Tuesday's focus at COP28 was energy and industry, the just transition, and Indigenous Peoples.  While controversy still surrounds remarks made by COP President about fossil fuels, and reports of the host country’s own plans to increase its own oil production, there was also coverage of high-level agreements at this year’s global climate summit: The second report of the Independent High Level Group on Climate Finance has been released at COP28. 'A climate finance framework: decisive action to deliver on the Paris Agreement' was co-authored by Nicholas Stern and presents a framework which it says can mobilise the estimated $2.4 trillion a year in investment required by 2030. The UK, France and a number of other countries and banks - including the World Bank and European Investment Bank (EIB) – have agreed to include more climate-resilient debt clauses in their lending. Climate-resilient debt clauses (CRDCs) allow vulnerable countries to pause debt repayments when climate disaster strikes, affording them ‘breathing space’ to recover. Welcoming the announcement, Prime Minister of Barbados Mia Mottley stated “I want to thank you for the extraordinary courage to do the right thing.  We can always bring back our debt, but we cannot bring back our society.”   Bill Gates has praised innovation at this year’s COP when he was among those attending the Climate Innovation Forum. The former CEO of Microsoft attended alongside Arvind Krishna, CEO of IBM, Kate Brandt, Chief Sustainability Officer of Google and other world leaders in the technology sector, who convened to explore cutting-edge solutions to tackle the global climate crisis. Solutions discussed included artificial intelligence (AI), satellite technology, big data, clean energy, industrial decarbonization, low-carbon hydrogen, and more. The world’s largest independent carbon crediting standards have announced a collaboration to increase the impact of activities under their standards. The pledge, published by the non-profit organisation IETA, outlines a number of activities which will help amplify the impact of carbon markets. Separately, the US regulator, the Commodity Futures Trading Commission (CFTC), is expected to propose the first federal guidelines for voluntary carbon credit derivatives, in a bit to “bring order to a market for the offset of emissions described as the ‘wild west’”. The value of the carbon trading market worldwide could reportedly expand to $100bn by 2030, up from $2bn in 2022. COP28 in numbers 36.8 billion: the number of metric tons of carbon dioxide that will be emitted this year from burning fossil fuels. 1.1: the percentage increase in those emissions on 2022. 1.4: the percentage increase in those emissions on 2019, before the Covid-19 pandemic.  6: the percentage increase in those emissions since the year of the Paris Agreement, according to research by the Centre for International Climate Research (Cicero) 0: the number of new power plants that should be built anywhere in the world fired by coal (the world's ‘dirtiest fuel’) according to US climate representative, John Kerry. The US has now committed to closing its existing coal power plants and not building any more of them in the future, and have joined the Powering Past Coal Alliance along with seven other countries, although it had to defends its climate leadership despite record oil and gas production (Financial Times) 60: the percentage by which much oil companies must commit to reducing their Scope 1 and 2 emissions by 2030, according to the Executive Director of the International Energy Agency Fatih Birol says 94: the percentage of oil-producing countries to have no pledges on phase out oil exploration, according to a new report from the Net-Zero Tracker. 2,456: the number of fossil fuel representatives at COP28, the largest ever to have attend the climate summit. Quote of the day “Absolutely not.” — Saudi energy minister Prince Abdulaziz bin Salman, on whether he would be happy to see a COP28 agreement on a “phase-down” of fossil fuels (Financial Times)   Find more news on the global climate summit our our COP28 page on Chartered Accountants Ireland's sustainability centre. 

As relations with the West continue to cool, China is facing economic challenges reminiscent of the Irish economy in 2008, writes Cormac Lucey Tensions are growing between the China and the US as the latter leads the West in a sharp reversal of a policy of openness and commercial integration, which continued despite concerns about military espionage and intellectual property theft.  Now, the US is reducing its interactions with China, and a wave of reshoring/friendshoring is underway in the West. Under current President Xi Jinping, China has been picking territorial fights with its neighbours and Xi has reportedly asked his military to complete preparations by 2027 to seize Taiwan by force.  Meanwhile, senior Chinese political and business leaders are disappearing suddenly with alarming frequency and non-Han ethnic minority groups, such as the Uyghurs and Tibetans, have been subject to terrible oppression.  The Chinese economy is not faring much better. When I look at China’s economic position, I think we may now be witnessing ‘peak China’.  First, the country’s enormous property/debt bubbles are beginning to deflate. Coming into 2024, China is in a similar position to Ireland circa 2008. Its economic underpinnings are dangerously fragile, the first tremors of deflation are being felt and the authorities are insisting that everything is okay.  Over the past 15 years, China’s total debt levels (public plus private) have doubled relative to economic output (GDP).  According to Numbeo, a website that analyses the cost of living across different countries, rent yields in Beijing range from 1.45 percent (city centre) to 1.69 percent (suburbs). These yields are way below the lowest levels witnessed in Ireland at the peak of our property bubble.  They are lower than Chinese interest rates, meaning that buy-to-let landlords using debt to fund their purchases will face interest charges that exceed their rental income (negative carry).  Thanks to its now defunct ‘one child per family’ policy, which ran from 1979 to 2015, China faces a demographic implosion over the coming decades. The UN forecasts that its population will decline from 1.4 billion this year to 1.3 billion by 2050 – and below 800 million by 2100.  Today, China faces the same demographic and debt-deflation challenges that confronted Japan three decades ago.  For all the messiness and dysfunction of the West, democracy does force a society’s problems onto the political agenda rather than allow them to be suppressed, and it facilitates innovation over stagnation.    Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland

In Irish news, we bring an update from the recent meeting of the Tax Administration Liaison Committee Collections subcommittee and Revenue publishes updated guidance on the small benefit exemption for the purposes of enhanced reporting requirements. In UK news, the Autumn Finance Bill 2023 has been published and in this week’s miscellaneous updates, read about the DIY housebuilder’s scheme going digital. In International news, the European Commission has published a report on the energy solidarity contribution.  Ireland Read the update from the recent meeting of the Tax Administration Liaison Committee Collections subcommittee. Revenue publishes updated guidance on the small benefit exemption for the purposes of enhanced reporting requirements. UK The Autumn Finance Bill 2023 has been published. Read about the DIY housebuilder’s scheme going digital. International The European Commission has published a report on the energy solidarity contribution. 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.          

