Although the weeks and months ahead will undoubtedly be challenging, quality should not be compromised argues Fiona Kirwan. Full-year and interim year reporting deadlines are fast approaching for accountants both in industry and practice. Companies’ financial reporting functions and their auditors are getting used to working in ‘new normal’ circumstances. However, these changed circumstances must not compromise the quality of the work we all deliver day-to-day. Here are some issues Chartered Accountants should consider as they seek to maintain the highest level of quality in all aspects of their work. People COVID-19 has transformed the way we live and work. We have heard this phrase a lot in recent weeks, but it remains true. Almost instantly, employees who are used to the rhythm of the workplace became remote workers – many without the chance to prepare adequately. This creates challenges for managers of both finance and audit teams in leading teams remotely. It is more challenging to coach and supervise people who are not physically in the same location. It is therefore important to stay in touch and stay close to your people. Connecting as a community during this time takes imagination. It could mean developing new channels or social tools for employees to share stories; it could mean embracing video calls to create a sense of physical presence. Virtual social events are becoming the norm. Even small investments in building a genuine community can have a significant impact on your employees’ morale. This sense of community helps when coaching teams. People who are closely aligned on a personal level will find it easier to communicate complex information simply and team members will feel more comfortable asking questions and querying essential messages. Teams must be aware that some colleagues may not have optimal ‘work from home’ environments; some are juggling home-schooling with office hours; others are working from their bedrooms in shared living spaces. Organisations should implement flexible working structures to allow teams to deliver quality work while maintaining processes to ensure confidentiality and transparency. Such flexible working structures mean that everyone in the financial reporting process, both finance teams and auditors, must allow extra time to execute tasks remotely. Technology Almost all finance functions and accounting firms transitioned to remote working arrangements overnight, and the quality of an organisation’s technology is critical to day-to-day operations and ensuring business continuity in this scenario. Some organisations may have challenges arising from the fact that their teams are heavily reliant on desktop computers, second screens, or printing facilities that are not available in the home environment. The move to remote working could also leave team members isolated, but this is where the ability to host video conferences, share screens, and collaborate in files in real-time has become vital. Not only do these technical solutions allow teams to communicate internally, they have also become critical channels for communication between auditors and their clients. At PwC, we utilise our combined suite of audit tools – Connect, Aura and Halo – to communicate with our clients and colleagues across the globe. We also use Google’s G-Suite of collaboration tools, and Datashare to help us work with the data of clients with less complex IT systems. The recent uptake in the adoption of these technologies has seamlessly transitioned a lot of this work, which was historically done in person, into the digital realm.  Controls One area where the successful application of technology solutions has become essential is the implementation of internal controls over financial reporting. The appropriate tone from the top is vital; managers need to remind people that remote working might change how controls work, but it does not lower the bar. How companies operate their controls has been amended to allow for remote working. For example, a manual sign-off may now be replaced with a confirmation by email. In these uncertain times, companies will want to ensure that shortcuts are not being taken and rigour – both in procedures and the provision of appropriate evidence to support the implementation of controls – are maintained. Auditors will need to consider whether the controls, as they currently operate, remain fit for purpose and any increased risks that may have arisen from recent changes. Financial reporting The COVID-19 outbreak, and the measures taken to mitigate its impact, are having a significant effect on economic activity. This, in turn, has implications for financial reporting. Companies and auditors must work together to ensure that quality is not compromised – even in challenging circumstances. The following is a sample of the wide range of accounting issues that companies and auditors have considered in recent weeks: Going concern and viability statement: companies must assess going concern at each annual and interim reporting period, with a look-forward period of one year from the financial statement issuance date. Companies impacted by COVID-19 have had to update their forecasts and provide appropriate disclosures to alert investors about the underlying financial impact and management’s plans to address it, including if conditions give rise to uncertainties about the company’s ability to continue to operate; Subsequent events: the consensus is that COVID-19 was a non-adjusting post-balance sheet event for 31 December 2019 reporting. However, the appropriate disclosure of impact on the overall financial statements is a critical element of the financial statements; Measurements of assets: for year-end reporting and interim statements after December 2019, companies and auditors must assess the timing of COVID-19-related events to determine the impact on assets, including goodwill and indefinite life intangible assets, inventories, and deferred tax assets. Companies and their auditors must consider disruptions to the entity’s business or the broader market in determining recoverable amounts of assets. Careful consideration must be given to the net realisable value of inventory and, in the event of a price decline, whether prices will recover before the inventory is sold; Revenue recognition and receivables: identify the appropriate sales price given increases in expected returns, additional price concessions, or changes in volume discounts. Companies and auditors should be mindful that revenue can only be recognised for new sales if payment is probable under IFRS 15; Alternative performance measures: the European Securities and Markets Authority (ESMA) has provided guidance relating to the use of Alternative Performance Measures (APMs) in the context of COVID-19. Consistent with previous guidance relating to the maintenance of consistency of APMs from one reporting period to another, ESMA advises that rather than adjusting existing APMs or including new APMs, issuers should improve their disclosures and include narrative information in their communication documents to explain how COVID-19 impacted and/or is expected to impact on their operations and performance; the level of uncertainty; and the measures adopted – or expected to be adopted – to address the COVID-19 outbreak; and Internal consultations and reviews: audit teams face significant additional internal consultations and reviews in the current environment. Early agreement on timetables and collaborations between companies and auditors will ensure that quality is not compromised. As events continue to unfold, the challenges faced by accountants both in industry and practice are mounting. The weeks and months ahead will undoubtedly be challenging. However, quality should not be compromised. Supporting our colleagues and utilising our technology capabilities will ensure that control frameworks continue to operate, financial reporting will be clear and transparent for all users, and audit quality will not be compromised. Fiona Kirwan is a Director at PwC’s Assurance Practice.

