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AB Accounting and Business
Ireland Accounting and Business November/December 2019
Ireland November/December 2019
Taking control
of technology
Donna Wheeler, FD and CFO of IBM’s
Global Business Services, UK and Ireland
Moral maze
How practices can embed
ethical decision-making
Budget 2020
Brexit and climate change cast long
shadows over financial planning
Enter the dragon
Chinese businesses ramp up
investment in Ireland
IE_Cover.indd 1 15/10/2019 12:19
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IE_insidecover.indd 1 10/10/2019 09:35
Welcome
The tortuous Brexit negotiations have underlined the need for government and
business to put the principles of trust and good standing at the centre of what they do
As AB goes to press, the outcome while columnist Ian Guider outlines
of the highly complex negotiations the changes that will help business
surrounding the UK’s departure from meet future challenges. Read his views
the EU remains unclear. Against this on page 28. One bright spot on the
background, ethical decision-making business horizon is the sharp increase in
has come to the fore. Chinese foreign investment, which we
Embedding core values within an explore on page 20.
organisation requires more than just Our main interview is with Donna
a mission statement, which may be Wheeler FCCA, who is FD and CFO of
overlooked in the heat of the moment. IBM’s Global Business Services, UK and
It requires careful consideration of a Ireland. She has seen the company move
company’s culture and an understanding through immense transformation in the
of each individual’s outlook. For tips on last few years, while holding strong to its
how to align personal priorities with the view of itself as ‘a 108-year old startup’.
company’s chosen values, see page 30. More on page 12.
Rachel Botsman, in an article on Change is in the air in other areas as
page 58, takes a look at the mechanics well. Ireland’s insolvency regime has
of trust, a topic that has attracted a undergone an overhaul since the depths
lot of interest in the audit world lately. of the financial crisis, and Insolvency
Across jurisdictions, there is a growing Service Ireland provides an outline of the
clamour for auditors to ensure corporate options on page 22. As the population
reporting is truly transparent. Read more lives longer, and everyone needs to fund
on page 32. a comfortable retirement, so the calls for
This month also saw the Budget, with reform of pensions tax relief have grown
Brexit casting a long shadow over the louder. See our update on page 24. AB
government’s choices for spending
and tax reform. We have a first look at Pat Sweet, Ireland editor
the key announcements on page 18, pat.sweet@accaglobal.com
Accounting and Business About ACCA Leadership
The leading monthly magazine for ACCA (the Association of Chartered President: Jenny Gu FCCA
finance professionals, available in seven Certified Accountants) is the global Deputy president: Mark Millar FCCA
Chief executive: Helen Brand OBE
different versions: China, Ireland, Malaysia, body for professional accountants. It
Singapore, UK, Africa and International. offers business-relevant, first-choice Member services
* Magazine contacts, page 66 qualifications to people of application, ACCA office details, page 82
ACCA Connect: +44 (141)582 2000
* Available in app and pdf ability and ambition who seek a
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November/December 2019 Accounting and Business 3
IE_Welcome.indd 3 15/10/2019 12:25
38 32
27 ACCA president
Jenny Gu sets out her
vision for inclusion
28 Ian Guider
The Budget wasn’t all
Brexit, with businesses
getting some useful help
Practice
29 The view from
Orla Carolan of
Grant Thornton, Dublin,
plus practice news
30 CPD Moral by nature
How to embed ethical
decision-making
32 Audit rehab
A fundamental overhaul
of the market is due
22 Rescued from ruin
News Corporate
Insolvency regime Insights
6 News in pictures 17 The view from innovation secures a
35 News in infographics
A different view of Marie McCrea, Centre for fresh start for debtors
Tax levies on personal
recent headlines Innovative Leadership, 24 Pension reform income around the world
8 News in brief plus corporate news Ballooning demand
36 Damage limitation
Digest of developments 18 Budget 2020 makes an overhaul of the
Bribery and corruption
across the globe Government prepares for system inevitable
can harm small firms
the no-deal Brexit worst as well as large
Interview Comment corporations
20 Dragon quest
12 Donna Wheeler A new wave of Chinese 26 Jane Fuller 38 Embedding data ethics
IBM GBS CFO on investment is moving Lessons for stakeholders An ethical approach to
