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

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

Revenue has published a new Tax and Duty Manual which highlights the updates in the Form CT1 2022 for accounting periods ending in 2022. The updated panels include Company Details, Trading Results, Extracts from Accounts and Irish Rental Income. The Form 46G for accounting periods ending in 2022 is available for filing. Filers can complete the online version in ROS (up to 30 payees), the offline version (up to 3,000 payees) or the 46G Return Tool. Filers should ensure that the period returned in the Form 46G matches the accounting period in the Form CT1.

Holistic paper has over 100 recommendations to improve the business operating environment, meet individual business needs, and those of employees   3rd annual edition of ‘The Next Financial Year’ informed by insights of Institute’s 30,000 members North and South    5 July 2022: Chartered Accountants Ireland today published its annual blueprint for creating a better business environment on the island of Ireland. This is the third year that the largest accountancy body on the island of Ireland has published ‘The Next Financial Year’, informed by the insights of its 30,000 members.     The blueprint contains over 100 individual recommendations to optimise the business environment, particularly for SMEs; to meet individual business needs; and to address personal finance and societal issues so that employees can survive and succeed as well as businesses.     Commenting, Dr Brian Keegan, Director of Public Policy, Chartered Accountants Ireland said: “This document sets out what is required for well-functioning economies and societies into the next year. Is it informed by the views of our members across the island of Ireland, and speaks to structural challenges in the business environment, the individual needs of businesses, and critically, the need of employees living in our communities.”   The business environment  Supporting business  The Institute identifies ways to address pinch points that can slow fast-moving businesses down. It prioritises developing greater capacity for business to success, particularly in the vital SME sector by ensuring supports and systems of compliance reduce burdens on business and promote adherence.     Dr Keegan notes:   “Last year, we noted that government in the future will be bigger, and this needs to happens in a way that helps business flourish. SMEs face increasing financial and administrative burdens in the coming months, from necessary legislative developments on auto-enrolment, the right to request remote working, and statutory sick pay. The timing of these, and their impact on business needs to be considered and balanced. Equally, for each, comprehensive guidance on the new rules is needed well in advance of introduction.”  The broad range of grants and supports in existence, aimed at manufacturing or internationally traded services sectors need to be adapted for SMEs. The Institute suggests widening the eligibility criteria to include ‘traditional’ industries and service sectors so important to local economies and communities. It suggests that the basis on which many grants and supports are offered should be adapted, with value rather than headcount the key performance indicator.    Business rescue process (SCARP)  As we emerge from the effects of the pandemic, and geopolitical and economic shocks continue, the Small Company Administrative Rescue Process (SCARP) can help viable SMEs and save jobs. The criteria for companies wishing to avail of the process mean that SCARP will effectively be available to 98% of companies in Ireland. The Institute recommends that renewed attention is devoted to encouraging the use of this mechanism and suggests that the Government employs an extensive communications campaign to promote it.    Meeting business needs   Access to finance   The Institute notes the detrimental effect that a lack of competition in the business lending market is having, with the exit of Ulster Bank and KBC. The paper suggests Government review the reasons why Ireland lost these banks, as well as examining what can be done to increase competition.     Dr Keegan commented:   “There is widespread support for creating a third pillar bank with many suggesting that role could be fulfilled by Permanent TSB, given the apparent lack of interest by foreign institutions in the Irish market. In addition, credit unions should be supported in their ambition to deepen their involvement as community-based lenders to small enterprises.    “As well as supporting competition in business banking, the Government should also recognise the importance of next-tier, alternative lenders. The non-bank funding market in Ireland is far too small and requires state support to grow. The SBCI needs to continue to grow and develop partnerships to create competition that will benefit and support SMEs.”    Ensuring regional connectivity   Recognising the importance of reliable digital connectivity, the Institute highlights the importance of making up for lost time in the roll-out of the National Broadband Plan. The original 2021 target of 102,000 premises connecting was revised down to 60,000, with just 34,500 premises connected. The paper notes that regional growth and new ways of working will depend on the availability of reliable broadband, which will substantially increase Ireland’s standing globally and bring economic benefits.   Meeting employee needs   Dr Keegan notes:  “Employee needs are at the very core of a successful business environment. ‘The Next Financial Year’ provides measures to address some of the most pressing societal issues facing Ireland, as the cost of living continues to increase for citizens. All around us we can see the impacts of a property market in crisis, the impact of taxation decisions on our competitiveness as a business environment. Many of the 100 + recommendations we are making today will, if adopted, have a real impact on people’s lives.”    Housing the workforce  While affordable housing remains a priority for government, unless there are profound and sudden changes in the housing market, Ireland will not be able to house its population. A sustainable economy requires a functioning housing market. Chartered Accountants Ireland recognises that the rental market is intrinsically linked with the owner-occupier market, and in the short term, increases in supply in the rental market may be achieved at the cost of a reduction in supply in the owner-occupier market, and vice versa.  ‘The Next Financial Year’ notes that tax policy is one of several tools at the Government’s disposal to help with the ongoing supply issues. Targeted tax incentives should prioritise measures that reduce development costs, easing cash-flow concerns and making investment more appealing. At the same time, the return on investment for the Exchequer from such measures should be appropriate.    Retirement planning  Part of meeting employee needs and business needs is helping people to undertake long term planning to ensure financial security in later years. Today, the Institute reaffirms its call for a clear and coherent long-term government pensions strategy, with adequate lead-in time for any changes to allow workers to plan. The Institute also recommends the abolition of mandatory retirement to allow people to work for as long as they choose.   Dr Keegan commented:  “Delay in addressing the pension issue over the last 20 years is storing up a considerable problem for another day, both for employers and employees, so we need to start moving, and keep moving on this reform journey. A consistent long-term strategy for the State Pension, including eligible age increases, we feel must be communicated 10 years in advance to allow people to plan, so there is simply no time for further delay.    “We have long been clear that reform of the State Pension cannot happen without commitment and action to increase private pension coverage. Again, for the ambitious timeline towards auto enrolment to succeed, we need to see the minutiae of what is planned.”   ENDS     For more information contact  Jill Farrelly  PR & Communications Manager      

