Thought Leadership articles

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

The introduction of the Corporate Sustainability Reporting Directive marks a pivotal moment in the evolution of corporate reporting in the EU, but it will bring challenges for all involved, writes Daniel O’Donovan In an era where businesses are increasingly being scrutinised for their impact on the environment, society and their governance practices, the European Union (EU) has taken a leading role internationally by introducing the Corporate Sustainability Reporting Directive (CSRD).  The CSRD is due to be transposed into Irish law before mid-2024. Following its transposition, mandatory reporting requirements will become effective for, among others, financial years commencing on or after: 1 January 2024 for public interest entities in scope of EU non-financial reporting rules (with more than 500 employees); 1 January 2025 for other larger companies and public interest entities (with more than 250 employees); and 1 January 2026 for listed public interest SMEs, with ‘opt out’ possible until 2028. This is a pivotal moment in the evolution of corporate reporting across the EU, bringing with it significant challenges for all involved, not least for reporting entities, their audit committees and assurance providers. What are the key challenges?  While the CSRD is a welcome framework for enhancing transparency and accountability in corporate sustainability reporting – reflecting the EU’s commitment to fostering sustainable and responsible business practices – it introduces three significant challenges for business: First, the breadth of information that relevant businesses will be required to report under the 12 European Sustainability Reporting Standards (ESRS) introduced by the CSRD; Second, the need to implement the systems required to gather and record reliable sustainability data and information; and Third, the need to provide assurance over the sustainability reports required by the CSRD. Breadth of information to be reported The ESRS, developed by the European Financial Reporting Advisory Group (EFRAG), aim to enhance the consistency, comparability and reliability of sustainability reporting among European reporting entities.  The scope of the ESRS is expansive, encompassing various elements that collectively contribute to a comprehensive understanding of an organisation’s environmental, social and governance (ESG) performance.  The key components driving the breadth of information required in this reporting are the: sustainability topics;  reporting boundary; double materiality concept; and  number of datapoints for disclosure within the ESRS. Sustainability topics The ESRS require disclosures about the following topics: climate change, pollution, water and marine resources, biodiversity and ecosystems, resource use and circular economy, own workforce, workers in the value chain, affected communities, consumers and end-users, and business conduct. As can be seen from this list, these are broad topic areas. The ESRS standards for each of these topics specify further subtopics in respect of which disclosures must be given. Furthermore, in respect of each of the topics and subtopics, disclosure is required about aspects of the topics as shown in the table below.  Reporting boundary The reporting boundary required by the ESRS is in stark contrast to what reporting entities are familiar with in the context of the financial reporting boundary used to produce annual financial statements, being within the reporting entity or group. The ESRS, however, require a reporting boundary that considers the entire value chain, from suppliers to end consumers, as shown in the figure below: This inclusive perspective ensures that the environmental and social impacts of a business are accurately captured, providing stakeholders with a complete picture of the organisation’s sustainability efforts, but it places a demanding requirement on reporting entities from a data collection standpoint. Double materiality Reporting entities in scope of the CSRD will be required to report on a double materiality basis. This means that they will have to report on impacts on and risks to them from a changing climate and other ESG matters (referred to as “financial materiality” as it is consistent with what entities report in the financial statements). In addition, they will report on the impact the entity itself might have on climate and other ESG matters (referred to as “impact materiality”). When compared with reporting in the financial statements, this concept doubles the challenge for reporting entities as all ESG topics must be considered from both perspectives. Gathering and assessing information and data about the reporting entity’s impact on the breadth of ESG topics is a new frontier for corporate reporting and one that the majority in the corporate reporting ecosystem have no experience of. Datapoints for disclosure It is clear that the scope of the information to be disclosed under the ESRS is far broader than the information to be reported in the financial statements. However, to underline this, the ESRS outline specific datapoints that reporting entities should disclose to provide transparency and facilitate comparability. As recently as October, EFRAG released a draft List of ESRS datapoints – Implementation Guidance, which includes all 1,178 disclosure requirements in the sector-agnostic ESRS published to date. The datapoints are standardised metrics that allow for consistency in reporting and enable stakeholders to assess the sustainability performance of different reporting entities. For instance, in the environmental domain, entities may report on their carbon footprint, energy consumption and waste generation. Social datapoints could include diversity and inclusion metrics, employee turnover rates, and health and safety performance. This new frontier of corporate reporting will generate tangible benefits for society at large and result in greater public interest therein but will not be without data capture challenges in the near future.  Sustainability information systems Given the significance of the breadth of sustainability information to be reported, the transposition of the CSRD into Irish law will have a profound impact on the information systems of entities within its scope. Moreover, the scale of the endeavour for those entities that will be required to report in early 2025 on the calendar year ended 31 December 2024 is enormous in terms of what must be achieved within a timeframe that is less than 18 months away.  