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Ethics and Governance

Christine Nangle and Bríd Murphy explore how pre-audit training factors influence professional scepticism, uncovering insights into recruitment, education and decision-making that could enhance audit quality and address persistent challenges in the auditing profession The importance of professional scepticism (PS) gained prominence at the close of the last century. The failure of major companies and financial scandals highlighted the need for auditors to adopt a more questioning and sceptical approach to their work.  Despite numerous academic studies and a heightened focus on this issue in the profession, failure to exhibit PS is still the most cited reason for sanctions imposed on audit firms.  This constant challenge underscores the critical need to foster a culture of scepticism among auditors to enhance audit quality and mitigate the risk of failures. The Brydon Report (2019) assigns blame to the practice of ‘rules-following’ which has blunted scepticism as well as the application of judgement, and calls for improved auditor education to foster the development of PS.   PS includes both an innate ability (trait scepticism) and a temporary mindset influenced by situational factors (state scepticism). Many studies have looked into how PS develops, but there are conflicting findings about what increases PS levels.  With the International Auditing and Assurance Standards Board driving strategic focus on PS through its Professional Scepticism Consultation Group and standards development, the profession must better understand the factors contributing to PS development to ensure accountants and auditors are appropriately skilled to meet evolving requirements and expectations. This study looks at how factors in pre-audit training contracts influence PS. By investigating these pre-audit factors, the study aims to provide information that can improve recruitment practices and audit quality. Understanding what fosters PS in graduates could lead to enhanced training and development initiatives, ensuring new auditors develop the critical thinking and questioning mindset essential for effective auditing in today's complex financial landscape. This study was made possible by the cooperation of accounting firms and their newly hired trainees. It forms part of a broader PhD study in Dublin City University (DCU) which aims to re-measure the levels of PS in the same participants as they approach the completion of their training contracts. A range of firms, from large to medium-sized professional practices, helped collect 332 surveys from participants. Most participants began their training contracts one to three months before completing the survey, allowing the research findings to be connected to factors before their professional training. Influences The survey revealed no significant difference in PS levels between male and female participants. However, it found that participants aged 26+ demonstrated greater PS levels.  Of the 332 participants, 26 percent had undertaken postgraduate studies, and results indicate postgraduate education is positively linked to increased PS levels. And while 73 percent of participants in this study had engaged in ethics education prior to their training contract, this study found no relationship between ethics education and PS levels.  Professional scepticism vs judgement  PS influences decision-making processes and judgements. Higher levels of PS should improve critical evaluation, enhance objectivity and mitigate cognitive biases that may cloud judgment, improving risk assessment and overall audit quality.  This study used scenarios to assess how PS levels affect initial judgements about fraud and errors based on different client experiences –  neutral, positive and negative. Participants were presented with three scenarios, containing details of the same material misstatement. The first scenario involved a neutral client experience, the second indicated a positive experience, and the third showed a negative experience. Participants answered questions after each scenario, about their perceptions of fraud, risk and client trustworthiness. Participants with higher levels of PS made more prudent judgments in all three scenarios. However, this effect was stronger in the positive and neutral scenarios, suggesting individuals with higher levels of scepticism are less likely to change their judgments based on different client experiences.  The study also highlighted concepts from ancient philosophy, specifically Pyrrhonian scepticism, which encourages refraining from making judgments and suspending belief, which can result in indecision or inaction.  Philosopher Sextus Empiricus warned that being too sceptical could trap people in doubt and hinder decision-making. To allow for analysis of this phenomenon, the survey allowed participants to skip questions instead of forcing them to answer.  Interestingly, the findings show those who skipped four or more judgments had significantly higher PS scores than those who skipped fewer. This suggests an optimal level of scepticism where too little leads to poor judgment, while too much can impede one's decision-making capacity. These initial findings provide some insights regarding potential recruitment screening criteria. It is hoped that the broader study will offer further insights regarding the development of PS during trainee contracts. A greater understanding of PS development at this important stage in the career of an auditor will help to ensure audit trainees’ development aligns with regulatory priorities to improve public trust and mitigate sanctions in the audit profession. Christine Nangle is Head of Discipline of Accounting at TU Dublin Bríd Murphy is Associate Professor at DCU

Jan 15, 2025
Personal Impact

As a trainee Chartered Accountant, success isn’t just about passing exams and gaining work experience—it’s about building connections, honing soft skills and finding balance. Becky Maye, CASSI PRO, explains how your regional student society can help you grow personally and professionally through events, networking and community support As trainee accountants, our main focus is on studying hard, passing our exams and gaining practical experience.  While these are undoubtedly important aspects of your professional development, you must also develop your soft skills, such as communication, teamwork, leadership and networking, which are essential for your career progression and personal growth.  One of the best ways to do this is to join your local student society and attend its events. Your regional student society is a platform to connect with your peers, share your challenges and successes, learn from each other and have fun. It is also a way to access valuable resources like mentoring, guidance, support and opportunities.  By joining your local student society, you become part of a community that can help you achieve your goals and enhance your well-being. Each regional society, as well as CASSI, organises events throughout the year designed to cater to your interests, needs and preferences. These events range from social to educational, casual to formal, and local to national. They offer you the chance to meet new people, make friends, network with professionals, learn new skills, explore new places and enjoy yourself. Some of the past events your student society has organised include: Webinars: Throughout the year, CASSI, along with Barden, have presented a variety of webinars to help students with all aspects of their careers. These webinars allow great insights on how to navigate coming out of contract, working abroad or career advice from the Barden experts.  Pub quizzes: These are a great way to test your general knowledge, laugh and bond with other students. They are also a good opportunity to relax after a long day of work or study and unwind with a drink and a snack. Brunches: These are a delicious way to start your day, especially on weekends. They are also a good opportunity to catch up with fellow students, share your plans and goals, and get tips and advice. Day trips and hikes: These are a fun way to discover new attractions, cultures and experiences. They are also a good opportunity to broaden your horizons, get active, clear your mind and create memories. Coffee mornings and catch-ups during study leave: These are a convenient way to take a break from your revision, recharge your energy and chat with your friends. They are also a good opportunity to motivate each other, exchange tips and tricks and solve any doubts or queries. The CASSI weekend away: This is the highlight of the year where you get to spend a whole weekend with all the regional student societies who come together in a different location. Over the weekend, students enjoy various daytime activities and, of course, the black-tie ball. This is a great opportunity to celebrate your achievements, reward yourself for your hard work and have a blast. It is also worth noting that during these events, we raised huge amounts of money for Jigsaw, our charity partner for the year! It was amazing to give back while also enjoying our time together. Joining your regional student society and attending its events can bring you many personal and professional benefits.  You can gain knowledge, skills, confidence, connections, support and happiness while having a lot of fun, which is important for your mental health and well-being.  So, what are you waiting for? Join your student society today, and don't miss out on the next event.  Keep an eye out for details of these events on our various social media accounts! 

Jan 15, 2025
Practice and Business Improvement

Chartered Accountants Ireland has agreed a 3-year strategic partnership with GRID Finance, Ireland’s leading independent lender for small and medium businesses. This partnership will deliver a biennial GRID Finance SME Business Sentiment Survey co-created with Chartered Accountants Ireland in support of its strategic focus on the SME/SMP sector. GRID will also become a sponsor of the Institute’s schools Bootcamp “Be The Boss” Challenge, a highly engaging, interactive business simulation for students signing up to the Bootcamp programme. This aligns with both GRID’s and the Institute’s ethos of educating future business leaders and promoting financial literacy from a young age, as well as giving back to the community. Finally, GRID will sponsor ‘Going into Practice’ days, an essential day of training for practitioners who are taking the first steps into running their own practice or being admitted as partners in small and medium sized practices in Ireland and Northern Ireland. Eoin Christian, CEO, GRID Finance, “We are thrilled to be part of this exciting new partnership between GRID Finance and Chartered Accountants Ireland. This collaboration marks a significant step forward in supporting and educating businesses of all shapes and sizes across Ireland by combining GRID Finance's innovative funding solutions with the trusted expertise of Chartered Accountants Ireland”. Barry Doyle, President Chartered Accountants Ireland, “This partnership is an excellent fit at an important time. As President, my commitment is to support and advocate for businesses, most particularly SMEs, the backbone of our economies. While the economy is performing strongly, businesses are facing turbulence, none more so than SMEs. “By virtue of their size, they often lack the ability to remain resilient against external shocks, of which there is potential in the global economy this year. Our partnership with GRID will allow us to map SME sentiment, understand and respond to it, while also investing in the education of our future business leaders and promoting financial literacy.” About GRID Finance GRID was founded in 2013 with a belief and a passion. Our belief is that small and medium sized businesses are the economy’s real powerhouses. And since they are so important, we’re passionate about keeping them open for business. GRID’s total focus is on providing quick and easy access to the capital, advice and tools small businesses need to grow and thrive.

Jan 10, 2025
Ethics and Governance

The Irish Corporate Governance Code represents a progressive approach to ensuring best practice among companies listed on Euronext Dublin and enhances the reputation of ‘Ireland Inc’ globally. Níall Fitzgerald and Louise Gorman explain why Did you know that Ireland hosts one of the most extensive corporate governance infrastructures in Europe?  In Ireland, there are specific governance codes applicable to listed companies, charities, state bodies, financial services institutions, funds and sports organisations.  This is in addition to other entity-specific requirements that may also apply – charities may have to comply with multiple governance requirements as a condition of receiving state funding, for example.  Yet, until recently, Irish listed companies have relied on the best practice principles of the UK Corporate Governance Code (UK Code).  It is therefore worth considering the extent to which the recent publication of the Irish Corporate Governance Code 2024 (Irish Code) presents a new opportunity to tailor best practice in corporate governance to Irish listed companies. The Irish Code will apply initially to a small number of companies listed on Euronext Dublin, the Irish Stock Exchange, for financial years commencing 1 January 2025. Those dual-listed in both Ireland and the UK have the option to either follow the Irish Code or the UK Code in respect of their Irish listing.  The introduction of the Irish Corporate Governance Code is nonetheless significant.  Four years on from the UK’s departure from the European Union (EU), the Irish Code signals that the time has come for Irish companies to follow a path aligned with EU policy and practice, while remaining loyal to the overarching best practice principles established by the UK. It also reflects welcome proactivity in protecting and enhancing the reputation of ‘Ireland Inc’ on the global stage.  Historically, many corporate governance codes and laws internationally have been introduced in response to corporate failings.  By contrast, the Irish Code has emerged out of a desire to ensure that best practice is suitably tailored to the specific circumstances of Irish listed companies.  This comes at no cost to our competitiveness. We retain our well-established ‘comply or explain’ principles-based approach, while also remaining globally connected via our EU membership. Further, we host a US Public Company Accounting Oversight Board presence relating to both Irish companies listed on US Stock Exchanges and US listed companies operating in Ireland. What does this mean for Irish companies? Irish companies already complying with the UK Code will, for the most part, maintain their existing governance practices. They will need to address some specific Irish Code requirements, however. The extent of any differences here will vary depending on each company’s governance policies and structures.  Some companies may find the adjustment process less challenging, particularly those already preparing for the new UK Code applying from 1 January 2025 (apart from Provision 29, which applies from 1 January 2026).  The UK Code served as the basis for developing the Irish Code. Euronext Dublin has made changes only where necessary to ensure proportionality and relevance.  To enhance the principle-based approach, Euronext Dublin has also taken the decision not to include some of the more prescriptive requirements driven largely by the UK regulatory environment.  Maintaining close alignment makes sense as the UK Code is highly regarded and sets a high standard for corporate governance that is emulated internationally.  Our table illustrates some of the key differences between the Irish and the UK Code. Some of these differences, and what they mean for Irish companies, are further explained below. Internal control and risk management: A significant new requirement in the UK Code is included within Provision 29. This requires boards to provide a “declaration of effectiveness” on internal controls, identifying any ineffective controls as of the balance sheet date. Compliance will require boards to establish an independent framework to monitor and assess their internal control and risk management systems. The Irish Code also requires boards to review and report on the effectiveness of these systems, but it is less detailed, not requiring specific declarations or publication of ineffective controls at the balance sheet date. Audit committees: The UK Code requires audit committees to adhere to the Financial Reporting Council’s (FRC) “Audit Committees and the External Audit: Minimum Standard.” In contrast, the Irish Code outlines the roles and responsibilities of audit committees, which are consistent with Companies Act 2014 (Section 167) requirements, without reference to an additional standard, specifying that their work should be detailed in the annual report. Maintaining the principle-based approach in this area is practical, as best practices for audit committees are evolving in accordance with emerging recommendations on audit tendering oversight and sustainability reporting coming from bodies such as the FRC and Accountancy Europe. Less prescriptive and more proportionate: The Irish Code retains core principles, such as workforce engagement, but leaves it to boards to choose the most appropriate methods for their companies’ needs. This facilitates greater flexibility relative to equivalent parts of the UK Code which specify detailed considerations or criteria. The Irish Code aligns some provisions with those in smaller EU capital markets, enabling a proportionate governance approach. For example, while one of the criteria for assessing non-executive directors’ independence in the UK Code requires a five-year employee cooling-off period to be considered, the Irish Code sets this at three years, balancing market size and available talent. Regulatory oversight and enforcement: Like the UK, the Irish Code relies on the market mechanism. It aims to promote high standards of integrity, transparency and accountability. Investors and stakeholders can evaluate disclosures and make comparisons across companies in assessing corporate governance quality. These assessments then inform decisions and actions taken in the markets, such as the decision to buy or sell shares. The implication of this in the UK experience is that the FRC has no sanctioning authority in instances of weak compliance; sanctioning is left to the market mechanism. The FRC does, however, conduct thematic reviews to guide improvements in corporate reporting and governance. Ireland currently has no equivalent body for corporate governance assessment. However, the Irish Auditing and Accounting Supervisory Authority reviews annual reports for EU Transparency Directive compliance, without a specific corporate governance focus. While sanctions do not apply for weak governance compliance, Euronext Dublin can impose sanctions or suspend listings for violations of the listing rules. The Financial Conduct Authority in the UK has a similar approach.   The Irish Code and the UK Code: key differences Workforce engagement  The Irish Code requires boards to explain workforce engagement methods and their effectiveness, without mandating a specific method as in the UK Code. Additionally, it requires a board review of policies for raising concerns. This requirement aligns with the OECD Corporate Governance Principles 2023.  Threshold for addressing shareholder dissent The threshold for consulting with shareholders on a dissenting vote against a board recommendation is set at 25 percent under the Irish Code (20% in the UK Code). Unlike the UK, there is no requirement to provide a six-month shareholder update on the consultation, but it should be addressed in the next annual report. Non-executive director independence  When considering the independence of a non-executive director (NED), the criteria relating to previous employment by the company is whether they have been an employee of the company within the last three years (compared to five years in the UK Code). Board appointments The Irish Code does not include the UK Code restriction on the number of appointments a non-executive director has in a FTSE 100 or other significant undertaking. The Irish Code requires all commitments to be considered when determining whether the NED has the capacity to fully commit to the board. Company Secretary The Irish Code further elaborates on the role of the Company Secretary in ensuring a good information flow within the board, its committees and between management and non-executive directors – recording accurate minutes, facilitating induction and assisting with professional development of non-executive directors. Board evaluation The Irish Code replaces the UK Code reference to FTSE 350 companies with “companies with a market capitalisation in excess of €750 million” in the requirement to conduct an external board evaluation at least once every three years. Board skills and expertise The Irish Code includes an additional requirement for the nomination committee to use the results of a board evaluation to identify the board’s skills, knowledge and expertise requirements. This should be reflected in board succession plans, professional development plans and steps taken to ensure the board has access to the skills, knowledge and expertise it requires. This requirement is consistent with good governance practices in other EU countries, e.g. the 2020 Belgium Code on Corporate Governance. Diversity and inclusion Whereas the UK Code includes reference to UK equality legislation for diversity characteristics, the Irish Code requires companies to have a diversity and inclusion policy regarding gender and other aspects of diversity of relevance to the company and includes measurable objectives for implementing such a policy. The Irish Code requires this policy to be reviewed annually. Audit Committee To ensure consistency with the Companies Act 2014, the requirement for one member of the Audit Committee to have “recent and relevant financial experience” is changed to “competence in accounting or auditing”. Reference to “financial reporting process” is replaced with “corporate reporting process” to better reflect the audit committee’s role in monitoring financial and non-financial reporting, e.g. sustainability reporting. Reference to the UK specific Financial Reporting Council guidance on “Audit Committees and the External Audit: Minimum Standard” is also removed. Internal controls and risk management systems The Irish Code does not include the UK Code provision for the board to include a declaration of effectiveness of material controls, but the requirement to monitor the company’s internal control and risk management systems and review their effectiveness remains.  Remuneration Under the Irish Code, share awards in long-term incentive plans must vest over at least three years, unlike the UK’s five-year minimum. Malus and clawback provisions should be described generally in annual reports, and executive pensions require thoughtful comparison to workforce pensions, with less prescriptive rules than the UK Code. What next for the Irish Code?  Euronext Dublin is in the process of revising the Listing Rules to give effect to the new Irish Code and is further streamlining the requirements.  An Irish Corporate Governance Panel will be established, with responsibility for reviewing and advising on changes to the Irish Code in the context of the evolving corporate governance landscape in Ireland, the UK and Europe alongside other factors.  What impact the Irish Code will have remains to be seen. It represents a sensible approach to building on the reputation and quality of the UK Code, and while there are some differences between the Irish and UK Code, they are mostly aligned.  We have been careful to note that the Irish Code initially applies only to a small number of companies, so one may be forgiven for questioning its true significance. Nonetheless, key issues on the European regulatory horizon suggest that it may mark the start of a greater departure from the UK’s approach to governance.  The recent transposition of the Corporate Sustainability Reporting Directive into Irish law provides another example of this as the CSRD’s required disclosures on governance introduce an EU influence into governance in Irish companies.  Future revisions to the Irish Code may further reflect this newly established autonomy in governance in Ireland, particularly as we adopt the Corporate Sustainability Due Diligence Directive and other directives the European Commission will inevitably introduce over time.  Currently, best practice principles for Irish private companies are limited to voluntarily following the UK’s Wates Corporate Governance Principles for Large Private Companies. Just as the UK Code has influenced these principles, the Irish Code may provide a basis for further extension to large private entities.  There is also a strong argument that any evolution in corporate governance guidance deserves due consideration, particularly as boards deal with increasing risks and opportunities from environmental, social, economic and technological developments.  As it happens, there are no immediate plans to draft guidance to support the Irish Code, and the FRC’s Corporate Governance Code Guidance should, in the short term, be sufficient to fill the gap.  Experts in the area have long noted that attention tends be paid to corporate governance only when a failure occurs.  Given the level of public scrutiny such failures attract, and the associated reputational costs borne by board members, any Irish listed company director should be asking themselves if they can really afford not to pay attention to the new Irish Corporate Governance Code. Níall Fitzgerald, FCA, is Head of Ethics and Governance at Chartered Accountants Ireland Louise Gorman is Assistant Professor at Trinity Business School

