Effective leadership requires more than competence. Compassion can help to foster a culture of both success and well-being, writes Paul O’Donnell Challenged by the after-effects of a global pandemic, organisations continue to change rapidly and are conscious of the need for effective leadership and talent engagement. Research suggests that compassionate leadership can bring the best results, but does compassion have a place in the world of work? The evidence suggests yes, it does. Compassion in the workplace improves collaboration, humility, trust and loyalty. Leaders who display compassion are more likely to have and hold on to engaged, committed and motivated employees. While good to have, empathy is an emotion. Compassion is an emotion with intention. Employees often avoid taking risks at work or rocking the boat during challenging times. They might be hesitant to report errors, for example, to voice concerns, suggest new ideas or share feedback. Demonstrating compassion as a leader can create a workplace environment conducive to emotional well-being, making employees feel safe enough to take risks that might help them to succeed. Compassionate leadership can benefit the leader as much as those they lead. Data shows a strong link between the demonstration of compassion and career advancement. Compassionate leaders enjoy greater life satisfaction and self-esteem and are viewed as stronger and more capable by their employees. By taking care of your staff, you are also acting in your own interests. Compassion alone is not enough, however. For leadership to be effective, it must co-exist with good judgment. Kindness cannot come at the expense of competence. The leaders who achieve the best outcomes are those who understand what motivates their employees and how to manage them towards desired outcomes. Leadership is hard: it necessitates pushing agendas, sharing critical feedback and knowing when to say no. Practising compassion as a leader does not imply the absence of these responsibilities. Instead, it means carrying them out while being conscious of people’s feelings. As Hougaard and Carter put it: “Wise, compassionate leadership is the ability to do hard things in a human way.” Developing compassionate leadership A study showed that 91 percent of over 1,000 surveyed leaders see compassion as vital to leadership. Eighty percent indicated that they wanted to improve their own compassion but did not know how. Compassion is not an inherent characteristic, but it can be developed. There are several steps leaders can take to develop a more compassionate leadership style. Have more compassion for yourself Taking care of others means minding yourself as well. If you are overburdened and burnt out, you won’t be able to help anyone else. Self-compassion requires getting enough sleep, taking short breaks throughout the day and setting aside time for yourself away from work. It also means not being too hard on yourself, recognising your mistakes, reframing setbacks as learning experiences and moving forward confidently. Be aware of your intentions Learn to manage your intentions before you speak to others by aligning your core values with your actions. Get to know each member of your team to understand what drives them and makes them feel valued. Advocate for change Compassion can become integral in an organisation. As a leader, think about policies that may be put in place to support employee well-being. This is beneficial to your employees and can lessen the onus on you over time. Can compassion become a hindrance? If you have a well-developed sense of compassion, but feel it hinders your ability to lead, there are a few things you should consider. Honesty and transparency As a leader, it is your job to offer guidance, even when it may be difficult for an employee to hear. If you step around the issue to be kind, you risk failing to convey your expectations and the employee will neither understand nor benefit from your help. Empathy vs compassion If you find yourself taking on the emotional burdens of your employees, take a step back and remember that you will be most helpful to them through action. Use your feelings of empathy as a catalyst for compassion and take practical steps to exercise it. Compassionate leadership propels success A compassionate outlook enhances a leader’s skills, resulting in more productive and motivated employees. Empowerment through compassion enables leaders and their teams to achieve their utmost potential, ensuring the organisation’s future success. Paul O’Donnell is CEO of HRM Search Partners

