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Irish companies lead on resilience but fall behind on ambition

Ireland’s medium-sized businesses are more optimistic than their global peers but a more ambitious approach is needed to deliver their expectations, writes Patrick Dillon Ireland’s medium-sized businesses are uniquely optimistic in their outlook ahead of the upcoming US presidential elections and in the wake of the recent elections in France and the UK.  Just 17 percent see geopolitical disruptions as a barrier to growth, compared to 42 percent in the Eurozone and 49 percent globally. This confidence follows through in the main findings among the Irish respondents to our latest Grant Thornton International Business Report (IBR), which captures insights into the outlook of 10,000 mid-market firms across the globe.  Our Irish IBR respondents are optimistic about the outlook for the Irish economy in the 12 months ahead. Close to three-quarters (73%) of the Irish medium-sized companies we surveyed predict a positive future. The findings are reflective of the resilience of Irish companies that have had to navigate a polycrisis in a short period of time, trading through the pandemic, cost-of-living challenges and disruption to global supply chains. This is not just a case of looking at the world through rose-tinted glasses, however. Irish medium-sized companies are anticipating a healthy bottom line over the next year.  Close to three-fifths of the Irish companies we surveyed predict a rise in revenues (57%), profits (59%), and headcount (52%) in the 12 months ahead. While it is fantastic to see such a strong sense of confidence among this cornerstone of the Irish economy, if the last few years have taught us anything, it is that none of us knows what’s around the corner.  To this end, the companies that will continue to succeed in the future will be those that remain hyper-focused on staying one step ahead of the competition – and this is where our International Business Report makes for slightly more concerning reading.  There is a significant difference in attitudes to innovation among Irish firms compared to their international peers. Just under a quarter (24%) of Irish businesses are preparing to increase investment in research and development over the next twelve months compared to three-fifths (60%) of their global peers.  We found a similar gap in levels of planned technology investment, with just under half (48%) of Ireland’s medium-sized firms budgeting for an increase, compared to 67 percent globally. Ireland is a small pool compared to the ocean that is the global marketplace. If Irish firms are to realise their ambition and potential, then they need to look to new markets.  Investing in innovation is key to unlocking these opportunities, whether it is leveraging digital channels to reach customers in every corner of the world or developing tailored products or services for a specific customer segment internationally.  A confident economic outlook is great, but it doesn’t put money in your pocket. To paraphrase Benjamin Franklin, an investment in innovation pays the best interest.   Patrick Dillon is Head of Deal Advisory with Grant Thornton Ireland *Disclaimer: The views expressed in this column published in the August/September 2024 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor.

Aug 02, 2024
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Technical
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ISA (Ireland) 600 Revised: navigating a new era in group auditing

Revisions to International Standard on Auditing (Ireland) 600 will result in higher-quality group audits, but more work will be required to deliver this benefit, writes Noreen O’Halloran The International Standard on Auditing (ISA) (Ireland) 600 has been revised. Issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), the revised standard applies to the audit of group financial statements.  Effective for periods beginning on or after December 15, 2023, these revisions aim to enhance audit quality and address inconsistencies in practice. They bring some challenges, however.  The purpose of ISA (Ireland) 600 Revised (the revised standard) is to enhance the quality of the audit delivered, by ensuing better co-ordination and understanding  between the group auditor and the auditor of a group component.  Audit committees, along with group and component management teams, will also experience changes in how the group auditor conducts the group audit.  Roles and responsibilities Various definitions are amended within the revised standard. These include the definition of a component, which now includes entities, business units, functions or business activities, or some combination thereof, determined by the group auditor for the purposes of planning and performing audit procedures in a group audit.  This concept of the auditor’s view of a component marks a departure from the previous standard. Under the previous standard, a component was identified by the group auditor based on the level at which the group or component management prepared the financial information.  As a result, audit committees can expect to see some changes in the identification of the components for the purpose of the group audit. The group engagement partner is responsible for the work performed by the engagement team. The definition of “engagement team” within ISA (Ireland) 600 Revised includes component auditors.  Therefore, it must be clarified that the group engagement partner along with members of the engagement team – other than component auditors (i.e. the group auditor) – will take responsibility for the nature, timing and extent of the direction and supervision of the component auditor’s work and the review of such work.  To fulfil this obligation, in addition to engaging with group management, the group engagement partner will need to be more involved with component auditors and, potentially, component management.  The definition of “significant components” has been removed. This means that there is no longer a set quantitative threshold above which a significant component’s financial information must be audited.  Rather, a more risk-based approach is required. Emphasis has been given to the consideration of the risk of material misstatement at the assertion level of the group financial statements associated with components.  This will mean that more decisions are made by the group auditor in terms of the level of work that is to be performed by each component and by whom this work will be performed. Component auditors may, therefore, expect changes to the scope of their work compared to previous years. The definition of group financial statements has been clarified. The standard focuses on the concept of a consolidation process. This includes the aggregation of the financial information of business units and is wider than the definition of the consolidated financial statement in financial reporting. As a result, audit committees may see a change in the approach to auditing an entity with multiple branches or divisions, as this is now considered to be a group audit.  The standard emphasises the need for a comprehensive approach to auditing all components contributing to group financial statements, ensuring that the audit covers all relevant aspects of the group’s financial reporting. The clarity regarding the definition of a component (including the removal of the significant component), the involvement of the engagement team and the responsibility of the group auditor, may enhance the quality of the audit delivered.  However, additional time will be incurred by the group auditor as a result, who must now ensure that all component auditors are adequately supervised.  The changes to the definition of a component will provide greater flexibility for the group auditor when identifying components. However, this may result in the entity’s management receiving requests for information regarding components that were not previously in scope. Risk-based approach One of the most significant changes in ISA (Ireland) 600 Revised is the alignment of the standard with the principles in ISA (Ireland) 315 Identifying and Assessing the Risks of Material Misstatement.  This requires the group auditor to focus more on identifying and assessing the risks of material misstatement at the group level when planning and performing the group audit, rather than simply defaulting to a full scope audit at the component level.  The alignment to ISA (Ireland) 315, and the requirement for the group auditor to take a more active role in identifying and assessing the risks of the material misstatement of group financial statements, will assist in improving audit quality.  It will also require more time, resources and effort on the part of the engagement team, however, and particularly the group engagement partner.  The group auditor will be heavily involved in identifying and assessing the risks of material misstatement at the group level and planning the approach to the entire audit, rather than delegating this to the component auditor.  The additional time and effort required will be most evident in large groups with components in multiple locations. The entity’s management may also receive additional, or more granular, requests for information from either the group or component auditor to support the group auditor’s risk assessment procedures.  Communication and documentation ISA (Ireland) 600 Revised reinforces the need for two-way communication between the group auditor and component auditor to ensure that both parties are in sync.  The group and component auditor together comprise one engagement team, so a collaborative environment is essential. The revised standard also emphasises that all ISAs, including ISA (Ireland) 230 Audit Documentation, must be applied in a group audit.  In applying ISA (Ireland) 230, the group auditor must demonstrate in their documentation how they are directing, supervising and reviewing the component auditor’s work.  The group auditor must consider the scenarios where access to either individuals or information at the component auditor level is restricted and how these restrictions are overcome. Enhanced documentation and two-way communication from the beginning of the audit will improve audit quality.  However, it will also require more co-ordination and collaboration, which may be challenging, particularly for complex groups with many components.   Early communication will be essential to addressing the changes in scope, higher levels of group auditor involvement and in identifying any challenges to this involvement, including restrictions on sharing audit documentation electronically or at all, or restrictions on travel to a specific area.  To fulfil their supervisory role, the group auditor may need to navigate various obstacles, including different time zones and language barriers.  Other practical challenges may include how to ensure that component auditors are part of the discussions required by the other ISA (Ireland) standards, including the fraud discussion required by ISA (Ireland) 240. Professional scepticism The revised standard clarifies how the requirements in ISA 220 (Revised) Quality Control for an audit of financial statements – particularly the importance of professional scepticism – applies to achieving audit quality in a group audit.  The group auditor must exercise professional scepticism by remaining alert to inconsistent information from component auditors, component management and group management, regarding matters that may be significant to the group financial statements.  The group auditor must take appropriate actions when inconsistencies are identified. In addition, the group auditor must emphasise the importance of exercising professional scepticism to each of the engagement team members, including the component auditors.  Exercising professional scepticism at the component level may result in the group engagement partner needing to engage more extensively with component auditors and component management throughout the audit.  Crucial supervisory role The revisions to ISA (Ireland) 600 introduce more requirements for group auditors and their component auditors. This requires increased resources, enhanced communication, increased documentation and a greater emphasis on professional scepticism.  Audit committees and group and component management will also see an increase in the level or type of information required from the group or component auditor so that the group auditor can fulfil their requirements in accordance with ISA (Ireland) 600 Revised.  The need for greater group auditor involvement in the planning and risk assessment stages, and the two-way communication required, highlights the importance for all auditors to understand the new requirements and ensure that they have the skills and resources needed to meet them.  To align with the revised standard, group and component management may see a change in the type or nature of information requested by auditors.  The supervisory role the group auditor plays is crucial to the execution of high-quality group audits.  Both the group auditor and the component auditor will need to be familiar with the new requirements and align their audit methodologies accordingly, while group and component management should be willing to provide the additional information required by the auditor.  While the revisions to ISA (Ireland) 600 will undoubtedly increase the workload of both auditors and group and component management, it will result in higher quality audits. This will, in turn, generate greater benefits to the public interest and may avoid high-profile group audit failures in the future.   Noreen O’Halloran is Principle, Audit Quality and Professional Practice Department, KPMG Ireland

