Diversity

VOLUME 49 

NUMBER 2 

APRIL 2017 

Diversity 

Is it really good 

for business? 

A conversation with 

Comptroller & Auditor 

General, Seamus McCarthy 

» PAGE 20 

How accountants can add 

value at all stages of the 

innovation process 

» PAGE 70

Here to help 

you grow 

Ronan Colleran, FCA 

FCA 

CEO Azon Recruitment Group 

Group 

“As a qualified Chartered Accountant, I have observed the milestones that thousands of 

“As “As a of 

ACAs a qualified achieve Chartered in their professional Accountant, careers I have and observed I am privileged the milestones support them that thousands in doing so. of 

ACAs achieve in in their professional careers and I am privileged to support them in doing so. 

Whether at the newly-qualified, middle management, or executive level, it is vital for ACAs 

Whether to seek at out 

at the the 

the newly-qualified, best career advice. middle management, or executive level, it it is is vital for for ACAs 

to to seek seek out out the the best best career advice. 

Similarly for employers, we lend our expertise to provide valuable advice on overall hiring 

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organisations 

organisations 

deserve 

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for 

for 

the 

the 

investment 

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making.” 

Nabil Ed Rossiter, McNaughton, Associate Business Director Leader Accounting & Finance 

Azon team 

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APRIL 2017

Comment 

3 

President’s comment 

April, in ancient Rome, was a month held 

sacred for the goddess Venus. It was also 

considered the “opening” of spring, a time 

growth and rebirth, a time for flowering and 

creativity. It seems appropriate, therefore, that this 

edition of Accountancy Ireland has a particular focus 

on the issue of diversity and its positive influence 

on effective corporate governance, innovation and 

building successful organisations. 

We are a leading voice on business issues, 

including ethics and governance. If we are to make 

this real and urgent, diversity in both the boardroom 

and at senior executive levels in business is of vital 

importance. In helping to lead the way, Chartered 

Accountants Ireland has formed a Diversity 

Committee reporting directly to Council. This 

initiative will, I believe, be transformative for our 

own governance. 

All of the studies show that diversity helps an 

organisation. For example, the Financial Reporting 

Council (FRC) has stated that “diversity in board 

composition is an important driver of a board’s 

effectiveness, creating a breadth of perspective 

among directors, and breaking down a tendency 

towards ‘group think’.” But much more than this, it 

is good for business. Our customers are not all the 

same, they don’t all think the same, so how can we 

be successful in business if all of our board members 

and employees are identikit models of each other? 

There are other studies that indicate links 

between diversity and resilience. Still more have 

asked if more diversity in boardrooms might have 

prevented the financial crisis. Now, it is possible to 

have too high expectations, but clearly any diverse 

board would by definition have to have performed 

better than many boards did in the lead-up to the 

financial crisis. 

The Diversity Committee has chosen first to 

address the area of gender diversity, and we have 

committed to specific targets to represent women 

and to develop female talent. Its task includes the 

challenge to work out what additional support 

Chartered Accountants Ireland can provide for its 

members to help facilitate stronger representation by 

women in senior leadership roles. 

I accept that there are other aspects to diversity, 

but let’s be honest with ourselves. If we can’t crack 

the nut as regards gender equality and representation 

where the population is split 50/50, we have little 

hope elsewhere. So, practically, what are we doing? 

build female representation towards achieving 

the proportion of women in our overall 

membership (currently 40%). This is not just 

a nice statistic – it sends the message to any 

woman considering getting involved that they 

will not be alone; and 

• Our new intake of students has had a 50/50 

gender split for some years now. However, 

progression rates for women towards the more 

senior roles remains slow. We aim to encourage 

and facilitate greater progression, and by simply 

calling out that we recognise it as an issue for 

our profession, we start dealing with it. 

As President, I encourage every female member 

to actively consider getting involved, whether in 

our committees or by putting themselves forward 

for election to Council. Of course, the challenge 

of ensuring diversity goes beyond a commitment 

to better representation of women in our own 

governance structure. But, it is a good place to start. 

The more representation we have, the stronger our 

voice will be for women in business more generally. 

To take a recent meme, my voice as a white male does 

not cut enough ice in this debate. However, I can set 

a tone, get things moving and call on the support of 

my fellow white males. It is a fortunate case where 

self-interest and the common good coincide. 

Members should be aware of ongoing initiatives 

from the Diversity Committee over the next few 

years, and should make their own voices heard. 

On a separate note, I would like to commend our 

Annual Conference 2017 on the theme of ‘Disruption’ 

to members. It takes place on 12 May at the Radisson 

Blu, Galway and will focus on the developments, 

technologies and trends that can be disruptive or can 

fuel innovation within our businesses and society. 

Finally, this is my last comment piece as President. 

I have thoroughly enjoyed my year representing 

you. I hope I have left things just a little better than 

I found them, and I hope I have helped to encourage 

some thought and debate on the issues facing us as a 

profession and as a society. I would like to thank all of 

you for your support over the year and in particular, 

our committees, volunteers, and staff. 

It is through your dedication and professionalism 

that Chartered Accountants continue to be the 

premier Irish business professionals, respected 

around the globe. 

• Female speakers will make up a greater 

proportion (42%) of presenters at our Annual 

Conference; 

• Also at the annual conference, there will be a 

Networking Lunch to focus attention on the role 

of women in business; 

• 33% of Council is now female and we continue to 

Liam Lynch 

President 

www.accountancyireland.ie

4 

Contents 

In this issue 

20 

46 

70 

24 

98 

Interview 

20 Serving the public good 

Spotlight 

24 Diversity... is it good for business, really? 

Financial Reporting 

46 UK & Irish GAAP to get easier before it gets harder? 

Innovation 

70 The strategy of innovation 

Member Profile 

98 A new orbit 

ACCOUNTANCY IRELAND 

APRIL 2017

Contents 

5 

Spotlight 

30 Pay gap, or promotions gap? 

34 Unlocking women’s route to the top 

37 The road to inclusion 

41 Thoughts on diversity... 

Technical 

42 The audit of the future 

50 Disruption and restructuring trends 

54 Prepare for an audit quality review 

56 The reality of a Revenue audit 

58 Self-employed: paying their way? 

60 VAT matters 

78 

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Careers 

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6 

News 

News in brief 

Cork Society hosts Daffodil Day breakfast 

Pictured (from left) at the annual Cork Society Daffodil Day breakfast in the Clayton Hotel in Cork are: 

Kyran Johnson, Janssen Supply Chain Ireland; Kevin Nyhan, Chartered Accountants Cork Society; 

Dr Robert O’Connor, Irish Cancer Society; and Cllr Des Cahill, Lord Mayor of Cork. 

Post-Brexit GDPR opportunities for 

Ireland-based multinationals – PwC 

The new EU General Data Protection Regulation (GDPR) 

will come into force in May 2018 and will have significant 

implications for Irish businesses in terms of data privacy 

and the protection of an individual’s data. It introduces 

widespread changes to current regulation in Ireland and 

across all EU countries. Importantly, for international 

businesses, if a company makes its data strategy decisions 

in one EU member state, it is only obliged to report to that 

Data Protection Commissioner. In a post-Brexit world, 

multinationals based in Ireland only need to deal with 

one Data Commissioner in English as opposed to dealing 

with different jurisdictions and the associated language 

complexities. PwC hosted a GDPR breakfast briefing 

recently, which was attended by over 250 Irish senior 

business leaders. Pictured (left) at the briefing are (from 

left): Denis Kelleher, Senior Legal Counsel, Central Bank of 

Ireland; Pat Moran, PwC Cyber Leader; and Helen Dixon, 

Data Protection Commissioner for Ireland. 


APRIL 2017

News 

7 

Enhancing audit 

quality anchors twoyear 

IAASB work plan 

The International Auditing and 

Assurance Standards Board (IAASB) 

has released its work plan for 2017–2018 

following a public consultation with 

stakeholders. The continuing relevance 

of the board’s strategic objectives was 

also confirmed with the IAASB’s release 

of a Supplement to its Strategy for 

2015–2019: Fulfilling Our Public Interest 

Mandate in an Evolving World. 

The work plan is guided by the three 

underlying strategic objectives set in 

the five-year strategy: a continued focus 

on international standards on auditing 

(ISAs) as the basis for high-quality audits; 

the importance of the IAASB’s standards 

for other services to address emerging 

needs of stakeholders; and the board’s 

intention to strengthen collaboration 

with others to address public interest 

matters relevant to its work. 

“The IAASB’s strategic objectives 

contribute to enhancing audit quality. 

The intent is for the audit standards and 

guidance being developed to further 

enhance that quality and to uphold the 

trust placed in audits and auditors,” 

noted Prof. Arnold Schilder, IAASB 

Chairman. 

EY sponsors Lions Tour 2017 

Rugby legend and EY ambassador, 

Brian O’Driscoll, and sports 

broadcaster, Evanne Ní Chuilinn, 

attended a showcase event led 

by EY’s Mike Kerr recently to mark 

its principal sponsorship of the 

British & Irish Lions Tour 2017. As 

part of the sponsorship, EY has 

developed the official Lions app 

for their Tour of New Zealand. The 

app provides an interactive digital 

experience for Lions fans who can 

select their fantasy squad and 

compare picks with their friends 

as well as former rugby greats 

such as Sir Ian McGeechan, Phil 

Vickery and Maggie Alphonsi. The 

app combines in-depth data and 

statistics on player performances 

drawn from every rugby match 

over the past two seasons, with 

each game showcasing over 150 

performance statistics collected on 

player performance. 

Brexit brings 

with it uncertainties for 

company secretaries, 

such as UK directors no 

longer being suitable for 

European Economic Area 

director requirements. 

Eoin Caulfield, Partner in William 

Fry’s Insurance & Reinsurance 

Department, speaking at a recent 

event entitled ‘Brexit – What Next?’ 

VC funding to global FinTechs reaches record high 

Venture capital funding to FinTech 

companies reached a record $13.6 billion 

in 2016 compared to $12.7 billion in 2015, 

with 840 deals recorded, according to the 

latest KPMG report on global funding to 

FinTech companies. Anna Scally, Partner 

and FinTech lead at KPMG in Ireland, 

said: “After 2015’s record-setting $46.7 

billion in overall investment in FinTech, 

2016 experienced a decline in the market, 

with a 47.2% slide in FinTech investment. 

However, this follows exceptional levels of 

M&A activity in 2014 and 2015, which were 

characterised by a number of significant 

outlier transactions.” 

$13.6 billion 

VC funding to FinTech 

companies in 2016. 


8 

News 

Entrepreneurial minds: lessons in entrepreneurship 

KPMG partner, Olivia Lynch, pictured with (from left) Sahar 

Hashemi, author and founder of Coffee Republic; Shaun Murphy, 

Managing Partner at KPMG; and Paula Fitzsimons, Going for 

Growth, at KPMG’s ‘The Entrepreneurial Mindset’ event. 

Pictured (from left) are: Karl McLaughlin, John Marks, John Glennon and Mairead Lyng. 

John Marks & Co. 

merge with RSM Ireland 

RSM Ireland has announced a merger 

with John Marks & Co., an accountancy 

practice based in Booterstown, Co. 

Dublin. The news of the merger comes 

less than one year after RSM Ireland 

joined the RSM network. “Following a 

successful brand launch in May 2016, 

we have used the past year to embed 

and strengthen the RSM brand in the 

Irish market, focusing on a unified 

vision to be the provider of choice to 

middle market businesses globally,” 

said John Glennon, Managing Partner 

at RSM Ireland. “The RSM brand 

continues to grow globally and we will 

continue to look for non-organic growth 

opportunities here in Ireland.” John 

Marks, who founded John Marks & Co. 

in 1987, joins RSM Ireland as Partner. 


APRIL 2017

Est 1887 

News 

9 

UCD and PwC promote talent development 

University College Dublin (UCD) and 

PwC Ireland have agreed a seven-year 

strategic partnership. The agreement 

includes three key areas where the 

organisations will work together: 

education and talent development; 

thought leadership and innovation; 

and corporate social responsibility. The 

arrangement involves collaboration on 

the support of leadership development 

of high-performance, high-potential 

talent; development of internship 

programmes, mentoring and academic 

programmes as well as joint research 

and promoting equality in education 

and wellness. Pictured (from left) at the 

launch are: Feargal O’Rourke, Managing 

Partner, PwC; Susan Kilty, PwC People 

Partner; and Professor Andrew J. 

Deeks, UCD President. 

Mazars tax partner 

joins Brexit delegation 

Pictured at the EY Women’s Network Event at Fallon & Byrne with Gina London (centre), former CNN anchor 

and now with Fuzion, are EY’s Amanda Murphy and Julie Fenton. Senior business leaders discussed how the 

Trump administration will impact on or accelerate the path of leadership for women. 

Mazars tax partner, Noel Cunningham, 

was one of 16 members from a range of 

leading companies in Ireland to visit 

Brussels recently as part of a delegation 

from the European Chamber of Ireland 

to discuss Brexit-related issues. The 

specific purpose of this two-day trip 

was to ensure that key EU decisionmakers 

understood the challenges 

Brexit will present for businesses 

operating in Ireland. 

The delegation met with, among 

others, the German EU Commissioner, 

Günther Oettinger; Irish EU 

Commissioner, Phil Hogan; Irish and 

German MEPs; and Irish and German 

permanent representatives. 

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10 

News 

35% 

Dissatisfaction with 

focus on cybersecurity 

Just 35% of Irish audit committee 

members are satisfied with their level of 

focus on managing cybersecurity risks, 

according to KPMG’s latest Global Audit 

Committee Pulse Survey. At a global 

level, 25% are satisfied, despite the issue 

being identified as a key challenge 

by committee members. While 

audit committees in general express 

confidence in financial reporting 

and audit quality, they rank legal/ 

regulatory compliance, cybersecurity 

risk, company controls around risk, tone 

at the top and organisational culture as 

their top challenges. 

The 2017 Global Audit Committee Pulse 

Survey can be downloaded at KPMG.ie. 

Deloitte Ireland has acquired Red 

Planet, a Dublin-based innovation 

consultancy. The firm focuses on 

driving corporate revenue growth 

through structured access to start-up 

innovations. According to Brendan 

Jennings, Managing Partner at Deloitte 

Ireland, Red Planet is a clear fit for the 

Big 4 firm. “We have to disrupt the way 

we work and deliver value,” he said. 

“Red Planet’s outside-in, start-up-led 

approach brings a different way of 

working for our clients. Furthermore, 

it expands our global network of 

Karl Aherne (left) and 

Brendan Jennings 

Deloitte acquires Red Planet 

experts, partners and start-ups to help 

our clients understand and harness 

disruptive technologies to create new 

and accelerated growth.” Karl Aherne, 

CEO of Red Planet, added: “Companies 

need to hardwire innovation into 

every part of their business, at every 

level, which will enable 10 times rather 

than 10% growth.” The deal follows 

the launch of Deloitte Ireland’s new 

Blockchain Hub, its recent acquisition 

of System Dynamics and ongoing 

investment in robotics, artificial 

intelligence and analytics. 

Lancaster draws the 

crowds at Leinster 

Society Rugby Luncheon 

Stuart Lancaster was the main speaker 

at the Chartered Accountants Leinster 

Society’s 2017 Rugby Luncheon. The 

event was a huge success, raising €12,000 

for the IRFU Charitable Trust. Pictured 

at the event are (from left): Gillian Duffy, 

Manager, District Societies at Chartered 

Accountants Ireland, Shane McAleer, 

Chairman, Chartered Accountants 

Leinster Society, and Stuart Lancaster, 

former England Rugby Head Coach and 

now Senior Coach at Leinster Rugby. 


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12 

Annual Dinner 

Chartered Accountants 

gather for annual dinner 

Over 700 guests attended the Chartered Accountants 

Ireland Annual Dinner which was addressed by James 

Rubin, policy analyst and media advisor to Hillary 

Clinton’s recent presidential campaign. 

Liam Lynch, President, Chartered Accountants 

Ireland and James Rubin, keynote speaker. 

Nadine Wattes, Irene O’Keeffe, Teresa Harrington, Mary Cleary and Anna Brennan. 

Dr Hilary Lindsay, President, Institute of Chartered Accountants in England and Wales; Brian Roberts, 

President, Chartered Institute of Public Finance and Accountancy; and Kim Roberts. 

Gerry Mallon, CEO, Ulster Bank and Aidan Lambe, 

Director of Professional Standards, Chartered 

Accountants Ireland. 


APRIL 2017

Annual Dinner 

13 

Gillian Doherty, Chief Operations Officer, 

Accounting Technicians Ireland and Nano Brennan, 

President of CPA Ireland. 

Liam Gahan, Rachel Tubridy, Kevin Foley and Saoirse O’Brien. 

Josephine Feehily, The Policing Authority; Eugene McCague, Master of Ceremonies; Vincent Sheridan, Past 

President, Chartered Accountants Ireland; Robert Watt, Secretary General, Department of Public Expenditure & 

Reform; Dr Margaret Downes, Past President, Chartered Accountants Ireland. 

Aoife Kelly-Desmond, Matheson (left) and Lindsay 

Andrews, Deloitte. 

Niall Cody, Chairman, Revenue Commissioners and 

Sean Whelan, Economics Correspondent, RTÉ. 

Nano Brennan, President, CPA Ireland; Brian McEnery, Association of Chartered Certified Accountants; 

Eamonn Siggins, CPA Ireland; Peter Fanning, CEO, Chartered Institute of Taxation. 


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Comment 

15 

Brian Keegan An uncharitable act? 

Challenging a charity isn’t necessarily a 

bad thing to do. In the world in which we 

now live, we all need them to get it right. 

The other day, I was greeted on the 

street by a man with a collection 

box who wanted to know if I 

wanted to support his charity. I told 

him I didn’t. I told him I didn’t like their 

public policy platform or the way they 

articulated it. If I did decide to give 

money to the Developing World, it would 

go elsewhere. 

It’s not good karma to challenge a 

charity. The charities sector fills in the 

gaps that can’t be reached by private 

benevolence or government policy. It 

highlights injustices and inequities, and 

good people respond with their money 

and, even more importantly, with their 

time. Most people are good. If you haven’t 

done any charitable work ever, or can’t 

think of anyone you know who has, you 

are very much in the minority. 

Pot shots 

A colossal amount of charity work is 

carried out by Chartered Accountants, 

both privately and within organisations. 

The Institute itself promotes and 

sponsors Chartered Accountants Support 

and Chartered Accountants Voluntary 

Advice. You can be pro-business and be 

pro-charity. 

So why do some charities feel they 

have to take pot shots at business? For 

example, Oxfam has produced spurious 

and inaccurate information regarding 

how Ireland conducts itself in the 

international tax arena, portraying the 

country as one of the worst tax havens to 

the disadvantage of developing nations. 

This particular item of false news was 

released in early December of last year 

and damages the reputation of the 

country. A cynic might say it was done 

to generate interest in the charity in the 

run-up to the Christmas period. This 

kind of nonsense needs to be called out 

for what it is. 

I don’t need to repeat here what 

Oxfam contended, nor indeed repeat 

the rebuttal by an apparently irritated 

Minister for Finance. The incident 

itself is, however, worth repeating as a 

reminder of how fragile people’s goodwill 

can be and how critically important it is 

for individual charities, and indeed the 

sector as a whole, to maintain a good 

image. It doesn’t help anyone’s cause 

when there are media reports of charities 

existing seemingly for the benefit of 

their management, nor when there are 

newspaper reports of tax avoidance 

structures involving the use of charities 

being put in place. 

The key to a good reputation 

It seems to me that the accountancy 

profession can play a critical role in the 

governance of the charities sector. Good 

governance is key to the reputation of 

this sector, before recourse ever has to 

be made to the statutory authorities. 

The regulatory framework for charities 

has a fragile look about it because in 

Ireland, the availability of charities tax 

relief is still a decision for the Office of 

the Revenue Commissioners and not a 

decision for the Charities Regulator. 

Back to 1891... 

Tax law doesn’t define what a charity is. 

For that, we have to go back to a court 

case in 1891 involving a Mr Pemsel. 

Pemsel was the treasurer of a Scottish 

missionary organisation which not only 

looked to convert heathen nations (their 

expression, not mine), but also looked 

for an exemption from income tax on 

some of the bequests it received. We still 

categorise charitable activities based on 

that century-old decision – the relief of 

poverty, the advancement of education, 

the advancement of religion and the 

ultimate catch-all – “all other charitable 

purposes beneficial to the community”. 

The regulatory framework for charities 

has a fragile look about it because in Ireland, the 

availability of charities tax relief is still a decision for 

the Office of the Revenue Commissioners and not a 

decision for the Charities Regulator. 

While this definition may well 

require modernisation, the obligation 

on charities to be transparent in their 

activities and accurate in their claims is 

as valid now as it was in Pemsel’s time. 

When it works well, and it usually does, 

the charity sector is a highly efficient 

way of delivering services. Few State, 

semi-State or commercial organisations 

would have such motivated personnel 

working to deliver the kinds of services 

many charities offer, often entirely in a 

voluntary capacity. 

On reflection, maybe it is not the worst 

thing to challenge a charity when it gets 

it wrong. We all need them to get it right. 

BRIAN KEEGAN 

Brian Keegan is Director of Public Policy 

and Taxation at Chartered Accountants 

Ireland. 


16 

Comment 

Paul Henry A view from the North 

Northern Ireland needs leadership, and 

who better to look to for inspiration than 

the New Zealand All Blacks. 

I 

recently attended a presentation 

by James Kerr to promote his book, 

Legacy, which addresses the lessons 

the All Blacks can teach us about 

leadership – a read I would recommend. 

It struck me that, in business, we strive 

to be successful and seek sustainable 

results and the All Blacks are a great 

example of this in the sporting arena. 

There are many lessons in Legacy 

that we in business can recognise, 

and many of our political parties in 

Northern Ireland would benefit from 

also: the opportunity and obligation 

to make a mark, make a difference, 

and add to the legacy for all people. 

The All Blacks eloquently sum this 

up by their drive to leave the ‘jersey’ 

in a better place. 

Whatever we are involved in, we 

should always seek to move things 

forward and leave them in a better 

place. 

What can we learn from the 

best rugby team in the world? 

The All Blacks have an impressive 

record of results, playing for 120 years 

with a current win ratio of nearly 80%. 

Ireland won a superb victory in Chicago 

recently, a feat that was 111 years in 

the making. Clearly, the All Blacks are 

doing something right, so what can we 

learn? 

They have a saying in New 

Zealand: “Gather the good food and 

cast away the rubbish”. The leader’s 

role is therefore to bring together the 

best, create the environment, and 

focus on culture and environment to 

bring out the right behaviours in her 

or his people. It is the environment 

that leads to great results. 

The All Blacks’ core values are 

humility, excellence and respect. 

Humility means, as an individual, 

you do not think you are special and 

above doing the small job; don’t get 

The leader’s role is to bring together 

the best, create the environment, and focus on 

culture and environment to bring out the right 

behaviours. It is the environment that leads to 

great results. 

ahead of yourself. It is an antidote to 

entitlement. 

Excellence means being the best 

in the world and wining every game. 

Respect, meanwhile, is self-respect, 

respect for your industry and 

community, and ultimately for the 

All Black jersey. 

Start at the beginning 

In business, a sense of humility is key 

when managing and motivating staff. 

Our training as Chartered Accountants 

gives us a sense of humility. 

That said, leaving university and 

believing I was capable of preparing 

the full accounts and the international 

tax computation for a major global 

organisation was not the most humble 

moment in my career. 

When given a shoe-box of bank 

statements and vouchers and the task 

of preparing accounts, I openly admit 

that I had no idea how to start. I soon 

progressed, however, to learn how to 

replenish photocopiers with paper and 

eventually, how to prepare accounts 

from incomplete records. 

Political application 

A sense of humility could go a long 

way across the political spectrum in 

Northern Ireland. I respect those who 

put themselves forward to improve 

the well-being for all citizens – it is not 

an easy task for politicians, and the 

media spotlight makes it all the more 

challenging. 

In Northern Ireland, we need 

our politicians to reaffirm their 

purpose, as set out in the Programme 

for Government, and help deliver 

improved well-being for all citizens. 

With Brexit looming, there are 

opportunities and many challenges, 

and a mature and active local 

administration is essential to get the 

best for Northern Ireland. 

The business community is willing 

to do its part by driving economic 

growth, and it desires a stable and 

progressive political environment. 

Small steps will eventually lead to 

a breakthrough, so if we can do 100 

things 1% better, it is much easier 

than trying to do one thing 100% 

better. 

We could do worse than look to 

those in the southern hemisphere 

and take a few lessons from the 

All Blacks. 

PAUL HENRY 

Paul Henry FCA is a Director at 

Osborne King and a member of Council 

at Chartered Accountants Ireland. 


APRIL 2017

Comment 

17 

Write it down Des Peelo 

From setting clear objectives to noting 

nasty remarks, there are a few simple ways 

to gain the upper hand in negotiations. 

Negotiations take many forms: 

many are simple, while others 

are complex or acrimonious. 

Negotiations can be defined as the 

dialogue between interested parties 

as to the terms necessary to achieve 

an outcome that is acceptable to both 

parties in a particular circumstance. 

They are not about winning or losing. 

Some simple advice: write it down. 

This wise advice was given to me by 

Ms Mella Carroll, a High Court judge, 

now deceased. Years of listening in 

court to conflicting accounts of the 

same event or circumstance have been 

distilled into that simple statement. 

In the writer’s experience, even 

with legal advisors on board, the 

outcome of negotiations is often 

concluded by understandings 

or incomplete or poorly drafted 

notes, correspondences and legal 

documentation. Hence the advice 

of Ms Mella Carroll. At the time of 

writing, there were six court cases 

reported in one week in The Irish 

Times concerning disputes that were 

being queried as to completeness and/ 

or accuracy: these cases must have 

originated from negotiations. There 

were likely many other disputes not 

reported or mediated privately. 

It is not unusual to find – in the 

relief of achieving an outcome at all, 

particularly in difficult circumstances 

– that the relevant paperwork is 

incomplete, or what initially seemed 

to be minor issues have become 

understandings. These may be 

subsequently disputed, sometimes to 

the extent of trying to have the whole 

event set aside because one party does 

not like the outcome. 

Clear objectives 

Successful negotiations start with 

clear objectives. These might be 

aspirational, but any dithering or 

“wait until we hear what the other 

side say” frustrates everybody in 

negotiations and can even cause a 

break-down. Write your objectives 

down and consider the arguments or 

evidence available to support those 

objectives. Exaggerated demands for 

money, if relevant, are rarely helpful. 

Do not be too agitated in advance as to 

what the other side might say; putting 

your case forward is your primary 

concern. 

Matters can easily go wrong in 

negotiations due to the stresses and 

strains involved. Egos too can get in 

the way. Some years ago in London, 

a merchant banker demonstrated 

to me how to keep negotiations 

going and stop them sliding into 

deal-break mode. His method simply 

requires a plain sheet of paper. When 

a blockage or difficulty arises that 

seems impassable, he draws a box on 

the page and writes a few words in it 

describing the nature of the blockage 

or difficulty. He then announces that 

the problem is “boxed” and that, later 

in the negotiations, they can come 

back and open the box. 

There are usually several such 

boxes in negotiations but if the 

negotiations can be kept open and in 

the spirit of keeping matters moving 

along, the blockage or difficulty is 

often more easily addressed later in 

the proceedings. 

Now, back to the paperwork. 

Where possible, try to focus the 

negotiations on your contention 

or proposal. This may be done by 

presenting to the meeting a written 

proposal, a particular definition or 

clause, a calculation, and so on. When 

something is presented in writing, 

everybody looks at it. This focuses 

discussions to your advantage; 

unless, of course, the opposition 

does the same. In contrast, a verbal 

statement during negotiations may 

not be understood or may be not 

fully heeded, as people are normally 

thinking about what they are going to 

say next. 

When some aspect is agreed, 

as negotiations go on, it is useful 

to ask for an adjournment so that 

what was agreed is drafted in 

writing. Alternatively, somebody 

present may be asked to step aside 

to complete a draft. This avoids later 

misunderstandings or omissions in 

whatever final document emerges 

from the negotiations. Barristers are 

particularly adept in this regard in 

settlement negotiations. 

Be patient 

Patience is a virtue, as it often takes 

at least three meetings to negotiate 

an agreement. Do not leave a meeting 

without agreeing with the opposition, 

preferably in writing, as to what has 

been achieved. Parties not used to 

negotiations often become repetitive 

in relation to aspects already 

discussed. Certainly, it is common 

negotiation practice that “nothing 

is agreed until all is agreed” but this 

does not stop interim agreements. 

Lastly, if one of the opposition 

makes a threat or a nasty insinuation, 

visibly write it down as verbatim as 

possible, repeat it out loud and then 

say nothing. This is usually unnerving 

for the person who made the threat. 

DES PEELO 

Des Peelo FCA is author of ‘The Valuation 

of Businesses and Shares’, published by 

Chartered Accountants Ireland. 


18 

Comment 

Cormac Lucey The key to growth 

How do you grow a company’s value? 

While it might be hard to do, it 

certainly isn’t complicated. 

What financial factors cause 

a company’s share price 

to rise? This is a profound 

question that may elicit several 

different answers. But finance theory 

concludes that the key to value 

growth is that a company should 

generate a return on invested capital 

(ROIC) in excess of its cost of capital. 

ROIC is simply the after-tax version 

of return on capital employed (ROCE). 

It is calculated using the following 

formula: ROIC = EBIT x (1 – t) / (debt + 

equity). 

Above the line we show operating 

profit, or EBIT, less tax. Below the 

line, we measure the total amount 

of return-seeking capital financing 

the firm. ROIC is, in my opinion, the 

key measure of how well a company 

is rewarding those who fund it. It 

is an after-tax measure, so it can 

legitimately be compared to cost 

of capital (which is also an aftertax 

measure). It is the relationship 

between a firm’s ROIC and its cost of 

capital that determines whether its 

value grows or not. 

