• Current students
      • Student centre
        Enrol on a course/exam
        My enrolments
        Exam results
        Mock exams
      • Course information
        Students FAQs
        Student induction
        Course enrolment information
        Key dates
        Book distribution
        Timetables
        FAE elective information
        CPA Ireland student
      • Exams
        CAP1 exam
        CAP2 exam
        FAE exam
        Access support/reasonable accommodation
        E-Assessment information
        Exam and appeals regulations/exam rules
        Timetables for exams & interim assessments
        Sample papers
        Practice papers
        Extenuating circumstances
        PEC/FAEC reports
        Information and appeals scheme
        Certified statements of results
        JIEB: NI Insolvency Qualification
      • CA Diary resources
        Mentors: Getting started on the CA Diary
        CA Diary for Flexible Route FAQs
      • Admission to membership
        Joining as a reciprocal member
        Admission to Membership Ceremonies
        Admissions FAQs
      • Support & services
        Recruitment to and transferring of training contracts
        CASSI
        Student supports and wellbeing
        Audit qualification
        Diversity and Inclusion Committee
    • Students

      View all the services available for students of the Institute

      Read More
  • Becoming a student
      • About Chartered Accountancy
        The Chartered difference
        Student benefits
        Study in Northern Ireland
        Events
        Hear from past students
        Become a Chartered Accountant podcast series
      • Entry routes
        College
        Working
        Accounting Technicians
        School leavers
        Member of another body
        CPA student
        International student
        Flexible Route
        Training Contract
      • Course description
        CAP1
        CAP2
        FAE
        Our education offering
      • Apply
        How to apply
        Exemptions guide
        Fees & payment options
        External students
      • Training vacancies
        Training vacancies search
        Training firms list
        Large training firms
        Milkround
        Recruitment to and transferring of training contract
      • Support & services
        Becoming a student FAQs
        School Bootcamp
        Register for a school visit
        Third Level Hub
        Who to contact for employers
    • Becoming a
      student

      Study with us

      Read More
  • Members
      • Members Hub
        My account
        Member subscriptions
        Newly admitted members
        Annual returns
        Application forms
        CPD/events
        Member services A-Z
        District societies
        Professional Standards
        ACA Professionals
        Careers development
        Recruitment service
        Diversity and Inclusion Committee
      • Members in practice
        Going into practice
        Managing your practice FAQs
        Practice compliance FAQs
        Toolkits and resources
        Audit FAQs
        Practice Consulting services
        Practice News/Practice Matters
        Practice Link
      • In business
        Networking and special interest groups
        Articles
      • Overseas members
        Home
        Key supports
        Tax for returning Irish members
        Networks and people
      • Public sector
        Public sector presentations
      • Member benefits
        Member benefits
      • Support & services
        Letters of good standing form
        Member FAQs
        AML confidential disclosure form
        Institute Technical content
        TaxSource Total
        The Educational Requirements for the Audit Qualification
        Pocket diaries
        Thrive Hub
    • Members

      View member services

      Read More
  • Employers
      • Training organisations
        Authorise to train
        Training in business
        Manage my students
        Incentive Scheme
        Recruitment to and transferring of training contracts
        Securing and retaining the best talent
        Tips on writing a job specification
      • Training
        In-house training
        Training tickets
      • Recruitment services
        Hire a qualified Chartered Accountant
        Hire a trainee student
      • Non executive directors recruitment service
      • Support & services
        Hire members: log a job vacancy
        Firm/employers FAQs
        Training ticket FAQs
        Authorisations
        Hire a room
        Who to contact for employers
    • Employers

      Services to support your business

      Read More
☰
  • Find a firm
  • Jobs
  • Login
☰
  • Home
  • Knowledge centre
  • Professional development
  • About us
  • Shop
  • News
Search
View Cart 0 Item

News

☰
  • Home/
  • News/
  • News item
☰
  • News
  • News archive
    • 2024
    • 2023
  • Press releases
    • 2025
    • 2024
    • 2023
  • Newsletters
  • Press contacts
  • Media downloads
Brexit
(?)

BREXIT: What are the next steps?

The Public Policy staff in the Chartered Accountants Ireland Advocacy and Voice Department write: On 24 December 2020, the EU and UK negotiating teams reached agreement in principle on a Trade and Cooperation Agreement (“the Agreement”), which provides for tariff-free, quota-free trade (where rules of origin criteria are met) and for sectoral cooperation in a number of important areas. The Agreement does not govern trade in goods between Northern Ireland (“NI”) and the EU where the Protocol on Ireland and Northern Ireland will apply. This means that no new procedures will apply to goods moving between NI and ROI (and the other Member States of the EU). We have assembled information on some key areas to help practitioners navigate the new trading environment. You can find further information on any of these areas in our Brexit hub. We continue to engage with UK and EU stakeholders on the changes that Brexit is bringing. For up-to-date information on Brexit developments and technical analysis, sign up for Brexit Digest. Recognition of your Chartered Accountancy qualification The UK’s departure from the EU results in some changes in the standing of the Irish ACA/FCA qualification. Students and Members in ROI who are EU citizens and who have qualified and gained the requisite experience in the EU prior to the end of the transition period, will experience no change in their rights and protections under the EU Qualifications Directive (Directive 2005/36/EU). Students gaining the Irish qualification in NI/UK post Brexit will be receiving a European qualification awarded in a third country. Members who are UK citizens (or other non-EU citizens), who qualified in NI/UK prior to the transition period and who have met the required EU-based experience requirements, will no longer be able to access the rights, among other things, to have their qualification recognised within the EU under the EU Qualifications Directive as they are not EU citizens under this Directive. The Irish ACA qualification continues to be recognised in Irish and UK law and members on both sides of the border continue to have mobility rights under the Common Travel Area (CTA) agreement. Additionally, members of this Institute will continue to have access to practice rights on both sides of the border. More information on the qualification’s standing in terms of Irish and UK law can be found here. VAT on services This section will be of immediate interest to practitioners with cross-border clients, and who need to raise fees for their services. From 1 January 2021, NI continues to follow the EU’s VAT rules for goods. However, as the UK-wide VAT rules for services will apply to NI, NI VAT-registered businesses are required to follow a dual VAT regime from 1 January 2021. The UK continues to levy VAT and the rules relating to UK domestic transactions continue to apply to businesses as before Brexit. VAT procedures for trade in services largely remain the same as those prior to 31 December 2020, but there are some changes to the VAT rules and procedures for transactions between the UK and EU member states. The VAT rules applying for supplying services between the UK and Ireland are now the same as the current rules for supplying services outside the EU. Broadly, the VAT treatment applicable to the supply of most business-to-business (B2B) services between Ireland and the UK will depend on the place of supply (i.e. the place of supply is the place where the business receiving the services is established). Using the example of an ROI business, if it receives services (including accounting services) from a business, including an accountancy firm, based in the UK after the transition period, in general Irish VAT will be due on the services. If an ROI practitioner provides services to a business based in the UK after the transition period, in general, UK VAT will be due on the services. See Revenue guidance and HMRC guidance. For business-to-customer (B2C) supplies of services from 1 January 2021, Irish VAT should not arise on the supply of certain services such as accounting, legal and consultancy work to non-business customers in GB or NI. If a UK business supplies accounting services to non-business consumers outside of the UK, the services are supplied where the customer belongs and are therefore outside the scope of UK VAT. See revenue.ie and gov.uk for more information. VAT on goods This Institute and the NI Tax Committee, chaired by Alan Gourley, have been engaging with HMRC on various Brexit matters, including customs changes and the NI VAT regime, throughout the course of 2020 and extensively on VAT in particular in recent months. We will continue to do so in 2021. For information on the VAT changes under the NI Protocol, VAT registration requirements in NI, VAT reporting obligations and key VAT system changes, distance selling rules and VAT on trade in goods between NI, ROI and GB, see our dedicated VAT information page on the Institute’s Brexit hub. VAT margin scheme on second-hand cars for Northern Ireland In mid-January, it was announced that the UK Government is seeking to reinstate the VAT margin scheme in NI on second-hand cars purchased from GB, in order to avoid a substantial increase in prices. This Institute has been lobbying HMRC to seek a derogation from the EU and reinstate the scheme for such goods and guidance has been released. We are in contact with Irish authorities seeking clarification on the position in ROI going forward and similarly whether the margin scheme can apply when second-hand cars are purchased in NI from GB and then onward sold to a car-dealer in ROI. We will keep members updated. Customs GB has left the EU’s Single Market and Customs Union meaning GB no longer benefits from the free movement of goods within the EU, and customs declarations are now required to move goods. NI remains in the EU’s Single Market and Customs Union for trade in goods only. This means that trade between the EU (and ROI) and NI remains largely unchanged. Members involved with importing/exporting particularly between GB and ROI are recommended to sign up to receive Revenue’s eCustoms notifications by contacting ecustoms@revenue.ie. For detailed information on the new customs rules visit our Brexit web centre. Data flows Cross-border data flows enable trade. We know that many businesses rely on the ability to transfer personal data about their customers or employees in order to offer goods and services. For example, an NI company’s payroll could be processed across the border in ROI. Any restriction on the ability of this data to flow freely would act as a trade barrier. Data protection did not form part of the Agreement but it has been agreed that an adequacy decision by the EU on the UK’s data protection regime will be made within six months i.e. by 30 June 2021. For now, data can continue to flow between the EU and UK as before which is good news in particular if you are outsourcing your IT or payroll function to a cross-border organisation. For more information see our website. Cross border workers The Common Travel Area arrangements will protect the rights of many of the estimated 23,000 to 30,000 cross border workers who live in one part of the island of Ireland and work in the other. While Irish nationals can continue to enter and work in the UK under the Common Travel Area agreement (and vice versa), this does not cover EU nationals living in Ireland and travelling across the border for example. Under the new UK immigration system that came into effect on 1 January 2021, both EU and non-EU nationals will be treated equally. Employers in Northern Ireland in particular should ensure that employees from other EU Member States are aware of, and encouraged to apply for, the EU Settlement Scheme which is open for applications until 30 June 2021. Employers should take action in light of new the post-Brexit immigration system, including verifying qualifications, considering the requirements under the new points-based system, and availing of any possible temporary transitional immigration schemes which may assist. Links to further information on employee mobility post Brexit can be found on our website. Online shopping Brexit was always going to bring new trading rules; and the costly impact of the UK’s departure from the EU has been felt by online shoppers since the start of the year. VAT and customs charges which until now might have earned a brief glance by online shoppers on payment screens, are now causing costs, confusion and even shipping delays. Most notably, consumers in ROI should be aware of the following changes when buying from GB (not NI): • If the good costs more than €22 (the customs value plus transport, insurance and handling charges), Irish VAT will apply. This VAT is generally payable by the buyer, unless like Amazon, the company picks up the bill. The €22 threshold will be abolished from 1 July 2021. • Orders with a value below €150 (including transport, insurance and handling charges) will not be liable to Irish customs charges regardless of where the goods are made. • The free trade agreement states that there will be no customs duties on goods coming to ROI from GB where those goods are made in the UK. However, if you purchase something online that costs more than €150 and it is not made in the UK, customs duties will apply for the buyer and the rate of the charge will depend on the type of product ordered. You can find all the rates in the TARIC database. • See Revenue.ie for more information. For consumers in GB, buying goods online from ROI/EU Goods with a value of STG£135 or less: • If the goods are outside the UK and sold through an online marketplace to customers in GB, the goods will have UK supply VAT charged at the point of sale. • If the goods are outside the UK and EU and sold through an online marketplace to customers in NI, the goods will have import VAT charged. Consignments valued at more than £135 Normal VAT and customs rules will apply on importation of the goods into GB from outside the UK or into NI from outside the UK and EU. This means that the customer will have to pay VAT to Royal Mail for example before the goods can be delivered. Customs The free trade agreement eliminates customs duties on goods coming to GB from ROI where those goods are made in the EU. If this isn’t the case, UK tariffs could apply and the rate will depend on the goods purchased. For more information see gov.uk.

Feb 01, 2021
READ MORE
Governance, Risk and Legal
(?)