Introduction The agri-food industry operates in a rapidly changing and dynamic business environment, where farmers and food producers, from multinational to artisan, are continually required to innovate and adapt. Events such as the COVID-19 pandemic and the war in Ukraine have increased complexity, disrupting food-supply chains and threatening food security. These circumstances have an impact on food production processes and consequently require a focus on sustainability. Sustainability is a key challenge facing all business sectors, not least the agriculture and food production industries. At a national and international level there is a huge focus on developing a sustainable food supply for a growing worldwide population. The United Nations (UN) forecasts a 34% increase in world population by 2050 and that an increase of 70% in food production will be required. Despite this, the UN reports that 30% of all food produced globally is lost or wasted. Greenhouse gases (GHG) emissions globally have increased by more than 60% between 1990 and 2022. The impact on climate change has been well documented, including increases in the frequency of flooding, droughts and wildfires. Such climate-change effects have serious consequences on food production and necessitate collaboration between all sectors of society to address the challenges presented. In Ireland, the economic importance of agriculture is clear. According to the Department of Agriculture, Food and the Marine, the agri-food sector accounted for 9% (€18.78 billion) of total exports in 2022 and 6.5% of total employment or 164,900 jobs, mostly in rural areas. Farms and farmers also provide valuable sources of environmental assets (e.g. hedgerows, wetlands and woodlands) and contribute to preserving natural habitats and biodiversity. However, from an environmental sustainability perspective there is much debate about the high level of GHG emissions generated by the Irish agricultural industry and how this issue needs to be addressed. In this article, I do not debate the extent to which the agricultural industry contributes to Ireland’s GHG emissions problem, but rather focus on acknowledging that farmers and food producers need to be included in determining a solution.  I also believe that the accounting profession has a key role to play in assisting farm enterprises, and small and micro agri-food businesses, to create more sustainable enterprises and to contribute to a sustainable food supply.  Environmental sustainability in agriculture Environmental sustainability is at the forefront of national and international policy development in agriculture and food production. This is primarily driven by the UN Sustainable Development Goals, as several of them relate to agriculture and food production.  At EU level, the European Green Deal, through its “Farm to Fork Strategy”, has set out plans on how to improve sustainability and the environmental impact of the agri-food industry. These are being incorporated into reform of the common agricultural (CAP).  At a national level, the Climate Action and Low Carbon Development (Amendment) Act 2021 introduced a framework of sectoral GHG emissions (‘carbon’) budgets, to be subsequently developed and proposed by the Climate Change Advisory Council (CCAC). In July 2022 (after much debate) the sectoral emissions ceiling for agriculture was set at a level requiring an ambitious 25% reduction by 2030. Stakeholders acknowledge the fundamental challenge that environmental sustainability presents for the industry. They also acknowledge the key role that the industry must play in addressing the national environmental sustainability challenge. A financial perspective on sustainability in agriculture Sustainability in agriculture is multidimensional and is broadly comprised of three main pillars:  environmental sustainability,  social sustainability, and economic sustainability. Environmental sustainability refers to how agriculture and food production processes impact our environment, and is the most widely discussed pillar of sustainability, the contribution of the industry to GHG emissions attracting significant debate.  Social sustainability in agriculture relates to farming communities, and the many challenges they face, and how the industry’s sustainability affects wider society.  Economic sustainability is generally viewed as economic viability, i.e. whether a farming system can survive financially in the long term in a changing economic context. It is perhaps to the economic sustainability of agriculture that the role and contribution of accountants is most relevant.  The National Farm Survey (NFS) is conducted annually by Teagasc, the Agriculture and Food Development Authority. Highlighting the economic vulnerability of many farm enterprises in Ireland, the 2022 report classes 43% of Irish farms as economically ‘viable’, 32% as ‘sustainable’, and 25% as ‘vulnerable’. At the root of this economic vulnerability is rising inflation and increases in the cost of farm inputs (e.g. fuel, fertiliser and feed), reducing the profit margins of food producers.  The challenge for farm and food production enterprises is to balance economic with environmental and social sustainability. A phrase used in the industry is “it’s hard to be green when in the red”. The NFS statistics reveal a situation of economic vulnerability for many farm enterprises. Therefore, financial viability may understandably be their top priority, with environmental and social sustainability of secondary importance.  However, despite the uncertainty of economic conditions in the short term, the long-term focus on environmentally sustainable food production and its positive social impact should not be forgotten. When a holistic perspective is brought to the concept of sustainability, we realise that the pillars of economic, environmental and social sustainability are intertwined and cannot be simply viewed in isolation.  While there are many scientific solutions (e.g. soil and grassland management, fertiliser use, changes to feed additives, alternative energy sources, shorter animal-to-slaughter periods, etc.) proposed to farmers on how to reduce GHG emissions, there appears to be little known about, or consideration of, the financial impact of such changes to farm practices.  The onus of identifying the changes required to farm practices to reduce GHG emissions on farms is placed on individual farmers, and farm advisory services are available to assist in this regard. However, many of the scientific solutions to reduce on-farm emissions require investment and involve a cost to farmers when making the transition. There appears to be little focus from the advisory services on assisting farmers to assess the economic cost or benefit for them when implementing such changes to farm practices.  Though many farmers want to adapt their work practices to contribute to a reduction in GHG emissions, many experience a knowledge gap regarding the financial impact on their livelihoods. This is an area where improvement in advisory services is required. Bringing a focused financial perspective to sustainability, accountants can contribute to bridging this knowledge gap. I contend that the accounting profession must collaborate with stakeholders in the agriculture industry and lead the way in helping to create sustainable farm and food production enterprises.  