Suppose a firm invests €10 million 

in a project with a cost of capital (or 

minimum expected return required to 

compensate investors for risk) of 8%. 

That means we expect annual returns 

of at least €800,000. But suppose the 

project generates annual returns of 

€1.6 million (i.e. ROIC = 16%) and that 

returns are expected to continue at 

similar levels into the future. 

Question: what is the maximum 

value that an outside investor with 

a cost of capital of 8% could put on 

the project? Answer: €20 million, as 

€20 million x 8% = €1.6 million, which 

the project is generating in annual 

returns. The implication is that 

generating an ROIC that equals twice 

the project’s cost of capital has led to a 

doubling in the value of the project. 

Over the last 30 years, Kerry’s share 

price has appreciated at a compound annual 

growth rate of 16.2%. That’s not far below the 

18.2% growth rate of Warren Buffett’s Berkshire 

Hathaway over the same period. 

Real-life examples 

Sophisticated companies are well 

aware that the key to value growth 

is generating returns well in excess 

of cost of capital. Consider DCC 

plc’s stated objective in an investor 

presentation last November: 

“To continue to build a growing, 

sustainable and cash generative 

business which consistently provides 

returns on total capital employed 

significantly ahead of its cost of 

capital.” 

That objective is crystal clear and 

mercifully free of the aspirational 

cant that clogs up so many such 

statements at other companies. More 

to the point, it has been backed up 

by results. Since DCC was first listed 

22 years ago, it has produced total 

returns for its shareholders (dividends 

plus capital gains) of 5,924%. That 

contrasts with returns of just 768% 

generated by the FT250 index. 

Look at the Irish food sector. 

According to brokers, Investec, 

Kerry Group generated an ROCE of 

12.0% in 2015, comfortably ahead 

of a cost of capital of 7–8%. This 

has been a consistent pattern over 

recent years as the company has 

migrated away from dependence 

on the commoditised Irish dairy 

sector towards greater exposure to 

the more profitable international 

food ingredients sector. Over the 

last 30 years, Kerry’s share price has 

appreciated at a compound annual 

growth rate of 16.2%. That’s not 

far below the 18.2% growth rate of 

Warren Buffett’s Berkshire Hathaway 

over the same period. 

Contrast Kerry’s recent record 

with that of baked products group, 

Aryzta. According to Investec, its 

2016 ROCE was just 3.7%, well below 

its cost of capital. The consequence 

of generating returns below cost 

of capital has been a sharp fall 

in the company’s value, the highprofile 

departures of several senior 

executives and a strategic review of 

its decision to diversify into frozen 

food manufacturing by acquiring 50% 

of Picard. 

The bottom line 

The key to making company 

value grow is generating returns 

comfortably in excess of cost of capital. 

It’s that simple. And it’s that hard. 

CORMAC LUCEY 

Cormac Lucey FCA is an economic 

commentator and lecturer at 



APRIL 2017

Comment 

19 

Emotion: the spoiler Annette Clancy 

People leaders might baulk at the idea of 

an ‘emotional’ workplace, but emotion is 

a positive force if channelled properly. 

We tend to think of organisations 

as rational places. Places where 

decisions are made on the basis 

of external, observable data. Of course, 

they are partly that. But organisations 

are also emotional, chaotic, political and 

anxiety-provoking places: they are both 

emotional and emotion generating. 

We rarely return from work extolling 

the virtues of technical tasks. We are 

more likely to talk about our feelings in 

relation to those tasks. Yet, if we are to 

believe research, emotion is generally 

identified as inferior to thought and 

reason in the workplace. This positioning 

is mirrored in the elevation of some 

emotions relative to others: the positive 

emotions signal good; the emotions most 

of us complain of when we wish to “kick 

the dog” are bad. 

At its most pernicious, this hierarchy 

is transformed into the utilitarian 

employment of emotion as a vehicle 

for advancement, recognition and 

intelligence. Emotion challenges the 

restrictions of scientific management 

with its view of organisations as rational 

enterprises engaged in productive, 

efficient tasks facilitated by processes, 

systems and protocols. Emotion as a 

disruptor of these ideas is relegated to the 

‘irrational’ camp, the dark side. Emotion 

is the spoiler in the orderly world of 

management as well as its literature. 

An intolerable exhibition 

Sigmund Freud described this dilemma 

in his introduction of psychoanalysis 

to the English-speaking world at Clark 

University in 1909. Freud describes a 

speaker delivering a talk as a noisy 

heckler in the audience interrupts 

proceedings. The heckler is evicted from 

the audience and the guards go so far 

as to place chairs against the door to 

ensure that the heckler cannot re-enter. 

Even though the door is closed, the 

muffled protest is still audible, “for now 

he is making an intolerable exhibition 

of himself outside the room, and his 

shouting and banging on the door with 

his fists interfere with my lecture even 

more than his bad behaviour did before”. 

The popular delusion 

What Freud (and many other 

management scholars since his time) 

tells us is that the more we try to 

delude ourselves that reason trumps 

feeling, the more we will find ourselves 

confronted with unpredictable behaviour 

in the workplace that seems to appear 

from nowhere. Absenteeism, illness, 

procrastination, resistance and bad 

behaviour are only some of the ways 

in which we creatively bring emotion 

back into the room. Similarly, trying to 

generate particular ‘positive’ emotions 

(such as happiness and satisfaction) 

and negate others (such as anger or 

disappointment) will backfire as it isn’t 

possible to only occupy one end of the 

emotion spectrum. 

Proponents of ‘positive thinking’ try to 

persuade us that changing how we think 

will change how we feel. Unfortunately, 

telling ourselves that ill-fitting shoes are 

‘grand’ will do nothing but create painful 

blisters and the development of bad 

feet. The positive workplace ‘industry’ is 

flourishing right now as we buy into the 

idea that feeling bad is simply a character 

flaw, one that is easily remedied by 

appropriate training, coaching and 

mentoring. So, is it wrong to feel angry 

if I am being bullied at work? No. It’s an 

entirely appropriate response that needs 

to be heard and addressed. Shutting the 

door on negative emotion and telling 

our colleagues to ‘cheer up’ and ‘think 

positively’ denies the lived experience 

Emotion challenges the restrictions 

of scientific management with its view of 

organisations as rational enterprises engaged in 

productive, efficient tasks facilitated by processes, 

systems and protocols. 

of organisational members as they 

negotiate workplace relationships 

and the pressures of organisational 

performance. 

A creative intervention 

Emotion is a sophisticated form of 

organisational intelligence. Adopting a 

position of curiosity in relation to the 

creative ways in which emotion presents 

itself can offer fascinating insights into 

how organisations function and what an 

organisation’s members deem important. 

However, reducing the bias towards 

the ‘rational’ work space, and expanding 

one’s considerations to the full range 

of emotions, may be the most creative 

intervention of all. 

ANNETTE CLANCY 

Dr Annette Clancy is a lecturer in 

organisational behaviour at University 

College Dublin. 


20 

Interview 


APRIL 2017

Interview 

21 

Serving the public good 

Seamus McCarthy, the Comptroller and Auditor General, 

is no stranger to the media. He recently spoke to 

Accountancy Ireland about his key objectives, 

whistle-blowing, and life in the public eye. 

BY FIONA REDDAN 

He is the State’s financial 

watchdog, auditing and 

reporting on the use of public 

funds and ascertaining whether the 

State is getting value for money from 

its public sector. “It’s an aid to the 

parliamentary accountability process 

and is the most visible aspect of it,” 

Comptroller and Auditor General, 

Seamus McCarthy, says of his office. 

It is also about ensuring value for 

money for the people who fund public 

services – the taxpayers. “It does serve 

a public good; everybody in society 

has to deal with the State. Nobody is 

neutral on the public sector, so they’re 

entitled to know what’s happening 

and what they’re paying for,” he says. 

“There needs to be that constant 

accountability to taxpayers and to 

citizens.” 

The Comptroller and Auditor 

General’s office provides this feedback 

by reporting on and auditing 

public sector bodies, and there is a 

considerable number of these – some 

300 entities in total – ranging from 

the Social Insurance Fund at one level 

to the National Asset Management 

Agency and third-level institutions 

including the University of Limerick 

and Trinity College Dublin at another. 

It is a heavy workload, one which 

the office’s 135-strong workforce is 

hoping to make easier through the 

recruitment of additional employees. 

“It should be up to 160,” McCarthy says 

of the office’s workforce, adding that 

it currently has several vacancies for 

which it is recruiting. 

Recruitment, however, isn’t 

necessarily the problem. “It’s 

retention,” McCarthy says. Indeed, 

just in the line of sight of the 

organisation’s swish new offices on 

Upper Mayor Street is Big 4 firm, PwC. 

It is a hazard of the public sector 

that, lured by higher salaries and 

job opportunities elsewhere, some 

recruits don’t hang around for long. 

“There are more opportunities as the 

economy has recovered,” McCarthy 

agrees, but he doesn’t downplay the 

opportunities that lie within the 

office too. “One thing that does strike 

me is that when people join us, they 

find out how interesting the work is 

and how real it is, and how it has a 

material impact on people’s lives,” he 

says. 

A career public servant himself, 

McCarthy has never been lured by the 

bright lights of the private sector. An 

economist by training, he joined the 

Department of Finance in 1981, where 

he worked until 1994 carrying out 

economic and demographic analysis 

and policy and programme evaluation 

work. From there, he moved to the 

office of the Comptroller and Auditor 

General where he served as deputy 

director, and then director of audit, 

before assuming the top job in May 

2012. 

Key objectives 

Already au fait with the workings 

of the office when he assumed the 

top job, McCarthy has been keen to 

continue the process of development. 

“I would have been reasonably aware 

of what the job was, so there were no 

particular surprises,” he says. But he 

also has some specific goals in mind. 

Bringing forward the timeliness 

of financial reporting is one of these. 

While McCarthy concedes that public 

sector financial reporting is “not as 

fast as the stock exchange might 

require”, it has improved somewhat, 

as shown in a report from his office. 

And he has ambitions for the scope 

of the work the office can do. “I’d like 

to expand it. We can do more work; we 

haven’t been doing as much reporting 

work as we’d like”. 

But what does he have in mind? 

One area McCarthy thinks the office 

should look at is broadening the 

‘follow the money’ principle. “There 

are particular constraints about 

carrying out inspection work. We 

are limited to certain bodies, but the 

principle applied in other jurisdictions 

is following the money to the point it 

is used,” he says. 

The office has also focused on 

improving the accountability of 

public bodies. It is not just auditing 

that the office focuses on; it also tries 

to work on other areas. For example, 

a 2014 report on the operation of 

audit committees included a selfassessment 

checklist which the 

committees could use themselves. 

The office also prepared a similar 

guide on severance payments, with an 

emphasis on managing the payments. 

“That sort of output is valuable,” says 

McCarthy. 


22 

Interview 

The search for value 

Amid cost overruns and everincreasing 

bills for projects such as 

the National Children’s Hospital – 

now estimated to cost €1 billion, up 

substantially from the original budget 

of €650 million – looking for value for 

money in the public sector should be 

more important than ever. 

“It’s inevitable if you reduce the 

cost of inputs, you improve efficiency,” 

he says. However, McCarthy believes 

that “there could be more evidence 

from public bodies of what value they 

are achieving,” he says. “It’s about 

measuring performance, being aware 

of what resources are going into an 

area and having a discussion about 

that.” 

While he agrees that focusing 

on value for money can be time 

consuming at first, “once you set it 

up, it should run along itself”, he says. 

“There needs to be a public debate 

– what do we mean by value? – and 

we need to understand as well that 

things have a cost,” he says. “If you 

don’t keep a focus on getting value, 

getting return, inevitably things drift.” 

It is also about having a good 

business case for making certain 

decisions. “You can’t keep asking for 

services without realising there’s 

a choice to be made – there needs 

to be a strong focus on economic 

analysis on business choices in the 

public sector. It happens, but not as 

much as it could,” he says, wearing his 

economist’s hat. 

The Comptroller and Auditor 

General is known for keeping tabs 

on the public sector; its annual 

accounts of the public service give a 

breakdown of overruns in spending 

by department and this is just one of 

its functions. But is it ever frustrating 

for the office to pinpoint spending 

concerns, make recommendations – 

and then for nothing to happen? 

McCarthy agrees that it can be 

“unsatisfactory”. “I’d certainly prefer 

to see action being taken,” he says. “In 

general, there is a very good uptake 

in terms of the recommendations we 

make and we try to be practical. 

“Ultimately, it’s for managers to 

manage bodies themselves and they 

need to be accountable.” 

Whistle-blowing 

Ireland has a curious relationship 

with whistle-blowers, as evidenced 

by the treatment of Sergeant Maurice 

McCabe in the penalty points 

scandal, which came into the public 

domain in 2012. The Comptroller and 

Auditor General decided to examine 

the matter, reporting in 2013 and 

supporting the claims of McCabe 

about the abuse of the penalty 

points system. The case itself is 

not something McCarthy wishes to 

discuss, but he notes that it is the 

type of case that can be looked into 

by the office. “We don’t investigate 

individuals,” he says, adding that 

the job of the office is to identify 

weaknesses in controls and processes 

in the public sector. “That’s where we 

test,” he says. 

The office takes whistle-blowing 

seriously and has a guide on its 

website that outlines its approach to 

handling such disclosures. 

McCarthy notes that the office goes 

through periods where there might 

be one or two disclosures a week, 

including about eight to 10 whistleblower 

cases in a year. 

Life in the public eye 

Unlike some other senior public 

sector roles where a secretary 

general, for example, can live a life 

of quiet influence away from the 

public eye, the role of the Comptroller 

and Auditor General is very much 

out there. This could exert a toll, 

but McCarthy is quick to sidestep 

the question of whether the job is 

stressful. “Life is stressful,” he laughs. 

Indeed, McCarthy and the office 

appear unafraid of putting their 

heads above the parapet. Last year, 

the office published a report into the 

controversial sale of NAMA’s Northern 

Irish loan book, known as Project 

Eagle, concluding that the decision 

to sell the loans at a minimum price 

of £1.3 billion involved a significant 

probable loss of value to the taxpayer 

of up to £190 million in NPV terms. 

The decision led to “disagreements” 

between the two arms of the State, as 

McCarthy himself conceded before an 

Oireachtas committee last year. But, 

he said at the time, he believed it was 

his “duty” to publish the report. 

This sense of duty is something 

McCarthy takes seriously. “It’s 

something we take very seriously. 

You can’t keep asking for services without 

realising there’s a choice to be made – there needs 

to be a strong focus on economic analysis on 

business choices in the public sector. It happens, but 

not as much as it could. 

We’re conscious of the potential for 

damage to reputations; we have no 

interest in getting anything wrong, 

we want to get it right,” he says. “We 

have to fulfil our role and deliver our 

findings where it’s appropriate”. 

Independence is a key element of 

the office, and one to which McCarthy 

apportions high value. “Independence 

is absolutely critical to the function. It 

very rarely arises that anyone would 

try to unduly influence us,” he says. 

It also means that the office doesn’t 

have to unduly influence in turn any 

of the entities it audits. Not having 

“to chase the business” gives the 

Comptroller and Auditor General a 

strength in its independence. There’s 

no pressure to say or do the right thing 

to retain the business. “The difference 

between my organisation and 

private sector auditors is that we’re 

appointed by statute – not as a result 

of a decision made at a shareholders’ 

meeting,” he says. 

FIONA REDDAN 

Fiona Reddan writes for The Irish Times 

and is the author of Ireland’s IFSC: A Story 

of Global Financial Success. 


APRIL 2017

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24 


Spotlight 


APRIL 2017


25 

Diversity... is it good for 

business, really? 

Diversity and inclusion initiatives have gained a lot of traction 

throughout Ireland’s corporate landscape. But do they add 

tangible value for organisations? 

BY OLIVIA McEVOY 


26 


Although accountants 

might not be able to bring 

themselves to agree, it can 

seem as though there are countless 

quotations pertaining to, and 

definitions of, ‘diversity’. Malcolm 

Forbes describes it as “the art of 

thinking independently together”, 

while others draw on an old Muslim 

saying that “a lot of different 

flowers make a bouquet”. Despite the 

overwhelming number of definitions, 

common ground is reached in the 

certainty that strength lies in 

differences. 

environment and leverage diversity 

to improve business performance. It 

is equally true to say that, if you are 

successful in building an inclusive 

environment, you are much more 

likely to attract and retain a diverse 

workforce. 

The business benefits 

Although it is almost universally 

accepted now that diversity and 

inclusion is a business imperative and 

a ‘must have’ rather than a rightsbased 

agenda or a ‘nice to have’, 

there are some who still question 

above their respective national 

industry medians. 

More recently, in 2016, the Peterson 

Institute for International Economics 

and EY released a study revealing 

a significant correlation between 

women in leadership and company 

profitability. The report found that 

companies with at least 30% female 

leaders had net profit margins up to 

6% higher than companies with no 

women in senior ranks. This report is 

but one of many to find that gender 

diversity has a positive impact on 

What is diversity and inclusion? 

The EY definition of diversity and 

inclusion is: “Diversity is about 

differences, seen and unseen. 

Inclusion is about creating an 

environment in which people are 

valued, feel valued and are able to 

achieve and contribute their full 

potential.” Creating an inclusive 

environment improves the way we 

interact with our people, our clients 

and our communities. Inclusion is 

also about leveraging our differences 

to deliver better business results. 

In both this definition and much of 

the recent commentary on diversity 

and inclusion, the focus is very much 

on inclusion. Indeed, some suggest 

we have achieved diversity and now 

need to concentrate our efforts on 

inclusion. There is no doubt that 

diversity is now an aspiration for 

most businesses in Ireland as well 

as globally, but many of those same 

businesses still struggle to attract a 

diverse workforce in terms of gender, 

sexuality, ability, age and education 

as well as personality type and 

thinking style. 

We tend to view diversity and 

inclusion as a journey, and it is 

important to acknowledge that 

some businesses are in the starting 

blocks and some are further down 

the road. Very few have reached 

‘Destination D&I’. It is, however, 

true to suggest that diversity can 

be the easier element to achieve; 

the real test begins in earnest when 

you are trying to build an inclusive 

There is a wealth of research and countless 

statistics that support diversity and inclusion as 

a key driver in achieving success in new markets, 

improving market share and ultimately driving 

revenue generation and profitability. 

whether diversity and inclusion 

can actually deliver better business 

results and contribute to competitive 

advantage. Again, there is a wealth 

of research and countless statistics 

that support diversity and inclusion 

as a key driver in achieving success 

in new markets, improving market 

share and ultimately driving revenue 

generation and profitability. While 

many of these statistics are global 

and depend on variables such as 

company size, there remains much 

indisputable evidence. A highly 

regarded McKinsey study in 2015 

entitled ‘Diversity Matters’ examined 

data for 366 public companies across 

a range of industries in Canada, Latin 

America, the United Kingdom and the 

United States. It found that: 

• Companies in the top quartile for 

racial and ethnic diversity are 

35% more likely to have financial 

returns above their respective 

national industry medians; and 

• Companies in the top quartile 

for gender diversity are 15% more 

likely to have financial returns 

profitability. As such, there are few 

businesses that can choose to ignore 

what automatically increases revenue 

and profitability, but the benefits of 

diversity and inclusion do not stop 

there. It also delivers: 

• Continuous innovation achieved 

by harnessing the power of 

different experiences, knowledge 

and skills; 

• Enhanced team performance and 

stronger collaboration; 

• Increased awareness of biased 

behaviours and their impact, 

resulting in better decisionmaking; 

• Enabled leadership to drive 

cultural change and build highperforming, 

diverse teams; 

• Increased motivation for 

employees resulting in better job 

satisfaction, reduced stress and 

reductions in absenteeism; and 

• Enhanced reputation in 

consumer markets. 

Despite the compelling nature 

of all of the above benefits, it is the 


APRIL 2017


27 

fact that diversity and inclusion 

is accepted as a key contributor to 

talent acquisition and retention that 

sways many businesses to pursue 

the agenda. No matter the size of 

your company, the war for talent is 

a hard one to wage and win. This is 

particularly the case in relation to 

attracting and retaining millennials 

who are the first generation to 

grow up in the digital age. There 

are currently more than 500,000 

millennials in Ireland and, in just 

10 years, they will comprise nearly 

75% of the workforce. This elevates 

the importance of the diversity 

and inclusion agenda even more, 

as millennials absolutely expect 

diversity as a matter of course. 

Indeed, millennials fully expect to be 

celebrated for their differences. And 

how right they are. 

Cognitive diversity, which is 

different thinking styles and 

personality types, is particularly 

valued by this cohort as it stimulates 

dynamic ideas and solutions 

that can drive innovations in a 

much more effective way. Indeed, 

research from the Billie Jean King 

leadership initiative reports that 

millennials see the concept of 

diversity and inclusion through a 

completely different lens and that 

there is now a trench between the 

generational mindsets on the issue. 

Fundamentally, millennials see 

diversity and inclusion as a necessary 

element for innovation. The same 

report emphasises that companies 

with high levels of innovation 

achieve the fastest growth of profits, 

while radical innovation trumps 

incremental change by generating 

10 times more shareholder value. 

The impact of a lack of cognitive 

diversity and inclusion hits hard on 

engagement and empowerment, as 

well as the ability of employees to 

remain true to themselves. 

If any of us are to be fully engaged, 

we require supportive leadership and 

a supportive culture. As reported 

in the Billy Jean King report: “If 

you want to build a truly inclusive 

culture – one that leverages every 

individual’s passion, commitment 

and innovation, and elevates 

employee engagement, empowerment 

and authenticity – you should be 

willing to break down the narrow 

walls that surround diversity and 

inclusion, and limit their reach. If you 

don’t know where to start, ask your 

millennials. Every one of them wants 

to be heard.” 

What makes for a good 

diversity programme? 

There has been an understandable 

tendency to adopt a strand-based 

approach to diversity and inclusion, 

with the need to address gender 

equality particularly obvious. The 

referendum on marriage equality 

brought increased awareness of, 

and focus on, the LGBT strand in 

Ireland. Therefore, at this juncture 

and where strides have already been 

made, we need to step back and take 

a more holistic and strategic view of 

diversity and inclusion and integrate 

it into our corporate strategy and 

core business activity. The following 

is central to any successful diversity 

and inclusion programme. 

Diagnostics and diversity and 

inclusion data: accountants should not 

need convincing of the importance of 

knowing the numbers! And they are 

spot on; it is absolutely imperative to 

know your organisation. Diversity 

and inclusion data gives critical 

insight into organisations. Indeed, 

even the data we are not able to 

gather tells its own story. Through 

diagnostic assessment, data can 

drive a deeper understanding 

of the employee experience and 

where the critical decision points 

are in order to achieve diversity 

goals. This might be across any one 

business component such as talent 

attraction and retention, performance 

management and progression 

or leadership competence and 

accountability. Detailed data on the 

likes of recruitment ratios, promotion 

rates of female employees compared 

to male employees, or salary-related 

data allow us to develop tailored 

action plans to address any specific 

issue that emerges. As with any 

other business element, it is vital to 

ascertain your current state before 

you can meaningfully set realistic 

targets and goals and make progress. 

Once you diagnose the situation, you 

can establish diversity and inclusion 

key performance indicator (KPI) 

frameworks and know how you are 

going to measure success. One of the 

challenges for those keen to pursue 

the diversity and inclusion agenda is 

that it is sometimes seen as a ‘nice to 

have’ add-on. Having evidence-based 

data helps counteract that and allows 

us to measure progress and resulting 

growth. 

35% 

Of ethically diverse 

companies are more likely 

to outperform. 

15% 

Of gender-diverse 

companies are more likely 

to outperform. 

0.8% 

The rise in EBIT for every 

10% increase in racial and 

ethnic diversity on the 

senior executive team. 

Source: McKinsey. Results show likelihood that companies in the top quartile for diversity financially outperform those in the bottom quartile. 


28 


Sustainable strategy and good 

governance: a diversity and inclusion 

strategy that is incorporated into 

business strategy and core business 

activity is central to success. Very 

simply, diversity and inclusion needs 

to become an essential component of 

how we conduct business. Having a 

strategy really helps align diversity 

and inclusion with corporate strategy 

and enables it to become embedded 

in the overall culture and governance 

of the organisation. The strategy 

needs to be goal-orientated, metricfocused 

and underpin all diversity and 

inclusion activity. The strategy should 

also be accessible and include key 

principles and messages that can be 

understood by all. 

It is essential 

to resource inclusive 

leadership and 

unconscious bias 

training that enables 

leaders to build highperforming 

teams and 

facilitate innovation. 

Informed, enabled and accountable 

leadership: any diversity and inclusion 

strategy or programme needs visible 

C-suite and executive sponsorship 

to succeed. Leadership needs to be 

aware and really understand diversity 

and inclusion, talking about it with 

people at all levels, inside and outside 

the business. As leaders, we also need 

to live and practise diversity and 

inclusion in our thinking, recruitment 

and work practices. In addition to 

leadership commitment and support, 

we must also emphasise impact, 

measurement and accountability. 

Introducing accountability as part 

of performance measurement 

certainly helps to elevate diversity and 

inclusion from a ‘nice to have’ to a core 

element of business activity. However, 

rather than expecting leadership to 

be automatically familiar with and 

knowledgeable about diversity and 

inclusion, we need to enable leaders 

to drive the agenda. To this end, it 

is essential to resource inclusive 

leadership and unconscious bias 

training that enables leaders to build 

high-performing teams and facilitate 

innovation. 

There are, of course, multiple 

other tenets of a successful diversity 

and inclusion programme, including 

flexible working arrangements that 

allow for, and support, diversity 

in the workforce. The visibility 

of diverse role models should not 

be underestimated based on the 

simple premise that ‘you can’t be 

what you can’t see’. People will 

naturally seek employment where 

they see themselves represented 

in the organisation, particularly 

at leadership level. Dovetailing 

recruitment practices with the 

diversity and inclusion data diagnosis 

and ensuing metric targets is also a 

key factor. 

Diversity and inclusion 

into the future 

Diversity and inclusion is a key driver 

of the future we aspire to, where we 

equate business in Ireland with risk 

excellence, sustainable growth and 

performance as well as cutting-edge 

innovation. It is also a key tenet of 

success right now. The first step is to 

truly value, champion and celebrate 

diversity, creating spaces where 

different perspectives are encouraged, 

from a workforce diverse in ability, 

age, ethnicity, gender, race and sexual 

orientation, as well as in thinking 

style and personality type. 

With the right strategic approach, 

leadership support and data analytics, 

we have the tools to leverage those 

celebrated differences to build a better 

working world that is truly diverse 

and inclusive. It is the right option. It 

is the business-smart option. It is the 

only option. 

OLIVIA McEVOY 

Olivia McEvoy is Director of 

Diversity & Inclusion Advisory 

Services at EY Ireland. 

REPRESENTING 

DIVERSITY IN 

FINANCIAL REPORTS 

Enhanced disclosure on diversity is an 

opportunity for companies to set out 

how embracing diversity can lead to less 

group-think, greater innovation, progress 

and growth. A new EU Directive on the 

Disclosure of Non-Financial and Diversity 

Information by Certain Large Undertakings 

and Groups is expected to be transposed 

shortly and will lead to new disclosures on 

diversity by large public interest entities 

(PIEs) with securities traded on a regulated 

market. This directive is something those 

complying with the 2014 UK Corporate 

Governance Code may already be aware 

of. For such companies, there are already 

reporting requirements in relation to 

diversity. The Code notes that a diverse 

board can lead to “constructive and 

challenging” dialogue which is “essential 

for the effective functioning of any board”. 

Companies that comply with the Code 

are required to include “a description of 

the board’s policy on diversity, including 

gender; any measurable objectives that it 

has set for implementing the policy, and 

progress on achieving the objectives”. 

The Directive requires that impacted PIEs 

include a description of the diversity 

policy applied to their administrative, 

management and supervisory boards in 

their corporate governance statement. 

This policy should consider aspects 

such as gender, age, professional and 

educational backgrounds. The disclosure 

should also include the objectives of 

the company’s diversity policy, how it 

has been implemented and the results 

in the reporting period. If no diversity 

policy is applied, the company must give 

an explanation as to why this is the case. 

While the disclosure requirements of the 

Directive and Code will apply to certain 

entities, diversity may be relevant to all 

organisations and we are hopeful that 

this change will lead more companies to 

voluntarily articulate the positive impact 

of diversity on their business. 

ALAN SEERY 

Alan Seery is a Director in the 

Financial Reporting Group at 

EY Ireland. 


APRIL 2017

LONGBOAT 

ANALYTICS 

WINNER 

FINANCIAL SERVICES 

AWARDS 2017

30 


Pay gap, 

or promotions gap? 

Michele Connolly looks at the data behind the headlines 

about the gender pay gap and explains why reporting 

on such issues will force companies to act. 

The title of this article is an 

interesting one; it highlights 

from the outset that the issues 

underlying diversity and inclusion 

in the workplace are multifaceted. 

Likewise, the solutions are not 

necessarily always obvious. 

Take the issue of the gender pay 

gap. A report published last month 

indicated that, in 2015, Ireland had 

a 14.8% difference in median pay 

between men and women. That figure 

has declined steadily from 19.7% in 

2000. However, statistics show it hit 

a low of 8.3% in 2012 before rising to 

15.2% in 2014. 

Does this mean that a significant 

number of companies pay male 

counterparts more for doing the same 

job as women? Not necessarily. The 

statistics reflect an average salary 

across each gender in an organisation. 

To get a true picture, you must go 

behind the headlines and compare 

the results at different grades of staff, 

with different working arrangements 

and across different levels of 

experience. 

Take a typical director grade in 

practice. The reality is that there 

are still probably more men in that 

grade who have been in that position 

longer, who have more experience 

and therefore – on average – get paid 

more. There also tends to be a greater 

proportion of women in support 

grades in our organisations, which 

tend to command lower salaries. 