Expectations on businesses to combat climate change have intensified. Dave O’Shaughnessy outlines how organisations can use artificial intelligence to reach sustainability goals Last month, the World Economic Forum reiterated the need for urgent action on climate change, which was also the core message from COP28. With the world poised at this make-or-break moment, societal and stakeholder expectations of the role of business in reducing the effects of climate change are at an all-time high. In a US Pew Research Centre Survey published last October, 52 percent of respondents said they believe large businesses and corporations can do "a lot" to reduce the effects of climate change. This suggests that the expectation has moved beyond businesses simply fulfilling their environmental, social and governance (ESG) responsibilities to the view that they should be focused on even greater change. This change – termed “regeneration” – calls for a reinvention of systems across an organisation, from business models to supply chains, to help drive a positive impact rather than simply avoiding a negative one. While this is certainly an important objective, many organisations are currently facing external and internal pressures, long-term planning challenges and reporting requirements that have grown in scope and complexity to even reach a stage of compliance and organisation, let alone regeneration. It’s here that artificial intelligence (AI) is a game-changer. By harnessing data and driving efficiency, it can help your organisation meet your most immediate sustainability goals: achieving carbon neutrality, reduction of water use, and meet Science Based Targets initiative (STBi) targets as well as the UN Sustainable Development goals (UNSDGs). At the same time, AI also frees up your people to consider the bigger, long-term regeneration opportunities that can change your organisation’s environmental impact. There are three ways AI can assist with and organisations sustainability goals, which are outlined below. One: Guidance on sustainability reporting standards New directives such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence (CSDD) mean companies face increasing reporting requirements. The high volume of reporting points and the interrelationships between regulatory reports and voluntary frameworks (Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP), and the Sustainability Accounting Standards Board) adds to the complexity of the task and requires organisations to be able to interpret complex policy documents in a short space of time. Unsurprisingly, many organisations are struggling with where to begin, unsure of how they fare compared to expectations and are confused by the multitude of requirements. As a result, they are unable to forge an action plan or identify potential problems. Generative AI can alleviate this concern. Its ability to analyse large volumes of documents (in this case, the reporting requirements and frameworks) in real-time and then to provide easy-to-understand explanations gives companies a clear starting point. It also cuts down on complicated, manual research time and ensures consistency in understanding and actions among staff. A chatbot is one means of achieving this. It can ingest all the legislation, directives, frameworks, and facts relevant to your company’s sustainability needs and then act as a “personal assistant” for any user questions. By combining knowledge from a vast number of resources, your organisation-specific chatbot can provide enhanced understanding on complex topics at speed, support decision-making, and even provide references so users can review the sources or answers for fact checking and traceability. Two: Actionable insights With the objective to halve emissions by 2030, companies must have a comprehensive and integrated net zero approach involving all aspects of their operations and value chain. But while this integrated approach is key to meeting targets, extracting information from multiple sources and the analysis of that information (crucial if opportunities and hot spots are to be identified quickly and adjustments made) means considerable work for teams. AI has the ability to monitor and analyse multiple data points, often combined with outputs from machine learning or other algorithms, quickly and efficiently (e.g. forecasting total emissions or identification of raw materials that have the highest impact on CO2 reduction). It can also enhance the quality of insights generated by this analysis by providing explainable and clear “next best actions”. Three: Sentiment analysis Public sentiment can significantly impact a business's reputation and performance. Social media, in particular – a key source of sentiment information with many people sharing their views and experiences – can often prove difficult for companies to monitor and manage quickly. Sentiment analysis can assist with this. A form of natural language processing (NLP) that uses AI to evaluate and classify sentiments expressed in textual data can provide consolidated insights to businesses. Until recently, sentiment analysis required extensive training data, making the process time-consuming and expensive. The process has been revolutionised with the emergence of Large Language Models (LLM). LLMs perform very well when it comes to classifying text and analysing sentiment without the need for prior training, thus streamlining the sentiment analysis process. This innovation makes the collection and interpretation of public sentiment more seamless, helping businesses get a quicker and more accurate understanding of how they are perceived by the public. New opportunities Organisations that leverage AI will find it easier to meet their immediate sustainability goals and be better prepared to address future challenges. Quicker collation of information and analysis enables workforces to take greater initiative. By being able to make faster, more insightful decisions, people will have the time to identify new opportunities for greater environmental impact. Dave O’Shaughnessy is Partner and Sustainability Reporting – Technology Lead at EY