Good Governance Awards improving the standard of non-profit reporting

The fifth annual Good Governance Awards concluded on 19 November 2020 with the announcement of the winners of the annual report awards across six categories. These categories are based on turnover including a new category this year for very small non-profits with an annual turnover of less than €50,000. One of the main aims of the Governance Awards is to improve the overall standard of annual reporting in the charity and non-profit sector and to provide specific feedback to all entrants alongside guidance on how to improve their annual reports, including their financial statements and disclosures.   Each of the annual reports goes through a very rigorous assessment but underpinning the many assessments and checklists there are some key elements or features which are essential in the eyes of the assessors and judges. In the spirit of improving standards, we have compiled a summary of the top ten judges’ recommendations arising from their assessment of this year’s shortlisted annual reports. We have also included the top ten comments from our assessors in relation to annual reports that were not shortlisted. Top ten judges’ recommendations Ensure the annual report tells a story, in a way which is easy to follow and easy to navigate. Make the link between the charity’s purpose, objectives, and expenditure apparent throughout the report. Focus on clarity and conciseness. The length of some annual reports raised questions concerning the additional value being added with very detailed accounts of activity. Use metrics and key performance indicators (KPIs) to describe achievements. Provide context by disclosing the targets against which KPIs are measured and, where applicable, disclose the prior year’s KPIs. Including a trend analysis of KPI performance over, say, a three-to-five-year period, was highlighted by the judges as good practice. Report on the organisation’s governance structures and processes and describe how adherence to good governance is embedded throughout the board and the organisation. This should include disclosing board members tenure and the approach to board succession planning. Avoid generic risk reporting and emphasise the key and specific risks the organisation faces, how these are being managed and expand into detail on what the board consider to be the current fundamental areas of risk. Include a clear explanation of what reserves are held by the organisation, including an indication of whether these are high, low or within expectations of the board. Material movements between reserves should be explained. Provide clear explanation for a deficit, if it arises, including whether this position is likely to persist and what actions or measures are being taken to address the underlying cause(s). For charities and other non-profits organisations that work with vulnerable adults and children, ensure that safeguarding (measures to protect the health, well-being and human rights of individuals, which allow people to live free from abuse, harm and neglect) is addressed in the annual report.There were some excellent disclosures on safeguarding included in some of the shortlisted organisations this year. Disclose how the charity or non-profit organisation is addressing matters relating to sustainability, cyber security, data protection, diversity and inclusion. These matters are of increasing interest to the readers of these reports. Top ten assessor comments on annual reports that were not shortlisted Ensure that there is a link between the non-financial narrative and the financial statements in the annual report. They should not read as two standalone documents. Review the report for consistency. There were notable instances where the financial statements reported a deficit but there is either no mention of this in the narrative of the annual report or a deficit of a different magnitude is referred to in the narrative. Some reports included a very upbeat and positive narrative describing the organisation’s many achievements, with little or no mention of the challenges, but the financial statements presented a different story. Ensure basic governance disclosures are included, such as providing an explanation of the operation of committees and the recruitment, induction and qualifications of board members and their tenure on the board. In addition to describing the organisation’s activities, describe the key risks and challenges faced by the organisation during the financial period. Disclose the organisation’s mission, vision and values and link these with disclosure of the organisations objectives for the financial period, key performance indicators, etc. Ensure the annual report includes transparency in relation to the various sources of funding accessed by the organisation during the financial period. Ensure the income and expenditure account, or statement of financial activities (for those apply the Charities SORP (FRS 102)) is presented showing restricted and unrestricted funds separately. Review, before submission, the financial statement disclosures to ensure they are complete (required disclosures are included), consistent with the information presented in the financial statements and elsewhere in the annual report and provide any additional information necessary to assist the readers understanding of the organisations successes and challenges faced during the financial period. Prepare an annual report that includes both the non-financial narrative and the financial statements to facilitate readers getting a better understanding of the financial position and key drivers for financial performance. Opt-out of the right to prepare financial statements in accordance with Section 1A of FRS 102 or to file abridged or abbreviated financial statements. This is sub-standard to good governance practice for charities and non-profit organisations reliant on government grants, fundraising from the public or other sources of charitable or voluntary donations (e.g. philanthropy or people volunteering their time to help others). We hope that the above observations and feedback comments will help in improving the standard of annual reports, including financial statements next year. Diarmaid Ó Corrbuí, CEO Carmichael. Email diarmaid@carmichaelireland.ie    

Dec 08, 2020
READ MORE
Practice and Business Improvement
(?)

Do you need a change?

Conal Kennedy, Head of Practice Consulting, writes: As the year draws to a close, many members in practice pause to reflect before starting their work in the New Year. Sometimes members will make plans to build their practices through organic growth, or to consolidate what they have in the New Year. In other cases, the turn of the year may lead them to conclude that more fundamental changes need to be made. Is it time to consider merging your practice with another, or selling it? You may have been generally interested in buying a practice or a block of fees, but is now a time to pursue this more vigorously? We in Practice Consulting are sometimes approached by firms to assist them with one of these ventures. If you are interested, feel free to contact us and we will endeavour to advise you and possibly to reach out to make contact with other firms on a confidential basis. We are particularly interested in hearing from members who would like to retire and sell all or part of their practice. We may also be able to help members who are currently sole practitioners but would be interested in joining a larger firm as a partner. We also need to hear from those people representing the opposite sides of these transactions, the potential purchasers or those larger firms. If you would like to discuss this further please contact us individually at the contact points below or email us at practicemembers@charteredaccountants.ie in confidence.

Dec 01, 2020
READ MORE
Tax
(?)

The race for global tax reform

With international tax reform progressing at unprecedented speed, Susan Kilty explains why Irish businesses must continue to participate actively in the discussion. With all the global uncertainty that Ireland is facing due to COVID-19 and Brexit, there is a risk that the OECD global tax reforms – the other major threat to Irish business and the economy – will be pushed further down the corporate agenda. But to do so would be very risky. Ireland must engage with this process now, at both the political and corporate level. The world of international tax is in a state of extreme flux as governments grapple with changes in the way multinationals do business. It is worth reiterating that Ireland has attracted healthy levels of foreign direct investment (FDI) over the past 30 years, and the multinational community has contributed significantly to our economic success. According to the OECD, Ireland received more foreign direct investment in the first half of this year than any other country. Along with Ireland’s near-iconic 12.5% tax rate, a crucial element in our continuing ability to attract international investment is the stability and transparency of the corporate tax regime here. Investors from abroad who establish activities in Ireland tend to be quite sensitive to changes in the taxation system. They like certainty and stability in a tax code, which is why Ireland presents such an attractive proposition. Ireland cannot afford to lose FDI as a result of turbulence in the global tax landscape at this time. As corporation tax accounts for almost 18% of Ireland’s total tax take, any change to the regime threatens to seriously undermine the attractiveness of our FDI model and negatively impact our revenue-raising ability. The crux of the matter is that we, and many other countries, apply 20th century tax systems to 21st century e-commerce business models. Businesses have an increasingly digital presence, and many no longer trade out of brick and mortar locations. This is not limited to so-called technology companies, but can be seen across industries and in businesses of all sizes. Businesses sell freely across borders without ever needing to set up operations abroad. This new digital way of trading is not always captured in our analogue tax rules, and the rules must be realigned with the reality of modern e-commerce. However, to tax a multinational business, you need a multinational set of rules. This is where the OECD comes in, but the uncertain shape that the new rules might take brings more uncertainty for businesses at a time when it is least needed. Many clients cite the changing international tax environment as one of the top threats to potential revenue growth. And although countries now face enormous bills for COVID-19, one sure thing is that BEPS, OECD and tax reform will not go away. International corporate tax reform is happening, and it will impact many businesses and our economy. Companies need to stay on top of these changes and prioritise the issues that will affect them. OECD proposals The OECD proposals offer a two-pillar solution: one pillar to re-allocate taxing rights and ensure that profits are recorded where sales take place, and a second pillar to ensure that a minimum tax rate is paid. At the time of writing, a public consultation is open for stakeholders to share their views with the OECD on the proposals that were recently summarised by way of two “blueprint” documents, one for each pillar. Pillar One seeks to give market jurisdictions increased taxing rights (and, therefore, increased taxable income and revenues). It aims to attribute a portion of the profits of certain multinational groups to the jurisdictions in which their customers are based. It does this by introducing a new formulaic allocation mechanism for profits while ensuring that limited risk distributors take a fair share of profits. Several questions remain as to how the Pillar One proposals, which constitute a significant change from the current rules, will be applied. Pillar Two, on the other hand, seeks to impose a floor for minimum tax rates across the globe. This proposal is very complicated. It is much more than a case of setting a minimum rate of tax. It is made up partially of a system that requires shareholders of companies that pay low or no tax to “tax back” the profits to ensure that they are subject to a minimum rate. At the same time, rules will apply to ensure that payments made to related parties in low-tax-paying or no-tax-paying countries are subject to a withholding tax. Finally, it can alter the application of double tax treaty relief for companies in low-tax-paying or no-tax-paying countries. Agreeing on the application and implementation of this pillar will be incredibly difficult from a global consensus point of view. Several supposed “safety nets” in Pillar Two are also likely to be of limited application. For example, assuming that the minimum tax rate is set at 12.5%, this does not mean that businesses subject to tax in Ireland will escape further tax. Similarly, assuming that the US GILTI (global intangible low-taxed income) rules are grandfathered in the OECD’s proposal, this does not mean that the US GILTI tax applies as a tax-in-kind tax for Pillar Two purposes. Pillar Two poses a significant threat to Ireland, as it reduces the competitiveness of our 12.5% rate to attract FDI and, coupled with the Pillar One profit re-allocations, could reduce our corporate tax take. The OECD estimates that once one or both of the pillars are introduced, companies will pay more tax overall at a global level, but where this tax falls is up for negotiation – and this is why early engagement by all stakeholders is critical. While the new proposals will undoubtedly have an impact, it is not certain that Ireland’s corporation tax receipts will fall off a cliff. Ireland has already gained significantly in terms of investment from the first phase of OECD tax reform, and this has helped to drive a significant increase in corporate tax revenue. But the risks must nevertheless be addressed. There is, of course, the risk that the redistribution of tax under the rules directly under Pillar One and indirectly via Pillar Two will impact our corporate tax take. But even if the rules have no impact on a company’s tax bill, they could still impose a considerable burden from an administrative perspective, and the complexity of the rules cannot be overestimated. At a time when businesses are grappling with other tax changes, led by the EU and domestic policy changes, this would be a substantial additional burden on the business community. The OECD is progressing the rules at unprecedented speed in terms of international tax reform. The momentum behind the process comes from a political desire for a fair tax system that works for modern business. However, does this rapidity risk the international political process marching ahead of the technical tax work? This is where Ireland, both government and corporate, needs to play a vital role. While the consultation period on both pillars is open, the focus for stakeholders should be on consulting with the OECD on the technical elements of its plan. Considering the OECD’s stated objective to have a political consensus by mid-2021, this could be one of the last opportunities for stakeholders to have a say in writing the rules. The interplay between the OECD and the US Treasury cannot be ignored when considering the OECD’s ability to get the proposals over the line. The US Treasury decided to step away from the consultation process with the OECD for a period in mid-2020. This, of course, raised questions around whether the OECD proposals could generate a solution that countries would be willing to implement. Added to this, the OECD has always positioned Pillar One and Pillar Two as an overall package of measures and has stressed that one pillar would not be able to move forward without the other. The “nothing is decided until everything is decided” basis of moving forward is a risky move, but the OECD recently rowed back on this stance. If the OECD fails to reach a political consensus by 2021, we could very well see the EU act ‘en bloc’ to introduce a tax on companies with “digital” activities. This could result in differing rules within, and outside of, the EU. It would also increase global trade tensions, all of which would not be good for our competitiveness. As a small open economy, Ireland will always be susceptible to any barriers to global trade. A multilateral deal brokered by the OECD therefore remains the best option – the last thing we want to see is the EU accelerating its own tax reform or, worse still, countries taking unilateral action. For the Irish Government, providing certainty where possible about the future direction of tax is critical. Where we have a lead is in how we provide that stability and guidance where we can. The upcoming Corporate Tax Roadmap from the Department of Finance will be an opportunity to give assurances in these uncertain times. Next steps for business The public consultation will be critical for businesses to have their say in shaping the rules. Ireland Inc. must continue to engage constructively with the OECD to try to shape the outcome so that we maintain a corporate tax system that is fit for purpose, is at the forefront of global standards, and works for businesses located here. Doing so would ensure that we articulate the position of small open economies like our own. Each impacted business must take the opportunity to comment on the proposals, as this may be the last chance to have a say. Indeed, what comes out of the consultation period may be the architecture of the rules for the future. We know that difficult decisions must be made at home and abroad in terms of the new tax landscape, and made with additional pressures we could not have foreseen 12 months ago. Although it may seem that much is out of our control, Irish businesses must continue to participate actively in the discussions and ensure that their concerns are heard. The game may be in the final quarter, but the ball is in our hands. Susan Kilty is a Partner at PwC Ireland and leads the firm’s tax practice. Point of view: Fergal O'Brien Since the start of the BEPS process in 2013, Irish business has recognised the importance of the work to our business model and the country’s future prosperity. At its core, BEPS has seen a further alignment of business substance and tax structures at a global level. This has resulted in an often under-appreciated surge in business investment, quality job creation and, ultimately, higher tax revenue for the Irish State. With its strong history as a successful location for foreign direct investment, and substance in world-class manufacturing and international services, Ireland was well-placed to benefit from the new global order. The boom in business investment, which last year reached over €3 billion every week, and increase in the corporate tax yield from €4 billion in 2013 to €11 billion in 2019, are evidence of the further embedding of business substance in the Irish economy. The current round of BEPS negotiations will have further significant implications for the Irish economy, and particularly for the rapidly growing digital economy. Ibec is working directly with the OECD to ensure that any further changes to corporation tax recognise the central role of business substance and locations of real value creation. Fergal O’Brien is Director of Policy and Public Affairs at Ibec.  Point of view: Norah Collender The OECD’s proposals to address the challenges of the digitalised economy will have a disproportionate negative impact on small, open exporter economies like Ireland. Earlier consultation papers issued by the OECD on taxing the digitalised economy suggested that smaller economies could benefit from international tax reform emanating from the OECD. However, the OECD now openly admits that bigger countries stand to benefit from its proposals more than smaller countries, and the carrot has turned into the stick in terms of what will happen if smaller countries do not support the OECD. Ireland is acutely aware of the dangers ahead if countries take unilateral action to achieve their vision of international tax reform. But that does not mean that countries like Ireland should be rushed into accepting international tax rules that fundamentally hamstring Irish taxing rights. Genuine consensus must be reached to ensure that international tax reform is sustainable in the long-term. Likewise, the new tax rules must be manageable from the multinational’s perspective and from the perspective of the tax authority tasked with administrating the rules. A rushed outcome to the important work of the OECD will make for tax laws that participating countries, tax authorities, and the all-important taxpayer may not be able to withstand in the long-term. Norah Collender is Professional Tax Leader at Chartered Accountants Ireland. Point of view: Seamus Coffey How Pillar One and Pillar Two of the OECD BEPS Project will ultimately impact Ireland is uncertain. One sure thing, however, is that there will be changes to tax payments. This will be a combination of a change in the location of where taxes are paid and perhaps also an increase in tax payments in some instances. But there will likely be both winners and losers. From an Irish perspective, there might have been some comfort in that the loser could have been the residual claimant – the country at the end of the chain that gets to claim taxing rights on the profits left after other countries have made their claim. As US companies are the largest source of Irish corporation tax revenue, it might have been felt that most of the losses would fall on the US. However, significant amounts of intellectual property have been on-shored here. Ireland, therefore, has become a residual claimant for the taxing rights to some of the profits of these companies. At present, Ireland is not collecting significant taxes from these profits as capital allowances are claimed. If BEPS results in a significant reallocation of these profits, we might never collect much tax on them. Seamus Coffey is a lecturer in the Department of Economics in University College Cork and former Chair of the Irish Fiscal Advisory Council.