Such entities need to determine what sustainability matters are material using the double materiality concept and are therefore required to be included in their sustainability report and start gathering, collating, aggregating and sorting the data in relation to 2024, which will be reported in early 2025.  Reporting entities will need to establish or enhance integrated data systems that allow for the collection and management of sustainability data. This could involve integrating sustainability data within existing enterprise resource planning (ERP) systems to ensure data consistency and accuracy. Additionally, tools may be needed, such as a materiality assessment tool to help systematically evaluate the importance of various sustainability information.  As stakeholder engagement is a crucial part of a materiality assessment, systems or tools that can help track and manage interactions with stakeholders, ensuring that their perspectives and concerns are considered in the reporting process, will be necessary. Developing or strengthening internal controls and policies related to sustainability reporting information systems will be essential. Reporting entities will need to create processes and controls to ensure the accuracy, completeness and reliability of sustainability data, which will be sourced from all areas of the organisation and well beyond the finance function.  Reporting entities that are successful in achieving this will be better positioned to facilitate an independent assurance provider’s examination of their sustainability report. Assurance over sustainability reports Initially, the CSRD requires an independent assurance provider to express an opinion based on a limited assurance engagement as regards the compliance of the sustainability reporting with the requirements of this Directive, including compliance with the ESRS, the process carried out by the undertaking to identify the information reported pursuant to the ESRS, and compliance with the requirement to electronically tag the sustainability report. In later years, after an initial period, reasonable assurance over the sustainability report may be required. For reporting entities, facilitating a limited assurance engagement in the year of implementation of such a significant suite of sustainability reporting standards will require additional resources and does not come without the increased possibility of qualification given the complexity of the ESRS and the potential immaturity of reporting systems. The challenge for independent assurance providers is that at present no assurance standard is in existence that governs the performance of such an engagement.  The International Audit and Assurance Standards Board (IAASB) is developing a standard and has released an exposure draft – International Standard on Sustainability Assurance 5000 – that seeks to address the performance of limited and reasonable assurance engagements over sustainability information.  The exposure daft is open for comment at present and a final standard is not expected until the second half of 2024.  While the development of the standard is welcome, the timeframe is extremely tight, and it is widely acknowledged that the exposure draft does not provide sufficient clarity in relation to the performance expectation of an independent assurance practitioner when performing a limited assurance engagement compared with a reasonable assurance engagement.  In the face of such unprecedented uncertainty, independent assurance providers may struggle to deliver high quality limited assurance engagements.  Challenges ahead The rate of recent extreme weather events in Ireland and elsewhere in Europe, and their impact on supply chains, provides a clear mandate to take better care of our environment. Most people are therefore likely to welcome the intent behind the CSRD’s introduction of sustainability reporting.  Sustainability reporting by entities will be on a basis far broader than financial statements. Additional resources will be needed to address the challenges outlined in this article, but time is running out fast; the time to act on these challenges is now.  Furthermore, the successful implementation of the CSRD regime in Ireland and across the EU requires considerable pragmatism and support from policymakers, standard-setters and regulators.  The new “gold rush” in which companies will seek to lead will be a race to capture data, integrate systems and assure sustainability reports. Undoubtedly, this marks a new frontier in corporate reporting – the ESG Rush! Daniel O’Donovan is a partner with KPMG and leads the firm’s Audit and Assurance Methodology team. He is also Chair of the Chartered Accountants Ireland Assurance and Audit Technical Committee

The publication of the National Philanthropy Policy will mark an important milestone in the evolution of this type of proactive giving in Irish society With a new National Philanthropy Policy due to be published later this month, the Department of Rural and Community Development will set out plans to create an ‘enabling environment’ for philanthropy in Ireland. For Philanthropy Ireland (PI), the representative body for the sector here, the policy’s publication marks a very important milestone in the evolution and perception of this type of proactive giving in Irish society on the cusp of the New Year. PI defines philanthropy as the act of giving money, goods, time or effort to support a charitable cause, usually over an extended period of time and in regard to a defined objective. “Irish philanthropy comes in different shapes and sizes, from small community grants to men’s sheds and new mothers’ groups to larger advocacy projects with a national remit,” explains Eilis Murray, Chief Executive of Philanthropy Ireland. “No matter what it looks like, philanthropy has touched every corner of Ireland, but it is still a relatively new concept here because our wealth is relatively new.  “Irish people are generous and support many social causes, but compared to the UK and Europe, philanthropy here is underdeveloped. Greater support from the State and public awareness can change that. “For context, there are about 8,000 grant-making organisations in the UK whereas, in Ireland, there are only around 100.” For Philanthropy Ireland, which has been working with Minister Joe O’Brien and the Department of Rural and Community Development to create the new National Policy on Philanthropy, its publication will be a welcome development. “We hope it will encourage more people with wealth to give and, equally, encourage those advising them to consider the potential of philanthropic giving or leaving a legacy,” says Murray.  