Four members in business review the challenges and opportunities of the past year, and explain how their organisations have successfully navigated the fall-out of the COVID-19 crisis thus far. John Graham  Managing Director, Andrew Ingredients The speed of the recovery in business after the first lockdown took us by surprise. As sales began to recover, I realised that we needed to start refocusing again on future growth and what we needed to do to support that. That made me reflect on my role, as covering the operational demands of the business was starting to limit my ability to focus on our long-term growth ambitions. As a result, we have just recruited a Head of Operations who started this month. This is a new role for the business and one we couldn’t have imagined creating this time last year. Now we are coming out of the worst of the pandemic, we are pushing ahead with our planned investments to give us the platform for future growth. This includes an extension to our warehouse (adding 50% more space) and the implementation of a new warehouse management system that should improve our efficiency and allow us to take advantage of future advances in technology. We also hope to get back to a full schedule in our WorkWith collaboration hub, where we work with our customers on new product development, trends, and market insights. However, there are still barriers in the way. Brexit and navigating the Northern Ireland Protocol has been a big challenge over the last six months, and that is unlikely to improve in the short-term. The bureaucracy it has created is sucking valuable management time from the business. Hopefully, the EU and UK can find some practical solutions to make the Protocol sustainable over the longer term. Despite Brexit, we believe there are great opportunities for the business, including the continued growth of Andrew Ingredients in Scotland, which is a new market for us, and bringing exciting, new ingredients to the Irish market. Wai Teng Leong Director of Finance – Financial Reporting, Tax & Treasury, Moy Park 2020 had been a truly unprecedented year, and no one anticipated the way the pandemic would change our lives and the way we work. Working from home presented enormous challenges initially, but I am incredibly proud of my team’s strength, resilience, and commitment during this time. As managers, we had to ensure that our teams performed at the high standards expected of a corporate function while finding innovative ways to motivate our people and keep up morale. We hold weekly social calls every Monday morning and arrange regular team-building events, which have ranged from baking cupcakes to book folding art craft. It is essential to take a light-hearted time out when working remotely to fit in social interactions. The rapid actions of our IT department enabled working remotely possible. For the first time in my career, we carried out quarterly and year-end audits remotely – virtual stock-takes were undoubtedly a novelty! Technology and innovative ways of working have enabled us to carry on with business as usual. Over the last year, we have held large virtual conferences (with goody bags delivered to delegates) and introduced e-learning modules to ensure that people development continues to be a priority.  The biggest challenges are inducting new team members and imparting knowledge, as these used to be carried out sitting side-by-side in an office environment. Project work such as ERP implementation also poses similar challenges. It is, therefore, important to be organised and keep a constant flow of communication. I believe that the events of the past year have made us all better managers. Looking ahead, flexible working will lead to a better work-life balance. Still, we also need to ensure that we do not lose sight of the importance of face-to-face interaction to support mentoring for career progression, creativity, and building relationships. As lockdown eases, I am optimistic that we will find a solution that combines the best of both worlds. Jason McIntosh EMEA Finance Manager, Seagate Technology It’s fair to say that how we work has changed significantly over the past year! As a key manufacturing site within our global supply chain, our work has always been very office-based. That shifted for a lot of us overnight. My whole team across the UK has now been working entirely remotely for over a year.  As we have continued to operate, we have maintained a significant on-site presence throughout the pandemic, too. One of the biggest challenges has been enabling continued collaboration between our factory and remote teams while maintaining a culture of innovation and development.  How we work together in finance has also changed considerably since last year. Whereas before we had face-to-face meetings and ample informal collaboration opportunities, now all our interaction is virtual. Having said that, I spend more one-on-one time with my team (via Teams) than before.  We have always worked as part of a global team, particularly in finance. My boss, although Irish, is based in Amsterdam, and I work closely with colleagues in locations like California and Thailand daily. We already knew how to work together virtually and while we had to adapt locally, we already had that experience. If anything, remote working is easier locally because you don’t have time zone challenges.  Making sure that everyone in our team invests in their wellbeing has been vital. I’m proud that our company has invested so much in employee wellness programmes, and I’m confident that they have helped us navigate challenging times for everyone. In the second half of 2021, I expect to see more of our team returning to the office (at least part-time), provided it is safe to do so. The most significant barrier ahead is undoubtedly the uncertainty that remains. Several countries around the world are still under some form of lockdown. When and how we emerge into some sort of ‘steady state’ will shape how we work in the coming years. Like all businesses, we have learned plenty of lessons during the pandemic that will create the opportunity to be more collaborative on a global scale going forward.  John Morgan Finance Director, BT Enterprise  Having just secured a role as Finance Director for a newly formed business unit in BT with a management team primarily based in London, I was geared up to spend a couple of days per week in London, commuting from Belfast. Little did I know that my last day in London would be my final interview in February 2020 and I would spend the next 15 months mainly working from home.   COVID-19 hit our business unit relatively hard for certain revenue streams. For example, mobile roaming revenue turned off overnight and call revenue reduced considerably as offices shut.  If anything, the pandemic has made us look to accelerate some of our existing medium-term plans instead of fundamentally changing our whole business strategy.  Within BT Finance, we had already adopted flexible working. We have found flexibility a key driver of engagement and a differentiator in the recruitment market. COVID-19 has taken this to another level, however. Trust is a massive enabler for this; if you trust and are trusted, it doesn’t matter where people choose to work. I sense that we will remain flexible. While individuals will have different preferences, I envisage the team working around two to three days a week from home. We are lucky in that we are about to embark on a significant property refurbishment in our prime site in Belfast and the team are pretty excited to be moving into leading-edge office space by early 2022.   There are still barriers in the way in our industry, however. The UK telco industry is one the most competitive in the world, and downward pricing pressures are significant. That said, we believe new strategic initiatives such as 5G allow us to differentiate ourselves and add value for our customers. 

Capital allocation and investment appraisal is a senior management team’s most fundamental responsibility, but it is easy to overstate prospective rates of return. Cormac Lucey explains. The goal of corporate investment should be to convert inputs – including money, things, ideas, and people – into something more valuable than they would otherwise be. After ten years in the position, a CEO whose company invests 10% of its existing capital stock each year will have been responsible for deploying more than half of all the capital at work in the business. This makes capital allocation and investment appraisal a senior management team’s most fundamental responsibility. In financial terms, that means that investments should generate an after-tax rate of return greater than the company’s cost of capital. Management will generally use Discounted Cash Flow (DCF) analysis to test whether a project is likely to achieve this goal. Two specific DCF measures can be estimated. If a company’s cost of capital is 7%, its investments need to generate a rate of return of at least 7% to adequately compensate investors for the risk they are exposing themselves to by investing in a company of that particular size, operating in that particular country, and in that particular sector. If the investment generates an 8% return, value is created. If the investment generates a 6% return, value is destroyed. By discounting projected future cash flows into their equivalent present values using the corporate cost of capital, net present value (NPV) quantifies the boost to shareholder value that an investment should generate. The other key DCF measure is the Internal Rate of Return (IRR). For any given set of project cash flows, IRR quantifies the cost of capital that would generate a nil NPV. The IRR measures the average annual rate of return that the project expects to generate over its life. If a project’s IRR exceeds the cost of capital, it will be expected to boost shareholder value. But there is an assumption implicit in DCF mathematics, which can lead to IRR significantly overstating a project’s prospective rate of return. The IRR approach assumes that intermediate project cash flows generated by the project (i.e. those generated after the initial investment period and before the project’s end) are themselves reinvested to generate a rate of return equal to the project’s IRR. If a company’s cost of capital is 7% and the project’s rate of return is 14%, this assumption means that surplus cash flows generated mid-project are themselves expected to be reinvested and to generate a 14% rate of return. This assumption is questionable: why should returns on surplus cash be higher just because they were generated by a high-return project? Modified Internal Rate of Return (MIRR) applies exactly the same approach to evaluating a project as IRR, except it assumes that intermediate project cash flows generate a rate of return equal to the cost of capital (rather than the project’s IRR) when reinvested. This will generally be a more realistic assumption than that underpinning IRR. Having already calculated IRR, it is a simple matter to estimate a project’s MIRR using Excel’s ‘=MIRR’ function. The difference in the measured rate of return between IRR and MIRR can be significant. Consider a simple example. Suppose we invest €1,000 today, and it is expected to generate annual after-tax cash flows of €140 for each of the next ten years, after which the project ends and we get our €1,000 investment back. The IRR of this project is 14%. But, if our cost of capital is 7%, the MIRR of the same projected cash flows would only be 11.4%. Bottom line: IRR can systematically overstate prospective project returns with its unrealistic reinvestment rate return assumption. MIRR corrects this. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.