Workplace romances can pose challenges for employers. From policies to breakups, Moira Grassick offers 10 tips on how to avoid and manage potential difficulties Valentine’s Day was just a few weeks ago, but workplace romances can happen at any time of the year. If romance blooms in your workplace, it can sometimes cause complications ranging from gossip to complaints or grievances. Here are 10 tips to maintain control of your workplace and continue fostering a healthy and safe environment for your staff when dealing with an office romance. 1. Check your existing policies and procedures Are your existing policies and procedures appropriate for dealing with any problems that might arise as a result of workplace romances? It’s sensible to have either a confidentiality policy or conflict of interest policy in place, requiring employees to notify you of any change in their personal circumstances that might give rise to a conflict of interest. 2. Encourage staff to notify management of a workplace romance Requesting that employees notify management about their love life might seem awkward or over the top, but it is important that management be aware of any romantic relationship in the workplace. Then, they can decide if appropriate steps need to be taken. 3. Don’t ignore a workplace romance Not every employee will be comfortable reporting their new relationship. It could become known to management by other means that a personal, romantic relationship between staff members has developed. It’s best not to ignore this information and proceed as you would if you had learned about the relationship from the people involved. 4. Think about changing the work environment It is sensible to consider whether the reporting structures within teams need to be revised. Changes like these must be discussed with the people affected. Reassessing reporting structures in the case of a workplace romance, especially if management is one of the parties involved, can help allay any suspicion of favouritism that might arise at a future date. 5. Beware of favouritism Ensure that staff engaged in relationships with a colleague are not involved in any management decisions involving their partners. It is important that management decisions are taken impartially and that the impartiality of the decision is clear to everyone involved. 6. Don’t be afraid to take action Treat any complaints from staff members – involved in the relationship or not – seriously. If people are witness to, or experience, inappropriate behaviour in the workplace, it is an employer's responsibility to manage it. 7. Training management Most managers lack training and knowledge on how to tackle romantic relationships at work. Managers need to be aware of how to manage such situations, what the potential risks are and how to manage these risks. Managers should also have regular training on how to respond to harassment complaints that may arise as a result of a romantic relationships at work, or its aftermath. 8. Social events Christmas parties or work social events are often the source of workplace romances. It’s a good idea to remind staff that they are still expected to abide by company policies, even if the party is outside of the workplace. If something goes wrong, you, as an employer, could be liable. 9. Breakups Of course, not all love is made to last. Problems might arise if a workplace romantic relationship ends, especially if it doesn’t end smoothly. These situations could impact an employee's work performance or professional relationships. This might require thinking about moving the staff members involved. 10. Obligation to maintain a safe workplace Sexual harassment and bullying can often arise in the context of workplace romances. Employers should have policies and procedures in place to deal with any such incidents and related complaints. Love may be in the air, but it doesn’t have to poison the workplace. Be proactive, set expectations around conduct and enforce your workplace policies. Moira Grassick is Chief Operating Officer at Peninsula Ireland

In this week’s Sustainability/ESG bulletin, read about Chartered Accountants Ireland’s new policy paper Achieving our Climate Goals which featured on RTÉ News. Also covered in Irish news is a new project for SMEs to implement effective sustainability measures, the Government’s call for SDG Champions, ESRI’s finding on active travel schemes, and details of flood supports for businesses in Northern Ireland. You can also read about European developments, including the first EU-wide voluntary framework for the certification of high-quality carbon removals, and a report showing that the largest global companies are providing more detail and breadth in their sustainability reporting. The technical updates, along with the usual resources, articles, and upcoming events are also covered. IRELAND Chartered Accountants Ireland publishes policy paper on climate goals Chartered Accountants Ireland has published a position paper Achieving Our Climate Goals, putting forward recommendations for accelerating Ireland’s transition to a net-zero nature-positive economy and society. This transition requires significant societal change in which Businesses will play a key role. However, they can only deliver with the right policy framework. Achieving Our Climate Goals, with is part of our Next Financial Year series of position papers, groups our recommendations under three headings: communication and awareness-raising; training and education; and targeted financial supports.   