Mairead McGuinness, EU Commissioner for Financial Services, Financial Stability and Capital Markets Union, talks to Elaine O’Regan about her role in implementing sanctions to stop the “Kremlin war machine”, her ongoing contribution to the future of sustainable finance  and her role in laying the foundations for the Capital Markets Union. You’re 18 months into your role as EU Commissioner. What do you see as your most important achievements so far, and what are your priorities now? I am responsible for sanctions and their implementation by the Commission and this is top of my agenda right now, given the terrible war in Ukraine and the need to respond to Russian aggression. We want to cut off funding to the Kremlin war machine.  We’ve listed hundreds of individuals, including Vladimir Putin, his Foreign Minister Sergey Lavrov and dozens of oligarchs, which means their assets are frozen. They can’t be provided with funds, and they are also subject to travel bans.  We’ve cut Russian access to EU capital markets, including a full asset freeze on three Russian banks with strong links to the Russian state, excluding seven key Russian banks from Swift, and blocking Russia’s EU-held foreign exchange reserves.  We also have measures on energy, transport, dual-use technologies, trade, visas for diplomats and disinformation. And, we have sharpened sanctions against Belarus, so it cannot be used by Russia to evade our sanctions.  At the same time, we’ve been working closely with our partners, including the US, Britain, Canada, Australia, Japan and others, to impose comprehensive and complementary measures that ensure Russia’s illegal actions bear a high cost. The focus now is on making sure that the sanctions are properly implemented so they are as effective as possible – and we stand ready to put more sanctions in place as the situation evolves. Beyond this, over the past 18 months my work on sustainable finance and the contribution of finance to tackling climate change has been important, as well as work on building up the Capital Markets Union to give companies across the EU better access to finance.  I’m also passionate about using my role to highlight the importance of financial literacy. People should understand how the financial system works, how they can make the best use of their money, and be confident enough to ask the right questions about their personal finances. The Ukraine invasion has placed energy supply at the forefront of the EU agenda. How do you expect the situation in Ukraine, and its impact on the flow of energy supply globally, to influence the policy initiatives laid out in the EU Green Deal?  Russia’s aggression against Ukraine makes a rapid transition to clean energy more urgent than ever. We’re too dependent on Russian gas. We must have a reliable, secure, and affordable supply of energy for Europe.  We already have the Green Deal indicating where we need to go, but Russia’s aggression has brought into very sharp focus our vulnerabilities and why we need to accelerate the transition to a more sustainable economy.  The Commission adopted a plan in March – REPowerEU – with new ways to ramp up green energy production, diversify supplies, and reduce demand for Russian gas.  The financial system has a key role to play in the Green Deal. The goal is both “to green finance” and “to finance green” to help the financial sector become sustainable and to make sure that the financial sector provides the money for business to become sustainable.  We’ve put clear and consistent rules in place, namely the EU Taxonomy, a disclosure regime for non-financial and financial companies; and investment tools, including benchmarks and standards like the European Green Bond Standard.  We are now increasingly moving to the implementation phase to make sure these rules are effective.  How far along is the Taxonomy at this point, and what are the next steps in the pipeline for the year ahead? What do companies operating in the EU need to know? The Taxonomy helps signpost the way for private investment to contribute to our climate goals: it provides clear definitions for sustainable economic activities. Companies can use it to plan their transition and to show the market what they are doing.  Last year, we adopted the first rules on activities that make a substantial contribution to adapting to and mitigating climate change.  They cover 170 economic activities, representing about 40 per cent of listed companies in the EU, in sectors responsible for around 80 per cent of direct greenhouse gas emissions in Europe.  The rules are applicable from January 2022. We have also specified how market players should disclose the extent that their activities are taxonomy-aligned. We’ve put forward proposals for how gas and nuclear can make a contribution to the transition to sustainability. We have not designated gas and nuclear as “green”, but we have recognised the specific role certain nuclear and gas activities can play in the transition to full sustainability, subject to very strict conditions and phase-out periods. This proposal is now under scrutiny by the European Parliament and the Member States. We have work to do on including more sectors in the Taxonomy and we will be preparing details on the four remaining environmental objectives – water quality, circular economy, biodiversity, and pollution prevention. The International Sustainability Standards Board (ISSB) is expected to put its first set of standards to public consultation later this month. How do you foresee the EU Commission working with the ISSB to progress the wider ESG reporting agenda?  The EU has been the global leader on sustainable finance. We are ahead when it comes to the contribution of the financial system to tackling climate change. So, we’ve gone further than others, and we’ve done that faster – which is important given the urgency of the climate challenge. But, of course, the climate challenge is global, and markets are global too. So, we are fully engaged in efforts on global standards. EU sustainability reporting standards have shown the way, to a great extent, and informed the international context.  We see global standards as a common baseline that allow us to go further to meet the ambition set out in the EU Green Deal.  At a practical level, the body that drafts EU accountancy and sustainability standards – the European Financial Reporting Advisory Group (EFRAG) – has established close cooperation with the ISSB. The CSRD proposal – and the reporting standards that will be part of it – will ensure that corporates disclose sustainability information that underpin the rest of the sustainable finance agenda.  EU standards must be coherent with the EU’s political ambitions and with our existing framework for sustainable finance, including the Taxonomy and the Sustainable Finance Disclosure Regulation.  From the beginning, EU standards will cover all ESG topics under a double materiality perspective – companies will have to report about how sustainability issues affect them and about their own impact on society and the environment.  In contrast, the standards set by the ISSB only look at risks to companies, but not at the impact of companies, and in the first instance they are focusing on climate.  EU standards will build on and contribute to global standardisation initiatives. We should build on what exists, and seek as much compatibility as possible, while also meeting Europe’s specific needs. At the recent IIF Sustainable Finance Summit, UBS Chairman Axel Weber said “banks can be a facilitator of channelling money into the right uses for a carbon transformation of the economy, but it’s not a banking issue.” What’s your take on this stance? All financial institutions, including banks, but others too, need to play their part in the transition to climate neutrality and improve their environmental performance as part of their financing, lending, and underwriting activities.  Financial institutions should integrate EU sustainability goals into their long-term financing strategies and investment decision-making processes.  We will help them accelerate their contribution to the transition, by reinforcing science-based target setting, disclosure and effectiveness of decarbonisation action, but also monitoring the financial sector’s commitments. The Corporate Sustainability Reporting Directive (CSRD) is being viewed as a crucial step in bringing sustainable reporting on par with financial reporting. It will require assurance on non-financial statements, however. Who do you foresee this responsibility falling to? The CSRD proposal requires statutory auditors to give an opinion on sustainability reporting – the idea is to ensure that the sustainability information disclosed is credible.  This will require statutory auditors to have the necessary skills in the assurance of sustainability reporting, helping to ensure that financial and sustainability information is connected and consistent.  We are mindful of the potential risk that the audit market could become even more concentrated, however. That’s why the proposal allows Member States to accredit independent assurance service providers to verify sustainability reporting. The proposal for the EU Green Bond Standard was published by the European Commission in July 2021 as part of the Strategy for Financing the Transition to a Sustainable Economy. Tell us about this proposed regulation.  Green bonds offer a great opportunity for financial markets to directly support the transition to a climate-neutral economy. They bring issuers reputational benefits and sometimes also a lower cost of funding.  