In response to requests from charities and their lead bodies, Benefacts produced a special report on Irish charities last May. Patricia Quinn explains the findings. In Ireland’s charity sector, just as across the rest of the economy, the COVID-19 pandemic cast a long shadow. A sector of predominantly small and micro entities, charities experienced the full gamut of disruption to their not-for-profit businesses in 2020, ranging from temporary closure to rapid adaptation to digital working and developing new solutions to meet the needs of vulnerable people in local communities. For some – especially providers of hospital, hospice, residential care, and homelessness charities – the impact for their staff and served communities was a matter of life and death. Other charities – especially in emergency relief, mental health, local development, and social care – experienced increased demand for their services. In some sectors such as the arts, heritage, and museums, charities without the capacity to move to digital working methods could not operate, or only to a minimal degree. They report staff cutbacks and other cost-saving measures, but most have limited reserves and cannot avoid fixed costs. Fundraised income, which is a significant proportion of the revenues of some Irish charities, was expected to take a severe hit. In some sectors that rely predominantly on traditional fundraising, including door-to-door or church gate collections, charity shops, fun runs and other event-based approaches, this has been the case. Where charities were already geared up to appeal to donors and collect gifts digitally, or transitioned successfully to online giving, some reported an increase in income from this source. What do we know about charities? Charities form a subset of all non-profits in Ireland, which number more than 32,000 if you drill down to the level of local clubs, societies, and associations. The 11,405 charities on the Register of Charities today include just under 3,600 primary and secondary schools. For practical purposes, they are regulated elsewhere. The Register also includes about 2,700 unincorporated associations, trusts, and non-incorporated bodies that file accounts to the Charities Regulator which – for various reasons – are not published on the Regulator’s website. Anybody wanting to study the financial and governance profile of the charity sector therefore relies mainly on the CRO (Companies Registration Office) filings of incorporated charities, of which there are about 5,000. These form the basis for a new benchmark report on the charity sector in Ireland released by Benefacts last month. Benchmarking the state of the sector There has never been a time when current, reliable data was more relevant to charities. In boardrooms around the country, trustee directors have been grappling with tough choices. Even the best risk register was unlikely to include a worldwide pandemic involving the near-total shut-down of whole sectors of the economy. And most charities are particularly ill-equipped to cope with financial adversity; by definition, they have no equity, no investors, and limited capacity to trade their way out of financial trouble. Few charities entered 2020 with significant financial reserves. Although the aggregate reported value of reserves in the sectors under review in the Benefacts report was €3.73 billion based on available data for 3,628 incorporated charities, most of these reserves (€2.5 billion) are held by just 80 larger charities – in particular, voluntary hospitals and social housing providers. The remaining €1.2 billion in reserves is distributed across smaller charities, primarily in local development, social housing, health, and services for people with a disability. Moreover, charities’ assets – unlike most commercial organisations – typically cannot readily be liquidated as they are essential for delivering services or may be of a heritage or highly specialised nature. When reserves are converted to the number of weeks of average weekly expenditure (using data from full accounts), our analysis found that more than one-third of charities have fewer than ten weeks’ reserves, with arts charities particularly heavily exposed. Not all bleak In preparing its report, Benefacts reviewed more than a dozen surveys and other reports prepared by sector lead bodies, policy-makers, and regulators. Many positive effects have been reported. These include heightened public awareness of the value of charities’ work, better engagement across geographic divides, cost and time savings, a better quality of life for staff, and the adoption of more diversified fundraising solutions – especially digital ones. In fact, it appears that a small percentage of charities that were already well-geared for digital fundraising will be reporting 2020 as a better year than usual. Philanthropists stepped up in response, especially to pandemic-related causes, and social enterprises were encouraged to bid for new additional funding. The State permitted some charity employees to avail of pandemic unemployment benefits and allocated additional funding to address areas of acute need. Using financial reporting data shared with us in advance of the publication of their own financial statements by the nine State bodies that are the principal funders of charities, we were able to identify a 10.7% year-on-year uplift in funding for charities – mainly in health, social care, arts, and culture. But in 2020, there were nearly ten pandemic-free weeks at the start of the year and lockdowns were partially lifted mid-year. Additional State support will undoubtedly have sustained some charities that might otherwise have gone under. But there’s already a recognition that 2021 – with the exit from full lockdowns only starting in the middle of the second quarter – will be a tougher year, and 2022 probably tougher again. Planning for better The last 30 years have seen considerable professionalisation in the charity sector. The 5,000 charities whose financial statements form the basis for this new report employ more than 101,000 people. Fundraising, a critical discipline in the 273 charities that rely on this as their principal source of income, has become highly specialised. The larger charities now have professional staff to manage their volunteer supporters. Even the voluntary directors of charities themselves are increasingly recruited using the kind of competency framework approach that would have been unheard of in this sector 20 years ago. And perhaps it’s as well, since understanding the drivers of charity business success is a crucial function of charity boards. Contingency planning will surely come to the fore, as well as a searching review of some of the fundamental assumptions about funding. Benefacts has already received queries from charities trying to understand their position relative to their peer organisations in a given sub-sector, anticipating perhaps an even more competitive environment in the future. Audited financial statements are a hugely valuable source of granular data that makes up the picture of any sector and its component entities. Like analysts in commercial sectors, Benefacts relies on charity company disclosures as the bedrock on which we build a profile of the charity sector and its sub-sectors. Common financial reporting standards bring consistency and reliability to the data that can be used to create a picture of the whole sector and track changes year-on-year at the level of individual charities and sectors such as hospice care, addiction support, or animal welfare. Thanks to its database, augmented each year with more than three million new data items harvested from non-profit company disclosures, Benefacts has been able to provide charities, funders, policy-makers and other stakeholders with a powerful knowledge asset to help them navigate uncertain times. The impact of regulation The range of data underpinning our analysis of this multi-billion euro sector suffered a setback with the new Companies Act reform in 2014. For the first time, small non-profit (limited by guarantee) companies could avail of the same exemptions from filing full accounts as commercial companies. While this is only fair and equitable on the face of it, it has diminished the public disclosures of thousands of charities that rely on public donations, state funding, or both to support their operations. Unfortunately, the Charities Act 2009 did not foresee this change and exempts charity companies from filing their accounts to the Charities Regulator to avoid the burden of double regulation. Again, fair and equitable – except for the unintended side effect of making the financial disclosures of thousands of charities less transparent to the very people on whom they rely for income and something more precious – trust. Here are the numbers: of the 3,628 charities that have already filed their 2019 accounts, 36% have filed abridged accounts and 26% have filed unaudited accounts. 106 of these charities receive funding from the State. This means that their unaudited accounts breach the reporting standards for any body receiving State funding set by the Department of Public Expenditure & Reform (Circular 13, 2014). Rules are there to be obeyed, and over time, the compliance authorities will surely iron out these wrinkles in the provisions of the various legal and regulatory frameworks. But charities are not like other small businesses. The principle rather than the letter of the legislation regulating them is one of transparency. To that, I would add informed self-interest. Sector lead bodies preparing a brief for their board or a presentation for an Oireachtas Committee hearing are often disappointed to discover that Benefacts analysis of their members is missing some critical dimension – especially an analysis of their income. That is because so many of the source documents lack an important few pages: the income and expenditure account. This is all the more galling as funders require the full accounts to be provided to them. We therefore experience a double standard – full accounts to go in the State filing cabinet, abridged ones for the rest of us.