Aug 02, 2024
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SMEs, the supply chain and the sustainability agenda

The CSRD has changed the sustainability outlook for SMEs reliant on business from larger entities in scope of the directive. Susan Rossney outlines what they can do now to keep ahead of the curve  Chartered Accountants Ireland is a global organisation with close to 33,000 members in positions of influence across society and the economy. With fewer than 250 employees, however, the Institute is also a small to medium-sized enterprise (SME). These SMEs are not often discussed in the context of climate change, but their combined carbon footprint is, on average, five times greater than that of their large corporate counterparts, according to CDP, the not-for-profit climate-disclosure organisation.  The European Commission estimates that SMEs contribute more than 60 percent of all greenhouse gas (GHG) emissions produced across Europe.   SMEs tend not to be at the forefront of sustainability discussions either, which have long been treated as the purview of larger accounting practices that have clients with sustainability reporting obligations.  This is expected to change with the implementation of the Corporate Sustainability Reporting Directive (CSRD), which introduces an obligation on (mostly) larger businesses to report on the carbon emissions of their supply chain partners.  As part of this, the focus of attention has moved to the SMEs in these larger companies’ supply chains, caught in a so-called ‘trickle-down effect’. These small businesses are expected to find themselves asked by key customers for climate-related information, often for the first time, with the risk of losing valuable contracts if they fail to do so. Despite this, Irish businesses – particularly SMEs – were found to be reluctant or unable to decarbonise, with 86 percent of Irish businesses having no set commitments or targets to decarbonise, and just 11 percent measuring and tracking performance on total CO2e emissions, according to a 2022 study.  Chartered Accountants Ireland aims to provide leadership in this area for businesses in Ireland, first leading by example in our own SME operations. Here are some of the steps we have taken to act on our central ethos, “for tomorrow, for good”. In 2020, we kicked off an Environmental and Climate Impact Project (ECIP) focused on managing carbon emissions, resources (water, paper, catering supplies, etc.) and waste.  We commissioned an energy auditor registered by the Sustainable Energy Authority of Ireland to carry out an internal energy audit for us, and we are working through their recommendations. Measures we have taken to reduce our carbon footprint include: Beginning the process of splitting our water and premises heating systems; Switching to light-emitting diode (LED) lights; Installing a roof net to prevent seagulls eating the insulation;  You can’t manage what you don’t measure, so in 2022, we invested in locally sourced emissions tracking software.  In 2022, we recorded a 13 percent decrease in carbon emissions on our 2021 baseline, and we recorded a 39 percent year-on-year reduction in carbon emissions at our Dublin headquarters in December 2023.   Similarly, there are many steps SMEs can take to reduce emissions and otherwise engage in sustainability practices. Our online Sustainability Centre signposts a variety of resources available to support businesses in these efforts.  Small steps make a big difference, but it’s a marathon not a sprint. My advice is start now, get help, measure – and keep going.  Susan Rossney is Sustainability Advocacy Manager with Chartered Accountants Ireland

Aug 02, 2024
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Feature Interview
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“I always had a desire to do well and to do something meaningful with my life”

Rory Mulvaney talks us through a multi-faceted career that has taken him from law to accountancy and on to entrepreneurship as the founder of his own corporate and compliance service firm  Belfast-born Rory Mulvaney, FCA, is founder and Managing Director of VANTRU, an independent provider of corporate and compliance services with a presence in Ireland, Britain and the Netherlands. Established in 2017 under the name Mulvaney, the company underwent a rebrand in 2023 to become VANTRU and employs a 20-strong team comprising accounting, tax and legal professionals. Here, Mulvaney tells Accountancy Ireland about the evolution of his career and path to entrepreneurship. Tell us a bit about yourself. Why you decided to become a Chartered Accountant? I was born in Belfast and my family then moved to Newry where I grew up and went to Abbey Grammar School. I now live in Rostrevor with my wife, Seana and our four children, Jack, Rory, Olivia and Charlie.   Starting out, I studied law at Queen’s University Belfast and, from there, undertook a Diploma in Legal Practice at the University of Law before joining Bank of Ireland and then McCartan Turkington & Breen in Belfast. At that stage, I decided that a career as a Chartered Accountant would give me the knowledge needed to one day become a business leader and I went on to train with John MacMahon & Co in Northern Ireland and undertook further training as a Tax Consultant with KPMG in Dublin. Looking back now, are you glad you made the decision to qualify as a Chartered Accountant?  Yes, absolutely! I wouldn’t say I had a career plan starting out, but I’m naturally ambitious and driven to succeed, so I always had a desire to do well and to do something meaningful with my life.  When I first decided to qualify as a Chartered Accountant, I could see that it would give me the freedom to work anywhere in the world for any type of organisation and possibly, one day, for myself.  After qualifying, I moved into industry with Bruce Shaw, now known as Linesight, a global cost management consultancy firm, where I was Group International Tax Manager for five years. What was it that prompted you to set up your own business? My first industry role with Bruce Shaw was inspirational. Working with a successful Irish business that was growing at pace and expanding overseas gave me confidence and a wealth of experience. In 2017, I decided to set up as a Corporate Service Provider (CSP) and established Mulvaney as part of Trustmoore, a global corporate services firm which had worked with Bruce Shaw on corporate services outside Ireland.  Trustmoore viewed Ireland and the UK as strategic jurisdictions for business growth. We established a two-year co-operation agreement after I pitched to the founders in Amsterdam in 2016. This was a pivotal moment in my career and a valuable opportunity to learn about the inner workings of the business. I was able to travel to global offices, attend internal academies and spend lots of time with Trustmoore’s founder and owners. Come March 2019, I established Mulvaney Corporate Services. I wanted to launch Northern Ireland’s first locally established, independently owned corporate services provider and to lead the market by providing a unique set of corporate and compliance services to foreign organisations across key jurisdictions. Today, we remain the first and only company of our kind in Northern Ireland. That makes me very proud. What prompted you to rebrand the business to VANTRU in 2023? We mainly service clients with foreign direct investment needs, both inward and outward, for trading and investment purposes, as well as clients in the capital markets space for whom Ireland is a relevant and attractive jurisdiction. As the company has grown, we have had opportunities to work with some high-profile global organisations and last year, seven years after our initial launch, I felt that the time was right to establish an identity and brand that would enable us to compete at the highest levels. What do you regard as your proudest achievements as a business owner? I am extremely proud of the fantastic team of qualified professionals who have chosen to work with VANTRU. It is also a massive achievement for me personally that VANTRU is recognised by many highly respected law firms, auditors, tax advisors and asset managers. We are in the very fortunate position of having financial institutions and CSP firms in other jurisdictions refer work on to us.  What are some of the most important lessons you have learned over the years?  Someone once told me: “people buy from people.” As a business owner, surrounding yourself with great people who can bring something unique to the table is key. In my wider career, I have had the privilege to work for and alongside people who have taught me valuable lessons. John MacMahon is a well-known Chartered Accountant from County Armagh who has built a fantastic all-island practice and property empire. John was always generous with his time, giving me plenty of valuable advice when I was starting out in my own career. Brendan O’Mara, Derry Scully and Gerard Campbell of Bruce Shaw also stand out. A natural entrepreneur, Brendan was the Founding Partner of Bruce Shaw in Dublin over 40 years ago.  Derry was the Group Chair during my time with the firm. He was both technically gifted and able to maintain a lot of key client relationships globally, including with some of the world’s biggest companies. I worked very closely with Gerry, as CEO, and learned a great deal from him also.  In my own journey, I have found myself adopting a lot of their habits, especially Gerry’s, with his little black books and knack for “getting things done”.  In the world of corporate services, I have learned a lot from two Dutchmen – Trustmoore founder Steven Melkman, who is an inspirational and charismatic leader, and Jan Jaap Kuipers, the former CEO of the BK Group.  Who do you most admire right now in business or public life? In business, it has to be Phil Knight, founder and former CEO of Nike Inc. I recently read his memoir, “Shoe Dog,” and was very inspired by his story. I found myself relating to his experiences, especially in the early days. In sport, despite being a Manchester United supporter, it has to be Pep Guardiola. I also read his biography, “Another Way of Winning,” by Guillem Balagué. Guardiola is so much more than just a football coach.  How has the role of the accountant evolved since you first joined the profession? The role of the accountant has been impacted by ongoing advances in technology, including the introduction of new and improved accounting software and cloud-based tools, which automate routine tasks such as bank reconciliations.  We are now also starting to see the impact of artificial intelligence, which will remove the need to carry out routine tasks for finance departments and accounting teams, such as data entry, reconciliations and generating reports.  The daily work patterns of accountants have also changed dramatically. At VANTRU, all of our employees have adopted hybrid working with some team members working remotely on a full-time basis. We recently hired a new team member who is based in Germany! There are many positives to this way of working for our business. We are moving towards a fully cloud-based business model, which will mean that we can hire people from anywhere in the world.   What are your plans for VANTRU in 2024 and beyond?  We have fulfilled most of the goals outlined in our 2019 business plan and we are in the process of agreeing our strategic plan for the next five years with the help of John-George Willis, our Non-Executive Director.   These plans will centre around improving our brand awareness, IT systems, processes and people. We will also consider growth by acquisition if the right opportunity arises.  Put simply, I want our company to continue to grow. I am very involved in developing new business opportunities and, every day, we talk to prospective clients from all over the world.  I am really looking forward to what we can achieve over the next decade.