They give investors transparency about how companies allocate their money. So green bonds make business sense as well as climate sense — and the market is booming. Last year, after many years of on average 40 percent growth, issuance increased by another 65 percent compared to the previous year.  However, there are some challenges. As new issuers enter the market, there is less consensus on what is green. This means more effort for issuers to prove their green credentials, and more work for investors to check them.  Companies acting as external reviewers of green bonds help investors navigate this complex landscape, but the wide range of methodologies they use can also be a source of confusion.  That’s why in July 2021, the Commission adopted a legislative proposal for a European green bond standard, as part of its work to guide investors towards greener investments. The overall aim is to create a new gold standard available to all green bond issuers on a voluntary basis.  While building on market best practice on reporting and external review, this standard would add two important new elements. First, full alignment with the EU Taxonomy, to ensure that funds raised by these bonds are spent on economic activities that are sustainable. Second, supervision by ESMA of external reviewers that provide opinions on the alignment with the standard.  There is already a lot of interest from both issuers and investors. But, in the end, success depends on whether we keep the environmental ambition high, and the unnecessary burden on issuers low. Negotiations are ongoing in the European Parliament and the Council, and we are hoping that an agreement can be reached as soon as possible.   You recently indicated that a bill to introduce a digital euro may be tabled in the EU in early 2023, providing a legislative framework for the ongoing work of the European Central Bank on a digital version of the euro. What are the potential benefits of introducing this digital euro? A digital euro would be to complement cash – which remains vital – and other means of payment provided by the private sector.  A digital euro would provide a digitalised form of money backed by a central bank, which would be designed to allow everyone to use it, from the tech savvy to those excluded by the financial system. How exactly it should be designed to meet those goals is currently being examined.  Other countries are working on or are already issuing central bank digital currencies, and the use of stablecoins is increasing. A digital euro would strengthen the EU’s ability to determine its own course and maintain the autonomy of EU monetary policy.  The digital euro raises challenges, but also opportunities. This is why we are working hand in hand with the ECB and listening to all stakeholders on this key project.  The ECB would be responsible for issuing any digital euro, while the Commission would need to put forward the legislative framework to allow the ECB to do so.  Currently, we are looking at early 2023 to introduce the proposal to give time for the Parliament and EU Member States to work before the ECB would decide how and whether to issue a digital euro. The EU is responding to the need for improved online security for cryptocurrencies with the Markets in Crypto-Assets Regulation and Digital Operational Resilience Act. What do you see as the biggest risks in this area? Unfortunately, the level of operational resilience in the crypto-asset space is not good enough. There are also a lot of hacks and thefts.  The Markets in Crypto-Assets Regulation (MiCA) will bring crypto into the regulated space and will mean that crypto service providers are covered by financial services legislation.  MiCA will put in place consumer protection measures and limit the risk of fraudulent behaviour in the market.  The Digital Operational Resilience Act (DORA) is for the whole of the financial services sector, to ensure ICT risks are better managed by financial companies. When MiCA enters into force, crypto service providers will have to adhere to the highest levels of operational resilience, as they will also be covered by DORA. DORA and MiCA are currently part of negotiations between the EU institutions. 

Russia’s invasion of Ukraine has dampened the global economic outlook, prompting predictions of spiralling price hikes not seen since the 1980s and looming recession. But, is it too soon to predict with any accuracy what really lies ahead? Professor Anthony Foley investigates. After two years of economic uncertainty because of the pandemic, Russia’s invasion of Ukraine, and its associated sanctions, have unsettled our markets once again, lowering projected GDP growth rates and increasing global inflation rates in 2022 and, to a lesser extent, in 2023.  However, the exact scale of the impact is as yet uncertain. It will depend on several factors, including the duration of the conflict, developments in economic sanctions — both in terms of impositions on Russia and its own retaliative measures — and the nature of any possible peace deal.  Together, Russia and Ukraine comprise a relatively small part of the global economy, making up about two percent of GDP internationally. They are important players in the markets for certain products, accounting for about 30 percent of global exports of wheat, 20 percent of corn, roughly 20 percent of fertilisers, 20 percent of natural gas and 11 percent of oil.  Both countries also have substantial uranium reserves and are significant suppliers of the inert gases used to make semiconductors and the titanium sponge used in aircraft manufacturing.  On top of that, Russia is a major supplier of the palladium used in the catalytic converters for cars and the nickel used in batteries and steel, while Ukraine is among the world’s foremost producers of sunflower oil and sugar beet. Mechanisms of the economic impact of war There are several mechanisms through which war has an economic impact. Trade flows are suppressed, hitting integrated global supply chains. The rising cost of commodities like gas, fertiliser and oil upends business cost models and lowers real consumer income.  Even had there been no response from the rest of the world to the Russian invasion, Ukraine would still be unable to maintain existing supplies of products, such as wheat and minerals, to the global market. This alone would result in supply chain disruption and price hikes for certain products.  Uncertainty, in general, suppresses economic growth, muting confidence and lowering consumer spending and enterprise investment — and this is especially true of the current situation in Ukraine. The intervention of the West thus far, through economic sanctions imposed on Russia and Belarus, has increased the economic impact of the war by limiting trade engagement with Russia.  Russia may retaliate against these sanctions by restricting gas supplies or defaulting on sovereign debt, which would further deepen the economic impact.  Energy prices were rising even before the Ukraine invasion, but the war has now accelerated the rate of inflation. Even if a country has no direct trade link with Russia, it will be affected by ongoing global price hikes.  Countries with trade links to Russia will have lower growth rates, curtailing their capacity to trade with other countries – even those with no direct trade links to Russia — triggering further global economic impact. Hundreds of western companies have opted to cut business ties with Russia, even if not required by official sanctions, including big brand names like Coca-Cola, McDonald’s and Nike. In addition, there are implications for the public finances of those countries taking refugees from and sending aid to Ukraine. If a peace settlement is reached, there will then be the cost of rebuilding Ukraine.  Irish trade with Ukraine & Russia Ireland exported goods worth €627 million to Russia in 2021 (just 0.4% of its total exports) and imported goods worth €598.1 million from Russia. In the same period, goods exported to Ukraine totalled €91.7 million, while imports came to €70.2 million.   The imports of goods are dominated by petroleum and petroleum products (€231 million), coal and coke (€140 million) and fertilisers (€134 million). These three imports are 84 percent of total Irish imports from Russia.  The value of services traded with Russia is much higher, however. Ireland’s service exports to Russia were valued at €3,242 million in 2020 (i.e. 1.3% of total service exports). The value of services imported to Ireland from Russia in the same year was €360 million. The main services exported to Russia were computer services (€1,840 million), operational leasing (€926 million), financial services (€81 million) and insurance (€27 million). The main service imports from Russia were business services. Service exports to Ukraine were €647 million in 2020, and imports were €49 million. Impact on economic growth and inflation There is significant uncertainty about the magnitude and duration of the economic impact of the war. However, the OECD, the National Institute of Economic and Social Research in the UK and the European Central Bank (ECB) have all recently attempted to quantify the economic impact.  The OECD estimates that in 2022, the war will reduce global growth by about one percent, from 4.5 percent to 3.5 percent. Global 2022 inflation will increase by 2.5 percent from 4.2 percent to 6.7 percent.   