harnessing the future into Ireland from Thomas Cook personal data processing
6 20 22 30
4 Accounting and Business November/December 2019
IE_CON_contents.indd 4 15/10/2019 14:39
40 42 46 58
40 Role up, role up 54 NI tax update
Management ACCA
Accountants can take on Developments for
multiple roles to ensure 46 CPD Look within practitioners in the North 60 Global economic survey
they are future-fit Ethical leadership means 55 Tax diary Trendsetter’s decade
42 Great result listening to the heart Upcoming deadlines 61 Council
Japan’s Rugby World Meeting highlights
56 Tax update
Cup is a financial success
Technical
Changes in taxation 62 Events
49 CPD Standards MOTs Diary dates
Careers The IASB’s post- People 64 International Assembly
44 CPD Praise indeed implementation reviews 58 Rachel Botsman News from the
Expressing gratitude 52 Technically speaking Academic and award- latest gathering
supercharges motivation The latest on audit, winning author explains 66 The future is digital
and performance tax and reporting the mechanics of trust Member portal relaunch
12 60
64
‘We’re a 66
108-year-old
startup. We keep
reinventing
ourselves’
November/December 2019 Accounting and Business 5
IE_CON_contents.indd 5 15/10/2019 14:42
6 Accounting and Business November/December 2019 IE_Newsinpix.indd 6 14/10/2019 13:40
Extinction Rebellion
protesters took part in
a global week of action
against climate change
outside the government
building in Dublin as
finance minister Paschal
Donohoe delivered his
Budget. Carbon taxes
were a priority.
Yvonne Farrell and Shelley
McNamara of Grafton
Architects – responsible
for such buildings as the
Solstice Arts Centre in
County Meath – are the
first all-woman pair to be
awarded the 2020 RIBA
Royal Gold Medal for
Architecture.
The Irish show jumping
team have booked their
tickets for next year’s
Olympic Games in Tokyo
by winning the €1.25m
Longines FEI Nations Cup
World Final in Barcelona
in October. It is the first
time in 15 years that the
team has qualified.
Harland and Wolff,
the Belfast shipyard
famous for building
the Titanic, has been
saved from closure by
London-based UK energy
company InfraStrata,
which has paid £6m.
The shipyard went into
administration in August.
November/December 2019 Accounting and Business 7
IE_Newsinpix.indd 7 14/10/2019 13:40
News in brief
This issue’s stories and infographics from Ireland and Northern Ireland, as well as a
look at the latest developments affecting the finance profession around the world
EY expands than half of the jobs will go and Auditor General in its EU in Apple blast
Big Four firm EY is to recruit to new graduates, providing annual report. The figure The Irish government ‘blindly
for another 600 positions young people with a great takes into account the accepted’ Apple’s arguments
across Ireland, with total start to their career straight current value of the state’s for low-tax arrangements,
headcount rising to 3,700 out of college. The spread investments in the banks the European Commission
next year. Most of the new of new jobs across six city (€8.4bn) and Nama’s retained has claimed at the European
jobs (366) will be in Dublin, regions is very much in earnings of €4.2bn. The Court of Justice. The court
with 136 in Belfast, 55 in line with the government’s exchequer invested €66.8bn is currently hearing an
Cork and 43 across Galway, focus on balanced in the banks, and €13.5bn of appeal by Apple and the
Limerick and Waterford. regional development.’ bonds have been redeemed. Irish government against the
Roles will include technology, The long-term recurring cost commission’s finding that
corporate finance, advisory, Bailout cost €41.7bn of servicing the debt is put at Ireland gave Apple €13bn
tax and accountancy. The Ireland’s bailout of the €1.1bn–€1.3bn a year. of illegal state aid through
announcement was made banking system cost €41.7bn favourable tax treatment.
by the taoiseach at EY’s net to the end of 2018, Higher tax for techs
Dublin HQ. Leo Varadkar according to an estimate by Proposals to increase the Broader tax base call
said: ‘It’s super that more the Office of the Comptroller tax revenues paid by digital The Irish Tax Institute
companies have been has called for a broader
published by the secretariat tax base. Frank Mitchell,
of the Organisation for president of the institute,
Economic Co-operation and said it has ‘concerns about
Development. The objective the robustness of the tax
is to make multinationals system at this time of
pay tax wherever they have growing uncertainty’, with
significant consumer-facing the country needing a stable
activities and generate system that is not overreliant
their profits. The move on any group or sector.