On an average basis, a higher 

number of women in lower paying 

support grades plays against a higher 

number of men in more senior, higher 

paid roles. The resulting statistic will 

show this simply as a pay gap. 

So yes, there is a pay gap. That 

is not discrimination; rather it is 

reflective of the fact that we have 

not yet succeeded in achieving better 

gender balance at more senior levels 

in our organisations. The real focus 

should be on how to address that 

issue. 

Gender pay gap reporting is coming 

Gender pay will feature in the UK 

media more and more as it introduces 

mandatory reporting on the gender 

pay gap for all companies with over 

250 staff from 1 April 2017. The UK 

is following a growing trend across 

Europe, with many other countries 

boasting similar provisions. 

The resultant statistics are likely 

to show that, in headline terms, there 

is a pay gap. But when you adjust 

for some of the factors referred to 

above, such as experience, grades 

and working hours, the gap narrows 

considerably. One organisation 

that voluntarily reported its gender 

pay gap in the UK reduced the pay 

gap from mid-teens to less than 3% 

when adjusted for differing levels of 

experience. 

Consider the adage: “what gets 

measured gets managed”. This 

principle can apply equally to 

business situations. It can mean that 

simply examining an activity in turn 

changes the activity by forcing you 

to pay attention to it. It can also mean 

that producing measurements about 

the activity gives you a handle on it, a 

way to improve it. 

Knowing that they might 

ultimately have to report statistics 

should therefore cause organisations 

to examine their data sooner rather 

than later, analyse the differences 

and consider what they can do to 

improve the gender balance in senior 

leadership levels in the first place. 

What about the promotion question? 

Confidence is key to leadership and 

driving forward for advancement. 

Yet it is something that, on average, 

women struggle with throughout 

their careers more than men do. 

KPMG undertook a study to 

explore the qualities and experiences 

that contribute to women’s leadership 

and advancement in the workplace. 

The findings revealed that there 

is no shortage of ambition among 

the women surveyed. Six out of 10 

aspired to be a senior leader of a 

company or an organisation, yet more 


APRIL 2017


31 

than half agreed that they are more 

cautious in taking steps towards 

leadership roles. The results reveal a 

critical disconnect: women want to 

lead, but something is holding them 

back. Were the women encouraged 

to lead as children? Did they have 

a role model? Were they offered 

appropriate support and development 

opportunities in the workplace? Such 

factors play a possible role in whether 

a woman moves up the career ladder 

into a senior leadership role. 

There is plenty of research on 

the approach taken by males and 

females in pushing for promotion or 

a pay rise. Of the women surveyed by 

KPMG, over 75% did not feel confident 

in asking for access to senior 

leadership, a promotion or pursuing 

a job opportunity beyond their 

experience. Their male counterparts 

are unlikely to be as hesitant. There 

is an oft-cited example of two people 

looking at promotion criteria for a 

new role. The male candidate will 

look at the 10 items, believe he meets 

the criteria in three or four and go 

for the job. The female candidate will 

do likewise, believe she meets eight 

to nine criteria and not apply as she 

doesn’t meet all 10. 

It is not a case of one approach 

being better than the other. The 

average female brain simply works 

differently and approaches such 

matters in a different manner. 

However, the reality is that most 

performance appraisal or promotion 

systems are traditionally designed to 

target more male-dominated traits. It 

is therefore (unconsciously, in many 

instances) not a level playing field. 

Iris Bohnet, a behavioural 

economist at Harvard University, in 

research for her book entitled What 

Works – Gender Equality by Design, 

has found that “companies that use 

potential, in addition to performance, 

as a way to evaluate employees are 

more likely to be gender-biased. 

We generally find that leadership is 

associated with men, and potential 

has something to do with career 

advancement and climbing up the 

career ladder. We don’t necessarily 

associate career and leadership with 

women”. 

On an average basis, a higher number of 

women in lower paying support grades plays 

against a higher number of men in more senior, 

higher paid roles. The resulting statistic will show 

this simply as a pay gap. 

What can we do to effect change? 

Many organisations are starting to 

tackle these differences by introducing 

unconscious bias training. This was 

first put forward as a concept by 

psychologists at Harvard University, 

the University of Virginia and the 

University of Washington who created 

‘Project Implicit’ to develop hidden bias 

tests – also called implicit association 

tests, or IATs, in the academic world 

– to measure unconscious bias. IAT 

measures attitudes and beliefs that 

people may be unwilling or unable to 

report, which would indicate that most 

of us are pre-programmed to associate 

certain roles and traits as either male 

or female. For example, you may 

believe that women and men should 

be equally associated with science, 

but your automatic associations could 

show that you (like many others) 

associate men with science more than 

you associate women with science. 

Unconscious bias training simply 

seeks to raise participants’ awareness 

of these inherent biases in our 

thinking so we can start to challenge 

ourselves more and apply a gender lens 

(as opposed to positive discrimination) 

in how we approach performance 

appraisal, salary reviews, promotion 

discussions and job allocations to 

ensure they are appropriately gender 

balanced. 

Another key component in the 

toolkit for addressing gender diversity 

is mentoring. Whether you are a man 

or woman, having someone more 

senior in the organisation looking 

out for you, acting as a sounding 

board and being an advocate for 

you is invaluable in helping you 

develop the skills necessary to push 

for advancement to more senior 

leadership roles. 


32 


Table 1: Gender representation in the corporate pipeline in 2016 

Entry level Manager Senior 

manager 

Men 

So how do you get a mentor? 

The same KPMG study quoted 

above highlighted that nine in 

10 women said they do not feel 

confident in asking for a sponsor 

and eight out of 10 lack confidence 

in seeking mentors. Implementing 

formal mentoring programmes and 

leadership development programmes 

aimed specifically at high-potential 

women in an organisation is an 

invaluable step on the road to 

changing the gender balance of an 

organisation. 

Is the gender balance improving? 

The number of females in 

management roles and at senior 

leadership levels in organisations 

is slowly but steadily increasing. 

The 30% Club’s recent Women in 

Management study with Dublin City 

University found that women now 

hold 40% of positions at the lowest 

level of management surveyed (three 

steps down from CEO) and 17% of 

CEO positions. The statistics do vary 

by sector and organisation size, with 

women more likely to feature in 

Percentage of employees by level 

VP 

Senior 

VP 

C-Suite 

54% 63% 67% 71% 76% 81% 

46% 

Women 

37% 

33% 

29% 

24% 

19% 

Percentage of women in pipeline in 2015 

45% 37% 32% 27% 23% 17% 

In 2010, when the European Commission first 

put the issue of women in leadership positions high on 

the political agenda, only 11.9% of board members of 

the largest publicly listed companies in the EU were 

women. This rose significantly to over 21% in 2015. 

leadership roles in areas such as HR 

and marketing, and less so in finance, 

sales, operations or IT. Other recent 

statistics show that in 2015, Ireland 

had on average 18% female board 

representation. That is up from 10% 

10 years ago and 16% in 2014. 

These findings are in line with a 

2016 McKinsey study on women in 

the workplace (refer to Table 1 above). 

In 2011, the EU proposed that it 

would introduce legislation requiring 

all publicly quoted companies to 

have 40% representation of women 

on their boards by 2020. While the 

council of ministers has failed to 

get all member states to agree to 

enact the legislation, it has had an 

impact. In 2010, when the European 

Commission first put the issue of 

women in leadership positions high 

on the political agenda, only 11.9% 

of board members of the largest 

publicly listed companies in the EU 

were women. This rose significantly 

to over 21% in 2015. 

In the UK, the 2011 Davies review 

recommended that the FTSE 100 

leading companies should have at 

least 25% female representation 

on their boards. Some investment 

managers are now mandating this 

among their investee companies and 

publicly saying they will vote against 

board appointments that do not 

contribute to meeting this objective. 

26% of board positions in FTSE100 

firms and 20.4% in FTSE250 firms 

are held by women. There are now no 

all-male boards in the FTSE100 firms 

and just 15 all-male boards in the 

FTSE250 firms. 

Like the gender pay reporting, 

a policy initiative is causing 

organisations to take notice and act. 

However, there is still a very long 

way to go if we are to achieve gender 

balance. 

As a profession, what else can we do? 

We know that work/life balance is 

an increasingly key factor in career 

choices – at all levels and for both 

sexes. Initiatives such as intelligent 

working arrangements, ramp up and 

ramp down in career planning, and 

greater maternity supports all play a 

key role here. 

Space is too short to delve properly 

into this area on this occasion other 

than to say that most of us now 

work in a very mobile fashion. Does 

it matter whether we are sitting at a 

desk, on a train or in our own homes? 

Should the measure instead not 

be the quality of the output rather 

than the location from which it is 

delivered? However, it does challenge 

the status quo of the presenteeism 

concept that still pervades in many 

areas. 

As a country, we have made a lot 

of progress in the past few years. Yes, 

there is more to do. But by reporting 

and commenting on the issues, 

organisations are starting to put in 

place positive strategies to effect 

change. 

We are realising that not only is 

it the right thing to do, but it makes 

good business sense too. 

MICHELE CONNOLLY 

Michele Connolly FCA is Head of Corporate 

Finance at KPMG Ireland and a member of 

the Institute’s new Diversity Committee. 


APRIL 2017

Mandatory Electronic 

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OF ANNUAL RETURNS 

IS MANDATORY 

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will be returned. If this leads to your 

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Be Ready! 

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will not be accepted on or 

after 1st June 2017. 

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Register with CORE now at 

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34 


The key to unlocking 

women’s route to the top 

A lack of exposure is inhibiting the rise of talented 

women throughout the corporate world. 

Could sponsorship be the answer? 

BY MARK FENTON 


APRIL 2017


35 

We’ve heard the soundbites – 

gender pay equality is 170 

years away; only 4.4% of 

S&P 500 CEOs are women; only 14% of 

Irish companies have either a female 

CEO or Head of Operations (and this 

ratio is diminishing). Meanwhile, an 

international report by Citi showed 

that closing the gender gap in labour 

market participation could add 12% to 

OECD gross domestic product (GDP). 

And yet there are many men (and 

some women) who believe gender 

equality in the workplace is a zerosum 

game. For example, if women 

are to win, men must lose. Men often 

feel disengaged from the inequality 

problem too because issues relating 

to gender do not concern them. 

Further, when men do generally get 

involved, it is to ‘fix’ the problem 

by encouraging women to behave 

in the same way that men do in the 

workplace. 

With such a high socio-cultural 

mountain to climb, it is no wonder 

that progress has been painfully 

slow towards gender equality at 

work. Furthermore, the traditional 

talent programmes (most commonly 

packaged as ‘mentoring’) have not 

delivered the necessary results in 

terms of the recognition, professional 

development and career progression 

of women. 

Why is this, and what can 

be done to correct it? 

A mentor can empower a person to 

see a possible future and believe 

it can be obtained, but many 

mentoring programmes fail because 

the discussion surrounding such 

empowerment doesn’t generally 

apply in real life. As E.M. Forster put 

it, “Spoon feeding in the long run 

teaches us nothing except the shape 

of the spoon.” 

Mentoring is restrictive as 

it involves talking to just one 

individual and, more often than not, 

expectations are not met regarding 

mentee belief and mentee exposure. 

Perhaps surprisingly, it is your exposure 

that holds the lion’s share of future opportunity 

and advancement. It is not what you know or 

indeed who you know. It is more about who 

knows you and what you can do. 

Exposure is the recipe; sponsorship 

provides the ingredients 

Studies have shown that there are 

three principle levers to career 

success and their weighting is not as 

you might expect. 

One’s professional performance 

(i.e. how you do your job) is 

important. However, in modern 

businesses with sophisticated talent 

attraction techniques, it accounts 

for just 10%. After all, your company 

expects you to be excellent – that is 

why you were hired in the first place. 

More important is your 

professional image (i.e. how you 

present yourself in the workplace). 

Being assured, trustworthy and open 

to change is central to your success 

and this impacts on just under onethird 

of your success. 

Perhaps surprisingly, it is your 

exposure that holds the lion’s 

share of future opportunity and 

advancement. It is not what you 

know or indeed who you know. It is 

more about who knows you and what 

you can do. 

Historically, men have been 

expert at cultivating their exposure 

levels through informal and 

male-stereotypical networking 

environments. Conventionally, 

women have less flexibility (and 

perhaps desire) to embrace these 

traditions. They also remain more 

risk-aware of their abilities, whereas 

men are generally openly confident 

about their suitability for a new 

opportunity. 

In terms of exposure, sponsorship 

is more involved than mentoring 

regarding both the sponsor and 

sponsoree – both are accountable for 

the process and its outcomes. 

The best programmes last for 

at least 12 months, include jobshadowing, 

resilience-coaching 

and are supported by clear metrics. 

Sponsorship takes mentoring beyond 

the tandem partnership and into 

the boardroom and/or management 

meetings. Sponsors talk to and 

about their sponsorees and therefore 

increase their corporate exposure 

and can provide feedback on unseen 

opportunities for growth. Sponsors 

also benefit from the learning 

opportunity that comes with an 

intense, frank and extensive personal 

and professional interaction. 

Sponsorship’s immediate and 

impressive impact 

The impact of sponsorship can be 

immediate and impressive. A recent 

series of sponsorship programmes 

within a Euro Stoxx 50 firm doubled 

the ratio of women at the top layer 

of management in just two years and 

demonstrated that an overwhelming 

majority of senior female promotions 

were directly linked to participation 

in such programmes. 

Sponsorship is not about talking 

to me; it is talking about me. It is the 

key to unlocking the main obstacle 

to women’s career success – a lack 

of exposure. 

MARK FENTON 

Mark Fenton FCA is founder of MASF 

Consulting, a specialist advisory firm 

focusing on diversity and inclusion. 


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37 

The road to inclusion 

While diversity is the buzzword of today, it will soon be 

replaced by inclusion. Dawn Leane explains how both diversity 

and inclusion can be integrated in organisations of all sizes. 


38 


It is virtually impossible to write 

an article on workplace diversity 

without referencing equality and 

inclusion. If diversity is the current 

hot topic in the workplace, then 

equality was its predecessor and 

inclusion will be its successor. 

In a workplace context, equality 

is often associated with compliance. 

It suggests that as a society, we 

must legislate for our differences 

and sanction transgressions. The 

term “equality” is synonymous 

with the nine grounds on which 

discrimination is outlawed. 

Diversity is a different concept. It 

is about valuing our differences, and 

it has a broader frame of reference 

than equality, including matters 

such as personality, cognitive style, 

education and socio-economic status. 

Inclusion, while closely related, is 

still a different concept. The Society 

for Human Resources Management 

defines inclusion as “the achievement 

of a work environment in which all 

individuals are treated fairly and 

respectfully, have equal access to 

opportunities and resources, and can 

contribute fully to the organisation’s 

success”. It is the deliberate act of 

welcoming diversity and creating 

an environment where all different 

kinds of people can thrive and 

succeed. 

But diversity is the buzzword 

of the moment. Employers have 

progressed from complying with 

equality legislation to recognising 

that a diverse workforce brings 

many benefits: innovation; balanced 

decision-making; reduced groupthink; 

retention of key staff; and 

improved risk management among 

others. 

Perhaps unsurprisingly, the 

technology sector is leading the 

way in creating workplaces that 

are genuinely diverse. While 

Apple contends that “the most 

innovative company must also be 

the most diverse”, Intel declares that 

“innovation begins with inclusion”. 

It’s easy to see how the technology 

sector readily benefits from diversity 

but other areas, including the 

professions, are also embracing 

the fact that diversity is good for 

business. 

Nonetheless success rates for 

diversity initiatives are still low. 

A report published in January by 

the ESRI highlights the fact that 

the unemployment rate for the 

Travelling community is 82%. None 

of the community is employed in a 

profession and just 3% are employed 

in managerial or technical roles 

compared to 28% of the general 

population. 

In March, the Central Bank of 

Ireland published a report which 

analysed the gender breakdown of 

applications for pre-approval as part 

of the fitness and probity regime. 

Of the pre-approval applications 

received by the Central Bank since 

2012, over 80% have been from male 

applicants. 

Why is it that so many diversity 

initiatives fail to deliver the desired 

outcomes? One reason is that many 

organisations take a ‘top down’ 

approach to diversity initiatives. 

While tone at the top is crucial to 

ensuring success, the top down 

approach can often manifest as 

policies and procedures that attempt 

to redress balance rather than 

encouraging a change in attitude. 

A recent Harvard Business Review 

article outlined the negative impact 

of such policies, claiming that they 

are often counter-productive. The 

article suggests that the reason most 

diversity programs aren’t increasing 

diversity is because organisations are 

still utilising the same approaches 

that they have always used and 

relying on diversity training, hiring 

tests, performance ratings and 

grievance systems to support the 

diversity agenda. 

Creating a diverse and inclusive 

workplace can mean changing the 

culture of an organisation. The 

best results are achieved when the 

focus is less on control and more 

on challenging existing attitudes, 

providing supports and encouraging 

accountability to ensure that good 

practice becomes embedded in the 

organisation. The following outlines 

specific initiatives that are delivering 

results. 

Accountability 

This is the most fundamental 

change an organisation can make. 

Without it, the other initiatives 

can fail to have any impact. It’s the 

old maxim – what gets measured 

gets done. For many organisations, 

publicly committing to diversity and 

publishing results – whether positive 

or negative – is driving change. Apple 

is among a number of organisations 

that publishes its hiring trends, 

highlighting areas such as 

representation among ethnicities 

and pay equity. While Intel also 

publishes its hiring rates, exit rates, 

promotion rates and pay equity, it 

goes a step further and ties a portion 

of its executives’ pay to achieving the 

organisation’s diversity goals. 

Education versus 

diversity training 

Organisations continue to provide 

diversity training, although it has 

been proved that such training 

doesn’t make people discard their 

biases – at best, it ensures that 

they are compliant. No-one is 

immune to unconscious bias; it is a 

manifestation of our life experiences. 

However, it often leads the best 

and brightest to feel unwelcome 

and not part of the success of the 

organisation. Rather than diversity 

training, progressive organisations 

such as Adobe are delivering 

enhanced awareness programmes to 

help eliminate hidden biases. These 

programmes cover topics such as 

how to identify bias, strategies and 

tactics for better decision-making, 

and how to speak up. 

Individualised development 

Most women say a clear path to 

career progression is important at 

work and, in response, organisations 

are now developing personalised, 

modular development plans to foster 

future leaders and improve gender 

diversity in leadership roles. 


APRIL 2017


39 

Sponsorships 

Organisations are evolving beyond 

mentoring programmes towards 

sponsorship as a means to help 

level the playing field for underrepresented 

groups. Sponsors serve 

a different purpose to mentors 

or coaching – they advocate for 

the advancement of people in the 

workplace, championing their 

work and potential with other 

senior leaders, helping them to 

secure optimal work allocation and 

opportunities to be more visible. 

Sponsorship is of particular help to 

women in the workplace and many 

relationships focus on women helping 

other women to gain profile at work. 

Returnships 

Returnships are a relatively recent 

development. Essentially, it is a 

professional internship designed 

specifically for people, most 

often women, returning after 

an extended career break. The 

position is relatively short-term, 

usually six months or so, and it 

allows the returner to refresh their 

existing skills and experience 

while deciding whether they want 

to return permanently to such 

a role. Returnships provide the 

returner with an opportunity to 

build their confidence and gain 

recent experience for their CV, while 

employers benefit from gaining 

access to the skills of experienced 

professionals. 

Inter-generational networks 

While many organisations were 

fearful of the impact millennials 

would have in the workplace, the 

more forward-thinking embraced the 

change and developed programmes 

to integrate existing and new 

generations. Such programmes 

include reciprocal mentoring, where 

younger people partner with longer 

serving ones to achieve specific 

business objectives. Generally, the 

younger person teaches the older 

person about the power of technology 

to drive business results while the 

For diversity and inclusion work to really be 

successful and really break through, it absolutely 

can’t be an initiative that is buried in HR. Diversity 

and inclusion absolutely has to be an integral part of 

culture and part of everything that we do. 

longer serving person shares their 

experience and organisational capital. 

Over time, millennials will become 

a demographic bridge between 

Generation X and subsequent, more 

diverse generations at work. The 

ability of millennials to advocate and 

become accepted will be key to the 

successful transition from diversity 

to inclusiveness. 

Accessibility 

Trinity College Dublin established 

the first third-level programme for 

people with an intellectual disability 

in Ireland. The Trinity Centre for 

People with Intellectual Disabilities 

provides access to education and 

ultimately to the workplace to people 

who previously would have been 

excluded from both. Employers such 

as Bank of Ireland have recognised 

the contribution that can be made by 

those from such marginalised groups. 

Promoting familyfriendly 

policies 

Most fathers in the workplace belong 

to a generation of men who place 

more value on work-life balance and 

taking time off with their children. 

Yet most family-friendly policies 

tend to be aimed at women and it is 

usually women who end up leaving 

the workforce to care for children 

or ageing parents. President and 

CEO of New America, Anne-Marie 

Slaughter, and Facebook COO, Sheryl 

Sandberg, agree that, in order to 

support women’s progression in the 

workplace, men must be allowed to 

take more responsibility at home. 

Organisations are beginning to 

encourage male employees to avail 

of family-friendly practices by 

“normalising” such practice. In the 

US, Facebook offers four months of 

paid leave to both male and female 

employees. Its CEO, Mark Zuckerberg, 

made a very public statement by 

taking two months’ paternity leave 

when his daughter was born. 

Conclusion 

The key to creating a diverse 

workplace is really quite simple. 

The starting point is to look beyond 

compliance and do what is right, 

rather than what is required. The 

role of senior management is to 

set the tone, to educate people and 

empower them to act; to make them 

accountable and trust them to do the 

right thing. Then, pay real attention 

to the results. 

Intel’s Chief Diversity Officer, 

Danielle Brown, suggests that, 

“For diversity and inclusion work 

to really be successful and really 

break through, it absolutely can’t 

be an initiative that is buried in HR. 

Diversity and inclusion absolutely has 

to be an integral part of culture and 

part of everything that we do.” 

With the implementation of 

such positive initiatives and future 

generations shifting attitudes and 

expectations, workplaces are being 

reshaped to become not just diverse 

but inclusive, closing the circle so 

that the term ‘equality’ reclaims its 

real meaning – the state of being 

equal, especially in status, rights 

or opportunities. 

DAWN LEANE 

Dawn Leane is Director of People 

and Resources at Chartered 

Accountants Ireland. 


The Valuation of 

Businesses and Shares 

A Practitioner’s Perspective 

2 nd Edition by Des Peelo 

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Updated for changes in relevant guidance and law, this new, 2nd 

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This book is available to buy from our online bookstore at 

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The Essential Manager 

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Enda Larkin 

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Expertise in Challenging Times


41 

Thoughts on diversity... 

Padraig McManus, Chair of eir and member of Council 


Be aware, and deliver on theory 

The main obstacle to raising awareness 

of diversity is the failure to understand 

what it means. In my experience, 

diversity has expanded to cover a range 

of differences that were not evident 

in this country as recently as 15 years 

ago. Ireland has become a multicultural 

society, prompting the need for 

businesses and individuals to reassess 

their understanding of diversity and 

their capacity to embrace change. 

While everyone is individually 

responsible, the lead must come from 

management. Management teams need 

to send clear signals to their employees 

and business partners that they welcome 

and promote diversity in all its forms. 

When it comes to gender equality in 

particular, in an ideal world it would be 

self-regulating. Even though progress 

has been made, quotas are required to 

achieve a balance – but they are not 

required in perpetuity. If gender balance 

is implemented we will find that, over 

a relatively short period of time, it will 

become self-sustaining. 

Position your firm 

as a talent magnet 

Attracting difference and fostering a 

culture that embraces talent diversity 

is critical for organisations looking 

to gain competitive advantage, foster 

innovation and be a talent magnet to 

the modern workforce. In PwC’s most 

recent Global CEO Survey, CEOs cite 

challenges in finding and recruiting 

uniquely human capabilities such as 

adaptability, collaboration, creativity and 

empathy – all skills at the centre of being 

an inclusive professional. The ability 

to foster inclusiveness and manage 

difference will only become more 

important for both businesses and talent. 

Good practice and 

sound business 

The promotion of equality of 

opportunity and recognition of 

diversity in the workplace is not 

only good management practice; it 

also makes sound business sense. 

Valuing the full range of talents 

and perspectives of our people 

ensures that organisations have a 

breadth of viewpoints, experiences 

and intellectual skills needed to 

succeed within an evolving working 

environment and marketplace. 

This in turn will lead to increased 

innovation, engagement, customer 

service and competitive advantage. 

Quotas may be a 

necessary evil 

I’m sure there are still some people out 

there who haven’t been convinced by 

the business case of having a diverse 

leadership and workforce, but they are 

the minority at this stage. Until we see 

more females on boards and at senior 

level, however, we won’t be able to 

inspire the next generation. This may 

support the argument for quotas in the 

short-term until we get a decent pipeline 

for the next generation. We also need to 

ensure our workplaces are supportive 

of a balanced work-life regime. It’s 

important that workplaces allow people 

to work and have an outside life. 

Aoife Flood is Senior Manager of the Global Diversity 

& Inclusion programme at PwC International. 

Keith Scott FCA is Business Performance Manager at 

Northern Ireland Water. 

Louise Kelly FCA is Audit Partner at Grant Thornton in 

Northern Ireland. 


42 

Audit 

Technical 

The audit of the 

future 

As technology fundamentally changes the nature 

of the audit, how can auditors use technology to 

enhance the way they analyse information? 

Our future is characterised by unparalleled 

organisational and informational 

complexity, with corporate and business 

reporting evolving rapidly. If the audit is to keep 

pace with these changes, we should ask ourselves 

the question: “What will the audit of the future 

look like and will our audit teams have the 

requisite skills to deliver this proposition?” 

There are two options to consider. First, to 

continue with the status quo whereby the audit 

is basically a control function for corporate 

businesses. And secondly, to be more progressive 

and drive change by developing a more 

insightful audit for this increasingly complex 

environment and, in doing so, win back trust and 

be regarded as custodians of the public interest. 

If we agree that the process needs to develop, 

then technological advances are a game changer 

for the audit. The use of big data and analytics 

are enablers for auditors to assess everincreasing 

volumes of data, thereby allowing 

them to better identify financial reporting, fraud 

and operational business risks and ultimately 

deliver a more relevant audit. 

Technology also affords us the opportunity to 

deliver increasingly comprehensive testing with 

improved focus and audit quality. These new 

capabilities signal a significant change for our 

profession, but also a wealth of opportunity. We 

can enhance our service offering by providing 

insights that are data-driven to support decisionmaking, 

and implement systems that are 

increasingly streamlined, agile and easy to 

tap into. 

BY EOIN MacMANUS 

Game changer 

The technological advances of the past few 

years are making high-performance computing 

and the ability to obtain valuable insights from 

client data more accessible to audit teams. The 

advent of internally hosted cloud computing 

and affordable data storage has improved 

the availability of increased computational 

capability, which we can effectively integrate 

into the audit process. This enables audit teams 

to consume larger volumes of audit-relevant data 

than previously possible. 

The combination of big data, advanced 

analytics and visualisation technologies is 

delivering audit and business insights that 

impact on the way an audit is planned, executed 

and delivered. For example, instead of testing 

a sample of revenue transactions to assess the 

appropriateness of revenue recognition, an 

auditor can now analyse all revenue and contrarevenue 

transactions to identify inconsistencies 

across the business or anomalies with specific 

customers or business units. This allows 

us to identify transactions that fall outside 

expectations for further examination 

and testing. 

Auditors can also categorise activity based 

on its attributes, identify risks and drill down to 

examine the underlying transactions and details 

that help to explain why something deviates 

from the norm. Testing procedures are targeted 

and audit evidence covers a complete population 

of transactions, which increases the quality 

of the audit while providing more meaningful 


APRIL 2017

Audit 

43 

insights for stakeholders and 

clients alike. 

Starting earlier 

From EY’s perspective, these 

developments have enabled us to be 

more forward-looking much earlier 

in the audit process. Historically, 

analytics were mainly used to carry 

out year-end substantive procedures. 

In those cases, to validate the 

account balance, we would obtain the 

underlying details from the client and 

then select and analyse a sample. Now, 

we begin gathering audit-relevant data 

earlier in the audit process, which in 

turn influences our audit scoping, risk 

assessment and planning. 

For example, analysing the details 

of a loan portfolio in advance by 

applying our collective quantitative 

expertise – financial, risk management 

and information technology – helps us 

to better assess the risk profile of that 

portfolio. This allows us to focus our 

resources on high-risk items and those 

where more judgement is required, 

thus delivering higher value to the 

client. 

Increasing expectations 

The current economic climate 

continues to emphasise the role of 

independent auditors in financial 

markets, with increasing expectations 

on the scope and value of the audit. 

Technology innovation also has 

a transformative impact on the 

audit and provides an opportunity 

to further align the audit with 

the expectations of the regulator, 

investors and clients. However, the 

practicalities of embedding new 

technologies into the audit process are 

not without challenges. 

Data capture has traditionally been 

an onerous task. In many cases, clients 

are concerned about the security 

of their data and are reluctant to 

have that data taken outside their 

organisations. Building analytical 

models that produce high-quality 

audit evidence and valuable business 

insights across multiple business 

processes and industries is no small 

task. Furthermore, the availability of 

qualified and experienced resources to 

process and analyse the data is scarce. 

People investment 

While the use of technology will 

enable companies and their auditors 

to identify inconsistencies in business 

activity, the use of data analytics 

will require a very different skillset. 

Analytics specialists will be needed 

with the expertise to identify the 

objective and data requirements of 

the analysis; to apply the necessary 

technology to capture the data; 

and finally to organise the data in a 

meaningful way so that the results 

of the analysis can be interpreted 

appropriately and provide relevant 

audit evidence. 

To evolve in parallel with this new 

world forming, firms will need to hire 

specialists who have the requisite 

technological skills. While having 

these specialists on board will be 

essential, it will also be necessary to 

educate and empower audit teams to 

ensure they have the knowledge to 

identify when to commission these 

services. Audit teams will also need to 

know the right questions to ask these 

specialists, and have the ability to 

comprehend the answers they receive. 