Dec 09, 2024
Personal Development

For Jaimie Dower, having a supportive work environment has played a critical role in helping her to navigate her gender transition positively and proactively When Jaimie Dower made the decision to transition in May 2022, she knew how important it would be to take a proactive approach to communicating her experience, not just in her personal life but also at work to her colleagues and clients at EY Ireland. For Dower, who is an Executive Director in EY’s Audit Quality Programme, her transition marked a watershed moment in her life. She was, she says, finally ready to “stand up in front of the world and say, ‘this is me’.”   “This is something that has been with me my whole life and something I had up until that point struggled with and hid,” Dower explains.  “There was always a disconnect – the person I knew I was inside and the person I was on the outside were not the same.  “It impacted my life in so many ways because there was always this noise in my head – this static – and the way I dealt with it for many years was to mentally compartmentalise and throw myself into things and say to that noise, ‘go away; I’ll deal with you another time.’” For Dower, who lives in Waterford and works at EY’s southeastern hub in the city centre, it was the onset of the COVID-19 pandemic in early 2020 that proved the catalyst for her transition. Working long hours at home and surrounded by the uncertainty that had engulfed the world as the pandemic took hold, she found she was no longer able to rely on life-long coping strategies. “I think this will resonate with a lot of people for their own reasons, but that first COVID lockdown in March 2020 really brought things to a head for me,” she says. “Out of everyone in our family, I was the one working alone from home the most. I had a lot of time to myself and, suddenly, I couldn’t manage those boxes I’d compartmentalised everything into anymore.  “Looking at what was happening in the world around me at that time, there was also this really strong sense of, ‘life’s too short.’  “It wasn’t just that I didn’t want to hide who I was anymore; I wanted to celebrate it. I wanted to stand up in front of the world and say, ‘this is who I am.’ That really came home to me during COVID.” First steps and early conversations Dower’s first step was to seek professional help. Working with a therapist helped her to ‘clarify’ her thoughts and begin to plan the practicalities of managing her transition.  “Talking to someone at that stage was very important – to have that help and support in coming out to myself, really, and the sheer relief of being able to say it out loud. It was powerful,” she says. By mid-2023, having begun hormone treatment, she was ready to start thinking about how to communicate her transition at work. “The hormone treatment changed my life. I can only describe it as coming into full focus for the first time. The dissonance I had felt all my life faded away. Now, I had to think about how to start telling people about my transition – to put a plan in place I was comfortable with.”  Initially, Dower decided to get involved in Unity, EY’s global LGBTQ+ network. “I took things slowly at first, getting involved in things like helping to organise Pride events. I got to know colleagues in the network and had one or two small conversations – really just to begin to gather my own thoughts on how to approach this.” By late 2023, Dower was ready to take more formal steps, and she reached out to EY’s HR team for support. “Their support was incredible. I was able to work directly with a colleague on the HR team I knew I could trust to work out a plan. That trust was immense for me.  “We talked about when I would start speaking to people, who I needed to speak to and when, and about what I wanted to say.” Intentional communication Dower began communicating with her colleagues in mid-February 2024 in advance of presenting at work as her authentic self. “There was a lot of anxiety for me initially around those conversations. Having worked at EY for 30 years, I did feel a lot of pressure because I have long-standing relationships with colleagues within the firm and clients externally and they trust me.  “I had faith that there would be a positive response, but in the back of your mind, there is always the worry that someone might not react well. “I will never forget that first call we set up for 2pm on a Friday afternoon with all the Assurance Partners across EY in Ireland – that was our starting point. “I work with EY people all around the country, but primarily in our Dublin office, and I needed to communicate to everyone.  “So, once I had that call with our Assurance Partners, I set up another group call with everyone on my team and then I sat down face to face with everyone in our Waterford office.” Although intense and, at times, overwhelming, the process also proved to be “empowering” for Dower who welcomed the positive feedback and support offered by colleagues.   “It was the support that came afterwards that really meant so much to me – people reaching out to say, ‘I’m delighted you were able to come to me and tell me this. I am with you – I support you.’  “Just knowing I could come to work as myself and it would be okay was incredible, because not everyone has that experience. Not everyone has that support.” While not easy, the process held great value for Dower, who felt empowered by being able to work proactively with her colleagues at EY to communicate her transition. “Every one of those conversations was difficult, no matter how many times I did it. Effectively, it was just me having to strip away all my defences to tell my story in different ways to different people depending on the nature of our working relationship and how well we knew each other.” “In some ways, it is a never-ending journey, but all I am fundamentally saying is, ‘I am still me, but I am the authentic me – a better version of me’.” Meaningful support and guidance In supporting employees at work as they transition, Dower sees enormous value in collaborative diversity, equity and inclusion initiatives, such as EY’s Unity network, which can help to foster a sense of community and act as a crucial conduit for support and communication. “Through my involvement with Unity, I had the privilege of being able to play a role in revising EY’s Transgender Identity, Expression and Transition Guidelines and I was also able to take part in a Transgender 101 Webcast for staff across the organisation.” As Dower sees it, such initiatives are vital in helping to foster a supportive environment for transgender employees and providing guidance and resources for the wider workforce. “From the employer’s perspective, education is so important. I’m not in a position myself to go around every day educating every person I meet. That’s where things like guidelines and webcasts can have real value. Even just a little bit of education can go a long way.” In particular, Dower sees value in establishing clear guidelines that are equally applicable to all and give everyone a simple and transparent baseline to work from. “I’ve had a sense sometimes that some colleagues may be a little nervous. It’s not that they are not supportive, it’s maybe that they are afraid that they might say the wrong thing or use the wrong terminology, and inadvertently cause offense or upset – and that is the last thing I want,” she says. EY’s Transgender Identity, Expression and Transition Guidelines include sections on gender identity and expression and the correct or inaccurate use of terms relating to gender expression, including pronouns. Guidance is also offered to managers on how to support transitioning employees and to individual employees who are transitioning. “I am very fortunate that EY as a firm, as an employer, has been so willing to work with and support me. When I reached out, the response wasn’t, ‘this is what we need from you,’ it was, ‘what do you need from us?’  “Now, I really want to communicate how important this is to the wider world, because I feel a responsibility to others who are transitioning and may not have the same support I have at work,” Dower says. “Because I have been with EY for 30 years, I have the privilege of a longstanding presence in the organisation and all the trust that comes with relationships built over that time. “Right from the outset I’ve thought, ‘if I can get this right, it might make it easier for someone who is younger and newer in the door who is going through the same thing.’  “Representation matters; visibility matters. Ultimately, I want to do what I can to help make this process easier for others in the future.” Interview by Elaine O’Regan Supporting employees transitioning at work For any person undergoing gender transition, the support of their employer, managers and colleagues will be crucial, and open, honest communication will play an important role in building trust and supporting a positive experience.  “At EY, we are committed to supporting individuals as they go through gender transition and working closely with them to provide personalised support, aid in establishing an action plan and setting expectations,” says Derarca Dennis, EY Ireland’s Assurance Partner and Sustainability Services Lead. “We value diversity and inclusion and the creation of a safe workplace in which everyone has the best opportunity to reach their full potential.” Based on EY Ireland’s own Transgender Identity, Expression and Transition Guidelines, Dennis shares seven key ‘best practice’ focus areas for all employers and managers seeking to support their own employees undergoing gender transition: Develop a transition plan When an individual approaches you with their intention to transition, it is imperative that you are supportive, open-minded and honest. Be prepared to discuss their aims and expectations, and what they intend your role to be in the transition. Make sure to consider stakeholders, colleagues, policies and procedures existing in the workplace. Ask your HR team for guidance and support as needed. Prioritise effective communication Clear, open and honest communication from managers, employees and the transitioning individual is essential. Communication will be different in all transitioning plans and dialogue can help alleviate any potential difficulties or issues. Hosting information and awareness sessions for team members and other stakeholders should be considered when developing this plan. Other fundamental communication areas to consider include what the transitioning individual is comfortable and willing to share.  Practise sensitivity and respect Be prepared to treat any employee who is transitioning with respect and an open-minded attitude. Be ready to ask questions, listen and understand their needs and concerns. All employees deserve to be treated with respect and sensitivity when related to their personal lives.  Use pronouns correctly Using the correct pronouns (he/she/they/ze etc) is extremely important. Simply ask the individual which pronoun they would like people to use and then ensure that everyone knows this. It may seem like a small thing, but it is incredibly important to get right as it demonstrates validation of the individual’s authentic self, which will go a long way towards helping them know they are fully accepted in their expression of their gender identity. Educate and raise awareness While everyone is expected to behave in accordance with policies, there should also be an opportunity for education and questions to be asked related to the transition process. It may be useful to host information sessions and forums to address concerns and educate employees who work in the team.  Guide on client conversations Should the individual be client-facing, they should be offered support (if required) in facilitating a conversation with any clients they work with. It is important to reinforce that their technical abilities will not have changed as a result of their expression of their gender identity and clients should be made to understand that all team members working with them must be treated with the same support and respect.  Respect confidentiality and privacy You should always maintain an appropriate level of confidentiality and privacy in relation to employee matters. Information should only be disclosed to those who need to know (such as HR, for example), those involved in the process, or those who have the consent of the transitioning employee. 

Dec 09, 2024
Personal Development

Julia Rowan answers your management, leadership and team development questions Question I am a mid-level manager in a large company with four direct reports who all manage teams of three to five people. We work to high standards and I don’t think we have any problems. I have one-on-ones with my direct reports and the five of us meet every fortnight. About once a month, the whole department meets. Should I be doing anything differently? We’ve worked hard to get here, and I don’t want to rock the boat, but I think we have more to give. Answer It sounds like you are doing a lot of things right. This is a great time of year to look at how the team functions and put strong foundations in place for the year ahead to increase your relevance and visibility. I trust that you and your team have more to give. Employees appreciate being consulted – and managers are often pleasantly surprised by their insight and interest. I suggest that some carefully planned team events could be very productive. Begin by working out what you want for your team and the service you provide. If you could describe “a better team,” what words would you use? Feel free to use words like “more” or “less,” and then change “less” to “more” (e.g., “less dependent’ might become “more independent”). If your organisation has a strategy, read it and reflect on where your team intersects. Consult with your direct reports to make sure they are on board. Organise a half-day session with the whole team. Plan it well and make it feel special – offsite, if possible, refreshments on arrival, lunch to finish, etc. Open the session by discussing your strategy and the team’s strengths. Celebrate wins – big and small – to build confidence and acknowledge contributions. Keep the focus positive while the teams build confidence in engaging in this type of process. For example, identify lessons learned rather than mistakes made and use interactive activities like a SWOT/SWOC analysis (strengths, weaknesses, opportunities, threats/challenges) to assess the team’s current standing and potential for growth. Don’t rush the pace – it can be really useful to meet a few times as issues can settle, and ideas can emerge between sessions. Consider the perspectives of stakeholders, including your senior team, customers and suppliers. One effective way to do this is by placing a few chairs in the room to represent them. Invite your team to occasionally take the seat of these stakeholders and ask questions such as, “What do they want from us?” and “What else can we provide for them?” This allows team members to see things from a different perspective. A valuable outcome of a session like this could be that team members ask for feedback from stakeholders using a set of agreed-upon questions. Use the opportunity to strengthen relationships within your team. For example, you might ask people who they would like to acknowledge or appreciate or which team they would like to work more closely with. As ideas about ways forward emerge, you might translate these into goals for 2025 – perhaps allocating ownership to front-line team members. This provides a nice connection to your team meetings. Julia Rowan is Principal Consultant with Performance Matters Ltd, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie If you read one thing... “The Boy, the Mole, the Fox and the Horse” by Charlie Mackesy is a gentle book that addresses human emotions like love, vulnerability, courage and connection. Beautifully illustrated, it would make a lovely takeaway from a team session.