would involve reallocating ‘Ireland’s personal tax regime
some corporate profits should be broadly based,
from low-tax jurisdictions to simple, fair and transparent,’
countries where revenues are he added. ‘We believe
Budget cranks up carbon tax generated. OECD secretary- everybody who works should
The carbon tax is rising from €20 to €26 per tonne, finance general Angel Gurría said: contribute to the exchequer
minister Paschal Donohue announced in the Budget. While ‘We’re making real progress according to their means,
the hike came into effect for vehicle fuels with immediate to address the tax challenges and those who earn most
effect, it will not be implemented until May for home heating arising from digitalisation should contribute most.’
and other fuels. The existing 1% surcharge on the vehicle of the economy and to
registration tax for diesel cars will be replaced from January by continue advancing toward Sage buys AutoEntry
a nitrogen oxide emission charge on new and imported cars. a consensus-based solution Sage has bought Irish
The Budget was dominated by measures designed to mitigate to overhaul the rules-based company Ocrex and its
the negative impacts of Brexit. More details on page 18. international tax system by AutoEntry automated data
2020.’ See also page 56. entry system. The acquisition
8 Accounting and Business November/December 2019
IE_N_newsinbrief.indd 8 14/10/2019 12:33
supports Sage’s strategy of EY skips AGM executive, and former Flybe literature, policy and expert
becoming a software as a EY has given a disclaimed CEO Christine Ourmières- views, and an in-depth study
service company and follows audit opinion on Datalex’s Widener as an independent of how regulators across the
a two-year partnership deal financial statements non-executive director. world manage risk.
agreed between the two and failed to attend the
companies. Lee Perkins, company’s AGM. In its The audit multikey Carlyle backs Heavey
chief product officer at Sage, delayed annual report, Multidisciplinary firms Carlyle Group is backing
said: ‘AutoEntry provides Datalex stated: ‘It is provide one of the best a new energy exploration
intelligent technology and an extremely disappointing mechanisms for developing business set up by Tullow Oil
open ecosystem that allow that the auditors have been the skills, expertise and veterans Aidan Heavey and
us to automate the inflow unable to express an opinion consistency needed for Tom Hickey. Boru Energy
of business-critical data, on the financial statements, quality audits, according will target acquisitions of
whatever the source, and primarily because of the to a study from ACCA and non-operated oil and gas
reinforces our commitment breakdown in the internal Chartered Accountants production assets of up to
to accountants and their controls.’ The company Australia and New Zealand $1bn in sub-Saharan Africa.
evolving role in helping their reported a loss for 2018 of (CA ANZ). The Audit quality ‘Boru Energy will build on
clients thrive. Having worked €42.7m. Earlier this year in a multidisciplinary firm our team’s experience in and
with AutoEntry for the past EY reported Datalex to the report aims to contribute commitment to investing in
two years, we have been registrar of companies for to the international debate Africa,’ said Heavey.
hugely impressed with the failing to keep adequate on the multidisciplinary firm
team and the technology accounting records last year. business model and auditors All-island economy
and are delighted to Datalex has now appointed providing non-audit services. The Ibec-CBI Northern
welcome them to Sage.’ Sean Corkery as its new chief It draws on academic Ireland Joint Business
November/December 2019 Accounting and Business 9
IE_N_newsinbrief.indd 9 14/10/2019 12:32
Council has called for the
further development of an Belts tighten
all-island economy in the Irish consumers made less use of their credit
face of Brexit. It identified cards over the summer months, suggesting
all-island priorities as that they are becoming more cautious in
transport infrastructure, their spending habits, according to data
crossborder public from New Payment Innovation. Its figures
transport, collaboration show credit accounted for 35% of all card
on skills development, spend in the period (37% last summer) while
co-operation on climate average card transaction value dropped
change and the delivery of from €60.82 to €54.27 in the same period,
the North South electricity indicating that contactless is replacing cash.