Dec 01, 2020
READ MORE
Careers
(?)

The six signature traits of inclusive leadership

Torunn Dahl and Glenn Gillard share the secrets to purposeful inclusion, which in these challenging times is more important than ever. Good leadership has never been easy. If it were, we would all be good leaders most of the time and organisations would not need to spend millions each year developing leadership skills. In reality, leadership is always a delicate balance of making the best decisions possible given the information to hand while taking into account the context, the strategic imperatives of the organisation, and the stakeholders involved in or impacted by the decisions being made. Operating in an environment of enormous unpredictability, wrought by a pandemic, makes this challenging task even harder. Never before has that well-worn phrase from financial services advertisements, ‘past performance does not guarantee future success’, been truer. There is no quick guide to leadership for these times. We can choose many possible routes to survive or thrive in the period ahead, as we learn to operate in an environment of ongoing uncertainty and volatility. This article will outline some steps you can take to ensure the route you choose is one of inclusive leadership, to the benefit of all your key stakeholders. A new social contract In the August issue of Accountancy Ireland, our colleagues outlined how people at the start of their accountancy careers seek a broad sense of purpose in the work they do. Similarly, in society, we have seen a significant change in people’s awareness of – and lack of tolerance for – the inequalities that exist in society. There is an opportunity to reset the path we are on as a society, to reduce systemic inequalities and become more purpose-led. Last year, 200 global CEOs, including Punit Renjen of Deloitte, signed a statement of purpose. It confirmed that a corporation’s purpose is to serve all its stakeholders – employees, clients and society. The COVID-19 pandemic and the Black Lives Matter movement have reinforced the message from the general public that business cannot be a neutral bystander. Business should, and can, be at the heart of this new social contract, and business leaders need to embrace this change. This reset to how society operates and meets the expectations of its citizens will require different types of leaders to navigate and drive the changes. In addition to the critical skills associated with good leaders such as strategic thinking, commercial acumen, decisiveness and effective communication, leaders will need to understand how to be genuinely inclusive in a broad sense. They will need to understand how a change to the social contract could impact their talent pipelines, customer relationships and supply chains. How will the decisions they make today impact their ability to retain customers, attract staff, reduce their carbon impact and sustain their business viability into the future? A model of inclusive leadership provides a framework for leaders to think about the thought process and the actions they need to consider to navigate the difficult decisions they now face. In the section below, we outline the six signature traits of an inclusive leader, as identified by Deloitte, and some suggested practical steps a leader can take to operate inclusively. The six signature traits Inclusive leadership is about treating people fairly and leveraging the thinking of diverse groups of people. While leaders must treat their people fairly, a genuinely inclusive leader in a new social contract will seek to ensure that people outside the organisation are also treated fairly. They will do this by providing opportunities for them to join the organisation or sell their goods/services to the organisation on fair terms. The examples below focus on what an inclusive leader can do inside their organisation. 1. Commitment. Highly inclusive leaders are committed to the inclusion agenda because these objectives align with their personal value systems and because they believe in the business case and moral case for inclusion. Practical steps: Put inclusion on the agenda at your meetings and hold people to account on actions agreed. Set targets, and encourage debate and discussion around what the right targets are and how to meet them. Attend diversity and inclusion events within and outside your organisation. Share new knowledge with your teams and outline the actions you will take. Reference an inclusion story or moment as part of every presentation you make. 2. Courage. Highly inclusive leaders speak up and challenge the status quo. They don’t walk past inequality; they challenge it. They are willing to admit to their own vulnerabilities and remain humble about their strengths and weaknesses. Practical steps: Speak up and challenge any inappropriate behaviour you see or hear. Others may feel equally uncomfortable and are likely watching to see whether you condone (through silence) or challenge the behaviour. Apply a diversity lens to everything you do – use a checklist if necessary as a prompt. Think about your next event or meeting. Who is talking? What images are being presented? Which metrics are being used? Do they all support an inclusive environment? 3. Cognisance. Highly inclusive leaders are aware that they, and everyone else, have biases that impact their judgement. They seek to ensure that processes are put in place to manage and overcome these blind spots and to create fairer opportunities for all. Practical steps: Seek to identify your own biases. Take the Harvard Implicit Association Test or pay attention to who you naturally gravitate towards and with whom you feel less comfortable. Pay attention to your inner voice and initial judgements and ask yourself whether biases are coming into play. We all have them! Use structured processes and criteria when making decisions that relate to people (hiring, promotions or performance, for example) to ensure objective criteria are used rather than generalised impressions. 4. Curiosity. Highly inclusive leaders keep an open mind and have a desire to learn more about others. They want to understand how they view and experience the world. They also demonstrate tolerance for ambiguity and change. Practical steps: Seek out someone on your team you don’t know well or who has a different background to yours. Put in time for coffee to connect and learn more about them. They could be the perfect person for your next project or have valuable perspectives on a problem you’re grappling with. Invite different people to present to your team or organisation to broaden everyone’s perspective. Remember to suspend judgement when listening to other perspectives; seek to listen actively and understand. Acknowledge what they are saying and respect their viewpoint. 5. Cultural intelligence. Highly inclusive leaders are confident and effective in cross-cultural interactions. They may feel uncomfortable in the situation but are willing to move out of their comfort zone and focus on learning, seeking to build their cultural intelligence. Practical steps: Start by focusing on a culture or area that interests you. Search for articles and podcasts that will broaden your understanding and seek out people who can answer your questions and build on what you have learnt. Encourage people within your teams and organisation to build out their cultural intelligence, supporting mobility opportunities where relevant. 6. Collaboration. Highly inclusive leaders empower individuals to deliver their best, in addition to working across diverse groups of people to drive better solutions built from a diversity of thought. Practical steps: Let others speak first. Ensure that you have heard from everyone in the group, actively encouraging people to contribute if they haven’t already done so. Find common ground and articulate a shared purpose and objective for the group that everyone can rally around. Create physical and/or virtual opportunities for interactions that encourage sharing and collaboration. Purposeful inclusion in a pandemic The COVID-19 pandemic presents both challenges and opportunities in building an inclusive culture and following-up on commitments our businesses have made to be more inclusive. The last few months have stretched everyone and how we act as leaders, now and in the months ahead, will influence how well our organisations, our people, and we personally come through this pandemic. It may be tempting to take a short-term view and focus solely on profits and cash flow to the detriment of suppliers, employees and the local community. But those who take a longer and more inclusive view are likely to reap the rewards, as will their communities. As organisations transition to being more purpose-led than solely profit-focused, their ability to navigate the current environment inclusively to the benefit of society more broadly will be a real test of their authentic commitment to this cause. Using the traits above, we will now explore some of these challenges and opportunities. Commitment: In the short-term, it is easy to step away from the commitments we have made. Many organisations have implemented, or are looking at, measures such as reducing headcount, suspending bonuses and promotions, and deferring hiring decisions. It is important to consider these decisions in the context of inclusion and look at how these measures are implemented and affect the future shape of the organisation. During the last recession, we saw a significant reversal of some of our key diversity measures, as women stepped away from the workforce to work in the home and as many employers reverted to traditional talent pools for staff. Cognisance: Biases can quickly step back into our thinking when faced with tough decisions or working under pressure. In the working from home environment, anecdotal research already indicates biases towards female participation. As women are traditionally viewed as the primary home-maker the risk of ‘killing with kindness’ escalates as individuals make assumptions as to whether someone can handle the workload or should be given specific work because of their family situation. While having progressive policies to support people during the pandemic has been important, this must be monitored so that it does not feed through to future decisions around performance, promotion and recognition. We must recognise, and seek to work through, these potential biases. Collaboration: During this pandemic, many organisations have reported increased engagement from staff and a greater sense of belonging. However, as the lockdown measures persist and remote working is more prolonged, maintaining a sense of ‘team’ and keeping people connected becomes a more significant challenge. Through organisation-wide collaboration, new models and methods for engagement, networking and social interaction can be developed. Indeed, there is a real opportunity to break away from our default methods of corporate social interaction in Ireland, which focus heavily on the dinner and pub scene and favour those willing (and able) to socialise after hours. Capturing new ways of interacting and building them into a new, more inclusive culture is an opportunity to redefine the workplace for many that traditionally felt excluded. Courage: Undoubtedly, the forced working from home arrangement arising from the pandemic presents a real opportunity to rethink how we look at biases around presenteeism, flexible working, and the office culture, and to re-imagine fundamentals like the daily commute and international travel. While these benefits seem obvious at this point, it will require courage to stay the course and implement the necessary changes so that these benefits can be retained as we move out of the pandemic. For example, if we are to move to more hybrid models with a greater level of remote working mixed with in-office teams, maintaining the inclusiveness of a meeting for those in-office and those at home will need to be supported by real leadership. The fear that we fall back into the old ways, where if you are not in the room you are not really participating, is already being expressed by many as they assess whether they could continue to work remotely into the future. Redefined leadership The relationship between community, employees and businesses has changed, and as leaders, we will be held accountable by our people. Truly inclusive leaders will thrive in this environment and make an impact not just within their own business, but across the community. The pandemic has challenged the way we look at the world and our role within it. We now need to seize the opportunities presented, and avoid the pitfalls, to create more inclusive organisations.  Torunn Dahl is Head of Talent, Learning and Inclusion at Deloitte. Glenn Gillard is a Partner at Deloitte and member of Council at Chartered Accountants Ireland.