Peter Vale considers the items that could become long-term features of Ireland’s tax regime under the new government. In the April issue of Accountancy Ireland, I wrote about the expected impact of COVID-19 on Exchequer receipts for 2020 and beyond. We have now seen the evidence with both VAT and excise down roughly 50% on similar months last year. While some of the drop in VAT receipts might be down to timing with companies deferring payments, a large chunk is an unquestionably permanent loss in VAT revenue due to lower spending. The income tax figures for May are also expected to show a significant drop, due to vastly lower numbers in employment. The Department’s view is that corporation tax figures will hold up better. I hope this forecast is right, but I fear that the hit to corporate profits will be higher than anticipated, with refunds for prior years and losses carried forward likely to feature. What is next? So, what does this mean for future taxes? Will the relatively healthy state of our public finances entering the crisis make for a less painful exit? The Minister for Finance, Paschal Donohoe T.D., has stated that he will not raise taxes this year as doing so would stifle the ability of the economy to recover. This makes sense, assuming we can afford to do it. You also cannot simply raise taxes and expect to collect more tax revenue; you reach a tipping point, after which further hikes result in less tax collected. And many of our taxes are already high. Tax reliefs Of course, ruling out impending tax increases does not mean that there will not be a focus on tax reliefs. While many tax reliefs have been abolished over the last decade or so, certain targeted reliefs remain available to taxpayers. It is unlikely that tax reliefs incentivising environmentally friendly behaviour will be targeted. Furthermore, the research and development (R&D) tax credit is also unlikely to be affected as it encourages more sustainable jobs. Reliefs that allow business assets to be passed (typically) to the next generation are more likely to be in scope. Generous reliefs exist for both the disponer and the recipient. These reliefs escaped the guillotine in the past as they continued to make economic sense; a large tax bill was avoided on a potentially illiquid event, allowing the business to be driven forward by the next generation. Capital taxes Capital taxes are likely to be targeted by the Minister, perhaps initially by way of curtailment of reliefs and in the medium-term via an increase in rates. That said, capital tax rates are already high with our 33% rate one of the highest in the EU. In contrast, the UK capital gains tax rate is 20%. We know that when the capital gains tax rate was halved from 40% to 20% some years back, the tax-take doubled. An increase in capital gains tax rates could see the opposite effect, with fewer transactions and potentially more tax planning resulting in a lower tax yield. Broadening the tax base One thing the Minister may look at in the future is broadening the income tax base. It is questionable as to whether this would be regarded as an increase in taxes, but it would generate more tax revenue. Broadening the tax base would mean more people paying tax, albeit many would pay very little. Adjusting the current exemption limits and credits would facilitate this. Broadening the tax base was a recommendation of the Commission of Taxation over a decade ago, but we have not seen it followed by governments since. While the notion of everybody contributing something may resonate more in the current environment, it may still prove politically unpalatable. Property tax In the medium-term, depending on the state of the public finances, other tax-raising measures may be considered. The options aren’t exactly limitless. Our VAT rate is already comparatively high, as are our income taxes. Our corporation tax rate is low but effectively untouchable. One tax rate that is low in a European context is property tax, in particular for residential property. Many economists see property taxes as the least distortive, so an increase in property taxes might be the ‘least bad’ way to raise taxes. Tackling property taxes would be a brave move for a new government, but potentially something that could be done in year one or year two of a new term. Conclusion In summary, tax increases later this year are unlikely – although we may see certain reliefs targetedand the ‘old reliables’ such as cigarettes and alcohol are unlikely to escape. In the medium-term, COVID-19 will mean that tax-raising measures are likely to feature. In my view, a broadening of the tax base and an increase in property taxes are the most likely outcomes. Both of the above could be long-term features of our tax regime, although much will depend on future government priorities.   Peter Vale FCA is Tax Partner at Grant Thornton.

Geraldine Browne provides food for thought as employers prepare to report end-of-year expenses and benefits. At the time of writing, I am adjusting to working from home and seeking the best working station in the house (I lost). Much of my time is spent assisting clients with queries on the UK Government interventions introduced to help businesses survive in this challenging time. The most common questions relate to furloughed workers as companies struggle to maintain productivity. It is difficult to choose a topic for this article amid the human tragedy unfolding before us on a global scale. As this article will publish in June, employers will be gathering the necessary information to complete Forms P11D and share scheme reporting for the year ended 5 April 2020. For this reason, I will focus on P11D reporting and consider the changes employers face in benefit-in-kind (BIK) reporting in light of the coronavirus emergency. The due date for P11D reporting is 6 July 2020 for BIK provided for the year ended 5 April 2020. While this may have been delayed in line with other announcements from HMRC, the preparation process will nevertheless be the same. What do I need to file? If the employer paid any benefits and/or non-exempt expenses, or if they payrolled any BIKs, a P11D (B) form must be filed. The employer must include the total benefits liable to Class 1A, even if some of the benefits have been taxed through payroll. Employers are also required to give employees a letter informing them of the benefits that were payrolled and the amount of the benefit. What do you need to include on the P11D form? Taxable benefits typically include private medical and dental insurance, company cars, and gym membership, for example. HMRC has published a useful guide for P11D completion, which is a good starting point. Company cars and vans Employers are required to disclose the company car BIK for the full tax year where it is made available for the entire period. The question has been asked as to whether an employer can reduce the BIK value since employees have been asked to remain indoors and business travel in a company car ceased temporarily from March 2020. If an employee is furloughed and the vehicle remains at the employee’s home, the car is seen as being available under the current rules. At the time of writing, HMRC has not yet issued formal guidance on this matter. There have been suggestions that HMRC may accept that company cars will not be deemed available for BIK tax purposes where they are ‘virtually’ handed back by returning keys and fobs. It is worth reminding ourselves of the rules regarding the cessation of the car benefit. The benefit may cease, but remember: The car must be unavailable for at least 30 days to pause or cease a company car benefit; and HMRC will accept that the car is unavailable to the employee if it is broken down and has not been repaired or if the employee does not have the keys. If you have not already considered the company car policy, it is worth seeking advice in this area. Taxable expenses when working from home If employers provide a mobile phone without restriction on private use, limited to one employee, this is non-taxable. If the employee already pays for broadband, no additional expenses can be claimed. If broadband was not previously available in the employee’s home, the broadband fee paid for by the employer may be provided tax-free although in this case, private use must be restricted. Laptops, tablets, computers, and office supplies will not result in a taxable benefit if mainly used for business. If the employee purchases a desk and chair and seeks reimbursement from the employer, this will be viewed as taxable, and you may wish to include this in a Pay-as-you-earn Settlement Agreement (PSA). Some employers may provide employees with an allowance for additional expenses incurred in connection with working from home. This was increased to £6 per week from 6 April 2020 and can either be paid to the employee or reimbursed to them. Businesses and the economy are facing unprecedented financial pressure. It is worth reviewing your current benefits and expenses to identify ways in which you can reduce the cost to your business and reduce the taxable benefit to the employee. With many employees now furloughed and under severe financial pressure, any assistance an employer can provide to increase net pay will be welcome.   Geraldine Browne is Tax Director at BDO Northern Ireland.