interconnector to take full
advantage of the single
energy market. stepping down after 10 years Chinese investment in the No deposit charges
in the post. Holland worked UK’s life science sector. An aged IT infrastructure
New Invest NI CEO at the British Embassy in He has also worked at life without the capacity
Kevin Holland has been Beijing from 2016 until science company Baxter. to charge for deposits
appointed the new chief this year, leading a team prevents Ulster Bank passing
executive of Invest Northern expanding trade and market Digi skills centre on the cost of negative
Ireland, replacing access for British companies Google is planning to create interest rates to most
Alastair Hamilton, who is in China and increasing a digital skills training centre customers. While some ad
in a retail unit in Belfast city hoc charges will be made
centre. The Google Digital for deposits of very large
Garage will enable people to amounts, the bank is pulling
attend digital skills training in customers that lose it
courses and one-to-one money – customer deposits
sessions, and is intended to rose by €1.8bn to €21.3bn
open seven days a week. in the first half of 2019
compared with the same
Council member Melanie
Proffitt and Mike Suffield,
Wrightbus collapses period last year.
ACCA’s director of Wrightbus – one of
professional insights, Northern Ireland’s largest NI ‘least favoured’
accepted the thought manufacturing companies Northern Ireland is
leadership award. – has collapsed. Around the least attractive
1,200 jobs will be lost, unless UK region for SME
ACCA scoops prizes the business is bought out investment, according to
ACCA won two categories at the Digital Accountancy Awards of administration. Known the UK Business Angels
in London last month. It was named Professional Body of for making the so-called Association. ‘The potential
the Year for activities including its quarterly themes (the ‘Boris buses’ for London, loss of investment from
power of technology, connections, ethics and future-ready the company’s parent the continent, including
talent) and ACCA China’s 30th anniversary. It also won the Cornerstone Group made the European Regional
Thought Leadership Initiative of the Year award for its report donations of £4.15m to fund Development Fund,
(undertaken with CPA Canada) How accountants can bridge the Christian groups in 2017 Horizon 2020 and the
global infrastructure gap. Outgoing ACCA president Robert – a year when it reported Jeremie funds, could
Stenhouse said: ‘I am thrilled that ACCA has been recognised. a pre-tax loss of £1.7m. create a huge investment
It’s a culmination of hard work and collaboration across teams Michael Magnay and Peter gap in the UK,’ warned
and geographies, focused on delivering value to our members.’ Allen of Deloitte have been Jenny Tooth, CEO of the UK
appointed as administrators. Business Angels Association.
10 Accounting and Business November/December 2019
IE_N_newsinbrief.indd 10 16/10/2019 13:26Climate of harmony Starbucks EU blow
There is a high level of Starbucks has won its case
alignment between the at the European Court of
major global reporting Justice against the European
frameworks on climate- Commission, which had
related financial disclosures, accused it of benefiting from
according to a Corporate illegal state aid. The court
Reporting Dialogue project. found that the commission
Disclosure charity CDP, the had not proven that the
Climate Disclosure Standards company gained a clear
Board, the Global Reporting economic advantage from
Initiative, the International tax arrangements it had
Integrated Reporting Council agreed with the Netherlands.
and the Sustainability The commission said that the
Accounting Standards ruling provided clarification Paddy Power takes on the world
Board took part in the that while member states Flutter Entertainment, which owns Paddy Power and Betfair,
project to assess alignment have exclusive competence has agreed to buy Sky Bet’s owner the Stars Group, creating
with the Task Force on in determining national one of the world’s largest gambling businesses in the process.
Climate-related Financial tax policies, they must not The merged business had a combined turnover of €3.8bn last
Disclosures’ disclosure make tax arrangements that year. Flutter chief executive Peter Jackson will retain the CEO
principles, recommended represent illegal state aid. AB role in the enlarged business, which is expected to target
disclosures and illustrative growth in the sports betting sector in the US.
example metrics. Paul Gosling, journalist
IE_N_newsinbrief.indd 11 15/10/2019 16:56Order from chaos
Troubleshooting and transformation are the name of the game for Donna Wheeler
FCCA, FD and CFO at IBM Global Business Services in the UK and Ireland
N i
o one would be surprised to She ensures her own teams, whether
CV
learn that Donna Wheeler FCCA, ACCA-qualified or not, are well schooled in
FD and CFO of IBM’s Global these fundamentals. ‘I have to understand
Business Services UK and Ireland, sees 2017 how IBM’s sophisticated transactions
the tech behemoth’s finance function Appointed FD and CFO, translate into a general ledger input and
as offering the business well-controlled IBM Global Business output,’ she says. ‘A debit is going to end
processes. These enable Wheeler and her Services, UK and Ireland. up in an account receivable, and someone
team to deal with IBM’s complex bespoke Graduated with MSc in is going to have to collect that cash.’