Aug 02, 2024
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The key to unlocking capital for scaling companies

A new report published by the Department of Enterprise, Trade and Employment could hold the key to unlocking crucial capital for scaling Irish companies, writes Sarah-Jane Larkin The Irish Venture Capital Association welcomes the report, The Use of Finance as a Catalyst to Develop a Scaling Ecosystem, published recently by Peter Burke, FCA, TD, Minister for Enterprise, Trade and Employment.  This comprehensive report highlights the critical role access to finance plays in the growth and development of businesses in Ireland. We commend the government for its focus on enhancing financial support mechanisms to empower Irish enterprises to scale and compete on a global stage.  We are also pleased to see the commitment to establish an implementation committee to immediately start work on recommendations to help high potential start-ups access scaling finance.  The recommendation to investigate options for pension fund participation in scaling equity funds, and encourage corporate venturing in Ireland, is particularly welcome.  This report has been published at a time when Ireland’s economy stands as one of the most dynamic and robust in Europe, comparing favourably to other small, advanced economies worldwide.  However, it has become evident for Irish companies seeking larger rounds of capital that the dramatic transformation in our economic fortunes in the last 30 years cannot outrun the impact of our longer-term economic history.  The measures suggested in The Use of Finance as a Catalyst to Develop a Scaling Ecosystem, if implemented, would contribute to rectifying the deficits caused by this history.  Ireland’s economic history has been marked by periods of colonisation, famine and political upheaval. All have contributed to some of the financial challenges we now face in terms of the capital available to our SMEs today.  During British rule, Ireland’s economy was heavily controlled, leaving little room for the accumulation of private wealth. The Great Famine further decimated the population and weakened economic structures, leading to widespread poverty and emigration.  Up until the 1970s and in the early stages of the boom in foreign direct investment (FDI), Ireland remained largely agrarian.  Our relatively recent prosperity, rooted in an open FDI-oriented economy, has resulted in a shortfall in the institutional and corporate investment typically seen in other European countries.  Unlike other nations, Ireland did not undergo a transformative industrial revolution in the late 18th and early 19th centuries, nor have we had the same opportunity to create domestic multinationals or intergenerational wealth.  As a result, there are very few domestic multinationals in Ireland that typically deploy assets in domestic venture capital funds or direct investment in start-ups. Over the last 30 years, successive Irish governments have implemented various policies to address these challenges, such as encouraging entrepreneurship, providing grants and subsidies for small businesses, investing in education and innovation and seeding a domestic venture capital and private equity industry.  These measures have met with mixed success due to deep-rooted structural issues, however, and the lack of sources of private capital. What The Use of Finance as a Catalyst to Develop a Scaling Ecosystem shows is that, while Ireland’s economic history has been shaped by a persistent lack of private funds, understanding these historical and structural challenges is crucial in developing strategies to overcome them.  The report’s recommendations to incentivise pension funds to invest in growing Irish businesses could significantly boost the available capital.  By enacting the report’s recommendations and addressing these issues head-on, Ireland could build a more robust and self-sustaining economic future.   Sarah-Jane Larkin is Director General of the Irish Venture Capital Association *Disclaimer: The views expressed in this column published in the August/September 2024 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor.

Aug 02, 2024
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Personal Development
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“Being a Chartered Accountant genuinely allows you to become a difference-maker”

As the new Chair of Chartered Accountants Ireland Ulster Society, Gillian Sadlier wants to demonstrate the many benefits a career in the profession can offer potential new entrants For Gillian Sadlier, the recently elected Chair of the Chartered Accountants Ireland Ulster Society, attracting and retaining accountancy talent will be a key priority in the months ahead.  A Senior Manager with Bank of Ireland UK, Sadlier was elected as Chair of Chartered Accountants Ireland Ulster Society at its 117th AGM held in Belfast on June 7. Taking office, Sadlier committed to advancing measures to address the skills shortage that is impacting the accountancy profession and wider economy in Northern Ireland.    It is a cause close to Sadlier’s heart, having trained as a Chartered Accountant with Coopers and Lybrand (now PwC) in the early nineties after graduating from Queen’s University Belfast with an economics degree. “I am immensely proud to be a Chartered Accountant and I feel hugely honoured and privileged to now hold the position of Chair of Chartered Accountants Ireland Ulster Society,” Sadlier says. “My Dad always told me that accountancy was a solid career choice and maths was my first love at school, largely thanks to an inspirational teacher. I later found myself embarking on my Chartered journey when I started applying for jobs in the November of my final year of university and went on to train with Coopers and Lybrand in Belfast.” Having trained on the small business team at Coopers and Lybrand, Sadlier moved into audit and took the opportunity to relocate to the firm’s Singapore office on a three-month secondment. Already, she could see how building a career as a Chartered Accountant could open doors and enable mobility and opportunity on a global level. “The Chartered Accountancy designation offers a wide range of career benefits – that’s very clear to me. Most of my career has been spent working in roles that have required me to hold the qualification, or an equivalent,” she says. “Though I haven’t strayed too far from home, several of my peer group took advantage of the mobility offered by the qualification to progress their careers overseas in places like Australia, the US and the Cayman Islands.” In her own early career, Sadlier chose to leave Coopers and Lybrand to join ASM Chartered Accountants in 1996. After nine years with the firm and having risen to Director level working across accountancy, audit and corporate finance, she moved to Invest NI, Northern Ireland’s economic development agency. “I really enjoyed being involved in commercial due diligence work, which allowed me to get right ‘under the bonnet’ of a business, so when the opportunity arose shortly after the birth of my second child to join Invest NI as a Corporate Finance Executive, I took it,” she says.  Sadlier spent seven years with Invest NI, carrying out commercial appraisals across a wide range of businesses. “I was privileged to work with some of the largest and most successful indigenous businesses and inward investments in Northern Ireland, something I don’t think I would have experienced working elsewhere,” she says.   “In 2012, I joined Bank of Ireland as part of their ‘challenged’ team, spending two years working closely with a portfolio of business customers with stressed borrowing, before moving into the lending team in 2014.”   Sadlier moved to her current role as a Senior Manager at Bank of Ireland’s UK Chief Executive’s Office in 2021. “Based on my career experience alone, it’s clear that the skills required for, and developed through, the Chartered Accountancy qualification are highly transferable and can open doors to a very broad range of careers right across the public, private and third sectors.” It is this message that Sadlier is intent on imparting to younger generations during her term as Chair of Chartered Accountants Ireland Ulster Society.  Against the backdrop of skills shortages in Northern Ireland, she will focus on the need to attract and retain accountancy talent, so that the profession can continue to support economic growth and development.  “Northern Ireland has so much economic potential, with unique access to Great Britain and EU markets, strong transport links with our neighbours, an educated workforce and a stable business environment,” she says. “However, the skills shortage affecting so many companies is threatening our ability to realise this economic potential.”  Recent research carried out for Chartered Accountants Ireland Ulster Society found that three-in-five (61%) of member businesses and organisations are currently experiencing skill shortages, compared to 62 percent in 2022 and 48 percent pre-COVID.  Seventy-five percent of the Chartered Accountants Ireland Ulster Society members surveyed reported difficulty finding the right people for jobs in Northern Ireland. The same percentage said they expect the shortfall in skilled labour to negatively impact Northern Ireland’s economic performance in the year ahead. “My focus in the coming months will be on promoting Chartered Accountancy as a profession. I want to show potential new entrants to the profession just how varied and full of opportunity a career in accountancy can be and to demonstrate the reality that being a Chartered Accountant genuinely allows you to become a ‘difference maker,’” Sadlier says. This work will include engaging with second and third level students and working closely with trainees and young professionals to support them in the early stages of their careers.   “Our qualification is widely regarded as an indicator of a broad range of skills and attributes, including professionalism, analytical ability, technical capability and commercial acumen,” Sadlier says.  “Taken together with the mobility of the qualification, opportunities to develop personal and professional skills, pursue related specialisms and network effectively, the qualification really can open doors to endless career options.”

Aug 02, 2024
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“AI cannot replace the strategic thinking and judgement accountants bring to the table”