Addressing the climate challenge calls for a whole-of-government approach. We encourage the Government to consider these proposals and lead on this critical issue. RTÉ news clip. Non-Executive Directors attend event on 'net zero'    An Post hosted the first Chapter Zero Ireland event of 2024 in their new Headquarters at the Exo Building in Dublin Port. Chartered Accountants Ireland were delighted to support the event which attended by non-executive directors of Irish medium and large sized companies, PLC’s and State Bodies. Members of Chartered Accountants Ireland who are non-executive directors can apply for free membership of Chapter Zero Ireland using this link. 2024 Basic Income Support for Sustainability scheme opens for applications The Department of Agriculture, Food and the Marine has opened the application process for the 2024 Basic Income Support for Sustainability (BISS), Complementary Redistributive Income Support for Sustainability (CRISS), Eco-Schemes and the other related schemes. The BISS is designed to provide a direct income support to Irish farmers to underpin their continued sustainability and viability. The closing date for BISS applications in 2024 is Wednesday 15 May 2024. Farmers and advisors are urged to avail of the early opening of the application process rather than waiting until nearer the closing date. New project for SMEs to implement effective sustainability measures Business owners and advisers have reportedly been invited to take part in a new €1.6 million international Target Circular project to help SMEs implement effective sustainability measures. The project is a collaboration between institutions in Ireland, Finland, Norway, Iceland and Sweden, and is led by the Hincks Centre of Entrepreneurship Excellence, with the support of Circular Bioeconomy Cluster Southwest, at MTU. It builds on recent research into how businesses can use a more scientific approach to decision-making. Report sees Ireland rank 8/14 of EU countries on UN SDGs A report from Social Justice Ireland (SJI) has shown that Ireland ranks 8th out of 14 comparable EU countries in this year’s Sustainable Progress Index. The report, Measuring Progress: Sustainable Progress Index 2024, ranks 14 comparable EU countries based on their delivery of the UN’s Sustainable Development Goals (SDGs) and ranks countries in the categories of economy, society and environment. Ireland is ranked 9th out of the 14 countries on the economy ranking, 7th on the social index, and is towards the bottom of the ranking on the environment, highlighting the major challenges Ireland face in meeting the environmental goals set out in Agenda 2030.  Call for organisations and groups to be Sustainable Development Goal Champions The Department of the Environment, Climate and Communications is now seeking Expressions of Interest for participants in the 2024–25 Sustainable Development Goal (SDG) Champions Programme. The programme aims to help raise awareness of the importance of the SDGs as the cornerstone of a fair, prosperous and sustainable future for all. Applications will be accepted in written or video format up to 5pm on Monday, 1 April 2024, and further information on the SDG Champions Programme, and how to apply, can be found on the department's website. ESRI research finds that active travel schemes have more positive effects than people expect New research from the ESRI has found that the impact of active travel schemes is often more positive than people expect. The study, undertaken by the ESRI’s Behavioural Research Unit, reviewed international evidence on the effects of infrastructure changes designed to promote cycling and walking, including the impact on communities and public opinion. Knock-on effects on local food and retail businesses tend to be positive or neutral, while such schemes can also reduce traffic congestion. NORTHERN IRELAND Flood support programme for businesses in Northern Ireland The Department of the Economy has made available details of a flood support programme for businesses affected by recent flooding, as well as two hardship schemes to provide support for businesses and some other non-domestic premises that were impacted by the flooding but were not eligible for the previous £7,500 payment or the Enhanced Flood Support Scheme. The Enhanced Flood Support Scheme will provide further support to businesses that were directly flooded following the severe weather in late October and early November. It will be delivered by district councils and is in addition to the £7,500 grants and rates relief that has been provided to date to affected businesses. Net zero target forms part of Minister’s vision for Northern Ireland economy Northern Ireland's Minister for the Economy, Conor Murphy, has highlighted carbon emissions reduction in a statement last week setting out his vision for the future of the Northern Ireland economy. Speaking in the Assembly, the Minister set out four key priorities as part of a new Economic Mission, which included creating good jobs, promoting regional balance, improving productivity and reducing the region’s carbon emissions. The Minister commented: “Reaching Net Zero by 2050 is a legal requirement and a moral obligation to the wellbeing of future generations. Done right, the transition can also generate prosperity for all.”  The statement comes as farmers in Northern Ireland acknowledge that climate change is having a local impact, with more frequent heavy rainfall events, increasing numbers of storms and more erratic weather patterns. EUROPE The European Commission has welcomed provisional agreement between the European Parliament and the Council on the first EU-wide voluntary framework for the certification of high-quality carbon removals.  This new framework will certify carbon removals and carbon farming to ensure that they are transparent and trusted, preventing greenwashing and creating new business opportunities. Once the European Parliament and Council have formally approved the agreement, the new legislation will be published in the Official Journal of the Union and enter into force.   A European Environment Agency (EEA) briefing has found that recycling, repair, re-use or reducing material consumption through circular business models can provide important additional reductions in greenhouse gas emissions helping to boost Europe’s climate change mitigation efforts.   The European Commission has announced it is investing over €233 million in 12 new Strategic Projects across Europe, including in Ireland, under theLIFE programme to support the implementation of the EU's environmental and climate ambitions under the European Green Deal.   Provisional political agreement has been reached between the European Parliament and the Council on the revised Ambient Air Quality Directive. Once adopted, the new law will set 2030 EU air quality standards aligned more closely with the WHO global air quality guidelines. Once the deal has been adopted by Parliament and Council, the new law will be published in the EU Official Journal and enter into force 20 days later. EU countries will then have two years to apply the new rules.   GLOBAL Report shows more detail being provided in sustainability reporting A report has been published by the International Federation of Accountants (IFAC) with AICPA & CIMA that shows the largest global companies are providing more detail and breadth in their sustainability reporting, and also are obtaining a greater scope of assurance on those disclosures.  The report, The State of Play: Sustainability Disclosure and Assurance 2019-2022, Trends and Analysis, finds that progress is being made but highlights the need for companies worldwide to move toward a global system of sustainability disclosure requirements. OECD publishes policy paper on climate adaptation by local governments A policy paper, Climate adaptation: Why local governments cannot do it alone, has been published by the Organisation for Economic Co-operation and Development (OECD), providing an overview and a discussion of the roles and responsibilities for climate adaptation across levels of government. The paper argues that co-operation across levels of government is needed to strengthen adaptation at the local level. Did you know? The International Ethics Standards Board for Accountants (IESBA) are hosting a series of global webinars on the proposed International Ethics Standards for Sustainability Assurance and Reporting. This Code of Ethics will be applicable by all sustainability assurance providers, regardless of professional backgrounds, as well as professional accountants involved in sustainability reporting, whether in business or in public practice. The first webinar took place on 22nd February 2024, with a further two scheduled for 27 February and 5 March. Technical Roundup (From our colleagues in Professional Accounting) EFRAG, the European Financial Reporting Advisory Group has released the first set of technical explanations to assist stakeholders in the implementation of the ESRS. Last year, EFRAG launched its ESRS Q&A platform to collect and answer technical questions. The platform is a useful resource for CSRD reporters and will be updated with further responses in future.   Sustainability Diplomas Chartered Accountants Ireland has launched two new Diplomas in Sustainability in March 2024: Diploma in Sustainability Reporting Diploma in Auditing and Assuring Sustainability Reporting. Here is a link to the YouTube recording of the recent information session on the new Diplomas.  