The Institute was represented by Dr. Brian Keegan, Director of Advocacy and Voice, at the National Economic Dialogue (NED) 2022 last week.  The theme of the forum, hosted by both the Department of Finance and the Department of Public Expenditure and Reform, was Building Economic Resilience to deal with International Challenges. The NED provides a forum for public consultation and discussion ahead of Budget 2023. The discussion centred on the cost-of-living challenges arising against an economic backdrop of war and global energy spikes, the risk of exacerbating inflationary pressures and the need to ensure sustainable public finances whilst reducing dependence on corporation tax receipts. Dr. Keegan emphasised to Ministers the importance of capacity building within the economy and the contribution of the accounting profession to the services sector. He also took the opportunity to outline elements of the CCAB-I’s pre Budget 2023 submission which was launched this week.  Documents and speeches from the NED can be found on gov.ie.

Stopping flow of landlords leaving the market critical to address housing crisis Frontload personal tax allowances for younger workers to halt brain drain  23 June 2022 – Tax measures that support individuals and make Ireland an attractive place to live and work are critical to protect competitiveness, according to the main accountancy bodies in Ireland. CCAB-I which represents over 50,000 professional regulated accountants published its pre-Budget submission today, containing a range of measures to alleviate cost of living pressures and to tackle barriers to recruitment and retention across the Irish economy. CCAB-I identifies two key areas for Budgetary focus; improving housing supply to address the crisis in the housing market, and reforming personal tax allowances to help people as they build careers, homes, and families.  Parity in the treatment of corporate and individual landlords Ireland needs a functioning housing market to attract and retain talent to our shores. The submission states that the residential property market is in crisis, with not enough houses to buy or rent in the private sector and not enough houses being built by the State for those who need social housing. Government sees the private rental market as a source of taxes, and this is not the correct approach in a housing crisis. Commenting Cróna Clohisey, Tax & Public Policy Lead, Chartered Accountants Ireland said “Landlords are an essential feature of a fully functioning residential property market, however in general, landlords consider it to be no longer economical for them to continue in the market. In the Irish tax system, corporate landlords holding rental property have a more favourable tax treatment, at 25%, whereas individuals face rates of 52% and beyond.  “The 25% rate should be extended to individuals to address some of the inequity. By removing disparities, the tax system could be effectively harnessed to encourage landlords to stay in the market and new entrants to meet the supply shortage.” The submission also proposes:  Local property tax should be allowed as a deduction against rental income Wear and tear rates for fixture and fittings should be increased from 12.5% to 25% per annum to facilitate landlords investing in the maintenance of properties Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work To incentivise loss making landlords to remain in the market, rental losses in a tax year could be used against other income (such as employment income) to reduce tax payable.  Capital tax solutions to encourage the supply of accommodation As landlords withdraw from the rental market, some opt to sell the property, others do not. The current rate of capital gains tax (CGT) of 33% is too high.   The CCAB-I proposes the following measures will prevent the extraction of rental properties from the market, reduce the displacement of tenants, and result in more residential properties becoming available to purchase: Make available a relief from CGT on disposal of a rental property, conditional on the property being sold with a tenant in situ and/or a requirement for the property to continue in use as a rental property. Reduce the standard rate of CGT from 33% to 20% to release residential property back into the property market for younger generations. Outside of housing, as detailed in full in the submission, a lower rate of CGT would also encourage innovation and risk taking which in turn would drive investment activity and improve returns for entrepreneurs. Reforming personal tax allowances Traditionally Ireland’s investment policy has focused on taxation from the employer’s perspective, however in 2022, retaining talent is a prominent concern among employers. The CCAB-I proposes that consideration be given to reforming personal tax allowances so that allowances are ‘frontloaded’ at the outset of a person’s career. The submission suggests that such reform is in line with government policy on FDI which notes “talent” among the key areas which makes Ireland a consistent target for such investment    Clohisey continued “We need to turn our attention to personal tax rates, as they are impacting attraction and retention of talent. Recalibrating personal tax allowances is a long-term project and the biggest obstacle will be overcoming political resistance to change. Nonetheless, personal tax allowance reform should form part of Ireland’s overall policy to retain talent. “Speaking on behalf of a profession where most are in the early stages of their careers, this could be achieved by increasing allowances available to those under 35 at a time when many are taking the first major life steps such as starting a family or approaching the first rung of the property ladder, while reducing the allowances available to those over 55 for example. ” In addition to reforming personal tax allowances, the CCAB-I supports the proposal to introduce a third rate of income tax. Presently, a worker in Ireland begins to pay tax at their marginal rate once they have earned €36,800 which is below the average industrial wage. A third rate would make the tax system more equitable provided that the entry levels to each band of tax are appropriate. Other measures proposed by the CCAB-I include    Leave Employer’s PRSI unchanged to remove barriers to employment creation. Overhaul and simplify the R&D credit to make it more accessible to SMEs. Reform the discriminative tax treatment of service companies if Ireland is serious about encouraging the prosperity of indigenous businesses.  Avoid any measures which diminish the already modest capital tax reliefs available to Irish entrepreneurs.  To encourage FDI and competitiveness, Section 110 companies should be allowed to deduct withholding taxes suffered on the receipt of distributions or interest received.  Pension auto-enrolment incentives should not disturb established tax reliefs for pension contributions.  A more flexible Tax-Saver Commuter ticket should be introduced to match the hybrid working model that has emerged for certain workers. ENDS Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I). Read the submission in full here.  For more information Jill Farrelly  PR & Communications Manager   Chartered Accountants Ireland  About the Consultative Committee of Accountancy Bodies-Ireland (CCAB-I) The Consultative Committee of Accountancy Bodies-Ireland is the representative committee for the main accountancy bodies in Ireland. It comprises Chartered Accountants Ireland, the Association of Chartered Certified Accountants, the Institute of Certified Public Accountants in Ireland, and the Chartered Institute of Management Accountants which combine to represent over 50,000 professional regulated accountants in Ireland.  