A financial management perspective acknowledges that economic sustainability cannot be sacrificed, and is crucial for the survival of farming and food production. Rather, work practices need to change to meet the ‘triple-bottom-line’ agenda of economic, environmental, social sustainability. Farmers and food producers need to be supported and advised to achieve this more complex and yet balanced objective. The role of the accountancy profession It is paramount that farmers and food producers are educated about what sustainability means and the financial implications for their business. Accountants are one of the primary sources of trusted advice for small business owners, including farmers. Therefore, the accounting profession has the potential, and an existing platform, to lead on how farmers and food producers can improve their sustainability, in the broadest sense.  Accountants are unique in having a wide range of knowledge about sustainable work practices from dealing with a varied client base across multiple industries. They can share this with farmers and small agri-business owners.  Accountants could assist farmers and food producers by: identifying the business opportunities for farmers presented by the sustainability transition; conducting cost–benefit analyses of implementing environmental sustainability initiatives (e.g. alternative energy sources); calculating the payback or return on investments that reduce the GHG emissions of enterprises;  helping business owners to avail of financial supports available to meet the cost of sustainability initiatives; advising farmers on how to develop sustainable work practices in a cost-efficient manner; sharing knowledge gained from SMEs and larger companies (e.g. on how to conduct sustainability audits).  Resources are available to support accountants to work with clients in this regard. For example, Chartered Accountants Ireland provide online resources in its Sustainability Centre, where free-to-access publications such as Sustainability for Small Businesses – A Guide provide practical insights. Conclusion There are many ways the accountancy profession can contribute to assisting farmers and food producers meet sustainability targets. These insights are not only important for food and agricultural businesses but are equally relevant and transferrable to how the accounting profession could rise to the challenge of assisting businesses in other sectors of the economy meet the increasing demand to strive for improved sustainability.  Dr Michael Hayden, FCA, is an Assistant Professor of Accounting at Maynooth University  

Monday at COP28 was both Finance Day and Gender Equality Day, with discussions on financing gender-responsive just transition and climate action. As Razan Khalifa Al Mubarak, UN Climate Change High-Level Champion said, “Climate change is not gender neutral. Women make up the majority of the world’s poor and despite and maybe because of this women and girls are at the forefront of climate action.” Some highlights: The Gender-Responsive Just Transitions & Climate Action Partnership was unveiled and endorsed by 60 countries contained a three-year package of measures to address the disproportionate impact of climate-related job loss on women.   A report titled "Feminist Climate Justice: A Framework for Action", was launched by UN Women. The report identified the climate crisis as threatening progress on gender equality and human rights, and hindering the achievement of the Sustainable Development Goals. The report describes how to achieve feminist climate justice and provides practical guidance on what countries need to do to transition to low-emission climate-resilient economies that, while recognizing the leadership of women, girls, and gender-diverse people in driving the change that is so urgently needed.   Hillary Clinton said in an interview that the absence of women in climate talks is a major worry (The Independent) Find more news on the global climate summit our our COP28 page on Chartered Accountants Ireland's sustainability centre. 

In the transformative era of 1920s Ireland, the Institute’s benevolent fund emerged as a pillar of aid. Now celebrating 95 years, CA Support remains a vital resource for Chartered Accountants facing hardship The 1920s was a time of immense significance, upheaval and formation in Ireland’s history. With the country’s independence in its infancy, this was a time when many important structures, proclamations, institutions, organisations and charities were born, including Chartered Accountants Ireland’s benevolent fund.  Founded in 1928, a time when there was no state welfare or support, benevolent funds were originally set up to assist those who worked within industries or professions who needed financial help for themselves and their families. In former decades, grants were primarily offered to widows to help them care for children and afford daily necessities. And while society has evolved and shifted, after 95 years, CA Support has proven to be as relevant today as it was then by continuing to be a trustworthy and reliable support system for thousands of Chartered Accountants and their families. It could be you It is a common misconception that financial professionals are always in good financial health due to their professional background. Like anyone in society, accountants come from all walks of life and can struggle financially for many reasons. Those who bravely contact CA Support are dealing with extreme hardships and burdens. Some common issues people present to CA Support with are:  redundancy; critical illness; bereavement of a loved one; marriage breakdown; domestic violence impacts; childcare and back-to-school costs;  household bills; and cost-of-living pressures. CA Support provides financial relief to about 100 beneficiaries every year. These are real people who are your professional peers, colleagues, friends and family who have found themselves in situations that have cost them their livelihood, financial security and family safety through no fault of their own.  Unfortunately, we can’t foresee what lies ahead in life, and for CA Support’s beneficiaries, it was almost inconceivable that they would ever need such support. Strengthening CA Support’s future Like most registered charities, CA Support relies on the generosity and goodwill of the Chartered Accountancy community. Without the kindness of members and organisations on the island of Ireland, CA Support would simply not be celebrating this milestone.  With your continued backing, CA Support hopes to support all those in our community for another hundred years.  If you are able to do so, you can donate to CA Support:  Online via the Chartered Accountants Ireland website or iDonate page at: idonate.ie/cause/casupport; By credit/debit card over the phone on 01 5233949/ 01 6377342 or 086 0243294; or By posting a cheque made out to CA Support at Chartered Accountants Ireland, 47–49 Pearse Street, Dublin 2.