Andrew Glenn, Head of Sales and Marketing for Intuit Ireland, explains what’s new at QuickBooks and how the company is tracking. It is one year since accounting software giant, Intuit, launched the Irish version of its accounting software, QuickBooks Online, in the Irish market. It has made significant inroads in this short period and since then, the company’s commitment to the market has grown. In this article, Andrew Glenn, Head of Sales and Marketing at Intuit Ireland, explains what’s new at QuickBooks and how the company is tracking. “We are thrilled with the progress we have made in Ireland. The region is really important to us, and we invested heavily to build a solution that will streamline processes and drive efficiency for local accountants and small business owners,” says Andrew. QuickBooks Online is the global leader in accountancy solutions with around 4.5 million users. It invests heavily in the product and focuses on prioritising customer needs, and initial feedback has been positive from both small business owners and accountants alike. The practice management solution, QuickBooks Online Accountant, allows accountants to manage their work and practice in one handy location. The solution harnesses technology like artificial intelligence and machine learning to reduce the number of manual processes required to manage client and practice accounting processes. “We have automated bank feeds with most of the Irish banks now, and this is an area we continue to work on,” says Andrew. To further strengthen its offering, QuickBooks recently launched mixed-mode reporting. It allows users and accountants to report on VAT on either a cash or accrual basis. Accessibility is important for QuickBooks users. As a web-based solution, QuickBooks Online also has a free app for Android and Apple devices that allows users to log in to their account at any time from anywhere. They can send quotes, invoices, and reminders as well as view the dashboard. Basically, they have access to all their financial data while on the go. “Irish accountants love the app too,” adds Andrew. “Being able to answer client questions while they are out and about has transformed client service delivery for many.”  Intuit is committed to delivering a value-for-money solution, one that harnesses the latest technology and is easy to use. The solution is packed with features you would expect in an enterprise-level solution. “We are committed to supporting our Irish accountants and provide QuickBooks Online Accountant for free. There is no charge to access this powerful solution,” says Andrew. Several free training programmes are available for accountants. QuickBooks want to ensure that accountants can harness the power of the software, and so it provides a comprehensive, free certification programme. A local team of account managers is also ready to support Irish accountants. In addition, Intuit provides wholesale billing programmes that allow accountants to save 50% on the recommended retail price. According to Andrew, Accountants can pass the savings on to their clients or pocket the difference and generate a lucrative revenue stream for their practice. “We make it easy to work with us. We don’t lock accountants into contracts; they simply pay by the month,” he adds.   If you would like to experience QuickBooks Online Accountant, call (01) 240 8711 to talk to a local account manager. This article is sponsored by Quickbooks.

I have so much work to do to grow my practice, but I keep getting sucked into day-to-day stuff. I have employed some good people, but the problem hasn’t gone away. Time management gets a bad rap because people think it’s all about to-do lists and tasks. In fact, it’s about strategic decision-making: there is never enough time to do everything, so we need to choose. Urgency creates a compelling gravitational pull, and you need to create an alternative centre of gravity by focusing on added-value work. The next time you find yourself sucked into operational issues, reflect on what is missing (for you or your team). Is it: Something about relationships? Think about patterns, trust, introductions, network. Something about infrastructure? Think about technology, systems, processes, templates, supplies, check-lists. Something about development? Think about information, knowledge, skills. Something about approach? Think about attitude, planning, reflection, focus. Spending time in these four areas allows you to build capacity. But we work on them one at a time, so choose one ‘fix’ that is achievable but would make a big difference, such as training your staff or creating a database. When that’s done, choose the next one. Above all, plan the week ahead on Friday afternoon and look at your week with your ‘capacity building’ glasses on. What opportunities arise? Overall, I’m happy with my team. They are good performers and we get on well. I have one particularly good person on my team; he’s clever, hard-working, and great with clients. The problem is his relationship with the rest of the team. He seems to look down on them. At team meetings, he is obviously multitasking. He never says anything offensive, but his eye-rolls and head-shakes speak loud and clear. I don’t want to lose him, but he is having an impact on morale. This is a familiar story: the high performer with poor behaviour, the rest of the team feeling undermined, nobody talking about it. Hoping the behaviour will go away is not going to work. Anybody could walk. Actually, this guy is clearly communicating with you – just not in words. You need to get curious about why this is happening; it’s great feedback for you. Find a good time to play his behaviour back to him (use “I notice” to describe behaviour and be careful not to judge). Invite him into a conversation with open, solution-focused questions like: What might be a more useful response? What might be useful for the team to hear? What would you like from the team? Such questions will help him explore the impact of his behaviour and take responsibility for changing it. As time passes, if you notice more supportive behaviour from him, quietly acknowledge it. If the poor behaviour continues, you may need to be more direct and ask him to behave differently. Julia Rowan is Principal Consultant at Performance Matters, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie. 

Daniel O’Donovan and Siobhan Orsi summarise the main changes in the Ethical Standard (Ireland) for Auditors, the International Standards on Auditing (Ireland), and the International Standard on Quality Control (Ireland) 1. In November 2020, the Irish Auditing and Accounting Supervisory Authority (IAASA) issued revised ethical and auditing standards in a bid to support the delivery of high-quality audit and strengthen confidence in audit in Ireland. The revisions build on changes made to the standards in 2017, which implemented the requirements of the EU Audit Regulation and Directive. These new amendments, which were the subject of a formal consultation earlier in 2020, are effective for audits of financial statements for periods beginning on or after 15 July 2021, with early adoption permitted. This article summarises the main changes in the Ethical Standard (Ireland) for Auditors, the International Standards on Auditing (Ireland), and the International Standard on Quality Control (Ireland) 1. Revisions to the ethical standard IAASA’s aim in amending the ethical standard was to simplify and restructure the standard to ensure a better understanding of the ethical requirements. It also introduces more prohibitive requirements, including removing the exemption for SME-listed entities that were not subject to many of the prohibitions applied to listed entities. These concessions, offered in the 2017 IAASA Ethical Standard to entities of this nature, have been removed. Other key changes to the ethical standards include, but are not limited to, the following: Third-party test: the new standard sets out a clearer and stronger definition of the “objective reasonable and informed third-party test”, which is a core element of the ethical standard. It requires audit firms to consider whether a proposed action would affect their independence from the perspective of public interest stakeholders rather than another auditor. Additional guidance has been inserted to assist in application. Internal audit services: firms will no longer be able to provide internal audit services to audited entities or their significant affiliates. IAASA’s view was that the provision of internal audit services to audit clients created a risk, both real and perceived, to independence that needed to be addressed. Recruitment and remuneration services: the standard incorporates amendments that now prohibit auditors from providing recruitment and remuneration services or playing any part in management decision-making. Gifts and hospitality: the requirement to establish policies on the nature and value of gifts, favours, and hospitality that may be accepted from and offered to other entities has been extended to apply to those entities that are likely to subsequently become audit clients. Enhancements to the ethics partner’s authority: new provisions incorporated into Section 1 of the ethical standard highlight the increased importance placed on the ethics partner. Enhancements include a requirement for reporting to those charged with governance where an audit firm does not follow the ethics partner’s advice. Partner rotation: the cooling-off period for engagement partners on public interest entity audits has been relaxed and amended from five years to three years, as was the requirement in the EU Audit Regulation in 2014. The change has also been applied to listed entities. Clarification has been added that when the engagement partners rotate off an audit, they cannot have significant or frequent interaction with senior management or those charged with governance during the cooling-off period. A new requirement has been introduced so that, where audits and those providing audits move from one firm to another, any rotation “on periods” for partners and staff include any time before they and the audit changed audit firms. Reporting breaches of the ethical standard The extant Ethical Standard for Auditors (Ireland) 2017 requires auditors to respond to all possible or actual breaches of the standard and keep records of any contraventions. A requirement has been introduced in the new ethical standard for auditors to report breaches of the ethical standard on an annual basis to IAASA, the relevant recognised accountancy body for auditors of public interest entities, and the relevant recognised accountancy body for non-public interest entity auditors. Such reports are to be submitted at least annually. IAASA indicated in its feedback paper on the consultation that it will issue guidance to auditors regarding the format of reports to be submitted. It also stated that any action taken by IAASA or the relevant recognised accountancy body in response to such reports will vary on a case-by-case basis depending on factors such as the nature of the breach, the appropriateness of the firm’s response, and the firm’s regulatory history. The new ethical standard permits firms to complete non-audit service engagements that were previously permissible provided they were entered into before 15 July 2021 and for which the firm has commenced work, while applying appropriate safeguards. IAASA did not introduce prohibitions on contingent fees for non-audit services, loan staff assignments, and tax advocacy services – all of which were proposed in the consultation paper. In addition, IAASA made changes to specific auditing standards: ISQC (Ireland) 1 and ISAs (Ireland) 210, 220, 250, 260, 600, 620, 700, 701 and 720. Hereafter, we will briefly discuss the most significant changes auditors and entities should be aware of for audits of financial statements with periods beginning on or after 15 July 2021. Revisions to ISAs IAASA has revised ISA (Ireland) 700, Forming an Opinion and Reporting on Financial Statements to extend the requirement for auditors of public interest entities to explain the extent to which the audit is capable of detecting irregularities and fraud to audits of listed entities also. There has been a significant expansion of the application guidance to the standard in relation to this requirement, which guides auditors to provide more detailed and granular explanations tailored to the entity being audited. IAASA acknowledged in the feedback statement that, in some situations, legislation (e.g. ‘tipping-off legislation’) would prohibit auditors from disclosing certain information in the audit report. ISA (Ireland) 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) has been revised to clarify that the work of component auditors used for the purpose of a group audit must be evaluated and reviewed by the group engagement team. Application guidance has been added to the standard to assist group engagement teams in determining whether the nature and extent of such evaluations and reviews of component auditor work are appropriate in their professional judgement. ISA (Ireland) 220, Quality Control for an Audit of Financial Statements now requires the engagement quality control reviewer (EQCR) for audits of group financial statements of public interest entities to perform their quality control review over each component for which work has been performed for the purpose of the group audit, and to discuss the results of the review with the relevant key audit partner. This is a significant enhancement of the quality control review required for such entities. ISA (Ireland) 701, Communicating Key Audit Matters in the Independent Auditor’s Report has been revised to require that the auditor’s report specify the threshold for performance materiality and explain the judgements made in determining performance materiality tailored to the circumstances of the audit.  This package of revisions to the standards is designed to enhance audit quality and public confidence in audit in Ireland. However, for group audits of public interest entities in particular, there is likely to be significant incremental associated effort and cost in complying with the new requirements. Chartered Accountants should familiarise themselves with all changes to the standards, which are available on IAASA’s website. Daniel O’Donovan is Principal in the Department of Professional Practice at KPMG Ireland and Chair of the Institute’s Audit & Assurance Committee. Siobhan Orsi is Associate Partner at EY Ireland and a member of the Institute’s Audit & Assurance Committee.