deliveries to its global clients. professional accountancy Wheeler’s biggest driver is to add
What may be surprising – especially for from University of London value. IBM Global Business Services is the
non-accountants – is that the approach professional services arm of the business,
Wheeler has to maintaining and enhancing 2007–17 providing consulting, machine learning and
these disciplines can be traced back Succession of roles at IBM, cloud solutions. She sees her main role as
to a small South African accountancy including chief accountant; being a trusted business adviser. FDs are
practice, where she worked while a commercial management few and far between, and Wheeler, who
student. ‘I learned so much and found it leader, finance and took the job in 2017, is proud of having
so interesting,’ she says. ‘The firm gave me operations outsourcing; UK worked her way up to this position.
a little job, so I would go there during the and Ireland FD for Global It’s a commercial and advisory-focused
week after lectures.’ Technology Services; role that involves working closely with the
The only aspect of office life that was and FD for Europe sales business, helping the general manager
automated was a Wang machine that she and distribution and the leadership team understand the
used to input timesheet data. Starting off risks as they take difficult decisions to turn
in a workplace that had no computers, her 2000 commercial actions into profit. ‘When I am
hands-on financial education began with Moved to UK and joined doing that I feel the most relevant, and I
T-accounts (debits and credits represented IBM as regional accounting love to bring people with me to do that.’
graphically on a piece of paper) and sorting manager
out clients’ accounting records – invariably The troubleshooter
delivered in a cardboard box – to produce 1988 Over the years, troubleshooting and
the finished financial statements. The way Graduated with BComm transformation have been her key
those T-accounts brought forth order out of from the University of skills. ‘People ask me to come into
chaos has never left her. South Africa their part of IBM, and when I leave
Eventually, though, she left practice. they acknowledge I have transformed
‘I was hungry for more responsibility and their business, leaving them in a much
knowledge, and wanted to be at the coalface,’ she explains. better state than when I found them,’ she explains. ‘I bring
Her younger self had concluded that her work was backward- structure, and I build organisational capability in a controlled
looking, and she wanted to be part of carving out the future. fashion. I choose every person in the team for the job that
However, she is clear that even today she uses those skills needs to be done.’
she learned early on, overlaid by the high-level technical She also builds teams to support her quest for relevance.
knowledge of her ACCA Qualification. ‘It does not matter how Based across various European finance service centres
much you automate or standardise processes,’ she points out. including the UK business, she describes them as ‘cross-
‘Understanding the debit and credit is absolutely fundamental cultural, dynamic and geographically diverse, and
to any finance professional’s value-add.’ commercially aware and well informed about the business’.
12 Accounting and Business November/December 2019
IE_INTER_Wheeler_IBM.indd 12 14/10/2019 14:03‘We are a
108-year-old
startup. We keep
reinventing
ourselves’
November/December 2019 Accounting and Business 13
IE_INTER_Wheeler_IBM.indd 13 14/10/2019 14:04And that business is – according to one description Wheeler asset through robotics, artificial intelligence, blockchain and
heard recently – a 108-year-old startup. ‘We keep reinventing the internet of things via cloud technology.’
ourselves,’ she says. ‘We’ve evolved from a company that In this emerging world, Wheeler suggests that it is becoming
instructs machines and software to working in a cloud and the responsibility of the CFO to ensure that the rest of the
cognitive environment. We use these technologies to drive our C-suite and the boardroom understand the meaning and
own thinking and decision-making.’ potential of data and to guide colleagues in its use. She says:
Partnering with other companies, the business helps others ‘This includes using data tools for risk management, scenario
to exploit all forms of data, structured and unstructured (such planning, pushing operational excellence, robotic process
as speech and vision). Wheeler says: ‘Data is the most powerful automation, predictive analysis to drive business insight,
asset for competitive advantage, and IBM is harnessing this streamlining and cost-effectiveness.’
14 Accounting and Business November 2019
IE_INTER_Wheeler_IBM.indd 14 14/10/2019 14:05For her the role of the CFO will become more important
as the degree of complexity, and therefore risk, increases.
i Basics
‘The CFO will have to pinpoint where that risk, such as
cybersecurity, is actually coming from. We will need to do the US$79.6bn
same thing in a different way.’ Total IBM revenue for the financial year ending
More broadly she warns that finance professionals need to December 2018
maintain their awareness of risk levels as automation increases.