Nov 30, 2020
READ MORE
Comment
(?)

A path to progress

Rachel Hussey explains how well-defined and inclusive work allocation practices can boost your colleagues’ career potential. One of the most common and unconscious ways in which old hierarchies are preserved in professional services firms is through the allocation of work, often at the early stage of careers. A well-defined work allocation process ensures a balanced portfolio of experience for future progression. But suppose a person is consistently allocated more challenging projects involving novel issues or premium clients. In that case, their career path is likely to take quite a different course to that of a person assigned more routine tasks, which can result in tremendous and unintended damage to the career paths of individuals. Research conducted by McKinsey in the UK in 2012 across professional services firms found that a man was three times more likely to be made a partner in an accountancy firm than a woman and ten times more likely in a law firm. McKinsey made several recommendations to address the imbalance, one of which was that women have equal access to the right career development opportunities through a systematic work allocation process based on objective criteria, such as competencies or experience. Work allocation goes to the very heart of the operation of a professional services firm. Changes to work allocation practices are hard to implement, but can have a considerable impact on the progression of female talent. McKinsey conducted follow-up research in 2015 and found that work allocation was an ongoing challenge. 70% of women in both law and accounting firms said that their firm’s work allocation process was unfair, and 86% of law firms had no formal work allocation process in place. In the absence of a systematic process, work allocation is a subtle concept that can be difficult to do in a way that promotes diversity and creates a level playing field for men and women. In deciding to whom work should be allocated, partners can make assumptions about women’s desire or capacity to do certain kinds of work or transactions. The result can be to ‘kill women with kindness’ by allocating the more challenging work to men on the team so as not to put too much pressure on a woman. A woman can ultimately end up with less experience, weaker client relationships, and lower revenue – all of which are career-limiting in a professional services firm. This phenomenon is also referred to as unconscious benevolence. Research conducted by the 30% Club in Ireland across 14 of the top Irish professional services firms in December 2019 contained some fascinating findings. For example, 21% of equity partners in accountancy firms are women, and that figure is 40% at the non-equity partner level. The research found that only four of the 14 firms that participated in the research had a formal work allocation process in place. On foot of that research, the 30% Club recommends that where firms have not adopted work allocation policies, they should pilot the introduction of such policies. They should also review work allocation practices to ensure that equal opportunities to gain expertise and experience are available to all. Finally, it urges firms to ensure that family-related absence does not impact work allocation and recognise leaders who successfully manage work allocation on their teams. Across professional services firms internationally, work allocation processes are becoming more formal and technology-enabled. Many resource management consultancies provide services and systems to firms to assist in this critical aspect of a firm’s work. Formal processes can have a significant impact on the development of female talent in firms and should, therefore, be considered as part of a firm’s diversity strategy.     Rachel Hussey is Chair of 30% Club Ireland and a Partner at Arthur Cox.

Nov 30, 2020
READ MORE
Careers
(?)

Collaboration at a distance

A lot of work today simply can’t be done well without high-touch collaboration – a challenge when many people are working from home. New tools are helping, though, write Ryan Kaiser, David Schatsky and Robin Jones. The pandemic, with an impact lasting far longer than initially expected, is forcing organisations to rethink how their teams can collaborate from a distance. Some widely used digital tools make certain forms of collaboration – such as sharing and editing documents – easy. But other, critically important types of collaboration remain challenging when colleagues are not sharing physical space, or even time zones. Organisations can experiment with a newer breed of tools, some still experimental, that aim to support remote, high-touch collaboration. In view but out of sync “Did he hear what I just said?” “Was that a smirk?” “She’s looking down – is she texting?” It’s safe to assume that these questions cross the minds of many workers during days of endless video calls. The concentration required to process these virtual interactions can be taxing, leaving workers exhausted. But with so many professionals working from home due to the pandemic, it’s imperative that organisations find effective ways for remote workers to collaborate. New technologies are answering this call: from immersive environments to virtualised offices that facilitate casual interactions, organisations may soon have many more options for helping their teams collaborate effectively at a distance. Collaboration is key, but challenged by remote work Most organisations accept that effective collaboration is essential for high performance. Apple leaders considered collaboration to be so important that they designed its headquarters building to promote creativity and collaboration. Even workers’ perceptions that they are working collectively, according to a 2014 study, can enhance their performance. Thus, collaboration activities are pervasive in the modern office. Indeed, some researchers believe “collaboration is taking over the workplace”, with time spent by managers and employees in collaborative activities increasing by 50% or more in recent years. It’s no surprise that collaboration is among the soft skills that employers seek most. But with the pandemic forcing millions of people to work from home, collaboration has become more challenging. Remote working obscures body language and distorts verbal cues that can be crucial to understanding intent. Formal, scheduled video calls – or more frequent instant messages or texts – are no substitute for quick, spontaneous exchanges of information. Professionals working in sales, customer service, management, design, and other roles in which impromptu and collaborative interactions are integral to the job may be particularly challenged. Some workers feel isolated. Managers are struggling to onboard, integrate, and teach office norms to new staffers, and building and sustaining an organisation’s culture has rarely been more difficult. Even when the crisis is behind us, the need for better remote collaboration will persist. High-touch collaboration still works best in person Of course, many, even most collaborative activities don’t require face-to-face interaction. A wide range of digital communication and project management tools support sharing files, editing documents, and communicating project status. But other valuable collaborative activities – scrum meetings for coordinating software development, brainstorming sessions to generate product ideas, hallway conversations to quickly exchange useful information – have tended to rely on face-to-face interactions. We call such activities high-touch collaboration. High-touch collaboration activities are typically synchronous, spontaneous, or sensory. Synchronous means two or more people are present in the moment when the activity is conducted, allowing for a free-flowing exchange of information. Spontaneous means unscheduled, low-overhead interactions that may occur outside the confines of a formally scheduled meeting. Some of the best ideas, and even businesses, started as impromptu thoughts or interactions between colleagues. Sensory refers to the non-verbal communication or body language we unconsciously decipher when interacting with others. Arm positions, posture, and tone of voice can influence how or when others choose to engage with or respond to us. Leaders can use this simple three-S model to identify the high-touch collaboration activities in their organisation that remote working arrangements may impair. Below are some common examples. They are important in our work and the work of many of our clients – and they can be difficult to perform when collaborators are just faces on a screen. Structured, interactive sessions. Some types of workshops or labs, employing techniques such as design thinking, aim to solve complex problems or help a group achieve consensus on a designated topic. In addition to typically needing a skilled facilitator, participants often need to read the room to assess group understanding, alignment, and engagement. Example: a lab may be used to forge consensus about the vision of a new firm-wide initiative. Ideation and co-creation. Many workers need to brainstorm and exchange information spontaneously, typically in a shared space with a visual aid such as whiteboards or sticky notes. Example: co-creation may be useful for brainstorming new product features to include in future releases. Spontaneous information exchanges. Employees may need to exchange information directly outside a formally scheduled meeting – perhaps as quickly and casually as poking one’s head in an office to ask a brief question. Example: spontaneously exchanging information with colleagues can be helpful when finalising an important client presentation. Informal connections. Conversations that typically take place in the elevator, office kitchen, or other common areas can foster a sense of connection and community; walking the halls can help cultivate relationships with clients and co-workers. Informal connections tend to rely on interpreting sensory and contextual information. Example: managers may informally check in with teams during a stressful time period to gauge well-being and engagement. To bolster collaboration among remote workers, we need tools that provide better support for these kinds of activities. Collaboration tools are proliferating A new crop of digital collaboration tools has emerged in response to the needs of companies with remote workforces. Vendors launched or enhanced at least 100 digital remote collaboration products in the first eight months of 2020, compared to the 24 product introductions we tallied in the fourth quarter of 2019. Established collaboration vendors are rapidly rolling out new features in response to user requests, and some have released free versions of products in an effort to gain market share. Some of this activity involves familiar categories of collaboration tools such as video-conferencing. Other types of tools – such as digital whiteboards, virtual offices, and immersive environments – may be less familiar, but they can provide crucial support to synchronous, spontaneous, and sensory collaboration activities. We scanned the offerings of hundreds of vendors and spoke with more than a dozen of them to learn more about their capabilities. Video-conferencing. When the COVID-19 pandemic forced millions of workers to work from home, many companies responded by substantially increasing their use of video-conferencing Google, Microsoft, and Zoom have all reported a surge in usage of their platforms. Allowing colleagues, clients, and partners to see each other over video can mitigate the feeling of isolation that some remote workers feel and can build and maintain the rapport crucial for collaborative efforts. Recent innovations in this category include the use of artificial intelligence to frame a caller’s face, background obfuscation to prevent distractions, and the use of avatars. But video-conferencing has its drawbacks. Not all work interactions occur in the confines of a formal meeting. Any given video-conference likely includes at least one participant battling audio and video quality issues, including lags that can jumble non-verbal cues and distracting background noise – especially for people sharing space with partners and children. Workers also report feeling exhausted at the end of a day filled with numerous video calls due to the mental focus required to concentrate on a grid of colleagues. Ideation and whiteboarding. Because it supports problem-solving, design, and strategic planning, ideation can be a critically important collaboration activity. A classic setting features a blank whiteboard, markers, and a team with ideas to share. Vendors such as Microsoft, Miro, and Mural offer digital tools that aim to provide the benefits of in-person ideation in a remote environment. Such tools typically feature an interactive workspace designed for visually oriented ideation and problem-solving. They are best suited for co-creation and ideation activities but can also be used to facilitate labs and similar sessions. A variety of features help spur thinking. For example, users may have access to templates or frameworks tailored to a variety of meeting types such as a scrum call or a design thinking session, time-keeping features to keep a group focused, virtual sticky notes to jot down ideas, and polling to streamline the decision-making process. These tools share little contextual information about users, however, making it hard for facilitators to read a room and determine how to best engage participants. Legibility can sometimes be difficult, and employees may need to consider a touchscreen, stylus, or other peripheral to maximise their capabilities. Virtual offices. Other types of tools attempt to replicate office spaces on your computer screen. Virtual offices are intended to run continuously in the background, showing in real-time what your colleagues are doing through the medium of digital aerial views of office floor plans, avatars, or even 3D worlds. And they aim to emulate the natural, rapid types of interactions that frequently take place in a physical workplace like tapping someone’s shoulder to ask a question. These platforms display context about colleagues – are they meeting with a client right now, or are they listening to music? – and they provide multiple pathways by which co-workers can informally connect. Sample virtual office vendors include Pragli, Sococo, Virbela, and Wurkr. Virtual offices typically allow significant customisation (avatars, floor layout, branding, etc.) and integrate with a growing list of social and collaboration applications one might use throughout the workday, such as Microsoft Teams, Slack, and Spotify. These vendors also enable informal interactions through emotive digital gestures such as high-fives or dance movements, allow users to tap each other to instantly join a virtual meeting room, and offer the ability to lock spaces for more private conversations. Many also allow screen-sharing and the uploading of files. Some virtual offices currently lack the ability to integrate with common office software such as Google or Microsoft and may lack common ideation mediums such as whiteboards. Some tools use much of a laptop’s processing power when rendering a 3D office, potentially affecting other applications. Immersive environments. This is an emerging category of tools that aim to enable workers to connect, share experiences, and participate in simulated real-life scenarios using augmented or virtual reality (AR/VR) technologies. Some studies have shown that VR is a promising medium for remote collaborative work. Users experience a 3D shared environment where they can see representations of themselves and colleagues and conduct meetings. Immersive environments are best suited for interactive sessions and co-creation/ideation. The virtual environments provided by tools such as Arthur, HoloMeeting, and Spatial can range from basic rooms to non-cubical architecturally complex spaces that expand creative possibilities. Some vendors make it possible for users to take a selfie and upload and wrap the image around an avatar for a personalised, life-like presence. Combined with spatial audio and visible mouth or hand movements, these technologies can give one the impression of being in the same space as a colleague. Interacting with the environment and accessing menus using one’s hands or controllers is highly intuitive. Typical features include 2D or 3D whiteboarding options, 3D process flows, and the ability to access content from the web, including images and 3D models. While some platforms are accessible by smartphones and laptops, the full experience is typically only available with the use of an AR/VR headset – a factor that may limit adoption in the near term. Early-stage tools may suffer from distracting latency – or lags in refreshing the display – or lack integration with other applications, which limits the type of work one can do, such as co-edit a PowerPoint slide, and most have smaller capacities (usually under 20 participants) when compared to virtual offices. What to watch The descriptions above are a snapshot of a rapidly moving market. Progress in the underlying technology of AR/VR, and increasingly affordable hardware, will likely boost the appeal of immersive environments over the next couple of years, for instance. Other developments in the domain of remote collaboration are worth watching. New features. With so many workers affected by the pandemic, collaboration vendors are quickly responding to user needs and rolling out new features. For instance, Microsoft recently deployed ‘Together mode’, using AI to place meeting participants side-by-side as if they were sitting in a virtual auditorium. Other advances include attention tracking, which alerts a host if an attendee goes more than a few seconds without having an application open; intelligent capture, which can make a person’s video image transparent so users can see content being written or drawn on a whiteboard as it happens; and real-time translation. Organisations should take note of this rapid pace and consider product road maps when evaluating tools. New mediums and uses. Remote collaboration tools are evolving, and organisations are likely to experiment with them in various ways. Some executives have used popular video games such as Animal Crossing, Grand Theft Auto, and Minecraft to conduct meetings, for instance. While some may not be inclined to use video games for collaboration or are unfamiliar with the format, others feel they help people think differently and bond with colleagues. The education sector may be another testing ground as teachers, students, and parents around the globe are now being forced to learn how to use virtual collaboration tools. Other formats are likely to emerge. New insights. Collaborating via software enables novel analytical applications not possible with conventional in-person conversations. For example, Gong uses speech recognition and natural language understanding technology to transcribe, annotate, and analyse data from sales calls to coach salespeople toward better performance. YVA.ai uses artificial intelligence to predict burnout and enhance employee engagement. Talent leaders may want to consider how data within these tools can help inform their talent strategies or improve employee performance. New shortcomings. Improved tools may eventually solve the video-conference fatigue problem, but it’s possible that emerging remote collaboration technologies may give rise to other unpleasant technology-induced side effects such as the dizziness or nausea that can accompany immersive environments. When choosing a collaboration tool, organisations should take these into account and design mitigation strategies such as time limits where applicable. New risks. As workers migrated to home networks and personal devices after the onset of the pandemic, firms faced an increase in hacking attempts, and many are enhancing their cybersecurity posture accordingly. The amount and type of information generated by remote collaboration tools could be especially sensitive, and companies should strive to ensure that such data is secure while meeting workers’ reasonable expectations of privacy. Preparing for a (somewhat more) remote future Many workers will not return to the office or may work from a company office only part of the time. According to a June 2020 Fortune/Deloitte CEO survey, CEOs expect 36% of their employees on average to still be working remotely by January 2022, three times as many as before the pandemic. One forecast suggests that through 2024, around 30% of all employees currently working remotely will permanently work at home. Many organisations are likely to need effective remote collaboration tools and approaches. Managers, particularly those in industries where remote working is already familiar, such as technology, financial services, and business and professional services, should begin exploring the use of remote high-touch collaboration tools, especially for collaborative activities that are synchronous, spontaneous, or sensory. As workers’ exposure to, and comfort with, these tools varies, organisations should consider implementing effective training and adoption strategies as well as policies guiding effective use. It may be helpful to think of remote collaboration as more than just a way of coping with the pandemic. To be sure, the pandemic triggered a surge of interest in remote collaboration and a burst of activity in the market for remote collaboration tools. But even after the crisis subsides, the need to support high-touch collaboration for remote workers will likely remain. This trend may carry the seeds of new opportunities. It may bring greater flexibility to talent models, offer workers new opportunities to balance professional and personal needs, help reduce the carbon footprint of work, and enable entirely new business models and industries. The development of remote collaboration could eventually change how we work in surprising and beneficial ways. Ryan Kaiser is a senior manager in Deloitte’s US Innovation group, where his efforts focus on digital transformation, strategy, and product/solution incubation. David Schatsky, Managing Director of Deloitte US, analyses emerging technology and business trends for Deloitte’s leaders and clients. Robin Jones is a Principal in Deloitte’s Workforce Transformation division, with 22 years of organisation and workforce transformation consulting experience.