From a control perspective, audit 

teams will need to manage internal 

specialists. This means having 

the knowledge to interrogate and 

interpret data in a way that ensures 

the effective use of technology, thus 

minimising risk. 

As technology evolves, so do the 

challenges and risks for auditors 

and the businesses they audit. This 

leads to questions like: how will the 

audit be managed via robotic process 

automation (RPA) and continuous 

controls monitoring? Will auditors be 


44 

Audit 

able to recognise and analyse the risks 

associated with cyber-crime and the 

impacts on reputation? 

While the advancement of 

technology is a compelling proposition 

for all of us, auditors will need to have 

the skills to limit the risks from the use 

of technology and ensure minimum 

disruption to their clients’ businesses. 

Moving on to the benefits of 

technology in the audit, it has helped 

people learn new skills, spend less time 

on manual, repetitive tasks, spend 

more time on analysing the evidence 

and following up on identified issues 

using their developed knowledge. It 

has also opened up opportunities for 

members of the audit team to move 

into specialised roles within the team 

that manages the analytics function. 

Prepare for more innovation 

The digital age is ever evolving and 

as such, we can count on innovation 

throwing up more issues for the audit 

profession to solve. Businesses and 

their auditors will need to assess the 

unknowns before they can take full 

advantage of these technologies. 

Take blockchain as an example. It is 

set to transform financial transactions, 

and thus the world of corporate 

reporting. It is envisaged that, with 

the advancement of blockchain, we 

could soon see transactions executed 

automatically and verified in real time 

with a computer settling derivative 

contracts on your behalf. In this world 

of real-time systems offered through 

a distributed ledger, it could enable 

companies to close their books every 

day while highlighting anomalies as 

they emerge. 

Businesses will therefore need to 

be ready for the many disruptions 

that blockchain could create. This 

means shaping the organisation’s 

strategy so that it is innovation-ready 

with the right technology platform 

in place. It also means understanding 

what blockchain can do for every 

department and how finance can 

innovate, using blockchain to drive the 

organisation’s future success. Auditors 

will also need to be prepared as they 

will be required to audit whether or 

not the distributed ledger systems are 

working correctly. 

We can look forward to more real-time audit 

and real-time reporting and less time spent on the 

onerous tasks... it will also make our work more 

dynamic by producing more tangible insights and 

enabling us to better assess true enterprise value. 

Similarly, artificial intelligence 

will allow us to digitise unstructured 

data, such as paper contracts, thereby 

enabling the software to analyse the 

information the way accountants 

would – just a lot faster. The parallel 

processing of vast amounts of readily 

accessible data and improved learning 

algorithms are already in use within 

global practices. 

Adapt or get left behind 

Technology is already having a 

profound impact on audit and the 

value it provides. In the long-term, we 

can look forward to more real-time 

audit and real-time reporting and less 

time spent on the onerous tasks that 

consume so much finance resource 

today. It will also make our work 

more dynamic by producing more 

tangible insights and enabling us to 

better assess true enterprise value by 

incorporating unstructured data. 

There will be new issues and 

challenges to solve and as we approach 

this new frontier, it is safe to say that 

continued digital transformation 

will result in an ever-changing work/ 

life experience for us at home and 

in the office. This new world will be 

more complex, yet offer more simple 

solutions. It will also provide us with 

more excitement as we engage with 

new technologies. 

And as with the past, we will turn 

challenges into solutions and thus find 

the right path for us as an industry. We 

will harness the use of technology and 

the opportunities it presents for our 

profession to win back trust and also 

be regarded as true custodians of the 

public interest. 

EOIN MacMANUS 

Eoin MacManus FCA is the Managing 

Partner of EY Financial Services in Ireland. 


APRIL 2017

TALK TO TOMORROW’S 

ACCOUNTANTS 

TODAY 

TO ADVERTISE 

Contact: Dylan Conway, 

Sales and Marketing Specialist 


Phone: +353 1 637 7241 

Email: Dylan.Conway@charteredaccountants.ie

46 


FRS 102: UK & Irish 

GAAP to get easier 

before it gets harder? 

In FRED 67, the Financial Reporting Council has published 

its proposals to relax and improve aspects of FRS 102. 

BY FIONA HACKETT AND TERRY O’ROURKE 

By now, a huge number of Irish 

companies have prepared 

one, if not two, sets of annual 

accounts in accordance with FRS 102 

The Financial Reporting Standard 

applicable in the UK and Republic of 

Ireland. Many of these companies had 

to change aspects of their accounting 

to comply with FRS 102, such as 

accruing holiday pay and recognising 

foreign exchange contracts at fair 

value – two areas of accounting 

where the UK’s Financial Reporting 

Council (FRC) specifically made FRS 

102 more rigorous than old GAAP. 

As part of its triennial review 

of FRS 102, the FRC heard 

concerns from preparers and other 

stakeholders about aspects of FRS 

102 where the case for its degree of 

rigour was not so compelling. 

Areas of concern 

Aspects of FRS 102 that caused 

particular concern to many 

commentators included: 

• The complexity of having to 

account for loans at fair value, 

rather than amortised cost, 

where the loans do not meet the 

rules-based definition of “basic” 

as prescribed in FRS 102; 

• The impracticality of small 

companies having to apply net 

present values to interest-free 

loans from director shareholders; 

• The difficulty and questionable 

usefulness of having to identify, 

recognise and measure new 

types of intangible assets in 

acquisition accounting; 

• The cost of having to obtain 

a fair value for accounting 

purposes for property that 

is rented to another group 

company, where that property is 

not included at fair value in the 

group accounts; and 

• The inconsistent interpretation 

of the definition of a financial 

institution under FRS 102, which 

has caused uncertainty about 

which companies have to provide 

enhanced disclosures about their 

financial instruments. 

The good news is that the FRC 

has listened to these concerns and 

proposes to relax these requirements 

of FRS 102, just as it reduced the 

burden of shareholder notification 

for companies that were qualified 

to avail of the reduced disclosures 

under FRS 101 and FRS 102. The FRC’s 

proposals to change FRS 102 are 

contained in the financial reporting 

exposure draft, FRED 67 Draft 

Amendments to FRS 102, which has 

just been issued. 

The proposals would result in 

fewer loan assets and liabilities 

having to be fair valued because of 

the proposed wider definition of 

what loans qualify as “basic”. 

The proposed option not to apply a 

present value to interest-free or nonmarket 

rate loans would be available 

only to small companies and in 

relation to loans from shareholder 

directors that are natural persons. 

The proposals would allow less 

intangible assets to be recognised in 

acquisition accounting than under 

FRS 102, and would provide an option 

for a group company to avoid the 

need to fair value a property it has 

rented out to another company which 

is not an investment property in the 

group accounts. 

FRED 67 proposes that the revised 

FRS 102 would be effective for 

reporting periods commencing on 

or after 1 January 2019, but allowing 

early adoption once the revised FRS 

102 is finalised, which could be before 

the end of 2017. In this case, many 

preparers may choose to avail of 

its proposals in their 2017 accounts. 

Early adoption would, of course, come 

with the caveat that the whole of the 

revised FRS 102 should be adopted, 

and not all of the proposals of 

FRED 67 represent relaxation of the 

existing requirements of FRS 102. 

FRED 67 emphasises that its 

proposals are intended to balance 

improvements in the quality of 


APRIL 2017


47 

financial reporting with maintaining 

stability and improving the 

usability of FRS 102. In explaining 

its proposals, the FRC uses the 

terms “easier”, “simpler” and “costeffective”, 

demonstrating its 

commitment to accounts being based 

on a financial reporting standard 

that is proportionate to the size 

and complexity of the entity and 

the information needs of users. 

The subtitle of FRED 67, which is 

Triennial Review 2017: Incremental 

Improvements and Clarifications, 

further reflects the objective of 

maintaining the stability of financial 

reporting. 

Transitional arrangements 

The usual rule of accounting when 

accounting policy changes are made 

is to restate prior year numbers with 

retrospective effect. In recognition 

of the effort that having to restate 

prior year numbers would involve 

where existing accounting policies 

are changed as a consequence of 

applying the new, less onerous 

accounting, FRED 67 proposes some 

exemptions from full retrospection. 

One of these exemptions relates 

to companies within groups that 

had to fair value properties rented 

out to other group companies under 

FRS 102 and that choose to cease fair 

valuing under the FRED 67 proposal. 

The existing fair value under FRS 

102 would be permitted to be carried 

forward as a deemed cost on applying 

the revised FRS 102. In relation to 

investment properties generally, 

FRED 67 proposes to remove the 

existing exemption where obtaining 

values would involve undue cost or 

effort, on the ground that all entities 

should be able to do so without 

undue cost or effort. 

FRED 67 also proposes that, for 

future acquisitions, companies 

need not recognise the additional 

intangible assets required by FRS 

102. Any additional intangible assets 

already recognised under FRS 102 in 

past acquisitions would be required 

to continue to be recognised, thus 

avoiding the need for prior year 

restatement. There would also be an 

option for companies to recognise 

In addition to its proposals to relax aspects 

of FRS 102, the FRC also proposes to introduce 

into FRS 102 certain areas of accounting on which 

FRS 102 is currently silent or where commentators 

suggested that its requirements should be clarified. 

the wider range of intangible assets 

in future acquisitions, subject to 

applying this option consistently 

to classes of intangible assets and 

explaining in the accounts why this 

approach has been adopted. 

Other proposed changes to FRS 102 

In addition to its proposals to relax 

aspects of FRS 102, the FRC also 

proposes to introduce into FRS 102 

certain areas of accounting on which 

FRS 102 is currently silent or where 

commentators suggested that its 

requirements should be clarified. 

These include macro-hedging (to be 

addressed by cross reference to IAS 

39), debt equity swaps, hyperinflation 

and transfers of a business in a group 

restructuring. 

Other incremental improvements 

proposed in FRED 67 include 

additional guidance on how to apply 

the fair value methodology and a 

closer alignment of accounting for 

share-based payment with IFRS. 

An area where FRED 67 proposes 

a significant additional disclosure 

relates to the Cash Flow Statement. 

FRED 67 proposes the inclusion of 

a net debt reconciliation, which 

has continually been requested by 

investors and, indeed, the old FRS 1 

required such a reconciliation. 


48 


The FRC recognises that 

additional guidance in FRS 102 

is desirable on how to determine 

whether an entity is acting as a 

principal or an agent, and FRED 67 

proposes to add such guidance based 

on IAS 18 Revenue. 

Recent IFRS standards 

Perhaps equally important to the 

proposals to change FRS 102 being 

made by the FRC is the fact that 

FRED 67 is not proposing to fasttrack 

the more recent new IFRS 

standards into FRS 102, such as IFRS 

15 on revenue, IFRS 16 on leases and 

the expected loss model of IFRS 9. 

FRED 67 states that these will be the 

subject of a later consultation by the 

FRC and will not be effective before 1 

January 2022. 

The FRC also considered whether 

to incorporate into FRS 102 the 

updated rules of IFRS on how to 

identify when one entity controls 

another, as set out in IFRS 10 

Consolidated Financial Statements. 

The FRC decided not to propose 

changing this aspect of FRS 102. 

However, FRED 67 recognises that 

this may result in certain structured 

or special purpose entities not being 

consolidated under FRS 102 and 

proposes that additional disclosures 

about such entities should be 

included in the accounts. 

Financial instruments: accounting 

and disclosure 

A major feature of FRS 102 is the 

choice it offers on accounting for 

financial instruments and the 

financial institutions it requires 

to give enhanced disclosures on 

financial instruments. 

Under FRS 102, preparers can 

choose whether to apply Sections 

11 and 12 of FRS 102, or IAS 39, or 

IFRS 9 in accounting for financial 

instruments. The FRC had to 

consider how FRS 102 should deal 

with these choices as the effective 

date of IFRS 9, as the replacement 

for IAS 39, draws nearer. FRED 67 

proposes that the three options 

should be retained in FRS 102 and 

specifies which version of IAS 

39 should be used where the IAS 

39 option is chosen. As a futureproofing 

measure, FRED 67 proposes 

that the version of IAS 39 to be 

used is the version that is effective 

at the preparer’s year-end date, 

The Financial Reporting Council recognises 

that additional guidance in FRS 102 is desirable on how 

to determine whether an entity is acting as a principal 

or an agent, and FRED 67 proposes to add such 

guidance based on IAS 18 Revenue. 

and proposes that, when IAS 39 is 

superseded by IFRS 9, the relevant 

version of IAS 39 will be the one 

that was effective at the date it was 

superseded by IFRS 9. 

As well as proposing an 

amendment to the definition of a 

financial institution under FRS 102, 

which will reduce the number of 

such institutions required to provide 

enhanced disclosures, FRED 67 notes 

that any entity with risks arising 

from financial instruments that are 

“particularly significant” may need 

to provide additional disclosures 

to enable users to evaluate the 

significance of financial instruments 

to its financial position and 

performance. 

FRED 67 also proposes to remove 

retirement benefit plans from the 

list of entities defined as financial 

institutions; retirement benefit 

plans will still provide the specific 

disclosures specified for them by FRS 

102 Section 34. 

To make FRS 102 clearer and easier 

to use, FRED 67 proposes to add a 

number of examples illustrating 

which types of financial instruments 

should be accounted for at amortised 

cost and which types at fair value. 

Conclusion 

Given the very wide variety of 

companies that use FRS 102, from 

the largest private companies to 

much smaller entities, it is not 

surprising that a mix of views was 

expressed by stakeholders on the 

future of FRS 102, from those who 

asked for a significant relaxation 

of its requirements to those who 

considered it should move more 

quickly to keep pace with changes 

in IFRS. The FRC considered 

that requests for amendment in 

some areas may reflect incorrect 

application of FRS 102, rather than 

a lack of clarity in FRS 102. It may 

provide additional informal guidance 

on such issues. 

In finalising the 140 pages of 

proposals in FRED 67, the FRC has 

had to consider very carefully which 

aspects of FRS 102 should be relaxed 

and which aspects should be retained 

or improved, while identifying the 

aspects of accounting that should 

now be introduced into FRS 102. 

In accordance with its usual 

practice, the FRC has invited 

comments on its proposals with 

those comments due by 30 June 2017. 

As many of the proposals represent 

an easing of FRS 102, it is important 

to note that they will not be effective 

until the final revised FRS 102 is 

issued. While many commentators 

can be expected to agree with the 

FRC’s proposals, others may not be as 

supportive. Now that we have seen 

how open the FRC is to considering 

the views expressed by stakeholders, 

if you have views one way or the 

other on the proposals of FRED 67 to 

change our GAAP, why not accept the 

FRC’s invitation to comment? 

FIONA HACKETT 

Fiona Hackett FCA is a Director with PwC and 

a member of the Accounting Committee of 


TERRY O’ROURKE 

Terry O’Rourke FCA is a Consultant with 

PwC and chairs the Accounting Committee 

of Chartered Accountants Ireland. 


APRIL 2017

LEADING PROFESSIONAL PUBLISHING

50 

Restructuring Trends 

Disruption is shaping 

restructuring trends 

While 2017 is awash with uncertainty, Luke Charleton and 

Damien Murran have identified the trends likely to 

affect the island of Ireland in the months ahead. 


APRIL 2017


51 

The 2016 restructuring market 

on the island of Ireland saw a 

continuation of the previous year 

with financial institutions continuing 

to de-leverage non-performing loans 

through further loan portfolio sales and 

subsequent settlement or enforcement 

measures. In addition, the National 

Asset Management Agency (NAMA) and 

international banks moved to the final 

stages of disposal of distressed loans and 

exiting the Irish market respectively. 

In December 2016, EY released its 

Economic Eye – Winter Forecast 2016 

report which predicted all-island growth 

of 3.7% GDP for 2016 and commented 

on the outlook for the economy in 2017 

and beyond to 2020. The report looks 

positively toward steady growth in 

2017. However, this is through the lens 

of continued uncertainty following the 

significant geopolitical events which 

took place in 2016 – namely Brexit and 

the success of Donald J. Trump in the US 

electoral campaign. These fundamentals 

will shape the growth of the all-island 

economy; therefore, any resultant 

changes to the trading environment will 

be hugely influential for the future of the 

economy in the months ahead. 

In October 2016, EY released its 15th 

edition of the Global Capital Confidence 

Barometer which surveyed executives 

across 45 countries. Looking ahead, the 

report provided a positive outlook for 

M&A activity. However, the underlying 

macro environment and corporate 

strategy assessment still present 

continued uncertainty and challenges. 

Due to remaining legacy debt, global 

uncertainty, and the continued traction 

of technology and ambition to innovate 

across all sectors, we believe that the 

restructuring market is in a period of 

change. In 2017, we expect companies to: 

• Continue to work through 

remaining legacy debt issues; 

• Plan for, and adapt to, a new trading 

environment; and 

• Restructure to innovate. 

Current developments are changing 

the way in which businesses analyse risk 

and how they apply themselves to deal 

with disruption. So what does this mean 

for business on the island of Ireland? 

Table 1: EY Global Capital Confidence Barometer – Executives rank the greatest 

economic risks to their core business 

Economic and political stability in the EU 

(including Brexit). 

An unexpected rapid slowing of growth in 

China. 

Slowdown in global trade flows (economic 

nationalism, protectionism, industrial policy. 

Global geopolitical instability (including 

terrorism, border and territoial disputes). 

Political stability in your home country/ 

region including the rise of populist parties. 

High volatility in currencies, commodities 

and other capital markets. 

1. Working through legacy debt 

Loan book sales: the period from 2011 to 

2016 saw approximately €95 billion of 

residential, commercial and development 

loan book sales with approximately a 

further €5-6 billion in progress at the end 

of 2016 or expected by the end of 2017. 

The year 2016 inevitably saw the 

continued shift for many borrowers 

from dealing with traditional banking 

relationships to one of dealing with 

international funds who acquired 

their debts. The work-out strategies for 

the individual loans within the loan 

portfolios acquired by the funds are 

well under way and, in the case of some 

early loan portfolio acquisitions, they 

are practically complete. Typically, these 

work-out strategies result in one of two 

possible outcomes: 

• Refinancing, or consensual disposal 

of security, or settlement of existing 

facilities; or 

• Failed refinancing or settlement 

resulting in formal enforcement 

proceedings. 

We also saw a continuation of 

receivership appointments across the 

island of Ireland in 2016, which we expect 

to continue in the months ahead. On the 

positive side, the underlying statistics 

from the Central Bank of Ireland (CBI) 

show that there was €3.282 billion in 

new lending in the first three quarters 

of 2016 in the Republic of Ireland. This is 

a positive indicator that there is credit 

in the market for good quality bankable 

propositions, and it demonstrates that 

0% 5% 10% 15% 20% 25% 30% 35% 

there are options to deal with legacy 

debt other than formal enforcement. 

This has helped a significant number 

of cooperating borrowers, but not all, to 

refinance and normalise debt levels in 

reaching a settlement with their existing 

or new lenders. 

The increased presence of alternative 

credit providers (ACPs) in the market 

has also helped the distressed financing 

space. ACPs offer competition to 

traditional lending and provide 

optionality on refinancing that may not 

have been available previously. 

We expect to see continued activity in 

the remainder of this year for distressed 

refinance and restructuring of legacy 

debts acquired by funds. 

Residential property debt: while, at an 

overall level, there are declining trends 

in distressed residential property debt in 

ROI, the residential property debt sector 

remains extremely challenging. At the 

end of Quarter 3 2016, the CBI outlined 

the position as follows: 

• A total of 75,562 principle dwelling 

houses (PDH) were in arrears; 

• 56,350 accounts were in arrears of 

over 90 days; 

• The number of PDH accounts 

classified as restructured was 121,140, 

with 88% deemed to be meeting the 

current restructuring arrangement; 

• 14,518 buy-to-let (BTL) properties 

were in arrears of over 720 days 

with an outstanding balance of €4.3 

billion, which is the equivalent of 

18% of the total outstanding balance 


52 


Table 2: Par value of debt 

In € millions 

45,000 

40,000 

35,000 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

on all buy-to-let mortgages. There 

was a notable 5.4% increase in the 

appointment of rent receivers on the 

previous quarter; and 

• Non-bank entities now hold 45,678 

mortgage accounts for PDH and BTL 

combined. Of this number, almost 

70% are held by regulated retail 

credit firms with the remainder 

held by unregulated loan owners. 

In respect of PDH accounts held by 

unregulated loan owners, 38% are in 

arrears of over 720 days, compared to 

19% of accounts held by retail credit 

firms. 

Given the above statistics, Ireland 

finds itself in a difficult position. A 

significant portion of current residential 

debt is distressed while at the same 

time, we have an absence of appropriate 

housing supply and rents are increasing 

in the major urban and commuter belts. 

Addressing this problem remains a 

priority for Government. 

We also believe that financial 

institutions will continue to work to 

satisfy European Central Bank (ECB) 

requirements of 5.5% capital ratios. 

We expect that this will require a 

combination of restructuring initiatives 

to achieve the target by 31 December 2017. 

2. Planning and adapting to a 

new trading environment 

Taking a broader view than specific 

debt issues and looking to the trading 

environment, events of 2016 have thrown 

up new (or revisited) business challenges 

for Ireland as an all-island economy in 

2017 and beyond, particularly in the area 

of exports. 

2011 2012 2013 2014 2015 2016 

Years 

Table 3 provides a breakdown of Irish 

exports based on the most recently 

available Central Statistics Office (CSO) 

data for 2015. In this table, it is clear 

that the UK and the US are significant 

export markets. However, this is just 

over a third of our total exports. This 

is notable due to the significant shift in 

their local politics, which we witnessed 

in the second half of 2016 and were not 

forecast by the markets. While markets 

reacted in the short-term to the Brexit 

vote and the election of the new US 

President, Donald Trump, the longerterm 

outcome of these changes – as 

well as the public outlook – remains 

unknown. These political shifts and 

associated uncertainty create new 

challenges which will impact on the 

trading environment. In looking at 

these potential disrupters, we see the 

following business challenges in the 

months ahead. 

Trading 

Trading – Republic of Ireland: the UK is 

a significant export market for Ireland, 

with 13% of all exports UK-bound in 

2015. An analysis of CSO statistics by 

sector shows the following: 

• ‘Food and live animals’ amounted to 

€3.9 billion or 28% of all UK exports; 

• ‘Chemicals and related products’ 

amounted to €3.9 billion or 28% of 

all UK exports; 

• ‘Machinery and transport 

equipment’ amounted to €2.5 billion 

or 18% of all UK exports; and 

• Total exports classified as ‘Other’ 

amounted to €3.4 billion or 25% of 

all UK exports. 

The triggering of Article 50 may have 

a significant impact on Irish exports 

to the UK, with the above sectors most 

exposed. Notwithstanding any longerterm 

structural trading issues as a result 

of exit negotiations, the immediate 

trading challenges post-vote centre 

on exposure to foreign exchange (FX) 

movements and the level of dependency 

on a UK customer base. In managing 

FX exposure, businesses should seek 

to ensure they have appropriate 

structures and mechanisms in place to 

hedge material movement. Businesses 

involved in export activity with the UK 

should assess in detail the impact the 

introduction of customs and duties could 

have on their supply chain and sales 

channels. Assessing competitiveness as a 

result of any changes and ultimately any 

negative impact on profitability should 

be the primary objective. Irish exporters 

to the UK will need to be continually 

vigilant to monitor any sustained impact 

on trade and supply chains. 

Trading – Northern Ireland: a large 

proportion of Northern Ireland exports 

are to the Republic of Ireland. Northern 

Ireland companies may face trading 

challenges with the Republic of Ireland if 

custom controls are imposed as a result 

of Brexit. They too will face uncertainty 

regarding the FX movements. However, 

some view the fact that Northern 

Ireland will be the only part of the 

UK with a land border to the EU as a 

positive. Northern Ireland’s corporation 

tax rate will be reduced to 12.5% in 

2018 (from 20%). The intention was to 

encourage foreign direct investment but 

following Northern Ireland’s exit from 

the European Union and the proposed 

reduction in corporation tax in England 

and Wales, the impact may not be as 

positive. 

Corporate strategy 

From a strategic perspective, in the 

longer-term we believe that companies 

will continue to consider whether the 

UK is the most appropriate place to 

maintain their centre of main interest 

(COMI). Among other things, post the 

potential withdrawal of the UK from 

the EU, international companies with 

a UK COMI may face a challenging 

restructuring environment as any 


APRIL 2017


53 

insolvency proceedings taken in the UK 

for pan-European operations may not be 

recognised across remaining EU member 

states, depending on the withdrawal 

agreement reached. This could result 

in a requirement that UK companies 

requiring to be restructured take multijurisdictional 

proceedings, which would 

inflict an unnecessary cost and time 

burden. 

Ireland as a corporate jurisdiction 

provides optionality for companies with 

international corporate structures as, 

in its simplest form, Ireland will provide 

a base for COMI with EU recognition 

should a pending restructuring event 

materialise. Ireland has tried and tested 

corporate insolvency regimes and 

processes to support it as a location of 

choice for COMI including receivership, 

examinership, scheme of arrangements 

and members’ voluntary liquidations. 

Ireland also has well-established 

debt-listing markets for large 

organisations. A potential trigger for 

such future restructuring events, and 

a requirement to consider a companies’ 

COMI, could include refinancing of 

high yield bonds. The Western Europe 

maturity wall for high-yield bonds will 

peak at approximately €70 billion in 

2019. Thereafter, approximately €60 

billion per annum will mature over the 

period 2020 to 2022. While refinancing 

activity in this area remains strong, 

any impact on liquidity in Europe 

could have a detrimental impact on the 

ability to refinance. The ECB continues 

quantitative easing (QE) measures across 

Europe and recently adjusted asset 

acquisition strategies. QE has bolstered 

market liquidity, but it is uncertain how 

long this can continue. We will therefore 

monitor market liquidity closely as a 

negative impact in this area will have a 

far-reaching impact on the restructuring 

market across Europe. 

US and the Trump agenda 

Trade: from a trading perspective, the 

US is Ireland’s single largest individual 

export market with 24% of all Irish 

exports US-bound. As the Trump 

administration sets its policies and 

explores options to drive internal US 

production and stimulate growth, there 

is a real risk that this could negatively 

impact on Ireland’s trade with the US. 

In addition, the presence of US 

companies in Ireland is significant. 

Any policy changes to draw American 

companies back to the US would 

therefore have a huge impact on 

Ireland’s economy. From a restructuring 

perspective, we will monitor the 

following agenda items in 2017 as the 

Trump administration sets policies: 

trading incentives in the US to drive 

down US imports; tax exemptions for 

repatriation of profits to the US; and 

changes to the US corporate tax rate. 

3. Restructuring to innovate 

Innovation is driving change in how 

businesses operate and the sectors 

in which they operate. To adapt, 

Table 3: Irish exports by country in 2015 

Switzerland 

Germany 

UK 

Belgium 

United States 

Rest of the world 

companies must drive substantial 

change in their businesses to address 

these challenges. Such changes include 

sector convergence, product innovation, 

industry regulation and increased 

globalisation, as documented in EY’s 

most recent Global Capital Confidence 

Barometer report. 

We believe that this year will bring 

a new dimension to restructuring in 

the form of operational review and 

restructuring. Technological advances 

– whether it be robotics, artificial 

intelligence or the increasing use of 

data analytics tools – are changing 

how business is carried out, and the 

potential efficiencies are driving 

competitive advantage. While there is 

a perceived substantial investment, it 

has nonetheless become the competitive 

edge in many cases and will push those 

unwilling or unable to adapt out of 

business. Reviewing and implementing 

a restructuring plan can assist in 

mitigating these risks. 

Conclusion 

For 2017 we expect to see further 

formal receivership appointments and 

distressed refinancing as financial 

institutions, funds and borrowers alike 

seek to address non-performing legacy 

debt. Those seeking to manage trading 

challenges will drive an increase in 

the number of examinerships in the 

Republic of Ireland and administrations 

in Northern Ireland in 2017 as companies 

seek to restructure. 

We further expect that there will be 

an increase in the level of liquidations 

0 10 20 30 40 50 

Total exports (€ billions) 

within certain sectors, particularly for 

businesses that cannot appropriately 

monitor, plan and adapt to these 

challenges. Furthermore, technological 

change and data efficiency continues 

to challenge businesses. We will see 

an increase in operational reviews in 

order to restructure to innovate and 

future-proof businesses. While 2017 is 

awash with uncertainty and challenges, 

most can be managed through an 

identification process and early 

engagement. 

LUKE CHARLETON 

Luke Charleton is Restructuring Partner 

and Head of Transaction Advisory Services 

at EY Ireland. 

DAMIEN MURRAN 

Damien Murran ACA is Restructuring 

Director in the Transaction Advisory 

Services division at EY Ireland. 


54 

Audit Quality 

How to prepare for an 

audit quality review 

For small- and medium-sized practices, there are ‘good’ and 

‘not so good’ aspects to all audit quality review visits. This 

article highlights some tips to help you ensure your firm does 

not fall into the ‘not so good’ category. 

BY JOHN McCARTHY 

Put simply, preparation is the 

key to a successful quality 

review visit from the Institute’s 

Professional Standards team. This 

preparation will involve having detailed 

knowledge of the audit issues around 

FRS 102, Ireland’s new accounting 

framework, the implementation of 

which has mostly been straightforward. 

Where transition adjustments are 

required, however, these are not always 

supported with appropriate audit 

evidence – especially regarding the 

independent verification of the fair 

values obtained. 

Auditing standards require the 

auditor to display a sufficient degree 

of scepticism in her or his work, 

and an auditor cannot be said to 

have carried out an effective audit 

without conducting corroborative 

research and obtaining appropriate 

written representations. Furthermore, 

all auditors should prepare a 

comprehensive audit file to support her 

or his audit opinion. 

