A successful COVID-19 vaccine roll-out, a growing economy and shifting priorities – 2021 may not have been the year we expected, but it has definitely delivered change and opportunity. Four members review the challenges they overcame, the surprises they faced and their hopes for the future.  Thady Duggan Senior Manager of CFO & Enterprise Value in Accenture At the beginning of 2021, I was expecting the impact of the pandemic to diminish faster than it did. Given the success of working from home and the fact that we proved, by and large, that many of us can do our job from home, I did not think things would return exactly to the way they were, but I did expect to be in our offices and our client offices more often. The biggest challenge, however, was home schooling. My sister is a teacher and I used to tease her about her holidays – she deserves them! However, professionally, it was continuing to work remotely. We have great collaboration tools and have become smooth at remote workshop facilitation, but there is something to be said for the personal touch. Conversely, because I was working from home, I was able to work on some global projects that I might not otherwise have had the opportunity to do. Under normal circumstances, a portion of my work could be in the UK or, to a lesser degree, Europe, but this year I was able to work with our US team on one of the world’s largest M&A deals. In 2021, I have been pleasantly surprised at how quickly we have galvanised around sustainability and climate. Work was clearly being done over previous years but there seems to be momentum, certainly from individuals and businesses, around these topics that were not there previously. I am also probably a little surprised that the rate of change we saw in the second half of 2020 has not slackened.  After the last year, I take more joy from smaller things and focus on the benefits small actions can have. I have probably done less socially over the past 12 months, but I try to enjoy each activity more. I hope COVID-19 peters out into just being like flu season, and we get back to having face-to-face client engagements again. Stephen Prendiville Head of Sustainability at EY I really didn’t know what to expect of 2021. For a while it was hard to see beyond the next week, not to mind the coming year. But when EY globally stepped out at Davos early in the year and committed to being net-zero in line with science-based targets for 2025, I knew the year was going to be dominated by the pursuit of that commitment. Over the course of 2021, we also became carbon negative, offsetting and removing more carbon than we emit.  On a personal level, it was a year of change. My family and I moved closer to extended family in Donegal and I took on the role of Head of Sustainability. Taking on the role came with a dual purpose: pursuing and supporting our internal sustainability goals at EY, but also structuring our teams to respond to the ever-increasing and challenging focus on the broad concept of sustainability and decarbonisation.  A professional highlight for me this year was representing EY and Irish business at COP26. While the climate diplomacy of COP can be difficult to appreciate, in the wings I had the opportunity to meet people at the cutting edge of technology and business that really do speak to the vastness of our new economic prospects. Prior to COP26, I would have considered that Irish business had a lot of common ground with the Irish Government. What I now see is that both the Irish Government and Irish business have more in common with the climate activist compared to our peers. Ireland can be a great disruptor. When we speak, people listen. We need to use that power not only to help the planet, but also to position ourselves in the new forthcoming global economy. In 2022, we need more dialogue. We need to get deeper on climate action. With the carbon budgets now in place, and the Climate Action Plan 2021 setting a sense of tone of direction, I think 2022 will nurture a great national dialogue and step-change in action for Irish business in particular.  Chalene Gallagher Regulatory Data Senior Associate at the Federal Reserve Bank of New York With everything that happened in the United States last year that served to highlight the inequities faced by minority groups throughout US history, it felt even more important for me to do more in the diversity, equity and inclusion (DE&I) space. The murders of Ahmaud Arbery, George Floyd, Breonna Taylor and too many others felt personal to me. Although I did not grow up in the US, as a black woman, the situations that led to their deaths could just as easily happen to me, a member of my family, or a friend.    The effects of the pandemic also served to compound disparities, as the loss of life and livelihood was felt most by communities of colour and by women who were the predominant employees working in the most impacted industries and who now had to take on more care-giving roles. Although the US and global economies are in recovery mode, it is by no means equitable, creating a K shaped recovery that further serves to highlight the struggles faced by minority groups.    My perspective really changed during the year in that instead of focusing on the feelings of frustration felt in 2020, in 2021, I chose to focus on action. Although I had been balancing my day role as a Regulatory Data Specialist with supporting people and culture-related efforts within the Bank, I personally felt the need to do more. So, I worked with my manager at the start of the year when I became the Vice President of the Women’s Employee Resource Network to intentionally split my time between regulatory reporting analysis and DE&I. Raising awareness, having tough conversations and trying to meet people where they are on their DE&I journey to help move the needle has been a challenge and an emotional investment. But is has been worth it.   Although there is still a lot of work to be done, I feel like we’re moving in the right direction.  For 2022, I hope we can continue to keep these topics at the forefront of the conversations we have in public and behind closed doors so that we can keep the momentum going and make real, tangible and sustainable change.  Sinead Fitzmaurice CEO of TransferMate Global Payments The COVID era has applied pressure to companies’ capital and cash flows, but those who experienced a surge in demand needed immediate information on cash flow and supply chain aspects. As we entered 2021, I expected to see a rise in demand from CFOs for the modernisation of payments infrastructure via digital platforms, and that theme has indeed dominated 2021.   The challenge is always the same: it’s about striking the right balance between personal and professional lives. They are both joined at the hip, like it or not, and both can be stressful in their own way. Striking the right balance is dependent on the talent you surround yourself with, and I am honoured to work with such a talented team at TransferMate who help us achieve our corporate goals daily.  I am always surprised at the resilience of the human spirit and our adaptability in the face of adversity and change. This has been tested to the extreme over the past 20 months in our personal and professional lives. We have a philosophy at TransferMate: “it is our people who make us who we are”. I can honestly say that I am inspired every day by our teams. They consistently rise to any challenge and deliver with utmost professionalism time and time again, regardless of the circumstances. The events of the past 12 months (20 months, actually) have been dominated by COVID-19 and for most of us, our lives have been put ‘on hold’. Yes, we have carried on as best we can within tight constraints, but we still have never really felt completely free. If nothing else, I have come to appreciate the freedoms we had taken for granted – the freedom to interact with people the way I want to, the freedom to travel, etc. In 2022, I hope we emerge from the pandemic for the better; we never forget the sacrifices that people have made as we wrestled with defeating it. I hope we learn not to be complacent about the possibilities of new threats rising and be prepared to defend ourselves when they do. On a professional level, 2022 promises to be a breakout year for my organisation. My goal will be to execute the plan flawlessly and blow through every milestone along that journey to the end of the year for everyone at the company.

Despite persistent and difficult challenges, Dawn McLaughlin is bullish on the north-west’s prospects for 2022 and beyond. This time of year is often a natural time to reflect and contemplate what has happened over the past 12 months. 2021, for all its challenges and difficulties, has been a greater whirlwind than the preceding year in many ways. While still profoundly challenging, businesses have got to grips with issues like the pandemic and the Northern Ireland Protocol, adapting to the challenges before them and seeking new ways of working to meet their customer needs and obligations. I have witnessed the hardship and listened to stories of decimation and uncertainty. But I have also been heartened by how businesses reacted to the crisis, putting their people before themselves. As we look towards 2022 and consider all that it may bring, it is important to look at the challenges we have faced, what we have achieved, how we have progressed, and what still needs to be done. For the north-west, it has been a year of optimism and positivity as well as change and progression. February saw the heads of terms signed off on the £250 million Derry and Strabane City Deal, an investment package that will see 7,000 jobs created over the next decade and an extra £210 million in GVA (gross value added) generated in our regional economy annually. It is difficult to overstate the transformative potential this deal could have for our region – a part of the island that has historically been underfunded, underdeveloped, and under-prioritised. If we get this right, there is an opportunity to carve out the north-west as a leading location in Western Europe for technology, health and life sciences, diagnostics, artificial intelligence, and other emerging industries that will become increasingly important to the global economy over the next decade. It has been a joy to finally see future doctors and consultants training in the city, with the opening of Derry’s new School of Medicine in September. The further expansion of Ulster University’s Magee campus is something that City partners are committed to making a reality, and we will continue to work collaboratively towards this goal. We have welcomed new Executive ministers this year, new MLAs in Foyle, and new party leaders. Ahead of the next Assembly election in Spring 2022, we have been working hard to get our message out there and tell our local candidates precisely what they must support to see our region flourish and prosper. We hope that issues like our regional connectivity and infrastructure, the expansion of our local university, job creation, attracting new investment, and skills development will be front and centre for our elected representatives in May. Specific issues still linger as we look ahead to 2022. Continuing disagreement over the Northern Ireland Protocol does no one any favours, especially businesses. Companies crave certainty, and they thrive when things are stable. While the Protocol is by no means perfect and difficulties are still to be ironed out, these are not insurmountable. Both sides can come to a positive conclusion through committed dialogue, and Northern Ireland can begin to take serious advantage of access to both the UK and EU markets. With growing inflation, a squeezed labour market, and rising costs of materials, services, and utilities, businesses face persisting challenges as we go into the New Year. However, I have spoken regularly about my optimism for the north-west throughout the past 12 months. This optimism has not abated, and I still believe 2022 will be a year of opportunity and prosperity for our region. Dawn McLaughlin FCA is Founder of Dawn McLaughlin & Co. Chartered Accountants  and President of Londonderry Chamber of Commerce.