David Duffy discusses recent Irish and EU VAT developments. Irish VAT updates VAT payment deferrals  In response to the economic impact of COVID-19, Revenue announced that interest would not apply to late payments by SMEs of their January/February 2020, March/April 2020 and May/June 2020 VAT liabilities. SMEs in this context are defined as businesses with a turnover of less than €3 million and which are not dealt with by either Revenue’s Large Cases Division or Medium Enterprises Division. Businesses that do not meet the definition of an SME but are experiencing VAT payment difficulties are advised to contact Revenue and these issues will be dealt with on a case-by-case basis. Revenue also advised that all taxpayers should continue to file VAT returns within the normal deadlines. Where key personnel are unavailable to prepare the VAT returns due to COVID-19, businesses should file on a ‘best estimates’ basis and any subsequent amendments can be completed on a self-correction basis without penalty.  Furthermore, on 2 May 2020, a scheme was announced to allow businesses that have availed of VAT and PAYE deferrals during the COVID-19 crisis to defer or “warehouse” the payment of those outstanding liabilities for a period of 12 months without accruing any interest. A lower than normal interest rate on late payment of tax (3% per annum instead of 10% per annum) will then apply until the warehoused tax liability has been repaid. Further details of this scheme are available on the Revenue website and legislation will be enacted in due course. Temporary relief from VAT and duty on PPE On 8 April 2020, Revenue announced that the 0% rate of Irish VAT and customs duties would apply to Irish imports (from outside the EU) of personal protective equipment (PPE) and other goods used to combat COVID-19. This relief applies to imports in the period from 30 January 2020 to 31 July 2020. Revenue also confirmed in eBrief 63/20, issued on 17 April, that the 0% rate of Irish VAT concessionally applies to domestic and intra-EU acquisitions of similar goods in the period from 9 April 2020 to 31 July 2020. These reliefs are subject to certain conditions, which are summarised below. For imports from outside the EU, the goods must be imported by, or on behalf of, State organisations, disaster relief agencies, or other organisations (including private operators) approved by Revenue. The goods must be intended for free-of-charge distribution or be made available free-of-charge to those affected by, at risk from, or involved in combating COVID-19. Furthermore, the importer must have both an EORI number and be pre-authorised by Revenue for the relief. In addition, import declarations must include the relevant customs codes in the appropriate SAD boxes. Where VAT and customs duties have already been paid but the relevant conditions for relief are met, a refund of such amounts can be claimed. Application forms to avail of the relief and to seek a refund of VAT or customs duty previously paid are available on Revenue’s website. For domestic supplies and intra-EU acquisitions, the 0% VAT rate temporarily applies to PPE, thermometers, ventilators, hand sanitiser and oxygen supplied to the HSE, hospitals, nursing homes and other healthcare facilities for use in the delivery of COVID-19-related healthcare services to patients. The sale of these products in other circumstances will continue to attract the VAT rate that would typically apply. VAT grouping In eBrief 053/20, Revenue issued guidance in respect of VAT groups. The guidance primarily outlines the requirements and implications of VAT grouping and includes examples, which show how the rules apply in certain circumstances. Businesses that are considering forming or breaking a VAT group should review the guidelines to ensure that the appropriate procedures are followed. The guidance includes a section on the territorial scope of Irish VAT groups and confirms that, where an entity that is established or has a fixed establishment in Ireland joins an Irish VAT group, it is the entire entity, including any overseas branches, that is considered to join the Irish VAT group. Consequently, charges from a foreign establishment of an Irish VAT group member to other members of that Irish VAT group are disregarded for Irish VAT purposes. This has been the Revenue position for some time, but it is helpful to have it reconfirmed – particularly for the financial services and insurance sectors. ROS enhancements In eBrief 58/20, Revenue announced several VAT-related enhancements to Revenue’s Online Service (ROS). Taxpayers now have the option to add a second VAT agent. To add the second VAT agent, taxpayers will need to complete an Agent Link form in the usual manner. Also, the Revenue Record (Registration Details) on ROS now indicates the VAT basis of accounting (i.e. the cash receipts or invoice basis) adopted by a given taxpayer. EU VAT updates VAT treatment of staff secondments The Court of Justice of the EU (CJEU) concluded in the San Domenico Vetraria (SDV) case (C-94/19) that the secondment of staff by a parent company to its subsidiary in return for a payment equal to the parent company’s cost (but excluding any profit margin) is a supply of services within the scope of VAT. The case highlights that VAT can arise on cross-charges for staff time and this should be carefully considered, particularly in cases where there may be no or partial VAT recovery in the recipient entity. In analysing the case, the CJEU re-stated that VAT arises on a supply of goods or services effected for consideration within the territory of an EU member state by a taxable person. A supply effected for consideration requires a legal relationship between the supplier and recipient, and reciprocal performance, meaning that the payment received by the provider of the service is in return for the service supplied to the recipient. In the present case, the CJEU was satisfied that there was a legal relationship between the parent and subsidiary and that there was a payment in return for the service provided. Consequently, where the Italian court, which had referred the case to the CJEU, established based on the facts that the amounts invoiced by the parent company were a condition for the secondment and that the subsidiary paid those amounts only in return for the secondment, VAT would apply to the secondment. The CJEU confirmed that the fact that the payment did not include a profit margin did not impact the VAT analysis, as it has been previously held that a supply for VAT purposes can take place where services are supplied at or below cost.   David Duffy FCA, AITI Chartered Tax Advisor, is an Indirect Tax Partner at KPMG.