Julia Rowan answers your management, leadership and team development questions I joined a new practice recently and now manage a team of six people. Everybody on the team is polite to me and each other. The work gets done, but there is little collaboration. Almost all communication is by email. Nobody speaks at team meetings. I have tried to find out what is wrong – but nobody will tell me. I find this exhausting. I work from the perspective that ‘everything is feedback’. And feedback is coming your way, loud and clear. The behaviour you are experiencing suggests that trust has broken down somewhere – most likely between team members.  Start to record what it is that you find exhausting about this situation. Do things take longer than they should? Are reasonable quality standards only being met with your input? You need to be able to be specific.  You also need to take a dual approach. First, let the team know that you need something different from them. Be very careful about your language – make observations (“I notice I’m being included in emails”) rather than judgements (“this isn’t good enough”).  Second, you need to start ‘calling out’ the tasks you find yourself doing that are not part of your job and handing each one back to the person who owns it. Conflicts like this can take a long time to get sorted, so it is especially important to be polite, patient and persistent.  I moved from a large consultancy firm to a smaller practice for lifestyle reasons some years ago. It’s been a good move, but I miss the variety, intensity and impact of the work I used to do. The work I do here is much more humdrum than in my previous roles and I feel like the other partners haven’t accepted me. They have worked together for a long time and are of one mind. My ideas are rejected.  I remember coaching a guy years ago who felt like an outsider on the team he managed and with his peers on the senior leadership team. He told me he was “very good at pretending to listen”.  And therein lay his problem: there are some things we can’t fake. Relationships are built on sincerity. So, I wonder what it is like for this practice to have invited you in … a person who finds the work “humdrum”. Do they sense your judgement?  I think the first thing you need to do is work out a way to engage with this practice sincerely. Write down the most honest observations you can make about your experience working there – to yourself, your peers and your team.  Write about how you feel about the practice, your ambitions and what you have lost by joining. Then (and only if you are sincerely interested), find a way to engage with your peers about what they have built and how they built it. What were their hopes, challenges and successes? What are they proud of?   It might also be helpful to look at your language. When stressed, we go to that very definite language (e.g. “they are all on the same page”). And the danger is that we start believing our thoughts.  Might it be more truthful to say, “they are often on the same page” or “many of them are on the same page”?  While that may sound trivial, it can change our perspective.  Once you’ve done this work, you should organise one-to-ones with your peers over lunch or coffee and try to connect with them genuinely. When people feel accepted, they find it easier to accept others. Julia Rowan is Principal Consultant at Performance Matters Ltd, a leadership and  team development consultancy. To send a question to Julia, email julia@performancematters.ie

As we prepare to usher in the New Year, three Chartered Accountants tell us about the biggest changes and challenges they have faced in their professional lives over the past 12 months Michelle Hawkins  Head of Business Advisory FPM 2023 has certainly been an interesting year!  As Head of Business Advisory at FPM, I support both public sector and private clients as they navigate these difficult times. A key challenge in 2023 has undoubtedly been the unprecedented rise in interest rates, resulting in difficulties accessing and servicing finance.  Clients increasingly require support in this area. To address this, our organisation established a dedicated Funding Solutions Division designed to help clients renegotiate their banking and loan commitments. The talent shortage and skills gap that our clients have experienced in the past year has been among the biggest in history.  It’s hard to believe that, in the current economic climate, lack of available talent is the number one challenge keeping businesses from growing and innovating. In response, we launched a Virtual Finance Function to support businesses that need to strengthen or fully outsource their finance department.  Another challenge this year has been the need to help businesses prepare for the impact of the Windsor Framework, which came into force in October. We are fortunate to have customs experts within the AAB Group with which we recently merged, whose knowledge and skills have greatly supported clients adapting to the new regime. John Morgan  CFO Dale Farm Coop I will most certainly view 2023 as a pivotal year in my career.  After spending 20 enjoyable years in a plc environment with BT, I took a leap into the unknown, joining Dale Farm Coop as Chief Financial Officer – switching not just to a different business model but also a very different sector.  Cash management has been crucial in both roles. During my time working with a plc, good cash management was about ensuring that we delivered our quarterly cash commitments to the city.  At Dale Farm, it’s about ensuring that our debt levels are controlled while paying a milk price that’s as competitive as possible. On reflection, the main challenge so far in this role has been managing the balance between profit and milk price. As a coop, our primary objective is to pay our members the most competitive milk price we can.  To achieve this objective, we need to generate a certain profit level to fund working capex/capex requirements and ensure we pay a competitive milk price over the long term. Managing this balance is critical to the role of CFO at Dale Farm.  Communicating directly with our board, leadership team and members to explain why we need to make a certain level of profit has been a key focus for me in 2023.  My second biggest priority since joining Dale Farm has been the management of interest costs and working capital levels.  Due to our investment strategy, debt levels have increased and, as interest rates have doubled over the last 12 months, this has required greater attention on working capital management. Educating the business on the parameters and importance of working capital has been a priority for me.  I would advise anyone considering a move between industries and business models to embrace the opportunity. I’ve found the change invigorating and I’m pleasantly surprised at how the core skillset of a Chartered Accountant can be applied so well in such different environments. Brian McNamara  Managing Director SwiftFile Customs When the post-Brexit trading environment kicked in almost three years ago, much of the initial focus was on keeping goods moving whereas ensuring compliance was not necessarily given the same level of attention by importers unfamiliar with customs obligations.  After a relatively relaxed initial approach from the Revenue Commissioners, 2023 has seen a significant increase in the number of companies selected for customs audits. With this, we have certainly seen a heightened awareness of the importance of managing customs risk. With Revenue audits now becoming the norm for importers and the potential fines and penalties that go with them, this is a trend I expect to see continue. October 2023 also saw the introduction of the Carbon Border Adjustment Mechanism (CBAM), the EU carbon tax on imports.  While not a core customs issue, the CBAM reporting requirements for importers of iron, steel and cement (initially) are particularly onerous.  Staffing continues to be a challenge in our industry. The economy has slowed in 2023, and there have been some high-profile job losses in the technology industry. As with other sectors, however, there are industry-specific reasons for staffing challenges in customs clearance.  Thirty years of single market membership has meant a shortage of customs professionals. Now that the UK has left the EU, it will take time to build the knowledge base on customs in Ireland. In the meantime, we address this issue by providing comprehensive in-house training.  Thankfully, everything stops moving over the Christmas period. This will allow us all to take a well-earned break and come back ready to meet challenges as they present themselves in 2024.

