE) with Chartered Accountants Ireland in 2012 —and then I reached a point where I wasn’t quite sure what I wanted to do next.” Rather than mapping out a strict career plan, Olalekan instead decided to hang back and gain more experience where she was, before deciding on her next move.  “A lot of my friends and peers around that time were moving to Australia, the Cayman Islands, Bermuda — and thinking ahead to ‘what’s next?’ I was happy enough where I was though, so I stayed with Deloitte, moving from Audit Senior on to Assistant Manager and then Manager.” It was when Olalekan was offered a secondment with Bank of Ireland that she got her first taste of working life beyond practice. “I got this fantastic opportunity to see what it was like on the ‘other side’ working in capital investment, and I found I really enjoyed it,” she says. The experience prompted Olalekan to look further afield and, when she decided to relocate to London in 2014, she found herself open to a move into shipping – a sector she had no experience in at the time. “It was my brother who told me about this job as Group Reporting Manager with SFL Corporation and, straight away, I was intrigued,” she says. “I knew nothing about the maritime sector at the time, but shipping is such a traditional and tangible industry. I thought ‘that’s how food gets to my table and how furniture gets to my home’.  “SFL Corporation is also listed in the US, which meant I could get experience in US GAAP. I already had experience in UK GAAP and International Financial Reporting Standards (IFRS) in Ireland. I thought US GAAP would be a challenge that would really stand to me.” Olalekan was promoted to her current role as Chief Accountant with SFL Corporation in London in 2017. “They have been very persuasive in keeping me, and I really enjoy the work I do here because it is just so interesting,” she says. “My day-to-day can go from journal approvals on really important qualitative items to filing statements to the US Securities and Exchange Commission’s EDGAR [Electronic Data Gathering, Analysis, and Retrieval] system. “I’m involved in preparing financial data for press releases, and in constantly reviewing and ensuring the accuracy of the information we make available to the public. I advise our commercial and operational teams on the accounting implications of new business contracts and potential transactions. My role is so varied and I find that incredibly rewarding professionally.” As her career has progressed, Olalekan has settled into an open, approachable leadership style centred on building strong relationships with the people on her team, as well as those she reports to and colleagues in the wider organisation. “There are many ways you can approach leadership and different styles work for different people—but I have always leaned into genuine, positive relationships and that continues to work really well for me to this day. “I make sure that I am seen as a ‘can-do’ person; someone people won’t hesitate to approach to ask for help. This has been very beneficial because people know I don’t shy away from work and that I’m not afraid of challenges.  “In any new role, you can’t know everything straight away. That is what growing and learning as a professional is all about. If you are seen as a positive can-do person who can be relied on to work hard, it is more likely that you will be offered promotions because your managers will trust that, even if you are not 100 percent ready, you will rise to the occasion, learn, and do what is needed.” Approachability, and a willingness to help others and collaborate to solve problems, is equally important for managers who want to support, encourage, and get the best from the people on their team. “Just as my managers know they can trust me, my team learns the importance of trustworthiness from me. It creates a positive chain reaction,” says Olalekan.  “They know they can come to me with problems and challenges, and that means they are also more likely to come to me with ideas, insights and solutions that can benefit the business. That is very rewarding for me as a manager.” A mother to two young children, Olalekan still finds time outside her work and home commitments to support her profession. A committed member of the London Society of Chartered Accountants Ireland, she was among four members recently elected to Council. “I am honoured to have been elected and to have the opportunity to give something back to the profession that has been so good to me in my career,” she says. “We train people to be robust, to be intimate with numbers, to be able to analyse the data and make sense of the figures. You don’t need to be the CFO of a FTSE 100 to be a success in this profession.  “My own ambition now is to add value to the organisation I work for, and support the people I work with. Even though I was so sure so young that I wanted to be an accountant, I couldn’t have known then how fulfilling my career would turn out to be. I am exactly where I want to be.”  

Karen Flannery and Níall Fitzgerald consider the critical points in the revised Chartered Accountants Ireland Code of Ethics, which came into effect on 1 March 2020. The revised Chartered Accountants Ireland Code of Ethics took effect on 1 March 2020. The revised Code was necessary to increase alignment with the International Ethics Standards Board for Accountants (IESBA) Code of Ethics, which underwent a significant restructure in recent years. While there are no changes to the fundamental principles, Chartered Accountants familiar with the previous Code of Ethics (effective September 2016 to 29 February 2020) will find the look and feel of the revised Code significantly different. While additional sections and emphasis were included, others were removed. This results in greater clarity and ease of navigation. Figure 1 provides an overview of the revised Chartered Accountants Ireland Code of Ethics. Added emphasis on fundamental principles The five fundamental principles of the Code of Ethics remain unchanged. These include integrity; objectivity; professional competence and due care; confidentiality, and; professional behaviour. The conceptual framework that describes the approach used to identify, evaluate and address threats to compliance with the fundamental principles also remains the same. However, there is now a heightened emphasis on the fundamental principles and the use of the overarching conceptual framework underlying each section of the Code. Before, much of the narrative was contained in a single section of the Code. Responding to non-compliance with laws and regulations New sections were added concerning non-compliance with laws and regulations (NOCLAR) for professional accountants in practice (Section 360) and professional accountants in business (Section 260). These bring the NOCLAR provisions of the IESBA Code of Ethics into the Institute’s Code. A vital feature of the NOCLAR provisions is the specific in-Code permission to breach the principle of confidentiality in the public interest. This permission has been explicit in the Institute’s Code for several years and so, the NOCLAR provisions can be seen as a change of detail rather than of substance. The new sections outline the required actions when NOCLAR is discovered and provide additional guidance in this area. Key points to note concerning the NOCLAR provisions are: The first response to identified NOCLAR is to raise the matter, and seek to address it, at the appropriate level within the relevant organisation (internally); Where NOCLAR is not dealt with appropriately internally, the professional accountant considers whether to report to an external authority in the public interest. The decision to report externally is (as it always has been) a complex one; and Where a report is made in the public interest and good faith, there is no breach of the confidentiality requirements of the Code of Ethics. However, there may be legal implications for the professional accountant to consider. Revised layout The most obvious change is the revised layout of the Code of Ethics, which now mirrors the structure of the IESBA Code of Ethics with additional material for members of Chartered Accountants Ireland. A new paragraph numbering format was introduced and as a result, sections were restructured (e.g. what was “Part C” (Professional Accountants in Business) is now “Part 2” in the revised Code).The revised layout facilitates more natural referencing and distinguishes between the Code’s requirements (in bold text and denoted by the letter ‘R’) and application material or guidance (indicated by the letter ‘A’). Complexity has been reduced by simplifying sentences and language in parts. Also a new ‘Guide to the Code’, explaining how it works, has been included. Other content changes Table 1 highlights other notable developments in the revised Code of Ethics and suggests where you might focus your attention depending on whether you are a member in practice or business. Retained Institute ‘add-on’ material Where existing Institute ‘add-on’ content created important additional requirements beyond the IESBA Code, these ‘add-on’ requirements are retained in the revised Code of Ethics. Such requirements include: Specific requirements regarding communicating with the predecessor accountant (Section 320); Particular obligations regarding transparency around the basis for fees and dealing with fee disputes (Section 330); and Agencies and referrals (Section 331). No new ‘add-on’ material was created. Additional support for members The Institute’s online Ethics Resource Centre is updated regularly with a range of supports and guidance for members. Additional information included in the old Code of Ethics, but removed in the revised Code and still considered useful, has been reproduced in a series of new Ethics Releases. The Ethics Releases are not a substitute for the requirements of the Code, but they do provide additional support for members in particular scenarios, including: Code of Ethics and changes in professional appointments; Code of Ethics and confidentiality; Code of Ethics and marketing of professional services; and Code of Ethics and corporate finance advice. Future updates The last substantial change to the Institute’s Code of Ethics was in 2016. While the Code does not change regularly, there is a significant body of work happening behind the scenes to ensure it remains appropriate, precise and effective in the context of the issues affecting the accounting profession. Members can, therefore, expect amendments from IESBA in the coming years; for example, considerations addressing the impact of technology-related ethics issues on the accounting profession. For members who are insolvency practitioners, a new Insolvency Code of Ethics is imminent. The current Code of Ethics for Insolvency Practitioners, appended as Part D of the Institute’s old Code of Ethics for members, remains in effect until then.  Actions speak louder than words It was evident from the Ethics Research Report, published by the Institute in January 2019, that members hold their professional and business ethics in high regard. While the Code of Ethics does not change regularly, it is a hallmark that establishes a minimum standard which is signed up to and shared by all members of the profession. It is useful to be familiar with its requirements and to remember that it is individual member actions that express commitment to the Code of Ethics in addition to a member’s personal ethics. The revised Code is available via the Institute’s Ethics Resource Centre.   Níall Fitzgerald FCA is Head of Ethics and Governance at Chartered Accountants Ireland.  Karen Flannery FCA is Head of Professional Standards Projects at Chartered Accountants Ireland.