To be truly successful in the fast-changing world of work, employers must start to think more strategically about the skills they need now as well as the skills they will need in the future, writes Niamh O’Brien. We are hearing a lot these days about emerging workplace trends and disruptors, such as Artificial Intelligence, smart working, and the gig economy. While it’s clear that all are having a marked impact on how we work and experience the workplace, what is less clear for many employers is how best to factor these far-reaching changes into their ongoing approach to people management. Evolution of technology, processes and skills Technology not only influences the work employees do but can also change the entire working environment—by facilitating remote working and providing access to a broader talent pool, for example, or transforming everyday processes and procedures. As a result, employers must start to think differently about their people, the skills they need right now, and the skills they are likely to need tomorrow. For many, this will require a more strategic, agile, and future-focused approach to managing their talent pool—not just for ‘right now’, but also for the future. Adding to this challenge are the evolving needs and demands of today’s workforce. More people are looking for greater opportunities to experience meaningful work, greater flexibility in their working lives, and more opportunities for personal development, training and upskilling. Employer value proposition To be truly successful, your people strategy must therefore encompass and build on all of these elements, but—no matter how complex or demanding the process of putting it together may be—your future-focused people strategy won’t, in itself, be enough.   As with any strategy, the real challenge often lies in bringing it to life, and it’s impossible to talk about people strategy without touching on Employer Value Proposition (EVP). Your EVP – that is, your employee branding and the way your organisation markets itself to attract talent – is integral to your people strategy. Without robust employee branding, you will lose people to your competition. The only way to gauge an active and engaged EVP is through measurement and KPIs. Keep on top of this and you are far more likely to achieve the desired results. This is because a measurable strategy, with clearly defined KPIs and a cyclical model of assessment and realignment, is far more likely to deliver results. Future-proofing your people strategy Your strategy should also span your entire talent ecosystem, including permanent employees, temporary or contingent staff, contractors, consultants, and gig workers. Only by mapping flexible solutions, which allow you to fill skills gaps in your organisation today and plan for the future, will you be able to implement a truly effective people strategy that can support long-term growth. Niamh O’Brien is Director of Talent Management at BDO.