The launch of a consultation on a new national financial literacy strategy for Ireland is welcome and accountants will be key as gatekeepers of financial knowledge, writes John Nolan Making financial decisions and navigating the world of finance is an unavoidable part of life, from setting up your first savings account to planning for your retirement and everything in between.  However, increasing numbers of people in society struggle with such tasks and these difficulties are further exacerbated by the ongoing digitisation of financial services.  ‘Financial literacy’ is the ability to engage with the financial system and to effectively manage your finances. While the concept is hardly new, it has received notable academic and political attention in the years since the onset of the global financial crisis in 2008.  That period was an inflection point that highlighted the financial struggles of many households and small businesses and the implications for the broader economy and society. o Since then, the financial experiences of many during the recent COVID-19 pandemic and the current period of high inflation and interest rates have heightened the focus on this issue at a government policy level. Low levels of financial literacy Research by the Organisation for Economic Co-operation and Development (OECD) has shown that financial literacy levels are worryingly low across the world. In the EU, a 2023 survey found that just 18 percent of respondents have high levels of financial literacy, with Ireland only marginally better at 19 percent.  These findings are a big concern for public policymakers because financial literacy improves our financial resilience and ability to deal with financial shocks, it increases our financial wellbeing and it contributes to the stability of the financial sector overall.  European Commissioner Mairead McGuinness is leading a policy initiative focused on financial literacy and encouraging European Union (EU) member states to develop national strategies aimed at ensuring a coordinated approach to financial education.  This comes on the back of over a decade of work by the OECD International Network on Financial Education (OECD/INFE) in establishing best practice guides for the development of national strategies and the measurement of financial literacy within populations.  A national financial literacy strategy In Ireland, Minister Michael McGrath recently announced plans by the Department of Finance to develop a national financial literacy strategy.  This is a welcome move and one that a variety of stakeholders have been calling for, including the Central Bank of Ireland, Social Justice Ireland and the Competition and Consumer Protection Commission (CCPC).  The new strategy will help to ensure Ireland is compliant with the G20/OECD High-Level Principles on Financial Consumer Protection and the OECD Recommendation on Financial Literacy.  We have been behind the curve in this area, with the Retail Banking Review published in 2022 by the Department of Finance noting that Ireland is one of just four EU member states that does not have a national strategy for financial literacy.  While some important studies and reports have been undertaken in an Irish context – by the National Adult Literacy Agency (NALA) and by the CCPC, for example – there is no coordinated national approach to financial literacy.  There remains a need for an overall framework for financial education initiatives, funding for research to develop baseline measures for financial literacy across the population and to support evidenced-based interventions, and a clear set of objectives to guide stakeholders. The decision to engage with stakeholders to develop a national strategy is perhaps the easiest step to take. The devil will be very much in the detail as we progress to the substance of what such a strategy might entail and where the focus and investment should go.  Three issues illustrate this complexity – and this is by no means an exhaustive list: Where to start? First, one critical decision is which groups in society should be targeted initially to ensure the most effective use of resources and that true value is derived from financial education initiatives.  The G20/INFE High-Level Principles suggest that focusing on specific (or vulnerable) groups for financial literacy interventions makes sense for many countries.  Research by both the OECD and EU has shown that there are some cohorts within populations that tend to have consistently lower financial literacy levels.  The recent launch by Commissioner McGuinness of a joint EU/OECD-INFE financial competence framework for children and young people highlights one relevant group that might be a natural starting point for any national strategy.  A focus on young people’s financial literacy – and embedding this in education systems to facilitate a culture of financial conversation early in life – seems logical.  Research has identified numerous other groups with consistently lower levels of financial literacy, including the elderly, low-income households, migrants and those with low digital literacy, for whom financial literacy interventions would be particularly beneficial.  One additional group is of particular relevance to accountants and it is under-researched in the context of financial literacy – entrepreneurs and small business owners.  The transition from the personal to the entrepreneurial in the context of financial literacy is significant.  The additional scale, responsibilities and complexity of the financial landscape for small businesses can overwhelm their owners.  The absence of financial literacy in the indigenous business sector has the potential to be just as damaging to the economy as a lack of personal finance skills among the general population. Financial literacy as a social practice Financial literacy is a social, rather than just a technical, practice. It is a social and human-centred practice in the sense that it is heavily influenced by peers, family and social institutions.  It is a much more complex issue than a mere ‘skill gap’ to be solved through financial education interventions.  Taboos surrounding personal finances, and discussion on the topic, can have a significant impact on how people view its importance and the need to upskill in the first place.  An appreciation of the complexity of financial literacy and how it fits within the social and cultural fabric of communities will be a serious consideration for any new national strategy. Clear concepts and terminology Discussing financial literacy and developing a strategy is further complicated by how its key concepts and terms have changed over the past two decades.  For example, the UK’s national strategies have evolved from a Financial Capability Strategy for the UK in 2015, which was replaced by the UK Strategy for Financial Wellbeing in 2020.  While traditionally associated solely with knowledge, ‘financial literacy’ has evolved to encapsulate skills, behaviours and attitudes, which is closely aligned to the concept of ‘financial capability’. The terms are now often used interchangeably.  The table below presents some of the key terms currently used in this area, and how they have been defined.  