Over the course of a successful 30-year career in international business, Shane Fitzsimons has refined a tried-and-tested approach to hitting the ground running in any new role. Now CFO and Executive Vice President at AIG Inc in the US, he talks us through the most important professional lessons he has learned over the years. “Keep your ears open, talk to people, pay attention to how things are done around you and adapt.”  For Shane Fitzsimons, the recently appointed Chief Financial Officer and Executive Vice President at American International Group (AIG) Inc, showing curiosity, trustworthiness and commitment to the business’ success really matters in any new role.  Over the course of a highly successful 30-year career in global business, Fitzsimons has refined a ‘go-to’ approach to hitting the ground running in a new position—no matter the business, industry or location. “In a lot of ways, you could say that getting off to the right start comes down to being a good listener. It’s important to go into any new situation with an open mind and be willing to learn about what’s around you,” he says. “Preconceptions will only ever get in the way and, when it boils down to it, people the world over generally share the same motivations. They want to know that they can trust you, that you can get things done, and that the success of the business is your number one priority.” Born in Belfast and raised in Cork, Fitzsimons has risen through the ranks at global companies like General Electric, Tata Group and now AIG over the course of a career that has taken him from Ireland to Europe, and on to the US, and Asia. Profound advice Every step of the way, he has continued to heed the “profound” advice he received at a pivotal point in his early years at General Electric while he was an analyst at the company’s headquarters in Connecticut. “I was about four months into this one-year assignment in Financial Planning and Analysis and I was gung-ho about the role, working 14- to 16-hour days, because here I was at the company’s corporate headquarters with the opportunity to be noticed by Jack Welch (then Chair and CEO of General Electric) and other senior people,” he says. “I wanted to demonstrate my commitment and my work ethic. Then, one day, the head of FP&A called me into his office. He’d noticed the long hours I’d been working. I was expecting praise.  “Instead, he sat me down and said: ‘I see you’re working these long hours and I’ve got to tell you: if you can’t manage the job I’ve given you in less than the working day, I can’t give you anything bigger to do.’” This advice has since become Fitzsimons’ guiding philosophy, he explains: “If you can’t take a job – even the most difficult job – boil it down, simplify it, and improve how it’s done, you’re not ready to move to a more senior role because you haven’t demonstrated a capacity to grow.” Productivity & performance That conversation prompted Fitzsimons to re-think his approach to productivity and performance.  “I had to reflect on how I could use my working time more effectively to do the job at hand while also getting to know other parts of the business. From that point onwards, I started to look at everything from the point-of-view of efficiency,” he says. “It was really quite profound. Even now with my team here at AIG, we have a major focus on supporting efficiency in the wider business.  “We obviously focus on the numbers—on traditional activities like accounting, treasury and tax—but we also see ourselves as an operational partner to the wider business with an important role to play in driving efficiency and supporting strategy and process improvement.” In this respect, Fitzsimons sees finance as an operational ‘enabler’ in business. “We play a very important role in control and governance, obviously, but we don’t see ourselves as the ‘checkers’,” he says.  “That’s why words like ‘expediting’ are so important to me – because finance is an enabler. Our role is really to help the wider business to be successful in the markets in which we operate.” Even at the earliest point in his career, Fitzsimons was already aware of the need to gain hands-on experience in the cut and thrust of the commercial world.  While completing his training with Chartered Accountants Ireland, he worked with Fitzsimons Flynn & Co., the practice run by his late father Garry, also a Chartered Accountant, from three locations in Cork city, Kinsale and Bandon. “I left Ireland pretty quickly. At the time, there weren’t many options to progress your career unless you were willing to travel and accountancy seemed like a very good career to take on the road with you.” From practice to industry Fitzsimons first moved to the Netherlands in 1990 for a six-month assignment with Coopers & Lybrand (now PwC) and would go on to spend a decade in the country, moving out of audit practice in 1994 to join GE Plastics in Bergen op Zoom.  “My father had always said that, to be a really good accountant, I would need experience in industry. He encouraged me to make the move early in my career, so, when I came across a finance role with GE, I decided to take it,” he said. Then a $5 billion subsidiary of General Electric, the US-headquartered multinational, GE Plastics had opened a manufacturing plant in Bergen op Zoom in 1971. By 1994, the site had become a key part of GE’s global operations, serving customers internationally. “I started in general accounting, consolidation, things like that, and quickly realised that, to progress my career, I would need to relocate to GE headquarters in the US and gain experience in areas like FP&A and commercial finance,” Fitzsimons says. He made the move in 2000, spending a year at GE’s Fairfield headquarters in Connecticut before heading southwest to Ohio to take up the role of Group FP&A Leader for Aviation. “That was a huge step up for me in terms of role and responsibility. It was a very formative period in aviation. The industry was heavily impacted by 9/11 and I learned a lot working with leaders like Dave Calhoun (now CEO and President of Boeing),” says Fitzsimons. “I worked very closely with Dave and other great leaders for four years, learning from them, and I was then asked to return to GE’s Connecticut headquarters as FP&A leader for the company. I stayed there for seven years.” Having weathered the worst of the financial crisis helming GE’s FP&A function, Fitzsimons was ready for “something new.” Now aged 44, he had already forged a successful career spanning industry and practice in Europe and the US.  So, what next? “Asia,” says Fitzsimons. “It was missing on my resume.”  When an opportunity came up with GE in Hong Kong, he decided to take it and, in all, spent six years in Hong Kong, initially as GE’s Chief Financial Officer for Global Growth and Operations, followed by Senior Vice-President of Global Operations.  “Then I turned 50 and decided to do what I’d always advised people never to do. I took time off. I’d been working since I was 18. I kind of needed a break. It was the right choice for me,” he says. After his sabbatical, Fitzsimons was on the move again—this time to Mumbai on India’s west coast.  There, he took up the position of Chief Synergy Officer at Tata Sons, the private principal investment holding company for Tata Group, India’s diversified “coffee-to-cars” conglomerate with operations in more than 100 countries. “I’ve moved around a lot over the years and what I’ve found is that there are more similarities between businesses and people around the world than you might expect,” Fitzsimons says.  “Often, you’ll find that the overriding priority for most people is to create a better future for their kids. That’s a very unifying motivation. “Another unifier is that you will always find people in a new company or situation who are willing to help you. Sometimes these folks will be buried in the organisation. They are the people who really want to help the company succeed. They’re willing to accept you early on and help you find your way.” This experience has taught Fitzsimons the importance of getting to know people in any new organisation he joins “at all levels.” “I don’t just want to get to know my direct reports, I want to get to know the people who work for them. I want to get to know people working in other parts of the business. Demonstrating your interest, your curiosity, is really important – and really valuable. People notice it.” An early win An early win can also help to create the right impression in a new role. “It’s important to be able to make a visible difference at the outset,” Fitzsimons says.  “It doesn’t have to be a big win, but it matters that people see it. It lets them know that you have the right intentions; that you’re here to execute and make the company better.” Fitzsimons spent 18 months with Tata Group, leading efforts to create synergies across the group’s diverse set of businesses. “At that stage, it was time to go back to the States. My family wanted to be in the US. The opportunity to join AIG came up in July 2019 and I jumped at it,” he says. Fitzsimons’ first role with AIG was as Global Head of Shared Services, based in New York. At the time, AIG’s Global Chief Operating Officer and Chief Executive Officer of General Insurance was Peter Zaffino, who is now the company’s Chair and CEO. “The shared services role attracted me, but, more than that, I really wanted to work with Peter,” Fitzsimons says.  Global Head of Shared Services was a newly created role at AIG, established to act as a single point of accountability for all key operational and financial capabilities across the organisation. “My biggest motivator right the way through my career has been the opportunity to just dig in and solve complex operational problems as part of a team, and I knew this role would be very operational, which would allow me to get involved in a lot of different aspects of the business,” says Fitzsimons.  “I enjoy breaking problems down into little pieces, finding the right operating cadences and rhythms, and the pure satisfaction you get when you find a solution—especially when you’re working at a pace that’s not necessarily comfortable, but it works.” The value of joining AIG in the shared services role and working with Peter Zaffino as a leader became quickly apparent.  