The Euro area economic growth will drop by about 1.4 percent from 4.3 percent to about 2.9 percent. Euro area inflation will increase from 2.7 percent to about five percent in 2022. The estimated impact on the US is almost one percent off the growth rate and 1.5 percent on the inflation rate. The assessment by the National Institute of Economic and Social Research in the UK is a little more optimistic but broadly similar to that of the OECD. Global growth this year may fall by 0.5 percent, while inflation could rise by about three percent.  Next year’s impact will not be as drastic, but it is something to watch out for. In 2023, we will see about one percent less in growth and an added two percent on the inflation rate. Euro area growth this year will fall by 0.9 percent, and inflation will rise from 3.1 percent to 5.5 percent. Euro area growth would be about 1.5 percent lower in 2023, and inflation would be about 0.8 percent higher.  Three economic scenarios The ECB recently undertook a detailed analysis of the economic impact and presented three scenarios (Table 1). In December 2021, the ECB forecast a GDP growth rate of 4.2 percent and 3.2 percent for the Euro area in 2022. These figures were revised in March, following the Russian invasion, to GDP growth of 3.7 percent and inflation of 5.1 percent.  This “baseline projection” assumes that current disruptions to energy supplies and suppressed confidence are temporary and that global supply chains are not significantly affected.  The ECB also produced forecasts based on two more negative but possible scenarios.  The adverse scenario assumes a worsening in all three impact mechanisms of trade, prices and economic confidence. The severe scenario assumes a more significant and prolonged increase in commodity prices, leading to second-round inflation and financial system impacts.  The differences between the severe scenario and the pre-war forecasts here are substantial. The growth rate drops by almost half from 4.2 percent to 2.3 percent, and the inflation rate more than doubles from 3.2 percent to 7.1 percent.  Of course, we do not yet know what the eventual impact of the Russian invasion of Ukraine will be. We can be sure there will be lower growth, and inflation will rise. On the most extreme assumptions, growth could almost halve, and inflation could more than double compared with the forecasts for the Euro area before the invasion. The ECB has also considered the potential longer-term impact of the Ukraine invasion on growth and inflation in the Euro area into 2023 (Table 2).  The news here is relatively positive, in that growth is closer to the ECB’s pre-war forecast of 2.3 percent on the severe assumptions, compared to 2.9 percent in December 2021. The same is true for inflation — 2.7 percent on the severe assumption compared to 1.8 percent in December 2021. Possible economic impact on Ireland Before the Russian invasion of Ukraine, the economy was expected to perform well in 2022. The Stability Programme Update, published by the Department of Finance in April 2021, forecast GDP growth of five percent this year, followed by 3.5 percent in 2023.  Modified domestic demand was expected to grow by 7.4 percent this year and 3.8 percent next. Inflation was expected to be 1.9 percent in 2022 and 1.5 percent in 2023. Up until the invasion of Ukraine, this forecast was expected to be exceeded.  The forecasts underestimated the rise in inflation, however – the October 2021 budget forecast Irish inflation rates of 2.2 percent in 2022 and 1.9 percent in 2023.  Using the relativities of the severe ECB scenario, Ireland might face a growth rate of about 3.5 percent instead of around six percent in 2022 and inflation of eight percent instead of four percent.  The good news is that growth is still likely in Ireland and the Euro area because of the relatively high growth rates before the effects of the war.  Of course, particular sectors face a more daunting situation. Ireland’s aircraft leasing sector has high exposure to Russia, and it is uncertain how this will play out in terms of aircraft recovery.  International tourism was expected to rebound after COVID-19 in 2022, but the war may have a dampening effect, particularly in the case of US tourists. Many enterprises in Ireland have had to pause or end their business activities in, and trade contacts with, Russia. Ireland must now cope with the financial requirements of taking in possibly 100,000 Ukrainian war refugees. However hard this may be, consider the position of Poland with millions of refugees to support. The major immediate economic problem is the very high inflation rate to which the war has contributed but is not entirely responsible. How will consumers and producers cope with the price increases? To what extent can the Government shield households from the effects of rising energy prices?  It is already clear that the economic impact of the war is substantial, and the scale and duration of the impact are still unclear, but, as of now, we should be able to avoid recession. Over the longer term, the economic impact will depend on whether there is a return to the pre-war normal (which is unlikely) and what the new normal will be in terms of trading blocs, continuing sanctions, higher defence spending, cyberwar, political tensions and bank payment systems. Anthony Foley is Emeritus Associate Professor of Economics at Dublin City University Business School.

In this week’s Public Policy Bulletin, read about recently announced Government initiatives to support remote working in Ireland, a BearingPoint study which analyses 123 European banks and the recently released annual report on public debt in Ireland. We also cover Minister McConalogue and Northern Ireland’s Minister Lyons’ trip to Expo 2020 Dubai and a statement from Minister Lyons on the independent review of Invest Northern Ireland  Initiatives to support remote working announced by Minister Humphrey   This week, the Minister for Rural and Community Development, Heather Humphreys, announced a series of major initiatives to support Remote Working. Through the Connected Hubs 2022 Call, the Department of Rural and Community Development will provide €5 million to add additional capacity to the existing remote working infrastructure in Ireland by upgrading existing hubs and Broadband Connection Points (BCPs). €8.9 million has already been provided for 118 remote working projects across the country in 2021.  In May 2021, the National Connected Hubs network was launched with 60 hubs onboarded onto the connectedhubs.ie platform. There are now in excess of 200 hubs live on the connectedhubs.ie platform, with an aim to hit 400 hubs by 2025. The Connected Hubs mobile app has been launched to allow users to find their nearest hub facility and easily book a desk space using their mobile device.   Read the press release here.  Pandemic impact on European and Irish Banks   A BearingPoint study has found that Irish banks were hit harder than many of its European peers during the Covid-19 pandemic. The study looked at 123 European banks from 2013 to 2020 and found that Irish banks set aside significantly more capital for the impairment of loans during the pandemic (an increase of 1300 percent), when compared to their European counterparts (an increase of less than 120 percent).  In 2020, Bank of Ireland and AIB had impairment charges of €1.1 billion and €1.4 billion respectively due to Covid-19 concerns. Irish banks had a negative return of 6.3 percent in 2020, compared to a European average return on equity of 2%. 2020 cost income ratios for Irish banks averaged at 68.7 percent, higher than the European banks average of 64 percent and the optimum cost income ratio, which should be less than 55 percent.   Noel Crowley, the Financial Services Director at BearingPoint, shares his response to the report here.   Annual Report on Public Debt in Ireland 2021   The Minister for Finance, Paschal Donohoe released the fifth annual report on public debt this week. The report found that public debt increased by €33 billion during the two years of the Covid-19 pandemic, now approaching a quarter of a trillion euros. This is an estimated 106 percent of national income or €47,250 for every person in the country. These figures stood at 95 percent and €41,450 in 2019.  Minister Donohoe highlighted the major fiscal challenges that lie ahead, including a likely fall in corporation tax receipts, an aging population and the large fiscal costs that will be required to finance the journey to “net neutral”. In a press release issued by the Department of Finance, Minister Donohoe concludes “This is why we need to rebuild our fiscal buffers, including by steering the public finances to a more balanced path. We can do this while continuing to make significant capital investment, as outlined in the National Development Plan. This will help to lay the foundations for future growth while protecting against the future fiscal challenges that lay ahead of us.”   Read the full report from the Department of Finance here.     Dubai’s Expo 2020  Minister for Agriculture, Food and Marine, Charlie McConalogue opened a Board Bia celebration of Irish food at the Irish pavilion at Dubai’s Expo 2020, with the current year theme “Island of Inspiration” highlighted when he remarked “that spirit of inspiration and creativity reflected in the Irish food producers, large and small, who are innovating and finding routes to premium markets in the Gulf region”.  Northern Ireland’s Economy Minister Gordon Lyons also attended the event during his two-day visit program to the UAE. Speaking from the UK Pavilion at the Expo, under the UK’s theme of “Innovating for a shared future”, Lyons said “Today, Northern Ireland is centre stage at the world’s largest live international event. We are here to bring a flavour of Northern Ireland to the world and showcase our innovations within business, tourism, food and education to a global audience."  Invest Northern Ireland independent review  Northern Ireland’s Economy Minister Gordon Lyons made a statement to the NI Assembly this week in relation to his decision to commission an independent review of Invest Northern Ireland (Invest NI). He pointed out the fantastic track record Invest NI has in making Northern Ireland the most attractive location in the UK, outside of London, in respect of foreign direct investment.   The statement from Lyons can be read here.   Dame Rotha Johnston DBE and Ms Maureen O’Reilly have been appointed as panel members to work with the panel chair, Sir Michael Lyons for this independent review. The report of their findings is expected in September 2022.   Invest NI’s offers of financial assistance to companies beyond March 2020 is currently on pause, as they await clarification on their potential 2022/2023 Budget sign allocation from its parent Department for the Economy 