For Liam Lynch, Tax Partner with KPMG and past President of Chartered Accountants Ireland, one of the biggest benefits of philanthropy is its potential to bring about positive change with real and lasting social impact. “Philanthropy provides the critical risk capital for projects and initiatives that benefit society and improve opportunities and outcomes for those who are disadvantaged in various ways,” Lynch says. “Some people are of the view that philanthropy shouldn’t exist and, instead, the State should administer all the money needed to fund good causes through the tax system. I don’t agree.  “There is a point of view and perspective philanthropy brings to the table that promotes innovation in a way the State and local government are just not set up to do. “There are services the State should be providing as standard to support social good. Philanthropy is about building on this in a strategic, outcome-driven way that can have a very positive impact on society.” For those who decide to become involved in philanthropic giving, it is often a deeply personal endeavour and one that reflects their personal convictions and values, according to PI. “Philanthropy can make a difference in so many areas, from tackling educational disadvantage and supporting employment opportunities, to health-focused initiatives – mental health, children’s or older people’s health, for example,” says Lynch. “Philanthropic giving can go towards promoting sustainability and the environment or protecting Irish culture and the arts. This is just the tip of the iceberg. The potential is enormous.  “That is why I would like to see more awareness and discussion of philanthropy, and philanthropists, in Ireland. I think we are generally very aware of the role of philanthropy internationally.  “My question is, why don’t we celebrate our own philanthropists as much and make a concerted effort to recognise the goodwill they are putting into doing good in society?” Frank Gannon – Lynch’s colleague at KPMG Ireland and a Partner in the firm’s Financial Services Group – sees similar benefits in philanthropic giving.  “For me, philanthropy means fulfilling the wish to give something meaningful to those who will benefit,” he explains. “Many people associate philanthropy with monetary donations, but there is much more to it than that.” Chartered Accountants Ireland’s members and trainees are well-placed to get involved in different types of philanthropic giving, Gannon says.  “Our members and trainees have all been educated to a certain level. Sharing our knowledge, information and know-how with those who have not had the same opportunities – and, in particular, those in socially deprived areas – can be a powerful tool,” he says.   “Social capital matters and a lot of Chartered Accountants have large networks of contacts. These networks can be leveraged to transform lives. Giving someone from a deprived area the opportunity to interview for a job could change the trajectory of their life with the positive knock-on effect extending to their family and wider community.”  For those whose philanthropic interest lies in monetary giving, meanwhile, Philanthropy Ireland offers a wealth of advice and information on what you need to know to get started. “There are many forms of monetary philanthropy, which is often considered within the overall context of wealth management and estate planning,” it advises. “Individuals, families and corporates often set up their own foundation or they link in with an intermediary philanthropic organisation that can support them in their grant-making decisions and provide governance and compliance support.” To find out more about Philanthropy Ireland, the organisations and initiatives it supports and the different philanthropic options on offer, log on to philanthropy.ie

As Chartered Accountants prepare for 2024, Ross Boyd outlines key measures to stay one step ahead in a challenging climate Whilst the dawn of a New Year brings with it a sense of hope and often optimism, accountants across the world should brace for a difficult 2024.  I established my practice over a decade ago, having earned my stripes for about 15 years before that, but in all that time I’ve never experienced such volatility and uncertainty.  The year that’s gone has presented the most complex economic test of a generation with the impact of two wars, Brexit and the pandemic completely transforming the business landscape.  I commend my fellow Chartered Accountants for powering through and continuing to do their best for their clients, and their own teams.  Chartered Accountants across the island will already be preparing for a tough 2024, aware of the implications of the current economic climate. The accountancy sector faces additional hurdles, including a skills shortage, retention issues, the continued rise of artificial intelligence and digital tools, and ongoing consolidation across the sector.  While changing business taxation is a big issue in the North, talent and technology are two common themes facing businesses across the island on the cusp of the New Year. Change continues at a relentless pace, and we must pause, embrace and adapt to remain relevant. Here are the key areas I recommend you focus on now, so that you can grow your business and continue to provide trusted and expert counsel to your clients.  Talent Labour shortages, paired with the capacity pressures these shortages cause, are likely to be the most pressing issues restricting growth across many sectors in 2024. Unfortunately, the war on talent is a trend our own sector will continue to battle too.  To put it bluntly, the sector’s image needs reinvention if it’s to continue attracting and retaining talent.  And to put it even more bluntly, investing in human capital is non-negotiable – after all, talent and growth are entirely correlated. As employers, we must adopt a two-pronged approach here.  First, we must invest in existing employees to support their continued contribution to the sector. I would advise any practice to objectively assess their employees’ skill sets and put the necessary plans in place to help them develop.  These development plans should look beyond ‘number crunching’ and financial recording to include a broader set of responsibilities, such as analysing forecasts, identifying emerging trends and networking.  It is crucial we ensure that the role of the Chartered Accountant isn’t limited or constrained, and that it is clearly positioned as that of strategic advisor. Second, we must focus on creating the type of organisation – and providing the kind of leadership – people want today.  Organisations that prioritise diversity, inclusion and flexibility are proven to have higher employee retention, and this is becoming even clearer post-pandemic as Gen Z becomes more present in the workplace.  