AI is revolutionising accountancy by automating routine tasks, enhancing data analysis and providing valuable insights for strategic decision-making. Conor Flanagan explains how Artificial intelligence (AI) has emerged as a transformative force across various industries and accountancy is no exception. As AI technologies advance, they are reshaping the accounting landscape by enhancing efficiency, accuracy and strategic decision-making.  The emergence of AI can be traced back to the 1950s when pioneers like Alan Turing began exploring the concept of machine intelligence.  Turing’s famous “Turing Test” proposed that a machine could be considered intelligent if it could engage in conversation with a human without being distinguishable from a human interlocutor. Since the 1950s, AI has continued to evolve through different phases, including the notable period in the 1970s known as the “AI Winter” when there was a significant fall-off in funding and interest in the technology.  Since then, and coinciding with advances in computational power coupled with the development of machine learning algorithms, interest in AI has been reignited, with breakthroughs in natural language processing, computer vision and data analytics paving the way for more practical applications.  This progress, although impressive, has been somewhat dwarfed by the advent of Generative AI in recent years, with companies like OpenAI and its now infamous ChatGPT platform sparking widespread interest in the technology and its potential.  Generative AI has given rise to exciting new systems now capable of performing complex tasks, such as image recognition, language translation and content creation. And for the sceptics among us – no, this article was not written by ChatGPT. The Microsoft experience AI is revolutionising accountancy by automating routine tasks, enhancing data analysis and providing valuable insights for strategic decision-making. At the recent Chartered Accountant Technology Conference, held in January 2024, Daragh Hennelly, Senior Finance Director with Microsoft in Ireland, shared the story of how the company is unlocking business value through AI-enabled outcomes in finance. Microsoft began its AI journey over seven years ago, leveraging traditional AI to create models that could recognise patterns in data and use this to predict and act on potential outcomes, driving significant efficiency gains. Some examples include: Task automation and content creation Microsoft is using AI to automate tasks such as setting up purchase orders and logging expense reports. Streamlining processes and reducing risks Invoice approvals: AI assigns real-time risk scores to automate more than one million low-risk invoices and cuts the manual effort required for the rest by 50 percent, resulting in 125,000 hours of time saved for finance team members who can now use that time to focus on more strategic tasks. Journal entry anomaly detection: Machine learning algorithms have been built to review thousands of journal entries to detect anomalies with the aim of reducing reporting risks or misstatements.  Enhancing contract review efficiency: AI reads and scores thousands of contracts, reducing the time needed for manual review by 50 percent and allowing finance professionals to focus on high-risk contracts. The recurring theme in all these examples is how AI can be deployed to either automate manual tasks previously carried out by Microsoft’s finance team or unearth and present anomalies requiring additional review.  This demonstrates how AI can create efficiencies in finance functions and processes, but as accountants, we still need to be professionally trained to make decisions based on a smaller and more focused sample base.Over the past 18 months, in particular, the opportunity to transform business and finance processes has accelerated with the roll-out of Generative AI and its ability to create original content – such as text, images, video, audio or software code – in response to user prompts and requests. Today, Microsoft is adopting Generative AI to further enhance processes and unlock business value. This opportunity can be categorised across four main areas: Summarise information. Generate content. Recommend actions. Simplify tasks. 1. Summarise information Recap meeting transcripts to capture key points and assign actions. Distil collection agents’ call notes into actionable plans. Flag key terms in contracts related to payments, pricing and discounts. Synthesise complex workflow documents to highlight handoffs and commonalities. Summarise earnings scripts to identify significant trends and highlights. 2. Generate content Draft financial close decks and write analytical comments and insights. Write contractual language based on simple notes. Draft collection calls and follow-up emails in different languages with payment plan details. Write initial internal audit reports and investor relations earnings call scripts. Produce market sentiment analysis using transcripts from corporate earnings calls and central banking authorities. 3. Recommend actions Analyse financial close variances and recommend areas of the business to investigate variance drivers. Define collection strategy based on customer payment history. Evaluate audit workpapers and resolution disputes against audit controls.  Guide users in setting up purchase orders, invoices, expenses and payments. Recommend policy adherence within workflows. 4. Simplify tasks Accelerate financing requests by automating credit checks and policy reviews. Review sourcing contracts to ensure compliance and reduce human error.  Automate Sarbanes-Oxley Act (SOX) operational controls and summarise insights. Prioritise collection emails, tag disputes and identify resolution owners. Streamline tax and customs procedures by identifying compliance obligations from different global jurisdictions. Central to the success of this transformation of finance at Microsoft is a strong culture of encouraging and rewarding employees to leverage new technologies to transform finance processes. As Amy Hood, Microsoft’s Executive Vice President and Chief Financial Officer, puts it, “by adopting innovative technologies, finance will strengthen its business leadership through compliance, accuracy and efficiency.”   Microsoft is at the forefront of the Generative AI wave, advancing ideas of what is possible and investing in AI solutions such as CoPilot. CoPilot is integrated into Microsoft’s applications (Word, Excel, PowerPoint, Outlook and Teams), working alongside the user with the aim of helping them to work more creatively and efficiently.  It is also enhancing business application products such as Power Platform, Business Central and Dynamics Sales, facilitating advanced data analytics and the creation of complex workflows using natural language that would previously have required the intervention of a developer.  AI’s other early adopters Outside Microsoft, there are other examples of organisations that have successfully implemented AI in their accounting processes, demonstrating the technology’s practical benefits in our field.  HSBC The multinational banking and financial services company has implemented AI to enhance its fraud detection capabilities. HSBC’s AI system analyses transaction data in real-time, identifying suspicious activities and flagging potential fraud cases. This has resulted in a substantial reduction in fraudulent transactions and improved security for customers. Xero The cloud-based accounting software provider uses AI to automate bookkeeping and financial reporting tasks for small and medium-sized businesses. Xero’s AI-driven platform can categorise transactions, reconcile bank statements and generate financial reports, saving time and reducing the risk of errors for business owners. AI and ethical risk While AI offers numerous benefits to the accounting profession, it also raises some ethical concerns. These issues must be carefully considered to ensure the responsible use of AI in accountancy. Data privacy and security AI systems rely on vast amounts of data to function effectively. This raises concerns about data privacy and security, as sensitive financial information may be at risk of unauthorised access or misuse. Organisations must implement robust data protection measures to safeguard against data breaches and ensure compliance with privacy regulations. Bias and fairness AI algorithms are only as unbiased as the data they are trained on. If the training data contains biases, the AI system may produce biased or unfair outcomes. This is particularly concerning in areas such as fraud detection and financial forecasting, where biased algorithms could lead to discriminatory practices. It is essential to ensure that AI systems are trained on diverse and representative datasets to minimise bias and promote fairness. Transparency and accountability AI systems often operate as “black boxes,” making it difficult to understand how they arrive at their decisions. This lack of transparency can be problematic in the context of financial reporting and auditing, where accountability is crucial. Organisations must strive to develop explainable AI models that provide clear insights into their decision-making processes. AI and the work of the accountant The automation of routine accounting tasks through AI has raised concerns about job displacement and the future of the accounting profession.  While AI can handle repetitive and mundane tasks, it cannot replace the strategic thinking and judgment accountants bring to the table.  That said, accountants may need to adapt to new roles and develop new skills to remain relevant in an AI-driven landscape. Like electricity, the roll-out of AI will have a major impact on every industry and many professions, but only those who embrace it will learn to harness its power. Accountants must be prepared to adapt to the changing landscape by acquiring new skills and knowledge. Continuous learning and professional development will be essential for accountants to thrive in an AI-driven world. This includes gaining proficiency in data analytics, machine learning and other emerging technologies. Rather than viewing AI as a threat, accountants should embrace it as a valuable tool that can augment their capabilities. By leveraging AI to handle routine tasks, accountants can focus on higher-value activities, such as strategic planning, financial analysis and advisory services. AI is undeniably transforming the field of accountancy, offering numerous benefits in terms of efficiency, accuracy and strategic decision-making.  From automated data entry and fraud detection to financial forecasting and auditing, AI is revolutionising traditional accounting processes. Its widespread adoption also raises important ethical questions, however. To fully realise the potential of AI while addressing this challenge, organisations must prioritise ethical considerations while also investing in reskilling and upskilling their people and fostering collaboration between humans and AI.  By doing so, the accounting profession can harness the power of AI to drive innovation and deliver greater value to clients and stakeholders. If you have found this article interesting, join us for the next Chartered Accountants Ireland Technology Conference on Friday 24 January 2025. Conor Flanagan is ERP Lead with Storm Technology and a member of the Technology Committee of Chartered Accountants Ireland

Aug 02, 2024
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The EU AI Act – sweeping regulation brings opportunity and challenge

The European Union’s new Artificial Intelligence Act brings opportunities for businesses but will not be without challenge, writes Keith Power Just seven percent of Irish businesses currently have governance structures in place for artificial intelligence (AI) or generative AI (GenAI). Despite this, the overwhelming majority (91%) believe that GenAI will increase cybersecurity risks in the year ahead. This is according to PwC’s latest GenAI Business Leaders survey, published in June 2024.  The European Union’s Artificial Intelligence Act (EU AI Act) is a sweeping new regulation aimed at ensuring that businesses have the appropriate AI governance and control mechanisms in place to deliver safe and secure outcomes.  Indeed, a large majority (84%) of our survey respondents welcomed the introduction of the EU AI Act, saying regulation is necessary to prevent the potential negative impact of AI in the future.  The new EU AI Act will also bring challenges, however. Its aim is to protect businesses, consumers and citizens in the EU from potential risks associated with AI in terms of health, safety, fundamental rights, democracy, rule of law and the environment.  By introducing standards and providing legal certainty, the Act also seeks to foster innovation, growth and competitiveness in the EU’s internal market.  It is the EU’s first comprehensive legal framework for AI and will level the playing field for businesses using the technology.  The Act adopts a risk-based approach, with its biggest compliance requirements applying to “high risk” AI systems.  These requirements include addressing data governance concerns, mitigating bias, ensuring transparency and implementing a system of quality management.  The Act also requires that users must be informed when they are interacting with chatbots, and that any AI-generated content must be clearly identifiable as such.   Several specific risks are particular to the EU AI Act, including failure to identify all uses of AI across a business as well as the potential for the inaccurate risk classification of AI uses.  The Act also obliges organisations to assess all of their use cases for AI. This may prove an onerous and time-consuming task given the dispersed nature of the use of AI in many companies. The risk of misclassification is high as risk classifications may change as an organisation’s use of AI evolves over time.  This necessitates the implementation of appropriate ongoing governance and control procedures to maintain compliance, bringing its own challenges. There is also a risk that the focus on compliance may lead to a drag on innovation.  The nuanced nature of some of the language used in the Act, coupled with risk classifications and role designations being subject to change, may prove problematic for some organisations.  The use of AI systems by third parties acting on behalf of organisations may also cause a degree of complexity.  There is much to be considered by Irish businesses to ensure they will be compliant with the new EU AI Act.  It will bring competitive opportunities, but complying with the new regulations will be a complex process. Keith Power is a Partner with PwC Ireland *Disclaimer: The views expressed in this column published in the August/September 2024 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor.