Welcome to this week’s Technical Roundup.  In developments in recent weeks, the Financial Reporting Council has issued January 2022 editions of UK and Ireland accounting standards. These editions reflect the amendments made since the previous editions were issued in 2018, as well as changes in Irish company law, resulting in a single up‑to‑date reference point for each standard; in the first International Accounting Standards Board podcast episode of 2022, IASB Chair Andreas Barckow and Vice-Chair Sue Lloyd join Executive Technical Director Nili Shah to discuss the main topics from the January 2022 International Accounting Standards Board (IASB) meeting. Read more on these and other developments that may be of interest to members below. Financial Reporting The Financial Reporting Technical Committee of Chartered Accountants Ireland (FRTC) has responded to the International Accounting Standards Board’s (IASB) request for information as part of the post-implementation review of IFRS 9. In its response, the FRTC highlighted the importance of providing guidance on how to treat financial assets with sustainability linked features which are beginning to emerge in practice. The FRTC has also responded to the IASB’s Exposure Draft Subsidiaries without Public Accountability : disclosures. This exposure draft sets the proposal for a new IFRS standard which would permit certain subsidiaries to apply reduced disclosure requirements when applying IFRS standards. Whilst the FRTC were supportive towards what the IASB are trying to achieve, they were not in agreement with the approach adopted. Rather than the standard setting out the required disclosures, the FRTC noted that a more appropriate approach would be to draft a list of disclosures that are not required when applying the standard. Such an approach would be similar to the approach set out under FRS 101 and would, in the opinion of the FRTC, be easier to compile and less costly for preparers. The FRC has issued January 2022 editions of UK and Ireland accounting standards. These editions reflect the amendments made since the previous editions were issued in 2018, as well as changes in Irish company law, resulting in a single up‑to‑date reference point for each standard. In the first IASB podcast episode of 2022, IASB Chair Andreas Barckow and Vice-Chair Sue Lloyd join Executive Technical Director Nili Shah to discuss the main topics from the January 2022 International Accounting Standards Board (IASB) meeting The International Accounting Standards Board (IASB) has issued its January 2022 update. Following the IASB's January 2022 meeting, the IASB work plan has been analysed to see what changes have resulted from the meetings and other developments since the December meeting. The IASB has also compiled a summary of its main news items in January 2022. The European Financial Reporting Advisory Group (EFRAG) has issued its January 2022 update. This summarises public technical discussions held and decisions taken during the month. EFRAG has asked for views on the Exposure Draft Non-current Liabilities with Covenants and Supplier Finance Arrangements. Questionnaires to facilitate this request are available to view on the EFRAG website and can be completed by 4 March 2022. EFRAG is seeking comments on their discussion paper “Better Information on Intangibles – Which is the best way to go?” Comments are requested by 30 June 2022. EFRAG has completed its due process regarding the initial application of IFRS 17 and IFRS 9- Comparative Information (amendment to IFRS 17) and has submitted its endorsement advice letter to the European Commission. As a result, EFRAG has also updated its Endorsement Status Report.` The UK Endorsement Board has published its Draft Comment Letter in response to IASB’s Exposure Draft - Supplier Finance Arrangements: Proposed amendments to IAS 7 and IFRS 7 and is seeking feedback on this by 4 March 2022. The IFRS Foundation, CDP and the Climate Disclosure Standards Board (CDSB) have completed the consolidation of the CDSB into the IFRS Foundation. Resources from the CDSB will transfer to the IFRS Foundation and provide intellectual property and technical assets which will support the International Sustainability Standards Board (ISSB). Auditing New research with Audit Committee Chairs reinforces the case for developing standards for Audit Committees. Independent research commissioned by the Financial Reporting Council which builds on similar research in 2020, reinforces the case for developing standards for Audit Committees to help promote a more consistent approach to audit quality. The research, conducted by YouGov, was based on in-depth interviews with Audit Committee Chairs (ACCs) discussing how they carry out their role. A link to the full research can be found here. Insolvency The Institute is hosting a free one hour webinar on 10 February on practical considerations for the small company administrative rescue process (SCARP). The process, how to prepare for it, what to look out for and key matters to be aware of when considering it will be discussed as well as exploring some practical issues including dealing with creditors and the pros and cons of a company entering the process. Fraud/Anti money laundering/Economic Crime Europol has recently issued its report “Cryptocurrencies: tracing the evolution of criminal finances”. It analyses the criminal use of cryptocurrencies, and the report contains core definitions, case examples, and details of the challenges authorities face in combating the illicit use of cryptocurrency. Also, in its press release Europol debunks some myths .It says that overall number and value of cryptocurrency transactions related to criminal activities still represent only a limited share of the criminal economy when compared to cash and other forms of transactions .It also states that cryptocurrencies are not anonymous and while privacy coins and a number of services and techniques may hinder law enforcement investigations, transactions are traceable. The UK Financial Conduct Authority recently published guidance on competency and capability for heads of compliance and money laundering reporting officers (MLROs) of firms authorised and registered by it. The FCA says it should help firms decide if an individual candidate is suitable. The guidance  is  based on FCA  experience of approved applications and gives details of what successful applicants had for example in the way of training and experience. The Treasury Committee of UK Parliament recently published a report on fraud, scams and economic crime. It has called for additional Government action to combat fraud and scammers. The report urges legislation against online fraudulent adverts and for the government to seriously consider whether online giants should reimburse those who fall victim to scams on their platforms. It makes recommendations such as appropriate resourcing and whether a single law enforcement agency would be more effective. Other Areas of Interest In recent days the Irish government launched a new national digital strategy, Harnessing Digital – The Digital Ireland Framework, to drive and enable the digital transition across the Irish economy and society. You can read more details and download the strategy from this page . The strategy was welcomed by regulators, the Broadcasting Authority of Ireland , Competition and Consumer Protection Commission (CCPC), Commission for Communications Regulation (ComReg) and the Data Protection Commission (DPC) . The UK government launched its Cyber Security Strategy this week. It sets out the government’s approach to building a cyber resilient public sector and to ensuring that core government functions are resilient to cyber-attack. Following a consultation last year, the Central Bank this week published its Guidance on the Use of Service Companies for Staffing Purposes in the Insurance Sector due to the potential of these staffing arrangements, if not effectively managed, to threaten the operational resilience of undertakings regulated by the Central Bank. The Guidance expects that where an undertaking uses such staffing arrangements, this should not impair the quality of its system of governance, unduly increase operational risk, impair the ability of the Central Bank to monitor compliance of the undertaking with its obligations, or undermine service to policyholders. This week the Central Bank also published its Regulatory Service Standards Performance Report for the second half of 2021. The document sets out the Central Bank’s performance against service standards that it has committed to in respect of (a) authorisation of investment funds and financial service providers, (b) processing of Pre-Approval Controlled Function Individual Questionnaire  applications and (c) contact management. There are 44 service standards against which the Central Bank sets performance targets. The report documents that during the period, there were 12 service standards which were not relevant and of the 32 which were, 27 of these were either met or exceeded. The Companies Registration Office (CRO) has announced that it will introduce mandatory online filing for 18 of its Companies Office forms from 1 March 2022. These include forms for winding up resolutions and  appointment of liquidators and receiver. Click here to see the list of affected forms. Any forms, which are mandatory online filings, received on or after 1 March 2022 will be returned for re-submission online. Users are advised to familiarise themselves with the CRO’s CORE system to avoid unnecessary delays.   