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

With demand for electricity expected to double by 2030, renewable sources will be key to decarbonising Ireland’s energy sector, writes Laragh Musselwhite. The decarbonisation of our electricity system has been one of Ireland's great success stories. Emissions from electricity generation in Ireland fell by 51.4 percent from 2001 to 2020.   This sizeable drop reflects improvements in the energy efficiency of modern gas-fired power plants as well as the increased share of renewables in the electricity system here.  The government has set ambitious targets for the ongoing roll-out of renewable energy generating capacity, including five gigawatts of offshore wind by 2030. Given that demand for electricity is expected to rise by anywhere from 19 to 50 percent over the next decade, meeting these targets will not be without challenge. Electricity in the Climate Action Plan The Climate Action Plan identifies the energy and electricity sector as a key enabler to Ireland meeting our Net Zero goal by 2050. The plan sets out an overall target of reducing carbon dioxide equivalent (CO2eq) emissions in the sector to between two to four mega tonnes of CO2eq by 2030. Our most significant challenge is, however, the rapidly rising demand for electricity across Ireland. In a high-demand scenario, our electricity needs are expected to as much as double by 2030. At the same time, our electricity emissions need to be reduced by 60–80 percent. Renewable energy Renewable energy will be key to decarbonising the sector. In 2020, electricity generated from renewable sources accounted for 42.1 percent of all electricity generated in Ireland — up from 33.3 percent in 2018. Ireland has significant renewable energy resources, with wind energy accounting for 36 percent of the country's electricity in 2020. We currently have an installed wind capacity of 4.2 megawatts, and the Climate Action Plan commits to increasing this to 13 gigawatts of combined onshore and offshore wind by 2030. The generation opportunity Alongside large-scale renewables, microgeneration and small-scale generation have an important role to play in empowering and driving engagement and participation. Both create opportunities for domestic, community, farming, and small commercial customers to take the first steps towards investment in renewable technologies, potentially helping to shape electricity demand and decarbonise homes and businesses. The Climate Action Plan also provides for a Microgeneration Support Scheme (MSS) aimed at supporting the deployment of an anticipated 260megawatts of new micro renewable generation by 2030. A separate small-scale generation scheme will also come into effect to support the deployment of rooftop and ground-mounted solar photovoltaic (PV) modules in cohorts not suited to other support measures. What does this mean for businesses? While the large-scale deployment of renewables will facilitate the decarbonisation of the national energy system, a growing number of individuals are also seeking to decarbonise their own operations. Options here include: investment in energy-efficiency; corporate power purchase agreements for renewable energy; and small-scale renewable asset deployment. As a first step, businesses are advised to calculate, monitor, and report on their Scope 2 emissions. These are the indirect emissions associated with the purchase of electricity, steam, heat, and cooling. By doing this, businesses can help to identify opportunities for reducing these emissions—and it’s worth noting that improving the energy efficiency of both property portfolios and business operations is crucial here. Potential measures for reducing Scope 2 emissions include securing direct renewable energy contracts, upgrading electric systems (e.g. lighting), generating renewable energy on-site, and optimising manufacturing and production facilities. Given the ongoing volatility in energy prices, the business case for reducing these emissions has never been stronger – and, by making considered choices, businesses can also expect to save on operational costs. The decarbonisation of Ireland's electricity system, therefore, presents a potential opportunity for businesses. In addition to the potential cost savings, other benefits could include reduced exposure to energy price volatility, stakeholder alignment, regulatory compliance and improved brand perception. Laragh Musselwhite is an Analyst at KPMG Sustainable Futures.

The Chartered Accountants Ireland Annual Report 2021 was published today. Entitled "Vibrant, Resilient, Connected", the report features Institute activity and financial statements for 2021. The report can be read here.

Movement on automatic enrolment welcome but sustained momentum needed to meet ambitious timeline Close adherence to timeline required to ensure passage of legislation and establishment of Central Processing Authority (CPA) achieved without delay €1 for €3 model should be withdrawn and existing, well-established model of tax relief for contributions should apply  29 March 2022: Today’s launch by Minister for Social Protection, Heather Humphreys T.D. of Ireland’s long-awaited automatic enrolment pension scheme is positive news, but Chartered Accountants Ireland has noted the ambitious timeline and cautioned that legislative hurdles, the tendering process, and the establishment of the CPA must progress at pace.    The largest professional accountancy body on the island of Ireland made the comments in response to confirmation by Government today that an automatic enrolment pension scheme for workers will be introduced in January 2024.    Commenting, Cróna Clohisey, Tax and Public Policy Lead with Chartered Accountants Ireland said: “While today’s announcement is welcome given the pension crisis facing us, the timeline is ambitious to say the least. A significant amount of work needs to be done not just to develop the legislation underpinning the scheme, but also to finalise its design and to establish the various mechanisms that will be required for it to function.     “Employers will also need sufficient time to plan and budget for its introduction. Payroll service providers tell us that a lead-in time of at least 18 months would be required to properly develop, test, and deploy a fully operational system. As the legislation progresses, the Government must work closely with businesses to advise and help them prepare for the introduction of automatic enrolment.”   Over 90 percent of respondents to a 2021 survey by the Institute supported the introduction of automatic enrolment, a scheme by which workers would automatically be enrolled in a pension scheme by their employers, and both employers and employees as well as the State would contribute to the pension fund. Chartered Accountants Ireland has also called for the existing model for tax relief at both standard and marginal rates for pension contributions to apply to automatic enrolment. It calls for the proposal to introduce a second model, whereby the State contributes €1 for every €3 paid in by an employee, to be withdrawn.  Ms Clohisey continued: “One of the issues that remains unclear is how the existing and well-established model for tax relief at both standard and marginal rates for pension contributions will sit alongside the €1 for €3 State model that is planned for automatic enrolment. The operation of essentially two tax systems between auto-enrolment and private pension schemes will cause needless tax arbitrage and confusion within the market. We are therefore calling for the existing model of tax relief to apply to automatic enrolment and for the proposed State model to be abolished.”   ENDS For more information Jill Farrelly PR & Communications Manager Chartered Accountants Ireland     