A recent global compliance study of 890 senior compliance professionals in 25 countries highlights an increasing emphasis on compliance as a value creator. Mairéad Divilly analyses how compliance professionals are factoring in this shift, the benefits to business, and the challenges ahead. Following a year of economic uncertainty arising from the COVID-19 pandemic, businesses worldwide are considering how to extract more value from their operations. The compliance function is no exception. In the past, companies tended to commoditise global compliance, seeing it purely as an overhead. More recently, there is growing evidence that businesses increasingly appreciate both the tangible and intangible values of good global compliance. Analysis of the global compliance survey results suggests that businesses are now much clearer on the benefits and opportunities of good compliance. According to the survey, 58% of compliance professionals now view global compliance as an opportunity to create value rather than an obligation that results in a net cost, as indicated by 37% of respondents. More specifically, 65% of respondents feel that good compliance increases investor confidence, while 64% say it increases client and customer trust and 61% say it helps build a good reputation. The benefits of good global compliance Recognition that good compliance brings returns in the form of a stronger reputation and greater revenue is increasingly evident, particularly when we consider that compliance failures carry significant repercussions. Compliance leaders know the considerable risks of falling short, with 77% saying their business has faced accounting and tax compliance-related issues somewhere in the world during the last five years. These consequences most commonly include reputational damage, internal disciplinary action, and fines. Pivoting from obligation to opportunity Squeezing extra mileage out of good compliance requires businesses to shift their approach from purely tactical to one that sees compliance as a strategic investment. It requires more engagement by top executives to drive real efficiencies, increase opportunities, and become more competitive. It’s an approach not lost on our survey respondents where compliance is seen as a core function of modern businesses, with C-suites devoting more time and attention to proactively managing it. According to the survey, the executive committees and boards engage with compliance at least once a quarter in 75% of businesses, and 39% engage monthly or more. Compliance as a commercial priority featuring more regularly on the calendars of senior leaders is validated by 44% of respondents who say the main reason decision-makers engage is to explore new insights or business opportunities. Only 28% say their senior people primarily focus on compliance to deal with an urgent issue or crisis. So again, we see compliance emerging as a business imperative that drives opportunities and not something seen as low priority or as a reaction to external developments. Reflecting this shift of top management focus is the continued growth of compliance funding, with three in five businesses having increased funding for global compliance over the last year and 68% planning to increase funding in the next five years. Regarding specific funding projects, 73% of respondents predict investment in developing new skills and capacities within teams, while 34% see monitoring external developments in accounting and tax as significant areas for investment. However, the biggest beneficiary of funding will be new technology to achieve compliance goals and drive future improvements, with over 78% of businesses looking to invest in new accounting and tax compliance technology in the next five years and 42% planning a major new investment, according to the survey. This focus on technology is not surprising as 39% of respondents say effective technology is the biggest factor in meeting their compliance goals today. In addition, 45% say new accounting and tax compliance technology will be the most significant factor in the compliance function’s improved performance in five years. Of those who plan to invest in technology, 49% of compliance leaders say artificial intelligence (AI) and machine learning (ML) are their biggest priorities for investment in the next five years. Robotic process automation (RPA) and blockchain are the top priority for 25% and 24%, respectively. Regarding specific compliance function technology-related investments, 38% state that tax compliance will be their priority, while 28% plan to explore the potential of risk management tools. Navigating the challenges ahead Despite this shift to global compliance being viewed as a strategic investment, companies face significant challenges in developing a strategy that takes them to the next level. While 82% of respondents express a high level of confidence in meeting compliance obligations now and in the near future, there is an acknowledgement that the increased complexity of tax rules, new compliance legislation, and the aftermath of COVID-19 will test abilities and compliance functions to the max. According to the survey, some 38% expect the ongoing impacts of the pandemic and increased complexity of compliance to be the two toughest challenges ahead. Meanwhile, 36% expect new legislation in the countries they already operate in to be one of their biggest challenges and 35% cite expansion into new countries. Political disruptions such as those connected to Brexit are also a factor, but are seen as a less likely disruptor with only 23% of respondents citing it as one of their most pressing challenges. Challenges compliance leaders expect to face In contrast, COVID-19 has raised new global challenges with over 75% of compliance leaders saying it has had an impact. The biggest challenge here is remote working, with 52% of respondents citing moving to home environments for work, particularly when in a different country to their employer’s location, has increased compliance needs, adding more pressure on the tax and accounting compliance functions. There is also an acceptance that new legislation and standards are leading to stricter compliance. Over the last few years, compliance reporting obligations not only doubled and sometimes tripled in size, but changes have been complex and fast-moving. As well as seeking the help of experts, the survey highlights that, as discussed above, businesses are investing in technology to leverage compliance functions and meet the need for real-time reporting obligations. While these are welcome improvements, the rise in cybercrime presents an additional risk that needs to be factored in when introducing any technology. Nor are automated and integrated compliance tools risk-free. Machines and algorithms are only as good as the information they are fed. Lack of knowledge remains a significant challenge in meeting compliance obligations, with 42% of respondents citing the need to develop the knowledge and skills of their compliance teams. The combination of skills shortages and the introduction of new technology can often add a new and unexpected layer of risk to the compliance function. Pockets of success lead the way forward The study does, however, highlight pockets of success in navigating the challenges of global compliance. COVID-19, for example, is seen as having a positive impact on individual employees by giving them more flexibility and forcing compliance leaders to become more vigilant. Additionally, while not a new phenomenon, more companies have begun to surpass legislative requirements on tax transparency. Over two-thirds of organisations (70%) voluntarily publish more than the law requires, 45% choose to publish some extra information, while a quarter publishes extensive, detailed information well above what is required by law. Tax transparency is now seen as a microcosm of the broader compliance story. Over one-third (36%) of compliance leaders cite building trust with tax authorities, politicians, and regulators as a key benefit of publishing extra information about the taxes their business pays. Plus, a third say improving their organisation’s public reputation is a crucial benefit of enhanced tax transparency. A further measure we see implemented by businesses that goes above and beyond is the inclusion of compliance strategies in annual reports. This sends a strong message to regulators and clients that can help improve company reputations. Looking ahead, we can expect tax transparency to evolve and measures like publicly available country-by-country reporting to become the norm. While large multinationals are likely to take the lead, tax transparency appears high on the agenda of all businesses irrespective of size and location, according to the survey. The global findings demonstrate that compliance professionals are also aware of the future direction of travel. Compliance-related demands on businesses will increase, leading to the dedication of more resources to meet compliance goals. At the same time, over half of businesses expect meeting compliance requirements to be more challenging in the future. Next steps In terms of the next steps, businesses should review and refresh their organisational setup and compliance functions to adapt to changing circumstances. This will include focusing on regulation as well as management processes to reduce risk and seize opportunities. Anticipating new laws and having the ability to react is vital. In particular, firms must understand their limitations to mitigate the risks linked to compliance. Nurturing agility will allow leaders to anticipate changes so their teams can keep up with global compliance rather than being hindered by it. The return on compliance investment may often be indirect and hard-won, but it should never be underestimated given its importance to growing businesses. Technology can also help companies with global compliance, but the development of skills and knowledge has to be addressed simultaneously. Using internal and external expertise to find the right balance between humans and technology is essential. With over a third of international respondents citing a more complex global compliance landscape as a significant challenge over the next five years, it’s clear that increased complexity will be a feature for years to come. As a result, businesses planning to expand globally will need to be secure in their ability to comply with employment, taxation, payroll, and company legislation in other jurisdictions. As the study demonstrates, when global compliance is done well, it builds investor confidence, increases client and customer trust, and shapes a positive reputation with the outside world. Shifting compliance from an obligation to an opportunity is something all businesses should now explore. Mairéad Divilly is Lead Partner, Outsourcing and Compliance Services, at Mazars Ireland.

Dr Brian Keegan explains why less is often more when it comes to the written word, despite the innate tendency to elaborate rather than edit. The first draft standard from the International Sustainability Standards Board (ISSB) was published last month. Dealing with climate, it runs to a mere 39 pages. But then you have to add on the appendices, which run to well over 500 pages. Even though it is still in draft, that’s a lot of material for people to get their heads around. There will be changes before it is finalised, and I wouldn’t bet that those changes will make it shorter. James Joyce rarely cut sentences when he edited his own work; he just added more words. Many of us subscribe to the Joycean approach. The business and regulatory environment has undoubtedly become more complex. That has a bearing on the volume of information we need to process, but it is not the only reason. Annual reports are growing in length; witness the growth in the size of the published accounts the Leinster Society considers and awards each year. Senior figures in the profession are now predicting the emergence of a more narrative form of assurance on corporate results. More reporting reflects business complexity and stakeholder expectations, of which the new ISSB draft standard is a paradigm example. Much of what we write shows a desire to be seen to have written rather than showing that we want to be read. We may literally be the authors of our own misfortune. Copy and paste functions aid and abet the blossoming of word counts. In this age of email and social media, it is trivial to point out that it is easier to send than to receive; it is certainly quicker. By tolerating this growth, we all do ourselves a disservice. One distinguished senior member and non-executive director put it succinctly to me earlier in the year, as he glumly surveyed yet another multi-volume set of board materials. The bigger the pile of papers, the more it suggested to him that the board didn’t trust management, that management didn’t trust the board, and that everyone assumed that everyone else had too much time on their hands. Even if none of that was true, it would be hard to disprove given the evidence. The tide may be turning, at least in some quarters. Many websites and journals now advertise the length of time it will take to read an article. This tactic is not without its risks either, as it insults fast readers and panics slow ones. Yet, we communicate best when the reader is minded to hear what we have to say. An assurance that the communication won’t take up too much of their time is a good way of getting an audience onside. The French philosopher, Blaise Pascal, is credited with first making the excuse for something he wrote being too long – because he had no time to make it shorter. Time cutting the verbiage is time well spent; the reader is much more likely to hear the message, but it’s not easy. We need to stop hiding behind executive summaries and elevator pitches and instead manage better what we write in the first place. I propose to lead by example. This column is supposed to be 600 words long, but it will be a little shorter this month. I hope the editor is okay with that. I hope you are too. Dr Brian Keegan is Director of Advocacy and Voice at Chartered Accountants Ireland.

In Irish tax developments Revenue is issuing ROS notifications to employers about EWSS payments and PRSI credits made in error between 18 and 28 October, and 10,000 more Form 11s were filed on the November 2021 income tax deadline compared to last year. On the UK front, HMRC has published updated guidance on the tax treatment of COVID-19 supports and tax administration and maintenance day is due to take place next week. While in international news, OECD and Eurasian officials discuss the BEPS Inclusive Framework. Ireland Revenue will issue ROS notifications to employers who claimed Employment Wage Subsidy Scheme (EWSS) payments and PRSI credits in error between 18 and 28 October. Revenue is also in the process of deregistering another cohort of employers not actively claiming EWSS. Revenue told Chartered Accountants Ireland that the number of Form 11 returns filed for 2020 is 560,267 which is 10,000 higher than last year. Revenue is processing requests from 137 tax agents seeking extensions for approximately 3,400 clients under Revenue’s exceptional circumstance facility. UK                 Read HMRC’s updated guidance on the tax treatment of COVID-19 supports. Tax administration and maintenance day is due to take place next week. International Eurasian Countries recently discussed the development and monitoring of international tax standards with the OECD. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount.