The Department of Enterprise, Trade and Employment (DETE) recently  launched a Public Consultation on Reform and Modernisation of Legislation regarding Co-operative Societies. Work is nearing completion on proposed legislation to repeal the Industrial and Provident Societies Acts 1893-2021 and provide a modern and effective legislative framework suitable for the diverse range of organisations using the co-operative model in Ireland. This consultation outlines a number of issues and asks specific questions to assist the DETE prior to finalising legislative proposals. The DETE is also taking the opportunity to give stakeholders a general overview of the proposed legislation. It is seeking responses from interested parties by 25 February 2022.The press release regarding the consultation can be found here. The Institute is responding to this consultation and we welcome comments from members. Please use the form here to send us your views on this proposed reform.  Following relaxation of many public health measures, including the requirement on public health grounds, to work from home, the Tánaiste recently published the Transitional Protocol, a guidance document which was developed in consultation with business representative groups and unions. It sets out best practice for keeping the workplace safe and to help employers and their employees return to work safely. The DETE has recently published its latest newsletter .It contains information on a number of matters including the Transitional Protocol mentioned in the preceding paragraph and the publication of the Competition (Amendment) Bill 2022 which, if passed, will give  more powers to the competition authority to protect consumers. The European Commission is running its annual event EU Industry Days from 8 – 11 February 2022.You can register and join online. It is a four day event with one day casting a spotlight on the EU tourism ecosystem and other days holding discussions across industrial ecosystems on their green and digital transition, in support of strengthening the resilience of EU companies (including SMEs).It will also hold a special youth programme  focusing  on some of the most urgent concerns for young Europeans today: social equality, youth unemployment and precarious work, and the urgent call for sustainable and socially responsible business models. Details of the programme including the special youth programme on 10 February 2022 can be found here. Speakers include Ursula Von Der Leyen President of the European Commission and Maroš Šefčovič, Vice President. A podcast series is also available on the website where industry insiders, civil society representatives, academics, and many others have a say about the trends, challenges and  opportunities that the green, digital, and resilient transition brings for European industry.

Oireachtas Committee responds to the final report published by the Commission on Pensions In its response to the Report of the Commission on Pensions, the Oireachtas Joint Committee on Social Protection, Community and Rural Development and the Islands has recommended that Ireland’s State Pension age remain at 66 years. This rejects the proposal put forward by the Commission on Pensions last year that the qualifying age is increased from the current 66 years by three months every year from 2028, reaching 67 in 2031.  To fund this, the Committee recommends that the Commission on Welfare and Taxation examine potential changes to Employers’ PRSI contribution rates.  Among the 13 proposals put forward, the Committee also recommends banning the mandatory retirement age for both new and existing employment contracts. Chartered Accountants Ireland issued a statement following the response this week, welcoming the recommendation to leave the state pension age unchanged at 66 years, while recognising that the shortfall in funding the State Pension long-term needs to be addressed. The Institute said that asking employers to pay increased rates of PRSI cannot be a long-term solution and the fact that employers are already paying high salaries to compensate workers for high personal tax rates must be recognised. The Committee also recommended that funding auto-enrolment should not be prioritised over retaining the current State Pension age. Chartered Accountants Ireland however believes that reforms to enhance the sustainability of the State Pension cannot take place without parallel reforms to increase private pension coverage in Ireland to enable workers to avoid living their retirement in poverty.    Calls for coherent Government policy were also made to enable workers to adequately plan for their retirement. Bank of Ireland’s recent economic pulse survey indicates pay rises this year    According to the most recent Bank of Ireland economic pulse survey, 50 percent of firms are pricing in pay rises this year. 56 percent of people surveyed indicated that it is now easier to find or move jobs, with a third of firms reporting a struggle to fill open positions. 46 percent of those surveyed expect to see a 3 percent average increase in wages in the next year. According to Bank of Ireland’s chief economist Loretta O’Sullivan, “As businesses look to retain and attract staff, and workers find it easier to get or change jobs, upward pressure on pay is likely” with a shortage of workers helping to drive the pay increases. The survey also indicated that 77 percent expect houses prices to rise in the next 12 months, with 70 percent also expecting a rise in rent. The Economic Pulse is based on a series of monthly surveys of households and firms where they are asked for their views on a wide range of topics including the economy, hiring activities, business plans, personal spending and financial situations among others. Tánaiste intends to strengthen remote working laws   We highlighted the draft Bill to give employees the right to request remote working published by Tánaiste Leo Varadkar. The proposed legislation will set out a legal framework to apply for remote working, the reasons the request could be refused and outlines the process for appeals. The Tánaiste discussed the draft Bill with the Select Committee on Enterprise, Trade and Employment this week, indicating his plans to strengthen the legislation and his intention that “employers cannot just tick a box to say no”. The Tánaiste also reiterated that the Bill is in draft form and that “there can’t be an absolute right to remote working”. Chartered Accountants Ireland has written a letter to the Tánaiste to request clear and comprehensive guidance, including practical examples, to assist our members to implement the legislation when it becomes law. Read the Draft Scheme of the Right to Request Remote Working Bill 2022. Enhanced Illness Benefit (EIB) extended The Minister for Social Protection, Heather Humphreys TD, has secured Government approval to extend the EIB payments until the end of June 2022. Almost €230 million has been paid in EIB to date, supporting over 374,000 people. The €350 weekly payment is available to people diagnosed with Covid-19 or told to self-isolate. This is available to employees or self-employed people. For more information, and to apply, go to MyWelfare.ie. Northern Ireland Business Demography Statistics 2020 released Northern Ireland Statistics and Research Agency (NISRA) recently released the latest business demography results for Northern Ireland which looks at births, deaths and survival rates of Northern Ireland businesses by Industry and District Council Area. 6,375 businesses were born in 2020, a decrease of 3.8 percent on the previous year. 4,900 businesses closed during the year, a decrease of 9 percent from 2019. The number of businesses births was greater than the number of business deaths for all district council areas across Northern Ireland.   Retail saw an introduction of 780 businesses in 2020, a 47 percent increase on 2019 and the highest number of births for the sector since the series by industry began in 2009. Importance of Traineeships as part of economic recovery in Northern Ireland This week, Northern Ireland’s Economy Minister Gordon Lyons highlighted the importance of traineeships to enable economic recovery in the region stating that “developing the local skills base is a key priority for me and a cornerstone of the recovery”. As part of the Department for the Economy’s 10X Economic Vision, the goal is “to equip people with the skills they need for the constantly evolving jobs market and build on Northern Ireland’s successes on the global stage”. The £180 million NI Traineeship program, launched in September 2021 as part of the economic recovery package, intends to fund 20,000 Traineeship places over the next seven years.