Aug 02, 2024
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“AI represents more of an opportunity than a risk for Chartered Accountants”

Numra co-founder David Kearney, FCA, sees a world of potential in the advent of AI for accountants who can now expect to see their work move up the value chain David Kearney vividly recalls the release of the first version of ChatGPT, the artificial intelligence (AI) chatbot, by US tech firm OpenAI in November 2022. A Chartered Accountant, entrepreneur and self-confessed “techie,” Kearney had sold Peblo, his first start-up, just months earlier and was on the look-out for ideas for a new venture with global potential. “That first ChatGPT release was really the first time I’d come across the concept and capabilities of generative AI (GenAI) and large language models (LLMs),” Kearney says. “It was all I could think about at the time. I remember spending a full week of evenings staying up late just playing with ChatGPT, getting to know it, reading all about GenAI and LLMs and learning about how it all works. I was fascinated.” Almost immediately, based on his own experience as a Chartered Accountant, Kearney could see a potential commercial application for the technology in the professional field he was most familiar with. “There are literally dozens of use cases out there for GenAI. The one I zeroed in on was accountancy,” he explains.  Kearney established Numra in August 2023 and, alongside his co-founder Conor Digan, began to develop an AI-powered automation platform for finance teams.  Numra closed a €1.5 million seed funding round in December led by Elkstone Partners, the early-stage venture capital firm, and released the first version of “Mary,” its AI assistant for finance teams. Numra’s AI platform is aimed primarily at mid-sized companies with in-house finance teams processing high-volume transactions. “One of the biggest things Mary can help these teams with is workflow automation. She excels at repetitive tasks, such as invoice processing, three-way matching, payments and reconciliations,” Kearney explains. “If we take accounts payable as an example, Mary can identify an invoice from an email, extract the required invoice data and enter it into the accounting system. She can then send the invoice to whomever needs to approve it and, from there, she can execute the payment.” Kearney says Mary has been designed to behave like a “real-life team member.” She can be trained up on existing company processes and can interact with communication platforms already in use, such as email, Microsoft Teams and Slack.  “You onboard Mary, just like a normal team member. You train her on your internal processes, you give her access to your systems and then get her to start helping you with your workload,” he says. “She can manage complex tasks like answering vendor queries and performing detailed cost allocations, improving over time through user feedback. “That’s really the beauty of GenAI. It has this capability to ingest and process vast amounts of unstructured data and take on tasks that were previously too complex to automate.” The result, Kearney says, is that the role of the Chartered Accountant will be elevated with a new focus on higher-value activities that require strategic thinking and creativity. “There has been quite a lot of fear mongering around how AI is going to impact jobs in the future, including jobs in the accounting profession,” he says. “That’s kind of understandable, but AI actually represents more of an opportunity than a risk for accountants and other professions. I think it should be embraced.” Kearney began his own career as a Chartered Accountant as an undergraduate studying commerce at UCD. He undertook a one-year placement with PwC and went on to train in the firm’s audit department. “The Chartered Accountant qualification had been on my radar for a long time and I specialised in accounting in my final year at college to get the CAP1 exemption,” he explains. “I always had a very strong interest in business and entrepreneurship and I felt that the Chartered Accountant qualification would be a really good launchpad for my career. It’s very dynamic and it gives you a lot of career options.”  After qualifying, Kearney moved to southeastern Australia in 2018 where he spent three-and-a-half years in Melbourne working for large-scale organisations like PZ Cussons, RACV and National Australia Bank.  “I worked in finance departments, mainly in financial planning and analysis. I had an amazing time and built up some great experience in commercial roles, but it was always in the back of my mind that I wanted to do something for myself,” he says. After returning to Ireland with his partner Grace in the early stages of the COVID-19 pandemic, Kearney hit upon the idea for Peblo, his first venture.  Peblo was a financing platform for content creators and influencers. Kearney established the start-up in late 2020 with co-founder Jake Browne and sold Peblo less than two years later to Wayflyer, the Irish-owned e-commerce funding platform. “Peblo was a bit of a crazy idea. It was an invoice factoring company for influencers and their talent agencies.  We were basically buying sponsorship invoices from influencers, so they could get paid sooner for sponsored work for brands. It took off. It grew legs really quickly and we sold in early 2022.” Peblo’s rapid growth and early acquisition was like “lightning in a bottle,” Kearney says now. “It’s rare enough that a start-up would scale that quickly and attract interest from a buyer,” he says. “It was good timing, a good value proposition. Sometimes things just work out.” Peblo may have taken off at lightning speed, but Kearney’s interest in technology goes right back to childhood. “One of my earliest memories is of my grandad’s Apple Macintosh computer. That was back in the early nineties. I was glued to the thing every time we visited and he ended up gifting it to me before I had even started primary school.  “I must have been about four and I still remember the excitement. Since then, I’ve been a bit of an early adopter of new technology. I love trying new things. Technology has always been a big part of my life.” Now, with Numra’s seed funding round secured, Kearney has ambitious plans for the fledgling venture. “We’ll use the funding to accelerate customer acquisition in the US and to invest further in product development,” he says. “Our main target market will be the finance teams in mid-sized organisations. These teams often have too much work and too few heads. They are the most likely to recognise, and benefit from, this kind of AI-enabled workflow automation from the get-go.” For Chartered Accountants fearful that the advent of such automated financial platforms could upend the profession, Kearney says the critical role the profession plays across all sectors will not be replaced. Rather, it will evolve. “The data entry, the document processing and the ‘number-crunching’ is going to go away. AI can do all of that better than we can,” he says. “AI is very good at doing a lot of the time-consuming work people don’t tend to enjoy and that is a positive for Chartered Accountants who can instead start to focus on more valuable strategic work. “Ultimately, I think we can expect to see the day-to-day work of Chartered Accountants move away from ‘the doing’ and more towards orchestrating and reviewing.”

Aug 02, 2024
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“Humans must be responsible for any decisions made at all times”

Artificial intelligence is ushering in a new era of tech-enabled efficiency in many sectors, but its widespread adoption also throws up ethical dilemmas. Dr Susan McKeever digs into the details Dr. Susan McKeever is Head of Discipline for Data Science and Artificial Intelligence (AI) at Technological University Dublin’s School of Computer Science. Here, McKeever talks to Accountancy Ireland about the benefits AI is bringing to sectors reliant on data and how regulators, Chartered Accountants and other professions must ensure its ethical adoption as it continues to evolve at a rapid pace. How is the emergence of AI impacting the world of accounting and other professions and sectors? Any profession, function or industry reliant on large amounts of data and repetitive data-related tasks traditionally carried out by people will be impacted by the advent of AI, if they are not being impacted already. These repetitive tasks might involve data entry, data assessment and the generation of reports and correspondence based on this data. AI is very “friendly” to taking over these kinds of tasks. It is really good at getting to grips with a lot of data, interpreting and analysing this data and generating knowledge from it.  The medical sector is one example of an AI-friendly sector, as is the legal sector and insurance. Accountancy is, in a sense, data-driven, but uses a very specific kind of data that needs to be assessed and interpreted, so it is quite specialist.  You can train AI to do simple, repetitive, data-related tasks in accounting. It won’t get tired and it won’t forget what it has already learned.  You can continue to re-train AI as the world moves along, or as the situation changes, and it will continue to build on its existing knowledge and become more and more intelligent. People are excited about the emergence of AI, but also fearful – is this fear well-founded? One of the fears surrounding AI is the general concept that it will “take over” in certain fields. I do believe that the widespread uptake of AI across industries will displace certain kinds of repetitive jobs further down the value chain – the kind of roles that can easily be automated.  The silver lining – and I do truly believe this – is that, as a result, we will see an uptick in higher-value roles. If you take accountancy, we will likely see a shift away from the very granular, detail-driven examination of individual transactions, for example.  Instead, with AI gathering and analysing this data, the accountant will be able to focus on higher-value work, spotting interesting patterns or anomalies of immediate value to their organisation. My advice to accountants, as with all professions, is to go with it. AI is here to stay.  ChatGPT really seeded the concept of AI in the public imagination. It is just one of the larger language models out there, but it just happens to be the one that has really landed in the public consciousness. You have all sorts of people already using ChatGPT to write letters, draft CVs and so on. Change is inevitable. The widespread use of AI is inevitable. My advice to all professionals is to adapt and prepare. Re-train or upskill if you need to. Try not to resist it too much.  What else should we be concerned about when it comes to the widespread adoption of AI? There is a fear out there that AI will start to make decisions we, as humans, used to own.  What is really important here – and this needs to be enshrined in legislation – is that, at all times, humans must be responsible for any decisions made.  So, while AI may be by your side, acting as an “intelligent” support to you in your work as an accountant, you – the human – must always be responsible for any decisions made.  Once you move away from this principle, you enter problematic territory. AI must be accountable to humans. People must maintain ownership of any and all decisions made, always. We train AI based on existing data and data sets – does this carry its own risk? In AI, machine learning models are trained using previous examples. This subset of AI uses algorithms to interpret large amounts of data. It learns from experience. So, if you use a machine learning model to train an AI algorithm to recognise suspicious transactions, for example, you might give it a dataset of 1,000 transactions in which 100 are suspicious. The model will start to figure out the pattern of what makes a transaction suspicious where a human might not have been able to decipher the “rules” underpinning these suspicious transactions.  If you train your AI algorithm based on 1,000 transactions, it might get a certain level of detail. If you up this training to a larger dataset comprising 100,000 examples, your AI algorithm will start to get really good at recognising the patterns in suspicious transactions.  One issue with this kind of machine learning is bias. If you are training your AI algorithm on what has gone before, you are also embedding biases that have existed over time. You are enshrining the world as it is, or was, into the trained examples you use. You have to be very careful that you do this well.  Already, we have seen how the use of AI-driven CV evaluation systems has brought bias to the hiring process based on race, gender, age and other factors. It is something we need to be very aware of. Are we doing enough to regulate and legislate for the safe and ethical use of AI now and in the future? The effective regulation of AI is something I feel very strongly about. This technology, like so many others, is already shaping our society and will continue to do so in the future. Our legislation is lagging behind the rapid evolution and deployment of AI in Ireland and across the world. We are behind the wave, and this is a problem. In the European Union, the Digital Service Act came into full effect in February and the Artificial Intelligence Act is also coming down the line. Its aim is to ensure that AI systems placed on the European market, and used in the EU, are safe and respect fundamental rights and EU values. These regulations are welcome, but their introduction is too slow. It is not keeping pace with AI. Our legislators are falling behind, and this has to be addressed. Otherwise, we could be looking at a society that is framed by technology instead of the democratic and legislative code that should prevail. This is not to paint an entirely negative picture. AI can be used for so much good. There is so much to be positive about in this extraordinary technology. It is up to us to make sure that it is used for good, however, and that the necessary controls are in place to make sure that we continue to have the kind of society we want. To do this, the legislation needs to get in front of the technology, and this is something we need to prioritise today. 