ARTICLES SMEs need significant Govt support to meet climate goals, says Chartered Accountants Ireland (RTÉ) Global carbon markets value hit record $949 bln last year - LSEG (Reuters) The uninsurable world: what climate change is costing homeowners (Financial Times) World needs 'trillions' for climate action, says COP28 president (RTÉ) TV Series - An Optimist's Guide to the Planet “A show about solutions and the people and the people behind them"   A series about people across the globe who are helping drive humanity toward a brighter, more sustainable future, with Nikolaj Coster-Waldau (aka Game of Throne’s Jaime Lannister). ( Watch trailer) UPCOMING EVENTS   A4S Sustainability In Action Webinar: Management Information An interactive webinar focusing on techniques to help finance professionals develop and integrate information needed to respond to social and environmental risks and opportunities into core management information processes. 27 February, 08:00 ISFCOE Unpacking COP28 and looking forward to COP 29: How Transition Finance Underpins our Net Zero and Nature Positive Future Convening leaders from the public and private sectors for a series of high-level dialogues, this event will reflect on recent COP28 outcomes while looking forward to COP29 in Baku in mid-November (and October’s Biodiversity COP16). Discussions will delve into the financial solutions, products and architecture required to support the meeting of net zero and nature positive targets, while maintaining social and economic balance. 27 February, 09:15 – 16:15   NESC, Making Nature Visible: What Can Natural Capital Accounting Do For Us? Following the publication by the National Economic and Social Council (NESC) of Natural Capital Accounting: A Guide for Action, this in-person event will discuss the potential of natural capital accounting in Ireland. 12 March, 08:30 - 13:30 GMT, In-person, Dublin Royal Convention Centre   InvestNI, Supply Chain Conference 2024 Invest Northern Ireland is hosting a free event to help businesses navigate current supply challenges and future-proof their supply chains. Panel discussions and case studies will showcase industry learnings and knowledge on the themes of sustainability, digitisation and supply chain improvements.Industry experts will also outline the steps you can take to stay ahead of the curve in your industry. 12 March 2024, 9:30am - 16:15, Venue: City Hotel, Armagh   A4S Sustainability In Action Webinar: Capitals Accounting An interactive webinar exploring various aspects of capitals accounting and how it is being applied in practice. The discussion will explore the information needed to tackle a range of impacts. 28 March, 08:00   Chartered Accountants Ireland ESG Masterclass: Take your sustainability knowledge to the next level (ROI/NI) Masterclass designed for all professional accountants working in business or practice, wishing to consolidate their knowledge and understanding of the sustainability regulatory, reporting and assurance landscape. 18 April, 08:30 – 13.00   National Sustainability Summit 2024 Dates: May 28-29 Locations: RDS Network for Chartered Accountants working on ESG projects Are you a Chartered Accountant working in ESG or working on ESG-related projects? Would you like an opportunity to engage with other Chartered Accountants working in this space to share insights, challenges and opportunities? Chartered Accountants Ireland now has a network to allow members working in sustainability/ESG to meet and discuss all matters of interest re ESG and accounting. Next: Wednesday, 28 February, 14:00-15.30 Teams If you would like to attend, please email sustainability@charteredaccountants.ie   You can find information, guidance and supports to understand sustainability and meet the challenges it presents in our online Sustainability Centre.

The UK Government published its first sanctions strategy on 22 February 2024. The strategy addresses how it uses sanctions as a foreign and security policy tool. It sets out the continued investment, partnerships and structures that support UK government sanctions and the cross-government architecture built to deliver sanctions. It outlines the partnerships developed with the private sector, NGOs, and international partners, and the steps being taking to strengthen sanctions implementation and enforcement. This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.

In Irish news, Revenue provides an update on the implementation of the enhanced reporting requirements for employers and in UK news, the Autumn Finance Bill has completed all stages in the House of Commons. In International news, members from the European Commission’s VAT team discuss the new Central Electronic System of Payment Information (CESOP).  Ireland Revenue has published details of compliance with the enhanced reporting requirements (ERR), which came into effect on 1 January 2024. Revenue has updated the Stamp Duty manual which provides guidance on company reconstructions and amalgamations. UK The Autumn Finance Bill has completed all stages in the House of Commons. From 1 July 2024, HMRC is changing the income tax treatment for certain double cab pick-ups from vans to cars. International The European Commission’s VAT team discuss the new Central Electronic System of Payment Information (CESOP). Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s EU exit corner here.