In an update of our earlier news item, the Government has today published a draft Scheme of the Right to Request Remote Working Bill 2022.Under it an employee who has completed at least 26 weeks of continuous service can submit a request for remote working. The employer must give the request due consideration but may decline if the proposal requested is not suitable on business grounds. The draft legislation outlines 13 non-exhaustive potential business grounds for an employer to refuse the request. Refusals can be appealed to the Workplace Relations Commission. Every employer will be required to establish and maintain a written statement of remote working policy. The Tánaiste said today that he wanted the legislation published by Easter and passed by the Oireachtas by the summer recess.

As we embark on shaping the next phase of work, there is a mix of concern and excitement about getting the transition right. Kevin Empey explores what leaders can do with this once-in-a-generation opportunity to mould the future of work here and now. After overseeing the most dramatic shift to work in modern history over the last two years, leaders are now centre stage again with the expectation to guide and lead organisations through an even more complex and tricky phase of work design. As many have remarked in recent months, it was one thing to get people out of the office against the backdrop of a pandemic and a standard set of rules and guidelines for everyone; it is quite another to get people back to a new model of work that is complicated by choice and continuous comparison with what everyone else is doing. Three work phases Most organisations moving to a hybrid or more blended model (remembering that there are thousands of jobs where remote working is not an option) typically agree that we are looking at progressing through at least three phases: Experimental: a tentative, almost experimental type experience that is currently underway for many, influenced by the changing realities of COVID-19. Transitionary: a more deliberate, test and learn and strategic phase, with a transition to different ‘target’ working models that are more sustainable and hopefully free of the constraints and concerns around COVID-19. Most agree that we are also not likely to get this transition perfectly right the first time. Bedding-down: the realities, lived experience and outcomes from the transition to new target models are truly revealed, understood, and implemented over the next couple of years. On the back of these three phases, leaders need to consider two things: The operational and logistical challenge of getting people safely through these phases; and The strategic challenge of creating a new work model, associated people processes, and a leadership approach and culture that is ultimately successful and purpose-built for the organisation and its future. Strategic agility The exact sequencing of these three phases and two workstreams will differ from organisation to organisation. However, there is one foundational quality that will maximise the success of this change-management experience and prepare the organisation and workforce for further inevitable disruption into the future. That quality is strategic agility. Strategic agility is a complex, ambiguous, vulnerable leadership challenge for everyone: organisational leaders, managers, human resources, and employees. But the transition to the next phase of work is also an invaluable case study of agility in action – a case study that we can learn from, experiment with, and embed into our ways of working. The longer-term prize for leaders and employees Over the next 6 to 12 months, the potential prize for organisations is not just a safe and successful transition to a new, post-COVID-19 work model. It is also about using the learning and experience of this transition (along with the lived experience of leaders and employees over the last 22 months) to help organisations develop and embed more agile ways of working, leading and thinking for the future. Being deliberate about developing these skills over the coming months will give us the ability to deal with any change, uncertainly and disruption. Importantly, it means our leaders and our workforces will be able to flourish and thrive in the longer-term future of work and not just respond and cope from one disruption to the next. Conscious development of the sustained and deliberate capability of agility at an organisational, team and individual level will be the long-lasting legacy of COVID-19. And this prize can be won through our combined work over the next year as we go through the experience of co-creating new, successful working models and working lives. Kevin Empey is the Founder and Managing Director of WorkMatters. He is also the author of Thrive in the Future of Work, published in 2021.

The CCAB-I Insolvency Committee has today published Technical Alert 04/2021 Register of Beneficial Ownership of Companies and Industrial Provident Societies – Guidance for Insolvency Practitioners. This Technical Alert highlights the features of the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies which are of particular importance to insolvency practitioners.  This guidance has been prepared on a practical basis and is intended to be of a practical nature.  This Technical Alert is available on our website.

Welcome to this week’s Technical Roundup.  In developments this week, over the recent months, the Institute of Chartered Accountants in England and Wales published a series of reviews of major standards looking at the differences between International Financial Reporting Standards and International Public Sector Accounting Standards and the suitability of each in public sector financial reporting. The fourth and final part of the series has now been released; EFRAG, Business Europe, and the IASB will host a joint webinar on 10 December 2021 on the IASB’s exposure draft 'Disclosure Requirements in IFRS Standards—A Pilot Approach (Proposed amendments to IFRS 13 and IAS 19)'. Read more on these and other developments that may be of interest to members below. Financial Reporting The International Accounting Standards Board (IASB) has published the exposure draft 'Supplier Finance Arrangements (Proposed amendments to IAS 7 and IFRS 7)' to enhance the transparency of supplier finance arrangements and their effects on a company’s liabilities and cash flows. The deadline for submitting comments is 28 March 2022. The IFRS Foundation has issued a monthly news summary for November 2021. EFRAG has completed its due process regarding amendments to IAS 12 and has submitted its Endorsement Advice Letter to the European Commission, recommending it’s endorsement. The Amendments revise IAS 12 to require entities not to apply the IAS 12 initial recognition exemption to transactions that, on initial recognition, give rise to equal and taxable temporary differences. The objective of the Amendments is to reduce the diversity that currently exists in practice. EFRAG, BusinessEurope, and the IASB will host a joint webinar on 10 December 2021 on the IASB’s exposure draft 'Disclosure Requirements in IFRS Standards—A Pilot Approach (Proposed amendments to IFRS 13 and IAS 19)'. In Accountancy Europe’s recent podcast entitled “Sustainability will never do without Governments”, senior manager Paul Gisby discussed sustainability reporting standards for the public sector and where this might lead to in the future, including the potential role of the accountant. The European Banking Authority (EBA) has published a report summarising the findings arising from the monitoring activities on the IFRS 9 implementation by EU institutions. EBA notes significant efforts in IFRS 9 implementation by EU institutions, but cautions on some of the observed accounting practices, especially in the context of the COVID-19 pandemic. IFAC’s Professional Accountants in Business (PAIB) Advisory Group has compiled insights on how accountants are contributing to value creation and sustainability in their organizations in both the private and public sectors in a new report, The Role of Accountants in Mainstreaming Sustainability. A study published as part of the working paper series of the European Banking Institute (EBI) looks at COVID-19 disclosures in half-year and year-end financial statements 2020 of European banks. ESMA, EBA, IOSCO and IASB communicated in the second quarter of 2020 their expectations on disclosure regarding the pandemic’s impact in order to meet the objective of the IFRS to provide decision-useful information to stakeholders. Over the recent months, the Institute of Chartered Accountants in England and Wales (ICAEW) published a series of reviews of major standards looking at the differences between International Financial Reporting Standards (IFRS) and International Public Sector Accounting Standards (IPSASB), and the suitability of each in public sector financial reporting. The fourth and final part of the series has now been released. Auditing The FRC has published a Collection of Perspectives, following the FRC Culture Conference held in June 2021 that brought together a wide range of international experts to explore the important link between culture and high-quality audit.     The Collection of Perspectives includes contributions from academics, audit firms, directors, regulators, culture change experts and other parties within the audit ecosystem.   The publication serves to highlight consensus between contributors, as well as thoughts on best practice to encourage learning and continuous improvement in developing a culture to improve audit quality.   The full Collection of Perspectives is available here. A summary from the FRC’s Culture Conference is available here. FRC encouraged by reporting by applicants on Stewardship FRC has published ‘Effective Stewardship Reporting: Examples from 2021 and expectations for 2022’ which analyses reports from the first signatories to the revised Code published in September 2021. There continues to be high quality of disclosures in the areas of governance, resourcing, and the integration of stewardship and ESG factors with investment. However, there is still room for improvement in explaining how they manage stewardship-related conflicts of interest, how managers review and assure their stewardship activities, and how they monitor and hold to account service providers operating on their behalf. Insolvency The Irish network of The International Women’s Insolvency & Restructuring Confederation (IWIRC) is hosting its first webinar ‘A look back on key restructuring and insolvency developments in 2021’ on Thursday, 9 December. Anti-Money laundering, Fraud and Cybercrime The Institute of International Finance and Deloitte have recently published a White Paper which highlights four focus areas where continued reform can build on progress already underway globally to help improve the effectiveness of the anti-financial crime framework: 1. the use of financial intelligence; 2. risk prioritization; 3. technology and innovation; and 4. international cooperation and capacity building. This paper also highlights important instances of ongoing systemic improvements, how similar efforts can be deployed across jurisdictions, and how policymakers could prioritize international cooperation and coherence. The paper is entitled “The effectiveness of financial crime risk management -reform and next steps on a global basis”. Read also Grant Thornton’s recently available report on The Economic Cost of Cybercrime Ireland 2021.  