Dec 09, 2024
Feature Interview

Barry C. Melancon, outgoing CEO of AICPA & CIMA, talks to Accountancy Ireland about the need for the profession to learn and adapt at a time of rapid change and unprecedented opportunity Accounting is undergoing change as never before, driven by the evolving needs of global business, regulatory regimes and – above all – the rapid emergence of new technologies that promise to transform the profession in the years ahead. Amidst all this change, a willingness to learn and adapt will be critical for accountants in all sectors. “Now is a time for reflection, particularly for those in our profession at the mid-career stage,” says Barry C. Melancon, CPA, CGMA.  Melancon is the outgoing CEO of the Association of International Certified Professional Accountants, the professional body formed by the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA). “Younger people are coming in as digital natives and the pace of change in the world today, certainly with regard to technology, requires us to be fully committed to adapting our competencies to keep pace,” says Melancon. “It is not the first time change has been required in our profession – for us, change is a constant – but the leap we need to take today is bigger than ever before, and we will need to adapt faster than ever before.” Committing to change as a constant In his role as President and CEO of the AICPA, Melancon was instrumental in overseeing its alliance with the Chartered Institute of Management Accountants to form the Association of International Certified Professional Accountants (AICPA & CIMA). Established in 2017, the association now has close to 600,000 members, candidates and registrants in 188 countries and territories worldwide. As he prepares to hand over the reins to incoming AICPA & CIMA CEO Mark Koziel, Melancon reflects on his achievements over three decades as AICPA’s longest serving CEO. “Serving the profession over the last 30 years has been a great honour and I have been fortunate to have played a part in its transformation,” he says. “The reality is that the role has been a change management process from the very start. The question at the outset was, ‘how do we create the organisation of the future?’ “My goal was to make the AICPA an organisation that would create a more permissive environment in which the profession could broaden its reach and become more successful – and I do sincerely think we have succeeded in opening people’s eyes to what the profession can be. “At the same time, today – as much as at any other time in the last 30 years – the importance of trust in our profession is paramount. “Trust is our trademark and, no matter how much or how quickly the world around us changes, we must continue to be committed to the trust and objectivity that sets our profession apart, and the value we create for those we work with.” Broad business lens Melancon grew up on the Gulf Coast of southern Louisiana and graduated from Nicholls State University in 1978, majoring in accounting with a minor in government policy.  “I went to university thinking I would be a lawyer and, during my first semester, realised I had a greater interest in business. I took an accounting course and discovered that, if I wanted to have a strong business perspective, accounting would be the best path to take,” he explains. “My perception was that accounting could give me the broadest ‘intellect’ as it relates to business. All the disciplines of business are encompassed in accounting in some form – management, economics, finance – the whole gamut.  “I think this still holds true today. This profession gives us the best and widest lens of all business disciplines.” Melancon began his accounting career in 1979 with a CPA firm in Louisiana before being appointed CEO of the Society of Louisiana Certified Public Accountants in 1987 and, subsequently, as CEO of the AICPA in 1995. “Like many people in our profession, I started out doing accounting, auditing and tax work,” he says. “I had a goal to become a partner in a CPA firm by the age of 25 and, as I’d started school at a very young age and skipped years along the way academically, I succeeded in reaching that goal.” Crucial role as trusted advisors At this early stage in his accounting career, Melancon worked exclusively with small and medium-sized enterprises (SMEs) and not-for-profit organisations. This experience, he says, formed his “early accounting perspective” and instilled an abiding respect for the value of SMEs in economies worldwide and the critical role accountants play in supporting and elevating entrepreneurial endeavour for the benefit of all. “This has been really key for me as as President and CEO of AICPA – creating an environment in which our profession can flourish has been about that wider business lens,” Melancon says. “There are thousands of SMEs around the world. SMEs are the lifeblood of most economies, both established and emerging. Entrepreneurs see opportunities and build businesses, and the expertise of the accounting profession helps them succeed and grow. “Society benefits, but we know SMEs also have high failure rates. They can have a much higher success rate if they walk hand in hand with a professional who really understands all aspects of their business and can act as the purveyor of truth and effective information.” As Melancon sees it, accountants have a crucial role to play as trusted advisors whose strategic and principled guidance is critical in business the world over. “Often, you will find that an accountant working with a business owner knows more about them than anyone else,” he says.  “If the business owner has a health issue or personal challenge, they will ask their accountant, ‘What does this mean for my business? What should I do?’ If they have concerns about competitors, cashflow or business acquisitions, the accountant is the first person they will consult.  “The business owner will understand their business model, the products or services they are selling and the market they are selling to, but their accountant will be the expert in pretty much every other aspect of how to run the business to make it successful.” Elevated role of the profession Beyond the SME environment, accountants in practice and the corporate world are assuming an increasingly prominent role in the boardroom. “Our role right across the board is becoming more strategic. It comes back to that ‘wide lens’ we offer and the higher-level skills we apply to deciphering the complexity of the world we operate in,” Melancon says. “In the corporate environment, leadership is looking to the finance function for more answers, particularly in areas such as environmental, social and governance (ESG) where decision-making is increasingly data driven. “If we look at the audit function, particularly in relation to larger capital market companies, we have moved from purely auditing financial statements to providing third party assurance across a whole range of areas, from ESG to cybersecurity, and this will only continue to expand. “With artificial intelligence (AI) – right now, people are really not sure if they can or should trust it. This will change and it will change rapidly – and we, as a profession, will be key to providing the assurance, objectivity and trust that is needed.  “Our tagline at AICPA & CIMA is, ‘We empower trust, opportunity and prosperity.’ That’s not just about the profession; it’s about society at large.” Emerging business models In tandem with the evolving role of the accountant, the traditional structure of accountancy firms is also changing. “AI, in particular, will fundamentally change the ‘shape’ of accountancy firms and the traditional leverage model,” Melancon says. “With the leverage model, the largest number of employees in accountancy firms have traditionally been at the entry-level – the base of the organisation – where a significant amount of the firm’s transactional activity has taken place. “As people starting out at entry-level progress their careers, they move up to the middle of the organisation, where there is a greater need for cognitive skills and business acumen. “Then, at the top of the pyramid, on the corporate side, you have the C-suite executives and in the firms, you have the partners and owners.  “This leverage model has served our profession well over the years, but, today, the need for all that work at the ‘base’ or entry level is rapidly falling away, in part due to technology like AI and automation. “Instead of pyramid-shaped firms, we will be predominantly ‘fat-middle’ organisations, so we will need to get more people into that middle more quickly with the business acumen and skills they need to build strong relationships with clients.” Robert Stokes award On a recent trip to Dublin to attend the Global Accounting Alliance Board Meeting in late October, Melancon received the Chartered Accountants Ireland Founders Award. The Robert Stokes Medal was presented to Melancon by Barry Doyle, President of Chartered Accountants Ireland, at a special event, in recognition of his outstanding contribution to the accounting profession.  The award represents the characteristics of Robert Stokes, the founder of Chartered Accountants Ireland, a pioneer and a courageous independent thinker, committed to fairness and “levelling the playing field”. Looking ahead to the future of accounting and younger generations entering the profession, Melancon reflected on the need for passion, ambition, commitment and confidence. “Accounting is a profession; it is not just a job. I think this mindset is really important. I don’t think people in any generation can expect to have truly long-term career success unless they understand the need for this professional commitment. Passion is important.” “When I became CEO of the AICPA at 37, a very wise person who headed up one of the largest professional services firms in the world at the time, said to me, ‘Barry, I don’t know you, but I know people put you in this position and my only advice to you is to be yourself.’ “I think the younger generation coming into accounting do bring themselves to the profession. They bring something new and valuable in terms of what they have learned and how they have learned it. “They are more tech-savvy and probably more worldly. They have access to much broader information sets. My message to these younger accountants is to value all of this and to ‘be yourself.’  “You also need to have clear goals and the confidence to speak to others around you about your goals and how to reach them. Seek people’s help and advice, and act on it.  “When I started out in my first role with that small firm in Louisiana, the Partners knew I wanted to be a Partner myself by 25.  “I wasn’t shy about it, and they supported me. They told me, ‘This is what you need to do to get there,’ and I was able to achieve my goal.  “It is important to have the confidence to talk to the people above you in a constructive, honest and positive way about what you want to be – to be yourself, in other words.  “Our profession requires that kind of commitment and, with their skills in technology, younger accountants today can play a very important role in preparing our profession for tomorrow.” *Interview by Elaine O’Regan

Dec 09, 2024
Personal Development

Beyond technical expertise, impactful communication ensures messages are understood and valued. Carmel Moore offers practical tips for refining non-verbal, written and virtual communication skills The art of communication is a vital skill for accountancy students, where clarity and precision are as important as the numbers.   Technical expertise is worthless if the receiver doesn’t understand the message, and sloppy communication can waste time and create risk.  Here are some simple principles to help improve your communication skills. “You cannot not communicate”   The principle “You cannot not communicate” tells us that silence, body language and tone in written communication all send out messages.  For accountancy students, this is a reminder to remain mindful of non-verbal cues, tone and timing in meetings, emails and virtual settings. You are never invisible. Meetings  In face-to-face meetings, you're still communicating even when you’re not speaking. Your posture, eye contact and facial expressions can be interpreted by others and people will make assumptions about whether you’re engaged, bored, confident or open to feedback.  Be aware of listening cues. When a client or colleague is speaking, show you’re actively listening by nodding or occasionally saying, “I see” or “That makes sense.” This communicates respect and interest, reassuring the other person that you value their input, even when you’re not actively speaking. Emails The tone in an email is important to get right as messages can easily be misinterpreted. Every choice in word, structure and even punctuation conveys tone.  In our work, we often seek information from busy people. For example, “Respond by Friday” and “Could you please have the response ready by Friday?” both communicate a deadline, but the latter comes across as more collaborative. Overly formal language can seem cold or detached. Aim for a warm yet professional tone to make recipients feel more comfortable and willing to engage.  Even response time is a form of communication—quick responses can convey efficiency, while delays may unintentionally signal a lack of priority.  Virtual meetings Virtual interactions bring unique communication challenges. Silence feels more pronounced on video calls, where pauses may be misinterpreted.  If a participant turns off their camera, it might signal disengagement, or it could simply mean a technical issue or a need for privacy. A note in the chat can easily explain a missing face on the screen without the unintentional insult. When you’re speaking, remember to smile, use hand gestures and keep your tone upbeat to convey openness. If you need a moment to gather your thoughts, simply say, “Give me a second to pull up that data.” Small acknowledgements can prevent misunderstandings that silence may bring in a virtual space. “The meaning of communication is the response you get”   Remember: good communication is not just about your intent, but also about the outcome. This is particularly important in finance, where technical topics can easily become complex or misunderstood.  If the message doesn’t come across as expected, it’s up to you to adjust how you’re communicating. I’ve often reviewed work where my colleague has said, “But that’s what I meant!” But it wasn’t what they said.  Meetings  This principle reminds us to focus on clarity and engagement. When presenting, watch for audience reactions—are they nodding, looking puzzled or asking for clarifications? These responses tell you how well your message is landing.  If someone looks confused, ask if they’d like you to explain it differently, perhaps by breaking down the information further or offering a different example. To check understanding, say “Is everyone okay before I move on?” Emails   In email communication, look for responses that confirm comprehension.  When explaining something technical, provide context that guides your reader toward a clear understanding. Use concise subject lines and straightforward language.  Conclude with an open-ended question, such as, “Does this explanation make sense?” or “Is there any area you’d like more detail on?” This invites clarification, helping to ensure your message is fully understood. If the response to your email suggests confusion, reply with patience. Simplify your language and provide a summarised recap if necessary.  If appropriate, ask the recipient to walk you through what didn’t land for them. Take notes for future adjustments. Before you click send on an email, it’s important to do a self-review of what you have written. Answer the question: Summarise the question being posed to others at the start to ensure focus. Highlight actions: Make actions clear. Don’t make readers search for them. Ensure clarity: Use simple, readable language. Virtual meetings Virtual meetings add complexity to communication. Non-verbal cues are harder to pick up, so the meaning of your communication becomes even more dependent on intentional check-ins.  Look for engagement indicators, like people turning on their cameras, nodding, or adding comments in the chat. Mix it up by using screen-sharing tools. You may have the technological advantage here! Regularly pause to invite questions or reactions, asking, “How is this coming across for everyone?” or “Any questions so far?” This lets you gauge understanding and adjust as needed. Putting it all together Applying these principles means taking responsibility for how your message is received.  Effective communication isn’t just about what you say, it’s about observing how your message is received.  By watching responses and understanding that silence or body language can carry powerful messages, you can become a more effective communicator, building trust and clarity with other students, colleagues and clients alike. Carmel Moore is Director at the One Moment Company  