Updated 28 February 2022 to include the response from chartered Accountants Ireland.  Corporate reporting by listed companies is the bedrock of capital markets as it gives investors the essential information they need to make sound investment decisions such as information about the financial situation of companies. Moreover, it enables stakeholders to hold companies accountable on, for instance, sustainability issues. The quality and reliability of public reporting by listed companies rely on three main mutually reinforcing pillars: (i) corporate governance in these companies; (ii) statutory audit; and (iii) supervision and enforcement by public authorities. Several recent failures of companies in Europe (e.g. Wirecard, Carillion) suggest that the three pillars that underpin the quality and reliability of corporate reporting by listed companies have not fully played their intended role. European Commission has initiated a broad review on the three core pillars of corporate reporting for large companies. This review will directly feed into an impact assessment that the Commission will prepare in 2022 with a view to: assessing problems with the quality of corporate reporting; and comparing possible options to remedy these problems. Five-part consultation The consultation is divided into five parts seeking views about the overall impact of the existing EU framework for the three pillars of high-quality and reliable corporate reporting: corporate governance, statutory audit and supervision. It also seeks views about the interaction between the three pillars: The first part seeks views about the overall impact of the EU framework on the three pillars of high quality and reliable corporate reporting - corporate governance, statutory audit and supervision. It also seeks views about the interaction between the three pillars. The second part of the questionnaire focuses on the corporate governance pillar, as far as relevant for corporate reporting. It aims to get your feedback in particular on the functioning of company boards, audit committees and your views on how to improve their functioning. The third part focuses on the statutory audit pillar. The first questions in this part aim at getting views on the effectiveness, efficiency and coherence of the EU audit framework. It focuses in particular on the changes brought by the 2014 audit reform. Subsequently, the questions aim to seek views on how to improve the functioning of statutory audit. The fourth part asks questions about the supervision of PIE statutory auditors and audit firms. Finally, the consultation will ask questions about the supervision of corporate reporting and how to improve it This consultation, which runs until 4 February 2022, will directly feed into an impact assessment that the Commission will prepare in 2022 with a view to possibly amend and strengthen the current EU rules. What the Institute is doing A working party from the Institute's committees will be reviewing the consultation, debating the issues and submitting a consultation.  We welcome comments from members interested in the project. Please send any comments to us via email. UPDATE: You can read the Institute's response here.  The three pillars of corporate reporting Corporate governance The consultation questionnaire seeks feedback on the effectiveness, efficiency and coherence of key features of the EU corporate governance framework relevant to corporate reporting. These include board responsibilities for reporting; internal control, fraud prevention obligation to establish an audit committee. Statutory audit The bulk of the consultation document is centred on audit, in particular the impact of the changes brought about by the 2014 EU audit reform package, focused on public interest entities (PIEs). The Commission’s last market monitoring report issued earlier this year had already revealed a number of deficiencies with audit quality (based also on inspection reports) and divergent use of the country options allowed under EU audit rules. General questions are raised on independence, firm rotation, the content of the audit and audit reporting, the provision of non-audit services, transparency rules and the internal governance of firms. Specific questions also ask for feedback on whether joint audits for PIEs should be incentivised or mandated; whether caps on auditor liability should be increased or removed; and whether a passporting system should be established to ease the cross-border provision of audit services.  Supervision Reflecting a number of concerns with the supervision of corporate reporting – the third pillar of the consultation document – feedback is also sought on deficiencies in the EU’s supervisory framework. These address the roles and responsibilities of national authorities, the exchange of information between authorities, the need for greater enforcement powers, as well as the role of the European Securities and Markets Authority. Background High quality and reliable corporate reporting are of key importance for healthy financial markets, business investment and economic growth. The EU corporate reporting framework should ensure that companies publish the right quantity and quality of relevant information allowing investors and other interested stakeholders to assess the company’s performance and governance and to take decisions based on it. High quality reporting is also indispensable for cross-border investments and the development of the capital markets union. In the context of this consultation, corporate reporting comprises the financial statements of companies, their management report that includes the non-financial and corporate governance statements, and sustainability information pursuant to the proposed Corporate Sustainability Reporting Directive. The consultation takes into account the outcomes of the 2018 consultation on the EU framework for public reporting by companies and the 2021 Fitness Check on the EU framework for public reporting by companies. This current consultation focuses on companies listed on EU regulated markets that is a subset of the companies subject to public reporting requirements under EU law. Find out more Commission consultation page and questionnaire ESMA letter to Ms Mairead McGuinness Commissioner in charge of Financial services, financial stability, and Capital Markets Union following Wirecard: Microsoft Word - ESMA32-51-818 Letter to EC on next steps following Wirecard (europa.eu) The European Commission’s second audit market monitoring report which takes stock of changes to the European audit market several years after the implementation of the 2014 audit reform package.

Welcome to this week’s Technical Roundup. In developments this week, the Financial Reporting Council and Financial Conduct Authority have jointly written to CEOs of UK issuers who are required to start producing their 2021 annual financial reports in a structured electronic format; the Committee of European Auditing Oversight Bodies has issued revised “CEAOB guidelines on the auditors’ involvement on financial statements in European Single Electronic Format (ESEF)”. They replace the initial guidelines issued by the CEAOB in 2019. Read more on these and other developments that may be of interest to members below. Financial Reporting The Financial Reporting Council (FRC) have published a staff factsheet on climate related matters to assist preparers of annual reports under FRS 102 The factsheet provides guidance on how climate-related matters may impact a set of financial statements. The first part of this factsheet outlines the ways in which climate related matters may impact a set of financial statements prepared under FRS 102 and the second part summarises current and proposed legislative requirements applicable to companies in the UK in relation to climate and associated matters. The FRC and Financial Conduct Authority (FCA) have jointly written to CEOs of UK issuers who are required to start producing their 2021 annual financial reports in a structured electronic format. The letter reminds such entities of their obligations and of the FRC and FCA’s quality expectations. The European Financial Reporting Advisory Group (EFRAG) have issued a detailed five-month status report outlining the progress to date for the elaboration of sustainability reporting standards following the recommendations of the Project Task Force on European sustainability reporting standards. The International Accounting Standards Board have announced that they expect to publish the Exposure Draft Non-current Liabilities with Covenants on 19 November 2021. The UK Endorsement Board (UKEB) has published its [Draft] Endorsement Criteria Assessment: IFRS 17 Insurance Contracts and welcomes stakeholders’ views on the potential adoption of IFRS 17 for use in the UK. The comment period runs to 3 February 2022.    The UKEB has also launched a survey on subsequent measurement of goodwill and are keen to hear views. You can take part in the survey until 26 November here. The UKEB invites stakeholders to attend a series of upcoming roundtables as it develops its response to the following IASB consultations: Post Implementation Review – IFRS 9 Financial Instruments, Classification & Measurement ED/20212/7 Subsidiaries Without Public Accountability: Disclosures Auditing A new report from the UK Financial Reporting Council (FRC) has set out the key elements required by audit firms to ensure they are delivering high quality audit. The Committee of European Auditing Oversight Bodies (CEAOB) has issued revised “CEAOB guidelines on the auditors’ involvement on financial statements in European Single Electronic Format (ESEF)”. They replace the initial guidelines issued by the CEAOB in 2019.  ESEF is the new electronic reporting format for annual financial reports published by issuers whose securities are admitted to trading on a regulated market in the European Union for financial years beginning on or after 1 January 2021. Other Areas of Interest The Pensions Authority has published FAQs on  investment and borrowing for one-member arrangements under the Pensions Act, 1990, as amended. It has also given notice of forthcoming information on  final Code of Practice and guidance for one-member arrangements (OMAs) during this week, instructions on outsourcing notification, guidance for the public and employers about the minimum standards they should expect from master trust vehicles and a findings report from the Authority’s engagements with master trust, DB and DC schemes during December .We will bring you details when published. The organisation, Irish Rule of Law International (a joint initiative of the Law Societies and Bars of Ireland and  Northern Ireland), is running a commercial law conference on November 25th.Readers may be interested in the paper on “Recent Developments Concerning Auditors Liability” by Gerard Sadlier and spoken to by Michael Coonan of McCann FitzGerald LLP. Tickets cost from €10-€30 euro and the conference can be booked here . The Public Interest Law Alliance together with a number of law firms is promoting Pro Bono week from 22nd to 26th November. Readers may be interested in the session on Implementing the Charities Governance Code on Wednesday, November 24 2021 - 12:00pm to 1:15 pm where legal professionals will discuss the Code, the organisational role played by trustees, the essential elements of good governance, the key legal duties of charity trustees, and provide tips to NGO's for compliance. The Decision Support Service (DSS) has launched a number of consultations recently as part of its preparations for the commencement of the Assisted Decision-Making (Capacity) Act 2015. One of the consultations is on the code of practice for financial professionals and financial service providers. This code will provide guidance for financial professionals and financial service providers on how to engage with and advise customers who are relevant persons under the 2015 Act. It also provides guidance on working with decision supporters and interveners.   You can access the draft code here. Feedback can be given by completing the online questionnaire or by downloading the questionnaire. The DSS asks that the financial professional draft code be read alongside the main  Code of Practice on Supporting Decision-making and Assessing Capacity. The consultation closes at 5pm on Friday 7 January 2022.   The Central Bank Governor recently spoke at a round table event focused on the changing landscape of the financial system, including issues such as the impact of climate change, technology and the need for firms and regulators to be future-ready. He said greenwashing was an area of concern as ‘green’ market practices are currently almost exclusively based on voluntary principles and standards, which leaves a lot of room for different interpretations. The Central Bank Director of Financial Regulation also spoke about climate change in his recent speech delivered at Irish Association of Corporate Treasurers (IACT) Annual Conference. In other Central Bank news, feedback on a consultation paper on engaging with stakeholders  from earlier in the year is now available .Also, the Central Bank recently published its Anti Money laundering bulletin focussing on Fund and Fund Management companies . For further technical information and updates please visit the Technical Hub and the Covid-19 Hub on the Institute website. 