Within five months, Fitzsimons took on the additional role of Global Head of Financial Planning and Analysis and three months after that, he joined the highest ranks of AIG senior management when he became Executive Vice President and Chief Administrative Officer in March 2021—and a member of the company’s 12-strong executive leadership team.  In October 2021, AIG announced that Fitzsimons would transition to the role of Executive Vice President and Chief Financial Officer by January 2022. In his new role as Executive Vice President and Chief Financial Officer, he leads hundreds of financial professionals across the globe who are supporting AIG’s priorities—from delivery on AIG’s financial performance objectives, to the separation of the Life and Retirement business from AIG, the execution of AIG’s budget and capital plans, and proactive engagement with investors and other stakeholders. Future plans & priorities “My biggest career goal now with AIG is to be the best CFO I can be; to cultivate and lead our diverse finance team in a way that allows each member to meet their own aspirations; and support the leaders who have placed their trust in me to be successful,” says Fitzsimons. A member of the Institute of Chartered Accountants Ireland since 1993 and a fellow since 2003, Fitzsimons’ career has taken him from Ireland to Europe, and on to the US and Asia. Despite his success in different industries, however, he didn’t have a “concrete” career plan starting out. “I always had ideas about the experiences I wanted to collect along the way, but I don’t think I ever had a set plan,” he says.  “My father had taught me the importance of gaining industry experience as an accountant, so you would have domain knowledge as a business advisor working in practice, but I found my niche in industry and that’s shaped my career. “Now, ultimately, my priority in my current role with AIG is to eventually leave the business better than I found it. It’s also very important for me personally to build a diverse and high-performing team within the finance function.  “My team is about 60 percent gender-diverse already, which is a high figure for leadership teams in financial services. The goal now is to build on all diversity within the finance team and right the way through the organisation.” Team dynamics For Fitzsimons, a healthy, diverse, and balanced team dynamic is essential to achieving successful outcomes – and there is no place for ‘hands-off’ leadership in this respect.  “Everything is about the team and how the team works together. I actually never use the word ‘manager’ in the sense that colleagues need to be constantly instructed,” he says. “Everyone needs to play an active role. Everybody’s got to have defined responsibilities. They must see themselves and their role as part of the team.” As Fitzsimons sees it, the ideal team should comprise a group of people with diverse experience and backgrounds. “They need to be able to communicate well with each other to be successful and ambitious,” he says.  “I always say that a perfect team has five people on it who think they can do my job and two who probably can. What’s important is the belief that they’re not working in silos and that they’re paying attention to the big picture. It’s a good dynamic.”

Delta Partners’ Maurice Roche has Ireland’s next generation of tech unicorns in his sights with the launch of the VC firm’s latest fund, writes Clare O’Sullivan. With the launch of its latest €70 million fund, Dublin-based venture capital firm Delta Partners is targeting the newest generation of promising seed and early-stage technology businesses across Ireland.    Announced in April, the fund is the sixth to be launched by Delta since its formation in 1995. In the years since, Delta has backed over 120 companies, realising a mammoth €1.8 billion.      The new fund is backed by limited partners (LP) including Bank of Ireland, Enterprise Ireland and Fexco as well as the family offices of successful Irish technology entrepreneurs. Bank of Ireland has been an investor in Delta’s previous funds and has a number of initiatives/products aimed at the technology sector. Fexco is a new LP to Delta and widely regarded for its innovation in the fintech sector. Previous companies that have received investment from Delta include Clavis, the e-commerce company sold to London’s Ascential plc in 2017, Neuravi, the Galway-based medtech firm acquired by Johnson & Johnson in the same year, and SensL Technologies—sold to ON Semiconductor in 2018. Delta’s current portfolio, meanwhile, includes Luzern, the Dublin-based e-commerce platform, and Sirius XT, a UCD spin-out developing the world’s first commercial lab-scale microscope. It is a diverse portfolio—and necessarily so, according to Maurice Roche, General Partner at Delta Partners and a Fellow of the Institute. “In a market as small as Ireland, you nearly need to be sector-agnostic as a VC investor. Our main focus is tech, but it makes sense for us to have a range of investments in the broader tech sphere,” Roche said. With the launch of Delta’s latest fund, as many as 30 start-ups will be in the running for funding over the next three to four years. “We will focus on a spread of early stage companies where we aim to be the first institutional investors , i.e. at the early seed stage (companies raising capital to develop the product and prove the value proposition with customers) to late seed (companies raising capital to scale on the back initial customer traction and have early signs of product/market fit),” said Roche. Among all potential investees, a top priority for Delta will be the people involved. “The numbers are important, obviously, but it’s also about the people to a huge extent, the market and the opportunity,” Roche said. “You want to be confident that the management team is capable of developing the product and getting early customer wins. The people behind the product really matter.” A case in point is Richard Barnwell, who recently joined Delta as a partner from Digit Games, the gaming studio he founded in Dublin in 2012. A previous investee of Delta Partners, Digit was acquired three years ago by Scopley, the LA-based gaming company. Another new addition to the Delta Partners team is Amy Neale, who is joining from Mastercard where she led fintech innovation teams globally. “Richard has real start-up experience, and he has been successful, so I think he will be a great support to the entrepreneurs we work with,” Roche said. “Amy is our first female partner and a very valuable addition because she has ‘lived’ in the fintech ecosystem through her role with Mastercard, and fintech is a sector we have invested in, and will continue to invest in, with our new fund.” The fund has reached a first close with Bank of Ireland and Enterprise Ireland as cornerstone investors, supported by Fexco and several family offices. New investors will be added to the fund in the months ahead. “We are extremely thankful to our investors who have entrusted Delta with their capital to invest in the next cohort of Ireland’s early-stage technology companies” Roche added. “This fund will be aimed at what we see as the funding gap for early-stage companies in Ireland. Great Irish entrepreneurs are succeeding across the technology spectrum and the main thing they lack is capital to help them achieve their ambitions,” Roche said. “Our focus will be the start of their journey and helping them to succeed at that foundational level.” A veteran of the VC sector in Ireland, Roche joined Delta Partners at its inception 27 years ago. “I qualified in 1990 and spent some time working in corporate finance where I gained experience advising companies raising venture capital. I was interested in technology, and it was serendipity really that I met Frank Kelly, the founder of Delta, by chance one day playing golf.  “Frank had come back from the States to set up a VC fund in Ireland and he was looking to hire. We got talking and I’ve been part of the Delta story ever since.” In that time, Roche has borne witness to the Dot.com crash, the recovery of the global tech sector, the launch of the iPhone and the rise of the mobile app, and the transition from on-site IT to Software-as-a-Service (SaaS) in an increasingly digital world. “From my own experience, I would say that Irish start-ups have done well in business-to-business (B2B) applications, particularly in fintech and payments,” he said. “We have a very strong entrepreneurial tradition and a lot of very successful companies that have scaled internationally across SaaS and enterprise applications spanning digital health, customer data analytics, customer experience management and many other areas. “We will always be looking at markets ripe for disruption because, where change is happening and new innovations are gaining traction, there is opportunity.” Right now, cybersecurity is one such market rich with opportunity, according to Roche.   “If you look at what has happened in the last few years, businesses have become a lot more conscious of the need to protect their data,” he said.  “We have seen a marked rise in phishing and other cyber-attacks. That has made people much more aware of data protection and privacy. As a result, we’re seeing a lot of money going into cybersecurity, particularly cloud-based offerings.” Another big focus for Roche is fintech. “We have seen just how transformational fintech can be from the consumer point-of-view and person-to-person payments with the rise of digital banking apps like Revolut and N26. “Our main interest here is on the B2B side, because the transformational effects technology continues to have in the enterprise space is enormous and there is a lot of potential there.  “We’ve also seen the speed at which tech start-ups in Ireland like Flipdish and Wayflyer have achieved unicorn status. “With this new fund, we want to find the very best tech start-ups out there waiting to be discovered and give them the funding and the support they need to achieve the global success they deserve.”