Institutes will now work together on the next steps to create the largest professional body on the island of Ireland.   Wednesday 21 February 2024:  Members of Chartered Accountants Ireland and CPA Ireland have voted in favour of a proposal to amalgamate the two Institutes.    The two Irish-based accountancy bodies will now work to implement the decision of their members, which will see the creation of a single Institute operating under the Chartered Accountants Ireland brand.   The proposal had been endorsed by the Councils of both Institutes who believe it will better position the profession for the future, driving new growth opportunities while being stronger to meet challenges.  In a joint statement, Sinead Donovan, President, Chartered Accountants Ireland and Mark Gargan, President of CPA Ireland said they were pleased that members had seen the benefits of the proposal.  Sinead Donovan, President of Chartered Accountants Ireland, said: “This is a vote of confidence in the future. Thanks to every member who engaged with us along the way and who turned out to vote in such numbers. Our work continues now to secure the legal and regulatory consents needed to deliver on this mandate for a stronger profession.”  Mark Gargan, President of CPA Ireland, said: “As one single Institute, we will be more strongly positioned to represent our members, to promote the profession and to be a positive voice representing the public interest.  The move towards consolidation of professional membership organisations is gaining momentum globally, and Ireland will be a model for other professional bodies in this regard.“

The UK Money Laundering and Terrorist Financing (Amendment) Regulations 2023 (Regulation 1371/2023) which took effect on 10 January 2024, provides that for the purpose of assessing risk, the starting point is that domestic (i.e.UK) PEPs present a lower level of risk than non-domestic PEPs .If no enhanced risk factors are present, the extent of enhanced customer due diligence measures to be applied in relation to that customer or potential customer is less than the extent to be applied in the case of a non-domestic PEP. A parliamentary statement on lower risk of domestic PEPs explains the change is to ensure that relevant persons take a proportionate and risk-based approach to the treatment of domestic PEPs, and to allay concerns that a number of holders of prominent public positions and their family have encountered problems accessing financial services due to their status as Politically Exposed Persons. This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.    

Recent corporate failures throughout the world have underscored the benefits of clarifying and enhancing the role of auditors in responding to fraud and suspected fraud as a means of enhancing public trust in financial reporting.  The proposed revisions to the IAASB standard significantly strengthen the standard on auditors’ responsibilities related to fraud by defining the expectations in relation to fraud, delineating more robust procedures, and increasing transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report. During the consultation period, IAASB will release a videos series to help stakeholders understand the proposed revisions and their implications for strengthening the financial reporting ecosystem. Stakeholder are encouraged to submit their comments using the Response Template by June 5, 2024. 

The Economic Crime & Corporate Transparency Act (ECCTA) 2023 received Royal Assent on 26 October 2023, and the provisions of the Act are starting to be implemented. The primary aims of the ECCTA are to enhance corporate transparency and reduce economic crime, therefore providing increased benefit to the UK economy, for both businesses, and individuals. To facilitate these aims, the Act implements provisions about companies, limited partnerships and other corporate entities, including the registration of overseas entities and the individuals associated with them. As part of implementation of the Act, Companies House will have new and enhanced powers to improve the quality of the information held on the Companies Register. Companies and individuals will also be required to comply with their obligations to deliver documentation on time and in the correct format. A number of the changes are being implemented from March 2024; these are outlined below. The changes will apply to incorporated entities, limited partnerships and limited liability partnerships. It will also apply to their members and directors. Companies House has set out the following important changes:  • Appropriate registered postal and email addresses – Companies will need to ensure their registered office address is “appropriate”, meaning that any document delivered to that address would be reasonably expected to come to the attention of a person acting on behalf of the company, and acknowledgement of delivery can be provided. For these reasons, PO Boxes will no longer be permitted as registered office addresses. Companies will also need to supply an appropriate email address with their next confirmation statement. As part of the transition, we understand Companies House will communicate to companies both by post and by email, with an eventual move to email-only communication. • Lawful purpose – On incorporation, the subscribers (the members of the entity at point of incorporation) will need to make a statement that the entity is being formed for a lawful purpose. A similar statement will be required for all entities on their next confirmation statement, confirming that all intended future activities are lawful. • Greater powers for Companies House – The Registrar will have enhanced powers to scrutinise, query and reject information it believes to be incorrect or inconsistent with information already held on the Register. In some cases, the Registrar will have the power to remove previously filed information. Annotations will also be made public on the Register to make stakeholders aware of potential issues with information supplied. • Enforcement and sanctions – Companies House will be given greater power to take action where a company, and its directors, do not respond to formal requests for information, or where their registered office is not an appropriate address. Sanctions could include financial penalties, annotations on the company’s public record, or even in the most severe cases prosecution. In addition to the above, Companies House will be closing their Belfast office to the public from 4 March 2024. Therefore, filing paper documents, including financial statements and confirmation statements in person will not be possible at the Belfast office from that date. Individuals wishing to file information in paper format will need to post the documents to the Registrar’s office in Cardiff. Electronic filing options are available for almost all documents, and Companies House are encouraging companies to avail of these filing options, as they phase out paper filings. Further information on the remaining significant changes, such as the identity verification requirements and changes in filing options, will be available in the coming months from Companies House. Article written by Maeve Hunt, Principal – Head of Accounting Services Grant Thornton (NI) LLP and Chair of the Members in Practice Committee. Originally published in Practice News February 2024. The opinions expressed are solely those of the writer and not to be construed as those of the Institute. The purpose of technical articles is solely to draw the attention of the reader to issues, and these should never be construed as guidance or relied on. To the fullest extent permitted by law, no liability is accepted by the Institute or the author for persons acting or failing to act as a result of anything contained in this article.  This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.