Now aged between 11 and 26, this generation will account for 27 percent of the workforce by 2025.  At RBCA, we have spent a lot of time developing our graduate programme so that we can give our trainee recruits every opportunity to thrive, including supporting their interpersonal development. We also recently invested in a new office in Belfast to provide a physical environment that supports productivity and learning, and our annual Away Days continue to be invaluable to the culture of RBCA.  Technology  We have all come to understand the importance of digital tools in recent years and it is critical that, in 2024, we continue to use technology to improve both efficiency and security.  At RBCA, we moved to cloud computing in 2011 and we recently invested in new cloud technology, successfully tackling our tech stack. Some ill-advised pundits would argue that accountancy’s future is limited in our increasingly digital world, but our experience is that new accounting technologies have been complementary to our work.  Technology will never replace our profession, however. Why? Because, in my opinion, people will always buy into people.  Relationships and quality communications are the greatest tools at the disposal of today’s Chartered Accountant, providing that crucial competitive edge.  Often, we are so focused on our clients’ businesses and their success that we don’t focus enough on the resilience of our own, but it’s vital that we harness the passion and commitment that exists across the sector to thrive in the New Year.  Ross Boyd is founder and director of RBCA, a Belfast-based Chartered Accountancy 

Geopolitical uncertainty is reshaping boardroom priorities and acquiring the right expertise is crucial for strategic resilience, writes Dan Byrne Geopolitical risk: Is your board talking about it? If so, do they know how to handle it? The harsh reality is that many companies can’t do so properly. However, stakeholders are rarely patient when it comes to geopolitics. When something happens, they want a response from your corporate leadership.  The last thing your board needs to be is unaware of how to handle a situation, what to say, and how to adapt your strategy to changing global events. The challenge is processing that it’s all happening at once.  The news cycle is now dominated by the Israel-Hamas war. Before this started, the spotlight was on the Russian invasion of Ukraine and, before that, the chaotic US withdrawal from Afghanistan.  Meanwhile, we’ve got tensions between the West and China, the right-wing backlash against Brazilian and US elections, and unresolved Brexit issues – not to mention the protracted conflicts that are now so ingrained in the fabric of modern geopolitics. Every geopolitical crisis begins a new chapter of geopolitical pressure in corporate playbooks. The importance of geopolitical risk Assessing geopolitical risk is essential. It’s not going away and, depending on your company, it could be crucial to your strategy.  This doesn’t have to be direct – your company’s stance on a particular issue, for example. It can also be indirect – such as the businesses you work with within your supply chain. Many American companies have been shifting their manufacturing from China to other locations, such as Vietnam, out of fear that Chinese authorities could disrupt their business at the drop of a hat. Corporate leaders will be prodded by investors wanting to know if their company can survive through sanctions or consumers wanting to see their response to escalating conflict. The storm of questions will come; the challenge is how best to weather it. Expertise needed Experts in geopolitical risk will have the following skills: A deep understanding of corporate strategy and risk; Knowledge of global affairs, new or potential conflicts with global impacts, the intricacies of trade sanctions and the knock-on effects of government changes on international relations; and The ability to navigate through substantial geopolitical fallouts. The hard part is finding this expertise. Finding the right candidate to fill a board seat depends on multiple factors, like the availability of talent, training, networks, and an alignment of values. In some situations, this is a heavy ask.  It’s also worth noting that the market for geopolitical expertise is highly active right now as companies realise that they need to be prepared. Playing the long game Organisations should realise that the quest for geopolitical experience for your board may be a long game.  It can take time to find the talent that works well for your business – and it’s time that stakeholders may not always give you, pushing you for an answer and refusing to accept that you might need more time. That’s why it is essential to start now on geopolitical expertise if you haven’t already. If it feels like you’re playing catch-up, bear in mind that this won’t always be the case. Eventually, you will have the solid knowledge you need on your board to help you develop thorough answers to complex questions.  In reality, the world always moves faster than corporate governance is comfortable with, so it’s better to get ahead. Dan Byrne is a content writer at The Corporate Governance Institute

Successful digital transformation requires strong leadership. Dave Vincent outlines his tips for successfully embedding innovation in business Growing up in Belfast in the seventies and eighties, I was convinced that by 2020, we’d all be travelling around on flying cars or hoverboards and have a host of robot servants looking after us. Fast forward to the nineties, and I can vividly remember sitting in my university computer lab wrestling with the logic and code required to help teach a hungry virtual monkey how to get their hands on a hidden bunch of bananas. In 2023, while software applications and systems are significantly more developed than in the nineties, the reality doesn’t quite match the vision of the eighties (the hoverboard being the biggest disappointment). I couldn’t have dreamed of many of the developments that have instead taken place, however. Since the term ‘artificial intelligence’ (AI) was first coined almost 70 years ago, we’ve seen wave after wave of technology-enabled innovation, from the rise of personal computing to the internet, mobile devices, augmented and virtual reality, the cloud, the metaverse, self-driving vehicles and now, generative AI. Each shift has captured the imagination, created new opportunities and raised further questions and challenges for business leaders. We are surrounded by technology, and every day, we can see that technology evolves and changes as it impacts how we live and do business. How can technology