As we celebrate Pride month, Dee France, Member & Student Support and Well-being Lead at Chartered Accountants Ireland, explores what diversity and inclusion means in the workplace, the important role it plays for employee well-being, and why employers should foster a culture of belonging and inclusion. Diversity and inclusion (D&I) has become a driving force in the changing organisational landscape. Companies and business leaders are placing greater emphasis on their approach to D&I and are embracing policies and strategies to create a more diverse, fairer, and resilient workforce.  Employee well-being and D&I are closely connected. In fact, employee well-being awareness can be seen as an intrinsic element of a company’s effective D&I strategies and policies.  An essential and significant feature of good overall well-being is our feeling of purpose and belonging. Programmes and initiatives that promote inclusion, diversity, and belonging can support and cultivate positive employee well-being. In its entirety, D&I in the workplace can have an impact on our overall happiness at work.  Emotional tax Employees from diverse backgrounds who experience a non-inclusive workforce can face an additional burden of an ‘emotional tax’ – the experience of being treated differently from peers due to race/ethnicity or gender, triggering adverse effects on health and feelings of isolation and making it difficult to thrive at work. This emotional tax can have an extremely negative impact on employees’ mental health and wellbeing. Feeling undervalued, overlooked, or excluded due to your identity can heighten a person’s vigilance to protect themselves from acts of bias or prejudice. Thrive, Chartered Accountants Ireland’s dedicated well-being hub, continues to receive regular calls from our members and students who seek support from the damaging impact a non-inclusive workplace can have on their wellbeing.   Managing diversity and inclusion  Implementing effective and successful D&I strategies and policies can take time, but a coherent and structured approach to these ensure that work practices and values support an inclusive culture that embraces different people, views, and perspectives. Producing a D&I policy allows a company to go above and beyond legal obligations and set a standard of expectation for the organisation and for its employees.  There are several ways companies can begin to incorporate inclusivity into the workplace.  Leadership and employee training  Providing training for leadership, management and employees increases awareness, aids the understanding and engagement in the company’s values and policies, helps embed these initiatives into the culture of the workplace, and allows for the development of empathy for others.  Employee network groups  Building an employee network group is an effective way to allow people to connect with others from different groups, and raise a sense of belonging, affinity, and kinship.  For example, the Institute has several different committee groups such as Balance, our LGBTQ+ committee, Student Committee, and D&I committee.  Open communication and feedback  Developing open and clear communication channels that are easily accessible to employees breeds better dialogue. It ensures employees and managers alike feel safe in airing grievances, giving feedback, and the feeling of being heard and valued.  Employee surveys on D&I initiatives allow companies to take onboard employees’ experiences and action feedback. It permits companies to assess if policies and strategies are working and evaluate and benchmark their efforts from year-to-year.  The Thrive Wellbeing Hub provides counselling, wellness coaching, practical advice and more to all members of the Institute. You can contact the Thrive wellbeing team by visiting our website, via email at: thrive@charteredaccountants.ie, or by phone: +(353) 86 0243294. 

The government’s new auto-enrolment scheme has been described as a ‘once-in-a-generation’ pension policy. Clare O’Sullivan examines how it will change our retirement  landscape. Andrew Glenn was 20 and an undergraduate studying in Adelaide when the Australian government’s Superannuation Guarantee (SG) came into effect in 1992, making it compulsory for employers to pay a percentage of their employees earnings into a retirement fund. In the three decades since, Glenn has become “passionate” about the scheme—dubbed the “Super”—which has, he says, created a positive culture around pension savings in Australia. “I remember when superannuation came in, I had a part-time job at university and, all of a sudden, I had money going into this separate retirement account. It wasn’t coming out of my pay. It was an additional payment, so, straight away, I felt good about it,” says Glenn. The idea behind the SG was that it would provide income in retirement for as many Australians as possible, substituting or supplementing the government pension. “There is definitely a mindset here now where people value their Super. It is pervasive throughout Australian culture and it can add up to quite a significant amount of money over time. If you are a home-owner, your Super would tend to be your second biggest asset, so people care about it,” says Glenn. Although not quite the same as Australia’s SG, the Automatic Enrolment Retirement Savings System announced recently by the Irish government has a similar aim to “build a culture” of saving for retirement, according to Minister for Social Protection, Heather Humphreys. Speaking in March at the announcement of the final design principles for the auto-enrolment regime, Humphreys described it as a “major reform” of the Irish pensions landscape. “It is intended not just to get people saving earlier, but to support them in that saving process by simplifying the pension choices and, importantly, by providing for significant employer and State contributions as well,” Humphreys said. Due to come into effect in 2024, the scheme will see some 750,000 workers enrolled automatically into a new workplace pension scheme with matching employer contributions and a state top-up. For every €3 saved by a worker, a further €4 will be credited to their pension savings account.  According to the Government, this means that, when the scheme is fully established, a worker earning €35,000 per annum will accumulate a fund (excluding investment returns) of €293,000 over their working life. Participation in the new scheme will be voluntary, however. Workers will have the ability to opt-out. Given the success of the Superannuation Guarantee in Australia, and the pension auto-enrolment systems since introduced in other countries, including Britain and New Zealand, the Irish scheme is expected to be a welcome addition to the pension landscape here. Although welcome, the government’s pension auto-enrolment scheme has been a long time coming, however.  “This goes back a long way. Pension policy in Ireland was first reviewed about 20 years ago and, today, we are the only OECD country that doesn’t yet operate an auto-enrolment or similar system as a means of promoting pension savings,” says Munro O’Dwyer, Partner, Pension Services, PwC Ireland. “In countries without such schemes, retirement savings tend to be quite low. In the UK, the introduction of an auto-enrolment system similar to that planned for Ireland doubled the rate of participation in private pension savings. The behavioural change was really quite significant. “If you dig further into the UK figures, you can see an even higher jump in the number of people in low-pay or low-security employment participating in private pension savings.  “We will see the same thing happening in Ireland once our auto-enrolment scheme is introduced, so, I think the benefit to society as a whole is really quite positive.”    Focus so far To date, much of the focus in Ireland has been on reducing future spending in the area of pensions, rather than working on incentives to increase private pension coverage, according to Miriam Donald, Public Policy Manager, Advocacy and Voice, Chartered Accountants Ireland. “This isn’t surprising given that the State Pension is the single biggest cost to the State in terms of benefits,” Donald says. Recent figures show that close to €6 billion was spent on the State Pension in 2020.  “This figure far exceeded the €4.5 billion spent on the COVID-19 Employment Wage Subsidy Scheme in the same year,” Donald says. Cultural shift As a result, the government has faced mounting pressure to change the “culture around pensions savings” in Ireland by introducing measures to encourage private pension coverage. “Recent studies show that life expectancy in Ireland is currently 90 years for men and 92.6 years for women,” says Donald. “This means workers, on average, will be retired for more than a quarter of their lives, with one third of the population depending solely on the State to fund their later years.” Figures released last year by the Central Statistics Office, meanwhile, showed that 34 percent of Irish workers had no pension coverage outside the State Pension. “The existing annual State Pension of some €13,000 might seem reasonable if you have paid off your mortgage, but Ireland’s home ownership rate in 2021 was reported to be 68.7 percent,” says Donald. “This means that many will pay high rents long after their peers own their own home and, with average annual rents lying north of €15,000 according to the Residential Tenancy Board’s 2021 rent index, sole reliance on the State Pension will not be sustainable.” Encouraging retirement savings By introducing auto-enrolment, Donald says the government has taken an important step in encouraging more people to save for their retirement over the course of their working lives. “At the moment, starting a pension requires taking an active decision to do so. The attraction of auto-enrolment is that, if a worker does nothing, a portion of their pay will automatically go into a pension fund,” she says. This means that the new scheme will overcome an existing barrier to pension savings whereby people simply overlook the need to put money aside for retirement over the course of their working lives, according to Donald. “Employees who do opt out after six months of being enrolled will be re-enrolled after two years, meaning private pension coverage could be increased considerably,” she says, “but the scheme also relies on behavioural inertia – i.e. trusting that some people will not get around to opting out of a pension scheme and will simply stay invested.” Challenges ahead Overall, Donald sees the introduction of auto-enrolment as a viable solution to increasing private pension coverage in Ireland. “It incentivises people to save, reduces the risk of people entering poverty in retirement and reduces the reliance on the State pension. Its introduction could even result in long-term savings for the State,” she says. Getting the scheme up-and-running by early 2024 will be challenging, however, according to Cróna Clohisey, Tax and Public Policy Lead at Chartered Accountants Ireland.  “A significant amount of work needs to be done—not just to develop the legislation underpinning the scheme, but also to finalise its design, and to establish the various mechanisms that will be required for it to function,” says Clohisey. As the legislation progresses, the government will need to work closely with businesses to advise and help them prepare for the introduction of automatic enrolment. Payroll providers, in particular, will face an uphill battle preparing for the planned introduction of the new scheme. “We know that this is going to be a considerable challenge for payroll providers to implement,” says Clohisey. “They are telling us that a lead-in time of at least 18 months would be required to properly develop, test, and deploy a fully operational system.  “January 2024 is not far away, and businesses will need time and guidance to get ready for this change. Sustained momentum will be needed to meet this ambitious timeline.” Central processing agency Jerry Moriarty, Chief Executive of the Irish Association of Pensions Funds, agreed that the planned introduction of the new scheme in early 2024 could give rise to significant challenges. “There is a huge amount to be done in a relatively short period of time, including the setting up of a central processing agency to do the job of auto-enrolling people—getting them on board and then dealing with all the administration that goes with making sure the contributions are passed on to the right investment managers,” he says. In the government’s favour is the fact that “we’ve been able to learn a lot from what’s happened with similar schemes in other countries,” Moriarty says. “In the UK, for example, the system focused on auto-enrolling employers rather than employees. That caused a huge problem with payroll systems, so they ended up having to phase in participation, starting with big employers.” Ireland’s new scheme will, by contrast, focus on auto-enrolling individual employees, Moriarty says. “It makes more sense because it means employers won’t have to deal with all of this extra admin and that, when people move from one employer to another, they won’t have to switch pension provider.”

The role of the charity director is an onerous one, but what about performance? David Brady considers the characteristics of an effective charity director, and future challenges and opportunities. The implementation in 2021 of the Charities Governance Code poses important questions for the effective governance of charity boards in Ireland, including the challenging, and occasionally sensitive, review of board performance and the performance of individual constituent directors.  Compliance with the Code is, however, a baseline measure of effectiveness. Beyond the legal requirements for directors under the Charities Act 2009 and the Companies Act 2014, the qualities, roles and responsibilities of the ideal charity director are largely undefined. Are charity directors different? Is being a director of a charity really that different to being a private sector director? Directors of charities and private sector directors have shared experience in overseeing the challenges: of recruiting, motivating, and retaining the right people; of there being sufficient funds to pay salaries; and of competitors in the same sub-sector.  There are also similarities in how the business of the board is conducted; the calendar of board meetings, sub-committee meetings, and annual general meeting; the annual audit; the risk register; and—increasingly common—evaluation of the board itself.  In both contexts, the chairperson is often selected for their relevant experience, ability to guide decisions or bring order in the face of complexity or challenge. There are, however, factors that are unique to charities, including: charities legislation and guidance from the Charities Regulator; compliance with the Charities Governance Code; a mixed-income revenue model, whereby funding is derived from a combination of restricted-purpose and unrestricted-purpose revenue sources; a volunteer, unpaid board of directors; staff members who may be unfamiliar with private sector/commercial work environments and practices; volunteers, who assist the organisation on an unpaid basis, but who may feel they have a stake/voice equivalent to employed members of staff or even board directors; functioning as public benefit entities, with accountability to end users and the public in general, and the fulfilment of a public-benefit purpose;  service-level agreements with funders. None of this makes life easy for the charity director and can be reason enough for some to shy away from holding board positions.  Nonetheless, there are many experienced and qualified people who wish to give something back to organisations that have positively impacted their lives or to causes aligned with their beliefs and values — often donating significant amounts of their time. How good is good? As noted above, the implementation of the Charites Governance Code has heightened awareness of governance standards in the sector and the importance of the role of the charity director in achieving these standards.  However, beyond meeting base-level compliance with the Code, the debate on how to define highly effective charity boards and directors, and their ability to impact on the success or effectiveness of their governed organisations, has yet to commence in earnest.  In this article, I propose a five-level model for evaluating charity boards in terms of their ‘maturity’ or otherwise (see Figure 1), from a non-compliant to an elite standard. I suggest applying the same model to the evaluations of individual directors. In devising and articulating this charity board maturity model, I considered the following: How mature is a charity board? What aspects of a board’s conduct define its maturity, or otherwise? What is the evidence of a board achieving the higher levels of maturity? For example, is it aware of charity sector challenges and opportunities in Ireland and internationally? What does this mean for director competencies and performance? Is it possible to connect board maturity with the related, distinctive competencies required of individual board members? Non-compliant boards typically have a negative attitude towards governance. They are often unaware of strategic developments within the sub-sector and have a short-term funding focus, relying on basic financial information and outdated policies and procedures. They have no board rotation or succession planning processes. Their AGM processes are weak, and they do not insist on the maintenance of a risk register. Compliant boards adopt a tolerant attitude to governance; however, strategically, they are largely closed to sector developments other than matters of self-interest. Their policies and risk register are compliant rather than effective; their rotation policy is not fully implemented, and the AGM is limited to board members only.   Effective boards see the benefits of good governance and revise board and staff structures to exploit opportunities. They seek funding opportunities to support strategy and use risk registers to manage risk and plan contingencies. They ensure that board appraisals and rotation of directors policies are implemented. AGMs include the attendance of, and participation by, non-board, external members of the charity.  Progressive boards seek continuous improvement in their governance of the organisation. They are keen to benchmark their maturity against the boards of peers. They seek collaboration in new initiatives that reflect market changes. Policies are updated in line with current business/market changes. The organisation’s risk appetite is determined and defined, and the board ensures that its skills gaps are identified and addressed. Board rotations are planned and implemented. Elite boards deliver strategic programmes resulting in significant impact and/or funding. Board members and staff have a collective problem-solving mindset. The charity’s performance is managed using both financial and non-financial KPIs. At the elite level, the board employs long-term resource planning, promotes a robust risk management culture, and reviews strategy regularly. Succession planning includes pro-active identification of new chair and board members, as well as key executive management positions. They embrace and learn from occasional failure positively. Benchmarking director performance As suggested, the five-levels of maturity model can be applied by analogy to the evaluation or benchmarking of individual board directors. The articulation of competencies, or rather their absence, of the ‘non-compliant’ director is straightforward.  