Welcome to this week’s Technical Roundup.  In developments this week, the FRC has published the annual review of corporate reporting which outlines the top ten areas where improvements are needed, IAASA has published a video briefing for audit committees and the EFRAG has released it’s third of three podcasts on “good practices in reporting the business model, sustainability risks and opportunities”. The Financial Reporting Lab has published a report to help companies prepare for mandatory TCFD reporting. Read more on these and other developments that may be of interest to members below. Financial Reporting The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting, which outlines the FRC’s ‘top ten’ areas where improvements to reporting are required. These include reporting on judgements and estimates, revenue and cash flow statements. https://frc.org.uk/news/october-2021/frc-to-focus-on-climate-related-reporting-as-new-d The IASB has prepared a series of five bitesize webcasts on the Exposure Draft Management Commentary. This has been produced to address frequently asked questions about the International Accounting Standards Board’s proposals for a new framework for preparing management commentary. The European Financial Reporting Advisory Group (EFRAG) released it’s third of three podcasts on “good practices in reporting the business model, sustainability risks and opportunities”. This third and final episode in the series highlights the current and potential role of technology in sustainability reporting. FRC publishes oversight responsibilities and independent supervisor reports The FRC has also published its annual report to the Secretary of State for Business, Energy, and Industrial Strategy (BEIS) on how the FRC has discharged its oversight responsibilities in 2020/21 and its Report of the Independent Supervisor on Auditors General. The Financial Reporting Lab (the Lab) has published a report to help companies prepare for mandatory TCFD reporting.  It includes practical advice and examples that better address aspects of TCFD reporting from those companies already adopting the framework on a voluntary basis. https://frc.org.uk/news/october-2021/preparing-for-mandatory-tcfd-reporting,-including Auditing IAASA have published videos for those who would like to view their recent Audit Committee Briefing. Sustainability 57 organizations have released an open letter for the European Union to act on ESG disclosure standards. They encourage the European Commission to promote a global baseline set of standards through supporting the IFRS Foundation on the launch of the International Sustainability Standards Board (ISSB). The Irish Central Bank Deputy Governor Sharon Donnery was a panellist at the recent awards ceremony for G20 Tech Sprint 2021 on green and sustainable Finance  where the central banks’ mandate and roles in the area was discussed including the dedicated climate change units. Fraud and money laundering The UK Government recently published a fraud sector charter containing an assessment of fraud threats in the accountancy sector.  This voluntary charter sets out actions to tackle fraud in the accountancy sector including improving information regarding fraud and enhancing Companies House data. The UK National Economic Crime Centre has launched a campaign aimed at raising awareness of payment diversion fraud. The aim is to help small and medium sized businesses and home-buyers protect themselves. Click here to read more about the campaign. The European Data Protection Supervisor recently issued its latest newsletter  which contains information on the EDPS views on matters such as  the European Commission’s proposed Anti-Money Laundering legislative package  which it supports but suggests improvements to protect individuals’ personal data.  Other Areas of Interest The Department of Enterprise Trade and Employment has published the revised work safely protocol recently. Entitled the “COVID-19 National Protocol for Employers and Workers” it has been reviewed by employers and employee representative groups following the most recent public health advice received by Government.  On 20 October 2021, a guidance note was published by the Labour Employer Economic Forum, which supports the guidance set out in the Protocol. Following on from its recent Annual Conference 2021 - Opportunities and Aspirations for the Assisted Decision-Making (Capacity) Act 2015, the National Disability Authority has added presentations and other resources to their website. Also, recordings of the conference sessions can be watched via the NDA Youtube channel. The Property Services Regulatory Authority (PSRA) issued its Annual Report which presents an overview of the activities and outputs of the Authority in 2020. For further technical information and updates please visit the Technical Hub and the Covid-19 Hub on the Institute website. 

Welcome to this week’s Technical Roundup.  In developments this week, the UK Financial Stability Board has welcomed the publication of the 2021 status report by the industry-led Task Force on Climate-related Financial Disclosures; Public trust and confidence in charities research has recently been published by the Charity Commission for Northern Ireland. According to new research 87% of respondents marked 'doing what they say they will do' as a major factor that influences their trust in a charity. Read more on these and other developments that may be of interest to members below. Financial Reporting The Financial Reporting Council (FRC) has published the findings of its review into IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’, which has been identified as a recurrent problem area by the FRC.  The International Accounting Standards Board (IASB) is currently consulting on proposals for a new accounting standard that would permit eligible subsidiaries to apply IFRS Standards with reduced disclosure requirements in their financial statements. The comment period is open until 31 January 2022. The IASB recently released a short video which introduces the board’s proposals set out in the exposure draft. The European Financial Reporting Advisory Group (EFRAG) released it’s second of three podcasts on “good practices in reporting the business model, sustainability risks and opportunities”. In this second podcast, Giuseppe Milici, Task Force member and Sustainability Services Senior Manager at Deloitte Italy, provides insights on the good practices identified in the report’s supplement, the selection process set by the Task Force, observed common threads among the identified good practices and the challenges encountered by the Task Force. The UK Endorsement Board secretariat has published its survey on IASB Exposure Draft ED/2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach (the Disclosure Pilot). The ED proposes replacing today’s mandatory disclosure regime with a series of disclosure objectives, giving companies more freedom to decide what should be disclosed to meet the objectives. Read more here. Q&A We have published a number of Questions & Answers to answer some of the most common questions members and other stakeholders have in relation to audit and assurance engagements financial reporting and insolvency. Other Areas of Interest The Financial Stability Board (FSB) has welcomed the publication of the 2021 status report by the industry-led Task Force on Climate-related Financial Disclosures (TCFD), which reports on the further progress in TCFD-aligned disclosures by firms. The Irish Pensions Authority recently published information on trustees obligations to notify the Authority of outsourcing arrangements. From 1 December 2021, trustees must notify the Authority when they enter an outsourcing arrangement for the provision of the internal audit and risk management key functions. Trustees who have entered these arrangements since 22 April 2021 must also notify the Authority. As part of Charity Trustees’ Week  on 15-19 November 2021 the Irish Charities’ Regulator together with Boardmatch Ireland, Carmichael, The Wheel, Volunteer Ireland, Charities Institute Ireland, Pobal and Dóchas, have put together a timetable of diverse events to suit trustees from every type of charity such as the Charities Governance Code Workshop for Small Non-Complex Charities on 18 November 2021 and the Charities Governance Code Workshop for Registered Charities on the 19 November. Places are limited so register now if interested. Public trust and confidence in charities research published by the Charity Commission for Northern Ireland. According to new research from the Charity Commission for Northern Ireland, 87% of respondents marked 'doing what they say they will do' as a major factor that influences their trust in a charity. Fraud and Money laundering The ICAEW has produced a useful insights article on payment diversion fraud. It outlines what it is and how businesses can avoid it for example by training and vigilance. It also provides advice  on what to do if it happens to your business and a link to the NCA brochure. HMRC has recently updated its guidance “Help and support for money laundering supervision”. There are a series of webinars on its pages on money laundering supervision containing information for all businesses and sectors including Accountancy Service Providers and Trust or company service providers registered with HMRC . For further technical information and updates please visit the Technical Hub and the Covid-19 Hub on the Institute website. 

The details of the procedure for accountants in exceptional difficulty to make an arrangement with Revenue for the income tax deadline are set out in our Irish tax developments, along with confirmation from Revenue that arrangements for accountants reporting turnover for VAT Form 56A continue to apply. On the UK front, read this week’s updates on HMRC administered COVID-19 supports and we also bring you news of a new economic crime levy. While in international news, with Ireland signing up to the OECD global minimum tax agreement, 136 jurisdictions including all EU Member States and OECD members have agreed the two pillar plan.     Ireland Revenue set out the process for accountants in exceptional difficulty for the upcoming income tax deadline to seek to put an arrangement in place. Long-standing arrangements for accountings to support a client’s VAT Form 56A application continue to be recognised by Revenue. UK           Read this week’s updates on HMRC administered COVID-19 supports. HM Treasury has published more information on a new economic crime levy on professional firms and financial institutions. International The OECD two pillar plan on international tax reform is agreed by 136 jurisdictions, including Ireland. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax Newsletter by updating your preferences in MyAccount. 