HM Treasury has published a Money Laundering Advisory Notice about the risks posed by jurisdictions with unsatisfactory money laundering and terrorist financing controls. This note also provides details of the new statutory instrument the Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2022 due to come into force on 29 March 2022 which specifies the updated list of high risk third countries. Once effective, this will replace the current list within the Money Laundering Regulations 2017. Members are reminded of the legal requirements within the Money Laundering Regulations 2017 to apply enhanced customer due diligence and enhanced ongoing monitoring in relation to high risk third countries. 

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

With Russia’s invasion of Ukraine signalling further hikes in energy prices, Neil Hughes asks if the government’s cost of living package will really make a difference for Irish households facing spiralling costs. The Russian military invasion of neighbouring Ukraine will undoubtedly carry devastating consequences for its people and economy. At our firm, our thoughts are with our colleagues at Baker Tilly Kyiv as their country faces the greatest challenge in its 31-year history as a democratic European state. The crisis has also presented the Irish government with a fresh set of unwelcome challenges concerning the spiralling cost of living here. The €505 million support package announced earlier this month covers several areas the government has prioritised to help alleviate the recent spike in consumer prices. Chief among them is the surge in energy prices, now more pressing in the face of the Ukraine invasion. Cost increase factors The rising costs we are seeing are down to factors including global energy prices, inflation for basic commodities, and pandemic-induced supply chain issues in critical locations. Russia accounts for the highest EU imports of natural gas (41.1%) and solid fuel (46.7%), according to 2019 Eurostat research. As Russia has such a stranglehold on the energy market, sanctions introducd by the EU, UK and US (among others) will inevitably destabilise energy costs in the coming months. Government supports The Irish government is offering cost of living supports in a number of ways: Electricity rebate The government announced plans for the €100 rebate before Christmas, but has since opted to double the amount to €200. The rebate will be VAT inclusive and will apply automatically to electricity bills through the March and April billing cycle. It will be added as a credit of €200 to pay-as-you-go providers. Public transport Public transport fees will be reduced by 20 percent from the end of April. Fare reductions will apply to Bus Éireann, Irish Rail, Dublin Bus, Go Ahead, Luas, DART and Local Link services. Fuel allowance Families receiving the fuel allowance will be given a lump sum payment of €125 before St Patrick’s Day. Health The Drugs Payments Scheme, which sees households paying €100 or less per month for specific medicines, will now be reduced to €80 per month.  School transport The family cap for school buses will be cut to €150 per family at primary level and €500 per family for secondary schools. Family payments The Family Working Payment will be brought forward, kicking in from 1 April instead of 1 June. The weekly tax-free payment is targeted at employees with children and supports low pay workers. Is it enough? Although these government supports are welcome, they will not benefit everybody in the same way. For instance, someone from commuter counties, like Wexford or Louth, who is reliant on their car for work will not benefit from the public transport price cut in the same way as a Dublin commuter might. On top of that, the electricity rebate is not being rolled out in a targeted manner. Instead, it will be made available to every household as a blanket payment of €200, no matter the energy rating or financial situation of that household. This support might have been better suited to a claims process, similar to the pandemic support subsidies made available to businesses, so that the more a household needs the support, the more they could receive by claiming through a centralised process. The decision not to implement a claims process might have been down to a perceived time-crunch. As the impact of the Ukraine war may now render the package woefully inadequate for many families, however, this strategy could come back to bite the government in the next election. Neil Hughes is the Managing Partner of Baker Tilly. He is the author of A Practical Guide to Examinership, published by Chartered Accountants Ireland.