John Slattery shares his simple three-step process to help you make a career choice you will not regret. In adulthood, bar sleep, we spend more time at work than anything else. Our career will have a massive bearing on the happiness, success, and fulfilment we experience in life. It is critical, therefore, that we make the best career choice possible at every professional junction. Making a career choice is a complex process, and there are many nuances to consider. Inspo’s three-step guide to making good career choices is designed to steer you toward the right decisions for you. The three steps are as follows. Step 1 Create an uninhibited list of career choices One measure of success around career choice will be the absence of any regret upon deciding. For this to be the case, we must identify all possibilities that appeal to us as possible career choices. This will enable us to feel confident that we are choosing from a complete list. You may be able to identify all possibilities yourself. Alternatively, you may need to bounce it off one or more people to help you formulate the list. If so, chat with someone you know who will give you a genuine opinion as to what career options they think would be worth considering. You must also ensure that you build an understanding of what each role entails. You can then make an informed decision as to whether to pursue or discard each option (more on that in step three). The end-goal for step one is to feel that you have identified a complete list of career choices and to have an informed understanding of each option. Step 2 Self-reflect To decide on the suitability of each option, you must self-reflect. You will use the output of your self-reflection to evaluate each option that has emerged in step one. There are three elements of self-reflection to carry out: Vision Positive psychologists Scott Barry Kaufman and E. P. Torrance claim that inspiration is the attempt to realise a future vision of oneself. Making career choices that align with our vision can, therefore, create a sense of inspiration in our professional lives. Research also suggests that making a career choice that is connected to our vision can lead to higher levels of productivity, motivation, and positivity. Therefore, our vision is a critical evaluation criterion. Strengths and interest areas This focus area of self-reflection derives from a definition of meaning by positive psychologist, Martin Seligman. He defines meaning as “using your signature strengths in the service of something greater than you are”. Seligman’s research identifies meaning as the most significant contributor to happiness. Strengths and interest areas are a simplified extraction of Seligman’s definition, but tapping into these two areas will give us excellent access to meaning and joy through our work. So, as with vision, strengths and interest areas are crucial evaluation criteria. Priorities Our career choices must be grounded in the priorities that exist in our lives at the time we make a choice. They might be personal, such as a desire to travel or buy a house, or they might be related or separate financial priorities. Honouring our priorities through our choice gives us the best chance to meet our goals, ambitions, and desires. It is the final critical element of evaluation. Our end-goal for this step is to have a clear vision, a sense of what our strengths and interest areas are, and an understanding of our priorities in life. Step 3 Evaluate, pursue, and decide In the final step, you first evaluate each option against the self-reflection criteria. For each option, you decide whether you are going to pursue or discard that option. This will leave you with a shortlist of options. From here, you pursue each shortlisted option further by furthering your understanding and actively exploring opportunities related to each career option. As you do this, you check-in with yourself regularly as to which prospect feels like the right one. You continuously repeat this check-in exercise during this final stage of exploration until you feel ready to make your career choice. I wish I could offer you a process that guarantees success in your career choice. Alas, neither I nor anyone else can do so. What I can say is that I have seen, through my work, that this process helps people make good career choices – and I hope it can do the same for you. The referendum effect Career choices are an imperfect process simply because the ‘perfect choice’ is rare if non-existent. So here is a concept I call the ‘referendum effect’ to help define success when it comes to career choices. Let us look back to the two most recent Irish referendums – the same-sex marriage referendum and the referendum on the Eighth Amendment. In both cases, there was high-quality information available and thorough debate and discussion on the merits of both sides of each argument. This allowed people to make an informed choice at the polls. In both scenarios, the consensus was that the right outcome was achieved. However, in both cases, more than 30% of people voted against the outcome. For me, these referendums are a good metaphor for what you should hope for with your career choices – that is to collect high-quality, accurate information regarding your options, to self-reflect, and to discuss the issues with people you trust and respect. At the end of the process, you will hopefully have a substantial majority for one choice. That for me would be the best outcome you could hope for when making a career choice. There is another side to this metaphorical coin. Consider Brexit – the quality of information shared with the UK electorate was of questionable quality and clarity. In some cases, the information was alleged to be factually incorrect. Voters therefore went to the polls with much higher degrees of uncertainty and a narrow, unconvincing majority voted in favour of Brexit. It has taken Britain several years to make any type of progress on the back of the referendum result and all the while, a vast cloud of doubt looms over the outcome itself. This is a good metaphor, in my view, for a poor career choice – poor or incorrect information, lack of clarity on the options available, and a very uncertain choice. Given the importance of our career in terms of our overall happiness, fulfilment and success, there is only one approach to take. Take the right one. Given the importance that we’ve discussed our career has in terms of our happiness, fulfilment and success – there is only one approach to take of these two shared in the Referendum Effect. Take the right one. John Slattery ACA is Founder of Inspo.