Welcome to this week’s Technical Roundup.  In developments this week, the recently published Companies (Corporate Enforcement Authority) Bill 2021 (the Bill) establishes the Office of the Director of Corporate Enforcement (ODCE) as a standalone statutory body with a commission structure, to be called the Corporate Enforcement Authority (CEA); In its third quarterly podcast, the IFRS Interpretations Committee Chair and Vice-Chair of the International Accounting Standards Board Sue Lloyd joined Technical Staff Member Patrina Buchanan to talk about recent activities to support the consistent application of IFRS Standards during the third quarter of 2021 Read more on these and other developments that may be of interest to members below. Auditing The International Auditing and Assurance Standards Board (IAASB) has issued a proposed International Standard on Auditing of Financial Statements of Less Complex Entities. The consultation is open until 31 January 2022. The Institute's Audit and Assurance Technical Committee is considering this proposal in detail. To keep our members informed and updated on this important development we have published a webpage where members can access the consultation papers and submit their comments to us. IAASA have issued a revised version of ISA (Ireland) 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. The main changes to the standard are designed to provide increased clarity about the auditor's obligations to detect material fraud and enhance the requirements for the identification and assessment of the risk of material misstatement due to fraud and the procedures to respond to those risks. Read more here. Financial Reporting In its third quarterly podcast, the IFRS Interpretations Committee Chair and Vice-Chair of the International Accounting Standards Board Sue Lloyd joined Technical Staff Member Patrina Buchanan to talk about recent activities to support the consistent application of IFRS Standards during the third quarter of 2021. Topics discussed in the podcast included; Non-refundable VAT on lease payments Accounting for warrants that are financial liabilities on initial recognition Demand deposits with restrictions on use Cash received via electronic transfer as settlement for a financial asset. The FRC’s Lab published a report that supports companies in the move towards high-quality digital reporting. The Lab report sets out key considerations and tips for companies covering: how to set up the structured reporting process; how to enhance the usability of structured reports; and common tagging issues to avoid. The Financial Reporting Council (FRC) has published the findings of its review into IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’, which has been identified as a recurrent problem area by the FRC. In it’s latest podcast, the European Financial Reporting Advisory Group (EFRAG) provided an insight into the European Lab Project Task Force on the reporting of non-financial risks and opportunities and the linkage to the business model (PTF-RNFRO) report : Towards Sustainable Businesses: Good Practices for Business Model, Risk and Opportunities, Reporting in the EU and Supplementary Document: Good Reporting Practices. Other Areas of interest The recently published Companies (Corporate Enforcement Authority) Bill 2021 (the Bill) establishes the Office of the Director of Corporate Enforcement (ODCE) as a standalone statutory body with a commission structure, to be called the Corporate Enforcement Authority (CEA). Listen to the Association of Compliance Officers’ podcast series. Compliance files- Season 2, Episode 1.This week they speak with Ian Drennan, Director of Corporate Enforcement, on the role and powers of his Office, the implications of the Hamilton Report and the Implementation Plan which can be found on the Department of Justice website. One of the strands is the Advisory Council one of the key responsibilities of which will be developing Ireland’s first multi annual strategy for combatting crime and economic corruption. The director also makes reference to the above Bill which he says the legislature hope to have in force by year end, so a recent priority of his office has been work in this area to have the CEA ready to go by January 2022. As part of European Cybersecurity Month ISME are hosting a webinar on cybercrime with Department of Justice and  An Garda Síochána on protecting your business from cybercriminals.    The free webinar is on 28 October, and you can register by clicking the link above. The Department of Enterprise Trade and Employment has issued a Budget day newsletter with a link to the department’s Budget 2022 allocation. The newsletter gives details of some of the business focused measures contained in Budget 2022 such as enhanced tax arrangements for remote working and funding for digital and green funds. The Central Bank’s Director General Derville Rowland spoke recently at  the A&L Goodbody Corporate Crime and Regulation Summit about the evolution of enforcement at the Central Bank. She referred to  areas such as establishing and maintaining the credible threat of enforcement by the Central Bank and also about the proposed Individual Accountability Regime under the General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021 making reference also to the UK experience in relation to this. HMRC has issued its October edition of its  bi-monthly magazine for employers and agents giving them the latest information on topics and issues that may affect them. Also, in the anti-money laundering supervision area, HMRC has recently updated its Guidance on Understanding risks and taking action for Trust or Company Service Providers. Sustainability Sustainable Finance Ireland in conjunction with the UN-convened FC4S, has launched Ireland's Sustainable Finance Roadmap, in collaboration with public and private stakeholders across Ireland including the Department of Finance, Skillnet Ireland, and internationally. Developing sustainable finance talent will be prioritised as a key pillar of the roadmap. In launching the report, the Minister for Finance Paschal Donohoe said the roadmap was a priority Action Measure under the Ireland for Finance Action Plan 2021, demonstrating sustainable finance’s increasing prominence as a priority for Ireland and an essential tool in addressing the climate crisis. For further technical information and updates please visit the Technical Hub and the Covid-19 Hub on the Institute website. 

Susan Rossney, Public Policy Officer, writes: It seems that everyone is talking about sustainability nowadays. Accountants in SMPs are watching the news and listening to the debate. You may well be asking questions like: “What can I do in the face of a global issue?” “How will this affect my practice and my clients’ businesses?” “What questions will my clients ask me next?” “ What expertise should I be developing now?” “How will sustainability work for me?” The sense of urgency to address climate change across the world is intensifying. Droughts, floods and wildfires are increasing, ecosystems are collapsing, and in response people are calling for change. But climate change is part of a broader sustainability challenge – one that can be summed up as ‘environment, social and governance’, or ESG. The responsibility to meet this challenge falls on all businesses and firms, including small ones. As ESG continues its rise up the political and corporate agenda, smaller businesses now more than ever need to meet certain ESG criteria so they can access finance, win contracts or be part of larger companies’ value chains. Clients and consumers also expect businesses to have a positive impact on the environment and to be doing their part to contribute to change. Companies that want to prosper in the future will have little choice but to become sustainable. Small businesses have a crucial role in the transition to more sustainable economies and societies. Accountants are key financial advisors for those businesses, but also need to understand and implement sustainability practices for their own businesses. This article discusses the opportunities for small businesses – and their advisors – in embracing sustainability. “Practices who want to engage particularly with the next generation of staff and clients need to be able to take sustainability seriously and need to be able to demonstrate that” Conal Kennedy, Head of Practice Consulting, Chartered Accountants Ireland Environmental, social and economic issues present huge risks for businesses. Examples include: losing out to competitors; having reduced access to capital; developing weaknesses in supply chains; developing succession risks; and failing to meet the requirements of stakeholders, including consumers, clients, banks, business partners, staff and regulators. Accountants can identify and quantify these risks for their own practices, and develop policies for themselves and their clients to address them. But managing risks against ESG factors can also benefit businesses directly. As this article will show, if properly addressed, it impacts employee welfare, improving employee experience and leading to greater output; it affects ability to access finance; it enhances an organisation’s reputation, helping to attract new business and staff; and it can help companies comply with supply chain requirements of their larger clients. Preparers and auditors of financial statements will also need to consider these issues going forward. Generating new business Many accountants are now adding “sustainability consulting” to their services to clients. As trusted advisors, they can play a key role in helping SME clients think about their potential sustainability risks, and leverage opportunities offered by the sustainable transition. For example - Accountants can help clients to: assess sustainability impact and risks improve efficiencies reduce costs avail of grants acquire finance identify opportunities to expand their range navigate the changes Sustainability is also an increasingly important factor in tendering for contracts with larger organisations which have stricter sustainability goals. Some of these large organisations perform assessments of potential suppliers. Others also carry out regular risk screenings of existing supply-chain suppliers, and/or conduct internal audits and onsite supplier audits to verify that their supply chain suppliers are conforming to their policies. Accountants have a huge role to play in helping companies prepare this information, and in doing so themselves if they are part of these supply chains or are tendering for contracts. Accessing Finance Embracing sustainability is working towards ensuring the financial future of accountants’ businesses or their clients’ businesses. Investors are actively looking to invest in sustainable projects, and are screening out certain sectors or companies (like those heavily reliant on fossil fuels, for example). Businesses seeking this investment benefit from being able to collect and report on their sustainability-related activities against a recognised standard. Many banks are also adopting sustainability criteria and may require proof of sustainable practices from companies looking to avail of finance. There are also business grants as well as support schemes and tax incentives available for organisations looking to transition to more sustainable practices. Again, accountants have a huge role to play in guiding clients through this. Savings Operating in a sustainable manner saves costs. While there may be short-term costs associated with transitioning to a sustainable business model, businesses can recoup the investment they make and can also reduce their business costs by introducing more sustainable ways of working. According to the Sustainable Energy Authority of Ireland (SEAI), the average SME can save up to 30% on its energy bill by becoming more energy efficient. A business with an engaged and motivated team is also less likely to experience high employee-turnover and associated costs. In a drive to decarbonise Ireland’s economy, the rate of carbon tax increased by €7.50 in October 2020 from €26 to €33.50 per tonne/CO2. Reducing your carbon emissions will reduce your cost. Ultimately, though, any costs associated must be reframed as the cost of compliance or risk management. The greater costs are the costs of not being sustainable. Reputation With social media increasing access to companies, there are very few places to hide for organisations which are falling short of sustainability-related expectations. Staff expect it, and customers demand it. Companies not being transparent about their sustainability achievements, or their goals, will be called out by their customers and staff. Likewise, there is little patience for companies that are ‘green-washing’, i.e. presenting a false or misleading green public image. “64 percent of customers are ‘belief-driven buyers’ who will choose, switch, avoid or boycott a brand based on its stand on societal issues.” 2019 Edelman Trust Barometer Special Report: In Brands We Trust? Mobile Survey Attracting clients On the flip side, though, organisations that do embrace sustainability are in a strong position to attract clients. They can do this by becoming more visible in their community. Supporting local literacy or numeracy projects, participating in local charities or sports clubs, or engaging in local-tree planting initiatives not only increases brand awareness of a firm or business: it builds trust with a community. Remember – not everyone may be doing this, so you will have a first-mover advantage if you do. As a greater number of large companies are either required to or decide to report on human rights, diversity and climate-related policies, a greater number of local businesses supplying those companies will also be obliged to disclose their own sustainability practices, and will need help from a financial advisor to do so. Accountants who are experienced in offering clients this support may attract more clients looking to comply with the sustainability requirements of large organisations. Attracting & retaining talent Candidates are actively seeking jobs in companies with strong ESG credentials and are rejecting jobs in those companies not aligned with their own values. What was identified by McKinsey in 1997 as the ‘war for talent’ is as fierce as ever within the professional services sector, and organisations are going to great lengths to recruit talent. These same companies are now including their commitment to ESG values as a competitive differentiation. This is a trend seen by Karin Lanigan, Head of Member Experience in Chartered Accountants Ireland: “I have worked in recruitment for more than 20 years and in recent years, I have noticed a growing trend whereby candidates have become more and more discerning about types of organisations they’ll work for. They are not just considering salary and package; they are looking at the sector, at the reputation of an organisation, and asking themselves ‘will I feel proud if I’m out with my friends on a Friday night to say that I work with whatever the organisation is or whatever the sector is that they are in?’ They want to have sense of pride in their place of work.” Remember: a commitment to ESG does not have to mean having a large sustainability department or running an eco-business. It can also mean being a firm or company that looks after its employees, provides good training and promotion opportunities, and is active in its local community. “With ‘measurements’ everyone thinks of ‘carbon footprint’. But it doesn’t have to be. You can measure staff satisfaction through surveys. You can measure employee-turnover and retention or absenteeism. Encourage staff to measure the number of hours they spend giving back to others in the community.” Teresa Campbell, PKF FKM Impact on Financial Statements Preparers and auditors of financial statements should consider the impact on sustainability and climate change on every entity. Quoted companies, and some categories of larger companies have defined obligations to report on the impact of environmental matters on the companies’ businesses. These specific reporting requirements do not apply to private limited companies reporting under FRS 102. However, climate change and sustainability are major and developing issues that cannot be ignored by anyone. Both IAASA and the FRC have recently commented on matters that they expect to see considered in financial statements. Whilst their comments were largely made in the context of the IFRS framework, much of what they have said is directly applicable to financial statements prepared under FRS 102. Accountants should consider and report on how climate change has impacted on the assets and liabilities of the company, what additional risks have emerged and whether new or increased provisions are necessary. How has climate change impacted on the estimates and judgements applied, and do these need to be disclosed? Consider such matters as the useful lives of property, plant and equipment. Consider also the impact on impairment assumptions. Does the entity have an obligation to remediate environmental damage caused by any of its activities? Have any of its contracts become onerous, or are they likely to? The financial statements, taken as a whole, should contain sufficient information to be useful to stakeholders, and preparers should avoid the use of non-specific boilerplate. See IAASA’s recent observations on published financial statements. The Institute will cover these areas in more detail in future issues of Practice Matters, broadcasts of Practice News, and CPD courses. Some member resources Find more on the Institute’s Sustainability Hub with resources from articles, podcasts and webinars to a glossary explaining the acronyms and terms. You can also find tips in the Institute’s guide on Sustainability for Accountants. This free guide for accountants describes what to do – and where to start – to operate sustainably, successfully and cost-effectively.  