Aug 02, 2024
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Artificial intelligence and the future of the profession

Artificial intelligence has the potential to usher in a bright new era for Chartered Accountants who could enjoy an elevated role in business and finance Having recently closed a €60 million funding round, AccountsIQ founder and Chief Executive Tony Connolly, FCA, is preparing for significant investment in artificial intelligence (AI), which will, he says, allow the Dublin-headquartered tech venture to “shape the finance function of the future.” The Series C funding from Axiom Equity, a London-based growth fund, has come at the “perfect inflection point” for AccountsIQ, Connolly says. “We’ve just hit a critical milestone with over 1,000 customers and users in 80 countries and now we’re poised to take AccountsIQ to the next level,” he says. The investment will allow AccountsIQ to leverage AI tools into practical, easy-to-adopt services for finance teams, Connolly says. The firm will also use the funding to double its headcount to 200 people in Ireland and other markets. It is an exciting time for AccountsIQ, which was launched in 2004 by Connolly, with founding members Darren Donohue and Gavin McGahey on board. By that time, Connolly had qualified as a Chartered Accountant with KPMG and then studied systems analysis and design at Trinity College Dublin. It was while working in practice consulting, designing complex finance systems for large organisations, that he spotted a gap in the market and decided to set up his own company, bringing Donohue and McGahey on board as his first employees. AccountsIQ is a financial management system (FMS) for international businesses operating across multiple locations and entities. The platform handles complex financial processes, such as multi-currency consolidation, multi-level approvals and third-party integrations while also automating daily processes for finance teams.  Looking beyond the hype The emergence of the web in the early 2000s was the catalyst for the business and Connolly sees similar potential in the emergence of AI and its scope to support and enhance the finance function of today. “I remember the advent of ‘the cloud’ and knowing it would be the future for AccountsIQ. The challenge then was convincing accountants that taking their data off-premises and putting it online would be safe and secure, but that has completely changed in the years since,” he says. “Now with AI, we’re seeing a lot of hype and some fear, but we’ve already been on a long journey ourselves with machine learning and automation, so we don’t see AI in 2024 as being ‘revolutionary’. “We view it today as a catalyst for the further development of automation and machine learning and as a digital assistant we can use to help make the work of finance teams easier. I think that is really what it means for Chartered Accountants generally.  “It won’t be replacing them. It will just take the drudgery out of processing and recording transactions and managing things like controls and reconciliations. “That just means that Chartered Accountants and finance teams will have more time to focus on helping to drive their business or organisation forward with access to the right tools and information.”                                                         AI and financial reporting Research released in May by KPMG found that AI is already in widespread use in financial reporting in Ireland, with close to two-thirds (63%) of the financial reporting executives and board members surveyed in Irish companies reporting that they were already using or piloting the technology. AI in financial reporting and audit: navigating the new era surveyed financial reporting executives and board members at 1,800 companies globally, including close to 100 in Ireland. Among Irish respondents, AI is viewed as a “game-changer,” the research found, with two-thirds reporting that their board had already developed a vision or strategy for AI adoption. “The adoption of AI today, and its impact tomorrow, is very much on the agenda at board level among the Irish companies we surveyed and their global counterparts,” Niall Savage, National Head of Audit Markets with KPMG in Ireland, says. The major focus currently is on identifying the most advantageous AI use cases. “Right now, the emphasis is on learning to understand AI, its capabilities, its limitations, the opportunities it may bring and, indeed, the potential threats,” Savage explains. “I was heartened to see in our findings that companies are not focusing solely on AI’s potential to cut costs. That would be a mistake, so it’s encouraging to see that they are instead thinking about identifying the opportunities.” As a technology that is still in its infancy, commercially speaking, AI has scope to encompass much greater capabilities in the future with potential applications of value to companies and their finance teams. “The tools out there and available for use right now – the likes of ChatGPT – are already showing us the great work AI can do in collating and interpreting data from multiple sources to answer our questions in real-time,” Savage says. “This is just scratching the surface, however. What businesses are focusing on now is how they can bring all the relevant data together to enable AI to facilitate much faster strategic decision-making in the future – to spot trends, opportunities, anomalies and potential risks, for example.” For Chartered Accountants and the wider finance team, the upshot will be change – change in the way they work, their capability and their role in the workplace. “For accountants in the future, there will be less need for research, bringing data together and writing up reports – AI will be able to do all of that far more efficiently,” Savage says. “In its place, accountants will have more time to focus on more meaningful work. They will not be under as much pressure to use their time to ‘get the numbers right’. “They will be even more involved in key decisions. They will have even more opportunities to have a place at the top table. The profession could change radically and, I think, very positively.” Upskilling for the AI world To benefit from this transition, Chartered Accountants will need to upskill and align their knowledge and experience with AI, a technology that has the potential to elevate their role in business and finance. “It’s a bit like the rise of Microsoft Excel in the nineties. At that time, even the finest technical accountants had to learn to use this technology – and learn to use it well and use it quickly. AI is the same,” Savage says.  “There will always be the need for the accountant to verify the information AI is giving them and, ultimately, to make the decisions. The need to exercise caution, judgement and governance will always be the remit of the accountant, even as AI evolves into the future.”   He continues: “The top use case identified by respondents in our survey was AI’s potential to provide critical, real-time information that can then be interpreted to deliver tangible benefits – for businesses, this might mean understanding where to allocate capital, where to invest or where they might have a problem. “This will really put Chartered Accountants and Chief Financial Officers across the globe at the coalface of business commercially. We will be the people who interpret the data to bring real value to the organisation. We will continue to be custodians as we are today, but with much more powerful tools at our disposal.” Chartered Accountants Ireland Chartered Accountants Ireland welcomes the advance of AI and sees it as a significant opportunity for the profession.  With every advance in technology over the course of the Institute’s 136-year history, the profession has adapted.  “The pace and advancement of AI is an aid to the accountant who can entrust the tools to perform functions that previously required manual input,” says Ian Browne, Director of Education at Chartered Accountants Ireland.  “In this way, we see the advancements in AI as an enabler for new economic activities for the profession.” Since 2017, the Institute’s Education Department has been reforming the educational syllabus for its primary qualification, with the introduction of principles-based teaching materials in several areas. This work has spanned data analytics, data visualisation, robotic process automation, blockchain, cryptocurrency, sustainability – and AI.  Launched in 2019, the evolved syllabus reflects the lived experience of the accountant in practice and industry, Browne says.  Two years ago, the Education Department formalised the findings of a major research project. Project Athena proposed to teach the latest advances in technology and emerging accounting practice, while incorporating emerging trends in accountancy, using a blend of the most up to date technology and teaching pedagogy. “The Education Department has been preparing the output of Project Athena with the launch of a new multi-disciplinary qualification beginning in September 2025,” explains Browne. “Part of the remit of the Education Department is to ensure that we keep abreast of technological developments, assess their future value and determine how they will affect the lived experience of a Chartered Accountant.  “Only then do we consider when to add the underlying principles of these advancements to the Chartered Accountant qualification. It can be easy to get carried away by the hype cycle attached to new developments in technology, but we only add new elements to syllabi that can meaningfully add tangible value to our students and economic value to the profession.” AI and attracting younger candidates In June, Belfast-based RBCA announced a £50,000 investment in AI. Partnering with Xero, the Chartered Accountancy firm will use the technology to reduce manual tasks and administration, automate bookkeeping and generate reports and forecasts. RBCA founder Ross Boyd believes the investment will allow his team of 20 to focus more on servicing and consulting with existing clients, while also building new business relationships. “When used correctly, I think AI can transform the professional services sector for the better by removing the focus on repetitive, routine tasks, such as data entry and document processing. It can free up employees to focus more on complex and relationship-led tasks,” Boyd explains. However, while AI can learn from data and make predictions, it will “never replace the value of human judgement,” Boyd says. “Chartered Accountants will need to respond to AI, and its increasingly prevalent place in our work, by adapting, training and upskilling. There is no way around that, as far as I can see, but AI will not replace the role of the Chartered Accountant. “It may remove the burden of repetitive and time-consuming activities for Chartered Accountants, giving us more capacity to tackle the challenges only the human condition can master, but I cannot see it replacing what we do.” Boyd believes the emergence and uptake of technologies such as AI in the profession may even help to attract younger candidates in the future. “At the end of the day, we live in a technologically minded world, so it’s time to accept new opportunities,” he says. A survey of 2,000 accountants in the UK carried out last year by Intuit QuickBooks found that 92 percent had experienced hiring challenges.  “We have to provide the right learning environment for young people who have grown up using technology to do tasks and solve tasks. Gen Z, now aged up to 26, are becoming more present in the workforce and will account for 27 percent by 2025,” Boyd says. “To continue to attract young people to accounting, I think it’s important that we harness the benefits of technology to position the role – not as monotonous and gruelling – but as interesting, varied and strategic. That is where AI comes in.” Elevated role for Chartered Accountants Brian O’Malley, Senior Manager, Private Client Services – Tax and Law, at EY Ireland, agrees that AI will bring a more strategic, higher value focus to the role of the Chartered Accountant. “Generative AI (GenAI), in particular, is a revolutionary tool for the accounting profession that has the potential to boost productivity, increase revenue and manage risk,” O’Malley says. “As GenAI becomes more prevalent in the years ahead, I think we will see a shift in the role of the ‘traditional’ accountant as the technology assists more and more with quantitative and routine tasks. “We will instead be freed up to spend more time on qualitative work requiring a focus on communication, leadership and ethical decision-making skills.” Accountants who embrace AI by developing the necessary skills to manage and interpret the output of AI systems will be well-positioned to offer greater value.  “Navigating the intricacies of AI outputs responsibly and ensuring that AI-generated insights align with overall business objectives and regulatory requirements, will become a key aspect of our role,” O’Malley says. EY has invested more than €1.3 billion in AI globally, encompassing technology and services, and last year launched EYQ, its own large language model. “I use EYQ myself regularly to assist with administrative tasks and carry out research safely and securely,” says O’Malley, who is based at the firm’s Southeastern headquarters in Waterford city. “AI has brought a sense of excitement to the Southeast in that both large multinationals and SMEs are keen to explore it and ‘unlock its power’ to enhance their everyday business operations,” he says. “This was evident at our recent EY Waterford Generative AI event, which was aimed at helping our local business community to better understand how they can implement it.  “The event was attended by many local businesses, demonstrating the strong interest in the technology and its potential.” This eagerness to harness AI among businesses in Ireland will only benefit Chartered Accountants in the future, O’Malley believes. “If you consider the world in which we work, it is fast-paced and constantly changing, especially from a regulatory perspective. AI has the potential to provide us with the necessary resources to thrive in the modern business world.  “It can help Chartered Accountants to meet our clients’ changing needs and act as strategic partners to businesses as they seek to capitalise on opportunities.  “By effectively harnessing  AI, I think many Chartered Accountants will see their role expand beyond financial statements to encompass that of trusted advisor, strategist and business solution provider.” 