Nov 05, 2024
Personal Impact

Older professionals have much to offer in today’s multigenerational workplace, but many continue to experience the ill effects of negative attitudes and bias As Honorary Treasurer and Interim Chair of Age Action Ireland, Colm Nagle, FCA, continues to apply the experience honed over the course of a 45-year career begun in 1979 when he joined Stokes Kennedy Crowley as a trainee. The longest-serving director of Age Action Ireland, the national advocacy organisation for older people and ageing in Ireland, Nagle is proud of his ongoing contribution to its work, in particular its annual Positive Ageing Week. Kicking off this year on 30 September and continuing through the first week of October, Positive Ageing Week (PAW) celebrates the contributions of older people and promotes their agency. As the dust settles on another successful PAW, which this year featured over 500 events around the country, Nagle is turning his attention to other priorities on the agenda of Age Action Ireland, which has published two annual State of Ageing reports since 2022, highlighting the reality of growing older in Ireland. “Age discrimination is often under-represented in discussions of diversity, equity and inclusion, and, in the workplace, ‘age’ is often left out of company’s DE&I policies and initiatives,” Nagle says. “So far in our culture, we just have not had the same conversations and awareness-raising around ageism that we have had around other forms of discrimination. People haven’t learned to stop and think about ageing or question implicit beliefs they might have internalised.”  The World Health Organisation’s Global Report on Ageism, published in 2021, found ageism to be a prevalent and serious form of discrimination.  “The report demonstrated that we come to accept ageist beliefs from as young as four years old, and that these beliefs – about ourselves and others – can have seriously negative consequences, including worse health outcomes,” Nagle says.  There is, he adds, evidence suggesting that ageism is especially sharply felt in the labour field.  “Age Action’s ‘Are We Ageist’ poll found that unemployed persons were most likely to report recently experiencing age discrimination,” Nagle says. “Ageism is also known to interact with and compound other forms of discrimination like misogyny, classism or ableism, and so, to effectively eliminate these kinds of discrimination, we must also be aware of what ageism is and how it works.” A priority for Age Action is to involve everyone in our society in the project of reframing ageing and changing how we think, act, and feel about older persons.  Rethinking mandatory retirement age Many people now are living more active lives well into retirement age and want to defer full retirement for as long as possible.  “Fundamental to all of us continuing to have choice and control over our employment as we age is the existence of mandatory retirement clauses in contracts,” Nagle says. “Currently, our Equality Acts make an explicit exemption that allows for this kind of age discrimination, so that people can be forced to leave their jobs for no other reason than that they have reached a certain age. This is based on harmful stereotypes of older persons, that deny their skills and capacity.” Mandatory retirement implies that in older age, we are all the same, Nagle says. “It is deeply concerning that through our laws, the State is currently legitimising these kinds of ageist beliefs. It forces older persons out of workplaces and thus contributes to social exclusion,” he says.  “At Age Action, we have spoken to people who, 10 or 20 years on, are still angry and hurt by having been forced to retire. “We have long campaigned for the abolition of mandatory retirement and, in April, we made our case before the Oireachtas Committee on Employment, which subsequently recommended it be abolished. “It has already been outlawed in Canada, Australia, New Zealand and the US, in some cases for decades, and their labour markets are still functional and productive.” Negative bias and discrimination Well before retirement age, professionals can feel the negative effects of unhelpful biases as they mature through their careers. Seventy-five percent of respondents in the most recent Workplace Equality Study published by Matrix Recruitment identified ageism as an issue in today’s workplace. More than two-thirds, meanwhile, said workers over the age of 50 have fewer promotional opportunities then their younger colleagues, up 19 percent points on the previous year’s findings.   Commenting on the findings, Kieran McKeown, Managing Director of Matrix Recruitment, said they were “hugely disappointing.” “There is a widespread view that professionals aged over 50 have fewer promotional opportunities than their younger colleagues, but the reality is actually quite the opposite,” McKeown says.   “On a more positive note, the majority of respondents surveyed (89%) agreed that people over the age of 50 have as much to contribute to the workplace as those under 40, and this is an opinion we, at Matrix Recruitment agree with, given the calibre of the candidates we speak to on a daily basis in this age group.”  Despite this, McKeown believes older and more experienced professionals in the Irish market remain something of an “untapped talent pool.” “It is quite a complex issue but there appears to be an unconscious bias against older candidates and a poor understanding of, or appreciation for, what they can bring to a workplace,” he says.  “There is a view – a misguided one, in my opinion – that if you are older, you are less likely than your younger peers to be considered capable, adaptable or willing to embrace something new. “We are living in a digital age in which transformation is constant. Given that half of our respondents were of the view that more mature candidates may not have ‘21st century’ IT and digitalisation skills, it is likely that employers think the same way.   “In my experience, the over-50s are highly skilled and actively embrace technological change. Together with their years of experience, this is a group whose contribution to the workplace cannot be underestimated.  “Of course, how people in their 50s are perceived varies greatly from person to person but populations are aging, working lives are lengthening and graduates are joining the workforce later – so 50 is young.” The Matrix Recruitment Workplace Equality Study found that mature workers were considered to have better life skills and those aged over 50 were also rated higher when it came to mentoring and guiding colleagues.  “Forty-eight percent of our respondents consider mature employees to be more reliable workers than their younger cohorts, who statistically are more likely to job hop,” McKeown says.  “Employers find that there are lower staff attrition rates with more mature workers who also have strong interpersonal skills and an equally strong work ethic. And of course, they bring to the workplace years of life experience alongside the expertise they have built up in other roles.” The biggest challenges facing older candidates in today’s job market often “come from within,” McKeown says.  “Losing confidence, feeling they are too old to move job or upskill – or simply not knowing how to go about driving change – are all barriers we see among candidates in this age group,” he says.  “I would encourage anyone considering a career or job move to speak to a recruitment expert.  We can help identify any gaps in their skill set or job spec and help them recognise and promote their transferrable skills.  “There are also lots of tools, such as LinkedIn, which can help individuals stay on top of industry trends and grow their network and connections.  “At Matrix Recruitment we have supported and placed dozens of candidates over the age of 50, including those looking for a new job, a different career or re-entering the workforce after many years. My advice is to get off that fence, speak to an expert and go for it!” Liberation from the rat race For Pat Barker, FCA, sitting on the fence has never been an option. A trailblazer for women in the profession, Barker sat her accounting exams in 1973, becoming only the 20th female Chartered Accountant in Ireland. “I didn’t have a master plan, but seemed to rocket from one opportunity to another,” she says now.   “Generally, I was offered chances and I probably said ‘yes’ to too many and found myself active all the time. Luckily, I am fit and healthy and had lots of energy, and I reflect back on a very packed work and non-work life.”  Barker served her articles with Stokes Bros & Pim in Dublin and then relocated to the UK for a time, becoming Partner with an accounting firm in Manchester and working at Manchester University as a Principal Lecturer.  She was appointed Lecturer at Dublin City University in 1980 and progressed to Senior Lecturer, Associate Dean of the Business School and Vice-President, Academic. Today, Barker continues to lecture in business ethics at DCU. “When you get older, you are liberated from the competition of your career trajectory and you must then decide, ‘What am I going to do now? Am I going to take up golf and play bridge and drink Chardonnay in the afternoon?” she says. “I thought about that and decided it wasn’t for me and the joy for me in continuing to lecture and to serve on boards is that I no longer feel the need to prove myself through my work. “I do not want to lose my capacity – my skills – as a Chartered Accountant. I do not want to stop applying these skills. I want to continue learning about what interests me, and to apply what I learn in the work I do. “That professional decision-making and problem-solving part of me continues to matter enormously to me and, these days, it is enhanced by an ethical overview. Continuing to work when you are older and out of the rat race is a kind of liberation.” Benefits of a multigenerational workforce With an ageing population, longer life expectancy and delayed retirement, workplaces in Ireland are becoming increasingly multigenerational, says Dee France, Wellbeing Lead with Thrive, Chartered Accountants Ireland’s wellbeing hub.  “Fostering a positive age culture is crucial to the Irish workforce and its future, but the importance and value of older employees in their workplace can be seriously overlooked,” France says. “An ageing workforce isn’t a burden; it is an opportunity and there are many business benefits to having a multigenerational workforce.  “With age comes a wealth of experience and with skill and labour shortages reported, employers should not overlook older employees but focus instead on actively retaining and retraining them to address growing talent shortages.” As France sees it, older workers bring an abundance of knowledge, experience and skills that can be invaluable to employers.  “Longer periods in the working environment allow employees to acquire and cultivate significant soft skills that are often so important and beneficial to both the company and younger employees – interpersonal and communication skills, for example, problem-solving and critical thinking along with other leadership qualities and abilities,” she says. Supporting and advocating for age-inclusivity By supporting and advocating for an age-inclusive environment, employers can retain these important qualities in teams, ensure knowledge transfer and provide meaningful and symbiotic mentorship opportunities.  “Failure to address the needs of an ageing workforce is a common issue when employers look to implement supportive work practices,” France says. “In this digital era, there can be preconceived notions and age-related assumptions surrounding older workers, such as their ability to embrace digital transformation, reluctance to adopt new processes and ways of working, or difficulty shifting to changes in company culture. “Many employers can also overlook the importance of providing flexible working arrangements for older employees, making it easier for them to remain in the workforce.”  It is crucial to implement policies that allow accommodations for an ageing workforce for part-time work, job-sharing or remote working, France says. “I would also advise considering phased retirement plans that allow employees to reduce their working hours gradually while maintaining a connection to the workforce.  “This approach can improve retention and reduce stress, allowing employees to continue contributing to the business for longer.” Supporting older workers: advice for employers  Embracing age inclusivity is not just a social matter, it is a business matter too, writes Dee France.  As Ireland’s demographics evolve, businesses must adapt and embrace the potential an age-diverse workforce can unlock. Creating a culture of belonging to foster equitable, inclusive and thriving workplaces that value diversity, including age diversity, is key to supporting a growing workforce.  Employers should actively promote age-friendly policies, avoid reinforcing stereotypes and encourage intergenerational collaboration by fostering mentorship programs that allow employees to share their generational knowledge, creating a mutually beneficial learning environment. Employers should also develop and prioritise well-being initiatives that support an ageing workforce.  Offering health insurance benefits, wellness programs and access to resources like mental health support or fitness programs can significantly improve employees’ quality of life.  Additional tailoring of benefits such as regular health check-ins and adjusting job demands to accommodate any limitations an individual may have, can help ensure that employees can continue working comfortably. Supporting the well-being of older workers through tailored policies on health, flexibility and career development can help them stay engaged and productive, ultimately benefiting the wider organisation.  Positive ageing initiatives can also help reduce turnover, increase job satisfaction and enhance loyalty within the organisation. Positive ageing in the Irish workforce is not just a trend but a critical component of building a resilient, productive and inclusive workplace.  Employers must recognise the value of older employees and take proactive steps to support them.  By addressing common pitfalls and adopting best practices, employers can create a work environment in which workers aged over 55 feel valued, supported and empowered to continue contributing to the success of the organisation. Dee France is Wellbeing Lead with Thrive, Chartered Accountants Ireland’s dedicated wellbeing hub  

Oct 09, 2024
Regulation

Accountants will play a critical role in helping SMEs manage the impact of new sustainability reporting requirements on their supply chains. Niamh Brennan, Louise Gorman and Seán O’Reilly explain why The EU’s Corporate Sustainability Reporting Directive (CSRD) was transposed into Irish law in July 2024. Those in management and accounting functions in some of Ireland’s large companies have struggled to interpret the Directive’s requirements.  The legislation will require reports under European Sustainability Reporting Standards (ESRS) from 1 January 2025 for the 2024 financial reporting year.  In recent years, many large companies have voluntarily reported sustainability information under the Global Reporting Initiative (GRI) and the Taskforce for Climate-related Financial Disclosures (TCFD) frameworks.  Moreover, the environmental topics covered by the ESRS are derived from the EU Green Taxonomy, with which large entities in certain sectors have already reported alignment. This alignment prepares them for the CSRD requirements to some extent.  Listed SMEs will not come within the scope of the CSRD until 2027 (for the 2026 financial year), with an opt-out for two further years to 2029 (for the 2028 financial year).  Nonetheless, many SMEs, both listed and unlisted, will experience the effects of sustainability reporting requirements before these dates. Significance of the value chain The ESRS require disclosures on material environmental, social and governance topics. Such disclosures must detail the undertakings’ own operations as well as those throughout their value chain.  The value chain refers to the full range of activities, resources and relationships related to the undertakings’ business model and the external environment in which they operate.  In Ireland, many large companies’ activities, resources and relationships involve SMEs. Examples include financial services institutions with SME customers, and food and beverage producers with SME suppliers.  The implication of such relationships, in ESRS terms, is that large companies must gather sustainability information from SME value chain partners. Reporting challenges for SMEs  We have conducted two research studies on sustainability reporting for Irish SMEs. Our first study employed the GRI framework, and our second used the EU Green Taxonomy, to assess SMEs’ reporting preparedness.  Mindful of SMEs’ strong reliance on their Chartered Accountants for reporting and advisory needs, we engaged with professional Irish accounting practitioners to gain insights into the challenges they face.  Both studies were conducted in 2022 in anticipation of the publication of the ESRS by the European Financial Reporting Advisory Group (EFRAG). Our findings are highly relevant now that sustainability reporting is legally mandated. The findings of both studies indicate that cost is the greatest barrier encountered by SMEs.  In particular, set-up costs, ongoing data management expenses and potential operational changes, are likely to prevent the average SME from collecting and reporting accurate and reliable sustainability data.  Resources, particularly human resources and associated training costs, also pose a substantial impediment to implementing a sustainability reporting system. Related to this, both studies identify a significant sustainability knowledge gap within SMEs.  While an implicit understanding of the importance of environmental and social sustainability exists, many SME managers and employees have not received education on the necessary topics or metrics which must be disclosed, many of which are scientific or highly specialist in nature.   Finally, access to the necessary technology to manage and report sustainability information is limited. Appropriate data management and reporting systems have only recently become available, at a price point that typically only large companies can currently afford.  With these issues in mind, future problems are envisaged as large undertakings request sustainability data from SME customers and suppliers for ESRS reporting. Supports for SMEs Supports could help to alleviate the challenges facing SMEs over the coming years. Our research found that national or EU governmental grants, tax incentives or carbon credits may assist SMEs in overcoming cost-related challenges.  The accounting practitioners in our studies also recognised that education and training in sustainability reporting for SME management and relevant employees may need to be subsidised.  Beyond financial supports, participants in our study indicated that simplified disclosure requirements would be appropriate for SMEs.  Since we reported these opinions from our study, EFRAG has published an exposure draft of Voluntary SME (VSME) sustainability reporting standards for small non-listed enterprises.  The exposure draft presents a modular approach that SMEs can adopt on a phased basis.  Alongside simplified reporting requirements, another non-financial support deemed suitable by our respondents was the establishment of a state-sponsored or equivalent body to provide SMEs with consultancy, resources and tools for sustainability reporting.  The Department of Enterprise Trade and Employment’s recently established National Enterprise Hub represents a valuable opportunity to aid Irish SMEs in meeting sustainability data demands from larger companies. The path ahead for SMEs In the immediate term, large undertakings collecting sustainability data from smaller value chain parties can avail of transitional provisions when data is not available in the first two to three years of reporting.  Nonetheless, such reliefs are limited amidst a strong impetus across Europe to set and achieve Greenhouse Gas emissions’ reduction targets in line with the Paris Agreement.  Without data from value chain parties, measures of Scope 3 emissions reported by large undertakings under the climate change standard, ESRS E1 Climate Change, will be inaccurate and misleading.  At a time when greenwashing is considered almost akin to financial fraud by the general public, large undertakings may impose pressures on small enterprises to produce relevant measurements, even if regulators do not.  Failure to do so may cost SMEs valuable business relationships. Disclosures required under ESRS E4 Biodiversity and Ecosystems will also impact Irish SMEs in value chains in sectors such as agri-food. With the Circular Economy Act signed into Irish law in 2022, reporting on the circular economy under ESRS E5 Resource Use and Circular Economy may be deemed a material topic for many companies.  ESRS E5 requires extensive discloses on product lifecycles and may well also necessitate data collection from SME suppliers as well as from SME consumers.  In fact, it is important not to consider SMEs solely from a supplier perspective. In terms of social sustainability, ESRS S4 Consumers and End-Users sets out reporting requirements on consumers’ use of goods and services, with a particular emphasis on health and safety.  SMEs intermediating between large companies and end-consumers will also be required to report upstream to larger companies in value chains.  Additionally, ESRS S2 Workers in the Value Chain requires large undertakings to report on the composition of suppliers’ and customers’ workforces, as well as their working conditions. Sources of support Our research findings, coupled with an analysis of the ESRS requirements, clearly indicate that support for SMEs is vital to ensure they retain strong positions within value chains in Ireland and across the EU.  Prompt development of the VSME standards is essential. Without standardisation, SMEs face requests from multiple supply chain stakeholders to provide various types of data in different formats.  The introduction of the VSME standards in a manner that encompasses guidance to larger firms on best practice in data collection from smaller value chain partners may ease the reporting challenges for undertakings of all sizes.  The role the accounting profession will play is integral, as smaller entities will need sustainability reporting alongside traditional accounting services.  Chartered Accountants Ireland offers advice, education and representation for members in the area of sustainability reporting.  As these requirements becomes a priority for SMEs, the Institute will continue to provide support to Chartered Accountants navigating the nuances of this major development in accounting and reporting. Niamh Brennan is Michael MacCormac Professor of Management at University College Dublin Louise Gorman is Assistant Professor at Trinity College Dublin  Seán O’Reilly is Assistant Professor at University College Dublin