The overarching goal of achieving ‘financial wellbeing’ is itself difficult to define and will mean different things to different people.  Thus, in the context of any new national strategy, it will be important to clearly articulate the objectives and what is meant by the terminology that is used. Finance is a sector whose jargon can overwhelm people, so it will be essential that any new strategy avoids this. Public interest The evolving policy focus on financial literacy should be of interest to accountants. A commitment to the public interest is one of the hallmarks of the profession.  Given the emerging evidence of the impact that poor financial literacy has on wealth inequality, financial exclusion and other adverse financial outcomes, addressing this issue is clearly in the public interest.  Accountants occupy a crucial position in society as gatekeepers of financial knowledge. We have a responsibility to utilise this position for good, both at an individual level in our interactions with clients, colleagues and the community and at a collective level in terms of support for the new national financial literacy strategy.  This is not just a policy for individuals and households; it is also for entrepreneurs and micro, small and medium-sized enterprises. Accountants, as trusted business advisors with financial expertise, have a key role to play in shaping and applying this policy. Financial literacy is about our relationship with money, which is, whether people like it or not, a core part of society. Promoting a culture of positive engagement with the financial sector and discussing finance from an early age is vital for a functioning economy and society.  Individuals and businesses rely heavily on financial services every day; at a minimum they should be confident and capable of accessing and engaging with what they need.  While financial literacy is likely something most accountants take for granted, for many in society it is a significant challenge. This is something we will be hearing a lot more about from a policy perspective in the coming months and years. Dr John Nolan, ACA, is a lecturer in corporate finance and financial reporting at the University of Galway

A successful flotation is a major milestone for any ambitious company but the path to IPO-readiness is paved with challenges and careful preparation is crucial, write Ciara O’Callaghan Crehan and Eimear McDermott The public markets are a bellwether for economic confidence at any point in time and we have witnessed a challenging period for equity performance and new issuances recently.  While the public markets offer just one source of potential funding for a business, an Initial Public Offering (IPO) is seen by many as a particularly significant milestone for promising businesses and IPO activity as an indicator of wider economic health.  There are numerous reasons why companies may want to list on a stock exchange. These include access to a new pool of capital to help take them to the next level, enhanced profile and prestige, a clearly defined business valuation and a route to exit for founders and shareholders. Raising capital through the public markets takes time and lots of preparation, however, particularly in a period of prolonged economic uncertainty.  Current IPO market conditions The current IPO drought has persisted for more than 18 months, but this doesn’t mean pre-IPO companies should be inactive. Rather, we would suggest taking advantage of the current lull to prepare now for a public offering further down the line. Already, we are starting to see the first green shoots of recovery. The third quarter of 2023 produced 36 IPOs that raised a combined total of about $8 billion. This was the same amount of proceeds raised for the full year in 2022 and was led by the largest tech offering in years, ARM, which raised approximately $4.9 billion. In particular, we are seeing a growing number of large corporates opting to consolidate their market listings on – or undertake a general move to – US markets. While this is not good news for stock exchanges in Ireland or Europe, it demonstrates the continued dominance of the US capital markets for access to funding.  The next wave of IPOs will be led by those companies that do the hard work of preparation today, readying themselves for amplified scrutiny and accountability and working to make the necessary corrections big and small. Choosing the right stock exchange Many factors play into the decision on where to list a company, including: Access to capital, which is critical – in many cases companies will decide to list on multiple exchanges to broaden their investor base; Market visibility and the reputation of the exchange, which may be known for a particular focus area; Liquidity and trading volumes; Regulatory requirements, which differ significantly across markets – the US capital markets are the most onerous from a compliance perspective but are more attractive to many stakeholders, from suppliers to employees and particularly to investors; and Expansion into new markets and peer group comparison. What it takes for a successful IPO  Any successful IPO needs a compelling equity story. In the current environment, IPO candidates need to be able to demonstrate a resilient trading performance and compelling strategy for future growth to tempt investors.  It is also important that the valuation expectation is reasonable. With a particular focus on the US market, some of the key steps in a successful IPO journey include: Ensuring you have a first-class management team and advisors; Getting your IT systems and control environment in order; Improving your financial reporting and getting audit-ready; Addressing change through a people-centric transformation programme; and Addressing environmental, social and governance-related performance and strategy upfront. It’s a team game The path to becoming a public company depends on a coordinated team effort by management and external advisors. In our experience, which spans both sides, we believe there are several critical ingredients to success: An experienced management team, ideally with some IPO experience that can build a strong equity story during the roadshow; External advisors with IPO credentials, contacts and industry experience; and A structured transformation of the people, processes (with a particular focus on technology) and culture of the company. IT capacity and controls Companies should not overlook or underestimate the ‘heavy lift’ needed for readying their IT systems ahead of a planned IPO. Some of the IT systems and tools commonly used by private companies in many cases cannot scale to meet the technology requirements of a public company.  Many companies face fundamental challenges in understanding their existing IT landscape and the interdependencies that exist between the different elements therein.  This is particularly important because you cannot expect to achieve a robust internal control framework for financial reporting without a strong partnership between the IT and finance teams.  