Aug 02, 2024
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Professional Standards
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Risk Outlook (updated) - Circumstances where there may be high risk of money laundering, terrorist financing or proliferation financing in the accountancy sector

Both Irish and UK AML legislation requires firms to take the appropriate steps to identify and assess the risk that they could be used for money laundering and terrorist financing, and in the UK, also proliferation financing. The Accountancy AML Supervisors Group (AASG) in the UK has recently updated its Risk Outlook Guidance which identifies those circumstances where there might be a high risk of money laundering, terrorist financing or proliferation financing in the accountancy sector. (Although drafted pursuant to UK AML legislation, many of the risks are also relevant in Ireland.) This Guidance has been updated to include risks associated with the following: Complex supply chains Crypto Register of Overseas Entity verification Services subject to trade sanctions Proliferation financing Contractors or agency workers paid by umbrella companies

Jul 30, 2024
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Professional Standards
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Changes to Insolvency Guidance Papers

Under the Joint Insolvency Committee’s (JIC’s) strategic work plan, Insolvency Guidance Papers (IGPs) are subject to periodic review to ensure they remain relevant to changing legislation and market conditions.  In 2024 all the IGPs are being reviewed and this notice is to advise you of the changes that have been approved by the JIC to date. Withdrawal of IGPs “Bankruptcy – The Family Home” and “Retention of Title” Following such a review, the JIC is withdrawing the Insolvency Guidance Papers entitled “Bankruptcy – The Family Home” and “Retention of Title” with effect from 1 August 2024.  These Guidance Papers were introduced in October 2005 and November 2014 respectively, but the JIC feels that the appropriate approach to both topics is now so widely accepted that separate guidance papers are no longer required. Revised IGP “Succession Planning” A revised IGP related to succession planning has been issued today by each of the Recognised Professional Bodies (RPBs) following approval by the JIC and the RPBs.  Summary of Changes – "Succession Planning” IGP The “Succession Planning” IGP has remained in place since 2005 during which time the insolvency market and profession have significantly changed.  The principal revisions to the IGP emphasise the importance of contingency planning and documentation to ensure the continuity of case management in the event that an insolvency practitioner is unable to act for one or more reasons and in different contexts including retirement, incapacity, death, loss of licence and the sale of a practice.  The revised IGP covers a variety of scenarios including sole practitioners, firms generally and firms where there are no other insolvency practitioners.   The IGP includes new sections on putting succession agreements or arrangements in place and guidance for alternates and potential alternates.  The style and language used has also been modernised to make it clearer and easier to apply. Implementation – “Succession Planning” IGP The revised IGP is published on 25 July 2024 and comes into effect on 1 August 2024.  

Jul 25, 2024
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Make your self-care a priority

We all experience periods in life that contribute to increased stress levels and anxiousness. Be it exams, a work deadline looming, moments of uncertainty, crisis, or big life events.  However, it is how we cope through life’s ups and downs that is important. Maintaining good wellbeing is a crucial aspect of living that can help us endure and cope with periods of stress instead of floundering or struggling to cope effectively. And breathe… In moments of stress or anxiety our breathing patterns change.  You might notice your breath is shallow, out of sync or you might find yourself holding in your breath at times. This creates a vicious cycle as out of control breathing is caused by stress but also causes stress, prolonging the symptoms and making them worse.  Whereas deep, controlled breathing has the opposite effect. A slow and steady inhalation and exhalation signals the parasympathetic nervous system to calm the body down. As our breathing is an automatic, unconscious, habitual function of the body, we might not even notice how we are breathing. Therefore, it is important to tune into your breath.  There are countless breathing techniques which helps relax the body and mind, but the general aim is to shift from quick, shallow upper torso breathing to a slow, deep abdominal breath.  Take a minute to focus on your breathing and its pattern. Then place your hand on your stomach and strive to feel the abdomen expand and contract as you breathe in and out. Pay attention to how you feel after engaging in this breathing technique, you are sure to feel calmer.  Food for thought  We all know the tendency to comfort eat when feeling stressed or emotional and it can be tempting to seek out sugary, high calorie, high fat foods for instant gratification or out of sheer convenience. This response however only works in the very short term and again can aggravate our stress levels.  Stress and anxiousness can create digestive and gut issues. Simple things like drinking more water to stay hydrated, reducing your caffeine intake and eating three balanced meals each day can help. Stress can leave your energy reserves depleted and low on essential vitamins and minerals.  Consume plenty of wholesome food that is rich in good nutrients.  Foods high in Vitamin C are understood to reduce anxiety levels while green leafy vegetables and nuts are high in magnesium which can regulate our stress hormones.  Rest and digest  For our brain to function optimally it needs rest and this responsibility falls to the parasympathetic nervous system, also known as the rest and digest system. The parasympathetic nervous system slows our stress response by releasing hormones that relax the mind and body and is where digestion, detoxifying and healing occur.  To activate the rest and digest system, there is no other option but to relax. For some that is mediation, practising yoga or indulging in some self-care.  Self-care has become a popular notion in recent years, but it is not all bubble baths and face masks. Forms of self-care can be spending time in nature, exercising, reading, journaling, colouring, tidying your surrounds or spending time with loved ones. Simply put, self-care practises are tools to help ease our response to stress and enhance our body and mind’s ability to rest, reflect and replenish.  It is important to also take regular breaks throughout the day, a brief pause in momentum allows the brain space to think and process information and brings clarity that helps you feel in control and ultimately reduce stress.  Get some ZZZs The power of sleep to regulate our stress levels should not be underestimated. Stress and anxiety can lead to sleeping problems and a lack of sleep can affect your general wellbeing – again another vicious cycle we can find ourselves in.  When we are not getting enough sleep, it is more difficult to regulate our mood, emotions, and reactions, can affect our concentration, memory and even lead to poor decision making. It’s not always possible to get as much sleep as we would like, generally we should be aiming for at least 5 hours of sleep a night but ideally, we should aim for 7-8 hours. To feel well rested, it is important we develop habits and routines that aid our ability to drift off.  Create a healthy sleep routine by going to bed and getting up at the same time every day, avoid lie ins and naps that can then disrupt our natural sleep cycle.  Start your own personal wind down by creating a night-time routine that you then begin to associate with sleep. It can be as simple as brushing your teeth and washing your face, developing a night-time skincare routine, reading a book or stretching.    This is one of the harder habits to develop but try to limit your use of technology an hour before bed. Our devices keep us awake and stimulate the brain through the activity itself but also from the blue light emitted from the screen. Most phones these days have a blue light filter and can be scheduled to switch on at a certain time.  Thrive is the Institute’s dedicated wellbeing hub which provides emotional and practical support to our members, students and their family members for life. Should you find yourself in a difficult situation, the team at Thrive can help steer you through life’s ups and downs. Talk to us today on mobile: (353) 86 024 3294 or email us.