Oct 09, 2024
Regulation

Companies complying with the Corporate Sustainability Reporting Directive could see real business benefits, but the right mindset is crucial, write David Connolly and Alba Boshnjaku At its core the Corporate Sustainability Reporting Directive (CSRD) is a reporting requirement, but it should not be viewed merely as a compliance exercise.  Companies within the scope of the Directive will be reporting in a standardised way. This means that sustainability statements could become a powerful tool for communicating more effectively with their stakeholders.  The CSRD could potentially enable these companies to build trust, enhance their reputation and strengthen their accountability.  This scenario is not dissimilar to existing accounting standards, whereby the requirement for companies to report financial information to investors, lenders and other stakeholders, has facilitated better and more transparent comparability between businesses operating in the same industry. Ignoring sustainability is no longer an option. Companies must be aware of, and report on, the impacts they have on people and the environment, as well as the sustainability-related risks and opportunities they face in the short, medium and long term.  Therefore, the CSRD gives companies an opportunity to understand what matters to them and their stakeholders. It allows them to re-evaluate their business to gain a competitive edge and potentially attract new customers, talent and capital, thereby strengthening their strategic resilience.   C-suite executives should recognise the potential the CSRD has to help steer their organisation towards a future that balances profitability with environmental and social responsibility governed by robust control frameworks.  Before exploring the potential benefits, however, let’s first revisit some of the key concepts of the CSRD. Europe: leading the way in sustainability reporting  An estimated 40,000 companies based in the European Union will be brought within scope of the CSRD on a phased basis, starting this year and continuing through 2028. Reporting obligations apply to all large and listed companies, including small and medium sized entities (SMEs), except for listed micro-enterprises. The size category into which an undertaking or group falls is defined by establishing thresholds in relation to net turnover, gross value and average number of employees during the financial year.  A large undertaking or a large group will, for example, exceed at least two of the three following criteria: balance sheet totalling €25 million; net turnover of €50 million; an average of 250 employees.  These criteria, including the ones for SMEs, are established in the Accounting Directive at EU level and transposed in national legislation, which companies must consult to determine whether they are captured within the scope of the CSRD. Certain non-EU companies with listed subsidiaries or significant operations in the EU market are also required to report. Non-EU companies that fall under the scope of the CSRD need to have: Net turnover of more than €150 million in the EU for each of the last two consecutive financial years;  A large or listed EU subsidiary, or EU branch, generating over €40 million in the EU. The requirement for certain non-EU companies to report will impact some companies established in Northern Ireland where they meet the relevant threshold criteria.  Ireland transposed the CSRD in the Companies Act in July 2024. Companies should carefully consider the relevant provisions to determine whether they fall within scope. The first wave of companies (large, listed companies with over 500 employees) have already mobilised their teams to get disclosure ready as they will be publishing their sustainability statements in the first quarter of 2025 for the current financial year.  Companies within the scope of the Directive must prepare their sustainability statements in line with the European Sustainability Reporting Standards (ESRS). The first set of twelve sector-agnostic standards have been adopted by the European Commission and are directly applicable to all EU member states.  Sector-specific standards are under development and proportionate standards for listed small and medium-sized entities are also expected.  Two of the standards – ESRS 1 and ESRS 2 – are cross-cutting and mandatory for all. The remainder, structured under Environmental, Social and Governance (ESG) pillars, are subject to the outcome of the materiality assessment. Companies will need to undertake a double materiality assessment to decide what they will need to report on.  They will have to identify and assess the impacts of their business on people and the environment (impact materiality) and the risks and opportunities the outside world poses to their business (financial materiality).  As part of this process, companies will need to understand the business and regulatory environment in which they operate and map their value chain. The value chain is defined as the full range of activities, resources and relationships related to the undertaking’s business model and the external environment in which it operates.  The value chain encompasses the activities, resources and relationships the undertaking uses and relies on to create its products or services from conception to delivery, consumption and end-of-life.  As part of their double materiality risk assessment, companies will also need to identify material- and sustainability-related impacts, risks or opportunities relating to their value chain across time horizons.  Once they have identified their material matters, they will then need to identify the material disclosures and data points to be reported in the sustainability statement.  The sustainability statement will be subject to limited assurance, with added responsibilities for audit board committees. Companies will need to implement robust control frameworks that ensure high quality, reliable and comparable sustainability information. The CSRD: a competitive edge  The CSRD offers an opportunity for companies to gain a competitive edge, because it requires that they report, not only on the material impacts they have on people and the environment, but also on the potential risks and opportunities they face.  For example, supply chain disruptions caused by climate change or dependencies on scarce natural resources could lead to operational risks for companies, which could then take the form of credit risks for financial institutions. Similarly, negative impacts on employees or affected communities could lead to litigation and reputational damage. On the flipside, investment in green technology or innovation could generate profit and add shareholder value.  By treating double materiality assessments as a box-ticking exercise, companies will miss the opportunity to better understand their business and make more informed strategic decisions.  A thorough, data-driven assessment should take into consideration value chain relationships, sector and geographical exposures. Supported by stakeholder insights, this approach can help a company to identify the existing and anticipated effects of sustainability on its business model and strategy, including risks or opportunities related to its financial position, cash flow and access to capital.  The double materiality assessment is dynamic and requires companies to think and assess what is material, not only this year, but in the medium to long term – and how this will impact its wider business plans and strategy.  For C-Suite executives, the results of the double materiality assessment could yield insights that enhance efficiency, improve performance and help them set realistic targets, all while demonstrating their company’s commitment to transparency. Opportunity for increased internal accountability  Under the CSRD, companies will need to report on the processes they have in place to identify and manage material sustainability matters. The preparation process will trigger important internal questions that require owners and demand accountability.  Are our policies and actions effective? How are we tracking the effectiveness of our targets? Is our data accurate? How robust is our internal control framework? Is sustainability integrated into our risk management process? What is the role of the Board in sustainability reporting?  These are only a small fraction of the questions companies will need to ask themselves to ensure that their reports are CSRD-compliant. These are also questions that could help companies become efficient and foster a transparent and risk-focused culture.  Further, reported sustainability information, such as financial reporting, will need to be reliable, accurate and comparable. What gets measured gets done.  By having to define baselines and measure progress from year to year, companies must ensure that time and resources are adequately allocated to set the business up for success.  Communicating what matters to stay ahead  Companies will have to report on what is material and relevant to stakeholders and, with stakeholder expectations evolving, ongoing engagement will be key.  Investors, employees, customers, suppliers and the public at large are becoming more aware of the sustainability impacts of companies, so they can make informed, ethical decisions.  Some stakeholders will be more interested in the sustainability credentials of companies than others. While customers and employees will take account of sustainability when deciding where they spend their money or where they work, funders and regulators will have more than a passing interest.  In 2023, according to the latest World Investment Report, the value of sustainable investment products, both bond and equity, reached more than $7 trillion, up 20 per cent on the previous year. Both investors and lenders rely on accurate and transparent information to make informed decisions, meet their own reporting requirements, and mitigate greenwashing risks. C-suite executives should be prepared to answer their questions. Regulatory requirements are becoming increasingly onerous across industries and regulatory bodies worldwide are pushing for uniformity and transparency in sustainability reporting.  While climate change has dominated the regulatory agenda in recent years, other environmental and social issues are also coming into focus, including human rights and labour practices within supply chains.  As new requirements are introduced globally – for example, IFRS sustainability disclosures –businesses operating across jurisdictions will need to think about interoperability to ensure consistent messaging and compliance.  By understanding who the users of the sustainability information are, and what they need to know, companies have scope to build trustworthy relationships that could benefit their market position, value and access to capital, while also ensuring compliance. Cultivating a winning mindset With the right mindset, companies complying with the CSRD could see real business benefits. The CSRD is a function of the European Union’s wider Green Deal, designed to revitalise and transform the European economy by decoupling economic growth from resource use to ensure long-term sustainability.  This will require a focus on innovation, new technology, sustainable products and services, responsible and sustainable business practices, employment and supply chains.  So, while companies prepare for their first year of CSRD reporting, C-suite executives should be thinking about potential opportunities and risks, emerging material sustainability issues, and how they can use sustainability reporting to improve their strategic resilience and business value.  David Connolly, FCA, is a Director in EY Financial Services Climate Change and Sustainability Services (CCaSS) Alba Boshnjaku is a Manager in EY Financial Services CCaSS, specialising in ESG reporting

Oct 09, 2024
Regulation

Daniel O’Donovan considers the urgent need to resolve interpretative questions that have emerged following the transposition of the Corporate Sustainability Reporting Directive into Irish law The European Union (Corporate Sustainability Reporting) Regulations 2024 (the Regulations), also known as S.I. No. 336 of 2024, transposes the Corporate Sustainability Reporting Directive (CSRD) into Irish law.  This legislation marks a significant step in aligning Ireland’s corporate reporting framework with the EU’s broader sustainability goals, as outlined in the European Green Deal and the EU Action Plan for Financing Sustainable Growth. The Regulations were signed into law during the summer and came into effect on 6 July 2024. Their principal objective is to integrate the new corporate sustainability reporting obligations with Ireland’s existing financial reporting framework.  It is estimated that about 1,000 Irish companies will fall into the scope of these Regulations. The Regulations will be phased in over the next few years and will generally apply to public interest entities and companies qualifying as large under section 280H of Companies Act 2014.  Companies regulated by the Central Bank of Ireland qualify as large under this section, for example. It is welcome to see the implementing legislation. Ireland is among the first countries in the European Union to have implemented the CSRD, thus giving businesses in Ireland as much time as possible in the circumstances to assess its impact.   The impacted entities have been assessing the obligations in the legislation since it came into effect.  As with any implementation of such a complex European directive, some interpretative questions in relation to the implementing legislation have emerged. What follows are some of the key interpretative questions that have emerged to date. The definition of “Applicable Company” Several questions arise from the definition of “applicable company” in Section 1586 of the Regulations.  The definition refers to a provision contained in Part 6 of Companies Act 2014 to define its boundaries and, in particular, draws on the definition of a large company in section 280H of the Companies Act 2014.  This appears to have unintended consequences because an ineligible entity is a large company.  For example, certain small and medium entities and micro-entities that fall within the definition of an ineligible entity may be included in year two of reporting pursuant to section 1587(1)(b), reporting on 2025 sustainability information, rather than being in year three of reporting pursuant to section 1587(1)(c), reporting on 2026 sustainability information.  Exemptions for certain subsidiaries Section 1594 of the Regulations provides an exemption for certain subsidiaries. However, the exemption appears to be more restrictive than the equivalent in the CSRD, because it appears to be limited to Irish subsidiaries of Irish holding companies and excludes Irish subsidiaries of EU holding companies. See first table below.  In addition, it appears that all subsidiaries that are themselves large public-interest entities (listed and non-listed entities) are precluded from taking the exemption – whereas the CSRD only excludes large subsidiaries listed on an EU-regulated market. Exemptions for certain holding companies that are subsidiaries Section 1598 of the Regulations provides an exemption for holding companies that are themselves subsidiaries, where: a higher parent undertaking prepares a directors’ report under Part 6; or  a non-EU higher parent provides a group report either in accordance with the sustainability standards or in a manner recognised as equivalent to them.  However, as “third country” in the Regulations is defined to exclude Member States, it appears that there is no exemption for holding companies that are subsidiaries of an EU parent. See second table below.  Further, this exemption appears to be restricted further than the CSRD, because all large public-interest entities are prohibited from availing of the exemption, whereas the CSRD only excludes large public-interest entities that are listed on an EU-regulated market. Transitional provisions for consolidated reporting The Regulations permits, in section 1607, a subsidiarity of a third country undertaking to report on a consolidated basis on behalf of a group until 2030 (artificial consolidation).  However, it appears that this provision only applies to financial years commencing on or after 1 January 2028 by virtue of its placement in Chapter 3 of the Regulations.  As such, companies that wish to avail of this provision may be unable to do so during a significant portion of the transitional period. Supporting sustainability ambitions The EU and Ireland’s shared ambition to lead in sustainability reporting, transitioning to a sustainable economy and economic model, it comes with an ambitious timeline.  For example, the period between the effective date of the Regulations and the end of the first period on which year one companies will report on sustainability, in accordance with the European Sustainability Reporting Standards, is just six months.  We believe that a stable and clear legal framework is essential for businesses to thrive in Ireland.  Ensuring that outstanding CSRD transposition matters are resolved promptly will help maintain Ireland’s strong reputation as an excellent place to do business.  It is in the public interest to provide companies with the clarity they need to comply with new laws effectively. We welcome The European Union (Corporate Sustainability Reporting)(No.2) Regulations 2024 (S.I. No. 498 of 2024) signed into law on 1 October. S.I. 498 of 2024 resolves some of the interpretative questions set out above, aligning: The exemption for subsidiaries that are themselves large public-interest entities with the CSRD, which only excludes large subsidiaries listed on an EU-regulated market from the exemption; The exemption for holding companies that are subsidiaries, with the CSRD, which only excludes large public-interest entities listed on an EU-regulated market from the exemption; and The commencement of the transitional provision regarding artificial consolidation with the CSRD, now available immediately. Significant questions remain to be resolved, however.  Accountants are committed to meeting the new sustainability reporting requirements, but we recognise that implementing the CSRD into Irish law is complex and that the necessary resources and expertise to prepare detailed and complex reports, and to obtain assurance on those reports, are still developing in the Irish market. By working together, we can ensure businesses have the support they need to meet these sustainability ambitions, aligning with the CSRD’s goals for 2024 and beyond. Time is running short. As the clock strikes the 11th hour, companies need to have clarity on the interpretative questions discussed in this article as a matter of urgency. Continued imminent engagement between the legislators and the legislates is critical to resolving these matters and ensuring our sustainability reporting ambitions are successfully achieved. Daniel O’Donovan is a Partner with KPMG and leads the firm’s Audit and Assurance Methodology Team