help? Some of the most frequent questions I hear from clients considering digital transformation are: “Where do I start?” “How do I create the most impact?” “What does success look like?” Rather than starting by asking or thinking about what a particular tool or technology can do, I prefer to reverse engineer the questions and ask: “What are you trying to do in your business or what problem would you like to solve, and how can a digital mindset or technology help?” As these new technologies continue to influence all areas of our business operations, customers and employees, companies need a new type of (digital) leader who can understand, interpret and navigate this digital transformation era. The digital leader Implementing new technology is challenging. The organisation seeking to embed the latest technology — and its staff — must unlearn old concepts and embrace the new systems. For digital leaders, this means adopting alternative leadership styles. In the past, leadership was about giving orders and making decisions. Digital leaders know that successful digital transformation is not just about adopting technology; it’s about transforming business and operating models, driving growth, enhancing competitive advantage and increasing business agility. Today’s leaders must be able to evaluate progress, priorities and business models continually and be prepared to change direction quickly. Digital leaders need to understand not only how systems and technology work but also how that technology will be received and used by staff, as well as how it will impact how employees work and the type of work they do. Digital leaders need to be able to effectively manage employees through shifts and changes to ensure that digital technology is used to deliver the best business outcomes. To make informed and pragmatic decisions about technology, digital leaders must be able to evaluate the impact technology can deliver for their organisations, use data to inform policy and decision-making, and proactively assess and manage risks related to data security. To drive digital innovation, leaders must be agile and flexible, creating a culture where innovation, collaboration and continuous learning can flourish and empower their teams to make data-driven decisions. To ensure focus and alignment, leaders must share a well-defined and compelling strategic vision, calling out what success looks like and showing the roadmap that will get there. It is also important to remember that leadership in the digital age is not just the responsibility of the nominated digital leaders and senior leadership teams, however. Every employee can be a digital leader. The future is digitally enabled Organisations can drive digital innovation and growth from the ground up by empowering staff at all levels to take ownership of, and show leadership in, their work.  The future of work is undoubtedly digitally enabled, and business leaders who are prepared to embrace this change and lead their teams effectively will be the ones to succeed. The digital age allows leaders to create more meaningful and purpose-driven work for their employees and promote innovation and growth for their organisations. Organisations can position themselves for continued success by investing in digital leadership development.  And maybe somebody will finally work out how to create the hoverboard of my dreams. Dave Vincent is a Director of Digital Transformation at Grant Thornton Northern Ireland

Accountants will be the profession best placed to bring the necessary rigour to the analysis and governance of critical data in the age of AI, writes Sharon Cotter Canadian philosopher Marshall McLuhan has suggested: “We become what we behold. We shape our tools, and thereafter our tools shape us”. This is important to remember today, when the spotlight is on the potential consequences, intended and unintended, of the artificial intelligence (AI) tools being shaped by humans. The rise of AI AI encompasses a vast range of computer science research. Since the 1950s, scientists have pursued the goal of building machines capable of completing tasks that normally require intelligent human behaviour.  Machine learning (ML), a subset of AI, enables machines to extract knowledge from data and to learn from it autonomously.  In the past decade, the exponential increase in the volume of data generated, captured, stored and available for analysis, coupled with advances in computing power, have created the impetus and means to rapidly advance ML, which in turn has facilitated the development of narrow AI applications.  In essence, narrow AI applications are computer programs, or algorithms, specifically trained, using very large datasets, to carry out one task, or a limited number of tasks. Best suited to tasks that do not require complex thought, narrow AI algorithms can often accomplish such tasks better and more swiftly than humans.  Most of the AI capability we use today is narrow AI – from Alexa and Siri, which carry out human voice commands, to ChatGPT and Bard, which generate output based on conversational text prompts, and Dall-E2, which generates visual images based on text prompts, to name but a few.  In the field of accounting, we can utilise coding languages and software tools such as Python, ‘R’ and Alteryx to generate predictive forecasts and models.  We often use these tools without realising that we are using elements of narrow AI. For example, these programming languages and software tools embed many of the statistical algorithms that allow us to easily carry out linear regression analysis, a common method of predicting future outcomes based on past data. Adapting to broaden our role The word ‘computer’ was first coined by the English poet Richard Brathwaite in 1613 to describe a person who carried out calculations or computations. For the next 350 years or so, most humans who needed to perform calculations used mental arithmetic, an abacus or slide rules until the widespread availability of electronic handheld calculators in the 1970s. As accountants, we have seamlessly adapted to the tools available to us – whether these are an abacus, double-analysis paper, a totting machine, or computer software tools like Excel and Alteryx.   The use of these tools, and the time saved by their use, have allowed us to broaden our role from recording, summarising and presenting the underlying economic transactions to providing a much wider range of useful information to decision-makers both within, and outside, organisations.  