As restrictions ease and businesses fully open again, what does the future hold for Irish insolvencies? Ken Tyrrell explains.   Given the hardship businesses have faced over the past two years, a rise in insolvencies in Ireland would be no surprise. A recent PwC report examining 18,000 business failures over the past 17 years sheds further light on the current state-of-play for companies around the country.  Measuring the correlation between key economic indicators and other trends with rates of insolvency, the report found that Government pandemic supports saved at least 4,500 Irish companies from going bust during the pandemic, representing an average of 50 companies per week during the period. A new enhanced measure for business failures developed as part of the research identified the ‘insolvency rate per 10,000 companies.’ When looking at business failures per 10,000 companies per county in Ireland, Kilkenny had the highest number of insolvencies in 2021, with 25 business failures per 10,000. Dublin ranked second with 24. Cork averaged 12 failures per 10,000 companies. Irish insolvency rates Overall, the Irish insolvency rate (number of liquidations and receiverships per 10,000 companies) stood at 14 in 2021, down 87 percent from its 2012 peak of 109 per 10,000 companies. The arts and entertainment sector was the most heavily impacted last year, with 85 insolvencies per 10,000 companies. Other sectors to feature at the higher end of the scale included travel and transport (47) and health (36). The research shows that retail (8), hospitality (16) and construction (15) had a much lower than expected rate of insolvency, an indicator that Government supports targeting these job-intensive service sectors were effective. At the other end of the spectrum, analysis of the report shows that the lowest insolvency rates per 10,000 in 2021 were in the information and communications, professional, scientific and technical sectors. This is likely due to the strong performance of FDI-heavy sectors, and the ability of people employed in these industries to transition to working from home during the pandemic.  Comparing the Irish results with those of our UK neighbour, Ireland’s rate of liquidation in 2021 (11 per 10,000 companies) was significantly lower than the corresponding UK figure of 26. The analysis also revealed that, over the past 17 years, the liquidation rate in the UK has historically trended 35 percent higher than in Ireland. Debt overhang of at least €10 billion  The pandemic and its successive lockdowns have certainly resulted in many businesses struggling to survive. PwC estimates that there is currently a debt overhang of at least €10 billion among SMEs in Ireland, made up of warehoused revenue debt, loans in forbearance, supplier debt, landlords, rates and general utilities.  Small Company Administrative Rescue Process (SCARP)  Based on the relatively low rates of business failure in the retail and hospitality sectors during the pandemic, it is clear that many of the 4,500 companies buoyed by the Government’s COVID-19 supports are in these sectors. While they have not gone bust, many are on life support and will need additional financial support to repair their balance sheets as the service economy fully reopens. Some businesses will agree to new terms with lenders and trade suppliers. Others will need to repair their balance sheets proactively. Many of these companies will need to restructure their debts and will look to formal processes such as the Government’s recently launched SME restructuring SCARP process, as well as traditional processes such as examinership. I expect to see a step-up in restructuring activity throughout 2022. As businesses recover and the economy fully reopens, critical areas for review will be liquidity, working capital and new funding avenues to finance growth.  Ken Tyrrell is Business Recovery Partner at PwC. Read the full PwC report.