It takes a coordinated approach – with informed, experienced leadership – to break down silos and ensure that everyone is speaking the same language. Getting the governance right at the outset is a prerequisite for successfully establishing and embedding your control framework. Companies that have not historically invested in technology and tools for financial reporting and business operations might struggle with the limitations of their existing technology if this is not addressed as a priority at the outset.  Assessing IT across people, processes and systems is critical. Taking a risk-based approach – and strategically sequencing your transformation initiatives – is equally important.  Early in the preparation phase is the time to get the fundamentals right, and to ensure that each step of your transformation is aligned to your IPO target state.  Companies should be incorporating audit and control requirements into their procurement decisions when looking at investment, alongside business, information security and other assessment criteria.  Financial reporting and audit The level of auditor scrutiny on public companies is high and ever-increasing. Therefore, getting your company’s historical accounting and controls in order is essential pre-IPO.  As already mentioned, it is critical to have the right technology in place here alongside the right people – and to give them sufficient lead time to do the work needed. In preparing for the rigours of an IPO, an auditor may have to re-audit parts of prior years’ accounts and update procedures to meet the higher standards expected of a public company. They will likely have to update controls and processes and document all key controls.  It is an arduous process and one that cannot be rushed. Early engagement with the audit team is important.  In our experience, bringing your auditor into the fold at agreed milestones can be hugely valuable in ensuring continuous alignment and avoiding any unexpected curveballs as you navigate the IPO journey. Tailored people-centric approach An IPO journey will have its challenges. It requires major transformation involving upgrading technology, improving financial reporting processes and implementing governance, risk and compliance capability. All are critical.  So too is a people strategy that sets out the vision for a collaborative and supportive post-IPO culture incorporating diversity, equity and inclusion as well as helping to guide how the business plans to achieve its environmental, social and governance (ESG) goals.  And finally, ESG As ESG continues to gain momentum, it is becoming a fundamental consideration for companies making strategic decisions in areas including funding.  Integrating ESG reporting into the equity story has become key for investors and, consequently, it is an increasingly important aspect of the IPO readiness plan for issuers.  This is especially true in Europe where regulatory requirements for listed companies will become mandatory as the European Union’s Corporate Sustainability Reporting Directive (CSRD) comes into effect. An ESG strategy is now a must-have for any company considering an IPO.  Becoming a public company and raising funding on the capital markets has always required lots of work and preparation.  Alongside a company’s equity story, financials and governance, there is now a broader focus on technology, culture and people strategy as well as ESG commitments and performance. The current market lull could provide just the ‘pause’ some companies need to prepare thoroughly for a successful flotation and future growth.  Ciara O’Callaghan Crehan and Eimear McDermott are co-founders and directors of Odyssey Consultants, a boutique risk and management consultancy for helping companies at all stage of their journey reach new horizons

Jonathan Wilson talks us through his career from his training in Belfast in the nineties through to his current role as Managing Director, Chief Internal Auditor with Barclays Europe In the 30 years since he began his training contract in 1993 with BDO Stoy Hayward in Belfast, Jonathan Wilson has carved out an accomplished career in internal audit in banks ranging from National Australia Bank and Danske to NatWest and now Barclays. Here, he tells Accountancy Ireland why he chose to specialise in audit and the decisions, opportunities and lessons that have helped him progress his career to date. Do you remember when and why you decided to train as a Chartered Accountant? When I was ten or 11, it seemed like all the kids around me wanted to be pilots or astronauts. I wanted to be an accountant. My uncle was an accountant, and I had a genuine interest in business – in particular, business performance – from a young age.  That’s why, when I finished at Methodist College in Belfast, I chose to study economics at Queen’s and, from there, to join BDO Stoy Hayward in 1993 to train as a Chartered Accountant. I got great training with really broad experience and, at an early stage, decided I wanted a career in industry rather than practice.  I started to focus on internal audit and risk management and joined Northern Bank in Belfast as a Senior Auditor in 1999.  Because National Australia Bank owned Northern Bank at that time, I got the opportunity to move to Melbourne in 2002 as a Senior Audit Manager working across areas ranging from corporate banking to retail services, finance and risk. That role also allowed me to work in New Zealand and in Asia and, when Northern Bank was taken over by Danske Bank in Ireland, I was asked to come back to help manage the transition as its Head of Internal Audit in the North and south. After five years, I was given responsibility for Danske Banks’ Internal Audit in new markets including Sweden, Norway, Finland, Russia, Poland and the Baltics. I then had a brief period as Group Chief Auditor with the Irish Bank Resolution Corporation followed by 18 months as Head of Audit with AIB. I joined NatWest as Chief Auditor in 2014 and started in my current role with Barclays in January 2023.  Are you glad you decided to qualify as a Chartered Accountant? Has the qualification helped or hindered your career? Being a Chartered Accountant can open up so many professional opportunities. You need a lot of discipline, patience and perseverance to earn the qualification in the first place and this experience has helped me enormously in my career since. Chartered Accountants can work in a really broad range of environments – from all kinds of businesses to practice or the public sector – you name it. This scope has given me a strong grounding in understanding how business works, not just from a financial point of view, but also in a broader sense. Tell us about your current role as Chief Internal Auditor with Barclays Europe. When I joined Barclays, it had been in Ireland for more than 30 years, but it was facing a new set of very exciting opportunities in the wake of the Brexit vote.  