The need for structured, robust, and reliable business intelligence has mushroomed in recent years. As an increasing number of businesses grapple with the issue, Paul Cullen  explains the critical elements for implementation success. Data volumes within businesses have increased dramatically in recent years, primarily driven by cloud-based data solutions. Many companies struggle to harness this data in a way that enables them to focus on the key drivers of their success and to know if the strategies they have executed are having the desired results. Proper and well-planned implementation of a business intelligence (BI) solution can give management the real-time information they need to maximise commercial opportunities and ensure organisational coherence to deliver on agreed performance metrics. Why Excel just doesn’t cut it for BI Accountants have always loved Excel, and it still has a pivotal role as an analytics tool. However, when it comes to flexible reporting and giving end-users the ability to dive beyond the headline numbers to get to the ‘why’, Excel falls short in several key areas: Model maintenance headaches: in a 50-tab reporting workbook, any change to the layout can be very time-consuming (and often error-prone). I frequently encounter client reporting workbooks riddled with errors because one sheet has a misaligned row, which results in an incorrect aggregated summary. The dreaded invisible F2 edit: how many times have you spent hours pouring over an Excel workbook trying to figure out why the individual tabs don’t agree with the summary, only to eventually discover that someone has keyed in a manual F2 edit in a cell? Distributabilty: so you have built this all-singing, all-dancing Excel reporting pack, but it’s 70MB and cannot be shared via email. You also realise that some information needs to be segmented so that specific users can only see select slices of the data. These issues usually mean that multiple Excel models must be maintained, amplifying the risk of error and potentially compromising data integrity. Limits on row numbers: Excel’s sheet row limit has increased to one million in recent years. While this sounds more than adequate, you can easily exceed this limit if you include transactional data. Housing data in this way within Excel will usually result in slow, large file-size models. Usually dependant on one key user: there is typically only one key person who knows how to run and maintain a reporting model. Therefore, reporting quality, outputs, and cycle time rely to a worryingly large degree on one individual. The need for structured, robust, and reliable BI has mushroomed in recent years. As a result, dedicated BI platforms like PowerBI, Tableau, Qlik and ZapBI have evolved to address these shortcomings and provide analytics visualisations and end-user self-service reporting that goes far beyond Excel’s capabilities. Key obstacles to getting good BI Master data Many finance professionals underestimate just how unstructured their data is. I often hear clients say: “Yes, but we use NAV/Dynamics 365, so our data is really good”. They often fail to understand the inconsistencies across the company in how transactions are coded or recorded by staff. These inconsistencies make life difficult when you need to connect transactions across different platforms. For example, say you want to connect salary data for an employee from an HR system with data in a time-recording system. The employee ID is, say, PCULLEN250 on the HR system but CULLP on the time-recording system. This is just one example of the data-mapping tasks that must be undertaken for BI to succeed. I have seen this to varying degrees in every BI project I have delivered because, for many years, siloed teams have had their own ways of doing things. They simply didn’t realise that there would be a future requirement to bring all this data together at a transactionally-connected level. Historical processes or ways of working The ways in which your teams have historically coded transactions on source systems will almost certainly present challenges in initially setting up your new BI platform. I once worked with a ship management group with 1,000 ships under their control. Management wanted to get to ‘vessel profitability’, and we knew that cost allocation would be a challenge due to the complexity of the company’s operating structures. However, we were surprised to find that revenue for each vessel wasn’t available from the ledgers because the company issued just one monthly invoice to each carrier, even though some had more than 50 vessels under management. Furthermore, payroll costs for vessel crews were recorded by office location, not by vessel. Both of these historical processes gave rise to significant re-analysis work and new process design to enable the required analyses. Similarly, one healthcare client wanted to understand their profitability by treatment type. They believed that everyone across the more than 100 clinics they owned used roughly the same few hundred treatment type codes. In fact, there were over 6,000 live treatment codes in use and in some instances, clinics could even create their own codes at will. So expect to change some of your ways of working as a result of embarking on a BI implementation. How far back to go? Once it becomes clear to key stakeholders just how much insight a good BI implementation will bring, there is typically a desire to have as much history loaded into the model as possible. This is often the case where the company is private equity-owned, or a sale is planned. My advice here is the old 80/20 rule. Yes, it might be nice to see this new level of insight going back five years. But if your company is one of those where a lot of re-analysis will be required, you have to ask: is it worth it? I instead recommend that older historicals should, where possible, only be incorporated in aggregate. You should then ensure that the new data processes are designed and implemented so that future analytics are both robust and reliable. How often is too often? When implementing a BI platform, the next consideration is how often the data and outputs should be refreshed. It’s tempting to think: “Great, I can see what the sales team are doing every morning and then follow-up to discuss what’s going on”. However, this approach can quickly create a situation where staff have to spend time each day figuring out what just happened. And this, of course, can lead to ‘paralysis by analysis’. Be judicious about how often BI data should form the basis of a trading or operations conversation, and otherwise use it to indicate the company’s direction of travel. Introducing a new performance management BI tool will initially strain your executives and managers as they sift through a deluge of new and revealing information. This takes me to the following consideration: the need for culture change if a BI solution is to work correctly. Warning! Culture change approaching Imagine you are a sales or production manager, and you wake up to a new, live, web-based BI portal that shows everyone in your organisation where things might not be going so well on your patch. Senior management must avoid using the BI solution to shame or berate colleagues. Instead, it should be seen as a tool to identify opportunities and enhance performance across the business. Tread carefully here and avoid the ‘big bang’ approach of rolling out BI. You want your teams to embrace this new way of working, not run away from it or, worse still, seek to discredit it. With all this new performance management data at your fingertips, you may wish to consider redesigning your legacy compensation and bonus systems to ensure that these insights drive the right behaviours across the organisation. Embedding a robust BI solution in your organisation can be the catalyst for undoing the traditional silo mentality that can arise when different functions perform to their own narrow targets. Factors affecting implementation speed The following four issues will affect the length of time it takes to build and roll out your new BI platform. Poor data mapping: it is critical to understand how different naming conventions are used across your systems. You should conduct a thorough data-mapping audit to ensure that independent systems can be bridged on common field names (by employee ID, customer ID, or product ID, for example). Doing this during the development of the BI solution is time-consuming, but products like Caragon Flex can make the process much more manageable. Organisational readiness: prepare your team for the effort required to clean up your data and, more importantly, how this information will be distributed and reviewed once it is live. Having a new suite of detailed analytics can be overwhelming for data consumers if it is not clearly understood what it will be used for. Also, inform your colleagues that they are not expected to understand every data point that surfaces in the reports. Absence of a project champion: projects that should take weeks often take months due to the lack of an internal project champion. It is vital to appoint one and empower them to ‘herd the cats’ to ensure the project is delivered on time. Unclear output requirements/moving targets: consider what you want to get out of the new BI platform and be ruthless in identifying the key reports and key performance indicators you will need at the outset. Solution providers will typically build a proof-of-concept model to illustrate the art of the possible. This is a good time to agree on the minimum requirements for Phase 1 – but don’t bite off more than you can chew. Some processes must change As the earlier examples show, digging deep on data to build robust processes across multiple systems will invariably highlight process weaknesses that, if not remedied, will compromise the integrity of any BI platform. Therefore, it is essential to understand at the outset that go-live and the ultimate success of the project will be contingent on staff being adequately trained in the new ways of working. This might, for example, mean retraining payroll staff on payroll coding so that the correct costs are tagged to the relevant activity. Similarly, invoicing processes may need to change to ensure that revenue can be appropriately tagged to achieve the desired level of reporting granularity. You should also introduce tighter controls on crucial data fields across your systems (customer codes, product codes or employee IDs, for example). In my experience, this is best achieved by having a data governance standing group, to which all data changes (or new data field creations) must go for approval and communication to other potentially affected users. In conclusion A BI implementation is an exciting journey for a company. To get the most from it, here are my top four tips: Appoint a data champion and BI steering committee to ensure the project both gains and sustains momentum, and the business is prepared for what’s coming. Take the time to fine-tune your data mapping processes. Phase your BI roll-out in bite-size chunks to avoid overwhelming the organisation. Create a sense of ‘new frontiers’ within the business as it embarks on its data-empowered journey. Paul Cullen FCA is CEO at 1Truth, a Belfast-based management information solutions provider.