In Irish tax developments, Business Resumption Support Scheme guidelines are now available. On the UK front, HMRC provides an update in response to issues with the 30-day CGT reporting service for residential property disposals. While in international news, the European Commission has extended the scope of certain aid measures under the General Block Exemption Regulation. Ireland Revenue recently published guidelines for the Business Resumption Support Scheme which will support businesses significantly impacted throughout the COVID-19 pandemic, even during periods when restrictions were eased.  A copy of the CG50A certificate is now available in the ROS inbox of the filer of the CG50 applications. UK              HMRC has published further details of the temporary solution to issues with the 30-day residential property disposal service. HMRC has issued a reminder that individuals can claim working from home expenses quickly and easily online.   International   The European Commission has extended the scope of the General Block Exemption Regulation which will allow Member States to implement certain aid measures without prior Commission scrutiny.   Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter.

Issues experienced by taxpayers and agents in respect of the 30 day residential property disposal service have been under discussion with HMRC. HMRC has now published further details of the temporary solution to allow taxpayers to offset a UK property disposal return CGT overpayment against another Self-Assessment tax. HMRC is also continuing to work on updating all the guidance on this service and is exploring a longer-term resolution to the offsetting issue. The two documents now published are as follows:- HMRC Offset of UK Property Capital Gains Tax; and HMRC UK Property Disposal Question and Answer.

Julia Rowan answers your management, leadership, and team development questions. Q. I get no feedback from my boss unless he’s unhappy about my work. I work hard and give the people on my team plenty of feedback, but I feel very unsure of myself. A. Of course, your boss should give you feedback. You could try to change him, but (and sorry for the cliché) the only person you can change is yourself. So, let’s look at what’s happening for you: your boss is not communicating with you and you are telling yourself a story (he doesn’t appreciate me, my work is sub-standard) that undermines your confidence. What if you trusted yourself and told yourself a different story? For example, ‘Isn’t it great that my busy boss can cut to the chase about my work?’ or ‘Isn’t it interesting that somebody that senior does not see the importance of giving feedback?’ These stories free you from feeling bad about your boss’s behaviour and allow you to be easier with the situation. Funnily enough, when we lose our anxiety, what we are searching for often manifests. As there is little communication, it could be an idea to write a short weekly email to your boss outlining, for example: Three main things your team progressed/achieved this week; Three main priorities for next week; and Issues impacting the team. That way, you build up a record of communication about progress centred on goals and priorities. Then, your boss will be aware of what’s going on and can respond if he chooses. On another note, it may be useful to pay special attention to your longer-term career development. Think about what you really want in the short- to medium-term (lead a team, manage a project, broaden your capabilities, specialise) and find someone who can be a listening ear. Also, focus on building relationships across your organisation to create a wider network of people who can support you. Q. I’ve just been appointed to lead the dream team. They’re hard-working and talented. But I can’t believe they gave me the job, and I wonder if I’m the right manager for them. A. If this team is experienced and motivated, they don’t need much direction – you could focus on coaching and facilitating the team, both individually and as a group. Here are a few things you could do: Develop your coaching skills. Coaching is a great way to build people’s competence and confidence through questioning and listening. It also helps the leader to work from a more strategic place. Help the team become more self-sufficient by locating and sharing resources and encouraging team members to share challenges and opportunities. Use your team meetings to challenge the team. Ask them where they want to get to – both individually and as a team – and start planning your way there. More importantly, you need to give that imposter syndrome the heave-ho. You got the job for a reason (if it helps, ask the interviewers why they chose you), but leaders need to develop a special blend of ‘confident humility’ – the confidence to acknowledge their strengths and the humility to keep learning. We do everyone a favour when we acknowledge our strengths; by acknowledging them, we make them available to others. Julia Rowan is Principal Consultant at Performance Matters, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie.

Bríd Heffernan provides an update one year after the Monitoring Group issued its proposed reforms to international standard-setting boards. In July 2020, the Monitoring Group issued its much-anticipated paper outlining reforms to the international standard-setting boards – namely, the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA). This article will reflect on the reforms proposed in the July 2020 Monitoring Group paper and analyse where the reforms stand one year on. The journey so far The Monitoring Group is a group of international financial institutions and regulatory bodies committed to advancing the public interest in international audit standard-setting and audit quality. The last set of reforms faced by the standard-setting boards were agreed to in 2003 by the International Federation of Accountants (IFAC) and the Monitoring Group. These 2003 reforms created the Public Interest Oversight Board (PIOB), which was tasked with increasing investor and stakeholder confidence in the standard-setting boards and ensuring that standards are responsive to the public interest. The 2003 reforms put IESBA and IAASB under the oversight of the PIOB, thus making them independent of IFAC. This, in turn, led to IFAC providing support to the standard-setting boards. The proposed July 2020 reforms do not change this structure, but they do propose changes to address the Monitoring Group’s concerns. Effectiveness reviews were built into the 2003 reforms. Every five years or so, the Monitoring Group conducts an effectiveness review and makes recommendations to improve the system. In the early reviews, the recommendations were made and agreed upon, and enhancements were implemented. However, the most recent review in 2015 resulted in the 2017 Monitoring Group consultation paper. Since then, there has been extensive discussion between the Monitoring Group, IFAC and other stakeholders culminating in the issuance of the July 2020 Monitoring Group paper. Monitoring Group concerns The July 2020 Monitoring Group paper titled Strengthening the International Audit and Ethics Standard-Setting System set out recommendations for reforming the standard-setting process. Below is an overview of the Monitoring Group’s main concerns that led to the recommendations, which are also discussed later in this article. The public interest is not given sufficient weight throughout the standard-setting process. Stakeholder confidence in the standards is adversely affected as a result of the perception of undue influence of the accountancy profession on the following two grounds: IFAC’s role in funding and supporting the standard-setting boards and running the nominations process; and Audit firms and professional accountancy organisations providing the majority of standard-setting board members. Standards are not as timely and relevant as they need to be in a rapidly changing environment. IFAC’s response As IFAC operationally runs the standard-setting boards, the Monitoring Group’s concerns and recommendations directly impact IFAC. In an update to its members, IFAC’s Chief Executive, Kevin Dancey, stated that IFAC was focused on agreeing on a workable set of changes that would enhance stakeholders’ trust and confidence in the standard-setting process. These reforms also provide an opportunity for IFAC to address its own issues with the current process, which are: That PIOB members are almost exclusively from a regulatory background. IFAC believes that the PIOB should have a multi-stakeholder composition and perspective. That the PIOB must be more transparent, and there is a need for clarity on its role and the role of the standard-setting boards and how the PIOB carries out its mandate. 2020 recommendations  The July 2020 Monitoring Group paper proposals retain the two standard-setting boards with the same mandates, and they will be retained in a similar size (16 members, down from 18 members). The respective roles of the PIOB and the standard-setting boards are also clarified. The Monitoring Group’s proposals clarify that the standard-setting boards are responsible for developing, approving and issuing the standards. The role of the PIOB is oversight. Combined with making the workings of the PIOB more transparent, this is a step forward. Responsibility for ensuring that the standards were responsive to the public interest was a source of confusion in the past. Was this the responsibility of the standard-setting boards or the PIOB? The July 2020 Monitoring Group paper contains a public interest framework, which confirms that it is the standard-setting boards’ responsibility to certify that the standards are responsive to the public interest. The PIOB will also have to certify that the standards are responsive to the public interest as part of its oversight function. Both the PIOB and the standard-setting boards will have a multi-stakeholder composition. For the PIOB, this means that its members will not simply be representatives of the Monitoring Group members. And for the standard-setting boards, this will ensure a diversity of views at the standard-setting table. Recognition of the significant role of both IFAC and the accountancy profession is a key improvement over the 2017 consultation paper. Current practitioners can still become members of the standard-setting boards, up to a maximum of five practitioners. Impact of the changes on IFAC With respect to IFAC, its ongoing role has been acknowledged in the July 2020 Monitoring Group paper: IFAC will continue to provide operational support to the standard-setting boards, the only difference being that it will be set out in a formal service level agreement. IFAC’s role in adopting and implementing the standards, promoting the standards, and monitoring their adoption and implementation has been acknowledged as an important ongoing responsibility. There will be a change to the nominations process for IAASB and IESBA members, however. The process is currently run by the IFAC Nominating Committee, which is chaired by the IFAC president. To ensure adequate independence in the nominations process and ensure good governance, the July 2020 Monitoring Group paper recommends that the nominations process sit under the supervision of the PIOB. The legal structure will also change. Currently, the standard-setting boards are committees of IFAC. The July 2020 Monitoring Group paper calls for the standard-setting boards to sit under a separate legal entity, independent to IFAC. Furthermore, changes have been recommended to the staffing model for the standard-setting boards. The proposals call for an increased staff complement and for staff to have greater responsibility for drafting the standards with less responsibility in the hands of the standard-setting boards. Since IFAC provides operational support for the standard-setting boards, this request for an increased staff complement will impact IFAC. Transition planning phase It was assumed by many observers that, with the issuance of the July 2020 Monitoring Group paper, all would be known. However, five years after the initial review, the reform process is only at the end of the beginning, seeing as many of the details remain unresolved. According to IFAC, the July 2020 paper is a significant improvement on the proposals outlined in the 2017 consultation paper. It is evolutionary rather than revolutionary. It sets out several high-level recommendations and principles that can be worked with. Right now, IFAC and the Monitoring Group are in the transition planning phase of the reforms – but many outstanding items must yet be worked through. The transition planning phase consists of IFAC and the Monitoring Group developing an implementation plan by participating in 26 workstreams. The goal is to work through all outstanding issues and finalise the recommendations in 2021. The implementation of the recommendations will then take place over the next three years, up to 2024. The changes will be phased in to ensure a smooth transition and no disruption to the current standard-setting process. Funding of the reforms  It is clear from the July 2020 paper that there is no new funding model. The profession’s resources were stretched before COVID-19, and this limitation will be exacerbated post-pandemic. This represents a significant fiscal constraint on implementing the reforms. IFAC’s funding for 2021 is down 13.5% from 2018, and there is no improvement anticipated in the funding outlook beyond 2021. Therefore, a key challenge is to reconcile the cost of the Monitoring Group’s recommendations to the funding available. Next steps As noted, the process is currently in the transition planning phase. The goal is to resolve all outstanding issues in 2021 while reconciling the cost of the recommendations to the funding available and reaching a deal on the phased implementation of agreed changes by 2024. While there is a long way to go before the reforms are implemented, it is positive to see progress that ultimately serves the public interest. Bríd Heffernan is Associations & Institutions Leader at Chartered Accountants Ireland.