I now lead a very experienced team of audit professionals based in Dublin, Paris and Frankfurt. The organisation is incredibly diverse, not just geographically but also in terms of the people I work with every day. I am ultimately responsible for the quality of the assurance work our team provides and I am lucky to have a team of strong directors working with me. As well as our assurance work, we are expected to add real value to the business in terms of risk management and systems of internal control. What are the biggest trends and developments you have seen in your profession and the wider market since starting out? Traditionally, auditing was very manual with lots of paper records stored in Lever Arch files and big, heavy briefcases. Audit software was only just beginning to emerge at the start of my career and it’s amazing to reflect now on how much this whole area has since evolved. Today, we are dealing with metadata and approaching the operating audit with a much greater emphasis on digital tools. Auditors nowadays need to be digitally enabled and we are also beginning to look at how we can use artificial intelligence in our work in the future. When I did my MBA with Manchester Business School, my specialist topic focused on the various financial crises we have experienced going right back to the Wall Street Crash of 1929. In the years since, the time lag between financial crises has narrowed dramatically. We used to get one every 50 years, but now we are finding ourselves in a crisis every five or ten years. I have experienced a number of these crises working in internal audit, and my international experience has given me a good perspective on how best to deal with them. Is there anything in particular you have learned in your career that has stood you in good stead? When I was with National Australian Group, Mark Martinelli was the Chief Auditor. He was a big influence on me. He taught me to ask the simple question: “If it doesn’t make sense, why doesn’t it make sense?”  We can get carried away, agonising over complex and difficult tasks and challenges. Sometimes, the best approach is to return to your key audit principles and ask this one simple question – and keep hold of it until you get the answer. Audit standards have been developed and refined over the years, but the core principles are the same today as they were when I was starting my career. Our role is about providing assurance and gathering sufficient audit evidence; it’s about our control objectives. Asking the simple questions is vital. What career advice would you offer your younger self if you had the opportunity? Don’t narrow your horizons. Keep your aspirations broad and try to work across as many different companies and countries as you can.  Also, do things you like to do and enjoy what you are doing. My son once considered a career in medicine, but he’s now an accountant – somewhat to my surprise!  When he told me he had taken a job with a film company making documentaries for Netflix, Disney and Amazon, I had some concerns given the insecure nature of the industry. Then I thought, “Actually, that sounds really exciting”. In the end, I told him to go for it – he would have anyway! I suppose my advice is that you shouldn’t make choices in your career to please anyone else. Do the things you want to do for yourself and don’t be afraid of failure. Finally, what are your career plans from here on in? I love the job I have right now. I’ve only been with Barclays for a short time and I have the ‘fuel in the tank’ to expand and develop in this role. It is a big challenge, but it’s very enjoyable. Another aspect of my career as a Chartered Accountant I find really rewarding is the scope it has given me to apply my skills volunteering as a trustee with various charities and sporting organisations.  I have done a lot of volunteering outside my ‘day job’ and my background in Chartered Accountancy has been incredibly valuable here. When eventually I am no longer working full-time, I hope to be able to continue in non-executive board positions and to continue to use my skills and experience where it may be required.

The EU Commission’s new enlargement package sets out ambitious plans for expansion but the rule of law and defence must govern any future accession negotiations, writes Judy Dempsey It was reminiscent of 1 May 2004, when the countries of Central and Eastern Europe joined the European Union (EU).  For their citizens, that day almost 20 years ago was not just a euphoric occasion, it was about returning to Europe – an aspiration that must have seemed remote while they were under the communist yoke from 1945 to 1989. Now, the opportunity for Ukraine and Moldova to join the EU is very real, following Ursula von der Leyen’s decision to unveil an ambitious enlargement package last month. The President of the European Commission announced on 8 November that the EU would open accession negotiations with Ukraine, Moldova and Bosnia and Herzegovina, while also granting Georgia candidate country status.  It will take several years for these countries to join the EU. Leaving aside how the war in Ukraine might end, significant issues will need to be addressed in all four: corruption, the role of the oligarchs, human trafficking and the weak independence of the judiciary, for example.  EU leaders will have to give von der Leyen’s plan the green light during their December summit.  Some will baulk at how Bosnia and Herzegovina will be able to begin accession talks despite ongoing misrule and ethnic tensions among leaders of the Serb community. Backed by Russia and its neighbour Serbia, it has long sought to have its own autonomous region. Yet, for all these problems, this next enlargement should be a chance for the EU to tackle two big issues that undermine the union’s credibility.  The first is how several countries, led by Hungary and Poland, have blatantly flouted the rule of law. For several years, Budapest and Warsaw have run roughshod over the judiciary, the media and the appointment of chief prosecutors.  Hungary’s Prime Minister Viktor Orbán has misappropriated EU funds in addition to promoting his own appointees loyal to the governing Fidesz party, to universities and other educational institutions.  And this is just the tip of the iceberg. In Poland, the judiciary, media, education and private sectors have been subject to interference from the governing conservative/nationalist party.  The Law and Justice party lost the recent parliamentary elections, however, so there is a chance that the centrist Civic Coalition party may put the country back on the path of the rule of law.   This is important for countries trying to make their way into the union.  Imagine sitting in Kyiv and seeing judges intimidated or sacked in an EU member state because they don’t toe the governing party line?  Civil society activists in Ukraine and Moldova have been campaigning for many years to root out corruption and establish a transparent court and judicial system free of state interference, lobbies and oligarchs. The second issue facing the EU is how, as a bloc, it cannot defend itself.  With the current instability along Europe’s eastern borders and its southern neighbourhood, the EU lacks the capacity to defend its citizens and provide them with the security they need and which, until now, had been provided by the NATO alliance.  Soft power takes precedence over any kind of hard power despite what is happening in Ukraine. These two issues – the rule of law and defence – are about the credibility of the EU and making the bloc ready for the next round of enlargement.  Judy Dempsey is a Non-Resident Senior Fellow at Carnegie Europe and Editor-in-Chief of Strategic Europe