Reform of the public sector accounting process to an accruals-based system of accounting is gaining momentum, but don’t expect the transition to be total in the short-term, warns Dr Brian Keegan. Last month, the Institute launched a report by Queen’s University Belfast academics, Prof Ciaran Connolly and Dr Elaine Stewart, into the modernisation of public sector accounting. Ireland has long managed its public finances on what essentially is a cash basis of accounting. Modernisation would migrate the State to an accruals basis for accounting for public spending. The fact of the matter is that government over the years has simply gotten bigger. There are 50,000 more people employed in the Irish public service than in 2011, and annual spending has almost doubled in that time. Despite the constant carping from opposition politicians and the commentariat, we have better education, better transport infrastructure, better regulation and governance, and better health services than we used to. All of this demands even more rigorous financial management. Recent surveys by the Chartered Institute of Public Finance and Accounting and the International Federation of Accountants note that 25% of countries worldwide have already migrated to an accruals-based system of accounting. There is an expectation that this will rise to 65% in the next few years. The UK is already operating an accruals-based system of accounting. The Minister for Finance, Paschal Donohoe TD, announced in 2019 that, in part due to OECD prompting, Ireland would undertake a similar public sector changeover. Nevertheless, as the Connolly and Stewart report notes, even the successful adoption of accruals accounting has its pitfalls. A cash-based system of accounting often suits politicians and civil servants alike. It is more difficult to explain away misspent funds or fudge budgeting processes if everything has to be tied up in neat, unaccrued bundles at the end of each year. In Ireland, these pitfalls may be particularly pronounced because we are not good at multi-year politics. Perhaps the most obvious instance of this is pension reform, where there have been at least as many reports and policy papers as there have been governments in recent times. Multi-year capital investment programmes can also fall by the wayside. The 20-year National Spatial Strategy, devised in 2002, seemed to run out of room. Both attempts to establish rainy day funds this century have yielded empty kitties. Constant change is both the glory and the weakness of the democratic process. Introducing an accruals-based accounting system will undoubtedly result in benefits in expenditure management. However, the multi-year budgeting and planning process is a different matter entirely, inextricably linked as it is with the political cycle. The process of change already underway seems to have considerable momentum, and Ireland will have better public accounting systems within the next few years. Even before the 2019 announcement, there was a process of improvement underway with the introduction of a Budget Oversight Committee and a Parliamentary Budget Office. The latter organisation does excellent work in explaining the shape of the public finances. Yet, the complete transition to the accruals basis will have to be phased in, with a long journey towards total change that will include staff training and the typically painful wrangling of recalcitrant IT systems. Arguably the most important stakeholders in this process are government ministers. They stand to benefit most from improvements in the financial management of their departments. However, great plans for long-term investment or reform too often fall by the wayside when the responsible minister loses their job at the polls. The prospects of re-election frequently depend on immediate policies with immediate spend and immediate results. It will be harder to run a political campaign on accruals accounting principles. Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.

The membership has voted to re-elect the Officer Group for a second term as the Institute and broader profession seeks to re-emerge from the COVID-19 crisis. President Paul Henry, Deputy President Pat O’Neill and Vice-President Sinead Donovan discuss the year that was and explain their priorities for the year ahead. The re-election of the Officer Group for a second term is an unprecedented step in the Institute’s recent history. Can you explain the thinking behind it and outline what it will mean for members as we enter a new phase in living with COVID-19 and its consequences? Paul Henry (PH): At the recent AGM, a proposal was put to – and passed by – the membership of Chartered Accountants Ireland to extend the term of the Officer Group by one further year. The coronavirus pandemic effectively halted important parts of the President’s role, not least outreach and member representation activities. As such, Council felt that an extension of our term would provide an opportunity for the Officer Group to achieve our objectives in a meaningful way for the benefit of members while providing much-needed stability and continuity as the pandemic on the island of Ireland enters a new phase. Over the past year, I have sought to provide leadership at a time of uncertainty as the island grappled with the challenges of COVID-19 and Brexit. During that time, I – along with my colleagues in the Officer Group – supported the advocacy activity of the Institute to alleviate pressure points for members so that they could continue to deliver for their businesses and clients. I also focused on attracting new talent to the profession, continuing a long tradition of positioning the Chartered Accountant qualification as the gold standard for the accounting profession. Looking ahead, the Officer Group will continue to lay the foundations for renewed growth in the aftermath of the pandemic. The future is uncertain and, for many, survival is the sole objective. My goal is to help Chartered Accountants, both in business and as advisors to business, prepare for the challenges that will come as economies re-open and a new ‘business as usual’ takes hold. Pat O’Neill (PON): The profession has worked through many unprecedented issues since the middle of last year, and now we are figuring out how to emerge from a period of significant restriction. We deliberated on the benefits that continuity would bring and concluded that as the economy opens up, the President and the Officer Group will have an opportunity to advance the member-focused initiatives identified at our election in 2020. So in terms of overseeing the evolution of our education model – and in the last year, that has entailed keeping the path to qualification clear and open for our students and member firms – this continuity is vital. We are also focused on supporting our future pathway to being a more digital organisation for the benefit of our members. And not least, we need to support our members in dealing with the challenges of emerging from the pandemic and the Brexit transition. Sinead Donovan (SD): As an Officer Group, we spent much of our time over the past year in fire-fighting mode. We now have an opportunity to make progress on issues of critical importance on a more proactive basis, and our re-election allows us to conclude some complex issues while putting the Institute and the profession on a solid footing as the vaccination programme and economic recovery gathers pace. The virtual environment has been a largely positive experience for the Institute and its members, but not without its challenges. How can members and students expect their Institute to evolve as the vaccination programme continues and restrictions are eased? PH: Since the pandemic took hold, members have benefited from a greater degree of accessibility to their Institute, and that will continue. There will also be a continued emphasis on upskilling and knowledge sharing, as the Institute’s suite of webinars, bulletins, and other digital communications have been invaluable in helping members adapt to remote working while staying on top of relevant technical developments in the profession. We will also continue to work on our digital education offering. Last year, the Institute moved from a traditional in-person examination model to a virtual examination environment, condensing a five-year project into a far shorter period. There have been challenges and setbacks on this journey, and I acknowledge the difficulties our FAE students faced in April. We knew at the outset that there were risks involved in moving all examinations online, and it has been our objective over the last year to mitigate these risks to the greatest possible extent. More than 20,000 virtual exams have now been completed, and we will continue to work closely with our partners to test and develop the platform as we improve the Institute’s digital capabilities into the future. PON: The experience of the virtual working environment has been different for everyone. Large organisations, for example, have central functions, which makes the transition to a virtual working world that bit easier. In contrast, some smaller businesses and practices struggled to adjust to new technology and remote working norms while achieving some degree of work-life balance. And whether you are in business or practice, the process of developing relationships with new customers or clients has been challenging. Indeed, certain ways of working have changed irrevocably, but the value of face-to-face interaction cannot be overstated for many members. We have seen this demand for connection through increased engagement from the membership with services provided by the Institute, such as webinars and digital networking events. Our district societies, both in Ireland and abroad, have played a vital role in this regard, and as Paul said, the Institute was at the vanguard of online education delivery at the very outset of this pandemic. Although the Institute embarked on its digital journey before the arrival of COVID-19, we will continue our measured approach on that journey as we seek to maximise the benefit to our members. SD: One challenge that will become crucial for the Institute is the absence of in-person, on-the-job training, which many trainee Chartered Accountants have now missed out on. The profession may not see the impact of this development for several years. Yet, we must be mindful of this and work to ensure that those trainee Chartered Accountants most affected by the pandemic from a training perspective are upskilled accordingly in the months and years ahead. PH: That is correct, and we must also bear in mind that the current crop of students is missing out on vital peer-to-peer networking opportunities. One of the most notable benefits of my training has been the number of people who studied alongside me that ultimately became lifelong friends and business acquaintances. Unfortunately, students are missing out on that engagement and vital on-the-job learning that helps them develop critical soft skills, which are increasingly crucial for the Chartered Accountant of the future. The business community continues to grapple with a host of issues from Brexit and sustainability to good governance and diversity and inclusion. How is the Institute maintaining its focus on these issues while supporting its members through the COVID-19 crisis? PH: The Institute has adopted a proactive stance on these key issues, notably Brexit. There has been much debate about the Northern Ireland protocol. Irrespective of your position on it, the profession must endeavour to make the best of the situation in the best interest of the island of Ireland while becoming more familiar with the associated operational issues. In terms of sustainability, there is a clear opportunity for members to lead the charge in tackling the climate crisis. As business advisors, we can help people understand and record their sustainability activity and begin to report on that activity in a meaningful and confident way. This work will evolve greatly in the coming months.  