This is reflected in commentary from the professional accountancy bodies emphasising the importance of good organisational decision-making and suggesting that the core purpose of our profession should be to facilitate better decisions and identify the business problems that better decisions will resolve. Asking the right questions In 1968, Pablo Picasso is reputed to have said: “Computers are useless. They can only give you answers”. While the remark may have been dismissive of the then cumbersome mainframe computer, it does encapsulate the notion that the real skill lies in figuring out the right question to ask, as this requires both judgement and creativity.  Useful, timely and relevant information for decision-making can only be produced if the right question is asked of the right data at the right time. On the face of it, this seems simple and straightforward, but in practice it is often much more difficult to achieve.  Deciding what question to ask requires knowledge of the business context, and an understanding of the issue being addressed as well as an ability to clearly articulate the issue. Critical thinking is key to identifying what answers are needed to identify the range of solutions for the issue at hand. Deciding what data is appropriate to use in the analysis requires an understanding of what data is available, where it is stored, how it is stored, what each data element selected represents, how compatible it is with other data, and how current that data is. It also requires knowledge of the limitations posed by using particular sets of data. Being able to generate the answer to the right question using the right data is only relevant if it can be produced at the point at which this information is needed. Sometimes, not all the data needed to answer the question is readily available, or available in the required format. Data from several sources may need to be combined and, where data is incomplete, judgement will be needed on the assumptions necessary to generate a relevant and timely set of data. Accountants are well-positioned The skills, experience and mindsets we develop as part of our professional training positions accountants well to provide the best possible decision-enabling information to decision-makers.  Scepticism is a key tenet of our profession. We look to spot anomalies in data and information, and to question the information by asking “does it make sense?” We are trained to be methodical, thorough and to look beyond the obvious. Training and experience enable us to develop our professional judgement, which we apply when determining what is relevant, appropriate and faithfully represents the underlying economic transactions.  We are adaptable and flexible in the tools we use, and aware of the need to stay up to date with the law and regulation applying to the storage and use of data. In short, we are valued problem-solvers and critical thinkers. Accountants’ ‘jurisdiction’ In his book The System of Professions: An Essay on the Division of Expert Labor, Andrew Abbott uses the term ‘jurisdiction’ to represent the link between a profession and its work.  Jurisdiction is an important concept, as the acknowledged owner of a task is likely to be able to shape the characteristics of that task. In the context of accountants’ work, the term ‘jurisdiction’ means the extent to which organisations, and society, accept that due to their professional expertise, only specific roles and responsibilities should be carried out by accountants.  Within organisations, accountants’ jurisdiction is not static. The roles and responsibilities that fall within their remit can, and do, change.  The jurisdiction of accountants can be encroached upon. Others within the organisation may also have expertise allowing them to claim work once exclusively identified with accountants. Challenges to jurisdiction The emergence of new roles, such as data or information specialists, who collect, clean and analyse data, has meant that complex analysis of financial information can now be done by non-accountants.  Some organisations have explored ways in which operational managers and decision-makers can be given direct access to financial systems.  Known as ‘self-service’ menus, such direct access to information allows decision-makers to drill down into the detail of transactions – for example, to identify the underlying causes of deviations from budget, all without the need to consult with their colleagues in the finance department.  If an organisation transfers responsibility for data analysis and decision support to data specialists and/or decision-makers, then the jurisdiction of the accountant may be narrowed or reduced. Opportunities for role expansion Equally, however, accountants’ roles and responsibilities can be increased, resulting in their jurisdiction being broadened or expanded.  The expansion of an accountant’s role requirements can either result from increased job tasks and responsibilities, or from changes in the tools and technologies available to carry out these tasks and responsibilities.  Recent research and professional body commentary has, for example, explored the extent to which management accountants have embraced changes in their role or taken on wider responsibilities, such as business partnering.  Multiple elements such as role identity, the ability to embrace change in a positive way and developing strong communication skills, to name but a few, all contribute to the successful adoption of additional responsibility. Futureproofing with digital fluency The rapid and on-going development, enhancement and availability of software tools that can be used to capture, store, identify, slice and dice data, and present information in visual graphics, are forcing accounting professionals to consider the level of IT competency required to operate efficiently and effectively in today’s digital world.   Professional accountancy bodies emphasise the importance of digital skills in futureproofing the accountant’s role while many of the larger multinational companies espouse the need for finance staff to have good digital fluency. Challenges and opportunities Both encroachments and expansions to the jurisdiction of accountants bring their own set of challenges and opportunities.  Maintaining, and expanding, accountants’ jurisdiction over the integrity of data, and the provision of information for decision-making, should be a key part of the profession’s strategy in the digital age.  I believe that the ‘governance’ of data, rather than the use of specific AI tools, should be the focus of the accountancy profession when formulating strategies for its future direction. In addition to enhancing our digital skills, we need to consider strategies such as adapting and changing the role of the chief financial officer to include overall direct responsibility for data analytics.  The governance, management and analysis of data should be as important as traditional responsibilities in finance.  Governance of data requires rigour and objectivity to ensure that its integrity is preserved. We should noticeably stake our claim as the profession best placed to bring that rigour and objectivity to the governance and analysis of data used for decision-making.  Failure to consider such strategies may mean we increase the risk that encroachments rather than expansions to our role – our jurisdiction – will become a reality. We should strive to ensure that our future role is shaped by us rather than by these new digital tools and techniques. Sharon Cotter, FCA, lectures in accounting and finance at the University of Galway