Is your battery full on Monday, depleted by Wednesday, and empty by Friday? Dr Eddie Murphy considers why we take care to charge our phones, but not ourselves. We have all been there – when you think your phone has been charging all night only to find that you did not flick the switch. You immediately accept that it will not function, or you will have limited usage until your next charging opportunity. Yet, when it comes to our bodies, we push on, potentially until we are stressed, exhausted, or burnt out. I am convinced that people who are continually in stress/overwork mode by choice or by necessity will eventually succumb. Illness will always catch up and then the person is forced to reprioritise. What if it did not have to be this way? What if we could manage our energy levels so that we can thrive rather than survive? As we all try to stay safe and healthy, here are my top five tips to help you keep your body’s battery in the green. 1 Sleep Sleep is the quickest way to emotional health and a fully charged battery. Ireland is a sleep-deprived nation. In general, we do not go to bed early enough or get enough good-quality sleep. Too often, the mobile phone is brought into the bedroom – invest in an old-fashioned alarm clock.    2 Exercise As paradoxical as it sounds, the more you exercise the more energy you self-generate. The issue is often motivation or planning the right time for physical activity. For me, I know that I am a poor trainer on my own but when I get out with the athletic club, the chat and social element keep me going. While social distancing makes that more challenging, you can always look into virtual ways to train as part of a group. 3 Savour moments Be mindful. Each morning when you wake up (before you check your phone), notice your breath and take two or three long deep breaths in and out. Throughout your day, do this whenever you think of it. It calms down the fight or flight stress response and allows the adrenaline to drain from the body. Your body will be less depleted as a result. 4 Write a real  to-do list Making an unrealistic list of everything you have to get done in one day and then attempting to accomplish everything will lead to immense frustration and a feeling of failure. This also wears down the body’s battery. Make a realistic list and you will, therefore, feel that you have set and reached some – if not all – of your goals in that day as best you can. This will not only conserve your battery life, but it will also give you some energy. 5 Call in help If you are struggling, admit it. It is okay; we all struggle. If you feel overwhelmed, share it with family, a colleague, or a friend. You will be amazed at how much better you will feel when you face the problem and how much energy you will save by merely addressing the issue. When asked for help, I know very few people who say no – and if they do, are they a true friend? Conclusion Remember, your battery life is your life, and you only have one of those. We are what we do daily, so check-in with yourself right now. What do you do? Do you need to add or subtract from it? If so, that could make all the difference in keeping your battery life a little healthier than usual. We all want to do a lot in our lives, yet our bodies and brains have finite daily resources. So, as you stick your phone on charge for the night (ideally not right under your pillow), just remember to keep an eye on your own battery life too.   Members and students can contact CA Support on 01 637 7342 or 086 024 3294, by email at casupport@charteredaccountants.ie or online at www.charteredaccountants.ie/ca-support. Dr Eddie Murphy is a clinical psychologist, mental health expert and author.

We are in the middle of an unprecedented health emergency. In recent weeks, many of us have had loved ones, friends and acquaintances suffer illness, hospitalisation or worse. It is an extremely difficult time for many. We must hope that the actions of businesses and the general public in following the official safety guidelines, combined with the herculean efforts of healthcare workers, will effectively curtail the spread of COVID-19 and a more normal life can resume sooner rather than later. After safety, our key priority has been to ensure that we maintain the highest level of service possible for members and students during the health crisis. In terms of our staff, the collaboration across the board to bring all of our processes into a new way of working has been rapid. For members, we have provided a vast range of insights, services and supports – from CA Support to Practice Consulting and Professional Standards supports – to individual members and firms through a busy schedule of webinars. The COVID-19 Hub also provides a one-stop-shop for members seeking information and guidance. We are providing our members with the best information, skills, and guidance that we can. For students, we have moved quickly to accelerate the changes that were already planned. Our e-assessment pilot interim exam has now concluded and sets us up well for the next development phase, to cover main exams later this year. On the delivery side, we see great innovation as we move online, supporting digital enrolment and changing how we support training organisations. We exist to serve our members and students, and Chartered Accountants Ireland is a mirror of the profession. Our member firms, members, their clients, and students are under severe pressure and are experiencing some very challenging circumstances. The crisis will also undoubtedly have some longer-term economic effects, and the expertise of our members will be vital in helping business and broader society overcome these challenges. Over the past weeks, the Institute has moved quickly to step-up service to our members in their time of need, and our staff have responded rapidly to adapt to new ways of working. I know that our Institute will come through this crisis as a stronger, smarter organisation. As an Institute and as a profession, we are all in this together. Our Officers, our volunteers, and our staff right across the island of Ireland and beyond may be required to work from home, but they continue to work hard to support members in their professional lives. We know that the skills of our members will be needed more than ever throughout the crisis and in the period of rebuilding ahead. We pledge to do all that we can to continue to effectively support our members, member firms, and students to make that vital contribution. Barry Dempsey Chief Executive

Given the world’s fragmented approach to the COVID-19 crisis, Dr Brian Keegan considers the potential for lasting suspicion of international standards of all sorts – not least accounting. There is a theory that suggests that 150 is the maximum number of people with whom any one individual can meaningfully interact. This number, known as Dunbar’s number after the anthropologist who came up with the idea, feeds into a myriad of management texts. Working in Chartered Accountants Ireland, whose staff complement is close to 150, Dunbar’s idea feels right. There is a sense of community and shared purpose here which, if anything, has been highlighted by the coronavirus crisis. But just as there may be a ‘best’ maximum number of staff in an organisation or business division, is there a maximum population beyond which meaningful government responses to crises cannot be developed? Big is not always best The varying coronavirus experiences and responses of countries right across the world suggest that big may not be best unless the government is of a totalitarian hue, as in China. It is surely no coincidence that the most populous countries in Europe – Spain, Italy, France, and the UK – have suffered some of the worst impacts of coronavirus per head of population. Germany, of course, is somewhat of an outlier; but then again, when is it not? The challenges of scale seem even more pronounced beyond national borders. Where the power of local or national government is subordinated to international organisations – or international treaties or federal systems, as in the case of the EU and the federal government in the US – official responses seem either inappropriate or inadequate. A fragmented response The EU’s approach to tackling the pandemic has been, to put it charitably, fragmented. The EU does not have a core role in health matters, but it does when it comes to financial supports. The Commission seemed slow out of the blocks in its initial response. Countries that usually see eye-to-eye on fiscal issues, such as Ireland and the Netherlands, found themselves at odds with each other over the issue of eurobonds to support bailouts for individual member nations. The G7 group of the world’s wealthiest nations couldn’t even come up with a joint declaration on the pandemic in March, apparently because the US Secretary of State, Mike Pompeo, insisted on referring to the disease as the “Wuhan virus”. The US also very publicly pulled its support for the World Health Organisation (WHO), but perhaps more insidious than that were the suggestions that its Ethiopian chief executive was unduly influenced by Chinese investment in his home country. The seemingly unstoppable momentum for international corporation tax reform sponsored by the OECD has waned, with crucial decisions adjourned sine die by governments with more pressing matters on their agendas. A newfound suspicion If the authority of major agencies like the EU Commission, the OECD, the WHO and the G7 is being diluted, undermined or plain ignored as governments attempt to tackle the pandemic, it seems that global approaches aren’t entirely cutting it. An international reach used to be enough for these agencies to assert their authority, but not anymore. That is not great news for a profession like accountancy, which prides itself on its global approach. One lasting legacy of the pandemic could be a suspicion of, and resistance to, efforts to establish international standards of all descriptions, accounting among them. Who will be trusted by governments to set and maintain the standards in accounting if countries can’t even agree on who should set the standards on issues like healthcare? A new Dunbar’s number is becoming apparent for the number of countries that can act together in any kind of meaningful way when dealing with a crisis. That number is not higher than one.   Dr Brian Keegan is Director, Advocacy & Voice, at Chartered Accountants Ireland.

There are several signs that the EU may be splintering at the edges, writes Cormac Lucey. One of our weaknesses as a species is our self-regard. Sitting at the top of the evolutionary tree, we are in danger of overlooking some fundamental weaknesses. One is the conceit that we make critical decisions based on our thoughts when there is considerable evidence that feelings heavily influence our decision-making. A prime example of feelings misleading decision-making occurred in the Irish property market in the years 2006 and 2007. In a Davy research note published in March 2006, Rossa White (then the stockbroker’s chief economist, now occupying that position with the National Treasury Management Agency) issued a warning in the note’s title “Dublin house prices headed for 100 times rent earned”. He cautioned investors that “the fundamentals suggest that it will be an adjustment in prices – rather than rents – that will eventually bring valuations down to more realistic levels”. The problem was that investors had extremely positive feelings about property as an investment class resulting from its extremely strong performance in the preceding decade and a half. Feelings trumped thought. Thousands got caught in the resulting carnage. There is a danger that similar forces may blindside us to weaknesses developing within the European Union (EU) today. When we look back, we see a relatively strong and united body. From an Irish perspective, we associate the dramatic rise in our prosperity in recent decades with our EU membership (much more than with our turbo-charged foreign direct investment sector). But there are several signs that the EU may be splintering at the edges. Faultline one… There have been recent calls from the Élysée Palace for the EU to issue jointly guaranteed bonds (debt securities) to help those member states worst afflicted by COVID-19. The alternative, according to the French president, is to risk the collapse of the EU as “a political project”. What you may not be aware of is that in 2019, before any of us had heard of the virus, France and Italy already had the second and third largest budget deficits in the EU. Having maxed-out their own national credit cards, they now want to use the hard-won creditworthiness of others to borrow more. Faultline two… The differing borrowing capacity of various EU member states has resulted in widely varying budgetary responses to the pandemic. Germany, which went into the crisis with relatively healthy public finances, plans to spend more than 6% of GDP to boost its economy, before considering the effect of loans and guarantees. Italy, by contrast, entered 2020 with a weak fiscal position and can afford an immediate fiscal impulse of less than 1% of GDP, even though it has been hit much harder by the pandemic than Germany. France is similarly constrained. We can look forward to more wailing from the Élysée Palace. Faultline three… The actions of the European Central Bank (ECB) are increasingly running up against political and legal constraints. The German Federal Constitutional Court recently ruled that the ECB had exceeded its legal mandate and “manifestly” breached the principle of proportionality with bond purchases made under previous quantitative easing programmes. How might it rule on the ECB’s current programme, which has been deliberately disproportionate to reduce financial strains in Italy? A related problem concerns the ECB’s Target 2 balances. They are a key measure of financial market strains within the euro area. They record how much a national central bank is borrowing from the ECB to lend to domestic commercial banks that are suffering deposit withdrawals. For years, Italy and Spain have been borrowers while Germany has been on the opposite side of the equation, helping to fund the ECB. In March, the Italian central bank’s borrowing jumped by over €100 billion to €492 billion, while the amount the Germans lent into the system rose by more than €100 billion to €935 billion. As the US economist Herb Stein quipped, “if something cannot go on forever, it will stop”. We just do not know when. Cormac Lucey FCA is an economic commentator and lecturer at Chartered Accountants Ireland.