The Institute also continues its work in critical areas such as diversity and inclusion and ethics and governance. Many members volunteer their time and expertise on a range of expert working groups, and I would like to express my gratitude to them for their involvement in the Institute and selfless work in the interest of the broader profession. This individual commitment is reflective of the broader societal contribution that we can make.  PON: It has been remarkable to see the extent to which, in particular this year, organisations have pivoted their narrative reporting to highlight their focus on issues such as governance, climate, and diversity and inclusion. We continue to promote these agenda items for our members through member committees, including those devoted to ethics and governance and diversity and inclusion. Much good work has been done in the past year or more, but the journey is just beginning in many respects. The Council of Chartered Accountants Ireland is very gender diverse. However, we have been working to ensure that diversity and inclusion are more formally incorporated into the appointments process for the Institute’s many boards and committees. I am glad to say that the Institute is moving in the right direction and at pace on many fronts. SD: 2021 is the year in which we need to take a giant leap forward in some of these areas. I fully appreciate the need to move forward with care, but the pandemic has also presented a catalyst for change. The past year has forced people to think about what has happened and what could happen in the future. At a very practical level, I have seen a distinct change in the rhetoric used around diversity and inclusion. There is still a degree of nervousness when it comes to asking specific questions of our membership, but I sense that the membership is becoming increasingly receptive to speaking out about diversity and sharing the many stories that are there to be told by our 29,500 members. And it isn’t just about our current members. The Institute and the profession as a whole must endeavour to be dynamic, vibrant, and attractive to the next generation of Chartered Accountants. We have made very good advances on that front in recent years, and it is up to us to maintain that momentum. Your re-election seeks to bring a sense of continuity to the profession at a critical juncture. But looking to the future, what is in store for the profession and its members in the decade ahead? And how will the Institute help them prepare for the changes that will come? PH: The future for Chartered Accountants is, in my view, very positive. People need advice in an increasingly complex world, and the members of our profession are trained to handle, interpret, and communicate technical information and data in a clear, accurate and insightful way. As the level of complexity grows, so too will the importance of those communication skills. And while artificial intelligence will support us in providing advice to clients, I don’t see it as a threat in any way. Instead, it will improve the insights we provide to our clients. PON: The Institute is working through its implementation of Strategy24. If I’m honest, the pandemic has meant that we need to be agile in terms of planning ahead. So, looking out to the end of our strategic planning period is difficult to do with much accuracy at the moment, not to mention beyond that. That said, issues such as the increasing digitalisation of business and the profession will be a challenge. Cybersecurity, automation, and analytics are becoming increasingly real for businesses. Business leaders – and, by extension, Chartered Accountants – must continue to embrace these developments. Taking a longer-term view, the Institute is also engaged with the Department of Education regarding the accounting syllabus in secondary schools in Ireland. This is an excellent example of the Institute looking forward and playing a very positive role in ensuring that the accountancy profession continues to play its part in shaping the education of the next generation of Chartered Accountants. What have you learned about leadership over the past year? And what do you see as the main challenges for leaders as the profession develops a shared understanding of the new world of work? PH: For me, the number one lesson has been the importance of communication. We have achieved a high level of communication at the Officer Group level and within the Executive Team at Chartered Accountants Ireland. However, many of the challenges faced by businesses worldwide during the pandemic arguably arise partly due to an inability to read the room in an online setting or notice nuances or concerns during a virtual meeting. I don’t think you can overstate the importance of this.  Another big lesson has been the importance of understanding the human side of your colleagues, and not just the professional side. It is vital to make time to get to know your colleagues and support them as we work through the months ahead. It could be something as simple as a 10-minute call with a cup of coffee to chat about anything other than work. Gestures such as this don’t take much effort or time, but the impact on your colleagues could be huge. PON: Flexibility is the word that springs to mind for me, the importance of adapting your leadership style. During this pandemic, I have learnt the importance of understanding the challenges and pressures my colleagues face beyond the office. It is important to reassure people that it’s okay to feel under pressure, to prioritise family and to look after their own wellbeing. Flexibility affords us all the opportunity to prioritise different areas of our lives while still achieving our professional goals, and harnessing this opportunity will be of great importance into the future. SD: I agree wholeheartedly with the point about communication. I have found that people with different personality traits have responded differently to the pandemic and the resultant lockdowns. So for me, the big lesson has been taking time to check in on individuals on your team, particularly those who might be closer to the introversion end of the scale. The extroverts, I have found, have managed during the pandemic as they can get their feelings across in a virtual setting, but that is not the case for all colleagues. If you want to get the best out of people and ultimately avoid losing excellent talent, leaders need to communicate and engage with their people in a meaningful way and on an ongoing basis. In that context, wellness must be a priority for all leaders – including us. As an Officer Group, we will therefore continue to raise awareness about the benefits of wellness initiatives and promote the many valuable webinars and other wellness initiatives hosted by CA Support and the various District Societies. Finally, what is in focus for you as you enter your second term? PH: The focus will be on building supports for members as the vaccine roll-out continues, economies re-open, and the recovery takes hold. There is also an opportunity to support the government and the public sector. We have begun to increase our activity in this space – not least with the recent publication of a position paper on proposed reforms to Irish public sector accounting, launched by Minister Michael McGrath – and that will continue in the year ahead. I would also like to take this opportunity to thank Barry Dempsey and the leadership and staff of Chartered Accountants Ireland for their sterling work over the course of the last year. It was a year of many firsts – the first virtual annual general meeting, the first virtual conferences, the first virtual conferring ceremonies, the first virtual student recruitment campaign, and the first virtual regulatory inspections. The staff have ensured continuity of service for members in the most challenging circumstances while innovating beyond what we thought possible just two years ago. Their efforts are greatly appreciated by the Officer Group, Council, and the membership at large. PON: There will also be a strong sense of continuity in the second term. For example, the Institute has made great strides in advocacy and raising the voice of the profession – and that will continue. The Institute is undoubtedly the best spokesperson for members in terms of the challenges they will face and the supports they will need as we re-emerge from the COVID-19 crisis. We will also seek to play our part in building trust in the profession. This is an emerging area, particularly with regard to developments concerning regulation in the United Kingdom. These developments will directly impact our members in Northern Ireland and possibly have a trailing impact for members elsewhere. It will be important to support our members through that process and we will do so in the first instance by responding in July to the United Kingdom’s consultation on proposed reforms to restore trust in audit and corporate governance. SD: Re-emergence is probably a good word to describe the theme of our second term. There will, of course, be an initial knee-jerk reaction to bring people together and enjoy face-to-face interaction once more, but we must not lose sight of the benefits of the hybrid working model. We need to ensure that we re-emerge from this pandemic in a safe and protected manner, but also in a way that embraces change for the benefit of our colleagues and organisations.