Reference should also be 

made within the audit planning 

memorandum (APM) to connect 

specific significant risks in the audit 

with the actual tests carried out. For 

the audit of the financial statements of 

a supermarket, for example, it may be 

turnover and stock completeness. For 

an audit of the financial statements of 

a quarry, on the other hand, it might be 

the restoration provision. 

There should be a link between 

the audit assertion (completeness, 

cut-off or existence, for example) and 

the individual tests executed. The 

assertions being audited must be made 

clear and the outcome of each test 

properly documented (for example, 

whether the result is satisfactory or 

unsatisfactory). If it is the latter, the 

auditor must explain the nature of the 

further work carried out. 

Analytical review (ISA (Ireland) 520 

Analytical Procedures) documentation 

must contain appropriate explanatory 

text to show why the numbers have 

or have not changed year-on-year, 

taking into account matters such as 

consideration of different revenue lines, 

expectations based on activity and 

so on. 

A mandatory requirement of ISA 

(Ireland) 315 Identifying and Assessing 

the Risks of Material Misstatement 

Through Understanding of the Entity 

and its Environment is that audit files 

show clear evidence of testing journal 

entries. This highlights the potential 

for fraud to have been perpetrated 

using seemingly innocuous journals 

to cover them up. Some auditors are 

now using audit data analytics tools 

like Information Data Extraction and 

Analysis (IDEA) to isolate outliers, 

such as unusual journals, which merit 

further audit scrutiny. 

Sample size selection often needs 

better explanation in the planning 

section of the audit file as well as more 

detail about the sampling method used 

(selected top 20 items, for example, 

then 10 random above performance 

materiality). 

Quite often, too much testing is done 

on trade creditors. When a supplier 

statement is available, for example, it 

may be unnecessary to check post-yearend 

payments as well. On pre-payments, 

there is no need to recalculate every 

figure and no need to place a copy of the 

supporting invoice on file to support 

every figure, especially when they are 

below materiality. 

With trade debtors’ verification to 

post-year-end cash receipts, audit files 

often neglect to show that the recorded 

remittances post-year-end actually 

relate to pre-year-end sales. 

Top tips 

Do not over-rely on financial statements 

presentation software; auditors must 

verify disclosures in accordance 

with Companies Act 2014 and FRS 

102. Chartered Accountants Ireland 

has some very useful toolkits for 

checking financial statement disclosure 

references. 

Note on the audit file any critical 

judgements or assessments made, as 

others reading the file may not come 

to the same conclusion. These notes 


APRIL 2017

Audit Quality 

55 

should be written clearly to justify the 

audit treatment adopted. 

Do not answer ‘Y’, ‘N’ or ‘N/A’ to 

questions in an audit programme or 

checklist without some supporting 

corroborative evidence as to why this 

is the correct answer. Just because it 

was there last year does not necessarily 

mean it is correct this year (with 

or without a change in accounting 

standards). 

In terms of related parties and 

beneficial owners, the audit team must 

be well briefed before the audit starts. 

If someone can influence the company 

– irrespective of whether they have 

entered into any transactions with the 

party or there is any required disclosure 

– the audit team must know about 

these people. For example, premises 

rented from a related-party landlord 

at a zero-rental charge is still a relatedparty 

‘transaction’ and disclosable if 

the market rent that would have been 

charged by a third party would have 

been material. 

Often, a free search on CRO will 

highlight other directorships previously 

unreported. Directors’ spouses, parents, 

children and business interests can 

be incorrectly omitted from relevant 

financial statement disclosures. 

With the new requirement on Irish 

corporates from 15 November 2016 to 

keep a register of ‘beneficial owners’ 

for anti-money laundering legislative 

purposes, auditors will need to check 

that the ultimate beneficial owners – as 

disclosed on that register – correlate 

to those disclosed in the company’s 

financial statements. 

Going concern evidence is another 

frequent bugbear on audit files. If the 

company is planning to stop trading in 

the next year, it is not a going concern. It 

is therefore important to ascertain and 

document the future business plans 

of the directors and shareholders (for 

example, to inject more working capital 

or file for liquidation). It is not enough 

to say that there is a positive balance 

sheet. If the sole director/employee is 

contemplating retirement, then the 

business may not be a going concern 

and the financial statements need to 

reflect this (for example, prepared on a 

‘break-up’ basis). 

Always follow-up on bank enquiry 

responses and obtain them before the 

audit is signed off. 

Note the difference between 

‘immaterial errors’ and ‘trivial errors’. 

Immaterial errors need to be noted for 

consideration while trivial errors do 

not. Refer to Practice Note 26 (PN26) 

Guidance on Smaller Entity Audit 

Documentation for more information. 

Where stock is material, the auditor 

is not absolved from stock-take 

attendance, even if there are expert 

stock-takers present. Expert stocktakers 

tend to be more prevalent in 

supermarket and pharmacy audits. 

Their presence is a useful addition 

to the audit evidence available to the 

external auditors, but the statutory 

auditor is still responsible for 

attending the stock-take (refer to PN25 

Attendance at Stocktaking and ISA 

(Ireland) 501 Audit Evidence – Specific 

Considerations for Selected Items) and 

assessing the work of the expert stocktakers 

under ISA (Ireland) 620 Using the 

Work of an Auditor’s Expert. 

FRS 102 has lots of useful 

exemptions, which auditors should 

become well acquainted with: Section 

35.10, which can only be used once on 

transition; Paragraph 1.8 for subsidiary 

company accounts; and Section 33.1a 

for related-party transactions in wholly 

owned groups. 

Once Section 1A is triggered for 

‘small’ companies, upon the signing 

into law of the delayed Companies 

(Accounting) Bill 2016, it will open 

up many other useful exemptions 

for certain ‘small’ entities, including 

the exemption from presenting the 

statement of cash flows. 

FRS 101 also has some useful 

disclosure exemptions for Irish/UK 

subsidiary companies preparing IFRS 

financial statements, and already 

includes the exemption from presenting 

the statement of cash flows. 

Lastly, audit report signatures 

must use the label ‘Statutory Auditor’ 

or ‘Statutory Audit Firm’, as the term 

‘Registered Auditor’ no longer exists 

under company law. 

JOHN McCARTHY 

John McCarthy FCA is Principal at John 

McCarthy Consulting Ltd. 

BE PREPARED 

When preparing for an audit quality review 

visit, ask yourself the following questions. 

Has your firm: 

• Carried out its whole firm annual 

compliance quality control review and 

documented the action plan arising? 

• Carried out the required number of 

audit, clients’ money and investment 

business cold file reviews (usually one 

file per partner) and documented the 

key action points? 

• Communicated and documented the 

findings of these internal reviews to 

relevant audit staff and partners? 

• Updated its professional indemnity 

cover? 

• Ensured that annual independence, 

fit and proper and confidentiality 

declarations have been completed 

by all relevant partners and staff, 

including sole proprietors making the 

declarations to themselves? 

• Put in place clients’ money fiveweekly 

bank reconciliations and bank 

letter of trust (for the clients’ money 

bank accounts)? 

• Filed up-to-date employment 

contracts with all staff and 

documented staff appraisals for all 

audit personnel? 

• Checked that, where the firm has 

recently incorporated its audit 

service, it has made the necessary 

arrangements for student trainee 

contracts to be registered with the 

Institute’s education department in 

the new entity’s name? 

• Got up-to-date CPD records for all 

relevant partners and updated CPD 

records for all other audit personnel? 

• Written audit quality control 

procedures in place to deal with the 

‘International Standard on Quality 

Control for Firms that Perform Audits 

and Reviews of Historical Financial 

Information and Other Assurance and 

Related Engagements’ (ISQC 1)? 

If you have answered “no” to any of the 

above, or are unsure of the answer: do your 

homework. These are some of the many 

items examined during a review. 


56 

Tax 

Tax 

The reality of the 

Revenue audit 

Revenue audits can be devastating. The key is to 

give yourself ample time to prepare. 

BY JIM KELLY 

When you or a client receive a notice of a 

Revenue audit, time becomes critical. It is 

very important that an audit notification 

receives your immediate attention, or that of your 

client, as even innocent errors can give rise to 

serious tax and interest exposures as well as severe 

penalties, publication and potential prosecution. 

In recent press reports, we have even seen prison 

sentences for the more serious tax offenders. 

It is possible that the taxpayer may 

inadvertently have a tax exposure which will 

come to light in the audit. Consequently, it is vitally 

important to consider the benefits of making 

a qualifying disclosure and the very serious 

implications of not doing so. The taxpayer should 

also consider a tax review before the Revenue visit 

to identify any potential exposures in their system. 

More and more, we are seeing audit notifications 

giving barely the 21 days required under Revenue’s 

Code of Practice for Revenue Audit and other 

Compliance Interventions. This leaves little 

time for completing any meaningful review to 

identify issues that should be disclosed prior to 

commencement of the audit. 

Importantly, the code provides for an extended 

period of two months for preparation of a 

qualifying disclosure. Paragraph 3.13 of the code 

states: “In the case of a ‘prompted qualifying 

disclosure’, if an additional 60 days to prepare 

the disclosure is required, the written notice of 

intention to make a disclosure must be given within 

14 days of the day of issue of the ‘Notification of a 

Revenue Audit’.” 

Revenue recently amended the code to specify 

that: “A notice of intention to make a qualifying 

disclosure will not be granted where the taxpayer 

has already availed of a 60-day period in respect of 

the same issue or period, i.e. only one 60-day period 

will be allowed to prepare a qualifying disclosure 

for the same issue or period.” 

It is worth noting that tax interest and penalties 

do not always have to be paid where a tax liability 

is discovered. There are, for example, occasions 

when failure to account for tax leads to the 

Exchequer being in a tax-neutral position. These 

are generally called “no loss of revenue” situations. 

Where the taxpayer can demonstrate that this 

applies, Revenue will generally not seek to collect 

the tax. However, Revenue are still likely to seek a 

penalty and possibly some amount of interest if the 

Exchequer was out of funds at any stage as a result 

of the error – even if only for a short period. 

Preparing a qualifying disclosure 

Given the significant benefits to the taxpayer in 

making a qualifying disclosure in advance of the 

commencement of a Revenue Audit, it is important 

to note the following in relation to the disclosure: 

• The burden placed on taxpayers selected 

to comply with the timeframes for making 

disclosures to Revenue; 

• The requirement that a disclosure should be 

up-front, with payment for back tax as well as 

interest and in writing; 

• The tax and interest must be calculated at the 

outset and paid at the start of the audit; and 

• The severe consequences of making an 

incomplete disclosure or indeed, from not 

making a disclosure at all. For this reason, it 

is vital to review all the tax heads in advance. 

Revenue considers incomplete disclosures for 

publication in the Revenue list of tax defaulters 

and for prosecution in very serious cases. 


APRIL 2017

Tax 

57 

BRASS TAX 

Current developments 

Revenue audits have always presented 

a challenge. However, the audit 

techniques currently being used by 

Revenue have brought matters to a 

new level. Most audits now consist of 

electronic or eAuditing testing, which 

involves Revenue obtaining data 

downloads and doing the testing at 

Revenue’s offices using sophisticated 

data analysis software designed to detect 

inconsistencies and errors as well as 

fraudulent activity. 

If an error is discovered and an 

additional tax liability is found to be due, 

Revenue will almost certainly charge 

statutory interest (8% or 10% per annum 

depending on the tax involved) and 

often a penalty, which will vary in size 

depending on a number of factors: 

The UK Spring Budget 2017 was delivered recently, but was 

it bland or bullish? Leontia Doran investigates. 

• Was the error disclosed by the 

taxpayer? 

• Was the error material and was it 

deliberate? 

• Did the taxpayer co-operate with the 

auditor? 

• Has the taxpayer made previous 

disclosures? 

The level of penalty is much greater 

where a disclosure has not been made, 

and Revenue is usually slow to permit 

an argument of “innocent error”. Where 

a penalty in excess of 15% is applied by 

Revenue, this can lead to the taxpayer 

being published in the national 

newspapers unless that matter was 

disclosed in advance. It is therefore vital 

that sufficient time is allowed to prepare 

for a Revenue audit and that any matters 

of which the taxpayer is aware are 

disclosed prior to the audit. 

The code has recently been updated 

and it is important that any taxpayer 

who is selected for Revenue audit makes 

themselves aware of its provisions – in 

particular, in relation to the applicability 

of penalties and the other more serious 

sanctions mentioned above. 

JIM KELLY 

Jim Kelly is a Director in Grant Thornton’s 

tax department. 

Spring is in the air. But was there a spring in Chancellor Hammond’s step when 

he delivered his first (and last!) Spring Budget on 8 March? With the triggering of 

Article 50 imminent, many expected further measures showing that Britain is “open 

for business”. These measures, and the word “Brexit”, were absent from his speech. 

The Chancellor’s approach seemed to be ‘steady as she goes’ on Budget day. There 

were perhaps three tax headline items – increased national insurance (NIC) for 

the self-employed, a concession on the Making Tax Digital (MTD) timetable and 

a reduction in the dividend allowance. But just a week later, the Chancellor did a 

u-turn on his Class 4 NIC proposal, confirming the changes will not go ahead. The 

increase in Class 4 NIC alone was expected to raise over £2 billion in tax revenue by 

2022. How will the Chancellor now fill this gap? 

MTD is to be delayed by one year (until April 2019) for businesses below the VAT 

registration threshold – a move that is not entirely surprising. This deferral is 

welcomed as it allows more time for software testing and businesses to prepare for 

the change. But does this go far enough? In these uncertain times, businesses need 

certainty. A final announcement on the complete exemption threshold is needed 

soonest – this is currently set at £10,000. We would like to hear your views (contact 

leontia.doran@charteredaccountants.ie) on MTD and how it will affect your daily 

work. 

And finally, with under a year to the proposed commencement of the Northern 

Ireland corporation tax regime on 1 April 2018, the reforms necessary to put the 

Northern Ireland Executive’s finances on the sustainable footing required to 

complete corporation tax devolution should not be forgotten. 

In the meantime, the Coleraine Enterprise Zone forges ahead. The pilot scheme for 

the new zone was formally designated by HM Treasury in August 2016. The zone will 

offer 100% enhanced capital allowances for qualifying expenditure in year one. 

Leontia Doran is Taxation Specialist at Chartered Accountants Ireland. 


58 

Tax 

Are the self-employed 

paying their way? 

The ultimate victim of the Chancellor’s 

recent u-turn will be tax simplification. 

BY SEAN LAVERY 

On Wednesday 8 March, the 

Chancellor gave his last 

Spring Budget with the 

Budget process now moving to an 

annual cycle in November. From a 

tax perspective, the content was very 

light, but it was more than enough 

to create a political storm, with the 

Chancellor accused of breaking 

election manifesto promises 

in raising national insurance 

contribution (NIC) rates for the selfemployed. 

The Chancellor was in a sticky 

position. While the UK economy has 

performed better than anticipated 

following the Brexit referendum, he 

clearly anticipates choppy waters 

during the Brexit period and would 

not enter into a Budget giveaway. 

With extra money required for 

social care, he had to raise additional 

taxes and targeted two areas: he 

announced increases to Class IV NIC 

contributions for the self-employed 

and reduced the Dividend Allowance 

from £5,000 to £2,000. Both changes 

are to take effect from 6 April 2018. 

There are valid reasons for the 

self-employed to pay more NIC. 

Employees can pay up to 12% NIC on 

their earnings with employers paying 

an additional 13.8%. Self-employed 

Class IV NIC rates for 2017/18 are 0% 

for profits of £0-£8,164; 9% for profits 

of £8,164-£45,000; and 2% for profits 

over £45,000. The self-employed also 

pay Class II NIC of £2.85 per week, 

but Class II NIC will be abolished 

from 6 April 2018. 

However, the proposed increase 

in the main rate of Class IV to 10% 

in 2018/19 and then 11% in 2019/20 

caused an almighty political stir, 

with accusations of broken election 

promises (even though technically, 

the promise was only made in respect 

of Class I NIC), and of being anti- 


APRIL 2017

Tax 

59 

entrepreneurial and favouring higher 

self-employed earners at the expense 

of low-middle income earners 

etc. Following pressure from the 

press and their own backbenchers, 

the Government subsequently 

announced on 15 March that it would 

not proceed with the NIC changes. As 

a result, the only substantive change 

from a tax-raising perspective 

announced in the March 2017 Budget 

is the reduction in the Dividend 

Allowance from April 2018 to £2,000. 

So, was there merit to the 

Chancellor’s argument that the selfemployed 

are not paying their fair 

share of tax? If we take an example 

of a self-employed individual with 

profits of £45,000 per annum and 

compare this against an individual 

who runs a company and also makes 

a profit of £45,000 but extracts the 

profits by mixture of salary and 

dividend in the most tax-efficient 

manner (but sufficient to give him 

a national insurance record), the 

results are quite revealing. Based 

upon the proposed changes to the 

dividend allowance, but keeping 

all other rates and allowances the 

same (which includes ignoring 

the potential introduction of the 

Northern Ireland corporate tax rate 

from April 2018), the results are as 

outlined in Table 1 above. 

This table shows that it is possible 

for self-employed individuals to pay 

less tax by being employed through 

their own companies and extracting 

funds in a tax-efficient manner. 

They are, meanwhile, entitled to 

the full range of benefits to which 

employees are entitled, although the 

reduction in the Dividend Allowance 

will reduce the differential from 

next year. The example ignores 

other issues around deductibility 

of expenses and costs of being 

Tax Year 2017-18 2018-19 2019-20 

Self employed 

Profits 

Income tax 

National insurance 

- Class II 

-Class IV 

Net income after tax 

Company owner 

Profits 

Salary 

Profit before Tax 

Corporation Tax 

Profit after Tax 

Dividend 

Retained Reserves 

Salary 

Dividend 

Income Tax 

National Insurance 

Net income after tax 

45,000 

(6,700) 

(148) 

(3,315) 

34,837 

45,000 

(8,164) 

36,836 

(6,999) 

29,837 

(29,837) 

Nil 

8,164 

29,837 

(1,613) 

- 

36,388 

incorporated, but it clearly destroys 

the myth that individuals set up as 

self-employed solely to pay less tax. 

So what is the Chancellor going 

to announce in his Autumn Budget 

to replace the additional £2.2 

billion of Class IV NIC revenue no 

longer coming his way next year? 

Any proposed tax-raising policy 

will now be first cross-referenced 

with the Conservative Election 

Manifesto to make sure it passes 

that test. That means no increases 

in the headline rates of income 

tax, national insurance and VAT. 

This will inevitably lead to further 

tinkering of the tax system and more 

complexity as the Chancellor finds 

a way to tinker with various reliefs 

and allowances. Future changes 

45,000 

(6,700) 

- 

(3,315) 

34,985 

45,000 

(8,164) 

36,836 

(6,999) 

29,837 

(29,837) 

Nil 

8,164 

29,837 

(1,838) 

- 

36,163 

could include a further reduction 

in (or removal of) the Dividend 

Allowance, which received very 

little negative press, despite raising 

more tax than the proposed national 

insurance tax rises; a change in the 

dividend tax rate; and higher rate 

tax relief restrictions for pension 

contributions. As ever, the Chancellor 

of the day will have to walk the 

tightrope between balancing the 

books and maintaining political 

credibility and popularity. The loser 

in all this will most likely be tax 

simplification. 

SEAN LAVERY 

Sean Lavery FCA is Tax Partner 

at BDO Northern Ireland. 

45,000 

(6,700) 

- 

(3,315) 

34,985 

45,000 

(8,164) 

36,836 

(6,999) 

29,837 

(29,837) 

Nil 

8,164 

29,837 

(1,838) 

- 

36,163 

Additional tax paid 

by self-employed 

worker 1,551 1,178 1,178 


60 

Tax 

VAT matters 

David Duffy highlights the latest VAT cases and discusses 

recent VAT developments. 

Irish Revenue update 

Revenue advance opinions: Revenue 

eBrief No. 79/16, issued in September 

2016, confirmed that the standard 

period for which Revenue advance 

opinions remain valid would reduce 

from seven years to five years. eBrief 

08/17, issued in January 2017, further 

confirmed that all advance opinions 

issued by Revenue have a five-year 

time period (or less if specified by 

Revenue). This applies to VAT and 

other taxes. Taxpayers who received 

Revenue opinions before 1 January 

2012 and wish to continue to rely on 

those rulings after 1 January 2017 

must submit a copy of the opinion 

and a full application for the renewal 

of the opinion to the relevant 

Revenue district by 30 June 2017. 

EU VAT updates 

VAT treatment of road tolls: the 

Court of Justice of the European 

Union (CJEU) held that the National 

Roads Authority (NRA), in directly 

operating certain toll roads, is not in 

competition with private operators 

of other Irish toll roads. It follows 

that the NRA is not obliged to charge 

VAT on the tolls collected on roads 

directly operated by it, namely the 

M50 Westlink Bridge and Dublin 

Port Tunnel. The decision came 

in the case of the NRA versus the 

Revenue Commissioners (C-344/15), 

which was a referral from the Appeal 

Commissioners. 

As well as being of obvious 

interest to Irish motorists, the 

judgment considers important 

principles on the VAT status of public 

bodies. Under EU VAT law, a public 

body such as the NRA is generally 

not obliged to charge VAT on its 

income, except in respect of specified 

activities or where there would be 

a distortion of competition with 

private operators who must charge 

VAT. As private toll-road operators in 

Ireland must charge VAT on their toll 

income, the CJEU was asked whether 

treating the NRA’s tolls as VAT-free 

would distort competition. 

The CJEU held that there was 

no distortion of competition by 

treating the NRA’s tolls as VAT-free. 

There is currently no distortion 

of competition as the privately 

operated toll roads are in different 

locations to the NRA-operated roads. 


APRIL 2017

Tax 

61 

Furthermore there was no realistic 

threat of competition in future from 

private operators constructing a toll 

road in competition with the existing 

NRA toll roads. 

VAT recovery on holding company 

costs: CJEU case law on the 

entitlement of holding companies 

to VAT recovery on costs continues 

to evolve. Recent case law has 

supported a holding company’s right 

to VAT recovery on its costs where it 

provides management services to its 

subsidiaries. 

However, the judgment in the 

MVM case (C-28/16) clarifies that 

the right to recover VAT on costs 

relating to the holding of shares does 

not arise where the management 

services are provided free of 

charge. In these circumstances, the 

management services were not an 

economic activity. MVM argued for 

VAT recovery on the grounds that 

these costs were general overheads 

linked to its overall VATable 

economic activities (which involved 

taxable leasing activities). The 

CJEU indicated that it was up to the 

national court to conclude on this 

point based on the facts, but cast 

doubt on whether there was such a 

link. 

Zero-rating of intra-Community 

supply of goods: the CJEU held in 

the Euro Tyre case (C-21/16) that 

an EU member state could not 

refuse the zero-rating of an intra- 

Community supply of goods where 

the substantive conditions were met, 

but the customer’s VAT number did 

not appear as valid on the EU’s VAT 

Information Exchange System (VIES) 

website. 

Euro Tyre supplied tyres from 

Portugal to a customer established 

in Spain. The Spanish customer had 

provided its Spanish VAT number to 

Euro Tyre. However, in Spain (unlike 

Ireland), traders with domestic 

operations only are given a domestic 

only VAT number which does not 

appear as valid on the VIES website. 

Euro Tyre received a domestic only 

VAT number from its customer. 

The CJEU ruled that Euro 

Tyre’s sale should be zero-rated 

for VAT purposes on the basis that 

substantive conditions were met. 

These conditions are that there is 

a transfer to a business customer 

of the right to dispose of goods as 

an owner and there is cross-border 

movement of these goods from 

one member state to another. The 

validation of the VAT number on the 

VIES is a formal step, but it absence 

alone should not prevent the zero 

rate applying. While this judgment 

helps clarify the requirements, it is 

nonetheless strongly recommended 

that sellers of goods or services 

to business customers in other 

EU member states validate their 

customers’ VAT number on the VIES 

website, as the seller is at risk if that 

number is invalid or if the customer 

is engaged in fraudulent activity. 

Second-hand goods: in the Sjelle 

case (C-471/15), the CJEU considered 

whether spare motor parts taken 

from a single motor vehicle bought 

from a private individual could 

qualify for the VAT margin scheme 

for second-hand goods. The margin 

scheme is a special VAT accounting 

scheme which applies to sales by 

a dealer of second-hand goods 

principally bought from private 

individuals. As VAT has already 

been borne and not recovered by the 

private individual when it acquired 

the goods, the dealer is only required 

to charge VAT on its margin from 

the sale. Otherwise, there would 

be double taxation. Based on the 

EU VAT Directive, second-hand 

goods are defined as movable goods 

which are suitable for further use as 

they are or after repair. The Court 

concluded that the spare parts 

qualified as second-hand goods and 

Taxpayers who received Revenue opinions 

before 1 January 2012 and wish to rely on those rulings 

after 1 January 2017 must submit a copy of the opinion 

and a full application for the renewal of the opinion to 

the relevant Revenue district by 30 June 2017. 

therefore, were capable of coming 

within the margin scheme. The fact 

that the parts were acquired as 

part of a single vehicle rather than 

individually did not rule out the 

application of the margin scheme 

where the conditions were met. 

Cultural services: in the British Film 

Institute case (C-592/15), the CJEU 

considered whether recognised 

bodies could directly rely on the EU 

VAT Directive to exempt all their 

cultural services in the absence of a 

specific national law to that effect. 

However, the CJEU ruled that the 

VAT Directive only required the 

exemption of certain rather than 

all cultural services. Therefore, EU 

member states have discretion as to 

which types of cultural services they 

treat as VAT exempt or not. 

DAVID DUFFY 

David Duffy ACA, AITI Chartered Tax 

Advisor, is a VAT Director at KPMG. 


tax journal tax.point and a regular contributor to Accountancy Ireland. She is a 


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The 

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tax. 

Tax Consultants, other tax and legal professionals and anyone studying law and tax. 

KImberLey rowan (Editor) is a Chartered Accountant and is Tax Manager 

at Chartered The Accountants eDITORS Ireland. Kimberley spent almost four years working in 

(Editor) is a Chartered the tax Accountant department and at is Tax PricewaterhouseCoopers Manager KImbeRLey ROwan before (Editor) moving to is a her Chartered current Accountant and is Tax Manager 

s Ireland. Kimberley role spent with almost Chartered four years Accountants working at Chartered Ireland. in She Accountants is editor of the Ireland. Institute’s Kimberley monthly spent almost four years working 

PricewaterhouseCoopers before moving to her current in the tax department at PricewaterhouseCoopers before moving to her current 

ountants lecturer Ireland. on the She Chartered is editor Accountancy of the Institute’s qualification. monthly role with Chartered Accountants Ireland. She is editor of the Institute’s monthly 

d a regular contributor to Accountancy Ireland. She is a 

ualification. brIan Keegan lecturer (General on the Chartered Editor, Legislation Accountancy Series) qualification. 

is Director of Taxation 

at Chartered Accountants Ireland and leads the Institute’s tax department in its 

eneral Editor, Legislation information Series) provision 

is Director 

and 

of Taxation 

representations bRIan Keegan work. Brian (General is a member Editor, Legislation of the Tax Series) is Director of Taxation 

ants Ireland and leads 

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the Institute’s tax 

Liaison 

department 

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in its 

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roup. He has edited and written extensively on tax matters 

Initiative Steering Group. He has edited and written extensively on tax matters 

ultant programme. 

and tutors on the Chartered Tax Consultant programme. 

Chartered Tax Library Chartered Tax Library 





Consolidation 

Act 2010 



Taxes 

Consolidation 

Act 1997 

Taxes 

Consolidation 

Act 1997 

ParT of The Consolidated Tax Legislation Series from the Chartered Tax 

Visit www.charteredaccountants.ie/TaxBooks 

rtered Tax Library 

Library 

Chartered Library Tax 



Stamp Duties 



& 

Stamp Duties 


Amended up to and including Finance Act 2016 

Chartered Tax 

Library 


PaRT OF The Consolidated Tax Legislation Series from the Chartered Tax Library, 




ParT of The Consolidated Tax Legislation Series from the Chartered Tax 




& Stamp Duties Consolidation Act 1999 



& Stamp Duties Consolidation Act 1999 

in the tax department at PricewaterhouseCoopers before moving to her current 

at Chartered Accountants Ireland. Kimberley spent almost four years working 

KImbeRLey ROwan (Editor) is a Chartered Accountant and is Tax Manager 

2017 Edition 

2017 Edition 

role with Chartered Accountants Ireland. She is editor of the Institute’s monthly 

the tax department at PricewaterhouseCoopers before moving to her current 

at Chartered Accountants Ireland. Kimberley spent almost four years working in 


2017 Edition 

2017 Edition 

2017 Edition 

2017 Edition 




Cover design: Niall McCormack 

ISBN 978-1-910374-48-1 

The eDITorS 



the tax department at PricewaterhouseCoopers before moving to her current 

at Chartered Accountants Ireland. Kimberley spent almost four years working in 


The eDITorS 

ISBN 978-1-910374-47-4 



Administration Liaison Committee, and also of the HM Revenue & Customs Joint 

information provision and representations work. Brian is a member of the Tax 


brIan Keegan (General Editor, Legislation Series) is Director of Taxation 


ISBN 978-1-910374-47-4 


brIan Keegan (General Editor, Legislation Series) is Director of Taxation 

ISBN 978-1-910374-48-1 

Joint Initiative Steering Group. He has edited and written extensively on tax 

Administration Liaison Committee, and also of the HM Revenue & Customs 



The eDITORS 

lecturer on the Chartered Accountancy qualification. 

ISBN 978-1-910374-49-8 



Administration Liaison Committee, and also of the HM Revenue & Customs Joint 



bRIan Keegan (General Editor, Legislation Series) is Director of Taxation 



ISBN 978-1-910374-49-8 

matters and tutors on the Chartered Tax Consultant programme. 


and tutors on the Chartered Tax Consultant programme. 

Chartered Tax Consultant programme.