Oct 09, 2024
Feature Interview

IDA Chair Feargal O’Rourke, FCA, talks to Accountancy Ireland about the inward investment agency’s plans and priorities at a “critical juncture” in Ireland’s FDI journey Feargal O’Rourke, FCA, assumed the role of Chair of IDA Ireland in January 2024 at a significant time for the inward investment agency, which celebrates its 75th anniversary this year – and, he says, a “critical juncture” in Ireland’s foreign direct investment (FDI) journey. O’Rourke joined the board of IDA Ireland after stepping down as Managing Partner of PwC Ireland in October 2023 following a storied 37-year career with the firm. In his new role, working alongside IDA Ireland Chief Executive Michael Lohan, time is, he says, “of the essence.” “The one thing I am always paranoid about is complacency, and I think you really do need to have a paranoia about that,” O’Rourke tells Accountancy Ireland.  “Right now, I think Ireland has ‘amber lights’ on infrastructure and we need to put the foot down. We need to invest in more housing. We need to invest in the grid. We need to invest in offshore energy.  “My biggest concern is speed. There are plans in place, but I constantly ask myself, ‘Are we moving fast enough? Can we move faster?’ “I think there is a broad consensus emerging that infrastructure is moving up our list of priorities.  “I take the view that capital spend on infrastructure is an investment. It is not an outflow of money. Deferring a project is a cost. It is not a saving because we will have to do it at some point, and it may cost more then.” New five-year strategy The single biggest task for IDA Ireland as an organisation currently is finalising a new five-year strategy, which will run from 2025 to 2029, O’Rourke says.  “We are doing this against the backdrop of significant geopolitical uncertainty. There is a more muted pace of growth in the global economy and more active industrial policy from some competitor nations,” he says. “There is also the challenge of climate change and the opportunity of the green transition, companies globally grappling with the next step on their diverse digitalisation journeys and, of course, the revolution that is taking place in artificial intelligence.” Ireland’s ability to continue competing in this fast-changing world will be dependent on having the right set of enabling conditions in place”, O’Rourke says.  “As we face challenges in terms of our national competitiveness relating to energy costs and renewable energy provision, housing, infrastructure and utilities, countries around the world are vying to win the race for the next generation of FDI growth. “The opportunity cost of not addressing these issues in a timely manner – particularly sustainable energy supply – risks being sizeable,” he warns. Storied career in practice A native of Athlone, O’Rourke studied commerce and accounting at University College Dublin and qualified as a Chartered Accountant with PwC in 1989. He is also an Associate of the Irish Tax Institute and current Chair of the Institute of International and European Affairs, the Irish-based international think tank. “My father left school at 16, so he always placed a big emphasis on education and business,” O’Rourke says. “He thought I should qualify as a Chartered Accountant and the ‘Chartered’ bit was very important to him, because he felt it had a cachet. That was back in the eighties, and I think the qualification still holds a distinction today. “I remember sitting my final accounting exams thinking, ‘I wonder what this bit of paper will do for my life?’ “There is no doubt that having the Chartered Accountant qualification contributed so much to me living out my professional dreams in the years that followed. The status it brought with it is hugely important and I think the standing of the qualification is as strong today as it was when I qualified.” O’Rourke joined PwC in Dublin in 1986 and remained with the firm for 37 years, holding the position of Managing Partner for the last eight. “I joined what was then Price Waterhouse on 8 October 1986, with the intention of qualifying as a Chartered Accountant and then returning home to Athlone,” he recalls. “Thirty-seven years later – to the day – I retired from PwC having had a wonderfully fulfilling career that was beyond any expectations I had when I joined.” His experience with the firm instilled in O’Rourke the importance of strategic planning for long term success – and it is a lesson he has brought with him to IDA Ireland. “You can’t just think about an organisation as it exists today, and the current generation. You must ask yourself, ‘when I’m 20 and 30 years gone, will I have seeded the fields to ensure it continues to succeed long into the future?’” With Central Statistics Office figures released earlier this year predicting Ireland’s population could grow to over seven million by 2057, O’Rourke’s vision for IDA Ireland is equally long term. “In my role with IDA Ireland today, I am thinking ahead to 25 or 30 years from now and asking, ‘what will Ireland look like then?’ “We have got to play our part in advising the system today if we want to have the right industrial base in the years ahead, not just to continue to attract FDI but also to support indigenous businesses and wider society at a time of ongoing population growth. “I feel a responsibility, as do many others in the system, to say, ‘okay, how does this organisation contribute to ensuring that we will have a successful society in which there are plenty of jobs for people? Do we have the infrastructure we need – both societal and industrial – whether that be in terms of housing, energy supply, water or transport?’  “These are as much societal issues as they are business issues and IDA Ireland will play its part. Building capacity is crucial. Ireland is facing infrastructural capacity issues, and they are a priority for IDA Ireland, particularly over the next five to six years.” FDI and global tax developments Having been appointed as a Tax Partner in 1996 and Head of PwC’s Tax Practice in 2011, O’Rourke spent a significant portion of his career working in Foreign Direct Investment (FDI).  “I worked extensively – but not exclusively – with household names from the West Coast of the US. I was privileged to work with many of the companies that now rank among the largest FDI employers in the country,” he says. “I still have the memo in which my then Partner Tadhg O’Donoghue said, ‘I’m going to ask you to focus on a particular area of tax – FDI.’ That one line in a memo almost 40 years ago completely determined my career and my life thereafter.” O’Rourke saw the evolution of Ireland’s FDI landscape firsthand over that span of time. “Tax became central to Ireland’s FDI proposition, delivering a major competitive advantage for us back in the eighties and nineties. It has really played a central role in how Ireland has positioned itself to attract FDI,” he says. As Head of PwC’s Tax Practice, O’Rourke also collaborated extensively with companies, officials, governmental bodies and the Organisation for Economic Cooperation and Development on the Base erosion and profit shifting (BEPS) initiative introduced in 2013 to curb tax avoidance among multinationals operating across different jurisdictions. “Successive Irish Governments over the past 15 years have really got it right on our FDI-related tax policy and we are now seeing the benefits of this in terms of our corporate tax take,” he says.  “That contribution to the State coffers is being used to build hospitals and schools, but other countries in the post-BEPS era are moving fast on their own FDI-friendly tax strategies, and I think we need to move quickly as well and make sure we continue to be agile and responsive, looking around the world and asking, ‘what lessons can we learn here from what others are doing?’” “A world-class organisation” Just over 10 months into his role with IDA Ireland, O’Rourke’s pride in the organisation is palpable. “In sporting terms, IDA Ireland is like Limerick in hurling or Manchester City in football,” O’Rourke says. “We have a fantastic record of success, but once the season is over, we must do it all again. We can survive a year where we are not top of the pile, but we can’t afford to enter a period where we are living off past glories. “You wouldn’t say to the Limerick hurling team, ‘you need to ease off the training for a few years and let everyone else catch up,’ nor would you say to Manchester City, ‘you shouldn’t buy any good players for now.’ “I don’t think IDA Ireland as an organisation should ever say, ‘we are doing really well, we could pull back a bit’. Life doesn’t work like that. Michael Lohan, our Chief Executive, often says, ‘when you turn off the tap, there is no guarantee that, when you turn it back on again, water will come out.’” As it stands, O’Rourke sees IDA Ireland as a “world-class organisation.” “This is not just my own view,” he says. “Over the course of my 37 years in professional services, I was repeatedly told this by clients who had experience of being ‘courted’ by a variety of inward investment agencies from around the world. “Today, our IDA Ireland clients tell me time and again, ‘we feel welcome in Ireland; we feel supported’.” These IDA Ireland client companies employ 300,583 people directly, accounting for 11 percent of total employment in Ireland currently. They spend a combined €35.8 billion annually on payroll and Irish-sourced goods and services, and €15.5 billion in capital expenditure. In total, 248 investments were approved by IDA Ireland in 2023 and a further 131 in the first six months of this year, with the potential to create some 27,000 jobs. “While I expect the pipeline of projects to continue to be strong as we move through 2024, the challenges we face to stay at the forefront of attractive locations to invest in are significant,” O’Rourke says. “If we stand back, there is no doubt that FDI flows have slowed a bit compared to, say, four or five years ago.  “This is, in part, because we have probably already seen the high watermark in globalisation. In retrospect, I think that occurred somewhere towards the end of the last decade.  “The good news for Ireland is that we are continuing to win FDI projects of substance and the 300,000 FDI direct employment figure is a new plateau for us.  “For many years, the benchmark for direct employment was 200,000. Now, our focus is on keeping that figure above 300,000 as we look to build on the next FDI cycle.” Emerging opportunities As IDA Ireland looks to future FDI growth, its focus will be centred on emerging opportunities in the ongoing green and digital transitions reshaping the global economy, O’Rourke says. “We recognise the need to help the Irish operations of global firms transform to thrive in a world that is changing fast.  “We actively partner with client companies on investments in talent development, digitalisation, research and development, innovation and sustainability, including decarbonisation,” he says. “When I was Managing Partner at PwC and we were at our most profitable and successful, we decided we needed to invest heavily in digitisation.  “It wasn’t just an investment in technology, it was an investment in our culture. Even though there were no clouds on the horizon, we could see that, if we stayed still, we might have another few great years – but, really, we needed to invest in the technology to continue growing beyond that. “Our focus now at IDA Ireland is on helping our clients to invest in the areas they need to focus on to do the same – to prepare to continue succeeding in the future. This means supporting them on investment in digitalisation and sustainability.” Collectively, IDA Ireland client companies spend over €7 billion on in-house research, development and innovation (RD&I) annually.  IDA Ireland approved 25 sustainability projects last year, focused on carbon abatement and building Ireland’s green economy.  New RD&I projects won by the semi-state agency in 2023 came with associated client spend commitments of €1.4 billion.  “With the requisite enabling conditions in place at a national level, aligned to emerging FDI attractiveness factors – such as AI skills and renewable, reliable and affordable energy – I think we will be well-placed to capture new investment opportunities,” O’Rourke says. A particular focus is Ireland’s future capacity to generate renewable energy – specifically, offshore energy. “We have been very vocal about the importance and potential of offshore energy. If Ireland gets its offshore energy strategy right – both fixed and floating – we could be in a surplus energy position in 10 years’ time,” he says. “That could transform our capacity to attract energy-intensive multinationals from various industries, because we would potentially be in a situation where have no constraints in relation to our ability to supply green energy.” O’Rourke is, he says, a born optimist. “When it comes to our strategy at IDA Ireland over the next five years, I do genuinely and fully believe that our best years are ahead of us.”

Oct 08, 2024
Sustainability

Chartered Star 2024 winner Evan O’Donnell talks to Susan Rossney, Sustainability Advocacy Manager with Chartered Accountants Ireland, about the future of sustainability in the profession Evan O’Donnell was recently named Chartered Star 2024, an annual designation recognising outstanding work in support of the UN Sustainable Development Goals (SDGs).   Run in partnership with One Young World and Chartered Accountants Worldwide, the aim of the annual Chartered Star competition is to celebrate the difference-makers in the profession who are helping to combat the climate crisis by bringing real, positive change to their workplaces and communities. As Chartered Star 2024, O’Donnell will attend the One Young World Summit, representing Chartered Accountants Ireland and Chartered Accountants Worldwide, in Montreal, Canada, in September. Here, he talks to Susan Rossney about his interest in sustainability and social responsibility. Tell us about your decision to become a Chartered Accountant. What attracted you to the profession? I loved accounting in secondary school – that “yes” moment when you know your inputs are the same as your outputs! My mother was a mathematics teacher, and my father was a banker, so figures are certainly in my DNA.  I studied accounting at University College Cork, but it wasn’t until I attended a careers fair that I understood the versatility of a career in accounting and the many doors Chartered Accountancy can open.  Have you always been interested in sustainability?  I’ve been interested in social responsibility from the time I was 16 when I travelled to India and worked with street and slum children in Calcutta.  Since then, I’ve volunteered for a range of charities, including Trócaire, Mary’s Meals, HOPE, Cork Penny Dinners, Pieta, Irish Guide Dogs for the Blind, the Irish Cancer Society and Breakthrough Cancer Research.  My interest in sustainability started when I led a sustainable gardening project at college. Volunteers completed training certificates and visited local nursing homes to assist the elderly residents in planting flowers and growing vegetables. It showed me what was possible. Since then, I’ve looked for opportunities to do more and was delighted when I got the chance to host a sustainability networking event at the Apple headquarters in Cork when I was Co-Chairperson of Chartered Accountants Student Society Cork. What initially sparked your interest in becoming a Chartered Star? I heard about the Chartered Star competition during the first year of my training contract with PwC.  In 2020, I was fortunate to be part of a fantastic network, the Irish FinBiz Task Force, with 30 finance and business professionals across Ireland. It had been founded by two previous Chartered Stars and, as the years went on, more Chartered Stars emerged from the network. I was on the network’s SDG Awareness Team where Patrycja Jurkowska (2019 winner) provided us with great insight and knowledge on the topic.  I saw how the competition opened many doors for my colleagues, and I felt it was an opportunity to meet amazing ambassadors of sustainability, be part of a knowledge platform and share key learnings with my network.  I am very proud to be part of the Chartered Accountants Ireland Chartered Star family! What do you see as the greatest sustainability-related impacts, risks and opportunities for Ireland?  Ireland faces significant sustainability challenges, but also has many opportunities. Climate change is causing more extreme weather, threatening infrastructure and agriculture. Biodiversity loss, due to urbanisation and intensive farming, is reducing ecosystem services like pollination and water purification. Resource depletion, including water scarcity and soil degradation, is harming agriculture and water supplies. Economic risks include the vulnerability of agriculture to climate variability and potential negative impacts on tourism from environmental degradation.  Dependence on fossil fuels poses a risk as global policies shift towards renewables.  Social risks involve health issues from heatwaves and pollution, as well as displacement due to coastal erosion.  Regulatory risks stem from the high costs of complying with EU environmental regulations. However, through all this, there are significant opportunities.  Renewable energy development, particularly wind and marine energy, can reduce fossil fuel dependence and create jobs.  Sustainable agriculture, including organic farming and agroforestry, can boost biodiversity and resilience.  Green technology and innovation, such as circular economy practices and smart grids, can enhance sustainability and efficiency.  By implementing robust policies through the Climate Action Plan and participating in the EU Green Deal, Ireland can lead in global sustainability efforts, attract investment and build a resilient future. Where do you see opportunities for young professional Chartered Accountants in sustainability? Chartered Accountants have many opportunities to help meet sustainability challenges. We can leverage our skills in financial analysis and reporting to enhance transparency in sustainability metrics, ensuring that companies’ environmental and social impacts are accurately reported and assessed.  We can specialise in sustainability assurance, auditing environmental, social and governance (ESG) reports to provide stakeholders with credible information. We can advise businesses on integrating sustainable practices into their operations and strategies and identify cost-saving measures through energy efficiency, waste reduction and sustainable supply chain management.  We can also influence policy by working with regulatory bodies to shape sustainability standards and frameworks.  Additionally, we can drive innovation by supporting the development of green finance products, such as green bonds and sustainable investment funds.  By combining our financial expertise with a commitment to sustainability, young professional Chartered Accountants can play a crucial role in fostering sustainable economic growth and addressing global environmental challenges. Can you tell us about your sustainability role with PwC? I always had a passion for sustainability, and I wanted to incorporate this into my day-to-day life at PwC.  During my time with PwC Cork, I worked in the Assurance Department specialising in high-technology and pharmaceutical company audits along with pensions and grant engagements.  In 2019, while on placement, I was on the Corporate Social Responsibility Committee, and worked under the food pillar of PwC Ireland’s Sustainability Council, focusing on food waste reduction initiatives primarily in PwC offices around Ireland.  I also became an SDG Champion with PwC by completing ‘The Sustainable Life School’ course. This course inspired me to apply for, and later become, a Climate Ambassador earlier this year, where I have equipped myself with education about climate. What does being named Chartered Star 2024 mean to you?  Being the Chartered Star, an ambassador of Chartered Accountants, means representing my profession and country on a global stage.  Having been selected to attend the One Young World Summit in Montreal this September, I am deeply honoured and grateful to have this opportunity.  The Summit brings together young leaders from around the world to discuss and address critical global issues, including sustainability, innovation and social impact. I am committed to making both my profession and my country proud by actively participating in the Summit, sharing insights and learning from global peers. This unique experience will enable me to bring valuable knowledge and innovative ideas back to my colleagues, fostering growth and development within our community.  I look forward to leveraging this platform to highlight the pivotal role of Chartered Accountants in driving sustainable and ethical business practices, ultimately contributing to a better future for all.

Aug 02, 2024
Feature Interview

Lindsay Russell, a Partner with EY Northern Ireland, talks to Liz Riley about the evolution of her career, professional inspiration and constant thirst for knowledge, variety and challenge in her working life  My interest in accountancy was first sparked as a teenager. During school holidays, while doing my GCSEs and A Levels, my parents encouraged me to gain valuable work experience, which led to a job with WHR Accountants in Armagh under the tutelage of Ken Harrison, one of the founding partners.  WHR had a fantastic team of about 15 who took me under their wing and got me started with the basics of accounting.  After writing out many cheque journals, cash books and extended trial balances manually, I learned that “balancing” numbers gave me a great sense of satisfaction. Something clicked and I realised that accountancy was a career I wanted to pursue.  This summer job continued for four years and greatly influenced my decision to study accountancy at university in Scotland. After graduating, I was fortunate to secure a position with EY Northern Ireland in 2004 and completed my professional exams in 2006. It has been a real privilege to become a Chartered Accountant, specifically an auditor in practice.  As auditors, we are afforded an insight into so many successful organisations across sectors and industries and are in a unique position to support and work with talented individuals through complex and interesting transactions and business initiatives.   The trust we provide as accountants, auditors and business advisors is something that is often underplayed, but is vital to the capital markets and the success of organisations, and I still consider myself lucky to say I play a part in that.  Almost 20 years later in this profession, and I have not looked back. Championing women In those 20 years, I have seen significant changes in the gender profile of our profession, particularly in the last decade.  I am pleased to have been part of this change personally, but what I am really proud of is being able to champion and sponsor female talent within our profession to ensure that others can share in the experiences and opportunities I was afforded early in my career.  As a female partner and leader, I am acutely aware of the responsibility I have in championing other women in our profession. In the long term, my goal is that we create a profession, industry and world in which such an active focus on gender diversity is no longer essential because we have created an environment where opportunities are afforded equally to all people and are fulfilled based on the right person for the role, regardless of gender or any other characteristics.  However, I know we still have some way to travel to make this a reality. I fully appreciate and understand that we must create the right environment for all our talented people to flourish.  For example, organisations must take parental responsibilities and flexible working into consideration. They must do all they can to provide a workplace in which working mothers know they can have a sustainable and rewarding career. I would also highlight that, while gender diversity is important to me as a female leader, I believe that diversity of thought, background and experience is the basis for excellence in any team.  It is not only the experiences of diverse groups, but also their willingness to be open to the views and experiences of others, that creates the best and highest-performing teams, delivering the most for clients and helping to build a better working environment for all.  Embracing education in your career I believe professional development is achieved via a combination of formal learning and on-the-job development.  Formal learning is very important, particularly in our changing regulatory environment, and I find it useful to check my own Continuing Professional Development (CPD) monthly and quarterly to ensure I am on track for compliance.  However, I also find on-the-job learning critical in putting all the theory we learn into practice, and developing the wider skill set that is so valuable and necessary for the accountants of today and tomorrow.  We are living in a world in which technology and the way we work is continuing to evolve, particularly with the advent of generative artificial intelligence. My advice is to embrace change and learn as much as you can from those around you.  Lastly, I would say it’s important to remember that the accountancy skill set remains as valuable today as it ever was and will remain a key part of the workplaces and businesses of tomorrow.  The fluidity of work-life balance There is no magic answer to work-life balance. For me, work-life balance is something that is fluid and needs to be reassessed and flexed regularly and continuously.  I learned an important lesson early in my career: your work-life balance will have ebbs and flows depending on what is going on in both your work and home life.  It is important to be flexible at times and, at others, to know and stand by your “non-negotiables.”  I recognise that at certain times I will have busier and more demanding times in the office, and that it is important to stay focused for the benefit of my teams and my clients.  Equally as important is the need to have planned downtime. I am protective of this downtime when it arrives so I can make sure my family and friends get a fully committed version of me. Everyone will have different styles and different ways of working. My advice is to ensure you understand your own style. Know your peak times, take time out and ensure you communicate clearly with those around you, both personally and professionally, about your work-life balance needs.  Stepping outside your comfort zone When I look back over my career, I can see that my biggest development has come about when I have embraced new opportunities (or challenges) and have been pushed out of my comfort zone.  It is very easy to stay comfortable, but trying new things, seeking out new learning opportunities and working with different people and teams is what accelerates our development, and ultimately, our career prospects.  My career advice is to say “yes” and give it your all. You will always be amazed at where it can take you! It is sometimes the tasks or roles that you think you didn’t want – or didn’t think you would be good at – that are the ones that help you progress and move on to your next role.  I also like to remind people that variety and new opportunities can come from staying in the same job or profession and do not always require drastic change.  I have been with EY for almost 20 years now, which feels increasingly rare in a world where new opportunities are everywhere. I am proof that you can have a varied career with many different roles and opportunities all with the same employer and within the same profession. My final piece of advice is to be honest and true to yourself. Someone once told me to hold a mirror up and be honest with myself about my strengths and weaknesses and what I ultimately want from my career.  I realised early on that I get easily bored and need variety in my work. I know that I am competitive, hard-working and need to feel I am adding value. I recognise that this combination of attributes means I often work too hard.  However, it also means that I am continuously rewarded with challenging opportunities for development, which keeps me motivated and stimulated.  Everyone in our profession must figure out what works for them and remember that their career path, regardless of direction, should be unique to them. Your career doesn’t have to replicate what anyone else before you has done, or what those around you are doing today.