Nov 30, 2020
READ MORE
Accounting
(?)

A post-pandemic roadmap for the professional accountant

As the global accountancy profession began adapting to the COVID-19 pandemic and its consequences, the International Federation of Accountants convened a series of round-table discussions to understand the implications of the pandemic for professional accountants and leaders. Kevin Dancey and Alta Prinsloo outline the findings. Crises inevitably demand that difficult decisions be made. Yet, the preferred conditions for making such decisions – time to deliberate or a clear sense of focus, for example – are in short supply. Countless small business owners, CEOs, government leaders and more confronted this reality in 2020. For many of them, professional accountants were there as trusted advisors when there was no semblance of certainty. Like every profession, accountancy will emerge from COVID-19 changed. We will be accustomed to digital processes we once thought impossible. Our change management abilities will be sharper than ever. How we anticipate the future will be informed by an experience many of us never imagined would happen. Right now, the profession has the opportunity to transform for the benefit of business, government, and society. It is also a critical moment to nurture existing talent and attract new talent. We must achieve this progress collectively, with clear and measurable goals. Through it all, the pandemic highlighted the importance of future-proofed skills that can anticipate challenges and opportunities, and are agile in a new world where professional accountants are established as strategic leaders. A shock to the system In the Netherlands, virtual work has been commonplace for more than a decade. When COVID-19 forced lockdowns, professional accountants were ready. In other regions, the transformations were not as simple. In South Africa, workers embraced change very quickly, but the more remote areas of the country found it difficult to find immediate solutions. In China, meanwhile, the shift to remote work was rapid. In the US and many other countries, new systems took root overnight, but with them came new-found concerns about security and the availability of technology. 94% of the global workforce live in areas where workplaces closed in 2020 due to lockdowns, according to the International Labour Organisation. These challenges impacted governments, businesses, and employees. In our new hybridised workplaces, preserving the tenets of trust and integrity while also embracing opportunities that virtual environments introduce is key. For example, when firms are not bound to a physical office, hiring more diverse talent from different geographies is possible. Educators and students were also disrupted and had to manage through a wide range of trials. On the one hand, universities and professors moved faster than ever to online instruction and, in some jurisdictions, had to overcome legal limitations in administering examinations online. On the other, students had not only to navigate internet bandwidth challenges, but also the mental health toll, personal economic hardships, and more, which the pandemic inflicted. One silver lining of remote learning is that classes not bound to a physical classroom can capitalise on the connective power of technology. In academia, as in the workforce, it has become clear that much of the accountancy profession’s infrastructure needed to transform – not just for the immediate future, but also the long-term. While the core skills of the professional accountant have not drastically changed due to COVID-19, the profession is changing. This crisis cast a spotlight on anticipation and agility, making it clear that the profession must take the opportunity now to rethink our curricula, our business models, and how professional accountants maintain their competency and relevancy so that they are ready for anything. Evolving technology, regulations and standards In early 2020, digital transformation was either in progress or identified as a strategic growth driver across businesses, accounting firms, governments, and beyond. Through the crisis, however, technology and data have been imperative not only to stay operational, but also to inform new and evolving strategies and ways of working. In a Deloitte survey, more than one-third of financial services industry firms in the US said technology upgrades were the top priority emerging from COVID-19. Meanwhile, more than half cited digitising client interactions as the first imperative. Across all industries, according to PwC, more than 60% of global CEOs acknowledge that they need a more digital business model for the future and that working outside of an office is here to stay. The way businesses everywhere operate is altered forever, and that reality has shifted how professional accountants engage with stakeholders. Professional accountants are the custodians of information that drives long-term strategy and, as businesses transform to stay relevant, professional accountants must be at the centre of that transformation. With change comes uncertainty, both for professional accountants and our stakeholders – especially the public. In this moment, the profession must align around clear goals for our members so we can collectively meet the changing demand around us. This is critical as we aim to leverage technology in new ways, and as we continue to champion trust and transparency in businesses and governments worldwide. As a profession, we cannot passively accept change; we must seize the opportunities change creates while also anticipating and mitigating risks. We have the guiding principles to do this and international standards for financial reporting, audit and assurance, ethics, public sector, and, hopefully soon, sustainability, will continue to help the profession evolve. Even regulators are being challenged to adapt to how accountancy work has changed, especially in light of 2020. In round-table sessions, we discussed how accounting firms should consider advocating for a way forward by partnering with regulators on the latest approach to financial reporting and auditing in a digital-first world. This will also serve us well as we align ourselves with a shared vision of the role sustainability reporting, focused on environmental, social, and governance (ESG)-related matters, will play in the future of the accountancy profession and our stakeholders. Accountancy is directly tied to prosperity, and a more holistic view of how people and planet fit into our profession is imperative. According to many stakeholders, sustainability is now an indisputable necessity. A long-term strategy rooted in sustainability helps guarantee any organisation’s place in the future. Indeed, two-thirds of global respondents in a recent BCG study on how the pandemic heightened awareness of environmental challenges agreed that economic recovery plans should prioritise environmental concerns. To that end, we must evolve our mindsets and reporting, and perhaps most importantly, our curricula for future talent. In particular, the students we spoke with were passionate about a much larger focus on ESG in the accountancy profession. As one student from Hong Kong said, “We are not prepared to handle ESG because there are no strict standards to hold us accountable”. For the future of the profession, transparency and accountability concerning ESG and long-term sustainability must be ingrained in high-quality reporting and assurance practices globally. IFAC is committed to advocating for new sustainability standards that would offer a reliable and assurable framework relevant to enterprise value creation, sustainable development, and evolving expectations. This is an opportunity for accountancy to evolve and to offer the next generation of professional accountants, many of whom identify as global citizens and environmental advocates, a strong foundation to make a difference. The important marriage of technical and professional skills Change management and sharp communications: From every region, discipline, and position, one skill was referred to more often than any other in every round-table we convened in the past three months: change management. We were in a rapid state of evolution before COVID-19. At the start of 2020, McKinsey & Co. noted that nine in ten business managers said skills gaps existed in their organisations or soon would. That reality has only become more evident. Accountancy is not a profession operating in a static world, and the skills learned have to reflect an equal measure of agility. There is a clear need for well-rounded skillsets that combine technical skills and professional skills that are rooted in relationship-building and communication. Doing so means placing more emphasis on stronger, trust-based relationships with key partners. This requires a focus on interdisciplinary skills when engaging with colleagues and in our strategic discussions with clients. Stronger communication skills will help professional accountants manage risks and garner buy-in for solutions. Scenario planning and storytelling: Professional accountants are dynamic thinkers with an aptitude for proactive planning. We are trusted partners in times of change and uncertainty, and we must be prepared for that demand to continue. We have to maintain the momentum 2020 created and the renewed trust imparted on our profession. Many round-table discussions spent significant time on the importance of accountants continuing to build in the areas of professional skills and focusing on new techniques for analysing and interpreting data in differing circumstances, and aptitudes for strategising on increasing priorities such as ESG. Our stakeholders agreed that the profession must become better storytellers, able to effectively show how all the pieces fit together and how the finance function bolsters resiliency and growth. The basics of this can be taught in classrooms, but this skill will largely be shaped on the job. Upskilling: How we compete in the learning and development space – with dynamic curricula, more agile credentialing and continuous learning models that are suited to a hybrid world – will be a differentiator moving forward. “Professions that invest [in education] now are going to come out of this with a competitive advantage,” said one academic leader. We have to show aspiring accountants and those who might be upskilling during their career that the profession is anticipating, adapting with agility, and remaining a step ahead. Affirming the need for agile, future-proofed skills, one professional accountancy organisation CEO said, “I’ve worked through three pretty major crises in my career, and the common theme through all of them is that you must use it as an opportunity for change. A crisis gives you license to adapt”. Defining the accountant of the future Professional accountants are, and will continue to be, strategic partners in any setting, be it in the private or public sector. The pandemic tested our capacity as business drivers, and we rose to the occasion. This is a pivotal moment for the accountancy profession, one where we will change old paradigms and embrace new skills for the digital and rapidly evolving world in which we live. How we act in this moment will define the future of the profession, and the opportunity for positive change is immense. Right now, societies and economies around the world are trying to find a way to move forward from a crisis-laden year. Professional accountants are the highly strategic and collaborative problem solvers who will help businesses and governments, large and small, move forward. In the round-tables IFAC conducted in recent months, CEOs, auditors, academics, students and more from around the world shared a clear vision: we, as a profession, must accelerate new ways of working, embrace technology, align our work to new and evolving societal demands and, above all, ensure we are investing in the right balance of skills that will fortify the profession for whatever the future holds.   Kevin Dancey is Chief Executive at IFAC, and Alta Prinsloo is Chief Executive at the  Pan African Federation of Accountants and former Executive Director at IFAC. The research process The International Federation of Accountants (IFAC) spent the past three months engaging with dozens of people associated with the accountancy profession across more than 20 countries with a range of perspectives. They included chief executives of professional accountancy organisations, chief executives in business, chief financial officers, audit committee members, auditors general, accounting firm leaders, academics and students.  By convening these various stakeholders, IFAC set out to understand the implications of the pandemic for professional accountants and leaders, and how their experiences will affect the future of accountancy and, more specifically, accountancy skills. The global COVID-19 pandemic has accelerated change and forced us to reconsider the role of professional accountants. We heard from our stakeholders about the transformation of organisations, the agility of business, and the resilience of professional accountants managing through unanticipated change.