Tax 

63 

Tax deadlines 

David Fennell FCA, Tax Director at EY, outlines the relevant 

compliance dates for April and May. 

and tutors on the 

Company dates 

14 April 2017 

Dividend withholding tax return 

filing and payment date for 

distributions made in March 2017. 

21 April 2017 

Due date for payment of preliminary 

tax for companies with a financial 

year ended 31 May 2017. If this is paid 

using ROS, this date is extended to 23 

April 2017. 

Due date for payment of initial 

instalments of preliminary tax for 

companies (not “small” companies) 

with a financial year ended 31 

October 2017. If this is paid using 

ROS, this date is extended to 23 April 

2017. 

23 April 2017 

Last date for filing corporation tax 

return CT1 for companies with a 

financial year ending on 31 July 2016 

if filed using ROS. 

Due date for any balancing payment 

in respect of the same accounting 

period. 

Loans advanced to participators in a 

close company in the year ended 31 

July 2016 may need to be repaid by 23 

April 2017 to avoid the assessment (on 

the company) of income tax thereon. 

A concessional three-month filing 

extension for iXBRL financial 

statements (not Form CT1) may apply. 

For 30 April 2016 year ends, this 

should extend the iXBRL deadline to 

23 April 2017. 

30 April 2017 

Last date for filing third-party 

payments return 46G for companies 

with a financial year ending on 31 

July 2016. 

Latest date for payment of dividends 

for the period ended 31 October 2015 

to avoid Sections 440 and 441 TCA97 

surcharges on investment, rental or 

professional services income arising 

in that period (close companies only). 

14 May 2017 

Dividend withholding tax return 

filing and payment date for 

distributions made in April 2017. 

21 May 2017 

Due date for payment of preliminary 

tax for companies with a financial 

year ended 30 June 2017. If this is 

paid using ROS, this date is extended 

to 23 May 2017. 

Due date for payment of initial 

instalments of preliminary tax for 

companies (not “small” companies) 

with a financial year ended 30 

November 2017. If this is paid using 

ROS, this date is extended to 23 May 

2017. 

23 May 2017 

Last date for filing corporation tax 

return CT1 for companies with a 

financial year ending on 31 August 

2016 if filed using ROS. 

Due date for any balancing payment 

in respect of the same accounting 

period. 

Loans advanced to participators in a 

close company in the year ended 31 

August 2016 may need to be repaid by 

23 May 2017 to avoid the assessment 

(on the company) of income tax 

thereon. 

A concessional three-month filing 

extension for iXBRL financial 

statements (not Form CT1) may apply. 

For 31 May 2016 year ends, this should 

extend the iXBRL deadline to 23 May 

2017. 

31 May 2017 

Last date for filing third-party 

payments return 46G for companies 

with a financial year ending on 31 

August 2016. 

Latest date for payment of dividends 

for the period ended 30 November 2015 

to avoid Sections 440 and 441 TCA97 

surcharges on investment, rental or 

professional services income arising in 

that period (close companies only). 

General 

30 April 2017 

Due date for submission to Revenue 

of returns of debit and credit card 

transactions (by merchant acquirers) 

for the year 2016. 

From 1 May 2017, qualifying 

disclosures will not be available 

to taxpayers wishing to reach a 

settlement with Revenue where the 

disclosure relates directly or indirectly 

to ‘offshore matters’. 

31 May 2017 

Under the new ‘Help to Buy’ scheme, 

rebates of income tax are available to 

first-time buyers of newly built homes 

calculated on the income tax paid 

over the previous four years. To treat 

claims as having been made in 2016, 

for contracts entered into between 

1 January 2017 and 31 March 2017, 

applications may need to be made by 

31 May 2017. 


64 

Professional Standards 

Regulation 

Admissions 

NAME STATUS LOCATION 

Maria Tinney FCA Co Donegal 

Jason C Bradshaw FCA Co Wicklow 

Jennifer Kelly FCA Dublin 18 

Thomas Brennan FCA Dublin 13 

Therese O’Donnell FCA Cork 

Roisin Duffy FCA Co Louth 

Dara Kelly FCA Co Limerick 

Bridget Siobhan Rivas May FCA Co Kerry 

Michael Ellis ACA Co Wicklow 

Paul M Flynn ACA Co Clare 

John Harney ACA Co Roscommon 

Brian Lenihan FCA Dublin 14 

Seamus Hayes FCA Waterford 

Gail Redmond FCA Dublin 18 

Cliona Mulcahy FCA Limerick 

Siva Rasarathnam FCA Co Derry 

Cessations 

NAME STATUS LOCATION 

James Brendan Murphy FCA Co Dublin 

Nigel Hickey FCA Co Cork 

Michael Nicholson FCA Co Carlow 

Cormac Dunne FCA Co Kildare 

Michael Spain FCA Co Tipperary 

Gerard Leahy FCA Co Kerry 

Emer Joyce FCA Galway 

Gillian Nevins FCA Belfast 

John Fagan FCA Co Meath 

Brendan Byrne FCA Dublin 15 

Tadhg O’Sullivan FCA Dublin 3 

John Power FCA Dublin 5 

Michelle Kehoe FCA Wexford 

Mary Dore FCA Co Limerick 

Aeveen Daly FCA Co Tyrone 

Ashley Campbell ACA Co Londonderry 

Cathal Gilbride FCA Dublin 7 

Sarah Williams FCA Cork 

Julian Williams FCA Cork 

Disciplinary Tribunals 

On the 16th day of February 2017 a Disciplinary Tribunal of the Chartered Accountants Regulatory Board (“CARB”) 

found that Mr Eamonn O’Sullivan, a Member of the Institute, currently practising as O’Sullivan Associates Accountants 

Limited, with an address at 69 Main Street, Blackrock, Co. Dublin, did act in breach of the Institute’s Code of Ethics 

for Members: Fundamental Principles (a) Integrity, (c) Professional Competence and Due Care and (e) Professional 

Behaviour in that he: 

(i) Acted in breach of the Public Practice Regulations by engaging in public practice whilst he was suspended 

from membership of the Institute and during which period he did not hold a practising certificate; 

(ii) Signed and issued audit reports on company accounts whilst he was not a registered auditor; 

(ii) Submitted company accounts to the Companies Registration Office that had not been signed by a 

Registered Auditor; 

and is accordingly liable to disciplinary action under the Institute’s Disciplinary Bye-Laws.” 

The Disciplinary Tribunal noted Mr O’Sullivan’s acceptance of the terms of the Formal Allegation and accordingly found 

the Formal Allegation proven against Mr O’Sullivan. 

The Disciplinary Tribunal ordered as follows, that Mr O’Sullivan be severely reprimanded and that he pay a fine of 

€2,500. This Order takes effect from the 16th day of February 2017. 

Further details are available on www.carb.ie. 


APRIL 2017


65 

Consent Orders 

AT RECENT MEETINGS OF THE CONDUCT COMMITTEE (FORMERLY THE COMPLAINTS COMMITTEE), CONSENT ORDERS 

WERE MADE IN RESPECT OF THE FOLLOWING MATTERS: 

That by virtue of Article 7.3.3 and Article 7.1 (a) of the Disciplinary Bye-Laws of 1 December 2012, a member firm of the Institute, having been the 

subject of an adverse finding in respect of its conduct by inspectors appointed by the Department of Enterprise, Trade and Investment under 

Article 425 (2) of the Companies (Northern Ireland) Order 1986, is accordingly liable to disciplinary action for Misconduct under the Institute’s 

Disciplinary Bye-Laws. 

The Conduct Committee determined that in relation to the Formal Allegation a sanction of Severe Reprimand, fine of €4,000 and costs in the 

amount of €2,000 were appropriate. 

That Mr M G Spain a partner in the firm of Spain, Fewer, Quinlan & Co, a member firm of the Institute with an address at The Mall, Thurles, 

Co. Tipperary while acting as auditor to a client company, did act in breach of the Institute’s Codes of Ethics for Members (2006 – 2014): 

Fundamental Principles: (b): Objectivity; (c): Professional Competence and Due Care; and (e): Professional Behaviour in failing to comply with: 

1. Section 187(2)(h) of the Companies Act 1990 in respect of audits for 3 financial years; 

2. Section 71(4)(g) of the European Communities (Statutory Audits) Directive in respect of audits for 3 financial years; 

3. The Institute’s Ethical Standard for Auditors (ES1) (2004 – 2010): Integrity, objectivity and independence by auditing a company in 

which he held 50% of the company’s shares in trust for a third party. 

The Conduct Committee determined that in relation to the Formal Allegation a sanction of Reprimand, fine of €1,000 plus €1,600 in respect of 

costs were appropriate. 

That Mr J J Quinlan, a partner in the practice of Spain, Fewer, Quinlan & Co, a member firm of the Institute with an address at The Mall, Thurles, 

Co. Tipperary did act in breach of the Institute’s Codes of Ethics for Members (2006 – 2014): Fundamental Principles: (a): Integrity; (b): Objectivity; 

(c): Professional Competence and Due Care; and (e): Professional Behaviour in that, he failed to comply with: 

1. The Institute’s Ethical Standard for Auditors (ES2) (2004 – 2010): Financial, business, employment and personal relationships: 

paragraph 7; and 

2. Section 193(4G) of the Companies Act 1990 regarding the signing of the audit reports of two audit client companies for 4 financial 

years. 

The Conduct Committee determined that in relation to the Formal Allegation a sanction of Reprimand, fine of €2,000 plus €1,600 in respect of 

costs were appropriate. 

Withdrawals 

THE INSTITUTE OF CHARTERED ACCOUNTANTS IN IRELAND REGULATES ITS MEMBERS IN ACCORDANCE WITH THE PROVISIONS 

OF ITS BYE LAWS OPENLY AND IN THE PUBLIC INTEREST. OVERSIGHT OF THIS ROLE IS PERFORMED INDEPENDENTLY BY THE 

CHARTERED ACCOUNTANTS REGULATORY BOARD. THE INSTITUTE HEREBY PLACES NOTICE THAT: 

Withdrawal of a member’s practising certificate 

The Quality Assurance Review Committee affirmed the decision of the Quality Assurance Committee to withdraw the practising certificate of Mr N 

O’Connor, of Reddy O’Connor & Co, Troon Lodge, Ballycrane, Wexford, Co Wexford for failing to comply with the requirements of the Public Practice 

Regulations. This order took effect on 31 March 2016. 

Withdrawal of a firm’s audit registration, investment business authorisation and 

entitlement to hold clients’ money 

The Quality Assurance Review Committee affirmed the decision of the Quality Assurance Committee to withdraw the audit registration, investment 

business authorisation and entitlement of the firm Reddy O’Connor & Co, Troon Lodge, Ballycrane, Wexford, Co Wexford for failing to comply with 

the requirements of the Audit Regulations, Investment Business Regulations and the Public Practice Regulations. This order took effect on 

31 March 2016. 


66 


Regulation 

Appeal Tribunals 

DECISION REGARDING AN ALLEGATION AGAINST MR TADHG GUNNELL 

At hearings held on 11 July 2016 & 26 September 2016 a Disciplinary Tribunal found that: 

A) Mr Tadhg Gunnell, a member of the Institute, with an address in Dublin 7 did act in breach of the Institute’s Code of 

Ethics for Members (2006 and 2011): Fundamental Principles: (a) Integrity and (e) Professional Behaviour in that during 

the course of an investigation by the Central Bank of Ireland he admitted that as an officer of a company he did: 

• Incorrectly account for financial irregularities in the accounts of that company; 

• Misrepresent certain partner capital contributions as unencumbered capital; 

• Misrepresent the regulatory capital position in regulatory returns submitted to the Central Bank of Ireland 

thereby misleading the Central Bank of Ireland; 

• Fail in his responsibility to have adequate internal control mechanisms and administrative and accounting 

procedures in place to provide the Central Bank of Ireland with all the information necessary to assess 

compliance with relevant capital adequacy legislation; and 

• Fail in his responsibility to ensure that accounting policies and procedures were in place to enable the delivery 

of true and fair financial reports to the Central Bank. 

Such admissions having been published by the Central Bank of Ireland in a “Settlement Agreement between the Central 

Bank of Ireland and Mr. Tadhg Gunnell” (the “Settlement Agreement”) on 21st day of May 2015 and in respect of which 

admissions he was reprimanded for his actions and disqualified for 10 years from being a person concerned in the 

management of a regulated financial services provider; 

Following the variance of the Disciplinary Tribunal’s Order by an Appeal Tribunal Mr Gunnell was suspended for a period 

of one year and severely reprimanded. 

B) Mr Gunnell did render himself liable to disciplinary action pursuant to Bye-Law 6.1(f) of the Institute’s Disciplinary 

Bye-Laws as an insolvency event occurred in relation to him; 

The Disciplinary Tribunal ordered that Mr Gunnell be reprimanded. Following the variance of the Disciplinary Tribunal’s 

order by an Appeal Tribunal Mr Gunnell was ordered to pay €11,372 towards the costs of the Institute. 

Regulatory Penalties 

IN ACCORDANCE WITH THE INSTITUTE’S PUBLICATION POLICY, REGULATORY PENALTIES MUST BE 

PUBLISHED IN ACCOUNTANCY IRELAND AND ON THE CARB WEBSITE. 

At recent meetings of the Quality Assurance Committee, the following regulatory penalties were offered: 

Regulatory penalty 

Reason for regulatory action 

€250-€420 A number of members were practising without holding a practising certificate (breach of Public 

Practice Regulation 5.2) 

€250-€500 A number of firms provided inaccurate information on the annual return (breach of Audit 

Regulation 6.06) 

€1000 A number of firms had not maintained high standards of professional practice and had not 

acted with professional competence and due care when carrying out audit work. 

€500 A firm did not comply with a Committee condition (breach of Public Practice Regulation 1.28) 

€2500 A firm failed to comply with section 71(5)(a) European Communities (Statutory Audits) 

Regulations 2010 –Prohibited relationships (breach of Audit Regulation 3.08) 

€250 A firm failed to identify that abridged accounts, including a special auditors report, for a small 

sized company were prepared and filed with CRO when the company was not entitled to do so 

(breach of Audit Regulation 3.08) 

It is at the discretion of the Quality Assurance Committee as to whether the name of the member, firm or affiliate should 

be published. The Quality Assurance Committee determined that in respect of each of the above, the names of the 

members and firms would not be published. 


APRIL 2017

Win a two-night stay at 

Clontarf Castle Hotel 

As part of our ongoing commitment to high-quality content, 

readers of Accountancy Ireland are invited to share their views 

about the magazine in our 10 question survey. Your responses 

will help shape the editorial direction of the magazine and 

ensure that Accountancy Ireland continues to meet the needs 

of its audience. 

All participants will be in with a chance to win a two-night 

stay for two in Clontarf Castle with dinner on the night of your 

choice in the award-winning Fahrenheit Restaurant, where 

locally sourced ingredients take pride of place under Executive 

Head Chef, Stuart Heeney. You and your guest will also be 

treated to an Artisan Castle breakfast each morning. 

To enter, visit www.accountancyireland.ie/competition and 

complete the brief questionnaire. The deadline for completion 

of the survey is 5pm on Friday 19 May 2017 and the winner will 

be announced in the June 2017 edition of Accountancy Ireland. 

Clontarf Castle is a unique 12 th century castle hotel oering 

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Visit www.clontarfcastle.ie or call 01 8332321 for more 

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T&Cs: Prize includes 1x2BB1D for two people, subject to availability. 

This prize is non-transferable.

68 

Membership 

Membership 

Allen, Robert 

Andrews, Amanda 

Barry, Claire 

Barry, David 

Bennett, Matthew 

Bourke, Mark 

Boyle, Niall 

Bradley, Mary 

Brosnan, Katie 

Buckley, Lee 

Butler, Nollaig 

Byrne, Muireann 

Clarke, Anna 

Coakley, Kathryn 

Connolly, Keith 

Corio, Carlotta 

Courtney, Philip 

Cowzer, Katherine 

Crosbie, Conor 

Cunningham, Ruairi 

Davey, Martha 

Dawson, Jack 

Deery, Martina 

Delaney, Colm 

Dobbs, Louise 

Dolan, John 

Dolan, Shane 

Donoghue, Eileen 

Fagan, Cliodhna 

Fenton, Aine 

Admissions 

Fitzpatrick, Sarah 

Foley, Graham 

Franklin, Timothy 

Freeman, Amy 

Galvin, Emma 

Grieve, Kathleen 

Griffith, John 

Guthrie, Diarmaid 

Hall, Daniel 

Harbison, Conor 

Hawkins, Joan 

Hayes, Alan 

Hayes, Emma 

Hayes, Jenny 

Hender-Phillips, William 

Higgins, Laura 

Higgins, Sean 

Holohan, Emma 

Jordan, Amanda 

Kane, Donal 

Kearney, Conor F. 

Kearney, Conor J. 

Kearns, Michelle 

Keating, Hollie 

Keller, Sally 

Kelly, Aine 

Kelly, Claire 

Kelly, Eoin 

Keogh, Triona 

Mac Giolla Bhride, Cian 

Manley, Kevin 

McDonald, Linzi Dawn 

McNally, Brian 

McSweeney, Niamh 

Moag, Paul 

Morris, Caoimhe 

Morris, Clodagh 

Mulvey, Lisa 

Murnion, John 

Murphy, Caroline 

Murphy, Paul 

Murray, Rebecca 

Nolan, Sinead 

Nugent, Claire 

Obilana, Olaoluwa 

O’Brien, Ciara 

O’Connor, Aine 

O’Connor, Michael 

O’Connor, Roisin 

O’Connor, Sarah 

O’Flaherty, Max 

O’Kane, Helen 

O’Meara, Patrick 

O’Reilly, Gillian 

O’Shea, Carol 

O’Sullivan, Roisin 

O’Sullivan, Sean 

Oztuna, Sibel 

Perkins, Andrew 

Power, Aaron 


APRIL 2017

Membership 

69 

Quigley, Keith 

Rice, Bronagh 

Roche, Mairead 

Rouse, Peter 

Rudden, Martha 

Shanahan, Eimear 

Shea, Cormac 

Sheridan, Ciaran 

Sherry, Hugo 

Smith, Cormac 

Smuts, Marien 

Stewart, Ivan 

Synnott, Stephen 

Thomson, Clare 

Traynor, Paul M 

Treanor, Gareth 

Tuffy, Deirdre 

Tyner, Derek 

Vernon, John 

White, Robert 

Wingar, Gemma 

Yeoman, Neil 

Update your 

details 

Abu Kassim, Mohd Shayariz 1977 

Barrett, Joseph Patrick 1930 

Bourke, Theo 1974 

Kerr, Paul Desmond 1954 

Leahy, Grainne 1976 

McDunphy, Desmond Michael 1928 

Esses, Edward Clement 

Hackett, Joseph 

Hughes, Robert Stephen Alastair 

Deceased members 

Resignations 

McGrady, Malachy Bernard 1926 

Murray, Grellan Thomas 1955 

Norton, Kevin Brian 1939 

O’Leary, Denis 1941 

Skelly, Margaret 1957 

Sheehan, Noel 

Stevens, Paul Joseph 

The Institute wants to be 

smarter and more targeted 

in the services we offer to 

meet both your business and 

professional development 

needs. To do this, we need upto-date 

information about your 

working role and environment. 

How can you provide this? 

Visit our website www. 

charteredaccountants.ie/ 

myaccount where you will be 

asked to insert your username 

and password. If you have 

any problems or need to be 

reminded about passwords, 

please email the My Account 

team at add email address. 

Bye-law 34(A) 

Edrich, Simon 

Perry, John 

Shaw, Mark J 

Bye-law 34(B) 

Monahan, Beth 

We particularly ask that you 

update your employment 

interests. Even if you are 

retired, based overseas, on a 

career break or unemployed, 

this remains an important 

exercise. 


70 

Innovation 


APRIL 2017

Innovation 

71 

The strategy of 

innovation 

Ciarán Black and David O’Leary explain why 

Chartered Accountants should involve themselves 

in all stages of the innovation process. 

To most people, the mention 

of “accountancy” and 

“innovation” in the same 

sentence conjures up an incongruity 

at best. It doesn’t add-up, if you’ll 

forgive the pun! Accountants, 

however, are key business leaders 

and have long played an important 

role in driving the growth agenda in 

most companies. 

As we all know, business growth 

is increasingly predicated on 

innovation and, as a result, the 

equation is changing for accountants. 

The role of accountants needs to 

extend beyond the core business 

and into new business areas, 

and they need to become more 

attuned to the principles that drive 

innovation. The good news is that 

this does not require as big a leap 

as you might expect. With the right 

mindset and armed with the leading 

tools of innovation, accountants 

can maintain and enhance their 

leadership positions in modern 

business. 

To start our discussion, we need to 

debunk one or two perceptions about 

innovation. 

The paradox of innovation and risk 

Innovation is risky. This fact may 

lead some accountants to have a 

naturally conservative bias towards 

innovation, so that they can honour 

their key role in flagging significant 

risks. However, most accept that, in 

modern business, it is unwise to rest 

on the laurels of the current core 

business. It is rational and prudent, 

therefore, to search for new ways to 

protect the current business from 

threats and to explore new growth 

opportunities outside the core. 

But this is innovation, so innovating 

is risky but not innovating is even 

riskier. In protecting the longterm 

sustainability of a business, 

accountants must view innovation as 

a key tool in managing risk and not 

as taking in new risk per se. 

The role of 

accountants needs to 

extend beyond the core 

business and into new 

business areas, and they 

need to become more 

attuned to the principles 

that drive innovation. 

The “genius myth” of innovation 

There is a common perception that 

innovation comes from a spark of 

genius, a creative leap, a light-bulb 

moment in the head of a solitary and 

visionary leader. This does happen 

from time to time in some highprofile 

examples, but it is far from 

the norm. 

It is now well understood in the 

rapidly emerging management 

science of innovation, that creativity 

in business is a skill that can be 

taught and therefore acquired. 

There are now many tools that allow 

companies to follow a systematic and 

structured approach to innovation 

with great success. Armed with these 

approaches, innovative companies 

have demonstrated that the truism 

of “the harder I practise, the 

luckier I get” can also be applied to 

innovation. 

The two key lessons – that we 

should view innovation as part 

of risk mitigation and that we 

can and should follow disciplined 

and structured approaches to 

innovation – are both well within the 

accountant’s comfort zone. 

Here are a number of ways in 

which accountants can apply these 

lessons and play a fundamental role 

in fostering and driving innovation. 

Portfolio mindset 

Portfolio management is nothing 

new in finance. Accountants are in 

pole position to apply a portfolio 

approach to managing the risks 

associated with innovation. To 

stay relevant and continue to grow, 

companies must look for innovation 

opportunities in three areas: 

incremental improvements in the 

core business, natural extensions 

of current activities (adjacencies), 

and transformational changes to 

the business or sector. Like any 

good portfolio, you don’t want to be 

too reliant on any single area and, 

to de-risk your future, you need to 

pursue opportunities in all three 

dimensions. 

A vital element of corporate 

strategy is making deliberate choices 

about balancing your innovation 


72 

Innovation 

portfolio based on the value-creating 

potential of each dimension. The 

more certain you are that your 

business is not under threat, the 

more you can rely on the core 

business. 

If your industry is undergoing 

substantial change, however, 

the more you need to seek out 

and develop transformative 

opportunities. If the management 

team is not making clear choices 

between these three sources of 

growth, you are putting your 

company’s future at greater risk. 

In that context, accountants can 

be champions of the innovation 

portfolio. They can promote the 

mindset and provide the right tools 

and analysis to manage the portfolio 

effectively. 

The business model 

Very often, the most outwardly 

visible signs of a successful 

innovation are centred around a new 

product or service, or on targeting 

a new customer segment. This 

tends to hide the full innovation 

picture – even within the companies 

that developed them. These two 

crucial areas are all about creating 

new value for customers but to be 

ultimately successful, the entire 

business model must capture that 

value for the company. Otherwise, 

we have a great product but we don’t 

have a viable business. 

This perception of innovation 

as being solely about creating new 

value, allied to the “genius myth” 

described above, can alienate 

accountants. They may excuse 

themselves from the noise of this 

hyper-creative process to focus on 

other things, but the reality is that 

the best innovations don’t stop 

at creating value – they innovate 

around how they capture value. 

This can be a happy stomping 

ground for accountants. They can 

play a vitally important role in 

ensuring that the company seeks 

to maximise the value created 

and captured from new growth 

opportunities by taking a holistic 

view and actively exploring 

innovative business models. 

Greater value can be captured by 

looking at the four components of 

a business model simultaneously. 

These are: 

• Who you are selling to; 

• What you sell; 

• How you create and deliver 

it; and 

• Why it is commercially viable. 

In the initial search for new opportunities or 

identifying threats, the starting point should be an 

accurate assessment of the current environment. The 

keen eye of the accountant can help enormously in 

producing the facts to call it as it is. 

Innovating in and around these 

four components will determine 

the level of success. Business model 

innovation isn’t confined to radical 

new ideas – transformative growth 

can be created by reconfiguring 

existing ideas that may be new to a 

company or industry. The business 

doesn’t have to be at the leading edge 

of technology or the first to identify 

an emerging trend to benefit from 

this approach. 

Get involved earlier 

Accountants are probably the 

most numerate members of the 

management team and their skills 

can be deployed to great effect 

within a structured approach 

to innovation. However, some 

accountants have tended to stay 

away from actively participating in 

innovation, perhaps waiting to the 

very end to sit in judgement when 

presented with new proposals. This 

shouldn’t be the case, as accountants 

can bring their numeracy skills to 

bear much earlier in the process. 

Modern innovation processes for 

existing companies are typically 

built around the following three or 

four phases: 

• Search for opportunities, identify 

threats – generate insights; 

• Generate a lot of new ideas and 

concepts – ideation; 

• Build, test and learn – build 

prototypes, surface assumptions, 

test and learn; and 

• Refine the strongest concepts 

and build the business case. 

Up and down this process there 

is a role for accountants to use their 

skills. 

In the initial search for new 

opportunities or identifying threats, 

the starting point should be an 

accurate assessment of the current 

environment. The keen eye of the 

accountant can help enormously 

in producing the facts to call it as 

it is, to develop new analysis that 

will offer up surprising insights, to 

audit existing strategic resources to 

identify strengths and weaknesses, 

to reveal the industry norms 

and orthodoxies – the “dominant 

logic” of the industry that are ripe 

to be challenged. Furthermore, 

accountants should be the go-to 

people in defining and documenting 

the reality of the current business 

model (this is often ill-defined and 

weakly understood). 

After generating a multitude of 

new ideas through ideation, the 

next step is an adaption of the 

“build, test, learn” loop behind the 

lean start-up movement. Existing 

companies should undertake a “rapid 

prototyping” cycle of increasing 

detail and sophistication to test their 

business concepts. This should be 

rough and cheap to start with, only 

progressing to more polished and 

expensive prototypes when initial 

results merit. This cycle quickly 

and cheaply identifies fundamental 

flaws before they go too far. One of 

the most difficult things to do in 

this phase is to design practical and 


APRIL 2017

Innovation 

73 

Graph 1: Title TBD 

Why? 

Revenue 

model 

executable tests that can generate 

meaningful results in the validation 

process. Accountants have strong 

skills in this area – rigour, discipline 

and analytics. A useful approach is 

to use “reverse financials” to identify 

the biggest financial challenges that 

need to be addressed for the concept 

to have a chance of becoming viable. 

But a word of caution – we are not 

yet trying to “prove” anything. Our 

focus is to identify and learn about 

the most important issues that need 

to be addressed. We then iterate back 

and forth into the ideation phase to 

generate creative new solutions. So 

accountants need to resist judgement 

for now, as they need to trust in the 

structured process. 

By now, we have tested quickly 

and cheaply and only the strongest 

concepts have survived. We are 

now in the next phase of refining 

and working towards a full-blown 

business case. We are still not ready 

for launch into the market and we 

are still in learning mode, but we 

must now commit serious time and 

resources. This needs finance to 

be heavily involved in justifying 

the expenditure but because 

accountants have been part of the 

innovation journey from the start, 

they intimately understand what 

is involved. They are familiar with 

the risks and understand them 

What? 

Value 

proposition 

Who? 

Value 

chain 

How? 

better. We follow a similar ‘build, 

test, learn’ cycle as before, but now 

with substantially more resources at 

stake. Accountants are now in more 

familiar territory and ultimately 

start building the financial models 

to make the investment case. It is 

structured better because we’ve 

learned from previous tests about the 

most important causal relationships 

and how they interact. With the 

valuable input of accountants, we 

have maintained a holistic view of 

innovation and sought to innovate 

across the business model to capture 

more value from the opportunity. 

Managing innovation 

Innovation is very different to 

business as usual. To manage it 

effectively requires a different set of 

processes, skills, talent and resources 

and, above all, a different mindset. 

This is especially true from the 

accountant’s perspective. 

The level of knowledge and 

certainty in the core business is, by 

definition, not available in innovative 

opportunities. This doesn’t mean that 

we should accept any less rigour in 

the analysis, but we must recognise 

that we will not be able to answer 

all the questions. We must address 

these ambiguities through a culture 

of experimentation and learning, and 

be much more open to external input 

and collaboration. It should be noted 

that, if all the answers are available, 

then we are not really dealing with 

an innovation. 

Accountants in the senior 

management team need to buy into 

the fact that they must set different 

expectations. To support this shift, 

separate governance structures need 

to be established for innovation 

activities. Teams need less of a 

‘steering’ and more of a ‘feedback’ 

input as they progress through 

the governance of an innovation 

project. Accountants need to ensure 

that the all-too-common “we’ll find 

it when we need it” approach to 

resourcing innovation is replaced 

with appropriate and dedicated 

commitments so teams are resourced 

to win. One of the best ways for an 

accountant to ensure that we get 

value for this money is to become 

an active member of the innovation 

team. 

Conclusion 

In DeBono’s famous ‘Six Thinking 

Hats’ methodology for problemsolving, 

two hats are ideally suited 

to accountants – the white hat of 

facts (information and data) and 

the black hat of caution (identifying 

weaknesses, risks, logic). Why only 

don these hats at the end of the 

process, when significant resources 

have already been expended? 