Jane O’Hanlon explains the common tax-related issues facing members in business and how to deal with them before Revenue comes knocking. As a tax advisor working in a specialised tax practice, I encounter similar tax issues in various businesses. This article will focus on the most critical issues and help ensure that your business is tax compliant. What should I do when Revenue knocks on my door? The answer to this depends on the nature of the knock! Any correspondence issued by Revenue must be looked at carefully to understand the purpose of the query. A letter might issue from Revenue with queries due to an incorrect entry on a tax return (referred to as an ‘Aspect Query’ letter). Where a business files a VAT return and is in a VAT recovery position, standard VAT verification letters are often issued by Revenue seeking documentation to support the VAT refund due. This type of correspondence is routine and while it should be dealt with promptly, it should not result in undue concern. If an error is discovered as you prepare your response, it is usually possible to make a ‘qualifying disclosure’ to Revenue. By making a qualifying disclosure, you can reduce the penalties payable, avoid prosecution, and avoid publication in the list of tax defaulters. A disclosure is unprompted if it is made before notification of a Revenue audit is received. Any disclosures in relation to items covered by the audit made after the audit notice is received is prompted, and the penalty reductions for unprompted disclosures are higher than for prompted disclosures. However, Revenue recently indicated that it intends to move disclosures made by a business under an ‘Aspect Query’ to the ‘Prompted Disclosure’ category. Although publication can still be avoided, higher rates will be applicable if penalties apply. When a Revenue audit letter issues, depending on the tax head and the period covered, the taxpayer should conduct a full review of all tax matters. Common problems include businesses making cash payments to casual staff without PAYE, incorrect claiming of VAT input credits, incorrect operation of benefit-in-kind (BIK), and incorrectly claiming a tax deduction for income or corporation tax purposes. When that audit letter is received, it is essential to at once consider whether the business will need to make a prompted qualifying disclosure. If it does, it can write to the Revenue auditor requesting time to prepare the disclosure. In my experience, the time spent at this stage is well worth it as it often results in the audit running more smoothly and concluding promptly. It is not in the interest of any business to have an audit process continue any longer than it needs to. Therefore, it is crucial to ensure that a full disclosure, if needed, is made and that all supporting documentation is gathered and available to the auditor. Cooperation is the best policy. * Review your tax compliance position on VAT and PAYE. Cooperation is the best policy when dealing with Revenue and, if necessary, make a voluntary disclosure. What VAT can I recover? At a high level, VAT can only be recovered by a business providing VATable products or services. This means that the business charges VAT on sales to customers. You may think that a business providing only products or services subject to VAT can recover all VAT charged by its suppliers. However, that is not the case. It is never possible to recover VAT on the purchase of food and drink items for use in an office kitchen. I frequently encounter cases where VAT is being reclaimed on bottled water purchased by the business, for example. Similarly, if a business owner purchases items for personal use, VAT should not be recovered as that purchase has not been made to provide taxable (i.e. VATable) supplies. Furthermore, if a company carries on a trade and owns several rental properties, you must determine if the expense relates to the trade or the rental properties. For example, if repairs are carried out on the business premises and all supplies by the business are liable to VAT, the VAT charged can be recovered. However, if repairs are carried out on a rented residential apartment owned by the business, the VAT cannot be recovered as the rental income from the residential apartment is not liable to VAT. In summary, consideration must be given to each invoice to determine if the business can recover the VAT charged. In addition, businesses can recover 20% of the VAT incurred on the acquisition or leasing of a car, provided it is used for business purposes at least 60% of the time. Businesses must also be aware that, in most cases, the supplier will not have charged VAT when the business purchases goods or services from outside Ireland. The business must self-account for Irish VAT at the appropriate rate and claim an input credit if it is entitled to do so. If foreign VAT has been charged, the business should satisfy itself that this is correct before payment is made to the supplier. A business cannot include an input credit in an Irish VAT return for foreign VAT charged. A business can only include a claim for a VAT input credit where a valid VAT invoice has been received. Accounts payable staff should be trained to ensure that all invoices are valid VAT invoices before settling them. It is easier to seek a proper invoice from a supplier when the invoice has not yet been paid. * Check that you are correctly claiming VAT input credit on cars and foreign purchases. How long do I need to keep documentation for? In general, documents must be kept for six years after the tax year in question. However, that is not as straightforward as it may sound. For example, I know of one situation where an individual claimed capital allowances on a building, with the capital allowances available over seven years. The tax return covering the sixth year in which the allowances were available was selected for verification three years after the return was filed, and Revenue sought copies of documentation to confirm the nature and the availability of the allowances. In this case, the taxpayer needed to provide documentation from nine years earlier. The key point from a tax perspective is that the burden of proof rests with the taxpayer. Therefore, you need to ensure that you can prove your entitlement to a deduction for any expenses or any capital allowance claimed in your tax return. Many recent tax appeals decisions have referred to this point. An Appeals Commissioner cannot decide a case in favour of a taxpayer where the taxpayer cannot discharge the burden of proof. Regarding an asset that is a capital asset, it will be necessary to keep documentation for six years after the property is disposed of. If a property was bought in 2000 and sold in 2021, for example, documentation regarding the purchase of that asset must be retained until 2027. Doing so enables you to prove your entitlement to a deduction for the costs of acquisition incurred in 2000 in determining the capital gains tax payable (or indeed the capital loss) on the disposal of the asset. The retention of documentation is also important in the context of VAT and the Capital Goods Scheme. When an asset is disposed of, the vendor is often obliged to complete Pre-Contract VAT Enquiries (PCVE) as part of the sales process. The PCVE contain full details of the purchase/development of the property, how it has been used since it was acquired, and how it is currently being used. To determine the correct VAT treatment of the sale, there can be no gaps in terms of how the property has been used. It is easier to maintain this information on a contemporaneous basis rather than pulling together information on all prior years as you prepare to sell the property. * Review your document retention policy as in some cases, you may need to keep certain records for more than six years. How do I ensure compliance with BIK rules on the provision of company cars? Employers who provide employees with company cars are obliged to keep contemporaneous records of business mileage. BIK operates by applying a percentage rate to the original market value of the car provided to the employee (other than electric cars, where different rules apply). The applicable percentage depends on the annual business mileage driven by the employee and ranges from 30% down to 6%. If any rate other than 30% is used, the employer must be able to prove the business mileage. Where an employee is provided with a car, they must complete a monthly log of the business journeys for their employers. While the tax is payable by the employee, the obligation is on the employer to operate the tax correctly. In addition, if the vehicle provided is a commercial vehicle or a van, the appropriate BIK rate is 5% regardless of the business mileage. * Review how you are calculating PAYE on the BIK on company cars and keep appropriate contemporaneous records of staff business mileage. What information does my tax advisor need to prepare my tax return? Where your accountant prepares your business’s financial statements, they will generally have sufficient information to prepare an accurate tax return. Where the financial statements are prepared by the business and provided to the tax advisor, however, they will generally need answers to the following questions: Are all expenses incurred wholly and exclusively for the purpose of the trade? For example, consider business entertainment, charitable and political donations, personal expenditure, and expenses paid for by the business that may not relate to that business. Was the employer’s pension contribution paid during the year, or is there an accrual in the profit and loss account? A tax deduction is only available on a paid basis. Can you provide an analysis of professional and legal fees? Fees that relate to capital transactions (e.g. asset purchases/sales) are not deductible in calculating trading profits. Can you provide a schedule of fixed asset additions to include the date of acquisition, the cost of acquisition, and the nature of the asset? Also, can you provide a schedule of fixed asset disposals so that accurate capital allowances claims and balancing charges/allowances can be prepared? Can you provide a reconciliation of any finance lease creditors from the opening position to the closing position? Can you provide a schedule of directors’ remuneration split by director? Can you provide details of any dividends or distributions paid during the year? Can you provide details of any non-trading income? Where medical insurance is paid on behalf of the staff, can you provide details of the tax relief at source (TRS) amount and confirm whether the gross or net amount has been included in the profit and loss account? * Save time and fees by completing the checklist your tax advisor will need to prepare your tax return. These issues occur in a wide range of businesses. You should aim to ensure that your business is compliant with tax legislation on an ongoing basis. Careful consideration should be given to amending any errors you discover – before you get that knock on the door. Jane O’Hanlon is a Director at Purcell McQuillan and a Fellow of Chartered Accountants Ireland.