Aug 02, 2024
Feature Interview

Rory Mulvaney talks us through a multi-faceted career that has taken him from law to accountancy and on to entrepreneurship as the founder of his own corporate and compliance service firm  Belfast-born Rory Mulvaney, FCA, is founder and Managing Director of VANTRU, an independent provider of corporate and compliance services with a presence in Ireland, Britain and the Netherlands. Established in 2017 under the name Mulvaney, the company underwent a rebrand in 2023 to become VANTRU and employs a 20-strong team comprising accounting, tax and legal professionals. Here, Mulvaney tells Accountancy Ireland about the evolution of his career and path to entrepreneurship. Tell us a bit about yourself. Why you decided to become a Chartered Accountant? I was born in Belfast and my family then moved to Newry where I grew up and went to Abbey Grammar School. I now live in Rostrevor with my wife, Seana and our four children, Jack, Rory, Olivia and Charlie.   Starting out, I studied law at Queen’s University Belfast and, from there, undertook a Diploma in Legal Practice at the University of Law before joining Bank of Ireland and then McCartan Turkington & Breen in Belfast. At that stage, I decided that a career as a Chartered Accountant would give me the knowledge needed to one day become a business leader and I went on to train with John MacMahon & Co in Northern Ireland and undertook further training as a Tax Consultant with KPMG in Dublin. Looking back now, are you glad you made the decision to qualify as a Chartered Accountant?  Yes, absolutely! I wouldn’t say I had a career plan starting out, but I’m naturally ambitious and driven to succeed, so I always had a desire to do well and to do something meaningful with my life.  When I first decided to qualify as a Chartered Accountant, I could see that it would give me the freedom to work anywhere in the world for any type of organisation and possibly, one day, for myself.  After qualifying, I moved into industry with Bruce Shaw, now known as Linesight, a global cost management consultancy firm, where I was Group International Tax Manager for five years. What was it that prompted you to set up your own business? My first industry role with Bruce Shaw was inspirational. Working with a successful Irish business that was growing at pace and expanding overseas gave me confidence and a wealth of experience. In 2017, I decided to set up as a Corporate Service Provider (CSP) and established Mulvaney as part of Trustmoore, a global corporate services firm which had worked with Bruce Shaw on corporate services outside Ireland.  Trustmoore viewed Ireland and the UK as strategic jurisdictions for business growth. We established a two-year co-operation agreement after I pitched to the founders in Amsterdam in 2016. This was a pivotal moment in my career and a valuable opportunity to learn about the inner workings of the business. I was able to travel to global offices, attend internal academies and spend lots of time with Trustmoore’s founder and owners. Come March 2019, I established Mulvaney Corporate Services. I wanted to launch Northern Ireland’s first locally established, independently owned corporate services provider and to lead the market by providing a unique set of corporate and compliance services to foreign organisations across key jurisdictions. Today, we remain the first and only company of our kind in Northern Ireland. That makes me very proud. What prompted you to rebrand the business to VANTRU in 2023? We mainly service clients with foreign direct investment needs, both inward and outward, for trading and investment purposes, as well as clients in the capital markets space for whom Ireland is a relevant and attractive jurisdiction. As the company has grown, we have had opportunities to work with some high-profile global organisations and last year, seven years after our initial launch, I felt that the time was right to establish an identity and brand that would enable us to compete at the highest levels. What do you regard as your proudest achievements as a business owner? I am extremely proud of the fantastic team of qualified professionals who have chosen to work with VANTRU. It is also a massive achievement for me personally that VANTRU is recognised by many highly respected law firms, auditors, tax advisors and asset managers. We are in the very fortunate position of having financial institutions and CSP firms in other jurisdictions refer work on to us.  What are some of the most important lessons you have learned over the years?  Someone once told me: “people buy from people.” As a business owner, surrounding yourself with great people who can bring something unique to the table is key. In my wider career, I have had the privilege to work for and alongside people who have taught me valuable lessons. John MacMahon is a well-known Chartered Accountant from County Armagh who has built a fantastic all-island practice and property empire. John was always generous with his time, giving me plenty of valuable advice when I was starting out in my own career. Brendan O’Mara, Derry Scully and Gerard Campbell of Bruce Shaw also stand out. A natural entrepreneur, Brendan was the Founding Partner of Bruce Shaw in Dublin over 40 years ago.  Derry was the Group Chair during my time with the firm. He was both technically gifted and able to maintain a lot of key client relationships globally, including with some of the world’s biggest companies. I worked very closely with Gerry, as CEO, and learned a great deal from him also.  In my own journey, I have found myself adopting a lot of their habits, especially Gerry’s, with his little black books and knack for “getting things done”.  In the world of corporate services, I have learned a lot from two Dutchmen – Trustmoore founder Steven Melkman, who is an inspirational and charismatic leader, and Jan Jaap Kuipers, the former CEO of the BK Group.  Who do you most admire right now in business or public life? In business, it has to be Phil Knight, founder and former CEO of Nike Inc. I recently read his memoir, “Shoe Dog,” and was very inspired by his story. I found myself relating to his experiences, especially in the early days. In sport, despite being a Manchester United supporter, it has to be Pep Guardiola. I also read his biography, “Another Way of Winning,” by Guillem Balagué. Guardiola is so much more than just a football coach.  How has the role of the accountant evolved since you first joined the profession? The role of the accountant has been impacted by ongoing advances in technology, including the introduction of new and improved accounting software and cloud-based tools, which automate routine tasks such as bank reconciliations.  We are now also starting to see the impact of artificial intelligence, which will remove the need to carry out routine tasks for finance departments and accounting teams, such as data entry, reconciliations and generating reports.  The daily work patterns of accountants have also changed dramatically. At VANTRU, all of our employees have adopted hybrid working with some team members working remotely on a full-time basis. We recently hired a new team member who is based in Germany! There are many positives to this way of working for our business. We are moving towards a fully cloud-based business model, which will mean that we can hire people from anywhere in the world.   What are your plans for VANTRU in 2024 and beyond?  We have fulfilled most of the goals outlined in our 2019 business plan and we are in the process of agreeing our strategic plan for the next five years with the help of John-George Willis, our Non-Executive Director.   These plans will centre around improving our brand awareness, IT systems, processes and people. We will also consider growth by acquisition if the right opportunity arises.  Put simply, I want our company to continue to grow. I am very involved in developing new business opportunities and, every day, we talk to prospective clients from all over the world.  I am really looking forward to what we can achieve over the next decade.

Aug 02, 2024
Personal Development

As the new Chair of Chartered Accountants Ireland Ulster Society, Gillian Sadlier wants to demonstrate the many benefits a career in the profession can offer potential new entrants For Gillian Sadlier, the recently elected Chair of the Chartered Accountants Ireland Ulster Society, attracting and retaining accountancy talent will be a key priority in the months ahead.  A Senior Manager with Bank of Ireland UK, Sadlier was elected as Chair of Chartered Accountants Ireland Ulster Society at its 117th AGM held in Belfast on June 7. Taking office, Sadlier committed to advancing measures to address the skills shortage that is impacting the accountancy profession and wider economy in Northern Ireland.    It is a cause close to Sadlier’s heart, having trained as a Chartered Accountant with Coopers and Lybrand (now PwC) in the early nineties after graduating from Queen’s University Belfast with an economics degree. “I am immensely proud to be a Chartered Accountant and I feel hugely honoured and privileged to now hold the position of Chair of Chartered Accountants Ireland Ulster Society,” Sadlier says. “My Dad always told me that accountancy was a solid career choice and maths was my first love at school, largely thanks to an inspirational teacher. I later found myself embarking on my Chartered journey when I started applying for jobs in the November of my final year of university and went on to train with Coopers and Lybrand in Belfast.” Having trained on the small business team at Coopers and Lybrand, Sadlier moved into audit and took the opportunity to relocate to the firm’s Singapore office on a three-month secondment. Already, she could see how building a career as a Chartered Accountant could open doors and enable mobility and opportunity on a global level. “The Chartered Accountancy designation offers a wide range of career benefits – that’s very clear to me. Most of my career has been spent working in roles that have required me to hold the qualification, or an equivalent,” she says. “Though I haven’t strayed too far from home, several of my peer group took advantage of the mobility offered by the qualification to progress their careers overseas in places like Australia, the US and the Cayman Islands.” In her own early career, Sadlier chose to leave Coopers and Lybrand to join ASM Chartered Accountants in 1996. After nine years with the firm and having risen to Director level working across accountancy, audit and corporate finance, she moved to Invest NI, Northern Ireland’s economic development agency. “I really enjoyed being involved in commercial due diligence work, which allowed me to get right ‘under the bonnet’ of a business, so when the opportunity arose shortly after the birth of my second child to join Invest NI as a Corporate Finance Executive, I took it,” she says.  Sadlier spent seven years with Invest NI, carrying out commercial appraisals across a wide range of businesses. “I was privileged to work with some of the largest and most successful indigenous businesses and inward investments in Northern Ireland, something I don’t think I would have experienced working elsewhere,” she says.   “In 2012, I joined Bank of Ireland as part of their ‘challenged’ team, spending two years working closely with a portfolio of business customers with stressed borrowing, before moving into the lending team in 2014.”   Sadlier moved to her current role as a Senior Manager at Bank of Ireland’s UK Chief Executive’s Office in 2021. “Based on my career experience alone, it’s clear that the skills required for, and developed through, the Chartered Accountancy qualification are highly transferable and can open doors to a very broad range of careers right across the public, private and third sectors.” It is this message that Sadlier is intent on imparting to younger generations during her term as Chair of Chartered Accountants Ireland Ulster Society.  Against the backdrop of skills shortages in Northern Ireland, she will focus on the need to attract and retain accountancy talent, so that the profession can continue to support economic growth and development.  “Northern Ireland has so much economic potential, with unique access to Great Britain and EU markets, strong transport links with our neighbours, an educated workforce and a stable business environment,” she says. “However, the skills shortage affecting so many companies is threatening our ability to realise this economic potential.”  Recent research carried out for Chartered Accountants Ireland Ulster Society found that three-in-five (61%) of member businesses and organisations are currently experiencing skill shortages, compared to 62 percent in 2022 and 48 percent pre-COVID.  Seventy-five percent of the Chartered Accountants Ireland Ulster Society members surveyed reported difficulty finding the right people for jobs in Northern Ireland. The same percentage said they expect the shortfall in skilled labour to negatively impact Northern Ireland’s economic performance in the year ahead. “My focus in the coming months will be on promoting Chartered Accountancy as a profession. I want to show potential new entrants to the profession just how varied and full of opportunity a career in accountancy can be and to demonstrate the reality that being a Chartered Accountant genuinely allows you to become a ‘difference maker,’” Sadlier says. This work will include engaging with second and third level students and working closely with trainees and young professionals to support them in the early stages of their careers.   “Our qualification is widely regarded as an indicator of a broad range of skills and attributes, including professionalism, analytical ability, technical capability and commercial acumen,” Sadlier says.  “Taken together with the mobility of the qualification, opportunities to develop personal and professional skills, pursue related specialisms and network effectively, the qualification really can open doors to endless career options.”