While 2021 was a big year for ESG pledges, climate ambitions and keeping the 1.5°C target within reach, 2022 will be the year of action. Russell Smyth outlines the seven ESG themes we will likely see this year. The global emphasis on environmental, social and governance (ESG) issues increased significantly in 2021 among governments, NGOs, the business sector, and other stakeholders. Given the remarkable momentum achieved last year, mainly stemming from the run-up to, and discussions at COP26, we expect the ESG growth trend to continue apace in 2022. Here are seven ESG themes we expect to see throughout the year. 1. Moving beyond the pledges At the close of the year, more than 2,000 companies worldwide had set or committed to setting emission reduction targets in line with the Paris Agreement climate goals through the Science Based Target initiative (SBTi). At COP26, global leaders agreed to the Glasgow Climate Pact, securing a near-global net-zero with over 90% of world GDP now covered by net-zero commitments. These actions have kept the 1.5°C target alive, but 'its pulse is weak', as stated by COP26 president Alok Sharma. In the year ahead, there will be increased pressure and scrutiny on corporates and countries to deliver on these (often vague) commitments, with regulators and stakeholders seeking transparent and robust evidence of tangible action, quantifiable progress, and interim targets well in advance of 2050. Companies failing to act on their climate and broader ESG goals risk suffocating the already weakening 1.5-degree target as well as experiencing the expanding impact inaction will have on business continuity. 2. You've got to bring your supply chain with you For companies, a key opportunity to deliver effective change in 2022 sits within their supply chain. Supply chain emissions, or so-called ‘Scope 3’ emissions, are typically the most difficult emissions for companies to track and influence depending on the complexity of their supply chain. However, tackling them can be transformational for corporate climate action. This stems from the fact that supply chain emissions often significantly outweigh a company's direct emissions – on average, supply chain emissions are 11.4 times that of operational emissions. Decarbonising Scope 3 emissions will require a rethink and possible redesign of current value chains but also provides a significant untapped opportunity in the drive towards a net-zero carbon economy. 3. Quantifying climate risk The corporate ESG agenda has to date focused on quantifying and reducing the impact companies have on the environment (e.g. carbon emissions, waste production). Now, however, the focus is shifting to the impact of ESG, particularly climate change, on companies. This will include quantifying, in monetary terms, both physical risk (e.g. flooding risk to factories) and transitional risk (e.g. new regulations, changing consumer sentiment) to a business, driven by the requirement to report against frameworks such as the Task Force on Climate-Related Financial Disclosures (TCFD) and investor demands. This will involve moving beyond qualitative assessments of climate and environmental risk to the provision of quantified and financially-based risk assessments to inform investors on the business's risk profile and assist management in business planning and strategy. 4. ESG reporting is coming of age The ESG disclosure and reporting rhetoric has been dominated by the challenges posed by the proliferation of competing metrics and, subsequently, the lack of consistency in measurement and disclosure. In 2022, however, a tipping point has been reached, and the next phase of ESG reporting is unfolding rapidly. This includes: EU Taxonomy: A new type of classification system which establishes a list of environmentally sustainable economic activities. The Taxonomy will require financial market participants and companies to disclose their climate change mitigation and adaptation performance in a comparable way by the start of 2022 and other environmental objectives by January 2023. The Task Force on Climate-Related Financial Disclosures: Provides a framework for companies to issue climate-related financial information. Corporate Sustainability Reporting Directive (CSRD): CSRD will come into effect in December 2022 and will entirely replace the NFRD. The proposed changes made by the CSRD include the extension of reporting requirements to include additional categories of companies and the inclusion of the 'double materiality concept'. International Sustainability Standards Board (ISSB): The ISSB is tasked with developing mandatory corporate ESG disclosures. 5. Biodiversity Biodiversity is fundamental to long-term business survival. Businesses depend on highly-functioning ecosystems for important inputs into their production processes and essential services like air, soil and water quality. This year will see the global biodiversity conference, COP15, take place in China after two years of delay due to the pandemic. The conference aims to set a Paris Agreement-style global goal for nature, with many organisations calling for a worldwide goal for businesses to be "nature-positive." A nature-positive world requires no net loss of nature from 2020, a net positive state of nature by 2030, and full recovery by 2050. To mitigate impacts on biodiversity, businesses are asked to avoid and reduce pressures on nature loss, restore and regenerate, so that the extent and integrity of nature can recover, and transform underlying systems to address the drivers of nature loss. It will be easier for companies to solve these issues by setting science-based targets for both nature and climate.   6. The emergence of the green consumer According to the Harvard Business Review, consumers want more sustainable products, but when faced with them, they don't consistently buy them and "keep reverting to old, habitual behaviour". The tide seems to be changing in 2022 as consumers become more aware of how individual actions can be part of climate change mitigation. In addition, governments are increasingly pressuring businesses to nudge consumers towards making that sustainable purchase. 7. The role of the circular economy In 2022, all businesses should investigate measures for enhancing waste management, increasing product durability and quality, and seek to involve recycling/take-back schemes for product end-of-life. These methods, among others, are examples of how companies can begin to implement circular economy principles into their day-to-day processes to become a more sustainable business. In Europe, the Commission has estimated that adopting circular economy principles could increase EU GDP by 0.5 percent by 2030 and create an additional 700,000 jobs. In the context of Ireland, EPA estimates suggest a 5 percent material reduction in the 100 million tonnes used annually could correspond to an annual €2.3 billion opportunity. In December 2020, Ireland launched its first Whole of Government Circular Economy Strategy, in which it estimates that annual savings of €2.3 billion could be achieved by boosting Ireland’s circularity. Russell Smyth Sustainable Futures Partner in KPMG.

When entering a period of organisational change, leaders need to remember that people are their most vital asset. Patrick Gallen explains how organisations can best engage with employees to transition successfully. The Greek philosopher Heraclitus said, “you can never enter the same river twice”, meaning somewhere between 535BC and 475BC, we knew that change would be a challenge we would grapple with throughout human existence. So, why do organisations still find it so difficult to change? There are several reasons but, generally, people find it difficult to leave behind old comforts, nurtured over the years and move towards something new, often unknown and not entirely predictable. We have learned many lessons since the onset of the COVID-19 pandemic in March 2020. Perhaps one of the greatest lessons has been that we must always be prepared for rapid change. For almost two years, it has been difficult to forecast the business landscape month-to-month in the way we might have been able to in 2019 and before. Another lesson organisations worldwide have learned since the beginning of the pandemic has been  that people are an organisation’s greatest asset. This is not just a headline for the careers page but a fact. Without the dedicated people who make up an organisation, you cannot meet company objectives or deliver excellent client service. People turn ideas into reality and strategy into action. So, when entering a period of organisational change, it is essential to put people at the centre of this change. To take your people on a journey with you, they must be willing to travel the distance. You must engage them, communicate your vision with them, and excite them about wanting to reach that destination. How can you do this? Communication Communicate early and often. If people are not connected to the ‘what’ and ‘why’ in the change process, it is difficult to convince them of the desired outcome. Updating staff on the status of the change and how it fits into your overall plan makes it much more likely that they will be accepting of, and excited about, it. Mobilise your change team Find the key influencers within your organisation, those who have earned their colleagues’ trust and respect. Getting these people behind your programme for change allows you to spread the word more quickly and effectively. You can use them as a sounding board to understand how change is perceived throughout the organisation.  Listen Employees may have lots of comments, questions, and worries throughout the change process. You must listen to this feedback openly, validate it, and address it honestly. Even if you can’t address their concerns right away, ensure that you listen to them and let them know you will address them when you can. Managing organisational change can be daunting, but that isn’t a reason to avoid it. When executed correctly, change will inject energy and progress into your organisation and help you and all of your people reach new heights. Patrick Gallen is Partner of People & Change Consulting in Grant Thornton Northern Ireland.