In the past, accountants may 

have made modest contributions 

to innovation and probably only 

at a later stage in the process – 

sometimes to pour cold water on, 

or kill, the initiatives. This doesn’t 

have to be the case. Accountants 

can make vital contributions to a 

structured, rigorous and evidencedriven 

approach to innovation and 

proactively promote innovation as an 

essential part of risk management. 

CIARÁN BLACK 

Ciarán Black is a Partner at BMI Labs, an 

international partnership that helps firms 

capitalise on business model innovation. 

DAVID O’LEARY 

David O’Leary is also a Partner at BMI 

Labs, which is based in Dublin. 


74 

Leadership & Management 

A good leader 

is a good coach 

How to develop a coaching culture in a mid-tier firm, 

medium-sized company or successful family business. 

BY IAN MITCHELL AND SIAN LUMSDEN 


APRIL 2017


75 

UK academic and executive 

coach, Peter Hawkins, was 

speaking to a room full of 

directors, managers and external 

coaches in Belfast in early 2015. 

“What I want to know,” he thundered, 

“is what executive coaches were 

doing when the banking crisis went 

down seven years ago.” 

“Making sure they got their fees 

paid,” came a reply from the back of 

the room. You’ll always get a wiseass. 

But the point was well made and 

continues to have relevance today. 

When the chips are down, what 

is the point of coaching within an 

organisation? The Big 4 and many of 

their multinational clients have put a 

lot of thought into this question and 

have been developing increasingly 

effective coaching structures 

within their organisations since the 

beginning of the millennium. In this 

context, the 2014 Ridler report on the 

development of internal coaching 

in the Big 4 accounting firms makes 

excellent reading, offering up such 

gems as: 

• “Through the influence of 

internal coaching, client-facing 

partners and staff learn to help 

their team members and clients 

to frame problems, facilitating 

solutions rather than adopting a 

traditional instructing style”; 

• “Demonstrable financial results 

from internal coaching have 

helped the firm to accept that 

coaching is not about being nice 

to people or about supporting 

under-performers, but is a 

business imperative for highperforming 

senior individuals, 

especially at key career 

transition points”; and 

• “The relationship with our 

external coaches is critical to our 

success”. 

Meanwhile, over at Google. 

Project Oxygen started with a 

fundamental question raised by 

executives: do managers matter? 

This question spawned a multi-year 

research project that ultimately 

led to a comprehensive programme 

built around eight key management 

attributes, first and foremost of 

which was ‘a good manager is a good 

coach’. 

Coaching competency 

As a result of our own work with 

directors, partners and senior 

managers across a range of 

organisations, we have come to 

augment this maxim slightly to 

include ‘a good leader is a good 

coach’. 

This is not to downgrade the 

importance of management. Rather, 

because the alignment between the 

board and its management team is 

so crucial to organisational success, 

it is vital to achieve a seamless 

interface between top leadership 

and organisational or business 

management across all levels of 

functionality. This includes the 

development of robust levels of 

coaching competency. 

As Thierry Nautin, writing 

about the aligned organisation 

in McKinsey’s 2014 publication 

entitled The Lean Management 

Enterprise, puts it: “Achieving real 

alignment where strategy, goals, 

and meaningful purpose reinforce 

one another, gives an organisation 

a major advantage because it has a 

clearer sense of what to do at any 

given time, and it can trust people 

to move in the right direction. The 

result is an organisation that can 

focus less on deciding what to do – 

and more on simply doing.” 

And it is this increasing focus 

on “simply doing” in today’s fastmoving 

economic, political and 

social environment that creates 

significant development issues that 

organisations – especially midtier 

business organisations – are 

required to face. In our experience, 

as well as in the opinions of many 

of those writing on leadership and 

management today, to face this 

challenge adequately requires 

Partner or C-suite buy-in for, and the 

allocation of financial investment 

into, the creation of a modern and 

meaningful coaching culture – one 

that develops an environment that 

supports this sharpened focus. 

Achieving real alignment where strategy, goals, 

and meaningful purpose reinforce one another, gives 

an organisation a major advantage because it has a 

clearer sense of what to do at any given time, and it can 

trust people to move in the right direction. 

Create the conversation 

Kegan and Lahey, in their excellent 

2016 book entitled An Everyone 

Culture, introduce examples of 

business cultures “which promote 

regular situational workshops where 

employees present live workplace 

dilemmas of decision-making to a 

workshop leader, who in turn poses 

(coaching) questions and helps 

expand the range of options for 

diagnosis and actions”. 

That’s about the ‘how’, which we 

will look at in more depth in the next 

issue of Accountancy Ireland. 

First, however, it’s about creating 

the conversation; about putting 

it out there that – although it’s a 

difficult ask for many medium-sized 

entities to initiate and develop the 

infrastructure around delivering a 

coaching style of management – it’s 

a discussion that needs to be had 

because a good manager is a good 

coach, a good leader is a good coach, 

and “demonstrable financial results 

from coaching have helped the firm”. 

IAN MITCHELL & SIAN LUMSDEN 

Ian Mitchell and Sian Lumsden are 

partners in Eighty20Focus. 


76 

Corporate Governance 

Implementing corporate 

governance: practices, 

practitioners, praxis 

Niamh Brennan and Collette Kirwan consider the effect of 

practitioners and praxis on corporate governance practice. 

In 2016, the Financial Reporting 

Council (FRC) revised the UK 

Corporate Governance Code. It also 

recently announced a new project 

to further review that version of the 

Code. The 2016 revisions of the Code 

of Practice for the Governance of State 

Bodies added more than 30 pages and 

three supplementary guidelines to the 

2009 version. Thus, the standard of 

best practice is ever-increasing. But 

what about the practice of corporate 

governance? 

The practice of corporate governance 

We use the umbrella term “the practice 

of corporate governance” to refer to: 

• Corporate governance practices 

(i.e. social norms and rules, best 

practice); 

• Practitioners (e.g. chairmen, 

executive directors, non-executive 

directors, internal auditors, 

external auditors); and 

• Praxis (i.e. activities). 

In their approach to “the practice 

of corporate governance”, regulators 

hint at an awareness of the disconnect 

between best practice and corporate 

governance in practice (i.e. praxis). 

For example, in its recent report 

entitled Corporate Culture and the 

Role of Boards, the FRC states that 

“the combination of legislation, 

regulation and codes provides a flexible 

framework for companies and their 

stakeholders to pursue their objectives 

and achieve long-term success. Success 

depends, however, on the spirit with 

which companies and investors apply 

the principles and use the flexibility 

they have”. 

Regulators now emphasise the 

importance of disclosing praxis (i.e. 

corporate governance in practice) and 

not simply reporting compliance with 

practice (i.e. rules, best practice). For 

example, the FRC’s Lab Project Report 

on reporting by audit committees 

emphasises the importance of audit 

committees “say[ing] what you did” 

(i.e. praxis), “not just what you do” 

(i.e. best practice). The examples of 

audit committee reports cited in the 

FRC Lab Project Report highlight the 

importance of: 

• Language (e.g. using “examined” 

instead of “reviewed”); 

• Instilling soft confidence/assurance 

(e.g. “we reviewed” and “we are 

comfortable”); 

• Adding “colour” to the description of 

audit committee work and avoiding 

boilerplate explanations; and 

• Personalising audit committee 

reports, perhaps creating a sense of 

familiarity and trust. 

Regulators seek better evidence that 

audit committees fulfil their oversight 

role, including examples of the praxis 

(i.e. activities) they undertake in 

fulfilling their role. 

Practices, practitioners and praxis 

Figure 1 illustrates the interconnections 

between the three elements of “the 

practice of corporate governance”. 

Practices provide the behavioural, 

cognitive, procedural, discursive and 

physical resources through which 

people interact to socially accomplish 

collective activity. Practices incorporate 

societal considerations and how society’s 

expectations and norms influence 

human activity. Practices refer to the 

shared understandings, rules, languages 

and procedures that guide and enable 

human activities. 

In a corporate governance context, 

these shared understandings can be 

referred to as “best practice” or “good 

practice”. The distinction between 

practices and what happens “in practice” 

depends on practitioners and their skills 

and initiative to convert practices into 

activities or “praxis”. This distinction is 

captured by the FRC’s statement that 

“while legislation, regulation and codes 

influence individual and corporate 

behaviour, they do not ultimately control 

it”. 

Practices inform praxis (A in Figure 

1). Practitioners draw upon practices 

when they perform an activity. The 

conversion process from practices 

to praxis does not involve mindless 

reproduction of ascribed practices. 

Praxis represents activities that do not 

stand by themselves. Human actions 

create activities and practitioners can 

change and improve those activities. 


APRIL 2017

Corporate Governance 

77 

Figure 1: Practices, practitioners and praxis 

A. Organisational and societal practices influence praxis 

1. Practices 

Shared understandings, 

rules, languages and 

procedures 

B. Practitioners combine, 

coordinate and adapt practice to 

their needs and context 

1. Practitioners 

Convert “practices” into “activities” 

3. Praxis 

Actual activities 

in practice 

C. Praxis influences organisational and societal practices 

Source: “Audit Committees: Practices, Practitioners and Praxis of Governance”, authored by Niamh Brennan 

and Collette Kirwan and published in the Accounting, Auditing & Accountability Journal. 

Practitioners combine, coordinate 

and adapt practices to their needs 

and context (B in Figure 1). Without 

practitioners, practices (i.e. norms, rules, 

best practice) cannot be converted 

into praxis (i.e. activities). Practitioners 

perceive, interpret and adapt practices 

to convert them into activities. They can 

shape activities through who they are, 

how they act and what practices they 

draw upon in their action. Through this 

adaptation process, and in a recursive 

relationship, praxis can shape practices 

(C in Figure 1). 

Illustrating the practice of 

corporate governance 

The practice of corporate governance 

occurs at the nexus between practices, 

practitioners and praxis. Societal, 

regulatory and organisational forces 

influence corporate governance activities 

in practice (A in Figure 1). 

Practices can come from the wider 

society (extra-organisational practices) 

or from specific organisational 

routines, procedures and cultures 

(intra-organisational practices). For 

example, norms and expectations 

set out in corporate governance best 

practice influence corporate governance 

activities in practice (i.e. praxis), such as 

the activities of boards of directors. 

In a feedback loop, corporate 

governance activities in practice (C 

A holistic view of “the practice of corporate 

governance” is required, incorporating the status 

quo practices that underpin “the practice of 

corporate governance” while recognising that 

effective corporate governance “in practice” is fluid. 

in Figure 1) influence societal shared 

understandings of rules and norms of 

corporate governance that are shaped 

by practitioners’ interpretation and 

adaption of practices (B in Figure 1). Thus, 

part of the resources of practice includes 

corporate governance legislation – rules 

and norms which practitioners both 

draw upon and change. 

Conclusion 

A better understanding of the 

importance of the dynamics and social 

interactions necessary for effective 

corporate governance might lead to more 

effective governance. A holistic view of 

“the practice of corporate governance” is 

required, incorporating the status quo 

practices that underpin “the practice of 

corporate governance” while recognising 

that effective corporate governance “in 

practice” is fluid, context-specific and 

depends on practitioners’ skills, initiative 

and adaptation. 

We therefore agree with Sir Winfried 

Bischoff, Chairman of the FRC, who 

suggested that the next review of the 

current UK Corporate Governance Code 

should retain the Code’s flexibility and 

not involve throwing the baby out with 

the bathwater. Best practice (e.g. the 

UK Corporate Governance Code) serves 

as a reference point for “the practice of 

corporate governance”, which concerns 

what practitioners do (i.e. praxis). Thus, as 

suggested by the FRC, “actual behaviour… 

is far more significant than a hundred 

statements” about what practitioners 

should do. 

NIAMH BRENNAN 

Professor Niamh Brennan FCA is the 

Michael MacCormac Professor of 

Management at University College Dublin. 

COLLETTE KIRWAN 

Dr Collette Kirwan FCA is a Lecturer 

in Accounting at Waterford Institute 

of Technology. 


78 



APRIL 2017


79 

Whistling in the wind… 

The country owes a great debt to whistle-blowers but for a 

company, a revelation can be a corporate earthquake. 

BY ITA GIBNEY 

Psychologists have a saying that 

“you are only as sick as your 

secrets” and psychotherapy 

has taken off as people deal with 

their issues through counselling, 

confessional memoirs, forgiveness 

and going public. Even the most 

admired and healthy-looking 

individuals (Bruce Springsteen, for 

example) are surprising us by telling 

us about their vulnerabilities. But 

that’s therapeutic, inspiring and part 

of the recovery process. It usually 

happens when the person is able and 

ready to face particular issues or 

problems. 

But consider this: if someone else 

– someone within the family, for 

example – were to ‘out’ your secret or 

your wrongdoing without warning, 

how could you then deal with it and 

the trauma that would inevitably 

arise? 

The corporate analogy is whistleblowing. 

In any game, it is up to the 

referee to blow the whistle. Can you 

imagine if a player on the Mayo team 

had one of their own team blowing 

the whistle when he saw a foul by 

his teammate? It would upend the 

game. In corporate entities, the act 

of whistle-blowing runs completely 

counter to how organisations work – 

be it a bank, church, police force, or 

political party. They are all systems 

where, when something goes wrong, 

the default dynamic is to close ranks 

and defend the side. 

Whistle-blowing turns such 

systems on their heads. It blows the 

lid off the game, the organisation, its 

leader and its entire structure and 

culture. 

Exposed and alone 

Maybe we have reached this stage 

in corporate Ireland because the 

various referees have been seen to be 

silent and blind. The public attitude 

is therefore akin to “fair dues to 

the whistle-blower”, recognising 

the courage it takes to act outside 

the system but also ignoring the 

isolation, scapegoating, character 

assassination, criminal investigation 

and future unemployability he or she 

may have to endure. Even the real 

referee will likely not befriend the 

guy who blew the whistle. 

Cheering on the whistle-blower is 

fine, and the media and politicians 

do so given the feast of information 

he or she can provide. Giving 

legal protection in the form of 

protected disclosures is progress, 

but being exposed and alone as 

the corporate ‘snitch’ when the 

earthquake happens can be a lonely 

and dangerous place to be – as 

history shows. Ireland is too small a 

country to have a witness protection 

programme, but maybe we could 

look at the citizen enforcement 

action provisions in the US. Whistleblowers 

risk retaliation if they 

challenge abuse of power or any 

other misconduct that betrays the 

public trust, and numerous studies 

have confirmed this. To ensure the 

effectiveness of a disclosure, the 

US False Claims Act enfranchises 

whistle-blowers to file suits in court 

against illegality exposed by their 

Giving legal protection in the form of 

protected disclosures is progress, but being exposed 

and alone as the corporate ‘snitch’ when the 

earthquake happens can be a lonely and dangerous 

place to be – as history shows. 

disclosures. These types of suits 

are known as “qui tam” actions in a 

reference to the Latin phrase “he who 

sues on behalf of himself as well as 

the king”. These statutes can provide 

both litigation costs and a portion of 

money recovered for the government 

to the citizen whistle-blower. It is 

the nation’s most effective whistleblower 

law in history for the 

difference it has made, increasing 

civil fraud recoveries in government 

contracts from $27 million annually 

in 1985 to over $1 billion annually 

since 2000. 

Cases in point 

Aside from the WikiLeaks initiatives 

and alleged hacking that impacted 

on the most recent US election, 

consider the most controversial 


80 


corporate whistle-blower stories. 

One of the most famous was the 

Hoffman La Roche case. The company 

is the world’s largest producer of bulk 

vitamins for the pharmaceutical, 

human nutrition and animal nutrition 

sectors. In 1973, senior executive 

Stanley Adams discovered documents 

which suggested that the company 

was engaging in price-fixing activities 

to artificially inflate the price of 

vitamins. He passed the documents 

to the competition commission of the 

European Economic Community (EEC) 

in the knowledge that Switzerland – 

while not part of the EEC – had a freetrade 

agreement with it. The EEC failed 

to keep his name confidential during 

its investigation, passing documents 

containing Adams’ name to Hoffman 

La Roche. Adams was arrested and 

charged with industrial espionage and 

theft, and his wife committed suicide 

when she was told that he faced a 

20-year jail term. In the end, Adams 

served six months in a Swiss prison. 

Adams later attempted to recover 

compensation from both the Swiss 

government and the European Union. 

In 1985, the European Union agreed to 

pay Adams £200,000 – about 40% of his 

total costs. 

The story of General Motors (GM) 

in 2003, meanwhile, has echoes of 

today’s Volkswagen crisis. Courtland 

Kelley, head of GM’s inspection and 

quality division, reported faults to 

management in the Chevrolet Cavalier 

and Cobalt. The cars had faulty ignition 

switches, which cut power in moving 

cars and were eventually linked to a 

number of fatal crashes. As his reports 

were ignored, Kelley brought an action 

against the company. US law allows a 

private individual or “whistle-blower” 

with knowledge of past or present 

fraud committed against the federal 

government to bring suit on its behalf. 

This suit was unsuccessful and Kelley 

was forced out of the company. In 

May 2014, the company was fined $35 

million for failing to recall cars with 

faulty ignition switches for a decade, 

despite knowing there was a problem 

with the switches. Thirteen deaths 

were attributed to the faulty switches 

during the time the company failed to 

recall the cars. 

A corporate earthquake 

Undercover news gathering, even by 

one’s own customers or employees, 

has become easy with the rise of the 

smartphone. Of course, most wellrun 

entities with strong corporate 

governance codes and a culture of 

doing things right have little to fear. 

They know and manage the risks to 

their reputations; they have crisis 

management plans; their ethos 

protects them; in their corporate DNA, 

people know instinctively what will 

pass and what will not. But if you 

don’t fall into this category and the 

whistle is blown, you face a sudden 

and immediate crisis. It is a corporate 

earthquake, a test of leadership like no 

other. It can start with a leak and finish 

in the High Court or, tragically, with 

loss of life. 

All the experts in the world will 

advise that it is easier to prevent a 

crisis than to handle one. Do no harm 

and you won’t have to worry about 

whistle-blowing. In other words, run a 

good ship. The corporate governance 

industry has taken off with this 

laudable ambition and people are 

making a good living lecturing on 

corporate ethics. But as financier Paul 

Coulson said at a recent Institute of 

Directors’ event, corporate governance 

is also good common sense. 

Whistle-blowing is not the only 

threat; at least those allegations 

have to be true. We live in an age of 

soundbite reporting and blogging, 

with unverified stories posturing as 

news on social media. In addition to 

the normal corporate vulnerabilities 

for which enterprises have planned 

responses and action plans (or should 

have), we now have unprecedented 

risks from inside information, secrets 

and wrongdoing – be that through 

whistle-blowers, data breaches, leaks, 

hacking or carelessness. Enterprises 

need to be very assured in their 

handling of the fallout; their mistakes, 

thanks to Google, will stay with them 

forever. In terms of crisis prevention, 

some wise chief executives now have 

corporate counsellors, a trusted senior 

independent person to whom they turn 

and who acts as their independent 

conscience before they make a decision 

to go down a particular path. Their 

lawyer is not always the one they 

ask – a decision can be legal but might 

not be moral or ethical or might not 

withstand the test of public interest or 

scrutiny. 

Some wise chief executives now have 

corporate counsellors, a trusted senior independent 

person to whom they turn and who acts as their 

independent conscience before they make a decision 

to go down a particular path. 

The road to rehabilitation 

Some people survived the recent 

earthquake in Italy by crawling 

under the bed. That is not a corporate 

strategic option when a crisis happens. 

Nor, of course, is recklessly going 

out in the storm to shout at the 

gods. Enterprises who deal well with 

these kinds of issues often come out 

stronger in the end. Corporate therapy 

requires honesty and communication 

as a prelude to full recovery; a lot 

of work goes into containing the 

damage, stabilising the situation, 

restoring normality (maybe even a 

new normality) as soon as possible 

and then dealing with the process of 

repair and rehabilitation which is so 

often necessary. And in the end, if the 

enterprise has survived, it can learn 

the lessons. Sometimes, tragically, the 

whistle-blower by that stage can often 

be left alone, whistling in the wind. 

ITA GIBNEY 

Ita Gibney is Executive Chairman 

at Gibney Communications. 


APRIL 2017

Commercial Feature 

81 

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82 


Leading the workforce 

management revolution 

Oliver Mitchell, Chief Financial Officer at Softworks, explains 

how the company’s workforce management software can save 

time and money, and add value for employees into the bargain. 

1. What does Softworks do? 

Softworks was founded in Ireland in 

1990 and our aim was to create the 

most sophisticated, innovative and 

easy-to-use workforce management 

software in the world. We were 

always a little ambitious! We initially 

developed time and attendance 

solutions and naturally expanded 

into other workforce management 

areas, including labour scheduling 

and rostering, human resources, 

projects and absence management. 

Today, we feel very privileged to 

work with some of the world’s most 

successful companies across various 

industries around the world. Our 

solutions help companies streamline 

processes, increase productivity 

and reduce costs through improved 

management of employee attendance 

and better, more flexible scheduling 

of labour resources. 

2. The solutions seem 

comprehensive, but are they 

easy to use? 

Yes. We have a really talented team 

who never sit still and because we 

develop everything in-house, we 

constantly challenge ourselves to 

come up with cutting-edge solutions. 

For everything we do, we ask 

ourselves questions like: how will 

this actually benefit our customers? 

And, is there a better way of doing 

this that no one has done before? 

Oliver Mitchell 

Our solutions are exceptionally user 

friendly, intuitive and easy to use. 

We recently launched the Softworks 

app, which allows employees to 

record their own time, attendance 

and absences and to check work 

schedules on their smartphones or 

tablets. Our time and attendance 

solution is one of the most powerful 

tools available for recording and 

analysing hours worked. Scalable and 

completely configurable, it automates 

the processing of your organisation’s 

unique pay rules for overtime, 

working public holidays and special 

or additional duties, for example, and 

ensures you are fully compliant with 

legislation. 

3. Can Softworks work with an 

existing IT infrastructure, or is 

it a standalone service? 

At the heart of Softworks is a 

very comprehensive human 

resources (HR) core application 

which can be used as a standalone 

HR management solution or to 

complement an existing HR system. 

If you already have systems in place, 

we also integrate with several leading 

third-party applications, including 

SAP, Oracle, Sage, Microsoft 

Dynamics, Ceridian, Workday, ADP, 

Ultimate, NGA and many more. We 

provide a simple upgrade path where 

you can import your historical data 

and our solution can be delivered on 

your premises or via the cloud. 

4. What kind of support can clients 

expect before, during and after 

implementation? 

At Softworks, you will meet a very 

friendly team with vast experience 

in solving workforce challenges 

with quality solutions. Our project 

specialists will ensure the smooth 

implementation of your system 

and we have a dedicated and highly 

skilled customer care department, 

training department and technical 

services team. We frequently survey 

our customers – whether this is 

following a project implementation, 

training or in response to a support 

query. We differentiate ourselves on 


APRIL 2017


83 

the high level of service and support 

we deliver and this is backed up by 

survey results, where we regularly 

achieve a 96% overall satisfaction 

rate or better, with many of our team 

members receiving 10 out of 10 for 

their dedication and hard work. 

5. What type of clients can 

use your service? 

From start-ups to global operations, 

our customers span multiple industry 

sectors and business sizes. They can 

also be found in various countries 

around the world. Popular industries 

include manufacturing, retail, 

financial services, healthcare, public 

sector, hospitality, pharmaceuticals 

and services. 

6. And how does the pricing 

structure work? 

The Softworks system is modular, 

which allows customers to pick 

and choose the solutions they 

want rather than being forced into 

purchasing solutions they don’t 

need. As our clients span multiple 

industries and company sizes, we 

offer a flexible approach in terms of 

solution purchase and user licences. 

Some of our clients may only 

require, for legislative compliance, 

an automated way to track holidays 

and hours worked, while others 

may require sophisticated time and 

attendance and eRostering systems 

to run a multinational operation. 

7. You have some impressive clients. 

Why do they choose you? 

When you invest in a solution from 

Softworks, you are guaranteed 

to get cutting-edge technology, a 

measurable return on investment 

and exceptional customer service. 

Our reputation and track record 

drive our success. Our solutions 

are built and supported by over 26 

years of experience in this area and 

a proven ability to understand and 

address just about any workforce 

challenge across all major industries. 

The fact that we have a proven track 

record in this field takes the risk out 

of choosing our solutions over others 

in the market. 

Case study: Clas Ohlson 

Clas Ohlson is a Swedish store chain 

and mail order firm that specialises in 

hardware, home, leisure, electrical and 

multimedia products. The company 

approached Softworks to provide a 

system that would handle employee 

time, attendance and scheduling for 

their 12 stores in the United Kingdom. 

Their key requirements were: 

• Automation: they required an 

automated system to easily 

manage employee time, 

attendance and rostering; 

• Integration: they needed a system 

that could integrate with their 

other systems, which included 

Microsoft Dynamics for HR and 

Sage for payroll; and 

• Custom reporting: as each branch 

creates their own rosters for their 

own team, handles exceptions and 

runs payroll, Clas Ohlson needed 

a system that could run custom 

reports in relation to branch costs 

and performance. They wanted 

reports they could share with their 

head office in Sweden. 

Softworks, along with other 

workforce management system 

providers, were invited to demonstrate 

their solutions. Softworks was chosen 

based on Clas Ohlson’s key criteria, 

and the client selected the following 

modules: 

• Time and attendance/flexitime; 

• eRostering/scheduling; 

• Employee self-service; and 

• Alerter and workflow. 

8. What can management teams 

achieve by using your services? 

More and more, organisations 

are realising the importance of 

optimising their use of labour – 

their single largest overhead – and 

minimising labour-related costs. 

Our solutions make it easy for 

businesses to track employee time, 

activities, schedules, and planned 

and unplanned absences. This in turn 

The benefits of the Softworks 

modular approach was that Clas 

Ohlson had the ability to choose 

only the modules they required while 

retaining the option to choose other 

modules at a later stage if required. 

Implementation 

Clas Ohlson started with a pilot 

project, implementing the system in 

two of their stores. This enabled them 

to ensure that they were happy with 

the system they had chosen and it 

also allowed for the smooth roll-out 

of the system in the remaining 10 

stores. Within three months, Softworks 

was successfully rolled out to all Clas 

Ohlson stores in the UK. 

The results 

Clas Ohlson is very pleased with 

Softworks’ solutions. According to 

Hannah Robins in Clas Ohlson, 

“The feedback we have received 

from the stores is that the system 

is very simple to use. It has reduced 

significantly the workload for the 

managers in stores, as the time spent 

on payroll has decreased.” 

For Clas Ohlson, one of the most 

significant features of Softworks is the 

ease of running reports on employees’ 

time and attendance, which can then 

be used for processing payroll. 

The company is also very happy that 

the implementation process allowed 

its employees to spend more time 

concentrating on tasks that could 

generate more sales as opposed 

to losing time on manual and slow 

processes. 

helps companies with the smooth 

operation of their activities. When 

configured and implemented, our 

solutions can deliver tremendous 

savings, efficiencies and assist in 

streamlining the business. 

OLIVER MITCHELL 

Oliver Mitchell ACA is Chief Financial 

Officer at Softworks. For more 

information, visit www.softworks.com. 



85 

An accounts payable 

solution that fits the bill 

In the never-ending hunt to cut the costs of business, Irish 

company InShip has come up with a solution that fits the bill. 

BY CIAN MOLLOY 

There is just one requirement 

to move to InShip’s automated 

accounts payable solution. Your 

suppliers just email you your invoices. 

No scanning needed. “We’ve researched 

this area and it will save you up to €2 

per invoice,” says the company’s founder 

and CEO, Adrian Kelehan, who is an 

accountant by profession. For more 

than 20 years, Kelehan thought that the 

traditional way we deal with suppliers’ 

bills and statements is too cumbersome 

and costly. According to a number of 

studies, the cost of generating and 

processing a paper invoice can be as large 

as €6 from the day it is generated to the 

day it is shredded six years later. 

“I thought there had to be an easier 

way. So Dr Kevin Casey, Glenn Murphy 

and myself, with help from Enterprise 

Ireland, developed InShip – a web-based 

accounts payable solution.” 

Works with any accounts package 

“If you are using an accountancy package 

like Sage, Quickbooks, Xero, TAS, Big Red 

Cloud or Surf, for example, you can just 

bolt Inship on to that,” he added. “We have 

developed InShip to integrate with all 

major accounts packages and during the 

development process, we worked closely 

with accounts companies – even forming 

a partnership with Big Red Books. InShip 

is flexible enough to be adapted to all 

accounts packages imaginable. “You can 

even use it as a stand-alone creditors’ 

ledger if you are a small business.” 

As InShip is a cloud system, users can 

also access their records from anywhere 

in the world. 

Our clients have 

been really appreciative 

of InShip. They love 

how everything is in 

one place; no need 

to look for missing 

invoices... everything is 

just a click away. 

Full flexibility 

The first time InShip receives an email 

from a supplier, the customer decides 

what data they wish to extract from that 

supplier’s invoices along with defining 

rules on how they wish to process that 

suppliers invoices. 

Statements are automatically reconciled 

Every subsequent email will then be 

automatically processed by the system, 

allowing you to avail of InShip’s many 

features throughout: PO matching, 

statement reconciliation, autoforwarding 

for approval and electronic 

archiving. “Traditionally, processing 

a paper-based invoice was a 10 step 

process,” says Kelehan. “With InShip, it’s a 

one step process – an invoice is submitted 

and InShip takes over automatically.” 

Watching for price increases 

The system will generate automatic alerts 

if it detects unauthorised price increases 

or if an invoice is short and you are being 

billed for goods or services that have 

not been delivered. InShip is also fully 

scalable and can perform within almost 

any business size, be it large or small. “Our 

typical customers are bricks and mortar 

outlets with a regular supplier base. Some 

of our clients have as little as 30 invoice a 

month but we also have clients that are 

processing more than 1,000 invoices a day 

automatically with InShip.” 