‘With the increasing use of algorithms, we as accountants US$37bn
need to understand how a number is made up – where did it IBM’s gross profit for the financial year ending
come from? In the future we won’t necessarily know.’ December 2018
And a key element on the risk register is the maintenance
of cybersecurity, which accountants need to champion. ‘We US$127bn
need to be alert, educating ourselves to a new way of working Market capitalisation
on these new technologies to navigate our way through,’ she
says. ‘This will ensure relevance.’ US$13.81
To take on those new responsibilities, CFOs and the finance Operating earnings per share
team need reskilling so they can understand the potential of
new technologies and direct businesses accordingly. Wheeler 375,000
is foreshadowing this emerging world in her current role. Number of employees, operating in more than 175 countries
‘IBM’s finance professionals are being
asked to do something that is very
different from running accounts over mentors – there are people I call if I
regular time periods, closing the have a difficult situation.’
books and going home. Things now During her time at IBM Wheeler
happen in real time.’ has driven financial transformations
The day before AB spoke to ‘If you don’t ask for that are designed to raise
Wheeler, her plans for the day had productivity – such as turning out
help, you can go
been superseded by the need to quarterly financial statements
contribute to a client negotiation. The
down a hole. I have faster. ‘Instead of repeating the
commercial team wanted financial mentors – people same transaction time and again
information that required scenario I call if I have a all over the organisation, you need
planning and financial modelling, difficult situation’ the concept of doing tasks once
which led to Wheeler and her team in order to save time, effort and
presenting to IBM’s highest finance costs,’ she says. This has led to the
levels to obtain approval and support consolidation of reporting work in
for the ultimate decision. increasingly automated financial centres, and using data and
technology-driven tools such as predictive analysis.
The bigger picture The skills that are required of financial professionals have
Wheeler praises her team as the bedrock of her success (‘You moved beyond the financial and even the commercial,
can’t do it on your own’). Describing her management style Wheeler says, and now extend to relating and communicating
as ‘I believe I’m firm and fair’, she emphasises her structured at all levels of the organisation. ‘We must have personal
approach. ‘That’s because I’m an accountant. From the word skills and emotional intelligence – including tolerance for
go, I make sure everyone in my team understands their roles cultural differences – in order to negotiate a way through the
and responsibilities, how they contribute to the bigger picture, complexities of building the networks and the connections
and they have a sense of their value.’ that will allow you to obtain the information you need. In that
She also places considerable value on networking, and is a way you earn the respect that ensures you have that place at
volunteer on ACCA’s mentoring programme. ‘No man is an the table as a key decision-maker.’ AB
island, and asking for help facilitates success for yourself,’ she
says. ‘If you don’t ask for help, you can go down a hole. I have Peter Williams, journalist
November/December 2019 Accounting and Business 15
IE_INTER_Wheeler_IBM.indd 15 14/10/2019 14:05Read on an app or online Choose to give up your print version
Simplify your life
– get the AB app!
Get so much more for less
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via myACCA at accaglobal.com
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IE.indd 16 2 09/10/2019
10/10/2019 14:59
09:55The view from
Marie McCrea FCCA, partner, Centre for Innovative
Leadership, on planning for change 58% of organisations
The Centre for Innovative meaningful change is often across the world have
Leadership is a networked a challenge to source, with deployed some form
international boutique the issue frequently being of automation, such as
consulting and executive a financial one. Very often robotics, machine
development organisation stakeholders and investors learning or natural language processing.
founded in 1989 with a allow the short to medium Source: Deloitte
South African and Irish term to take precedence
base for operations. We over the longer term.