They are unfamiliar with the sector or sector trends. They bring no valuable experience or expertise to the board, are unfamiliar with governance frameworks, and generally blame others for problems rather than take responsibility themselves. The compliant director has an up-to-date understanding of the charity, brings technical knowledge to the position, is familiar with the Charities Governance Code and brings governance oversight to the organisation.  Moving up a level, the effective director will have served previously on multiple charity boards and brings valuable experience. Other board members will be aware of their specialist knowledge and draw on their expertise to derive solutions for organisational issues.  Their awareness of internal and external stakeholders will be strong and their input to decision-making will reflect this. The progressive director is a strategic thinker. In addition to having specialist knowledge, they bring a strategic understanding of the niche in which the charity operates and its competitive advantages.  Their leadership qualities are also evident from previous directorships, and they are skilled in multiple business and/or charity sectors.  Accepting change as normal and necessary, a key characteristic is their desire to introduce innovations to the charity’s operations, particularly ideas that are working well in the commercial sector. Finally, the elite director provides economic, political, and social thought leadership to the charity, in addition to the strategic leadership attributes of the progressive director. They possess the qualities required to chair either the board or one of its sub-committees.  Through a broad network of private and public sector collaborators, they are well positioned to plan for the sustainability and growth of the charity.  They set the tone of communication within the board, between the board and the staff of the charity, and between the board and the sector and broader public arena. The style of the ‘elite’ charity director is, paradoxically, non-elitist, collaborative and influential, with an evident social purpose. What next for charity directors? As well as understanding the characteristics, competencies and behaviour of the ideal charity director, and applying these when evaluating boards and their individual members, there are several critical issues that pose important challenges and questions for the sector as a whole: Should there be mandatory term limits for holding the position of charity director and/or defined limits for the role of chairperson and secretary? Should charity directors be paid, and if so, in what circumstances, how much, and under what terms and conditions? How can more experienced businesspeople, qualified professionals and members of the public be encouraged to hold board positions in charities? What can the sector do to facilitate this? What training and development, beyond the compliance level, do charity directors need? Should mandatory, accredited training be introduced before board positions are offered and accepted? What can Irish charities learn from international experience and best practice regarding governance? Should the legislation be changed to make it easier to identify, caution, penalise or remove ineffective charity directors? The implementation of the Charities Governance Code has given an important boost to the raising of standards across the sector and the priority must be to ensure this happens promptly and comprehensively.  The extension of governance into territory beyond compliance is an exciting and challenging move with long-term benefits for all stakeholders.  Defining charity boards in terms of their maturity, from non-compliant through effective to elite, and evaluating director competencies by analogy, will serve to both challenge and develop a trusted and vibrant charity sector.   David Brady is a principal at DB Consulting.  (Views expressed in the article are strictly those of the author.)

Pat O’Neill outlines his priorities for the year ahead, including the need to increase the supply of accounting talent nationwide and reach out to members globally post-pandemic.  As Pat O’Neill begins his term as President of Chartered Accountants Ireland, his driving focus will be on tackling the ongoing capacity constraints facing the profession. Speaking at his election by members at the Institute’s 134th AGM in Dublin recently, O’Neill pointed to the urgent need to address the ongoing shortage of critical accountancy skills in the Irish labour market. “Despite the recent and current challenges of the pandemic and the re-emergence of significant inflationary pressures, the economy continues to grow,” O’Neill told attendees at the AGM on Friday, 20 May.  “Our economic pillars of large-scale foreign direct investment and successful domestic business require appropriate levels of accounting talent, both within their organisations and also in the accounting profession upon which they rely for their transactional and regulatory compliance needs.”  Despite this fundamental need, however, the reliable supply of accounting talent continued to be disrupted by structural issues requiring urgent action, O’Neill said. “If we don’t work hard to tackle significant issues facing accounting supply in this country relating to education, qualifications and permits, this ongoing shortage could have a significant impact on businesses here, both indigenous and FDI, potentially harming the wider economy in the future.” Second-level syllabus One of the primary factors impeding the supply of accounting talent nationwide is the accounting syllabus at secondary level. “The syllabus was introduced over 25 years ago,” said O’Neill.  “Not only does this mean that our students are being taught material and concepts, which are now somewhat obsolete, but the syllabus also does little to introduce our young people to the breadth of what the modern accountant’s role actually is—and how they add value to businesses, the economy, and society as a whole.”   It is crucial that the syllabus be reviewed, refreshed, and made “truly fit for purpose” in the 21st century, O’Neill said.   “Without this, students will be deterred from pursuing further studies and a career in accounting due to a fundamental misunderstanding of what accountancy involves and the career opportunities and choices it provides,” he said.  “Another consequence is that we have an insufficient number of students emerging from second level through third level and into professional qualifications. Ultimately, this means Ireland won’t have enough ‘bench-strength’ to support Irish businesses—but, thankfully, it is within our power to create positive change now.”   Departmental submission The Institute, under the auspices of the Consultative Committee of Accountancy Bodies-Ireland, last year made a submission on this matter to the Department of Education, including the findings of its accounting syllabus review.   “The National Council for Curriculum and Assessment has published its Report on its Senior Cycle Review and, whilst we are heartened that reform of the senior cycle is now recognised as necessary, the pace of change is just too slow,” O’Neill said.   “It has taken four years to reach this stage and it will likely be 2027 by the time we see changes coming through in the first tranche of subjects, which are still to be determined.  “Unfortunately, during this time, the issues facing Irish businesses in terms of the lack of supply of accounting talent are only likely to worsen.”  As it stands, the accountancy profession is already included on the Government’s Critical Skills Occupations List.  Compiled by the Department of Enterprise, Trade and Employment, the list catalogues professions required for the proper functioning of the economy, which are being impacted by a shortage of qualifications, experience or skills. The Northern Ireland Executive has also listed accountancy as an in-demand skill north of the border. Recognition of qualifications In addressing the capacity issue, O’Neill also referenced the need to ensure that the needs of business and the profession are met through the adequate recognition of qualifications. With more than 30 years’ experience as an audit partner with EY, he has significant involvement at board level with many plcs, providing insight and best practice guidance regarding boards’ risk and corporate governance agendas. “In the Republic, a substantial amount of the work required for the audit qualification must be statutory audit work,” O’Neill said. “This means that, despite students spending a significant amount of their training supporting US FDI businesses with their US reporting requirements—and with much of this controls work also used in the statutory audits of Irish subsidiaries—it will not count towards qualification. “The same goes for experience gained in auditing UK subsidiaries by students based in the Republic. The Department of Enterprise Trade and Employment and the Irish Auditing and Accounting Supervisory Authority (IAASA) must be involved in finding a solution to this situation.” Sourcing overseas talent O’Neill noted that, as a growing economy, if Ireland cannot source sufficient accounting capacity at home, we must ensure that we do all we can to attract candidates with the necessary skills from other countries. “It is my steadfast belief that people and businesses achieve great things when they come together and that diversity of background and thought is key to any profession,” he said. “I benefited from my own upbringing from an early age in Shannon, Co. Clare, which was at the time perhaps a uniquely multinational community in the regions. “Early in my career in audit, I moved from Dublin to the UAE where I spent some time working in Dubai in the early nineties. I was thrown in at the deep end and had the opportunity to work with some companies over there that followed US accounting rules.   “That experience turned out to be incredibly useful for me professionally for many reasons, not least because—when I returned to Dublin in 1995—Ireland’s tech boom had begun and indigenous companies like CBT, Smartforce, Iona, and Trintech, were listing on the Nasdaq.  “The experience I had gained working with those companies in Dubai following US accounting rules was suddenly invaluable, so I know first-hand just how important experience gained in other jurisdictions can be in our career.” Chartered Accountants Ireland has been working closely with the government in recent months to promote the need to reduce application processing times for Critical Skills Employment Permits granted to accountants from outside the European Economic Area who have been hired to work here.  “The improvement now coming through in the processing time for such permits as a result has seen wait times reduced to six to eight weeks from as high as four months,” said O’Neill.  “Now, however, we must retain—and even improve upon—these shorter processing times to attract the right talent.” Northern Ireland Protocol  O’Neill highlighted the need for certainty and stability in the wake of the most recent Assembly Elections amid ongoing disagreement on the Northern Ireland Protocol.  “The Protocol remains a subject of debate now more than ever, and there is no doubt that challenges exist, but predictability and certainty are key for business and the economy in Northern Ireland,” he said.  “The Institute was an early advocate for the unique benefits of the Protocol for businesses located in Northern Ireland.  “We have almost 5,000 members there, and it is incumbent upon us to convey the positive feedback the Institute has received regarding the unique market access they have into both Britain and the EU.” Power of connection Now that the worst of the COVID-19 restrictions are behind us, O’Neill stressed the need for greater connection and acknowledged the crucial role played by the Institute in supporting a global network and helping to forge valuable professional and personal connections among members the world over.  “The benefit of networking to our 30,000+ members, and the critical importance of the physical interaction of our students, cannot be understated,” he said.    “We will continue to work towards a return of our networking events to pre-pandemic levels to the extent we can over the coming year. We have been highly successful in our innovations in training, and ability to shift to examining our students remotely through the pandemic.   “Through the Institute’s Education Department, and in conjunction with our training firms, we will be looking at how to achieve a balanced blend of online and physical learning delivery in the future to facilitate this interaction.”  O’Neill is a longstanding member of the Institute who has served on the Council of Chartered Accountants Ireland since 2014. He is a former Chair of the Institute’s Audit, Risk and Finance Board, and a former Chair of its Leinster Society.   “The importance of the Institute and our District Societies both here, across the Island of Ireland, and abroad in connecting—and now reconnecting—our members is not lost on me,” said O’Neill.  “I have benefited enormously from my membership over the years, and during my Presidency, my hope is that I can give back to the Institute and to all of our members whose commitment is so highly valued.” Global membership Established in 1888, Chartered Accountants Ireland today represents more than 30,000 members in over 90 countries and has responsibility for educating 7,000 students.   The Institute’s objective is to create opportunities for members and students, and ethical, sustainable prosperity for society.   It is a founding member of Chartered Accountants Worldwide, the international network of over one million Chartered Accountants. It also plays key roles in the Global Accounting Alliance, Accountancy Europe, and the International Federation of Accountants.     “The Institute is here to serve our members and students and I feel privileged to be able to support this effort in my role as President,” said O’Neill.  

As the recently appointed Vice-Chair of the International Sustainability Standards Board (ISSB), Sue Lloyd will play a key role in paving the way for a “global baseline” for reliable ESG investment criteria. Elaine O’Regan talks to the New Zealand-born former IASB Vice-Chair about what lies ahead in her new role.  Prior to taking up your role with the ISSB, you were Vice-Chair of the International Accounting Standards Board for six years. Looking back on it, what do you see as your most significant achievements in that role? Completing the international IFRS Standard for insurance contracts was definitely a high point, and also chairing the IFRS Interpretations Committee from 2017 to 2022, and making it more responsive. What does your appointment as Vice-Chair of the International Sustainability Standards Board mean to you professionally? How important do you think the work of the ISSB will be, and your role in it? I see this appointment as a really exciting opportunity for me professionally. Corporate reporting is at a real turning point where we are embracing the need for the broadest set of information about sustainability, risks and opportunities to help investors make informed decisions. I am really excited and honoured to be part of that process. The ISSB has a pivotal role to play in bringing more comparability and quality to reporting on sustainability risks around the world and building a more efficient system, both for the preparers, providing the information, and also for the investors consuming them. One of my key roles as Vice-Chair of the Board is to bring to bear the standard-setting approach of the IASB. My technical skills from that world, and my knowledge of financial reporting, will help me to bring that rigor to sustainability reporting for investors. How will the ISSB’s approach to standard-setting emulate or differ from that of the IASB? How will the two bodies coalesce and work together in the future? There will be a lot of similarity with the IASB, particularly in relation to due process and the thoroughness in which we approach our work. The ISSB wants to be really inclusive and build on the viewpoints of our stakeholders. We have that in common with the IASB. Obviously, the subject matter is different. Sustainability is a more nascent area of reporting, so we will have to work more closely with our ecosystem and really work with assurers and specialists in sustainability to build this new infrastructure for reporting. The ISSB is a sister board to the IASB, and that is great because it means we are part of the same foundation. It gives us the unique ability to sit together and work out the package of information we are asking for to meet investor needs, and to make sure that the reporting and the financial statements fit well together. When the IFRS talks about the ISSB establishing a “global baseline of sustainability standards” what does this mean, and why is it important for the ESG agenda globally? When we talk about a global baseline, what we really want to do is establish a set of disclosures that are sufficient to meet the needs of investors—to enable them to understand how sustainability, risks and opportunities affect the value of a company’s shares and its debt.  We want to provide a ‘set of information’ on companies around the world so that investors can make decisions based on consistent and comparable data. That is really what a global baseline means. It will happen in practice through a combination of two different mechanisms. One will be adoption or incorporation into the regulation in different countries, so that it becomes part of the mandatory reporting system for jurisdictions, in the same way that the IASB’s accounting standards have been mandated by jurisdictions around the world.  Complementing this, we expect there to be a lot of voluntary application of the standards, separate to the regulatory element, because this is a good way for preparers to understand what information is relevant to meet investor needs.   Tell us about the ISSB’s four core pillars – governance, strategy, risk management and metrics. How relevant is each one in the context of your overall mission? Our overall objective is to make sure that investors have the information they need to understand the effects of sustainability risks and opportunities on enterprise values, share price and the value of a company’s debt.  Our pillars are the prism we use to gather sustainability information from four different perspectives. One is how a company governs its risks, and how it is managing those risks and building them into its business strategy. We also look at the metrics they use to assess where they are now, to set their targets for the future and measure their progress in meeting their targets. This ‘package of information’ is designed to meet the investor’s needs, and, importantly, it is designed to encourage companies to think about how they govern and manage risks. How will the work of the ISSB support and help investors in respect of good environmental, social and governance (ESG) practice? What other ‘ESG stakeholders’ will benefit from your work? We know that there are different parties who are interested in information about sustainability, not just investors. We want to facilitate the provision of information to all of them. We want to make this an efficient reporting system for public policy purposes and for broader stakeholder groups beyond investors, for example. One of the aspects that we are focusing on here is what we call the “building block” approach.   This means that, when we are building our requirements, we have investors’ needs in mind, but we also want to make sure that others can add specific investor requirements onto our disclosures to meet broader needs. If we can avoid the need to have one set of disclosures for investors and a completely separate set for broader stakeholders, it is more efficient for those preparing the information. Tell us about the first draft ISSB standards, published in April. What do these draft standards provide for, how is the consultation process progressing and what will the next steps be? There are two documents. The first is the General Requirements Exposure Draft, which sets out the overarching requirements for what should be provided for in sustainability reporting.  