The Financial Action Task Force has recently published its Annual Report 2020-2021   . Read about FATF’s achievements under the first year of its German Presidency including the publication of two reports analysing the opportunities and challenges of new technologies, a report into money laundering from environmental crime, which concluded that most countries are failing to assess this area as part of national or money laundering risk assessments and a report on ethnically or racially motivated terrorist financing. Members may be interested in a webinar FATF is holding on Proliferation Financing Risk Assessment and Mitigation on 16th December. Proliferation Financing is financing for the malicious use of chemical, biological, radiological and nuclear materials and weapons. Other Areas of Interest The Pensions Authority has previously advised that from 1 December 2021, trustees must notify the Authority when they enter an outsourcing arrangement for the provision of the internal audit and risk management key functions. Trustees who have entered these arrangements since 22 April 2021 must also notify the Authority. The Authority has now issued instructions on how to notify  it of the arrangements. The Pensions Authority has also recently issued an information note on various regulations signed by the Minister for Social Protection on 25 November 2021. The regulations make amendments to existing regulations under the Pensions Act 1990, as amended, in relation to disclosure, scheme registration, trustee investment qualifications, funding standard, cross-border requirements, and bulk transfers; and revoke and replace the existing investment-related regulations under that Act. Click here for the link to the website which gives further information and links to the regulations. The Central Bank recently issued its Cross Industry Guidance on Operational Resilience. The pandemic has put firms’ operational resilience to the test and highlighted the importance of being more operationally resilient. The guide applies to regulated financial service providers and communicates how to prepare for, respond to, recover and learn from an operational disruption that affects the delivery of critical or important business services. It is also to communicate the Central Bank’s expectations in this regard. The Central Bank recently published its second financial stability review of 2021 which outlines key risks facing the financial system and the Central Bank’s assessment of the resilience of the economy and financial system to adverse shocks. Findings show that economic recovery has continued over the past six months, but more medium-term vulnerabilities have been building up. You can read full details of the review here  and the Central Bank Governor’s remarks on the publication here. HMRC recently issued its Modern slavery statement. This statement details the work HMRC is currently undertaking to eliminate modern slavery in supply chains and to ensure modern slavery risks are identified and managed. The Government has recently agreed that the Dept. for Public Expenditure and Reform undertakes a review of the statutory framework for ethics in public life before it brings forward proposals for legislative reform in 2022.The Dept. has issued a consultation document entitled “Reform and Consolidation of Ireland’s Statutory Framework for Ethics in Public Life” which gives background to the current framework and a proposed policy approach. The Dept is seeking views on a number of questions in the consultation document .Please follow the link to the consultation and document. Submissions can be made up to 5pm on Thursday 23rd of December 2021. A short informative video is now available to view from the A &L Goodbody Corporate Crime Regulation Summit 2021 .Here Ian Drennan of the ODCE talks to Kenan Furlong of ALG  about the ODCE’s work and the imminent establishment of the Corporate Enforcement  Authority which is expected to be established by year end .Ian Drennan talks about the resourcing increase for the new Authority, new powers (which will come on stream over time ) and the important part that technology plays in their work. The European Data Protection Supervisor recently issued its monthly newsletter .It announces its proposed summer 2022 Data Protection conference, “the future of data protection: effective enforcement in the digital world”, it highlights a report on “Biometric And Behavioural Mass Surveillance In EU Member States”  and it comments on a European Digital Identity Wallet. For further technical information and updates please visit the Technical Hub and the Covid-19 Hub on the Institute website. 

Dave Riordan ACA, Recruitment Specialist & Career Coach, Chartered Accountants Ireland Careers Team, writes: Recruitment into practices, large and small, is a challenge in the current climate. We know this. So what can we do to make our recruitment processes easier and more effective? Here are some tips that I deem essential to attracting and onboarding suitable additions to your team: The senior management team should incorporate into their Practice Strategy some core objectives and KPI’s on the firm’s candidate attraction (and retention) approach. This needs to be a permanent fixture in quarterly management meetings for the firm and constantly updated. Conduct one comprehensive, all encompassing, interview that allows you make a quick decision about the candidate – no second interview needed. This way you have a time advantage and first mover advantage versus competing practices. As well as traditional jobs boards, use social media channels to get the word out LinkedIn, Instagram, Facebook, Twitter etc. Align your message across each and post simultaneously to each platform for full reach to your audience on the same day. Develop your Practice Brand as an employer of choice in the practice-sphere. This will mean differentiating your firm to increase attractiveness. Train your own – take the longer term view and hire trainees to grow them in your culture. Hire Part-time/ flexible workers – the world is shifting towards the ‘gig-economy’ mindset, so why not employ FCAs who are seeking part-time roles? This way, you can benefit from the vast experience they can bring to the role, and they benefit too as they can balance their role with wider family needs. Many members are now very focused on work-life balance and, even if they are nearing retirement, they could be in a position to contribute some of their best years to your firm. Many FCA’s with 30 years+ experience would be delighted to contribute a wealth of experience to a role in practice for a few days a week, and it doesn’t necessarily need to be at a senior level. Flexible core hours or work to facilitate school drops and pickups are another obvious element in this. Consider ‘Returners’ (members who have been off work travelling or developing home life for a few years). They may often be a ‘little’ flexible on salary to get a foot back on the ladder that then enables them to restart their career. Returners not only have a wealth of experience to bring to a role, but they also have maturity and life experience that can be hugely beneficial. If it’s hard to find the Audit and Tax people you are seeking, why not start to build a branded presence on LinkedIn. Raise the profile of your firm so that ACA’s are aware of it and how good your practice is to work for from an early stage in their career. This will ensure you tap into a pool of passive candidates and attract interest over a period of time. Offer different elements in your remuneration package: e.g. gym membership, social Fridays each month, pension, commission structure, phone paid etc. Often a well run internal candidate-referral reward scheme can be a highly effective way of incentivising current employees to bring in ACA’s that they feel would be a fit for your firm. Done well, this can extend your reach into the market for candidates significantly and also help maintain a consistent culture. Use a highly regarded recruitment agency. Partnering with an agency closely can be very advantageous in the market if you do it right! Some tips on this: Meet the consultant you are working with; Have a regular scheduled update call (e.g. weekly); Accept speculative CVs from the agent; Be flexible on the fee rate. If you get an exceptional candidate they can be worth it and remember it’s contingency based, so no fee is applicable if the process is incomplete; Keep updating the agent about the news in your firm; Offer to work exclusively with the recruitment firm, but ask what steps they will go through to find/headhunt the right candidate for you; Make sure you have created an excellent job spec and offer to assist with the advert text; Recruiter fees can appear high on the face of it, but a good recruiter can allow you get on with the day job of billing clients while they streamline the candidate selection process saving you time and money; Make the partnership a positive one where you share background (but always confidential) information with the recruiter, ensuring you are on the same page & wavelength regarding the person and role; If you trust your recruiter to know what you are looking for and he/she recommends a candidate that does not look like an obvious fit on paper, give the recruiter the benefit and trust their judgement and meet them. I would also be generally open minded on applications. For example, if a candidate is not a right fit for your current active role, consider whether they might be suited to your firm in a different role where they will add value, or perhaps consider them as a short-term contract addition to the team if that could alleviate a work backlog for you. Candidates in the practice market in 2021/22 are savvy and have built shortlists of their preferred employers that match their career pathway. You need to be on their shortlists as an employer of choice. As an interviewer, be clear and well-practiced in the selling points and differentiators of your firm and communicate them warmly during the meeting. Refine your interview techniques and get honest feedback on them to ensure the interview experience for the candidate is a positive professional reflection of the organisation. As an additional guide I can highly recommend a Chartered Accountants publication by Mary E Collins – “Recruiting Talented People”if you are looking for additional detail. I always recommend looking for opportunities each quarter/year to stay close to the Institute, and so partnering with the Careers Team in Chartered Accountants Ireland for your recruitment needs is a good idea to ensure you are attuned to the market, and first in line for ACA candidates who prefer to tentatively explore a practice career move with the confidentiality and assurance of their own Institute. If you would like to speak to the Chartered Accountants Ireland Careers Team, please email us at careers@charteredaccountants.ie.  