Michael Diviney and Níall Fitzgerald explore the ethical challenges arising from artificial intelligence (AI), particularly ‘narrow’ AI, and highlight the importance of ethics and professional competence in its deployment Earlier this year, artificial intelligence (AI) industry leaders, leading researchers and influencers signed a succinct statement and warning: “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.” Was this a publicity stunt? Well, probably not, as the generative AI ChatGPT was already the fastest-adopted application in history.  Was this an over-the-top, alarmist statement by a group possibly trying to steal a march on self-regulation of a rapidly emerging technology and growing industry?  Again, this is unlikely if one considers the warnings of pioneer thinkers like Nick Bostrom, Max Tegmark, Stephen Hawking and Astronomer Royal Martin Rees. They concur that there is an existential threat to humankind if human-level or ‘general’ AI is developed and the ‘singularity’ is reached when AI surpasses human intelligence.  Autonomous weapons and targeting are a clear risk, but more broadly, unless we can ensure that the goals of a future superintelligence are aligned and remain aligned with our goals, we may be considered superfluous and dispensable by that superintelligence.  As well as the extinction threat, general AI presents other potential ethical challenges.  For example, if AI attains subjective consciousness and is capable of suffering, does it then acquire rights? Do we have the right to interfere with these, including the right to attempt to switch it off and end its digital life?  Will AI become a legal entity and have property rights? After all, much of our economy is owned by companies, another form of artificial ‘person’. Ethical challenges from ‘narrow’ AI Until general AI is here, however – and there is informed scepticism about its possibility – the AI tools currently in use are weak or ‘narrow’ AI. They are designed to perform a specific task or a group of related tasks and rely on algorithms to process data on which they have been trained.  Narrow AI presents various ethical challenges:  Unfairness arising from bias and opacity (e.g. AI used in the initial screening of job candidates include a gender bias based on historical data – in the past more men were hired); The right to privacy (AI trained with data without the consent of the data subjects); Threats to physical safety (e.g. self-driving vehicles); Intellectual property and moral rights, plagiarism and passing-off issues in the use of generative AI like ChatGPT and Bard; and Threats to human dignity from the hollowing out of work and loss of purpose. Regulation vs. ethics Such issues arising from the use of AI, particularly related to personal data, mean that regulation is inevitable.  We can see this, for example, with the EU’s landmark AI Act, due to apply by the end of 2025, which aims to regulate AI’s potential to cause harm and to hold companies accountable for how their systems are used. However, as Professor Pat Barker explained at a recent Consultative Committee of Accountancy Bodies (CCAB) webinar, until such laws are in place, and in the absence of clear rules, ethics are required for deciding on the right way to use AI.  Even when the regulation is in place, there are likely to be cases and dilemmas that it has not anticipated or about which it is unclear. Legal compliance should not be assumed to have all the ethical issues covered, and as AI is evolving so quickly, new ethical issues and choices will inevitably emerge.  Ethics involves the application of a decision-making framework to a dilemma or choice about the right thing to do. While such a framework or philosophy can reflect one’s values, it must also be objective, considered, universalisable and not just based on an instinctual response or what may be expedient. Established ethics frameworks include: the consequentialist or utilitarian approach – in the case of AI, does it maximise benefits for the greatest number of people?; and the deontological approach, which is based on first principles, such as the inalienable rights of the individual (an underlying philosophy of the EU’s AI Act). (The Institute’s Ethics Quick Reference Guide, found on the charteredaccountants.ie website, outlines five steps to prepare for ethical dilemmas and decision-making.)  A practical approach While such philosophical approaches are effective for questions like “Should we do this?” and “Is it good for society”, as Reid Blackman argues in Harvard Business Review, businesses and professionals may need a more practical approach, asking: “Given that we are going to [use AI], how can we do it without making ourselves vulnerable to ethical risks?”  Clear protocols, policies, due diligence and an emphasis on ethical risk management and mitigation are required, for example responsible AI clauses in agreements with suppliers. In this respect, accountants have an arguably competitive advantage in being members of a profession; they can access and apply an existing ethical framework, which is evolving and adapting as the technology, its opportunities and challenges change.  The Code of Ethics The International Ethics Standards Board for Accountants (IESBA) recently revised the Code of Ethics for Professional Accountants (Code) to reflect the impact of technology, including AI, on the profession. The Chartered Accountants Ireland Code of Ethics will ultimately reflect these revisions.  IESBA has identified the two types of AI likely to have the most impact on the ethical behaviour of accountants:  Assisted intelligence or robotic process automation (RPA) in which machines carry out tasks previously done by humans, who continue to make decisions; and  Augmented intelligence, which involves collaboration between human and machine in decision-making. The revisions also include guidance on how accountants might address the risks presented by AI to ethical behaviour and decision-making in performing their role and responsibilities.  