are experts in scenario-based strategy, Irish boards analysis
systems thinking and successful large- My role is diverse, involving a variety More than half of newly appointed
scale organisational change. Simply put, of different client types across a directorships of Irish public companies
we help individuals and organisations range of sectors and structures. I am were awarded to foreign nationals,
be resilient now and when confronted currently focused on building capability according to analysis by recruitment
with the future. I have been a partner and capacity with organisations and advisers Heidrick & Struggles. It also
with CIL since 2010. individuals involved with societal change. found that just 29% of directors of
public listed companies were women,
The nature and the pace of change Longer term, I want to grow and be part the lowest of any European company
today mean many organisations do not of a more inclusive and collaborative studied and below the quotas of 30%
have the chance to reflect on what the approach to development. I see to 40% set by several European states,
future may hold, let alone understand Ireland having a key role in this process, according to the report. In a new study,
what it may mean for them and specifically in Africa, given our own Gender diversity is correlated with
address its practical implications. This history, recent journey and capabilities higher ratings, Moody’s found in a study
does not mean those in leadership are developed. of 1,109 publicly traded North American
not trying to look ahead. However, the companies that companies with greater
timeframe for their vision is often too One of the biggest and recurring gender diversity on their boards tend to
short and they remain in reactive mode. challenges is that the need for quick have higher credit ratings.
Leaders are seeking solutions, yet the fixes to complex issues often results in
investment they need to bring about unintended consequences. Addressing NI rates consultation
this requires a continuous process of Northern Ireland’s Department of
managing expectations while remaining Finance has launched ‘a full and
true to what we know works. We strive to comprehensive review of business
Ireland has a facilitate a process that produces results rates’. The review will evaluate the
that clients themselves have been part of current rates system and recommend
key role in a
creating and are committed to. how it can be made effective and
more inclusive fair, without losing revenue. The
development Each year brings new opportunities. I’m department said: ‘It is of strategic
process, specifically looking forward to further collaboration importance for government to ensure
in Africa, given between Ireland and South Africa across that the business rating system is fit
the public, private and not-for-profit for purpose in order to fund Northern
our own history
sectors, specifically working with SMEs Ireland’s key services, both at regional
and journey to enable positive and sustainable social and district level.’
and economic outcomes. AB
November/December 2019 Accounting and Business 17
IE_YCorp_Intro.indd 17 15/10/2019 12:30Budget highlights
Brexit uncertainties have cast a long shadow over this year’s Budget, along with the
need to respond to climate-change concerns and ensure continued financial stability
With the outcome of the Brexit Just the start: Paschal Donohoe
negotiations still unknown on has created a €1.2bn war chest in
anticipation of a no-deal Brexit.
8 October when Paschal Donohoe,
minister for finance, presented his
Budget, the emphasis was on planning
for a range of potential scenarios.
Describing the circumstances as
‘without precedent’, Donohoe said his
aim was ‘to manage risk for our nation
while aiming to make progress on so
much, from the health of our national
finances to the quality of our public
services and to the great challenge of
climate change’.
The Budget’s central assumption is
that the context for Brexit has shifted
to no deal. The minister warned that
intervening to support the economy over €1.2bn, excluding EU funding, If a no deal does happen, Donohoe
in the event of the UK crashing out to respond to Brexit. The first stage said there will be a further intervention,
of the EU without a deal will result in will see approximately €200m made funded by government borrowing.
the projected surplus of 0.2% of GDP available next year to increase the level This will make €650m available to
swinging to a deficit of 0.6% next year. of staffing, upgrade infrastructure at support the agriculture, enterprise and
Given the no-deal expectation, ports and airports, and invest in IT and tourism sectors and assist the most
Donohoe announced a package of facilities management. affected citizens and regions, with
€220m of that sum being deployed
immediately. In addition, €500m due to
Brexit resources be transferred from the Exchequer to
The Budget set out a range of funding for Brexit including: the Rainy Day Fund this year will now be
* €45m transition fund retained in case it is needed for Brexit
* €42m rescue and restructuring fund contingency resources.
* €8m transformation fund for food and non-food businesses Brexit, though, was not the sole
* €5m extra for Micro Finance Ireland preoccupation of the Budget.
* €5m for an emergency Brexit fund for local enterprise offices Donohoe also declared: ‘While Brexit
* €2m extra for Intertrade Ireland represents our most immediate
* €3m extra for regulatory bodies. economic risk, climate change is without
doubt the defining challenge of our
€110m will be provided through the Department of Agriculture, Food and the Marine
in the event of a no-deal Brexit. This will be divided up as follows: generation. We need to prove that we
* €85m for beef farmers can grow the economy while reducing
* €14m for fisheries our environmental impact.’