Paul Henry shares his thoughts on the challenges ahead following his re-election as President of Chartered Accountants Ireland for a second successive term. It has been my privilege to serve as President of Chartered Accountants Ireland for the last year, and in a sign of these unusual times, I find myself at the mid-way point of a two-year term of office. I feel incredibly fortunate to represent our almost 30,000-strong membership once again as we move into what I hope will be a brighter time for us all. I want to express my appreciation to my colleagues on Council, and my fellow Officer Group members, for affording me the opportunity to continue to lead the work we started together this time last year. It is a pleasure to be joined by Pat O’Neill and Sinead Donovan in this issue of Accountancy Ireland for a round-table discussion on the issues of importance for our members and students. This will be a year of adaptation as we recover and grow again. It is more crucial than ever that I, as President, my Council colleagues, and our entire organisation channel our collective energies to empower our profession to fulfil its mandate, “for tomorrow, for good”. For society and the economy at large, the last year has been one of worry, isolation, and loss. The public health crisis has persisted for longer than most of us expected, and it has tested us. As human beings, we are not designed to operate at such removes from each other. We are now at an inflexion point, as a combination of prudent public health measures and successful vaccination delivery facilitate reopening and a greater sense of sustained optimism than there has been to date. This time of year is an inflexion point for Chartered Accountants Ireland too – a chance to reflect and plan for the coming months. While it may feel like we have been running to stand still during the pandemic, it is important to reflect on what has been achieved. It was a year of firsts: our first virtual AGM, our first entirely virtual conferences, the virtual completion of examinations, our first virtual conferring ceremonies, and our first virtual student recruitment campaign, to name a few. We have seen a surge in member engagement, which shows that what we are doing is resonating. I thank the Institute’s staff for their commitment to making this possible. I thank our members for their perseverance and resilience in delivering to the high standards that our profession demands in practices, businesses, and the public sector at home and abroad. Our profession has played an instrumental role in supporting businesses in keeping the show on the road in the face of immense challenge. And there is so much still to do. I said last year that recovery from the pandemic would be the challenge of a generation, and all of us will be called on to show even greater leadership and resilience. I look forward to leading the Institute in meeting this challenge. Chartered Accountants Ireland will continue to work on behalf of members this year as your strongest supporter and ceaseless advocate. We will work to promote the profession in which we hold such pride to a new generation. And above all, we will position our shared expertise to contribute to a meaningful and sustainable recovery. I was asked recently as President what career tips I would give to my younger self, and right up there was my advice to build a strong team and keep hold of them. The stronger the team, the better the outcome. None of us can meet the challenges of the future without a collaborative approach, and I look forward to working with you, and for you, this year. Paul Henry is the President of Chartered Accountants Ireland.

Minister Michael McGrath provides an update on the National Recovery & Resilience Plan and the National Development Plan, as Ireland sets about rebuilding its economy with a focus on sustainability and resilience. In the past 15 months, the world has been hit by a massive health and economic crisis, unprecedented in modern times. No country could possibly try to tackle this on its own. By collaborating with international partners, we have been able to harness the best available medical knowledge for diagnosis, treatment, and vaccination against COVID-19. It was clear from early on in the pandemic that, as well as a concerted medical response to the crisis, there would need to be a dedicated economic plan to mitigate the economic impact. In July of last year, EU leaders met against a backdrop of growing turmoil in member states over the impact on people’s livelihoods. At this summit, an agreement was reached on a recovery package to complement the work of national governments.  The National Recovery & Resilience Plan NextGenerationEU The European Union’s €750 billion NextGenerationEU recovery instrument, along with the Union’s trillion-euro budget for the next seven years, is central to the EU’s response to the global pandemic. There is an important difference in the EU’s response to the global pandemic compared to the response to the financial crash. Lessons have been learnt, and the EU moved quickly to reassure member states that we would be supported. NextGenerationEU aims to help repair the immediate economic and social damage brought about by the pandemic and prepare for a post-COVID Europe that is greener, more digital, more resilient, and fit to face the future. The Recovery and Resilience Facility is the largest component of NextGenerationEU, making €672.5 billion available to member states in the form of grants and loans to stimulate economies and improve conditions for citizens. Every crisis is also an opportunity and, as we move on from COVID-19, we must use these funds to make a real difference to our country, reform where it’s needed, and put climate action at the top of our agenda. The Recovery and Resilience Facility and Ireland Ireland is expected to receive €915 million in grants under the facility in 2021 and 2022. A further set of grants is to be allocated in 2023, taking into account economic developments between now and then. To access this funding, Ireland has developed a National Recovery & Resilience Plan for approval by the European Union. The plan sets out the reforms and investments to be supported by the facility. My Department of Public Expenditure & Reform is responsible for preparing this plan, along with the Department of the Taoiseach and the Department of Finance. Other departments have also given their input to ensure a coordinated ‘whole of government’ approach. We are all on the same page when it comes to using these funds wisely and getting the best possible value from this investment. Recovery and Resilience Facility The Recovery and Resilience Facility is structured around six pillars:  Green transition; Digital transformation; Economic cohesion, productivity and competitiveness; Social and territorial cohesion; Health, economic, social and institutional resilience; and Policies for the next generation, as well as seven flagships identified by the Commission. Addressing green and digital transition is a hallmark of the facility. National plans must devote a minimum of 37% of expenditure to climate and 20% to digital investments and reforms. Plans should also seek to address seven flagship areas identified for reforms and investments: Clean technologies and the acceleration of development and use of renewables; Energy efficiency of public and private buildings; Sustainable, accessible, and smart transport; Roll-out of rapid broadband services, including fibre and 5G networks; Digitalisation of public administration; Increase in European industrial data cloud capacities and the development of powerful and sustainable processors; and Adaptation of education systems to support digital skills and educational and vocational training. Member states are required to embed the measures they plan to take in their national budgetary processes. The plans must also strike a balance between reforms and investments and seek to address challenges identified in the relevant Country Specific Recommendations. Ireland’s Plan and Projects Ireland’s Plan has a particular focus on green and digital transition, as well as supporting economic recovery and job creation. It is aligned with the National Economic Recovery Plan and has been developed alongside the ongoing review of the National Development Plan. Priorities for the National Economic Recovery Plan aligned with the National Recovery & Resilience Plan include climate actions and reforms; digital delivery of public services; social and economic reforms; digital transformation and adoption of artificial intelligence (AI) technologies by SMEs; and research and innovation. The National Recovery & Resilience Plan includes a suite of projects focused on: Advancing the green transition; Accelerating and expanding digital reforms and transformation; and Social and economic recovery and job creation. Several large-scale reforms and investments are included to maximise the impact of the funds provided. Next steps National plans must meet stringent EU requirements set out in the Recovery and Resilience Facility regulation before they receive approval from the European Commission and the Council of Ministers. Intensive negotiations with the European Commission have been underway in recent months, and Ireland’s plan will be considered carefully for two months before it is approved. The facility is a performance-based instrument, which means that demanding milestones and targets must be met before funding can be drawn down – and this is as it should be. As well as milestones and targets, requirements include green and digital expenditure tagging, detailed costings, an appropriate control and audit framework, and compliance with the ‘do no significant harm’ principle. Plans should demonstrate a lasting impact on member states, whether by strengthening job creation and social resilience, whether the expenditure is reasonable compared with the expected return, and whether suitable control mechanisms are in place to prevent corruption, fraud, and conflict of interest.   