Professional competence and due care The Code requires an accountant to ensure they have an appropriate level of understanding relevant to their role and responsibilities and the work they undertake. The revisions acknowledge that the accountant’s role is evolving and that many of the activities they undertake can be impacted by AI.  The degree of competency required in relation to AI will be commensurate with the extent of an accountant’s use of and/or reliance on it. While programming AI may be beyond the competency of many accountants, they have the skill set to:  identify and articulate the problem the AI is being used to solve;  understand the type, source and integrity of the data required; and assess the utility and reasonableness of the output.  This makes accountants well placed to advise on aspects of the use of AI. The Code provides some examples of risks and considerations to be managed by professional accountants using AI, including: The data available might not be sufficient for the effective use of the AI tool. The accountant needs to consider the appropriateness of the source data (e.g. relevance, completeness and integrity) and other inputs, such as the decisions and assumptions being used as inputs by the AI. This includes identifying any underlying bias so that it can be addressed in final decision-making. The AI might not be appropriate for the purpose for which the organisation intends to use it. Is it the right tool for the job and designed for that particular purpose? Are users of the AI tool authorised and trained in its correct use within the organisation’s control framework? (One chief technology officer has suggested not only considering the capabilities of the AI tool but also its limitations to be better aware of the risks of something going wrong or where its use may not be appropriate.) The accountant may not have the ability, or have access to an expert with that ability, to understand and explain the AI and its appropriate use.  If the AI has been appropriately tested and evaluated for the purpose intended. The controls relating to the source data and the AI’s design, implementation and use, including user access. So, how does the accountant apply their skills and expertise in this context?  It is expected that accountants will use many of the established skills for which the profession is known to assess the input and interpret the output of an AI tool, including interpersonal, communication and organisational skills, but also technical knowledge relevant to the activity they are performing, whether it is an accounting, tax, auditing, compliance, strategic or operational business decision that is being made.  Data and confidentiality According to the Code, when an accountant receives or acquires confidential information, their duty of confidentiality begins. AI requires data, usually lots of it, with which it is trained. It also requires decisions by individuals in relation to how the AI should work (programming), when it should be used, how its use should be controlled, etc.  The use of confidential information with AI presents several confidentiality challenges for accountants. The Code includes several considerations for accountants in this regard, including: Obtaining authorisation from the source (e.g. clients or customers) for the use of confidential information, whether anonymised or otherwise, for purposes other than those for which it was provided. This includes whether the information can be used for training AI tools.  Considering controls to safeguard confidentiality, including anonymising data, encryption and access controls, and security policies to protect against data leaks.  Ensuring controls are in place for the coding and updating of the AI used in the organisation. Outdated code, bugs and irregular updates to the software can pose a security risk. Reviewing the security certification of the AI tool and ensuring it is up to date can offer some comfort.  Many data breaches result from human error, e.g. inputting confidential information into an open-access web-based application is a confidentiality breach if that information is saved, stored and later used by that application. Staff need to be trained in the correct use and purpose of AI applications and the safeguarding of confidential information. Dealing with complexity The Code acknowledges that technology, including AI, can help manage complexity.  AI tools can be particularly useful for performing complex analysis or financial modelling to inform decision-making or alerting the accountant to any developments or changes that require a re-assessment of a situation. In doing so, vast amounts of data are collected and used by AI, and the ability to check and verify the integrity of the data introduces another level of complexity.  The Code makes frequent reference to “relevancy” in relation to the analysis of information, scenarios, variables, relationships, etc., and highlights the importance of ensuring that data is relevant to the problem or issue being addressed. IESBA was mindful, when revising the Code, that there are various conceivable ways AI tools can be designed and developed to use and interpret data.  For example, objectivity can be challenged when faced with the complexity of divergent views supported by data, making it difficult to come to a decision. AI can present additional complexity for accountants, but the considerations set out in the Code are useful reminders of the essential skills necessary to manage complexity. Changing how we work As well as its hugely beneficial applications in, for example, healthcare and science, AI is proving to be transformative as a source of business value.  With a range of significant new tools launched daily, from personal effectiveness to analysis and process optimisation, AI is changing how we work. These are powerful tools, but with power comes responsibility. For the professional accountant, certain skills will be brought to the fore, including adaptability, change and risk management, and leadership amidst rapidly evolving work practices and business models. Accountants are well placed to provide these skills and support the responsible and ethical use of AI.  Rather than fearing being replaced by AI, accountants can prepare to meet expectations to provide added value and be at the helm of using AI tools for finance, management, strategic decision-making and other opportunities. Michael Diviney is Executive Head of Thought Leadership at Chartered Accountants Ireland Níall Fitzgerald is Head of Ethics and Governance at Chartered Accountants Ireland