Aug 02, 2024
Innovation

AI is revolutionising accountancy by automating routine tasks, enhancing data analysis and providing valuable insights for strategic decision-making. Conor Flanagan explains how Artificial intelligence (AI) has emerged as a transformative force across various industries and accountancy is no exception. As AI technologies advance, they are reshaping the accounting landscape by enhancing efficiency, accuracy and strategic decision-making.  The emergence of AI can be traced back to the 1950s when pioneers like Alan Turing began exploring the concept of machine intelligence.  Turing’s famous “Turing Test” proposed that a machine could be considered intelligent if it could engage in conversation with a human without being distinguishable from a human interlocutor. Since the 1950s, AI has continued to evolve through different phases, including the notable period in the 1970s known as the “AI Winter” when there was a significant fall-off in funding and interest in the technology.  Since then, and coinciding with advances in computational power coupled with the development of machine learning algorithms, interest in AI has been reignited, with breakthroughs in natural language processing, computer vision and data analytics paving the way for more practical applications.  This progress, although impressive, has been somewhat dwarfed by the advent of Generative AI in recent years, with companies like OpenAI and its now infamous ChatGPT platform sparking widespread interest in the technology and its potential.  Generative AI has given rise to exciting new systems now capable of performing complex tasks, such as image recognition, language translation and content creation. And for the sceptics among us – no, this article was not written by ChatGPT. The Microsoft experience AI is revolutionising accountancy by automating routine tasks, enhancing data analysis and providing valuable insights for strategic decision-making. At the recent Chartered Accountant Technology Conference, held in January 2024, Daragh Hennelly, Senior Finance Director with Microsoft in Ireland, shared the story of how the company is unlocking business value through AI-enabled outcomes in finance. Microsoft began its AI journey over seven years ago, leveraging traditional AI to create models that could recognise patterns in data and use this to predict and act on potential outcomes, driving significant efficiency gains. Some examples include: Task automation and content creation Microsoft is using AI to automate tasks such as setting up purchase orders and logging expense reports. Streamlining processes and reducing risks Invoice approvals: AI assigns real-time risk scores to automate more than one million low-risk invoices and cuts the manual effort required for the rest by 50 percent, resulting in 125,000 hours of time saved for finance team members who can now use that time to focus on more strategic tasks. Journal entry anomaly detection: Machine learning algorithms have been built to review thousands of journal entries to detect anomalies with the aim of reducing reporting risks or misstatements.  Enhancing contract review efficiency: AI reads and scores thousands of contracts, reducing the time needed for manual review by 50 percent and allowing finance professionals to focus on high-risk contracts. The recurring theme in all these examples is how AI can be deployed to either automate manual tasks previously carried out by Microsoft’s finance team or unearth and present anomalies requiring additional review.  This demonstrates how AI can create efficiencies in finance functions and processes, but as accountants, we still need to be professionally trained to make decisions based on a smaller and more focused sample base.Over the past 18 months, in particular, the opportunity to transform business and finance processes has accelerated with the roll-out of Generative AI and its ability to create original content – such as text, images, video, audio or software code – in response to user prompts and requests. Today, Microsoft is adopting Generative AI to further enhance processes and unlock business value. This opportunity can be categorised across four main areas: Summarise information. Generate content. Recommend actions. Simplify tasks. 1. Summarise information Recap meeting transcripts to capture key points and assign actions. Distil collection agents’ call notes into actionable plans. Flag key terms in contracts related to payments, pricing and discounts. Synthesise complex workflow documents to highlight handoffs and commonalities. Summarise earnings scripts to identify significant trends and highlights. 2. Generate content Draft financial close decks and write analytical comments and insights. Write contractual language based on simple notes. Draft collection calls and follow-up emails in different languages with payment plan details. Write initial internal audit reports and investor relations earnings call scripts. Produce market sentiment analysis using transcripts from corporate earnings calls and central banking authorities. 3. Recommend actions Analyse financial close variances and recommend areas of the business to investigate variance drivers. Define collection strategy based on customer payment history. Evaluate audit workpapers and resolution disputes against audit controls.  Guide users in setting up purchase orders, invoices, expenses and payments. Recommend policy adherence within workflows. 4. Simplify tasks Accelerate financing requests by automating credit checks and policy reviews. Review sourcing contracts to ensure compliance and reduce human error.  Automate Sarbanes-Oxley Act (SOX) operational controls and summarise insights. Prioritise collection emails, tag disputes and identify resolution owners. Streamline tax and customs procedures by identifying compliance obligations from different global jurisdictions. Central to the success of this transformation of finance at Microsoft is a strong culture of encouraging and rewarding employees to leverage new technologies to transform finance processes. As Amy Hood, Microsoft’s Executive Vice President and Chief Financial Officer, puts it, “by adopting innovative technologies, finance will strengthen its business leadership through compliance, accuracy and efficiency.”   Microsoft is at the forefront of the Generative AI wave, advancing ideas of what is possible and investing in AI solutions such as CoPilot. CoPilot is integrated into Microsoft’s applications (Word, Excel, PowerPoint, Outlook and Teams), working alongside the user with the aim of helping them to work more creatively and efficiently.  It is also enhancing business application products such as Power Platform, Business Central and Dynamics Sales, facilitating advanced data analytics and the creation of complex workflows using natural language that would previously have required the intervention of a developer.  AI’s other early adopters Outside Microsoft, there are other examples of organisations that have successfully implemented AI in their accounting processes, demonstrating the technology’s practical benefits in our field.  HSBC The multinational banking and financial services company has implemented AI to enhance its fraud detection capabilities. HSBC’s AI system analyses transaction data in real-time, identifying suspicious activities and flagging potential fraud cases. This has resulted in a substantial reduction in fraudulent transactions and improved security for customers. Xero The cloud-based accounting software provider uses AI to automate bookkeeping and financial reporting tasks for small and medium-sized businesses. Xero’s AI-driven platform can categorise transactions, reconcile bank statements and generate financial reports, saving time and reducing the risk of errors for business owners. AI and ethical risk While AI offers numerous benefits to the accounting profession, it also raises some ethical concerns. These issues must be carefully considered to ensure the responsible use of AI in accountancy. Data privacy and security AI systems rely on vast amounts of data to function effectively. This raises concerns about data privacy and security, as sensitive financial information may be at risk of unauthorised access or misuse. Organisations must implement robust data protection measures to safeguard against data breaches and ensure compliance with privacy regulations. Bias and fairness AI algorithms are only as unbiased as the data they are trained on. If the training data contains biases, the AI system may produce biased or unfair outcomes. This is particularly concerning in areas such as fraud detection and financial forecasting, where biased algorithms could lead to discriminatory practices. It is essential to ensure that AI systems are trained on diverse and representative datasets to minimise bias and promote fairness. Transparency and accountability AI systems often operate as “black boxes,” making it difficult to understand how they arrive at their decisions. This lack of transparency can be problematic in the context of financial reporting and auditing, where accountability is crucial. Organisations must strive to develop explainable AI models that provide clear insights into their decision-making processes. AI and the work of the accountant The automation of routine accounting tasks through AI has raised concerns about job displacement and the future of the accounting profession.  While AI can handle repetitive and mundane tasks, it cannot replace the strategic thinking and judgment accountants bring to the table.  That said, accountants may need to adapt to new roles and develop new skills to remain relevant in an AI-driven landscape. Like electricity, the roll-out of AI will have a major impact on every industry and many professions, but only those who embrace it will learn to harness its power. Accountants must be prepared to adapt to the changing landscape by acquiring new skills and knowledge. Continuous learning and professional development will be essential for accountants to thrive in an AI-driven world. This includes gaining proficiency in data analytics, machine learning and other emerging technologies. Rather than viewing AI as a threat, accountants should embrace it as a valuable tool that can augment their capabilities. By leveraging AI to handle routine tasks, accountants can focus on higher-value activities, such as strategic planning, financial analysis and advisory services. AI is undeniably transforming the field of accountancy, offering numerous benefits in terms of efficiency, accuracy and strategic decision-making.  From automated data entry and fraud detection to financial forecasting and auditing, AI is revolutionising traditional accounting processes. Its widespread adoption also raises important ethical questions, however. To fully realise the potential of AI while addressing this challenge, organisations must prioritise ethical considerations while also investing in reskilling and upskilling their people and fostering collaboration between humans and AI.  By doing so, the accounting profession can harness the power of AI to drive innovation and deliver greater value to clients and stakeholders. If you have found this article interesting, join us for the next Chartered Accountants Ireland Technology Conference on Friday 24 January 2025. Conor Flanagan is ERP Lead with Storm Technology and a member of the Technology Committee of Chartered Accountants Ireland

Aug 02, 2024
Innovation

Numra co-founder David Kearney, FCA, sees a world of potential in the advent of AI for accountants who can now expect to see their work move up the value chain David Kearney vividly recalls the release of the first version of ChatGPT, the artificial intelligence (AI) chatbot, by US tech firm OpenAI in November 2022. A Chartered Accountant, entrepreneur and self-confessed “techie,” Kearney had sold Peblo, his first start-up, just months earlier and was on the look-out for ideas for a new venture with global potential. “That first ChatGPT release was really the first time I’d come across the concept and capabilities of generative AI (GenAI) and large language models (LLMs),” Kearney says. “It was all I could think about at the time. I remember spending a full week of evenings staying up late just playing with ChatGPT, getting to know it, reading all about GenAI and LLMs and learning about how it all works. I was fascinated.” Almost immediately, based on his own experience as a Chartered Accountant, Kearney could see a potential commercial application for the technology in the professional field he was most familiar with. “There are literally dozens of use cases out there for GenAI. The one I zeroed in on was accountancy,” he explains.  Kearney established Numra in August 2023 and, alongside his co-founder Conor Digan, began to develop an AI-powered automation platform for finance teams.  Numra closed a €1.5 million seed funding round in December led by Elkstone Partners, the early-stage venture capital firm, and released the first version of “Mary,” its AI assistant for finance teams. Numra’s AI platform is aimed primarily at mid-sized companies with in-house finance teams processing high-volume transactions. “One of the biggest things Mary can help these teams with is workflow automation. She excels at repetitive tasks, such as invoice processing, three-way matching, payments and reconciliations,” Kearney explains. “If we take accounts payable as an example, Mary can identify an invoice from an email, extract the required invoice data and enter it into the accounting system. She can then send the invoice to whomever needs to approve it and, from there, she can execute the payment.” Kearney says Mary has been designed to behave like a “real-life team member.” She can be trained up on existing company processes and can interact with communication platforms already in use, such as email, Microsoft Teams and Slack.  “You onboard Mary, just like a normal team member. You train her on your internal processes, you give her access to your systems and then get her to start helping you with your workload,” he says. “She can manage complex tasks like answering vendor queries and performing detailed cost allocations, improving over time through user feedback. “That’s really the beauty of GenAI. It has this capability to ingest and process vast amounts of unstructured data and take on tasks that were previously too complex to automate.” The result, Kearney says, is that the role of the Chartered Accountant will be elevated with a new focus on higher-value activities that require strategic thinking and creativity. “There has been quite a lot of fear mongering around how AI is going to impact jobs in the future, including jobs in the accounting profession,” he says. “That’s kind of understandable, but AI actually represents more of an opportunity than a risk for accountants and other professions. I think it should be embraced.” Kearney began his own career as a Chartered Accountant as an undergraduate studying commerce at UCD. He undertook a one-year placement with PwC and went on to train in the firm’s audit department. “The Chartered Accountant qualification had been on my radar for a long time and I specialised in accounting in my final year at college to get the CAP1 exemption,” he explains. “I always had a very strong interest in business and entrepreneurship and I felt that the Chartered Accountant qualification would be a really good launchpad for my career. It’s very dynamic and it gives you a lot of career options.”  After qualifying, Kearney moved to southeastern Australia in 2018 where he spent three-and-a-half years in Melbourne working for large-scale organisations like PZ Cussons, RACV and National Australia Bank.  “I worked in finance departments, mainly in financial planning and analysis. I had an amazing time and built up some great experience in commercial roles, but it was always in the back of my mind that I wanted to do something for myself,” he says. After returning to Ireland with his partner Grace in the early stages of the COVID-19 pandemic, Kearney hit upon the idea for Peblo, his first venture.  Peblo was a financing platform for content creators and influencers. Kearney established the start-up in late 2020 with co-founder Jake Browne and sold Peblo less than two years later to Wayflyer, the Irish-owned e-commerce funding platform. “Peblo was a bit of a crazy idea. It was an invoice factoring company for influencers and their talent agencies.  We were basically buying sponsorship invoices from influencers, so they could get paid sooner for sponsored work for brands. It took off. It grew legs really quickly and we sold in early 2022.” Peblo’s rapid growth and early acquisition was like “lightning in a bottle,” Kearney says now. “It’s rare enough that a start-up would scale that quickly and attract interest from a buyer,” he says. “It was good timing, a good value proposition. Sometimes things just work out.” Peblo may have taken off at lightning speed, but Kearney’s interest in technology goes right back to childhood. “One of my earliest memories is of my grandad’s Apple Macintosh computer. That was back in the early nineties. I was glued to the thing every time we visited and he ended up gifting it to me before I had even started primary school.  “I must have been about four and I still remember the excitement. Since then, I’ve been a bit of an early adopter of new technology. I love trying new things. Technology has always been a big part of my life.” Now, with Numra’s seed funding round secured, Kearney has ambitious plans for the fledgling venture. “We’ll use the funding to accelerate customer acquisition in the US and to invest further in product development,” he says. “Our main target market will be the finance teams in mid-sized organisations. These teams often have too much work and too few heads. They are the most likely to recognise, and benefit from, this kind of AI-enabled workflow automation from the get-go.” For Chartered Accountants fearful that the advent of such automated financial platforms could upend the profession, Kearney says the critical role the profession plays across all sectors will not be replaced. Rather, it will evolve. “The data entry, the document processing and the ‘number-crunching’ is going to go away. AI can do all of that better than we can,” he says. “AI is very good at doing a lot of the time-consuming work people don’t tend to enjoy and that is a positive for Chartered Accountants who can instead start to focus on more valuable strategic work. “Ultimately, I think we can expect to see the day-to-day work of Chartered Accountants move away from ‘the doing’ and more towards orchestrating and reviewing.”

Aug 02, 2024
Innovation

Artificial intelligence is ushering in a new era of tech-enabled efficiency in many sectors, but its widespread adoption also throws up ethical dilemmas. Dr Susan McKeever digs into the details Dr. Susan McKeever is Head of Discipline for Data Science and Artificial Intelligence (AI) at Technological University Dublin’s School of Computer Science. Here, McKeever talks to Accountancy Ireland about the benefits AI is bringing to sectors reliant on data and how regulators, Chartered Accountants and other professions must ensure its ethical adoption as it continues to evolve at a rapid pace. How is the emergence of AI impacting the world of accounting and other professions and sectors? Any profession, function or industry reliant on large amounts of data and repetitive data-related tasks traditionally carried out by people will be impacted by the advent of AI, if they are not being impacted already. These repetitive tasks might involve data entry, data assessment and the generation of reports and correspondence based on this data. AI is very “friendly” to taking over these kinds of tasks. It is really good at getting to grips with a lot of data, interpreting and analysing this data and generating knowledge from it.  The medical sector is one example of an AI-friendly sector, as is the legal sector and insurance. Accountancy is, in a sense, data-driven, but uses a very specific kind of data that needs to be assessed and interpreted, so it is quite specialist.  You can train AI to do simple, repetitive, data-related tasks in accounting. It won’t get tired and it won’t forget what it has already learned.  You can continue to re-train AI as the world moves along, or as the situation changes, and it will continue to build on its existing knowledge and become more and more intelligent. People are excited about the emergence of AI, but also fearful – is this fear well-founded? One of the fears surrounding AI is the general concept that it will “take over” in certain fields. I do believe that the widespread uptake of AI across industries will displace certain kinds of repetitive jobs further down the value chain – the kind of roles that can easily be automated.  The silver lining – and I do truly believe this – is that, as a result, we will see an uptick in higher-value roles. If you take accountancy, we will likely see a shift away from the very granular, detail-driven examination of individual transactions, for example.  Instead, with AI gathering and analysing this data, the accountant will be able to focus on higher-value work, spotting interesting patterns or anomalies of immediate value to their organisation. My advice to accountants, as with all professions, is to go with it. AI is here to stay.  ChatGPT really seeded the concept of AI in the public imagination. It is just one of the larger language models out there, but it just happens to be the one that has really landed in the public consciousness. You have all sorts of people already using ChatGPT to write letters, draft CVs and so on. Change is inevitable. The widespread use of AI is inevitable. My advice to all professionals is to adapt and prepare. Re-train or upskill if you need to. Try not to resist it too much.  What else should we be concerned about when it comes to the widespread adoption of AI? There is a fear out there that AI will start to make decisions we, as humans, used to own.  What is really important here – and this needs to be enshrined in legislation – is that, at all times, humans must be responsible for any decisions made.  So, while AI may be by your side, acting as an “intelligent” support to you in your work as an accountant, you – the human – must always be responsible for any decisions made.  Once you move away from this principle, you enter problematic territory. AI must be accountable to humans. People must maintain ownership of any and all decisions made, always. We train AI based on existing data and data sets – does this carry its own risk? In AI, machine learning models are trained using previous examples. This subset of AI uses algorithms to interpret large amounts of data. It learns from experience. So, if you use a machine learning model to train an AI algorithm to recognise suspicious transactions, for example, you might give it a dataset of 1,000 transactions in which 100 are suspicious. The model will start to figure out the pattern of what makes a transaction suspicious where a human might not have been able to decipher the “rules” underpinning these suspicious transactions.  If you train your AI algorithm based on 1,000 transactions, it might get a certain level of detail. If you up this training to a larger dataset comprising 100,000 examples, your AI algorithm will start to get really good at recognising the patterns in suspicious transactions.  One issue with this kind of machine learning is bias. If you are training your AI algorithm on what has gone before, you are also embedding biases that have existed over time. You are enshrining the world as it is, or was, into the trained examples you use. You have to be very careful that you do this well.  Already, we have seen how the use of AI-driven CV evaluation systems has brought bias to the hiring process based on race, gender, age and other factors. It is something we need to be very aware of. Are we doing enough to regulate and legislate for the safe and ethical use of AI now and in the future? The effective regulation of AI is something I feel very strongly about. This technology, like so many others, is already shaping our society and will continue to do so in the future. Our legislation is lagging behind the rapid evolution and deployment of AI in Ireland and across the world. We are behind the wave, and this is a problem. In the European Union, the Digital Service Act came into full effect in February and the Artificial Intelligence Act is also coming down the line. Its aim is to ensure that AI systems placed on the European market, and used in the EU, are safe and respect fundamental rights and EU values. These regulations are welcome, but their introduction is too slow. It is not keeping pace with AI. Our legislators are falling behind, and this has to be addressed. Otherwise, we could be looking at a society that is framed by technology instead of the democratic and legislative code that should prevail. This is not to paint an entirely negative picture. AI can be used for so much good. There is so much to be positive about in this extraordinary technology. It is up to us to make sure that it is used for good, however, and that the necessary controls are in place to make sure that we continue to have the kind of society we want. To do this, the legislation needs to get in front of the technology, and this is something we need to prioritise today. 

Aug 02, 2024

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