Jul 25, 2024
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Whistleblowing-18 months on

Readers, in particular employers, may find useful A &L Goodbody thoughts and insights after 18 months of the new whistleblowing regime | A&L Goodbody LLP (algoodbody.com) .It is written 18 months after Ireland transposed the EU Whistleblowing Directive through the Protected Disclosures (Amendment) Act 2022 (“2022 Act”). It notes for example a substantial increase in the number of whistleblowing claims and discusses the question most frequently asked by its international employer clients. This is whether the employer can retain its centralised reporting channel at parent company level with the introduction of the 2022 Act or whether each legal entity in a group has to have its own internal reporting channels and procedures. Readers are also reminded of the Institute resources in this area. The Institute pages on protected disclosures on the technical hub have a large volume of information and resources available on this topic. This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.  

Jul 24, 2024
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Tax UK
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Exchequer Secretary to the Treasury appointed as new Government extends current parliamentary session to 30 July 

Completing the new Labour team in HM Treasury, the Exchequer Secretary to the Treasury (XST) role has been allocated to James Murray MP. Last week’s King’s Speech set out the new Government’s legislative agenda but did not give any further hints on what tax policy will look like. And the current parliamentary session has been extended from 23 July to 30 July, during which it is expected that the date for the new Government’s first fiscal event will be announced.     The XST is responsible for the UK tax system including:  Direct, indirect, business, property, and personal taxation   European and other international tax issues   Customs and VAT at the border   The Finance Bill and the National Insurance Bill   Departmental Minister for HMRC, the Valuation Office Agency, and the Government’s Actuary’s Department   Tax administration policy   Input to Investment Zones and Freeports focusing on tax and customs elements   Overall responsibility for retained EU Law and Brexit.  

Jul 22, 2024
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Tax UK
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Share your views on HMRC’s new alcohol duty digital service 

HMRC has asked users to share their views on the new alcohol duty approvals, returns and payments digital service which due to launch in 2025 via a survey. According to HMRC, it will use feedback from the survey to “improve the quality and relevance of information in future”. The survey will take less than 5 minutes to complete. All responses will be kept confidential and anonymised when used in reporting.  

Jul 22, 2024
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Tax UK
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This week’s miscellaneous updates – 22 July 2024 

In this week’s miscellaneous updates, the latest Agent Update is available and the rules for reporting advances of pay have been relaxed. Construction industry scheme payment deduction statements should now only be requested by post and the UK and Gibraltar have signed an agreement on social security. HMRC guidance on genuine contact has been updated for new emails about child benefit and the latest schedule of HMRC live and recorded webinars for tax agents is also available for booking. Spaces are limited, so take a look now and save your place. HMRC has also published data on expected exchequer receipts from environmental taxes and finally, the VAT refund scheme for museums and galleries came into operation from 8 July 2024.   Latest Agent Update   Agent Update 121 is available now. Get the latest guidance and information including:   changes to form R40   more information on notifying HMRC of changes to VAT registration details   supporting your clients to claim refunds for PAYE tax overpayments   P11D and P11D(b) filing and payment deadlines.   Relaxation of rules for reporting pay advances    From 6 April 2024, any payment on account of salary which is a genuine advance and not a loan should be reported by employers via PAYE Real Time Information on or before what would have been the normal payday, as opposed to being reported on the date of payment of the advance. This applies even if the normal date of payment falls into a different tax year.   The Income Tax (Pay As You Earn) (Amendment) Regulations 2024) SI 2024/305 and the Social Security (Contributions) (Amendment No.3) Regulations 2024 SI 2024/306 are the underpinning legislation for this change.    Construction industry scheme payment deduction statements   HMRC has recently contacted us to advise that from 1 July 2024 it is now no longer possible for subcontractors in the Construction Industry Scheme (CIS) to request payment deduction statements from HMRC’s CIS helpline. Any such request should instead be made by post. HMRC has advised that this change has been made for security reasons and acknowledges that this may increase the admin burden for some taxpayers. More information on this is included in this month’s Agent Update.   Social security agreement with Gibraltar    An agreement between the UK and Gibraltar on social security coordination was implemented from 1 June 2024. HMRC’s view is that the agreement simply replaces retained EU law following the UK’s departure from the EU and works to protect the social security position of cross-border workers whilst also continuing to ensure access to the UK state pension. HMRC advises individuals from the UK who are working in Gibraltar to continue to follow the guidance on GOV.UK.   Genuine HMRC contact updated   HMRC has updated its guidance on genuine contact to provide information of how HMRC may contact child benefit applicants by email to acknowledge receipt of their claim and advise it is being progressed. In order to do so, HMRC will use the email address provided in the application and will use the subject line ‘Thank you — we’ve received your Child Benefit claim’ in the email title.   Environmental taxes   HMRC has published provisional 2023/24 data on exchequer receipts from a range of environmental taxes, including the climate change levy. Overall receipts for 2023/24 are expected to be lower than in 2022/23.   VAT refund scheme for museums and galleries    The Value Added Tax (Refund of Tax to Museums and Galleries) (Amendment) Order 2024 SI 2024/720 came into force on 8 July 2024. This adds additional museums and galleries which provide free public admission to the VAT refund scheme and removes those no longer eligible. A policy paper on the scheme is also available. This scheme supports the government’s policy of encouraging free admission to be offered by museums and galleries by enabling VAT refunds of certain purchases related to the provision of free admission.  

Jul 22, 2024
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Tax
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EU exit corner – 22 July 2024 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service bulletin is also available.   Miscellaneous updated guidance etc.    Recently updated guidance and publications relevant to EU exit are set out below:   Notice to exporters 2024/14: customs declaration service (CDS) - exhaustion in error guidance   Customs Declaration Service error codes   Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service   Appendix 2: DE 1/11: Additional Procedure Codes of the Customs Declaration Service (CDS)   Data Element 2/3: Document and Other Reference Codes: Licence Types — Imports and Exports of the Customs Declaration Service (CDS)   Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service   External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service   Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS).  

Jul 22, 2024
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News
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How regulation is driving a focus on sustainability reporting globally

Global regulations are increasingly driving a focus on sustainability reporting, requiring companies to disclose their environmental, social and governance practices, writes Miriam Donald When I became an accountant nearly 20 years ago, the intersection of business and sustainability was very different to what it has become today. I remember a university course touching on corporate social responsibility (CSR), but with more of an ethical and community lens than an environmental focus. At that time, CSR was positioned as something that was “nice to do”. Today, the landscape has changed considerably. Sustainability is becoming more and more intertwined with how businesses operate. This shift is being driven not just by voluntary sustainability reporting, but also increasingly by evolving regulatory frameworks. This evolution comes down to demand from international investors who understand that environmental risks can have a significant impact on the financial sustainability of businesses. This means that it is now necessary to upskill and find out what is required in your jurisdiction and report as needed. The International Financial Reporting Standards (IFRS) Foundation has had a busy few years. Its International Sustainability Standards Board (ISSB) released its first two sustainability standards in June 2023. The foundation has also been working hard to consolidate Sustainability Accounting Standards Board (SASB) standards and Integrated Reporting Framework and Climate Disclosure Standards Board into the organisation while also building interoperability with the Global Reporting Initiative and the European Sustainability Reporting Standards (ESRS). This consolidation drive is part of the IFRS Foundation’s goal to create one set of global standards with the aim of facilitating easy comparability of sustainability disclosures globally. Despite these efforts, reporting obligations still differ across the world. It is useful, then, to look to countries like New Zealand and Australia and draw inspiration from their sustainability reporting efforts. New Zealand was one of the first countries to legislate mandatory climate-related disclosures for about 200 businesses from 1 January 2023. These disclosure standards were developed by New Zealand’s External Reporting Board. The first 34 of these entities have now published their first climate statements, which can be viewed on New Zealand’s Companies Office register. These disclosures are mainly qualitative but encourage company boards to think differently about their strategy, with a newfound focus on how climate change might affect their operations and value chains. One of the main purposes of this reporting is to ensure that the effects of climate change are routinely considered in business, investment, lending and insurance underwriting decisions. The hope is that, by bringing these effects to the forefront of board members’ minds, more climate-friendly decisions might be made in the future. Across the Tasman, Australia is also mandating climate-related disclosures for a much broader group of entities, with legislation now before parliament at the time of writing. The Australian Accounting Standards Board is developing these standards, which are expected to be closely aligned to the ISSB standards on climate-related disclosures. Reporting periods for the first entities will begin from 1 January 2025. With new regulations come opportunities. For reporting entities, responsibility for this reporting is increasingly sitting with their finance functions. They also need to be thinking strategically beyond compliance, however, to better respond to the risks and opportunities of climate-related matters. These disclosures will also be assured, and accounting practices will need to build their knowledge in this new and evolving area. As the driving force behind these disclosures and jurisdictions, the IFRS is signalling that while climate is the first focus area for disclosures, it is not the end game. Finding out what is coming down the track for your business will be important. Miriam Donald is Lower North Island Regional Manager with Chartered Accountants Australia and New Zealand

Jul 19, 2024
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