Julia Rowan answers your management, leadership, and team development questions. My team works hard and to a high standard, but a couple of people on my team turn every team meeting into a moan about the company. I’m worried that this will affect new team members. The company is a pretty decent employer. What can I do? A. It seems that there are two issues here. First, dealing with the moaning (I will use your word here) and second, making sure that it does not affect new team members. Let’s deal with them separately. When team members moan, our natural tendency can be to jump in, explain, defend, etc. And sometimes that may be the right thing to do, but there is often a “yes but” no-win game being played. There are a couple of things you could do. You could just listen, thank the team member and move on without comment. Or you could listen and ask, “who do you need to talk to about this?” or “who needs to know this?” Or you could have a one-to-one with the moaning team member and try to get under the issue. Only do this if you can be genuinely curious. You could ask questions like “how does that affect how you show up?” and “how can I support you here?” Many people work hard and moan hard, in which case I would praise them for working hard despite their misgivings. If you have a good conversation, you could share your concern that their negativity affects new team members. Loud complainers can create a strong gravitational pull, and you are right to be concerned about their impact on new team members. Make sure to spend plenty of one-to-one time with the new team members, opening up a two-way dialogue, establishing a good feedback relationship, meeting with them regularly, talking about their development, etc. The manager-employee relationship is the most important relationship at work – make sure it’s a good one. I feel my team regressed in the last work from home period. Now we’re working from home again, what can I do to hold the team together? A. Leadership is so important when people are working remotely, as everything is moving online. Five-minute conversations in the canteen often turn into 30-minute Zoom conversations. And you only see your own team and key stakeholders, with none of that easy connection with ‘corridor friends’. Be proactive here. Bring the team together and take some time to review the learning from the last lockdown (what worked well, what worked less well) and invite them to create a set of guidelines (sometimes called a team charter or ground rules) to help them navigate this period. Make this a live document. Check whether it is working and ask, “what else can we do to make this easier for everyone?” You can’t fix this on your own; step back so that the team can lean in. Create a ‘social only’ meeting once a week and get it into people’s diaries. If your team is large, put people into small breakout rooms of two to four people for 15 minutes to give time for connection. If budget permits, send a small gift from time to time. One-to-one check-ins are critical too. Julia Rowan is Principal Consultant at Performance Matters, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie.

Cormac Lucey explains the three reasons why Ireland’s property market does not have ‘bubble’ status this time around. I recently received “a private request” from a junior work colleague. She was wondering whether she and her partner should buy a residential property even though she was worried that “the market is overheating, and it is not a good idea to buy anything right now”. Has Irish property returned to bubble status? I’m afraid that I have some form on this question. Back in April 2005, when I was working as political advisor to then Justice Minister Michael McDowell, I had used a pseudonym to write in Magill magazine that “We risk maxing out on debt and thereby making ourselves vulnerable to any short-term economic set-back. The closest parallel may prove to be the Japanese economy. They too experienced a growth miracle built on a credit bubble induced by politically-determined interest rates. Their bubble was pricked in 1991. If their experience is anything to go by, the bursting of the Irish bubble would be a nightmare. The economy would prove impervious to monetary and fiscal stimulus, as individuals and corporations sought to curtail spending in order to reduce their bank borrowings. A downward spiral of asset prices, forced liquidations and further falls in asset prices could result. Growth would prove elusive and the financial sector would be in permanent crisis.” Sadly, I was right even if it took another few years for that to become clear. But there are three strong reasons why I don’t believe that Irish residential property is in a bubble today. First, there has been little or no credit growth pushing Irish property prices up. Irish residential property prices peaked in April 2007 and then collapsed to just 46% of those levels (in June 2012) only to recover to 93% of their peak value in September. But lending for house purchases has dropped from its bubble era peak without ever really rebounding. It peaked at €125 billion in March 2008. Since then, it has fallen by over 40%. As of June, it was down at €73 billion, a miserable 0.4% above the minimum reached in March 2020. If financial bubbles are generally credit-fuelled, how can Irish residential property currently be in a bubble after experiencing only deleveraging over the last decade and a half or so? Second, it is cheaper today to buy and own a house than to rent it. A key test of whether we are in a bubble or not is the relationship between the annual expense of renting a house and the burden of servicing a mortgage on that same house. It was far cheaper to rent from 2000 to 2007 as the property bubble reached its climax. By 2006, mortgage rates were about 7% while rent yields (annual rental income divided by property value) were only half that. That meant that a fully debt-funded interest-only buy-to-let landlord was receiving only half of their interest expense in rental income. What is the position today concerning rent yields and mortgage rates? According to CBRE’s Q4 2020 Marketview report, prime residential rental yields in Dublin were 3.75% late last year. Recent Central Bank figures show the average mortgage rate on a new mortgage was 2.72% in September, down marginally compared to 12 months earlier. Even though we face the second-highest mortgage rates in the Eurozone, it is still cheaper to buy than to rent. This is the second strong argument that we are not currently experiencing a residential property bubble. The third clinching argument that we’re not in a new property bubble is behavioural. Since I got vaccinated last summer and the pandemic restrictions eased, I have attended several dinner parties in south County Dublin. In sharp contrast to 2005-2007, not once did property prices feature as a topic of discussion. This indicates the absence of a popular property mania today, such as the one we experienced at the tail-end of the bubble. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.