With the introduction of the Government’s Waste Action Plan for a Circular Economy, Ireland has the opportunity to become a leader in circularity and waste reduction – but  innovation and buy-in will be needed to succeed. Michael Quille explains. The Irish Government’s Waste Action Plan for a Circular Economy outlines bold ambitions to encourage a more circular, sustainable waste management model. Ireland can be a leader in waste reduction, given our legacy as one of the first nations to ban single-use shopping bags. We need to leverage that innovative spirit to find new pathways to zero waste. The ‘Waste Action Plan for a Circular Economy’ (the Plan) outlines an ambitious roadmap for Ireland’s waste policy up to 2025. Taking a holistic view of resources, the Plan actively encourages a more circular, sustainable waste management model that will maximise the value of materials throughout a product’s life cycle, putting climate action at the core of national resource management policy. The Plan contributes to the Government’s commitment to move towards a circular economy (set out in the Programme for Government) and is complemented by several Government publications at various stages of approval. Ireland has a real opportunity to become a leader in the EU and internationally by embedding a solid circularity ethos across society and the economy. Both the private and public sectors have gradually begun to integrate process innovations into business models which design-out harmful waste, extend product lifetimes and, in some instances, prevent waste from arising in the first place. There is a growing consensus among industry leaders and policymakers as to the economic potential of the circular economy business model. However, many companies struggle to incorporate circular thinking into their corporate strategy and day-to-day operating models due to a lack of understanding and technical capabilities. The Plan provides Ireland with coherent and actionable objectives that look at how we consume materials and resources; how we design the products that households and businesses use; how we prevent waste generation and resource consumption; and how we extend the productive life of all goods and products in our society and economy. Impact on households Under the Plan, households are challenged to reduce waste, improve recycling activities, and generally embrace and expand their social responsibility efforts. To encourage engagement, a deposit and return scheme for plastic bottles was signed into regulation in November 2021 and is set to become operational during 2022. Waste bin colours will also be standardised across the country, and apartment complexes will be required to segregate waste properly. Further changes are proposed to the regulation of the commercial and household waste collection market, improving consumer protection and ultimately promoting more equitable market competition. Nevertheless, many of the measures aimed at waste collectors, such as recycling targets and the levy on waste disposal, may ultimately be paid for by the consumer as pass-through charges. To smooth out the transition to a lower-waste household economy, targeted education and awareness campaigns are proposed to encourage better-informed consumption decisions and buy-in to a shared responsibility. Impact on business All business in Ireland will be affected by the requirements for circularity and the shift to a new macro perspective of holistic, zero-waste resource management. Indeed, the impact on some may be even more acute than our carbon ambition, demanding behavioural and mindset changes that are difficult to appreciate fully as we move from the linear make, use and dispose model to something with increased circularity. In light of these headwinds, business leaders should embrace and implement a proactive and sustainable business approach, addressing any compliance or regulatory requirement risks associated with implementing the Plan head-on. Organisations should review their existing business models and integrate a focused circular economy strategy to help fulfil circular expectations, reduce resource dependencies, anticipate legal constraints, generate cost savings and drive business value. Capacity to deliver Critical to the successful implementation of the Plan will be the capacity and overall ambition of both the private and public sectors to comply with and deliver on the Government’s ambitious agenda. The culture towards waste disposal in Ireland must further regenerate and evolve, with Government ensuring that the right leadership, governance, procurements, incentives and forms of contracting are in place. The transition to a circular economy offers the real possibility of a sustainable alternative future; it is an essential step towards a decarbonised economy and will create measurable long-term value for everyone. Ireland can be a leader – we were one of the first nations to ban single-use shopping bags and move to the “bag for life” concept. We are proven innovators and adapters for waste reduction, and now we need to leverage that resilience and innovative spirit to find new pathways to zero waste. Michael Quille is Strategy and Transactions Associate Director at EY Ireland.