Nov 30, 2020
READ MORE
Comment
(?)

Dangerous simplicity

Cormac Lucey explains why, as societal fissures and inequality grow, we must no longer be satisfied with unduly simple answers to complex questions. The biblical story of the Tower of Babel explains how humans across the world speak different languages. In the generations following the Great Flood, humans spoke a single language and migrated to the land of Shinar, where they decided to build a tower tall enough to reach heaven. Unhappy at this impudence, God intervened so that humans spoke several different languages, were unable to understand each other and were thus unable to build their idolatrous tower. Today, it is not different languages, but several other aspects of life, that risk pulling us apart. Specialisation has been one of the key ingredients of dramatic economic growth in recent centuries. But growing vocational differences and technical specialisation make it more and more difficult for national leaderships comprised of generalists to manage and control a society increasingly comprised of technical specialists. Consider the economic disaster of the financial crash just over a decade ago, and the failure of the Central Bank of Ireland and the Financial Regulator to take corrective action. Consider the current lockdown and reflect on the fact that, if everyone in the Republic contracted COVID-19 and we suffered the median fatality rate estimated by the World Health Organisation (0.23%), the resulting fatalities would equal around one-third of total fatalities that we suffered from all causes in 2019. Another serious societal fissure is growing economic inequality and the increasing role of education in determining an individual’s earning capacity. Here in Ireland, we are lucky that income inequality has not grown over recent decades. But it has grown substantially in the US. We can see the political polarisation that has followed and, increasingly, political affiliation in the US follows education. This pattern was very evident when the UK voted for Brexit. The political and media establishments may dismiss those who dared to vote for Brexit or Trump. But if the pandemic has taught us one thing, it is that in an ever more complex world, our fates are increasingly interdependent. In such a world, it makes little sense to dismiss large blocs of fellow citizens as if they are fools. Yet that is what has happened. This sneering reaction feeds another fissure, that which separates insiders from outsiders. We can see this in the rise and rise of monopolies and quasi-monopolies in the US. A paper published recently by two Federal Reserve economists found that the concentration of market power in a handful of companies lies behind several disturbing trends in the US economy such as a falling share of national GDP going to labour, a rising share going to capital, increasing inequality, rising financial leverage, and an increase in financial instability. Here in Ireland, we are confronted by a different monopolistic power, that of the State. At the end of Q2 this year, average weekly earnings in the Irish public sector exceeded those in the private sector by 32.6%. In the UK in 2019, (pre-pension) public and private sector earnings were approximately equal with public sector earnings 3% ahead before consideration of bonuses and 3% behind after their consideration. The stark public/private gap in Ireland arouses little public commentary, but feeds the fissures in our society. What can we do as we face this increasingly divided world? We should be careful of those who suggest simple answers to complex questions that generally don’t have yes/no answers but, rather, difficult trade-offs. Independence of judgement matters just as much for our public life as it does for our auditors. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.

Nov 30, 2020
READ MORE
Comment
(?)

Two sides to the COVID-19 coin

2020 was nothing short of a disaster for many people, but a constellation of emerging factors can give us hope for 2021 – from an economic standpoint at least, writes Annette Hughes. For the Irish population, COVID-19 has in many ways been a double-edged sword over the past nine months. The recent transition from levels two and three to a nationwide level five lockdown caused a significant number of businesses to close once more and pushed the number of those in receipt of government wage support through the Pandemic Unemployment Payment (PUP) up by 50% month-on-month from 228,858 on 11 October to 342,505 on 9 November. However, this is still well below the 5 May peak of 598,000. EY’s labour market forecasts suggest that, for November, this represents approximately 14% of those in employment. Kerry and Donegal suffer most, with about one in five workers in receipt of PUP at present, possibly due to their dependence on tourism. The reality for the fortunate segment of the population that managed to hold on to employment is quite different. The Central Bank of Ireland has reported that household deposits increased by 10.9% year-on-year in September 2020. This is indicative of a general trend of reduced consumption and increased savings since the beginning of the pandemic, as the measured savings ratio reached an unprecedented 35.4% in Q2 2020 with a quarterly increase in savings of €10 billion for Q2 2020. This suggests that there is a section of Irish society that is broadly unaffected, has money, and is merely waiting to spend. Results from a recent survey conducted by EY indicate that the world mood is anything but black and white. The impact of COVID-19 on consumer behaviour has led to diverse spending patterns globally. In the October release of our Future Consumer Index, 26% of consumers noted that they were unaffected and unconcerned for the future, while 31% stated the antithesis, commenting that they were struggling and worried about what is yet to come. A lack of job security, family health, and discomfort around a premature return to societal norms are foremost in the minds of those who believe the COVID-19 impacts will remain in the medium- to long-term. The remaining consumers surveyed classed themselves as either okay but adapting (30%) or hard-hit but optimistic (13%). Retail in Ireland is a mixed bag of late. The CSO release for September proves the lockdown ‘banana bread, work-from-home, DIY’ hypothesis with sales of hardware, paint and glass up 31.3% year-on-year while food, beverages and tobacco also increased by 12.4%. Meanwhile, sales for fuel have reduced by 10.2%, with stationery, books and newspapers also down by 11.6% as large swathes of workers, particularly those working in multinational companies, no longer commute to Ireland’s urban centres. EY expects that economic recovery will resume in 2021, with GDP forecast to rise by 3.5% after a 3.9% contraction in 2020. The current accumulation of deposits, which are earning meagre interest in the banks, combined with reduced reliance on PUP and projected employment growth of 6.5% should significantly support consumer spending next year and act as a catalyst for increased economic activity. Annette Hughes is a Director at EY-DKM Economic Advisory.

Nov 30, 2020
READ MORE
Financial Reporting
(?)

Practical issues in applying ISA 570 Revised: Going concern

Leigh Harrison outlines the practical issues, for both the auditor and management, that may arise when applying the revised going concern standard. As auditors rapidly approach the start of ‘busy season’ and management near the end of the financial year, one of the biggest challenges that will impact on both the auditor and management are the changes to the going concern auditing standard. The revised standard, applicable for periods beginning on or after 15 December 2019, increases the auditor’s work effort, which includes expanded risk assessment procedures over going concern, increased scrutiny over management’s going concern assessment and enhanced reporting requirements in the auditor’s report. The directors’ responsibility for going concern is seated in company law, with the duty to prepare financial statements that give a true and fair view, in accordance with the applicable financial reporting framework. The accounting standards require the preparation of a going concern assessment, taking into account all available information about the future, for a period of at least 12 months. The financial statements are prepared on a going concern basis unless management determines that they intend to liquidate the entity, cease trading, or have no realistic alternative but to do so. Complexities in the current year The world is now a very different place than it was at the start of 2020. In a matter of months, COVID-19 swept across the globe. The pandemic subsequently led to travel restrictions, business closures, cancelled events, and lockdowns. Governments responded with a range of financial supports in an attempt to support jobs and businesses. During this time, management will have had to revisit their business plans, forecasts and cash flows in response to the ever-changing economic environment. Meanwhile, calls for better climate change reporting and the end to the Brexit transition period compound the complexity. Practical issues for management Although the directors are ultimately responsible for the assessment of going concern, in many cases, they may delegate the preparation of the assessment to management. The directors will need to possess the skills and knowledge to understand and challenge the assessment prepared by management and have a robust governance, oversight and approval process to challenge and validate management’s assessment. For management in smaller businesses, where an assessment of going concern may not have been formally prepared and documented in previous years, the requirement in the current year is likely to be a step-change. In some ways, the continually changing economic environment in which businesses currently operate will have prepared management for the preparation of their going concern assessment as they continuously re-assess the impact of change on their business. Ahead of year-end, management should engage with their auditor to agree on the expected audit deliverables and ensure that they have the processes in place and resources required to perform the assessment. Remote working may add further complications as inputs required for the assessment are likely to be prepared across the finance function, and team members may be on furlough. Management will need to factor in additional time for scenarios where, for example, additional funding is required or waivers of covenants must be negotiated and agreed, as credit approval may be delayed due to the impact of bank staff working remotely. Management will need to have specific processes in place, including a risk assessment process to identify, assess and address risks facing the business relating to going concern. Management will also need to explain to the auditor how they measure and review financial performance, use their information systems to identify and capture events or conditions that may impact the going concern assessment, and how management identified the relevant method, data and assumptions used within their going concern assessment. The assessment must be prepared and documented by management in all cases and should be tailored and right-sized for the business. For some non-complex businesses with high levels of cash reserves, management’s assessment may not require detailed cash flow forecasts. A memorandum detailing management’s analysis and considerations may suffice. In contrast, more complex entities will require a thorough assessment of current and future risks, forecasted cash flows, consideration of current funding available, and the identification and assessment of plans to address identified risks. The area management must consider when preparing their assessment is wide-ranging and includes risks facing the business (both internal and external, current and future), the business environment, developments in the industry, and future prospective plans. The purpose of the assessment is to determine whether certain events or conditions may cast significant doubt on going concern and whether those events result in a material uncertainty to exist. In preparing and documenting their assessment of going concern, the auditor might expect to see the following: Analysis of the core operations of the business as they relate to going concern, including the business model, types of investments or disposals planned, how the business is financed and so on. Analysis of the current financial position compared to the prior year, considering key metrics such as net current assets/liabilities, operating cash inflow/outflow for the year-to-date, funding arrangements in place and related covenants, and so on. Analysis of the results post-year-end compared to the prior year, including revenue, profits, and status of funding. Details of events or conditions identified by management that may cast significant doubt on going concern and may affect the future performance of the business. For example, changes in demand for products or liquidity challenges. Where events or conditions are identified by management, management should document their plans to address those events. When management consider that a detailed assessment is required, they should document the model, assumptions and source of data used in their assessment. Management may find it useful to prepare a sensitivity analysis, where there are several potential assumptions or actions. The assumptions and data used in the assessment of going concern must be consistent with those used elsewhere in the business – when considering the valuation of goodwill, for example. Practical issues for the auditor In the planning phase, the auditor will need to ensure that the team has the resources and experience necessary to perform the required procedures. Where the new requirements present a step-change for clients, it will be particularly important for the auditor to engage early. Doing so will help clients better understand the extent of audit evidence expected, and the level of input that will be required from management throughout the audit process to assist the auditor in their enquiries and procedures. There is no prescribed methodology for management to use when preparing their assessment of going concern. In scenarios where management has determined that detailed forecasts and cash flows are not required, the auditor will need to use their professional judgement to determine whether they consider the assessment to be appropriately detailed. This may lead to difficult conversations. At the other end of the scale, management’s assessment may include, for example, detailed forecasted cash flows that are built on complex models with multiple assumptions and sources of data. In these situations, the auditor will need to obtain a detailed understanding of the model, and careful consideration will be required to determine which assumptions and sources of data are critical to the assessment. Professional judgement will be needed when designing the required audit procedures, which may include evaluating the design, implementation, and testing management’s controls over the process for preparing the assessment. For 2020 year-ends, more entities will likely face liquidity issues given the continuing impact of COVID-19 on business. As such, management’s plans may include seeking reliance on group support. Auditors of components within groups will need to get a ‘big picture’ view of the group’s ability to provide the support required. More than ever, there is a greater need for the auditor to maintain their professional scepticism, challenge management throughout the audit process, and evidence that on the audit file. Conclusion For some businesses, the implementation of the revised going concern standard will be a step-change that will result in changes to processes, controls, oversight arrangements and increased management input to prepare management’s assessment of going concern. For the auditor, greater audit effort will be required, resulting in additional time input throughout the audit process. The auditor will need to exercise their professional judgement when evaluating management’s assessment, identifying the critical assumptions and data, considering whether sufficient appropriate audit evidence has been obtained, and concluding on going concern in the audit report.  Leigh Harrison is Director at KPMG’s Department of Professional Practice.

Nov 30, 2020
READ MORE
Comment
(?)

Coals and goals

When it comes to sustainability, the problem is not that there are no standards. Rather, there are too many of them, writes Dr Brian Keegan. In the current abnormal news cycle, something has to be really strange to stand out. One such item in October was a report that UK authorities were to permit the opening of a coal mine in the north-east of England. This runs counter to most of the prevailing trends. True, the rehabilitation of coal was an element of Donald Trump’s first presidential campaign, but that has not prevented its decline in the US in favour of cleaner natural gas and more sustainable sources like wind and solar. Coal from this new British mine is not for energy production. It is apparently to be used in the manufacture of steel. It is also being used in the manufacture of jobs for the impoverished north-east. Job creation tends to rattle sustainability priorities and seems to have been the consideration that swayed the local council into granting permission. The incident does highlight, however, the elusiveness of sustainability because “Decent Work and Economic Growth” is Goal 8 of the 17 sustainability goals promoted by the United Nations. While these goals have garnered considerable traction in the sustainability debate, having 17 goals impedes progress because, in practice, the goals can be contradictory. Goal 13, for example, is “Climate Action”, which is at right angles to opening coal mines in some quarters. This vagueness has conflated the sustainability debate with the already nebulous concept of corporate social responsibility. Corporate social responsibility should be looked upon with suspicion. All too often, HR initiatives to boost staff morale, marketing initiatives claiming green credentials for a particular product or service, or even support for the pet charity of the chief executive are folded in under an ersatz comfort blanket of social responsibility. Claiming sustainable practices or having corporate social responsibility champions won’t cut it. There has to be a concerted drive to come up with broadly acceptable standards to measure genuine corporate progress on sustainability issues. The current problem is not that there are no standards, but rather, that there are too many of them. The current custodians of standards- and ethics-setting, the International Federation of Accountants (IFAC), recently proposed that a new sustainability standards board be established, which would exist alongside the IASB under the IFRS Foundation. This new sustainability standards board should pull together existing expertise and the work of some existing sustainability reporting initiatives. The resulting framework could then be passed to the International Audit and Accounting Standards Board to develop the best assurance processes. This IFAC initiative differs from many other governance initiatives. Too often in the past, ‘solutions’ were provided, for which there was no demand. One of the legacies of this pandemic will be a greater awareness of sustainable practices.  There is demand from investors for comparable and dependable data on environmental, social and governance factors and this form of reporting offers a value-added opportunity for accountants. On the other hand, the initiative carries the risk of becoming hijacked by environmental activism, leading to reporting requirements that would fail a cost/benefit analysis within the SME sector. Earlier this year, Harvard Business Review suggested that the chief financial officer should become the most prominent climate activist in their organisation. There is still some distance to go before this becomes a reality, but in an era when western governments are contemplating opening coal mines, nothing can be ruled out. Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.

Nov 30, 2020
READ MORE
Comment
(?)

President's welcome - December 2020

Welcome to a new edition of Accountancy Ireland, the last in what has been an extraordinarily difficult year for most. The best-laid plans made last December are by now  unrecognisable after months spent adapting to shifting realities. Chartered Accountants Ireland started the year with the presumption that Brexit would be the main issue for members in their external environment. Although a global pandemic overshadowed it, the Institute has worked throughout the year to support members on Brexit-related matters and to advocate on their behalf. As we approach the end of the Brexit transition period, our events and updates have continued. We recently opened registration for the third intake of students for our Certificate in Customs and Trade and, in the final quarter of the year, launched a new Brexit Digest e-newsletter full of practical guidance for businesses in Ireland and Northern Ireland. In recognition of Chartered Accountants’ critical role in driving the sustainability agenda, the Institute also recently published the Sustainability for Accountants guide, along with a Sustainability Hub on our website. The fight against climate change is now a corporate imperative. Moving our gaze west, Americans have gone to the polls and the New Year will bring a new administration. In this edition, we look ahead to what the next four years might bring. Change is also afoot in global tax, and Accountancy Ireland looks at the OECD’s proposed reform of the global digital and corporation tax system. Closer to home again, the Institute has endeavoured to respond quickly and effectively to meet the needs of members during the COVID-19 pandemic. Our primary focus has been on providing timely, helpful and practical support to members as they serve their clients and steer their organisations. As an educator, we are acutely aware of the challenges facing students during these months. Our education provision has evolved dramatically over the last year and our CAP1, CAP2 and FAE programmes successfully launched on our new online education platform. Producing the highest-calibre finance professionals is more important than ever for our economy. This festive season will be very different, but I’d like to wish members and students a peaceful, safe and enjoyable Christmas. For those who find themselves in particular difficulty, remember that assistance is available from CA Support. You can find details on our website. Thank you to the committees, volunteers, management and staff of the Institute for their efforts during 2020. I hope that we can make a return to a more normal way of life in the New Year. Paul Henry President

Nov 30, 2020
READ MORE
Tax
(?)

Five things you need to know about tax, 27 November 2020

Irish stories this week cover the Revenue Chairman’s appearance before the Public Accounts Committee. The Chairman responded to questions relating to bogus self-employment claims, the tone of Revenue engagement and difficulties facing the self-employed and SME sector in meeting their tax obligations due to COVID-19. In UK developments, HMRC has set out its policy on the tax treatment of virtual Christmas parties, and read HMRC’s updates including COVID-19 compliance checks. While in international tax, the OECD published a report on the activities and achievements in the OECD’s international tax agenda for the G20 leaders.       Ireland Revenue chairman, Niall Cody, appeared before the Public Accounts Committee last week, responding to questions on bogus self-employment claims, the tone of Revenue engagement and the difficulties facing the self-employed and SME sector in meeting their tax obligations due to COVID-19; The CCAB-I made further representations to the Minister for Finance highlighting concerns on the impact of the transfer pricing provisions contained in Finance Bill 2020, which were not abated in Committee Stage Amendments; UK Read about HMRC’s policy on the tax treatment of Christmas parties and what to do if you pay employees early in December; Key messages from recent HMRC meetings are available including important updates on compliance work in respect of COVID-19 supports; and   International The OECD published a report outlining the activities and achievements in the OECD’s international tax agenda for the G20 leaders.

Nov 26, 2020
READ MORE
Tax
(?)

Five things you need to know about tax, 30 October 2020

Our top Irish stories this week include a review of the provisions contained in Finance Bill 2020 for the COVID Restrictions Support Scheme and the warehousing of income tax debt. In the UK, the UK Government announced that the Job Support Scheme will open on 1 November and run for six months, until 30 April.  While in international tax, the European Commission is seeking feedback on a new initiative to review the VAT rules for financial and insurance services. IrelandFinance Bill 2020 sets out the provisions for the  COVID Restrictions Support Scheme; The provisions relating to the warehousing of income tax debt are also considered;UK The UK Government announced that the Job Support Scheme opens on 1 November; HMRC launched a campaign to contact taxpayers who have ceased to trade and claimed the SEISS grant; andInternationalThe European Commission is seeking feedback on a new initiative to review the VAT rules for financial and insurance services.

Oct 29, 2020
READ MORE
Leadership and Management
(?)

The value of being prepared and members in practice resourcefulness

Conal Kennedy, Head of Practice Consulting, writes: As we start into October, the end of the year looms, and we begin to look back at 2020 and focus more on 2021. The COVID-19 crisis has been the overwhelming story of the year. Very few businesses or practices have done better out of the crisis but everyone has done something different. What has been brought home to firms is the value of being prepared. Those firms that had invested heavily in technology were the best placed to rebound. That said, what has struck me most is the resilience and resourcefulness of our members in practice. Members pivoted from business as usual, to remote working, and on to a blend of remote and socially distanced working. Members moved quickly at each stage to assess the situation, gather information and help their clients, first to secure cash flow, then to arrange state benefits, then to help with those structural changes that are necessary to meet the demands of the new normal. As this continued, the regular work of compliance continued. What turn is next from the crisis remains to be seen. As of going to print, governments on both sides of the border are contemplating reintroducing measures to control the resurgence of the virus. In the meantime, a hard Brexit is threatening. What is certain is that more change is coming and practitioners will have to respond again. In the weeks up to 8th July, we carried out the All-Member Survey 2020. We asked a range of questions, including members’ engagement with and attitude to the Institute, and their responses to the COVID-19 crisis. See Brendan O’Hora’s article in this month’s Accountancy Ireland, where he provides an overview of the results of the survey. Specific points relating to practice were that practitioners have been disproportionately impacted by the crisis, compared to members generally. 93% of members in practice considered their firms were stable or growing at the start of the year, but 63% changed their description post-COVID to being somewhat impacted or struggling. In the Republic of Ireland, 47% of practising members said that they could charge clients usually or always for work done to assist them in dealing with the crisis, and 35% said that they could charge for this work sometimes. In Northern Ireland, these percentages were lower at 39% and 33% respectively. Practitioners were generally pleased with the Institute’s response to the crisis, particularly the supports provided through the COVID Hub and the Webinars series. Compared with members in general, practising members are generally more engaged with the Institute and see it as more relevant to them. We were pleased to see a 7% drop in those members in practice who stated that they were dissatisfied with the Institute since the last survey in 2018. The Institute has already used the results of the survey to inform the issues that we should raise with government as a matter of priority, and it has also informed our continuing engagement with our members to determine what practical steps we should take to improve the experience of members in practice. At this stage, members in practice have told us that they are keen to generate and develop new work. As always, referrals are the best source of new work, and these are not particularly impacted by the crisis, in that if you do good work for clients, they will let their contacts know. However, practitioners have a natural desire to try to accelerate this process by forging and renewing personal contacts in their networks. As we go through lockdown and socially distancing measures, this is more difficult. Many members are most comfortable if they can visit a client or contact and meet personally with them in their own physical space, and they feel that conversation and ideas flow most readily in this environment. In this instance, it makes sense, so far as is safe and reasonable to create these opportunities for physical visits, even if this process needs to be more structured and is less spontaneous than before. Other members are now reaping the rewards of early efforts to digitalise their marketing efforts, especially in the social media space, that, if anything has taken on more importance in this crisis. If you have not developed a significant social media presence before now, it might be in order to do this now. One way or another, you should be planning ahead, and considering how you will finish out this year and what plans you should put in place for 2021. For our part, the Institute will take member feedback on board as we plan our services in the year ahead, so we continue to keep pace with the needs of members in practice.

Oct 01, 2020
READ MORE
Tax
(?)

Five things you need to know about tax, 2 October 2020

The TWSS reconciliation process and the requirement to report the subsidy paid amount to Revenue before 31 October 2020 features as our top Irish story this week. Revenue has also provided details on how payments received under the TWSS and PUP will be taxed.  In the UK, was the Chancellor’s Winter Economy Plan a trick or treat, and what’s new with HMRC? While in international tax, the OECD has published a report on BEPS Action 13 Country by Country Reporting.      IrelandTWSS reconciliation process – employers are required to report the actual subsidy paid to employees to Revenue before 31 October 2020; A Revenue press release sets out details on how payments received under the TWSS and PUP will be taxed;UK Was the Chancellor’s Winter Economy Plan a trick or treat? Read more on the tax measures announced last week; What’s new with HMRC? We set out some takeaways from a recent meeting; andInternationalProgress on transparency, the OECD has published a report on the BEPS Action 13 Country by Country Reporting. 

Oct 01, 2020
READ MORE
Member Profile
(?)

In conversation with… Suzie Arbuthnot

Suzie Arbuthnot ACA, the winner of BBC’s Best Home Cook, discusses life as a parent, entrepreneur, and TV presenter.Earlier this year, you were crowned BBC’s Best Home Cook, how did that come about?Back in 2017, I entered the Great British Bake Off. I was first reserve and was devastated when I didn’t get called up. One of my friends told me to enter this other food programme, and so I did. A few days later, I had a phone interview and then a face-to-face meeting in Northern Ireland, where I had to make a savoury and a sweet dish. I was then flown to London to replicate the three stages you see on the show and, as they say, the rest is history!You recorded the show while setting up your own business. What was that experience like?I became self-employed on 1 February 2019 and I flew to London at the very beginning of March to start filming Best Home Cook. I was completely stressed because I wasn’t bringing in an income, but my husband said: “You have worked so hard for this opportunity, you can’t give up now!” So, having won the title and trophy plate, I had to return to normal life and not tell a soul. It was an agonising nine months. I set up my own practice by following the straightforward steps set by Chartered Accountants Ireland. I was extremely fortunate that my old firm (PGR Accountants, Belfast) referred a piece of work to me, and that got me started.What would you describe as your greatest challenge or achievement to date?I used to say: “finally qualifying as Chartered Accountant”, as it took me eight years. I never gave up, and I knew I could do it. I was able to have my family, have my children, and just enjoy life. I don’t regret a moment of it at all. However, I think winning a UK-wide cooking competition and now presenting my own food-focused TV show, Suzie Lee’s Home Cook Heroes, is pretty amazing!What’s the most valuable lesson you’ve learned?Have faith in yourself in whatever you do, as others are quick to knock you down. This has been true in all areas of my life, so be kind to everyone you meet, treat them the way you would like to be treated, and have no regrets.What do we most need in this world?We need to learn how to switch off. I am a huge culprit, but we are too connected these days – attached to our phones, tablets and laptops. The art of social interaction is starting to wane right in front of our eyes, and it’s all down to our devices.How do you recharge?I love keeping busy, but I get my energy from spending time with family, cooking, going to the gym, playing hockey for Lisnagarvey Hockey Club, and singing with Lisburn Harmony Ladies Choir.

Oct 01, 2020
READ MORE
Careers
(?)

How to get a great job in a challenged market

While it might be difficult to find a new job in the current market, it's not impossible. Niamh Collins outlines five key considerations that will put you in the best position to move on in your career. The disruption to employment caused by the COVID-19 pandemic has been severe. From hiring freezes to the Employment Wage Subsidy Scheme to remote working and the tough decision of making redundancies, 2020 has been a year like no other for almost every industry. At the end of July, CSO data showed the COVID-19 adjusted unemployment rate as 16.7% across Ireland – the effects disproportionately spread across younger generations with 41% of 16-25-year-olds out of work compared to 14% for those aged 25-74 years. The employment market is not universally challenged. Despite the economic pressure and instability, there are organisations that need your knowledge, skills and experience. Whatever your reasons for looking for a new role, there are five key considerations which will put you in a better position to get a great job in a challenged market. 1. Be bold with your networking Contacts are invaluable. It’s important to stay in touch with as many people as possible – suppliers, customers, old colleagues and clients. Maintaining these relationships will stand you in good stead because the individuals could provide precious information when it comes to job opportunities, offer useful advice or guidance and even act as a reference when necessary.  Beyond your existing contacts, you can also actively seek out new networking opportunities in your field. Be bold on LinkedIn and connect with plenty of relevant professionals. 2. Be thorough in your research If you have identified a vacancy or a company that you would like to work for, always be thorough in your research. Read up about the business; the values, what they do, who their clients are, and also find out the names of the managers and as much about their careers as you can. Not only will this allow you to address any communications to a specific individual within a department, but it will help you create a better picture of the organisation as a whole.  3. Be flexible about your requirements While you may want the security and stability offered by a permanent job, have you considered pursuing a contract role? The flexibility of hiring a contractor is an attractive prospect for organisations at present. Also, it could be beneficial to weigh-up your salary expectations, especially if (as with many industries) you are able to work remotely. Regularly working from home will save monthly commuting costs and, therefore, lowering your pay demands accordingly (while being sure not to undersell yourself) could increase your attractiveness to employers and might be the difference between being hired or not.  4. Be open to partnering with a recruitment agency Eliciting the assistance of a specialist recruitment agency is a straightforward way to give your job-hunting efforts a boost. It will save you time, give you access to their extensive network of industry contacts, offer a wide range of opportunities that are often not advertised on job search sites and they have the inside line on knowing exactly what hiring organisations are looking for. 5. Be ready to clear your diary and move fast If you are serious about moving jobs, arguably the most important thing to remember is to be ready to act fast as things can change rapidly. Be prepared to clear gaps in your diary so that you can take calls or attend meetings, virtual or otherwise, at short notice.  Clearly explain what your requirements are from the outset and have references ready to go. When markets are difficult and hiring organisations may be looking for its new employee to start at a short turnaround, they will want a quick response if you do get offered a job.  Despite these unusual times, careers are being progressed. Your next role could be a couple of meetings away, but it will require focus, determination and input from you to make it happen. Niamh Collins is Associate Director of Finance & Accounting at Morgan McKinley.

Oct 01, 2020
READ MORE
Tax
(?)

VAT matters - October 2020

David Duffy discusses recent Irish and EU VAT developments.Irish VAT updatesVAT rate decreaseAs most readers already know, the standard rate of Irish VAT has been reduced from 23% to 21% for the period from 1 September 2020 to 28 February 2021. We expect that most businesses will already have made the necessary changes to their systems and processes to apply the new rate to affected transactions from 1 September 2020 onwards. However, when preparing your September/October VAT return in November, it may be helpful to check that the new rate has been correctly applied. Some of the points to check may include:Has the new VAT rate been correctly applied to your sales? The tax point and corresponding VAT rate for your sales may differ depending on whether the sale was to another business or consumer, whether you operate the invoice or cash-receipts basis of accounting for VAT, and whether a payment was received in advance of the supply. The Revenue Tax and Duty Manual on changes in rates of VAT, available on the Revenue website, provides further guidance on how to apply these rules.Has the appropriate VAT rate been applied to purchase invoices received in the period?Has the appropriate VAT rate been applied to credit notes issued or received during the period? In general, the VAT rate applied to the credit note should match the VAT rate applied to the invoice to which the credit note relates.Does VAT charged at the new rate correctly map to the appropriate general ledger accounts and is it correctly captured in your VAT reports for the period?Extension of COVID-19 reliefsRevenue has confirmed an extension of a number of temporary, indirect tax reliefs introduced earlier this year to help combat COVID-19. These reliefs were originally due to expire on 31 July 2020, but have now been extended until 31 October 2020, subject to further review. The temporary reliefs include:The zero-rate of VAT applies to personal protective equipment (PPE), thermometers, medical ventilators, hand sanitiser, and oxygen when supplied to the HSE, hospitals, nursing homes, care homes and GP practices for use in providing COVID-19-related healthcare services. Relief from import VAT and customs duties applies to the import of medical goods to combat COVID-19 by or on behalf of State organisations, disaster relief agencies and other organisations approved by Revenue, and which are provided free of charge for these purposes. No VAT clawback will arise for the owner of a property used to provide emergency accommodation to the State, HSE or other State agencies in order to combat COVID-19. EU VAT updatesDeferral of VAT e-commerce rulesThe EU has recently agreed to defer the introduction of significant changes to the EU VAT rules for e-commerce transactions from 1 January 2021 to 1 July 2021. The deferral was in response to potential challenges of meeting the 1 January 2021 deadline for tax authorities and businesses as a result of COVID-19. While this deferral gives businesses more time to prepare, it is important for businesses that will be impacted by the changes to begin their preparations. Businesses which will be most affected include retailers with online stores, online platforms and marketplaces which facilitate sales of goods to consumers, and postal and logistics operators which handle imports of goods on behalf of retailers or consumers. A brief summary of the changes coming into effect on 1 July 2021 is set out below. The current domestic VAT registration thresholds for cross-border business to consumer (B2C) sales of goods in each EU member state will be abolished. As a result, a retailer selling goods to consumers in other EU member states will be obliged to charge VAT at the appropriate rate in the member state to which the goods are shipped regardless of their value, subject to a very limited exception where the value of sales to consumers across all EU member states is less than €10,000 per year. The VAT payable to tax authorities in other member states on these sales can be remitted through a quarterly One Stop Shop (OSS) registration rather than requiring an overseas VAT registration. VAT will apply to all goods imported into the EU, at the appropriate rate in the EU country of import, regardless of their value. This is as a result of the abolition of the import VAT relief for low-value consignments with a value of up to €22. This is likely to significantly increase the volume of packages imported on which VAT must be paid. To help facilitate the payment of VAT, the retailer or, in certain cases, the online marketplace facilitating the sale can charge the VAT at the time of sale and pay this VAT to the tax authority in the country of import through a new Import One Stop Shop (IOSS). This return would be filed, and related VAT paid, on a monthly basis. However, this will only apply to imported consignments with a value of up to €150. Packages above that value will be subject to import VAT and customs duty in the normal way at the time of import. An online marketplace that facilitates sales of goods to consumers will be deemed to have purchased and resold those goods in two scenarios: first, the goods are imported from outside of the EU in a consignment of up to €150; or second, the goods are sold within the EU by a retailer established outside of the EU. This will bring additional VAT collection and reporting obligations for these platforms.Additional VAT record-keeping requirements will apply to platforms and marketplaces which facilitate other supplies of goods and services to consumers within the EU.VAT on property adjustmentIn the HF case (C-374/19) the Court of Justice of the European Union (CJEU) ruled that a VAT clawback was payable by a German retirement home operator where it ceased to carry out taxable supplies in a cafeteria attaching to the main retirement home building. The operator constructed the cafeteria and fully recovered VAT on the construction costs as its intention was to sell food and beverages to visitors. This activity would be subject to VAT. It was subsequently determined that there had been approximately 10% use of the café for VAT exempt supplies to residents of the retirement home, which resulted in a partial adjustment of the VAT reclaimed. This was not in dispute.However, subsequent to that initial adjustment, the taxable activity of sales of food and drinks to visitors ceased entirely. The only remaining use was in respect of the VAT exempt supplies to the residents, albeit there was no absolute increase in their use of the building. The question was, therefore, whether this triggered a further adjustment of VAT.The taxpayer had sought to rely on earlier court judgments which support the position that where VAT is reclaimed based on an intended taxable activity but that activity does not subsequently take place, the taxpayer’s right to VAT recovery is retained. However, the CJEU distinguished this case from the others because the intended taxable activity had commenced but ceased and the property was now only being used for VAT exempt activities. Ireland has adopted similar rules (referred to as the capital goods scheme) which can result in a clawback or uplift in VAT recovery where the proportion of taxable/exempt activity in building changes. This typically needs to be monitored over a period of up to 20 years. It is, therefore, important to carefully consider any changes in use of a building as this could have significant VAT consequences.David Duffy FCA, AITI Chartered Tax Advisor, is an Indirect Tax Partner at KPMG.

Oct 01, 2020
READ MORE
...71727374757677787980...

The latest news to your inbox

Please enter a valid email address You have entered an invalid email address.

Useful links

  • Current students
  • Becoming a student
  • Knowledge centre
  • Shop
  • District societies

Get in touch

Dublin HQ

Chartered Accountants
House, 47-49 Pearse St,
Dublin 2, D02 YN40, Ireland

TEL: +353 1 637 7200
Belfast HQ

The Linenhall
32-38 Linenhall Street, Belfast,
Antrim, BT2 8BG, United Kingdom

TEL: +44 28 9043 5840

Connect with us

Something wrong?

Is the website not looking right/working right for you?
Browser support
CAW Footer Logo-min
GAA Footer Logo-min
CCAB-I Footer Logo-min
ABN_Logo-min

© Copyright Chartered Accountants Ireland 2020. All Rights Reserved.

☰
  • Terms & conditions
  • Privacy statement
  • Event privacy notice
  • Sitemap
LOADING...

Please wait while the page loads.