No capital expenditure 

InShip is software as a service, and is paid 

for with a monthly subscription based on 

a client’s usage volume. A small business 

using InShip to process 100 documents 

or less will pay just €20 a month 

whereas a large corporate processing 

500 documents a month will pay €80 a 

month plus a 15c per document overage 

charge. “We currently have more clients 

in Ireland than anywhere else, although 

some of our larger clients are based in the 

UK ,” says Kelehan. “Our clients have been 

really appreciative of InShip. They love 

how everything is in one place; no need 

to look for missing invoices, no need to 

chase up invoices to be approved and as 

for audits and tax inspection, everything 

is just a click away. 

“Within many companies, if you want to 

find a paper invoice processed in the last 

two years, you need to grab a ladder to go 

looking through stacks of drawers in the 

back room, I’ve experienced that.” says 

Kelehan. “With InShip, you can find an 

invoice in seconds. It’s not just a question 

of cost, InShip is also about reducing the 

hassle and the headaches.” 


I trusted 

my future to 

Barden 

So shoulD you 

Shane Moran - 25,000 th member of 


Deloitte Trained 

Financial Accountant in Global Pharma 

Experts in accounting, 

finance and tax recruitment. 

Your next job isn’t just a job. 

It’s a stepping stone to a brighter 

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Whatever you’re looking for 

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your best interests. Because 

the future doesn’t just happen. 

We make it happen. 

Dublin: 01 477 3463 Cork: 021 2376124 e: hello@barden.ie

Careers 

87 

Careers 

Becoming a real 

business partner 

In the first of three articles on becoming a real 

business partner, Peter Gillespie explains the 

challenges that Chartered Accountants will likely 

encounter on the journey. 

Imagine you’re a Chartered Accountant who has 

decided to build a career beyond practice, but let’s 

assume that you aren’t yet the financial director. 

Obviously, we take for granted that you can 

‘do’ the normal tasks of a Chartered Accountant 

including accounting, tax, payroll, statutory 

reporting, audit, treasury – the traditional finance 

stuff. However, the business is really crying out 

for you to apply your skills in other areas as a “real 

business partner”. 

This is great news, as you want to get away from 

the traditional finance stuff. But, I’m sorry to say, 

just wanting to be a real business partner probably 

won’t be enough. You will meet many challenges, 

the first of which is how you are going to work out 

what the business needs in terms of management 

information, and how to deliver it. 

Management information 

Management information isn’t codified in the 

same manner as IFRS, for example. There will be 

resistance to change, turf wars and egos to deal with. 

You will be asking yourself from the outset why 

you should even bother to push the boulder uphill, 

as often nobody in management – not even the 

financial director – expects anything from you other 

than the traditional finance stuff. 

Almost everyone in the business will agree that 

there are problems, but nobody will have found any 

realistic alternatives. Staff at the sharp end – the 

ones who deal with the problems and deficiencies 

on a daily basis – often have pragmatic and costeffective 

ideas that could solve these problems, but 

no-one listens to them. 

Strangely, management may not even understand 

the concept of management information. In my 

experience, they tend not to trust the numbers and 

are therefore free to make unconstrained decisions. 

Furthermore, despite having the hierarchical 

position and control over budgets to make change 

happen, management doesn’t always follow through 

in this regard. 

I once had a quotation hanging on my office wall, 

possibly attributed to Henry Ford. It said: “If you 

always do what you’ve always done, you’ll always get 

what you’ve always got.” My then financial director 

looked at it and said, in all seriousness, “That’s good – 

so we shouldn’t change anything, right?” 

What the business needs 

Outside of the traditional finance stuff, you will 

likely find the following situations in your business, 

which will reliably point to where you will need to 

act: 

Everything is done in Excel: I’ve been using Excel 

forever and still regularly find exciting new 

functions, but when did you last understand a 

colleague’s spreadsheet file? Unfortunately, we all 

use Excel in individualistic and unstructured ways. 

Multiply this across the whole business and you 

have ‘Excel hell’ – a serious waste of time caused 

by everyone “tapping in” the same or similar data, 

and yet more waste when you have to reconcile the 

various versions. The problem is getting worse as the 

capacity of Excel continues to increase. You will need 

to consider: 

• How to reorganise the information and 

processes to reduce the total number of 


88 

Careers 

keystrokes and create just one 

version of the truth; and 

• How to train staff to adopt best 

spreadsheet practice. 

Management information is a long 

way from business intelligence: you 

will probably find that management 

information is collected in a variety 

of ways which are perhaps creative, 

but certainly time-consuming. The 

information collected will probably be 

incomplete, inconsistent and unfit for the 

business’s needs. The process may have 

been imposed by a group headquarters 

many miles away, or even by a previous 

owner, but its usefulness (or lack thereof) 

won’t have been challenged recently 

as all resources are tied up doing the 

traditional finance stuff. If Excel is 

involved, forget it as the process will be 

virtually impossible to change. Frankly, 

you will need to put the business back 

into business intelligence. You will need 

to consider: 

• What management information is 

necessary but missing, or redundant 

but being collected; 

• Whether financial and non-financial 

metrics are aligned – in terms of 

time or location, for example – and 

whether meaningful business ratios 

covering both can be produced; and 

• How to design a process that defines 

the information needs of the 

business (detail, ratios, sub-totals and 

so on) and achieves business buy-in. 

You will then need to reconcile this 

information with that which is 

contained in the reporting of the 

traditional finance stuff. 

Management reports are either too 

short where it matters, or too long 

where it doesn’t: too many figures, 

spurious accuracy, too many rambling 

commentaries, inconsistent formats; all 

“financial” and not enough “business”. 

Why is management reporting so 

neglected? You will need to consider: 

• The information management really 

needs to run the business; 

• How best to synchronise lower-level 

“operational” reports and high-level 

“board-type” reports; and 

• The appropriate format, taking into 

account the management team’s 

style. 

Budgeting and forecasting processes 

aren’t fit for purpose: the processes, if 

they exist, are probably limited to a list 

of basic macroeconomic assumptions to 

use, a timetable for inputting data, and 

an unfriendly set of blocking controls of 

“the computer says no” variety. All very 

manual, with everyone obliged to spend 

lots of time creating their own Excel 

files to ‘feed’ the required inputs. What 

is missing is any method of modelling 

the future from operational metrics in 

use across the business. You will need to 

consider: 

• How to identify and document the 

real business drivers in a way that 

will allow you to forecast them; 

• How the process should be rebuilt to 

improve forecasting accuracy and 

control, and reduce time; and 

• How to add real value. Ask yourself: 

what are the real time wasters and 

bottlenecks, and what information is 

currently missing? 

Proper data management doesn’t exist: 

collecting, storing, consolidating and 

maintaining management information – 

including non-financial information – is 

probably unstructured and uncontrolled, 

resulting in duplication of effort. You will 

need to consider: 

• How to extract information from the 

key data sources in the business and 

combine it in a reliable, efficient way 

so that it is accessible by those who 

need it; 

• Categorisation (of products, for 

example) will be a problem, however 

much you might try to get it right. 

The factors that need to be measured 

tomorrow may not even exist today, 

and categorising based on historical 

usage restricts future analysis. The 

best you can do is to stay as flexible 

as possible; and 

• Who should take responsibility for 

maintaining the master data? 

Real variance analyses are non-existent: 

you will be unlikely to find anything 

other than basic arithmetic “actual 

– budget” variances. Many finance 

departments seem to have forgotten that 

the point of the analysis is to explain the 

‘why’. You will need to consider: 

• How to define the key drivers 

underlying profits, working capital 

and cash to understand how the 

figures are evolving (in terms of 

volume, price and efficiency effects, 

days’ credit, meaningful cash flows 

and so on); and 

• How to automate the production of 

these variance analyses so that they 

become embedded in the culture and 

are used by management. 

Why me? 

As a Chartered Accountant, you are 

well-positioned to become a real business 

partner. Your listening skills, logical 

approach and data management ability 

combine to produce creative solutions. 

Your rigour, innate sense of value for 

money and healthy cynicism ensure 

that these solutions are viable. And your 

tenacity, sense of humour and teambuilding 

skills ensure they are accepted. 

What issues will I encounter? 

Things to watch out for include: 

• Initial suggestions made by 

others of how to improve things 

will be unrealistic. They will be 

too expensive, take too long to 

implement, or fail to solve the 

problem (or create others); 

• Management won’t know how 

business processes actually work 

anymore, so spend more time 

listening to the people who do – 

those who use them, day in, day out; 

• Excel is not the panacea, but it is 

really hard to wean people off it once 

they have it; and 

• You will need to keep challenging the 

status quo, and you will constantly 

face resistance. 

Looking at things from an operator’s 

viewpoint, rather than that of the finance 

function, greatly increases your chances 

of becoming a real business partner. 

PETER GILLESPIE 

Peter Gillespie FCA is founder of Meaningful 

Metrics. He worked in manufacturing and 

services in several countries for 30 years. 


APRIL 2017

Join a company 

that’s going places 

We’ve partnered with a leading 

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90 

Careers 

The hard case 

for soft skills 

A range of non-technical competencies are essential for 

career success in the accountancy world of today. 

BY KARIN LANIGAN 


APRIL 2017

Careers 

91 

The focus on competencies by HR 

and management professionals 

has existed for decades, with 

‘competencies’ being a well-utilised 

buzzword. Competencies relate to 

more than skills and knowledge. They 

refer to the appropriate attitude that 

eventually translates into behaviour. 

In a fast-paced, dynamic world and 

workplace, the competencies required 

for career success have become more 

complex. 

Competency requirements can 

vary across professions, sectors, 

roles and levels of seniority, but 

there are many that are universally 

required. You are likely to see many 

of these competencies appear in 

job descriptions as well as personal 

development and training plans. 

Chartered Accountancy has always 

been deemed to be a very technical 

profession and to a large extent, it 

still is. But due to developments in 

information technology, growing 

business complexity and the resulting 

changes in the role of the accountant, 

the range of competencies and skills 

required of Chartered Accountants 

have expanded and evolved. 

A changing world 

The move away from the traditional 

technical accountancy positions 

to roles requiring cross-functional 

collaboration and business partnering 

have shone a light on a range of 

other competency requirements. The 

focus on non-core technical skills 

has intensified with more emphasis 

on value creation, collaboration, 

technology use and partnering with 

non-finance business units. This is 

not to say that the profession and 

the role of the accountant is no 

longer underpinned by technical 

competence – it is; but there is now 

a clear requirement to demonstrate 

technical accounting competencies 

complemented by a wider, more diverse 

range of competencies. They are not 

necessarily new requirements, but the 

focus on them has certainly intensified 

and the expectation is that Chartered 

Accountants should possess and 

actively demonstrate such non-finance 

competencies. 

As your career advances and 

you take on more management 

responsibility, the combination 

of the competencies required will 

also change. You will need a multidisciplinary 

approach. If you take on a 

management role, for example, you will 

be required to possess management, 

mentoring and appraisal skills as well 

as work planning, delegation and teambuilding 

skills. This is in addition to 

your core technical skills. Similarly, if 

promoted to a senior management role, 

There is now 

a clear requirement 

to demonstrate 

technical accounting 

competencies 

complemented by a 

wider, more diverse 

range of competencies. 

you will be required to demonstrate 

leadership, decision-making, influence 

and relationship management skills. 

Starting point 

With the fast pace of business, it can 

be a challenge to stay up to date. 

Many believe that all learning and 

development takes place in a classroom 

or formal training setting, when 

often the most valuable and instilled 

learning comes from doing and 

engaging with others. 

The starting point for developing 

and enhancing your competencies is 

firstly to gain a clear understanding 

of your current ability. This can be 

achieved through psychometric 

testing, your work appraisal process 

and 360-degree reviews by colleagues, 

friends and family. These processes 

will help identify the areas you need 

to focus on and you can then put a 

development plan in place. 

Your development plan should take 

a broad approach and include training 

courses and professional development, 

but there are other ways to develop 

your core competencies. 

Key projects 

Extensive learning can be acquired by 

getting involved in projects outside 

your department. Make it known 

that you are interested in working on 

cross-functional projects where you 

will gain exposure to other disciplines 

and other areas of the business. This 

will facilitate a learning process on 

a number of levels – you will better 

understand other areas of the business; 

you will be better able to communicate 

across departments; and you will 

raise your profile. Moving beyond 

your comfort zone will be a learning 

experience in its own right. 

Professional coaching 

Coaching will allow you to take the 

time you need for self-reflection and 

will provide some space to think and 

plan while receiving the facilitative 

support of an experienced professional. 

A coach will help you tap into your true 

potential and work towards enhanced 

career success and fulfilment. 

Mentoring 

Mentoring has been proven to deliver 

key learnings to professionals at all 

levels. A mentor can provide support as 

you develop solutions to career issues; 

they call upon similar experiences 

to empathise with the mentee and 

understand the key issues. Acting as 

a mentor can be equally beneficial 

in terms of your development, as 

you learn about yourself while 

developing skills in a range of areas 

including communication, listening, 

understanding, empathy and feedback. 

Give something back 

Becoming involved as a volunteer 

in an organisation outside your day 


92 

Careers 

job can add an entirely new range of 

competencies to your repertoire. It will 

allow you to demonstrate and enhance 

competencies that until now you have 

not had the opportunity to use. For 

instance, volunteering can improve 

your abilities in terms of teamwork, 

communication, relationship 

management, problem-solving and 

critical thinking. 

Become a non-executive director 

Obtaining a position as part of a 

board can also provide the ideal 

opportunity to develop a new range of 

competencies, such as communication, 

influencing and strategising. It is, 

of course, a great way to increase 

your network and profile. Securing a 

board position with a not-for-profit 

organisation can be a great starting 

point as well as an opportunity to 

make a meaningful contribution to a 

cause that you have an interest in. 

Join Toastmasters 

Toastmasters is an international notfor-profit 

organisation that provides 

a supportive environment where you 

can improve your public speaking, 

communication and leadership skills. 

Self-promotion 

Developing your competencies is an 

essential part of a successful career 

and a core skill in its own right is the 

ability to promote these competencies 

in a way that gets you noticed. 

Increased visibility will enhance your 

credibility. Working on your ability to 

self-promote and build a network is 

critical. 

The recruitment process 

The HR and recruitment processes 

implemented by many organisations 

have a competency framework at 

their core. They have driven and 

accelerated the use of competencies in 

the provision of training, drafting of 

job specifications and the recruitment 

process. Most job specifications will 

now include an outline of the core 

competencies required for a role. The 

interview process will also most likely 

incorporate questions that require the 

candidate to outline the competencies 

they have demonstrated in the past 

TOP 10 NON-FINANCE 

COMPETENCIES 

1. Communication and 

influencing skills. 

2. Emotional intelligence/selfmanagement. 

3. Relationship management. 

4. Project/change management. 

5. Flexibility/agility. 

6. Performance management – 

company, self and others. 

7. Analytical/strategic thinking. 

8. Problem-solving/innovation. 

9. Commercial acumen. 

10. Coaching/mentoring. 

and how they will utilise these to 

the advantage of the organisation in 

a new role. During most interview 

processes, you are now required to 

demonstrate how you meet each of 

the core competencies identified by 

the employer. CVs are no longer just 

an account of the functionalities of 

your role; they should also incorporate 

an overview of the non-technical 

competencies the candidate has 

to offer. This is in turn reflected in 

LinkedIn profiles, which professionals 

showcase to the world. 

Doing that bit extra 

When prospective employers look 

for potential candidates, they often 

zone in on extra- curricular nonwork-related 

activities to get a better 

sense of the skills you might bring 

to the role. Looking at the interests 

you have outside work can provide 

real insights into the person you are, 

the competencies you possess, what 

motivates you and what environment 

might suit you best. 

A new focus 

When we consider competencies, we 

might not be inclined to consider 

resilience and self-compassion. 

However, they are crucial to achieving 

career success. In a fast-paced and 

ever-changing world, the ability to 

cope with this pressure and manage 

your reaction to it is essential for 

survival. We can develop the ability 

to identify, manage and bounce back 

from challenging situations. Resilience 

is now recognised as an important 

competency in the modern-day 

workplace. Developing your levels of 

resilience includes key management 

skills such as managing conflict and 

difficult situations, being assertive and 

understanding why people behave in 

particular ways. It also includes the 

ability to use and implement stress 

management techniques such as 

mindfulness and meditation. 

Another key competency in terms 

of career success is self-compassion. 

Cutting yourself some slack and 

not being hard on yourself is an 

underestimated competency. We often 

set ourselves unrealistically high 

standards and when we inevitably 

fail to reach them, it impacts on our 

confidence and can cause huge levels 

of stress. Knowing when and how to 

use self-compassion is a crucial selfprotection 

mechanism in sustaining 

your mental health and career success. 

Many see self-compassion as a failing 

but in reality, it is a survival strategy. 

Newly qualified? 

Following their training, newly 

qualified members understand the 

key technical competencies required 

to start their career. The next step, 

however, is to supplement this 

knowledge with competencies such 

as effective communication skills, the 

ability to work autonomously, effective 

time and project management and the 

ability to demonstrate initiative and 

commercial acumen. 

Last word 

The role of the Chartered 

Accountant is evolving and will 

continue to do so. It will remain 

underpinned by core technical 

and accounting competencies but 

to add real value and to remain 

relevant in a rapidly changing work 

environment, those seeking career 

success and fulfilment will need to 

add and develop other non-finance 

competencies to their offering. 

KARIN LANIGAN 

Karin Lanigan is Manager of Career 

Development & Recruitment Services 



APRIL 2017

Accountancy 

Solutions 

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Some things can be left to 

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Current Vacancies 

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advice about your career 

direction, a conversation 

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will give you expert advice 

towards making the 

correct career decision. 

If you are interested in any of the above 

positions contact: 

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Merchants Hall, 25/26 Merchants Quay, 

Dublin 8. 

Finance Director, 

Construction Supply - Dublin 

Our client is a medium sized business and a 

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construction sector. They have experienced 

significant growth over the last number of 

years and are seeking to hire an experienced 

finance professional to join their management 

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finance function, they will be working closely 

with their MD to assist with the strategic growth 

and direction of the business. Candidate 

should have several years’ post qualification 

experience and be able to demonstrate 

success in a senior role for a large fast-paced 

organisation. 

Tax Director, 

Medium Practice - Leinster 

Our client is a large well established 

accountancy firm seeking to hire an 

experienced senior tax professional to head up 

their tax division. Role will involve managing 

a high level of planning & consultancy 

assignments, managing & developing the 

existing tax staff and assisting the directors in 

increasing the client base and fee income of 

the division. Role offers an excellent package 

with great career development opportunities. 

Finance Manager, 

Property - Dublin City Centre 

Our client is a leader within the construction 

industry and are seeking to appoint a Finance 

Manager to the Group. This role reports to 

the Head of Finance and will be responsible 

for leading the finance team and all elements 

of financial reporting. There will be a strong 

emphasis on process improvement and 

introducing efficiencies within the group. 

Financial Accountant, 

Technology - Dublin City Centre 

Our client is a knowledge services provider 

dealing with the largest Fortune 500 clients, 

due to expansion they require a financial 

accountant. This is an excellent opportunity for a 

recently qualified accountant to gain invaluable 

experience and exposure in a fast-paced finance 

team. Responsibilities will include full ownership 

of the management account pack, managing 

junior colleague’s and involvement with special 

finance projects. On offer is an excellent package 

and personal development. 

Financial Accountant, 

Pharmaceutical - Galway 

Our client is a global organisation with a 

significant presence in Ireland. To support 

their current growth plans they are looking 

to expand their finance team with some new 

recruits. Responsibilities include analysis & 

completion of statutory financial statements 

and ongoing contribution to the strategic 

growth plan for the group. An exciting 

opportunity for dynamic individuals to join a 

progressive company. 

Financial Analyst, 

Public Service - Dublin West (9 months) 

Our client is currently looking to recruit a 

Financial Analyst to join their team on a contract 

basis with a possible view to permanency. 

Reporting to the Head of Finance this role will 

involve carrying out analysis for up to 30 regional 

sectors; including process improvements, 

compliance and developing the reporting 

structure. Suitable candidates will be fully 

qualified with broad accounting experience. 

E: bfowler@accountancysolutions.ie 

T: 01- 6797990 

www.accountancysolutions.ie 

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Careers 

95 

Flying high 

This issue, we look at life in the aircraft leasing industry. 

David Breen explains why this sector can be a rewarding 

stomping ground for Chartered Accountants seeking 

a challenging, fast-paced environment. 

Over the past number of years, 

Ireland has emerged as the 

epicentre for aircraft leasing 

firms, growing to become the leading 

jurisdiction globally for this profitable 

industry. Several reports have found 

that 50% of the world’s leased aircraft 

are managed from Ireland, with 

an Irish-leased aircraft taking-off 

every two seconds somewhere across 

the globe. The success of aircraft 

leasing in Ireland was founded on 

the establishment of Guinness Peat 

Aviation (GPA) in the 1980s. This 

led to the creation of a local hub 

of experienced and skilled global 

aviation professionals. 

More recently, the key success 

factors include: 

• Ireland’s corporation tax rate of 

12.5%; 

• 0% VAT on international aircraft 

leasing; 

• A comprehensive double tax 

treaty network; and 

• Ireland is recognised as a centre 

of excellence in this sector. 

Where do accountants fit in? 

Despite Ireland being home to most 

of the world’s leading aircraft leasing 

firms, there appears to be an apparent 

lack of understanding as to how 

the industry operates and where 

accountants fit in the process of renting 

aircraft. 

Aircraft leasing operates in a 

similar way to other high-value asset 

investment businesses such as property 

development, hotel groups or renewable 

energy. While the assets in these other 

industries lack the unique ability to 

fly, the fundamental principles of the 

business process are very similar. 

The lessor raises funds to purchase 

an aircraft and subsequently derives 

an income from this asset by leasing 

it to airlines under a specific leasing 

agreement. 

While there may be numerous 

similarities, it is the differences that 

distinguish aircraft leasing from 

the industries mentioned above. 

The methods used to raise capital to 

purchase aircraft, the complexity of the 

leasing agreements and the fast-paced 

nature of multi-billion dollar dealmaking 

are just some of the factors that 

contribute to a dynamic, challenging 

and energetic environment. 

Shatter the glass ceiling 

The widespread global growth in the 

aircraft leasing industry, combined 

with Ireland’s status as a hub for 

lessors, has cultivated a variety of 

prime opportunities for ambitious 

accountants seeking to grow their 

career in a thriving business sector. 

The progressive pace and constantly 

changing landscape of the industry 

presents unique challenges, cultivating 

a culture of hard work, ambition and 

perseverance. The rapid speed at which 

the industry is growing has resulted 

in somewhat of an absence of a glass 

ceiling in terms of career progression. 

Opportunities are presented and given 

to those who are committed to, and 

passionate about, their work. 

Aircraft leasing is an exciting, 

dynamic and unique industry that 

can enable an ambitious accountant to 

realise their true potential and allow 

their career to truly take off. 

DAVID BREEN 

David Breen ACA is Head of Finance at 

Avolon, which will soon be the world’s third 

largest aircraft leasing firm. 


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Divisional Financial Controller Bank €100k plus benefi ts 

Senior Internal Audit Manager Insurance €85k plus benefi ts 

Internal Audit Manager Bank €80k plus benefi ts 

Accounting Manager Reinsurance €75k plus benefi ts 

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Corporate Finance Manager Fintech Start Up Salary negotiable 

Investment Analyst Private Equity Salary negotiable 

Group Accountant Pharma Start-Up Salary negotiable 

Assistant Financial Controller Private Equity Backed FMCG Salary negotiable 

Financial Planning & Analysis Renewable Energy Salary negotiable 

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A leading Bank is seeking an experienced accountant to join the Finance Business 

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Reporting to the Finance Director, the role will involve managing group reporting, analysis 

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suit ACA with 1-2 years’ PQE within a group fi nance or treasury related role. 

Financial Accountant x3 Aircraft Leasing Dublin €55-€60k 

A leading aircraft leasing and asset management company, is seeking a number of top 

recently qualifi ed ACAs to support their ongoing fl eet and organisational expansion. 

Responsibilities will include fi nancial reporting, treasury management, portfolio reviews 

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Leading Big 4 fi rm seeking an Audit Director to strengthen their senior management teams. 

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Appointments 

97 

On the move 

McInerney Saunders 

appoints new directors 

McInerney Saunders Chartered Accountants recently 

promoted two senior members of their team to the position 

of director. Deirdre McGinley FCA has worked with the firm 

since 2015 and has over 15 years’ experience in providing 

financial reporting and audit services to companies of all 

sizes. Darragh Henry FCA has been with the firm for 20 years 

and has significant experience across many client service 

areas, and audit in particular. Pictured (above, from left) 

are: Deirdre McGinley FCA, Director, Audit; Owen Sheehy, 

Managing Partner at McInerney Saunders; and Darragh 

Henry FCA, Director, Audit. 

Deloitte appoints Corkbased 

Transaction 

Advisory Partner 

Ronan Murray has been appointed to 

the position of Transaction Advisory 

Partner at Deloitte. Based in Cork, 

Murray will lead Deloitte’s Munster 

Corporate Finance team while 

working closely with colleagues 

throughout the country. Murray is 

a Fellow of Chartered Accountants 

Ireland and holds a Bachelor of 

Commerce degree from University 

College Cork. 

Ormsby & Rhodes 

appoints Associate 

Ormsby & Rhodes has announced 

the appointment of Ciara McDunphy 

as an Associate of the firm. 

McDunphy has been with the 

firm since 2009 and has gained 

particular expertise in the audit 

of international group companies. 

McDunphy, who is a member of 

Chartered Accountants Ireland, 

is pictured with Geoffrey Lewis, 

Managing Partner at Ormsby & 

Rhodes (right) and Colm Duggan, 

Partner at Ormsby & Rhodes (left). 


98 

Member Profile 

A new orbit 

From start-up to acquisition, the last 

five years have been a roller-coaster 

for Red Planet CFO, Claire Fitzpatrick. 

First of all, how did you come to be 

involved with Red Planet? 

I had been working in Telefonica 

Ireland (O2 Ireland), leading and 

executing on large strategic initiatives, 

the last of which was the sale of 

Telefonica Ireland to Three Ireland in 

2014 – a challenging but exhilarating 

learning experience. Wayra, a digital 

accelerator funded by Telefonica, 

opened in 2012 and I was immediately 

interested. I visited Wayra and became 

a mentor to one of the investee 

companies. One of my colleagues from 

O2 had joined one of the start-ups and 

was loving it and when Wayra was 

seeking a CFO, I jumped at the chance. 

Some of my peers were more than 

sceptical as it wasn’t a conventional 

move, but I loved it from day one. 

It was all completely new – the 

environment, the people, the cuttingedge 

technologies and, the best part, 

a chance to use my experience to help 

build new businesses while on a steep 

learning curve. I was amazed at how 

quickly and cost-effectively digital 

businesses were being created and 

launched into the market. 

Despite Wayra’s success, it was closed 

in 2015 due to Telefonica withdrawing 

from the Irish market. My Wayra 

colleagues and I immediately started to 

talk about the next chapter. Corporates 

were engaging with start-ups, but not 

in a structured way that would lead to 

revenue growth. With our combined 

experience in corporate innovation, 

start-up curation and acceleration, Red 

Planet set about providing structured 

access to digital start-up innovations, 

delivering revenue growth for both 

start-ups and corporates. 

At a high level, what services does Red 

Planet provide? 

Red Planet delivers revenue-focused 

start-up engagement for corporates 

who understand that the internet and 

digital technology is creating a new 

world where traditional corporate 

strengths can become weaknesses. 

We call it ‘outside-in, start-up-driven’ 

innovation. Our aim is to create new 

value for corporates struggling to 

resonate in a digital world and the 

young start-ups with the customercentric 

solutions but a weak channel to 

market. 

What can the world of accountancy 

learn from Red Planet’s ‘stability 

versus agility’ philosophy? 

The internet, digital technology and 

new human behaviours are enabling 

new business models with the power 

to disrupt all industries and markets. 

Airbnb is a great example. It has access 

to more rooms in New York than the 

largest hotel chain, but it doesn’t pay 

for cleaning or security and it delivers 

a unique experience to every customer. 

This disruption applies to accountancy 

too. The outcome is unknown, but the 

certainty is that the profession must 

embrace change to take advantage of 

opportunity. 

As CFO of Red Planet, which was 

recently acquired by Deloitte, what 

was the hardest part of the acquisition 

process? 

Being part of the sale of Telefonica 

Ireland made me well prepared for the 

process, but this time it was a more 

emotional journey. As a founder, you 

have started and built the company 

so you care deeply about the outcome. 

The most challenging part was keeping 

the day-to-day going, continuing to 

develop a pipeline of clients and meet 

existing clients’ briefs. It would have 

been very easy to get distracted by the 

acquisition, but you have to remember 

that without clients or a pipeline, there 

would be no acquisition. 

Do you have any pieces of wisdom to 

share with other CFOs who might be 

facing acquisition? 

Anticipate the information requests 

from the acquirer and their advisors. 

Accept that you cannot control the 

outcome or the process, but you can 

be prepared and influence it. And as I 

already mentioned, don’t forget about 

the day job because as soon as you take 

your eye off that, the wheels come off. 

On both personal and professional 

levels, where do you go from here? 

On a personal level, I am really excited 

to join Deloitte and to see where we can 

take Red Planet. In a short time, I have 

already seen the value Deloitte put on 

their people and the investment they 

are prepared to make in their career 

development. With Red Planet, I have 

seen the real demand from corporates 

for start-up-driven innovation and 

Deloitte recognised this opportunity, so 

combining their channel and resources 

with our ‘outside-in’ innovation process 

will be an exciting new chapter for 

the future. 

CLAIRE FITZPATRICK 

Claire Fitzpatrick FCA is Chief Financial 

Officer at Red Planet, which was recently 

acquired by Deloitte. 


APRIL 2017

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