European solidarity The lifetime of this Government will see Ireland mark 50 years of EU membership. Our membership has played an immense role in our social, economic, and political development. The values of the European Union are our values. That is why the Programme for Government sets out a vision of Ireland at the heart of Europe and global citizenship. During the five decades, we have benefited from the solidarity that comes with membership. We have seen this over the last year as we responded to the global pandemic and in the previous five years as we navigated the challenges posed by Brexit. In the Recovery and Resilience Facility, we see further evidence of that solidarity. In the coming weeks and months, the National Recovery & Resilience Plan, along with the National Economic Recovery Plan and the National Development Plan, will enable us to move beyond the pandemic to rebuild the economy and improve our country for all. We have been through a difficult period, and the economic and social scars cannot be underestimated or dismissed. However, decisions at the EU level have shown that we really are all in this together. Member states will be supported in finding their way forward, and we will emerge as a stronger and more resilient EU. The National Development Plan Creating our shared future Like accountants, ministers and civil servants are analytical thinkers, carefully scrutinising the driving forces of change, the prevailing macro-economic factors, and the views of the people we serve. We depend on evidence and numbers, and this analysis is vital as we craft the revised National Development Plan, which is due for publication later this year. The National Development Plan is one half of Project Ireland 2040. Launched in 2018, it sets out the investment priorities that underpin the implementation of the National Planning Framework. When this Government took office last July, we set about tackling the many challenges we face as a country, including the COVID-19 pandemic, Brexit, housing, and an uncertain political landscape. Our country is at a critical stage in its development, and there has been much discussion about an ‘infrastructure-led recovery’ across the globe. We know that we need to create opportunities to rebuild a better Ireland for all, as without substantial reform, we risk repeating the mistakes of the past. Investment decisions must support broader economic, environmental, and social outcomes. Our national recovery requires a holistic approach involving the contribution of both urban and rural areas. It is my view that we should take the opportunity to create the foundations for long-term, sustained economic growth. That is why, on taking office last July, I asked my officials to bring forward the mooted review of the National Development Plan. Economic context Our population is set to grow by one million people by 2040. The infrastructure implications of that alone are enormous. We must ensure we have thriving and sustainable communities for future generations. Ireland’s economy was the only one to grow in the EU last year. The European Commission expects Irish GDP to grow by 3.4% in 2021 and marginally faster in 2022. These are solid numbers considering the global challenges we’re facing. The impact of COVID-19 on our working lives has been seismic. We have undertaken the greatest global home-working experiment ever, moving it from the fringes to the mainstream. The Government’s National Remote Work Strategy helps to make remote working a permanent option in Ireland. It plans to give employees a legal right to request remote working and to introduce a code of practice on the right to disconnect. The Strategy commits to investment in remote work hubs and the development of the national broadband plan. The Programme for Government characterises the climate emergency as the single greatest challenge facing humanity. We are the first generation to truly feel the effects of climate change, and we may be the last to have an opportunity to reverse it. This is why we have to act now. In the public consultation we undertook, there was near consensus that the revised National Development Plan will have to be viewed through a climate lens. Public Spending Code We need to ensure that the right policy settings are in place. Rigorous cost-benefit analysis is essential, particularly in the current economic climate. As part of the ongoing reform of Ireland’s public investment management system, the Department of Public Expenditure & Reform has reviewed and updated the Public Spending Code. The review was informed by an extensive consultation process involving engagement with public officials and an examination of international best practice. Importantly, the Public Spending Code also incorporates learnings from various capital projects in Ireland, including the National Children’s Hospital. The update to the Public Spending Code specifically strengthens the existing guidance to better reflect the realities of project delivery with a particular focus on financial appraisal, cost estimation, and risk management. The updated Public Spending Code: Supports public bodies in delivering greater value for money; Provides greater clarity on roles and responsibilities; Revises the project life-cycle to reflect the realities of project delivery; Strengthens guidance; and Increases transparency through the publication of business cases and evaluation reports. This update followed an extensive consultation process, and as a result, there is a stronger focus on cost estimation and professional project management. We have also learned from international experience when it comes to managing mega-projects over €100 million. There are at least 40 projects in this category in the National Development Plan. Later this year, we will have a new governance and assurance process for major projects. This will involve two external reviews of major projects at key points in the project life-cycle by independent experts in infrastructure delivery. I have asked my ministerial colleagues to rigorously assess the costs of existing planned projects to ensure that those costs are up-to-date and realistic. I am also developing a new external review process for all major projects worth over €100 million. The process In early April, I published the Phase 1 Report on the Review of the National Development Plan. The work carried out as part of Phase 1 included:  Macro-economic analysis; Public capital expenditure and infrastructure demand analyses; Consideration of climate action, housing, and planning; and Alignment with the National Planning Framework. The Phase 1 report also includes detail on the successful public consultation process, Review to Renew, which generated 572 submissions. Phase 2 will involve detailed engagement with colleague departments to agree on capital allocations for the coming period and priority programmes for inclusion in the new National Development Plan. Combined, this is a solid evidence base that will allow us, as a Government, to make informed decisions and bring forward a new National Development Plan in the summer of 2021. Michael McGrath is Minister for Public Expenditure & Reform, a TD for Cork South Central, and a Fellow of Chartered Accountants Ireland.

Julia Rowan answers your management, leadership, and team development questions. Q. I did really well at the beginning of the lockdown, but it’s beginning to feel like a struggle. We worked hard before, but COVID-19 has added at least 15% to our workload. I’m trying to remain positive and upbeat with my team, but I feel I’m running on empty. There is so much in this short question – the pressure to be positive, the desire to mind your team. And I appreciate how important it is to be positive, but what kind of positive? Leaders often want, with great intention, to protect their teams – from negativity, from too much work, from politics. The problem is that the leader then takes on the dual burden of protecting and being positive. That’s exhausting. You manage a team of adults. Trust yourself to be real with them. You don’t want to be relentlessly negative (‘everything is awful’), but unrealistic positivity (‘everything is awesome’) is not doing anyone any favours. You can be positively realistic (‘it’s harder with COVID-19, let’s talk about how we cope with that’). Not having to pretend will allow you to show up more authentically, and that gives permission to others to be authentic. I generally find that when teams are allowed the space to express how difficult things are, they find solutions and ways forward. Not having to pretend releases creativity. By being realistic, you have not stopped supporting the team – you are supporting them in a more useful way. I’m a huge fan of journalling to become aware of our drivers and then put them to good use. Positivity, perfectionism, and people-pleasing are drivers I come across all the time. Becoming more conscious of them helps us to channel them more usefully. Q. An experienced member of my team continually asks for direction. The quality of their work is good, but I have to spend a lot of time briefing them, checking, and so on. I’m not sure how to address this or whether I should just let sleeping dogs lie. My first response to this question is to ask whether your team member’s need stems from their ‘will’ (confidence, motivation) or their ‘skill’ (ability). You tell me that the quality of their work is good, so my guess is that their skill is okay, and the issue is confidence. There is also the possibility that they are simply in the habit of asking you. The next time this person asks you for input about a task, engage in a different kind of conversation and provide a different kind of support. Ask questions that allow them to access their knowledge and experience and build on their strengths and achievements. If there is a genuine lack of confidence, be sure to reassure and give positive feedback. You need to prepare for this because on a busy day, it’s very easy to get bounced back into the usual way of doing things. Write out some good questions in advance. I often advise leaders to respond carefully when asked a ‘How do I…?’ question and reflect on what the person asking the question truly needs: is it advice, confidence, or permission? Julia Rowan is Principal Consultant at Performance Matters, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie