Thought Leadership articles

The Department for the Economy unveiled an ambitious plan to boost the Northern Ireland economy in 2021, but will it be up to scratch? Professor Anne Marie Ward, Dr Esmond Birnie and Dr Stuart Henderson crunch the numbers to find out if the 10x Economy vision can deliver. Some argue that the Northern Ireland (NI) economy has strong potential given its apparent unique trade position as a halfway house between Europe and Britain, combined with the Department for the Economy’s (DfE) ‘10x Economy’ policy, which targets innovation, inclusion and sustainability. Yet, despite experiencing 25 years of peace, NI continues to suffer from political uncertainty and lower economic productivity relative to Britain and the Republic of Ireland (ROI). Moreover, ongoing uncertainties associated with Brexit continue to dampen potential foreign direct investment, which has been vital to the strong economy in ROI. It is against this backdrop that the DfE introduced a new growth policy in May 2021 aimed at achieving a 10-times better economy (‘10x economy’) by 2030.  The 10x vision is underpinned by objectives grouped into three pillars—innovation, inclusive growth and sustainability—and focuses on six priority sectors:  1. Agricultural technology (agritech); 2. Life and health sciences; 3. Advanced manufacturing and engineering; 4. Financial services and financial technology (fintech); 5. Software (including cybersecurity); and 6. Screen and low carbon.   The data The Northern Ireland Economic Trade Statistics (NIETS) is a new dataset that provides details on trade between NI and Britain for the first time. We have analysed this dataset, which covers the period 2014–2020 and comprises a sample of enterprises that are VAT or PAYE registered and trade in NI.  Approximately 5,000 to 7,000 enterprises respond to the survey annually. As part of our research, we examined the 10x priority sectors over the period 2014–2020.  Data on financial services and fintech are not included in the dataset and due to GDPR issues, we had to merge some of the 10x priority areas, ending up with four 10x sectors:  • Agritech;  • Health and life sciences; • Advanced manufacturing (including low carbon); and  • Software and screen.  Approximately 11.4 percent of the total sample is classified as being 10x. Here is a summary of our findings. Growth in sales and gross value added (GVA) As shown in Table 1, the 10x sectors of the NI economy were relatively resilient from 2014–2020 as total Gross Value Added (GVA) increased over the period, though agritech was negatively impacted by COVID-19.  Performance of the non-10x sectors improved over the period 2014–2019, as evidenced by increased total GVA (except traditional manufacturing, which declined by 20.35%). Most non-10x sectors were adversely impacted by COVID-19, however, except manufacturing and ‘other’ production.  Productivity Productivity is measured by the ratio sales per employment and GVA per employment. As illustrated in Figure 1, for 2014–2020, the wholesale and retail sector had the highest sales per employment, followed by agritech and other production. Other production has the highest GVA per employment, followed by construction, health and life sciences and software and screen. Agritech has the second lowest GVA per employment. External sales behaviour A country’s wealth is influenced by its ability to attract funds from external markets. To determine how NI is doing, we investigated the trade behaviour of NI enterprises using four ratios, which reflect the percentage of overall sales each business undertakes with Britain, ROI, the rest of the European Union (REU) and the rest of the World (ROW). The average percentage for each year (2014–2020) for the whole sample is provided in Table 2.  The most important external market is Britain, accounting for on average 11.75 percent of sales, followed by ROI (6.18%), ROW (2.69%) and REU (1.74%). Generally, the percentage of total sales to these external markets increased steadily over the period 2014–2019 and declined in 2020, coinciding with COVID-19. Patterns in the percentage of total sales to the four markets are further analysed by sector over the period 2014–2020 in Figures 2 to 5. Sectoral differences are evident. Generally, non-10x enterprises (the six to the left-hand side of each figure) are less engaged with external markets relative to 10x enterprises (the four to the right-hand side of each figure).   Differences in the relative importance of markets is also observed across sectors. For example, the ROI market is most important to the agritech sector (Figure 3), and the ROW market is most important to the health and life sciences sector (Figure 5), probably indicative of sales to the US. This sector is also very active in markets in the REU (Figure 4).  Note: When interpreting these results, be aware that the data is based on the largest enterprises in NI and the authors had to design their own 10x categories based on Standard Industrial Classification codes.   Will it work? The number of enterprises in NI that can be classed as ‘10x’ increased over the period from 619 in 2014 to 723 in 2020. They are contributing GVA to the economy and, importantly, most of their turnover is to external markets, which is beneficial for a small regional economy where local demand is limited.  These enterprises seem to be resilient, with little change in behaviour observed in the period after Brexit, and, with the exception of agritech, they continued to grow despite COVID-19 (though the data was only available for 2020).  In theory, the DfE’s ambitions are laudable. Cluster approaches have proven successful in other countries, including ROI, where foreign-owned high-tech enterprises pay higher wages, invest in R&D for future growth and have high exports.  Moreover, the vision of sustainable growth and prosperity for all (levelling up) aligns with more holistic concepts of economic growth that account for social and environmental concerns alongside economic prosperity.  There are concerns, however. This is an ambitious undertaking that will take time to implement. The 2030 target set by the DfE is tight, the support structures to fuel 10x growth are not yet fully established, ‘10x’ is not yet fully defined, ‘place’ is not yet fully defined and hence the data are not (yet) available to enable 10x to be identified and analysed by place.  This will hinder the ability to foster clusters and build networks, which are important for innovation. Also, change will be difficult due to existing established structures.  For example, most policy and government action is managed through Local Government Department (LGD) level structures. However, clusters of enterprises may cross LGD boundaries, complicating a joined-up approach.  In addition, economic and social development is not only managed by the DfE; many other bodies such as central government and local government departments, business networks and educational establishments, are involved. Role for accountants Accountants can play an important role in the success of the DfE’s policy and the future of the NI economy. Accountancy firms are present in most towns across the region. Accountants are part of local business networks and have first-hand knowledge of entrepreneurship and innovation within communities.  Moreover, accountants are well-equipped to facilitate the creation of priority clusters and expanding networks that enable local businesses to connect and grow both within and beyond their communities. This will be good for communities and for the accountancy profession.   *Note: The tables and diagrams in this article are from the authors’ full report, available on the Northern Ireland Statistics and Research Agency website. Professor Anne Marie Ward, FCA, is Professor of Accounting at Ulster University; Dr Esmond Birnie is Senior Economist at Ulster University; and Dr Stuart Henderson is a Lecturer in Financial Services at Ulster University.

The explosive growth of AI has transformative potential but also raises critical privacy concerns that must be addressed, writes Pat Moran The world of artificial intelligence (AI) took a massive leap forward with the emergence of ChatGPT in November 2022. Since then, there has been a surge in the design and implementation of AI use cases across industries such as healthcare, retail, financial services, manufacturing and others. While the emergence of AI is transformative, this powerful tool is not without its challenges, particularly the profound privacy concerns it raises. As organisations eagerly harness the potential of AI, it is vital to know the associated privacy risks, such as: Data collection and breaches – As AI models evolve, their training datasets will likely grow, increasing the risk of personal and special category data being included. These datasets must be stored and processed securely while training AI systems. Algorithmic bias and discrimination – Biased algorithms may inadvertently perpetuate biases and lead to decisions that could negatively impact certain groups of people without the organisation’s intention to discriminate. Data subject requests – Once the AI systems are trained and deployed, responding to certain data subject requests becomes increasingly difficult. Transparency – As AI systems become commonplace in organisations, users will increasingly unknowingly interact with these systems, including instances where users are affected by automated decision-making. Regulatory requirements and industry standards – Even though AI is considered a novel technology, there are existing and upcoming regulations and standards that define and guide its usage. Organisations must demonstrate compliance with these regulations and standards to maintain customer trust and meet procurement standards in the market. Misuse of personal data in AI-enabled cyberattacks – Malicious actors have begun leveraging personal data such as audio clips and deep-fake content for advanced phishing attempts and other scams. Inaccurate responses – It is common for generative AI programs to respond based on probabilities identified within the data sets used to train the AI instead of actual, accurate data points. This can result in inaccurate responses and may cause issues if users do not verify the authenticity of the system’s responses. Organisational changes for AI To successfully traverse the concerns listed above while developing and integrating AI systems, organisations should consider the following best practices: AI governance: The teams involved in developing AI governance should be interdisciplinary, including teams in AI development, legal, privacy, information security, customer success and others. Privacy by design: The foundation of responsible AI lies in the concept of ‘privacy by design’, which states that data protection and privacy considerations must be implemented throughout the development lifecycle for any AI system. This includes incorporating privacy-enhancing technologies, ensuring appropriate security, compliance with regulatory requirements and other privacy-specific principles. Some AI systems have a ‘black box’-like nature, which makes it harder to detect and fix ethical, privacy and regulatory issues once deployed, increasing the need for privacy by design. Further, there might be other processes that pose too high a risk to move towards automation through AI and will require controls such as “a human in the loop”. Transparency: Users must be provided with clear and transparent communication in the form of privacy notices and other means including: confirmation that AI systems are used to process their data (including details of automated decision-making, if present); how their data is collected and processed; how long it will be stored; an outline of their rights, etc. The information helps users provide informed consent and builds trust in AI systems as well as the organisation. Fairness: An important step is to perform regular audits of AI systems to test their performance and ensure no bias or discrimination against users. The review should include the automated decision-making algorithm, and the process by which the algorithm makes decisions should be transparent and explainable. Data management: Ensure data ingested by the AI system during training is lawfully obtained, high-quality, and rigorous vetting and anonymisation have been performed. Technologies such as pseudonymisation or data aggregation should be implemented to ensure compliance with data minimisation and retention privacy principles. Up-to-date records of processing activities should also be maintained to ensure data is managed effectively throughout its lifecycle. Remember, organisations cannot use publicly available data to train AI systems without a valid lawful basis. Risk management, compliance and information security: A risk-based approach, including a data protection impact assessment, should be implemented to assess the level of risk involved before AI systems are deployed. The organisation should also sign off on the risk levels, controls and mitigations. AI compliance monitoring should be incorporated into the organisational, regulatory compliance programme or privacy programme. The wider organisational information security programme should include AI systems and their underlying data to prevent data breaches and malicious attacks. Technical and organisational measures such as encryption, data masking, password management, access controls and network security should be implemented. Employee training: As AI is a new technology, employees must be trained periodically on responsible AI usage. Training should include the privacy impact of AI systems, compliance with data protection regulations while using AI, misuse of personal data in AI-enabled cyberattacks and how to guard against it, and data protection best practices. Conclusion The advent of AI may be compared to the invention of the combustion engine. While organisations can move faster, they will also require stronger brakes. These brakes may address these multifaceted concerns, which necessitates a holistic approach, combining technological innovation, ethical practices, user empowerment and regulatory adherence. Organisations’ responsibility will be to innovate and ensure that innovation aligns with the values of privacy, ethics and user trust. Pat Moran is the Leader of Cybersecurity Practice at PwC.

In the complex landscape of corporate decision-making, understanding the differences between ESG and sustainability is crucial, writes Dan Byrne Corporate decision-making today involves a lot of talk about the environment, social and governance (ESG) and sustainability – precisely, how your company will fit into both movements. No one wants to discover they don’t know the difference between the two in the middle of a board meeting. While the two ideas share a lot of overlapping principles, they are different. It is essential to understand these difference because, once you sit down with colleagues to oversee core strategic decisions, you must have robust knowledge about the relevant topics. The difference between ESG and sustainability Sustainability is a principle dictating that, while we must look after the needs of our current society, it cannot be to the detriment of future generations. The concept of sustainability is so broad that it inevitably means different things in different boardrooms. The common thread in most organisations is that sustainability principles guide stakeholder expectations and, as a result, company strategy. ESG isn’t a principle; it’s a framework for measuring specific impacts and risks. It is a tool that can help investors and stakeholders to understand where their money is going. Why the confusion? There is a lot of overlap between ESG and sustainability, so organisations often file them under the same heading. In practice, companies embracing ESG will often commit to not harming the planet (environment), its people (social) or themselves (governance). While this should always be approached with the understanding that ESG is an investment metric and tool for analysing risk, it can be easy to generalise to the point that ESG is instead viewed as a sustainability metric or simply another name for sustainability itself. This is particularly true when companies focus on the “E” part of ESG. It’s popular across multiple industries and wins the backing of key stakeholder groups. An organisation’s focus on the environment creates a natural overlap with sustainability activities. Avoiding confusion in the future If you are in a board meeting and find yourself hovering around both topics, be sure not to hint that they’re the same with these tips: Remember that ESG is a collection of metrics; sustainability is a principle; If you’re talking about ESG, you will likely end up talking about numbers, quantities, reporting and investment opportunities. If you’re talking about sustainability, it’s expected more in the context of organisational goals, culture and policies; and Sustainability, in many respects, is the end goal. ESG is a pathway and a framework that will allow you to get there. Dan Byrne is a writer with the Corporate Governance Institute

As artificial intelligence and hybrid working reshape roles, accountants must begin to embrace IT, analytics and real-time data. Mark Lam explains why Bean counters, excel spreadsheets, sums and calculators – just some of the stereotypes and imagery that are associated with accountants. In 1955, General Electric began to use computers to perform accounting functions, and in 1978, VisiCalc, the first spreadsheet software allowing financial modelling, was developed. Since then, technology has continued to evolve and become more complex and central to the role of the accountant. A worker is only as good as the tools they are given to complete the tasks at hand and accountants are no different. Spreadsheet software itself revolutionised the profession, turning a “20-hour per week bookkeeping chore into a few minutes of data entry”. We have been seeing a more recent new shift in the profession in the past decade and this has been exacerbated in the years since the COVID-19 pandemic with the rise of hybrid working and artificial intelligence (AI). Technology has clearly advanced since the introduction of that first spreadsheet, with developments in computer systems and software connecting each function of the business to a single Enterprise Resource Planning (ERP) system. Just like in the 1970s, accountants are going to need more IT skills in order to stay competitive in the current market. New roles for accountants have emerged, such as the project accountant, financial system accountant, system accountant or data accountant. All are technically the same role, requiring high levels of IT systems and process knowledge­ and functioning as the intermediary between the IT and financial functions of businesses.   Future skill requirements As digital transformation is becoming more of a hot topic, companies are seeking continued improvements in efficiency combined with the need for real-time data causing businesses to increase data collection and connectivity between business processes. ERP systems providing the solutions to these needs offer just one part of the answer. Business leaders increasingly want accurate real-time data and information to aid decision-making. Accountants are required, not only to understand how the systems work, but also produce meaningful reports for bosses. Employees who understand how these systems work can build processes around them and extract and present the relevant information to help management leverage ERP systems to best effect. To stay ahead of the curve, businesses need to consider the future skill requirements of their financial teams, just as accountancy bodies will have to consider the curriculum provided to trainees to meet those needs. Businesses that take on trainees may start to consider taking on those who come from an IT background instead of accountancy, for example. Accountancy firms should be able to train accountants but can’t train computer programmers, after all. It may be more important to have new skills at the organisation’s disposal rather than more traditional accountancy functions. Accountants have always been more than just bean counters, but now this stereotype is becoming a distant memory. Mark Lam is H&W Group Financial Reporting Manager at Vhi and Chartered Accountants Ireland Technology Committee Member The Chartered Accountants Ireland Technology Conference will aim to inform members about this change, to allow us to bravely step into the world of digital transformation having learned from our peers and industry experts. Industry leaders such as Microsoft and Sage will present on the best practice around digital transformation at the conference and there will be case studies from fellow accountants detailing their digital transformation journey and lessons learned. Sign up now.

As finance leaders grapple with the Corporate Sustainability Reporting Directive and its complex demands, IT collaboration will become increasingly important, writes David Codd Finance Directors and Financial Controllers are working hard to understand the implications of the Corporate Sustainability Reporting Directive (CSRD) and to put the necessary reporting in place in their businesses. But their colleagues in IT also have a vital part to play. This is an unusual challenge for IT, and it’s important to consider how to collaborate effectively. What are the pitfalls to avoid? And how can you build a strong partnership to deliver your sustainability reporting programme? The CSRD, finance teams and IT The CSRD will expand sustainability reporting which will become mandatory for publicly listed companies (plcs) in 2025 for 2024 performance and a year later for all large companies. Finance teams are now performing double materiality assessments and assessing what new measures and information will be required. However, the underlying data itself must be identified and sourced, its reliability established, and processes put in place to extract and interpret the data and report accurately on an ongoing basis. This has the potential to become very onerous. IT support will be critical to an effective and efficient process, i.e. high-quality reporting with minimum manual intervention. An unusual IT challenge This is an unusual challenge for IT departments for various reasons: The scope is exceptionally broad The activities that impact the environment are conducted across an organisation’s operations and – for Scope 3 emissions – through multiple steps in the supply chain. So, the systems and datasets your IT colleagues will have to work with are unusually disparate and will even fall outside the boundaries of the technology estate they control. The standards are still being rolled out IT project managers like clear definitions at the start of a project. However, the first sustainability reporting standards have only recently been released, and the taxonomy for digital reporting is a work in progress. Plus, the “limited assurance” concept will give rise to different interpretations of the quality of the audit trail needed. This is a big project without a conventional monetary business case Chief Information Officers usually have many more attractive-sounding initiatives in the pipeline than they can deliver at once. So, they work with their finance and functional colleagues to prioritise, and resources are allocated based on financial payback or loss avoidance. Your CSRD-driven reporting programme does not neatly fit these criteria.      How to manage risks There are several risks when working with an IT team on sustainability reporting. Confused responsibilities You usually work with a financial systems team, but IT business partners for supply chain or manufacturing operations will already have been partnering with sustainability managers to develop scorecards. Muddled ownership and communications can result in lost time. In a large business, reporting is a full-blown programme consisting of several streams. It needs experienced management to coordinate it and manage the relationship with you. I would also recommend that accountability for IT delivery sits with the head of financial systems, and the IT project manager should sit on the team. This keeps the ownership and lines of communication as simple as possible. Your IT team can’t resource the project Since the 2000s, IT resource has shifted from enterprise systems to ecommerce, data analytics and security. Enterprise resource planning systems teams have been staffed to make incremental changes on the basis that resources can be contracted in as needed. However, consulting firms are now experiencing heavy demand for their sustainability reporting expertise as deadlines approach. The work should be scoped out with IT as early as possible. Most of the scope can be clarified now. Finance and IT should accept that adjustments will be needed, but it’s wise to use resources now and make progress. In this case, perfect is the enemy of good. Motivation The tech community loves stimulating work – through either buying into a goal or working with innovative technology (and preferably both). You need enthusiastic professionals volunteering for this project, but you’re competing with exciting fields such as artificial intelligence and the possibility of going to other employers. The people you need have lots of options. Be aware of the nuanced differences between finance and tech culture and accept that you’re competing for talent. Reach out to the IT community in your business, explain that CSRD prevents greenwashing and that high-quality reporting is a noble undertaking that will help your business to show the world what you’re doing. True partnership is key Recognise the significant challenge presented for both IT and finance by the imperative to develop a quality, efficient sustainability reporting process at pace. A true partnership between finance and IT is the key to successful reporting. David Codd is a Non Executive Director and Strategy and Transformation Consultant

Kevin Empey explores the three phases of flexible work adoption, from foundational steps to future-focused strategies As we enter a new year, there is still a noticeable gap between desired employer policy and employee practice and expectations as to how flexible work arrangements should operate. This gap narrowed in 2023, with both employers and employees taking steps to make flexible working fit-for-purpose more standard practice, but the evolution of more flexible work models is far from over. The employment market in 2024 looks set to be split between two types of employers. First, there will be the employers who continue to be open about how and where work is done with an eye to emerging influences such as artificial intelligence (AI) and the four-day work week. Second, there will be those who revert to more ‘fixed’, pre-COVID work models and mindsets with minor concessions to demands for some form of hybrid working offering.  While other business and employment priorities take over the agenda in 2024, it doesn’t mean flexible work design is done and there is further change ahead.  In our experience, there are three distinct phases in the transition to flexible work models and how organisations are adapting to new and emerging realities. Phase 1: Base camp Some organisations (not many) are still in the early stages of settling on their flexible working vision. They are continuing to lay the groundwork for establishing new work models that cater to evolving work patterns and demands as well as organisational priorities. This phase involves embracing the basics, getting the framework up and running and also considering their flexible working strategy for frontline roles and work that cannot be done remotely. Phase 2: Integration Most businesses find themselves in this second phase. They have spent 12 to 24 months adapting to their declared approaches (the ‘what’) and are now in a position to refine and integrate their flexible models (the ‘how’) with the demands of their business. This involves addressing specific challenges encountered in recent months, bridging gaps between employer policies and employee preferences, and adapting legacy processes and definitions of productivity. The opportunity presented by this phase is to ensure that work redesign will be an ongoing expectation and reality and is just not about getting hybrid right. The risk of this phase is that employers allow poor habits and practices to set in and that the expectation and need for ongoing reform and improvement is not made clear.   Employees are also considering whether their employer’s flexible working models align with what they want. Continued flexibility and ongoing dialogue will be critical to keeping people on board.  Phase 3: Beyond hybrid Organisations that have reached this stage have moved beyond the hybrid conversation. They have integrated hybrid working into a broader flexible work model. Their experiences and approaches provide valuable insights into how this transition can best be managed. A critical theme in this phase is the shift in narrative, where the focus is not solely on the hybrid debate but on achieving work flexibility and adaptability more broadly across the organisation. This will include open work design conversations involving AI solutions, four-day work week options and other influences on how and where work can be done better and faster. This encompasses reforming processes, enhancing employee experiences, reconfiguring workplaces and aligning change with ongoing cultural and transformational agendas. In this phase, the emphasis also shifts to enabling teams to drive changes and improvements collaboratively rather than imposing them from the top down. Furthermore, continuing support for managers to lead ongoing change becomes paramount in ensuring sustained success. It is also quite common to see some organisations shift from one phase to another and back again, as they re-set strategies and solutions with employees and their people leaders. The future agenda  As we move forward into 2024 and beyond, the perspective is shifting beyond the mere transition to hybrid working models. Building on recent hybrid working experiences and fostering a culture of adaptability and agility will be transformative for both employers and employees, narrowing the gap between what employers offer and employees want. The journey towards a flexible and adaptive workplace is ongoing and will continue at pace, with new chapters and milestones on the horizon. Those organisations that prioritise learning from recent experiences and adapting to change as an ongoing habit will be best-equipped to succeed and minimise the employer/employee gap. Kevin Empey is the Managing Director of WorkMatters

With tech-enabled fraud on the rise in Ireland, businesses must carefully assess and manage potential risks, writes Sara McAllister Ireland is a hub for data storage and technology organisations and, as such, we are at the fore of innovation and transformation. There is a flipside, however. As this industry grows and technology evolves, so too do risks associated with fraud. Businesses and organisations in Ireland have become a greater target for fraudulent activity by criminals looking to exploit vast amounts of data created, shared and uploaded every single second. The challenge now is how best to identify, monitor and manage this risk. The National Risk Assessment 2023, published by the Irish government earlier this year, points to Ireland being especially vulnerable due to the scale of technological infrastructure developed here. Its exploitation by bad actors could cause significant disruption. A rise in the volume of fraudulent attacks carried out in Ireland speaks to the appetite of those looking to exploit weaknesses in infrastructure, industry or organisations. With this heightened focus on Ireland, business and organisational leaders here may find themselves under pressure to assess, manage and prepare for risks attached to operations, both in-house and outsourced. Artificial intelligence As new technologies come on stream, the focus on risk reduction will need to move at a faster pace. Advances in artificial intelligence (AI) have helped scale businesses via real-time automation, but this technology comes with its own risks. Ultimately, it is a double-edged sword. On the one hand, AI has been a game-changer in areas like audit and forensics, allowing businesses to deploy ‘needle in a haystack’ algorithms to identify anomalies and exposures. This is one of the reasons we are seeing an improvement in the detection of fraudulent activity. On the other hand, AI has allowed bad actors to identify new opportunities to carry out fraudulent attacks, penetrating weaknesses in the new and novel AI technology businesses are learning to use. Hybrid and remote work Most businesses have introduced remote and hybrid working processes in recent years, and many will continue to review these policies in line with changing business needs. A key consideration in this context is the risk associated with social engineering threats, which rely on human error and can be much more difficult to detect than other fraud-related risks. Where employees work remotely, evidence suggests they are less likely to consider the legitimacy of communications they receive by email, for example, and may be more inclined to respond to fraudulent requests that appear to have been sent by colleagues or superiors within their organisation, creating vulnerabilities across entire business networks as a result. Security training and awareness is the first line of defence against social engineering, yet many organisations fail to sufficiently consider the risks associated with employees working on-site and remotely. Fraud trends Several other trends are raising concern for businesses, too, beyond AI and hybrid working. Synthetic identity theft uses legitimate and fabricated information to exploit vulnerabilities and remains problematic for businesses as it is increasingly difficult to detect. Account takeover fraud remains prevalent and, as the number of personal online and social media accounts increase, so too do attacks by criminals attempting to gain access to personal data or bank details, often through stolen information. Crypto currency fraud, albeit less mainstream, also fundamentally exploits technology control weaknesses to attempt to steal coins, such as Binance Smart Chain, Ethereum and Bitcoin. Necessary risk assessment The heightened risk landscape is part of a changing cybersecurity picture where digital technology is constantly being attacked and weaknesses are identified and accessed by criminals to exploit data and information for their own gain. Fraud risk must always be a key factor for consideration when managing shared infrastructure, data breaches, preventing unauthorised access and engaging with third-party providers, among others. Industry and political stakeholders are acutely aware of the challenges in this space. Without the proper risk assessment, governance and control mechanisms in place, any single attempt at fraud could potentially put a business at the centre of a perfect storm with a highly damaging aftermath.  Sara McAllister is Partner and Head of Business Risk Services at Grant Thornton

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

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