Annette Hughes outlines the four consumer behaviour trends that have emerged from the COVID-19 pandemic. The COVID-19 crisis is being defined by four distinct consumer behaviour responses, according to the first edition of the EY Future Consumer Index. The survey tracks consumer sentiment and behaviour across several geographies, but these four behaviours, outlined below, are all evident in Ireland and have implications for the pending economic recovery. Cut deep (27%): these consumers are mainly more than 45 years old and have seen the biggest impact on their employment status. Almost one-quarter have seen their jobs suspended, either temporarily or permanently. 78% are shopping less frequently, while 64% are only buying essentials. Stay calm, carry on (26%): these consumers do not feel directly impacted by the pandemic and are not changing their spending habits. Just 21% are spending more on groceries, compared with 18% who are spending less. Save and stockpile (35%): this segment has a particular concern for their families and the long-term outlook. 36% are spending more on groceries, while most are spending less on clothing (72%) and leisure (85%). Hibernate and spend (11%): usually aged between 18-44, these consumers are most concerned about the impact of the pandemic with 40% shopping less frequently. Rationalised personal consumption From the Irish economy’s perspective, the unprecedented impact on the labour market has a significant effect on consumer spending. Personal consumption accounts for around one-third of Ireland’s GDP. Before COVID-19, the economic recovery was associated with a healthy annual average growth in consumer spending of 3.5% over the last five years. With the categories affected by containment measures accounting for around one-half of consumer spending, according to the Central Bank of Ireland, a sharp contraction in consumer spending is expected in 2020, which in turn impacts on investment and overall GDP. Recent projections from the Department of Finance forecast that personal consumption will contract by 14.2% this year, with GDP down by 10.5% (April 2020). The impact of the pandemic on employment, supply chains, travel and tourism, and mobility has hugely reduced consumer confidence and spending – and the shock is likely to be felt for some time to come. Looking beyond the immediate effects of COVID-19, few consumers expect to revert to pre-crisis behaviours any time soon. Overall, 42% of respondents believe that the way they shop will fundamentally change as a result of the COVID-19 outbreak. Plummeting consumer confidence While these four segments could morph as the crisis abates, the adverse impact of the pandemic on consumer confidence remains. In an Irish context, the KBC Consumer Confidence Index fell to its lowest level in the survey’s 24-year history due to a combination of weak conditions and the risk of poorer prospects. 584,600 people are in receipt of the Pandemic Unemployment Payment while the unadjusted Live Register total for April 2020 was 214,741. An additional 425,204 are being facilitated through Revenue’s Temporary COVID-19 Wage Subsidy Scheme. This implies that in the region of 1.224 million people – or almost 50% of the workforce – are in receipt of some form of income support. Joined-up thinking required The recovery in consumption will depend on the extent to which the unemployment situation is reversed. Companies that were struggling to keep up with changing consumer behaviour before the pandemic are now faced with the challenge of anticipating how consumers will evolve beyond the pandemic. The Government’s roadmap to ease COVID-19 restrictions and re-open Ireland’s economy and society on a phased basis are welcome, but the pace at which different sectors and regions begin to recover will vary greatly. While smaller towns may benefit from increased local spending, online sales are likely to remain high, at least in the short-term. We must look at what business and governments can do together to help everyone get through what continues to be an incredibly difficult period to ensure that they are all ready to participate in the recovery when it comes.   Annette Hughes is an Economist and Director at EY-DKM Economic Advisory.

Des Peelo shares his one guiding principle for setting a fair professional fee. Professional fees occur in many occupations including dentists, doctors, accountants, solicitors, barristers, and architects. Public relations practitioners, management consultants, estate agents, investment bankers and technical advisers of all kinds also charge professional fees, as do lecturers and conference speakers. But how should you calculate a professional fee? There are no guidelines as such, other than custom and practice within a particular sector. Competition law prevents price-fixing within a sector. Nevertheless, norms or rules of thumb usually develop over time. Enquiry suggests that a routine GP visit costs between €55 and €70, while a medical consultant may charge between €250 and €300. An estate agent may charge 1-2% plus outlays and VAT on the sale price of a property, and an architect may charge a percentage of the project costs. Practising accountants typically charge an hourly rate for routine services such as audit, accountancy, and tax work. For more complex work, mainly carried out by larger firms, such as a major investigation or a difficult liquidation, an hourly rate of €450 per hour plus VAT has been quoted in the High Court for a partner’s time. This €450 currently seems a benchmark rate and is scaled downwards for less senior staff. In general, straightforward work such as audits for an accountant, conveyancing or probate work for a solicitor or routine dental work for a dentist is competitive, and fees fall within identifiable ranges. It is difficult, however, to generalise in linking a fee to the mix of expertise provided, responsibility taken, and the value to the client. What is the value of a careful and competent diagnosis of a malady from a GP, or a substantial tax saving through expert knowledge? What is the value of the identification and rectification of a serious IT glitch, or a crisis successfully managed by a skilled public relations practitioner? Round sum fees are common for non-routine work or work not measured in terms of time incurred. There is the story of a computer glitch that closed down an entire business. A technician arrived, turned a nut, and got the system up and running again. The bill was €1 million, and the client demanded a breakdown. The response was €100 for the hour in turning the nut, and €999,900 for “knowing which nut to turn”. Legal fees, apart from routine matters, can be a mystery – particularly in litigation. There are regular reports of substantial fees across all types of litigation. A UK judge once remarked that the Savoy Hotel and the courts are open to everyone. In my experience, this is because of the extensive input necessary in almost any litigation, such as identifying the issues and the law relating thereto; assembling the relevant documentation and preparing the required procedural paperwork; accessing expert evidence; consultations; and, of course, the actual court hearing. There is an amusing story about legal fees allegedly involving a firm of solicitors in the United Kingdom. A long and complex litigation case had come to a satisfactory conclusion, and it was time to finalise the bill. The more technical aspects had already been completed as to measuring the files at £100 per inch and weighing the files at £150 per pound. Instead, each partner had to review the files and put his or her estimate of the total fee in a sealed envelope, placed in a box. When the box was opened, the partner with the lowest estimate did not share in those fees and the partner with the highest estimate had to collect the fees. An optimum balance. Investment bankers charge astronomical fees. This is because they can. The transactions involved are mega takeovers or the funding of large projects. The enormous sums of money involved are often backed by prestigious names, not necessarily professional expertise, and this is what underpins the hefty fees. Fees of 1-3% of the amounts involved do not seem unduly high when expressed that way, but these percentages translate into millions of dollars or euro. George Bernard Shaw observed that professions were conspiracies against the laity. This, of course, does not refer to Chartered Accountants and professional fees. A guiding principle as to good professional practice is to ensure that the subsequent fee is not a surprise to the client. Service before remuneration.   Des Peelo FCA is the author of The Valuation of Businesses and Shares, which is published by Chartered Accountants Ireland and now in its second edition.