It asks companies to provide information about all of their significant sustainability risks and opportunities relevant to enterprise value assessment.  It also sets out some other general ideas—for example, the fact that you should be able to understand how this information relates to the financial statements and the proposal that this information be provided at the same time as the financial statements. The second document is the Climate Exposure Draft, which sets out what specific disclosures should be provided by a company about climate risks and opportunity. This means that, if a company using the General Requirements Exposure Draft identifies climate risks and opportunities as a “significant” sustainability-related risk and opportunity, they can turn to the Climate Exposure Draft to find out what disclosures to provide.  That document is asking for information about the physical risks of climate change the company is exposed to—flood risk, for example—but also opportunities arising from climate change. If a company has developed a product, which may become more popular because of climate change, investors may want to hear about that as much as they would climate-related risk.  These drafts are out for comment until 29 July, 2022. Once we get the feedback, we will decide what we need to adjust, what we can keep as is, and then we will move on to the final requirements. How do you foresee the “roadmap” of additional draft standards rolling out beyond these first two? What standards are next on the agenda for consultation and what is the anticipated timeline for their introduction? Our next step will be to ask our stakeholders what they think we should prioritise after the General Requirements Exposure Draft and Climate Exposure Draft documents are approved.  We only have so much time, and the same is true for our stakeholders, so it is important to us to ascertain where the greatest needs lie. In other words, it is really up to the stakeholders to decide what we work on next. How will the International Sustainability Standards Board (ISSB) build on work already carried out by the Task Force on Climate-Related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB)? Our four core pillars (governance, strategy, risk management and metrics) are taken straight from TCFD recommendations, and they form the backbone of the proposals we have out for comment.  We have incorporated their structure and the climate disclosures included in the TCFD have been incorporated into our Climate Exposure Draft. We have built on SASB materials in two ways. Industry-based requirements in the appendix to the Climate Exposure Draft are taken from SASB’s industry-based standards.  We took the climate-related metrics and included those in the Climate Exposure Draft as part of the mandatory climate disclosures.  We are asking stakeholders to use SASB guidance to help them meet their disclosure requirements in the General Requirements Exposure Draft up until the time we draft more specific disclosure requirements of our own. How do you foresee the ISSB working alongside, and collaborating with, other standard-setting and regulatory bodies and initiatives like the Securities and Exchange Commission (SEC) the Global Reporting Initiative (GRI) and European Financial Reporting Advisory Group (EFRAG)? Having our proposals out for comment at the same time as the SEC and EFRAG proposals means that we have a unique opportunity to compare and contrast these different proposals and bring as much commonality as we can to our requirements. In an ideal world, we want to work together to build this global baseline and ensure as much consistency as possible with the SEC, EFRAG, the Global Reporting Initiative (GRI) and others.  We have a Working Group tasked with doing so with the US, Europe and also China, Japan and the UK. We are encouraging our stakeholders to write to the SEC and to let the commission know if they think that the global baseline is important.  The GRI is also very important and is a really good example of the ‘building block’ process that I described earlier.  We have a Memorandum of Understanding with GRI. One of our aims is to work together to form a global baseline we both agree on to meet investor needs and to encourage GRI to add the additional pieces of information to meet the broader information needs.

After decades of barely-there inflation, a mix of issues resulting from the pandemic and the war in Ukraine has created the perfect storm for excessive inflation, writes Jim Power. A total lack of inflation has characterised the developed world economy for the past decade. Many central bankers have been focused on generating inflation using historically low interest rates and quantitative easing (QE), a mechanism for keeping long-term interest rates down and injecting liquidity into the financial system.  Indeed, the Japanese have spent 30 years trying to break a deflationary spiral.  Economists still do not fully understand the mechanics of inflation. However, it seems clear that the lack of inflation in recent years can be attributed to a combination of factors:  Globalisation;  The emergence of very low-cost producers of goods in the developing world, particularly in areas such as clothing and white goods;  Intense retail competition, particularly in the online sphere (Amazon, in particular);  Waning power of trade unions;  The growth of technology; and  The impact of the great financial crash and the policy of fiscal austerity that followed.  All has changed over the past year. Inflation has come back with a vengeance – the annual rate in the eurozone now stands at 7.4 percent; 8.5 percent in the US; seven percent in the UK; and 6.7 percent in Ireland, the highest rate recorded since October 2000.  Demand-pull vs cost-push Traditional economic theory suggests that inflation is either demand-pull or cost-push.  Demand-pull means that there is excess demand in the system, and the prices of goods and services are bid up as supply fails to match demand.  The Irish housing market is a good example of demand-pull.  Cost-push inflation arises when input costs, such as labour and raw materials, increase in price. The two oil price shocks in the 1970s provide a good example of this phenomenon for those of a certain age.  The resurgence of inflation over the past year is primarily an example of inflation driven by supply difficulties, but there is also an element of demand-driven pressures.  A crisis upon a crisis We have experienced a very unusual set of circumstances over the past couple of years. During the COVID-19 pandemic, production was significantly disrupted against a background of restricted demand and the shutdown of many businesses. There were also significant problems with shipping and logistics due to the COVID-19 restrictions.  When economies started to re-open, repressed demand was unleashed into the system, and this resurgence in demand came up against supply constraints. Prices began to rise, something particularly evident in energy markets. At the beginning of this year, the view was that as the post-COVID world returned to some semblance of normality, the supply bottlenecks would sort themselves out, the resurgence of repressed demand would ease, and inflation would come back down.  Unfortunately, we have been reminded that we should always expect the unexpected in recent weeks.  The Ukraine war is causing serious supply issues in energy, wheat and other foodstuffs, fertilisers and many industrial metals. A crisis has come upon a crisis, and the transitory inflation problem is now looking more long-lasting.  Excessive inflation Excessive inflation is a problem on several fronts.  If the rate of price increase exceeds the growth in wages, real incomes decline, and people’s purchasing power is damaged. This is a particular problem for those on fixed incomes, such as pensioners.  For a small open economy like Ireland, if inflation here is rising faster than countries with which we trade or compete, international competitiveness is eroded.  On the plus side, Ireland’s inflation problem is not unique – everybody else is grappling with the same problem. In Ireland, prices increased by 6.7 percent in March. Of this 6.7 percent increase:  housing, water, electricity and gas contributed 2.76 percent, due to higher electricity, gas and rent costs; transport contributed 2.4 percent, due to higher oil prices; alcohol contributed 0.41 percent due to the introduction of minimum unit pricing in January this year; and restaurants and hotels contributed 0.53 percent due to wage pressures and higher energy costs.  It is clear that energy has been the big driver of inflation, but it is now starting to become more deeply ingrained as the Ukraine war continues and labour shortages cause wages to rise.  The likelihood is that food price inflation will increase over the coming months due to rising food production costs and wheat prices. The possibility of the scarcity of products such as rice and sunflower oil is also high. Intense retail grocery competition might just put some brake on these price pressures. Breaking the cycle One of the problems with inflation is that it can become embedded in people’s expectations, causing them to seek higher wages which, in turn, feeds through to higher prices.  History shows that the persistence of inflation increases as the rate rises. Central banks and governments will have to work hard to break this cycle and make tough decisions with interest rates, taxation and government spending. Populist cash giveaways are not the way to respond.  Inflation and its causes are now the dark clouds threatening the economic outlook.  Jim Power is and Independent Economist and host of the podcast, The Other Hand.