On 5 February last, the report stage and third reading of the latest Finance Bill took place in the House of Commons. The Government’s proposed amendments to the Bill were passed, as was a new clause which had been tabled to introduce a new investment exemption for the electricity generator levy.  The Bill has now moved to the House of Lords where second reading was scheduled to take place on 21 February 2024. As the Bill is a ‘Money Bill’, it should be noted that this is a formality only as no changes can be made to the Bill by the House of Lords. This therefore means that, for UK GAAP/IFRS purposes, the Bill is now classed as ‘substantively enacted’. 

HMRC has published a new section in its Employment Income manual which sets out that from 1 July 2024, certain double cab pick-ups will no longer be treated as vans for income tax purposes leading to significantly higher benefits in kind as a result of being treated as cars. The UK Government has agreed to update the terms for transitioning from the Digital Services Taxes to Pillar One and HMRC has published the latest performance data for the quarter ended 31 December 2023. And finally, this week, the National Audit Office has published its report on tax measures to encourage economic growth.   Change in treatment of double cab pick-ups  HMRC has confirmed in its Employment Income Manual that from 1 July 2024, certain double cab pick-ups will no longer be treated as vans and will be classed as cars for income tax purposes.   According to the guidance in the Employment Income Manual, from 1 July 2024, HMRC will no longer interpret the legislation that defines car and van for tax purposes in line with the definitions used for VAT purposes. This VAT approach for double cab pickups differentiated the treatment based on payload, with anything under one tonne classified as a car, and anything a tonne or more as a van. This rule was replicated as a pragmatic way of resolving the primary suitability and classification of double cab pickups. Going forward, classification of double cab pickups will therefore need to be determined by assessing the vehicle as a whole at the point that it is made available to determine whether the vehicle construction has a primary suitability as per the two-part test outlined at EIM23115 onwards.   As a result, from 1 July 2024, most if not all double cab pickups will be classified as cars when calculating the benefit in kind. This is because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability.   Transitional arrangements will apply for employers who have purchased, leased, or ordered a double cab pickup before 1 July 2024, meaning that they will be able to rely upon the previous treatment until the earlier of disposal, lease expiry, or 5 April 2028. The position prior to 1 July 2024 remains unchanged as outlined at EIM23150.   Digital Services Taxes and transition to Pillar One  The UK, together with Austria, France, Italy, and Spain, has agreed to update the terms for transitioning from their Digital Services Taxes to Pillar One and have also published a joint statement on the transitional approach.  In 2021, 130 countries of the G20/OECD Inclusive Framework agreed on a two Pillar package of reforms to the international tax framework. In support of that, in a joint statement in the same month, the US, Austria, France, Italy, Spain, and the UK announced the terms of a political compromise on the transition from existing Digital Services Taxes to the new multilateral solution and to continuing discussions through constructive dialogue.  In light of the continuing multilateral negotiations at the G20/OECD Inclusive Framework, those same countries recently announced an extension of the political compromise set forth in the October 2021 joint statement through to 30 June 2024 which is consistent with the revised timeline.   Latest HMRC performance data  The latest HMRC quarterly performance data has been published and specifically data in relation to the quarter ended 31 December 2023. Monthly performance data is also available for the month ended 31 December 2023.   The Institute continually discusses HMRC service levels with HMRC and welcomes your feedback at any time by email. We recently requested feedback in relation to the most recent self-assessment filing deadline and are still accepting feedback on this until the end of this month. Members are encouraged to get in touch and share their experiences to enable the Institute to engage more effectively on their behalf with HMRC.