Richard Day and Alannah Comerford look at how Chartered Accountants can explore the potential for robotic process automation using UiPath. In this series of articles, we are exploring the power of visualisation and data analytics and the benefits it can bring to Chartered Accountants. As you may know, the FAE syllabus was recently updated to include data analytics concepts and tools such as Tableau, Alteryx, and UiPath. Previous articles dealt with the concept of data visualisation and the value it can bring to an accountant, and most recently we covered the data processing tool, Alteryx, and the significant advantages it affords when performing data transformations and calculations. In this article, we will move to the more advanced area of automation. Robotic Process Automation (RPA) is an acronym you are probably familiar with, as more and more businesses seek to streamline their operations and exploit the advantages of automation. UiPath, which has been selected by the Institute, and similar tools enable RPA at a practical level. UiPath is a software solution that acts like a robot, programmed to perform the various activities in a process just as a human would. The tool can be used to run without human supervision or can work as an assistant. Automation without human supervision is extremely difficult and may not be the answer for complex processes that require significant judgement, reasoning or analysis from the person performing them. In such cases, automation may still support the person who is completing these tasks as an assistant, but human intervention is vital. However, if we consider those processes that are suitable for automation, they can usually be described as highly repetitive, manual processes where the employee does not exert judgement. All decisions are made based on business rules and pre-defined logic. Significant value can be derived from automation where there is interaction between multiple systems, but the inputs required are standard, making the process tedious and time heavy. Similarly, when the current manual procedure is inadequate for standardising a process and remains subject to error, automation – which has the power to perform the process accurately every time – can be invaluable. As an accountant, you might think that opportunities for automation should fall under the remit of those working in IT. Accountants, with their holistic knowledge of how a business operates and analytical nature, are ideally placed to identify potential automation opportunities and act as a key stakeholder throughout the process. Automation at work Consider a simple process whereby you are required to run reports or extracts from different systems and perform some data transformation and analytics on the information to produce an output, perhaps in the form of a reporting dashboard. Alteryx can be set-up to run workflows to deal with inputs from different systems and produce the desired output. However, you would still need to run the input files and refresh the dashboard manually. Incorporating UiPath can automate the process even further. UiPath can log-in to each system and can be used to run specific reports from different systems at set times, replacing the need to download data manually. It can then load this data into Alteryx, run a pre-defined workflow, and produce the desired dataset. This information can then be brought into Tableau to refresh a dashboard with the current information. In this way, UiPath can be configured as an interface between systems to offer a fully integrated solution. These processes can be as simple as taking a list of suppliers from one system, along with balances from another. UiPath can automate the production of these lists and balances for processing in Alteryx to produce a customer statement. This statement is then converted to a named PDF document and emailed to each customer. In an audit context, where proof of delivery can provide recognition of a sale, client records can be reconciled with those from a third-party delivery company, exceptions identified and presented for further investigation by the auditor. A business can reap many rewards from automation. While efficiency and time-saving with a shorter cycle time immediately spring to mind, increased quality and compliance as a result of a reduction in errors and an increase in accuracy are also often seen. Unlike mere mortals, robots never sleep and processes can operate autonomously 24/7, driving real-time transactions and analysis. While certainly more challenging to measure than the benefits outlined above, increased employee satisfaction through a focus on higher-value activities and a reduction in time spent on menial, repetitive tasks is a clear benefit. It helps shift the priorities of the employee to innovation, strategy and activities that add value to the business proposition, resulting in a happy and productive workforce and consequently, higher output. While the benefits that automation can bring when applied to appropriate processes are clear, we must bear in mind that, while automation can reduce hours in the long run, up-front investment is required to get it right. Also, control-aware accountants would know that any automated process requires ongoing review. A successful move towards automation requires the skills that accountants use all the time. For example, detailed process maps that are validated by walk-throughs are essential as well as thorough testing with scenario analysis. Consideration of the impact on controls, appropriate training, procedures, and user manuals are also required along with a measurement of actual versus expected results and periodic performance assessments. Accountants are likely to be key stakeholders in each of these activities. Admittedly, we have only just skimmed the surface of the potential of UiPath and what it can be used for. Still, given the myriad of considerations included above, this is hopefully understandable. We hope we have sparked a reflection on potential use cases in your own business and perhaps demonstrated areas where Alteryx alone may not go far enough. We encourage you to consider these use cases, investigate whether your organisation has the necessary experience and consider a proof of concept. In the world of RPA, do not be afraid to consult and draw on experience.   Richard Day FCA is Partner, Risk Assurance Leader, at PwC Ireland. Alannah Comerford ACA is Senior Manager, Data Analytics & Assurance, at PwC Ireland.