In an age of information overload, what websites and internet resources can someone who wants to keep up-to-date with the world of finance and financial management rely on? Here’s Cormac Lucey’s selection. For daily business news… The RTÉ website offers us the opportunity to read the daily survey of business and financial news published by the main Dublin stockbrokers. This is not just a useful survey of the previous day’s financial economic news, it also offers readers the opportunity to understand how financially literate readers view that news.   Visit www.rte.ie/news/markets/broker_reports (and check out Goodbody Stockbrokers). For detailed financial data on leading Irish corporates… I opened up an account with Davy Stockbrokers largely to get access to the company’s Weekly Book. That is a compendium of corporate data for quoted companies covering recent financial history, near-term financial forecasts and key valuation metrics. For avid financial number crunchers such as myself, it’s the equivalent of crack cocaine! Visit www.davy.ie  For an up-to-date overview of the Irish economy… The National Treasury Management Agency (NTMA) borrows money on behalf of the State. That requires regularly updating international debt investors (who may buy Irish government debt) on economic developments here. Visit www.ntma.ie (and look for ‘Investor Presentation’).  For an overview of the Northern Ireland economy… EY’s Chief Economist, Neil Gibson, provides a regular and authoritative update on what is going on up North.  Visit www.ey.com (and search for ‘EY Economic Eye: Northern Ireland’). For a global economic overview from a monetary perspective… Simon Ward, Janus Henderson’s economic adviser, uses monetary and cycle analysis to assess economic and market prospects. Visit www.moneymovesmarkets.com For general trends in financial management… Two large international consultancies offer regular publications that combine a focus on the practical problems facing financial staff in corporations with intellectual rigour.  Visit www.mckinsey.com (and search for McKinsey on Finance, which offers readers a quarterly selection of useful and stimulating articles). Visit www.bcg.com/capabilities/corporate-finance-strategy/insights, which offers regular corporate finance updates. For current developments in international markets… The Financial Times has an excellent capital markets blog (www.ft.com/alphaville), and there is an offshoot of that (www.ftalphaville.ft.com/longroom/home) on which you can (once registered) access interesting research reports from the world’s top investment banks. Another website where you can access high-level research reports from investment banks is www.savvyinvestor.net (registration required). For the technical situation of main financial markets… Steve Blumenthal, executive chair of Capital Management Group, produces a useful technical survey of the main US markets each week.  Visit www.cmgwealth.com/ri-category/on-my-radar  For financial chatter, conspiracy theories and the occasional blinding insight... It’s all available here: www.zerohedge.com  Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.

As businesses across the island of Ireland grapple with the post-Brexit trading environment, any and all opportunities for growth should be grasped with both hands, writes Dawn McLaughlin. The new trading arrangements brought about by Brexit and the Northern Ireland Protocol have caused much economic and political upheaval and controversy since the turn of the year. We are all well versed by now in the arguments for and against the Protocol. However, it remains the case that businesses, in the main, are largely supportive of the new arrangements in the absence of any better solutions. While no one would claim that it is a perfect situation, for businesses in Northern Ireland – particularly those in the north-west border region – there are advantages. Being able to trade freely with the rest of the UK and into the EU and the rest of the island of Ireland is a distinct competitive advantage afforded to businesses on one side of the Derry-Donegal border that isn’t available to the other. Another positive consequence has seen north-south trade in Ireland boom since the start of 2021. It has increased by over 60%, according to the Central Statistics Office’s most recent figures. Some local businesses have begun trading with their southern neighbours for the first time, shifting supply chains and finding new markets and customers. However, many of these businesses will not have realised that they are technically exporting their goods or services, often considered to be the preserve of shipping products across the world. The Londonderry Chamber of Commerce, in collaboration with our partners at Invest Northern Ireland, Derry City and Strabane District Council, InterTradeIreland, and Enterprise North West, have established Growth North West. This partnership is developing new initiatives to help businesses grow their operations across several business areas, such as exporting and innovation. Focusing on the export journey first, experts will cover different aspects of the exporting process to show attendees how to make the most of the export opportunities available to them. Then, businesses can schedule a one-on-one appointment for a more bespoke review of their exporting needs and challenges. This covers everything from export documentation, logistics and sales prospecting to maximising social media and perfecting your pitch. Growth North West is a one-stop-shop for everything your business needs to begin expanding into new markets and trading with new customers. As well as a series of monthly webinars, a mapping exercise has been carried out detailing all available export support. As a sole practitioner, I know that keeping up-to-date with ever-changing programmes and supports is hugely time-consuming. So, to help Chartered Accountants add value and guide clients on their export journey, Growth North West will hold awareness sessions in the coming months. These sessions will be publicised through the Chamber and are open to all. We look forward to engaging with businesses of all kinds, shapes and sizes as they begin or expand their export operations. There are significant opportunities for our local firms, both beyond these shores and on our shared island. As we all grapple with the post-Brexit trading environment, any and all opportunities for growth should be grasped with both hands. Growth North West aims to deliver stimulation and growth opportunities for our region at a time of economic uncertainty and upheaval. Throughout the pandemic, firms have been innovating their services and pivoting their operations to stay afloat. Looking outwards at new export markets is one way our local businesses can positively react to both the effects of the pandemic and the UK leaving the EU. Dawn McLaughlin is Founder of Dawn McLaughlin & Co. Chartered Accountants and President of Londonderry Chamber of Commerce.

David Swinburne outlines the practical considerations for members as they prepare to deal with the Small Company Administrative Rescue Process. With the much-anticipated legislation for the Small Company Administrative Rescue Process (SCARP) ready to be enacted, it will be interesting to see how the process evolves. SCARP aims to rescue struggling businesses that form the backbone of the Irish economy – small and micro companies. These SMEs provide the greatest number of jobs in Ireland. The process, by and large, mirrors the successful examinership process, which has been around for 30 years. However, the costs associated with SCARP are expected to be significantly lower than those associated with examinership. Under SCARP, there is no automatic involvement of the Court. Therefore, the costs associated with legal representation for both the company and the examiner are not applicable. Under SCARP, a company does not have protection from its creditors. However, there is the comfort that the Court is there should it be required. Of course, if recourse to the Court is required, costs will increase. What should a company or its external accountant be doing now? In a typical examinership case, there is invariably some event that occurs at very short notice or an unforeseen shock that pushes the company into insolvency. This, in turn, leads to an urgent application to Court for protection and the appointment of an examiner. Thus, the process for the duration of the examinership becomes a pressure cooker. For SCARP to be successful, planning at a very early stage and engagement with an insolvency practitioner (known as the ‘process advisor’ under SCARP) is vital. The insolvency practitioner will need to quickly assess whether or not the company is a suitable candidate for SCARP. The company can only be a suitable candidate if it has the prospect of survival, which means that it must be viable. Before commencing the SCARP process, the company will therefore need to determine (in as far as it can) that there is a strong likelihood that it will emerge successfully out the other end. For this, it must have a viable core business and source sufficient financial resources to fund the SCARP (if its creditors are to be settled immediately instead of over a period of time). The company’s stakeholders will want certainty on the outcome for them. This will form their decision as to whether or not they will support, and therefore vote in favour of, the SCARP. Fail to plan, plan to fail Early engagement with an insolvency practitioner will also allow them to identify creditors that are likely to be more challenging to deal with in the SCARP due to the complexity of the contractual relationship between such a creditor and the company. Such creditors may include landlords and others to whom the company has more onerous obligations. These creditors can be dealt with under SCARP (subject to their consent). However, if the issues are likely to be difficult to resolve, an application to Court may be required. Identifying such creditors before the process begins will be crucial in setting out the options and, consequently, the further anticipated costs that may arise in dealing with them. Based on recent applications before the High Court, it is evident that the Court will want the company to endeavour to engage with creditors and attempt to resolve difficulties before bringing the matter before the Court. Therefore, the Court should not be the first port of call in resolving issues with any creditor. Excludable debt The possibility for State creditors (with a particular focus on Revenue, which is likely to be a creditor in any SCARP scheme) to opt-out of the process has generated mixed reactions. In my experience, however, Revenue is not a blocker. Instead, it is – and will continue to be – supportive of company restructurings, whether informal or formal (i.e. SCARP or examinership). For Revenue to take such a supportive stance, the company and its directors will need to have a compliant and transparent record in their dealings with Revenue. Therefore, companies must continue to meet their Revenue filing obligations – even in circumstances where the company has warehoused debt and is not in a position to discharge its ongoing taxes as and when they fall due. Directors’ duties Under SCARP, there is a requirement for the process advisor to report any offence to the Director of Public Prosecutions (DPP) and the Office for the Director of Corporate Enforcement (ODCE). It is therefore vital that all directors act honestly and responsibly at all times. When will SCARP cases commence? There is a view that as long as COVID-19 State supports are in place, companies will not succumb to the pressure that they may face after the removal of all State supports. However, not all Irish entities are receiving State support. And those that are not are heavily reliant on their trading partners to discharge their obligations to ensure their own survival and future success. Formal insolvencies are at an all-time low. Given the impact of the last 17 months on the economy, you would expect insolvencies to have increased, not decreased. There is no doubt that the various extensive State supports, coupled with payment breaks and holiday periods from other key creditors and stakeholders, have ensured the continued survival of businesses that would otherwise have run out of cash. As the ‘new normal’ continues to be rolled out and we all adjust and adapt, creditors will be forced to become more active in their efforts to collect cash and recover amounts owing. This is when a company becomes vulnerable in terms of its future survival and direction, as its creditors start to take matters into their own hands. Control in terms of survival will quickly switch from being with a company to its creditor(s). Therefore, as highlighted above, early engagement with an insolvency practitioner and an assessment of SCARP as a credible option is a must. Time-frame The end-to-end time-frame for a SCARP is much shorter than examinership (70 days versus 150 days), which means that much preparatory work will take place before the SCARP is formally kicked off by the directors via a resolution and the appointment of the process advisor. Getting difficult and challenging creditors onside is time-consuming. If certain creditors are unlikely to be supportive before the commencement of the SCARP, it is more likely that they will object to it. This will result in an automatic application to Court to seek approval for the SCARP, which impacts the certainty of the outcome for the company, its employees, and its consenting creditors. What should I do next? If one of your clients is struggling now or is highly likely to struggle in the future, or you own or lead an SME that is eligible for SCARP (see sidebar), you should consult now with an experienced insolvency practitioner. David Swinburne FCA is an insolvency practitioner and Advisory Partner at FitzGerald Legal & Advisory, Cork. SCARP eligibility An SME will be eligible for SCARP if it satisfies two of the following three criteria: Turnover of up to €12 million; A balance sheet of up to €6 million; and/or Up to 50 employees.