* €6m for other livestock farmers and the mushroom sector As a first step, he announced a €6
* €5m for the food and drinks processing industry. increase in the price of carbon. This will
take effect immediately for automotive
18 Accounting and Business November/December 2019
IE_YCorp_Budget_Spotlight.indd 18 15/10/2019 12:43fuels although its application to other
fuels will be delayed until May 2020,
after the winter heating season. The
measure will raise €90m in 2020, all of
which will be ringfenced to fund new
climate action measures.
Caitriona Allis, head of ACCA
Ireland, said: ‘This is an important
step in achieving the government’s
long-term goal as part of the EU-wide
reduction in carbon emissions of 40%
(on 1990 levels) by 2030. We would
welcome the opportunity to further Green light: environmental concerns
support the government in reviewing have been addressed with a carbon tax
hike and a new NOx emissions charge.
policies similar to the R&D tax credit
scheme, which could allow Ireland’s
business community to offset some time from 1 January 2020. The charge However, he announced a number of
of their investment in tackling carbon will apply on a per mg/km basis, with measures to tackle specific issues. They
emissions and better enable them the rate rising in line with the level of include targeted changes to address
to help with our country’s shared nitrogen oxide emitted. a potential gap between the dividend
climate goals.’ Donohoe refused to commit to withholding tax (DWT) remitted by
The 1% diesel surcharge that was personal tax cuts across the board given companies and the income tax and
introduced last year is to be replaced the prevailing economic uncertainty universal social charge that is ultimately
with a nitrogen oxide (NOx) emissions- that exists. ‘The unfunded tax cut of payable by individual Irish-resident
based charge that will apply to all today is the unwelcome tax increase of taxpayers. There will be an increase in
passenger cars registering for the first tomorrow,’ he warned. the DWT rate from 20% to 25% from
1 January 2020; then from 1 January
2021 Revenue will introduce a modified
Key Budget announcements DWT regime using real-time PAYE
Among the changes introduced by the Budget are: data that allows a personalised rate of
* reform of the employment and investment incentive (EII), with full income tax DWT to be applied to each individual
taxpayer, based on the actual rates of
relief in the year of investment, an increase in the annual investment limit to
€250,000 and a new €500,000 annual investment limit for those who invest for tax they pay.
10 years or more As for corporation tax reform,
* a rise in the R&D credit from 25% to 30% for micro and small companies Finance Bill 2019 will introduce new
* extension of the special assignee relief programme (SARP) and the foreign anti-hybrid mismatch rules, as well as
a technical amendment to the exit tax
earnings deduction (FED) to the end of 2022
* a relief from betting duty and betting intermediary duty up to a limit of €50,000 rules introduced last year, to ensure
they function as intended. New transfer
per calendar year, subject to the conditions laid down in state aid regulations
* targeted amendments to the real estate investment trust (REIT) regime to ensure pricing rules ensuring these are in line
with up-to-date OECD standards will
an appropriate level of tax is paid on property gains by REITs
* a rise of 1.5 points in the rate of stamp duty applicable to non-residential apply from 1 January 2020. AB
property transactions to 7.5% – a move that will bring in almost €140m
* an increase of €150 in earned income tax credit for the self-employed, bringing it Pat Sweet, AB editor
to €1,500 per year
More information
* an increase of €100 in the home carer tax credit, taking it to €1,600 per year
Full details of the changes that were
* a two-year extension of the Help to Buy scheme to the end of 2021
announced in Budget 2020 can be
* extension of the Living City initiative to the end of 2022.
found at bit.ly/Budget-2020.
November/December 2019 Accounting and Business 19
IE_YCorp_Budget_Spotlight.indd 19 15/10/2019 12:44Opportunity knocks
While China and the US have been locked in an escalating trade war, Chinese foreign
direct investment into Ireland has boomed this year. Will it continue?
Irish accounting executives are busy in China. The nature of our work has open economy, and that post-Brexit
advising clients on how to benefit from changed with our ability to offer these it will be the only English-speaking
a new wave of Chinese investment clients services beyond traditional tax, country in the EU (except Malta), ‘it has
that is moving into Ireland. At a party audit and transaction services, such as certainly put Ireland on the radar of
staged at the Convention Centre aviation finance advisory services.’ Chinese companies to a greater extent’.
Dublin this September to mark 40 Over at EY Ireland’s China desk, Chinese companies have already had
years of diplomatic relations between key industries targeted for Chinese an existing non-UK EU presence, ‘for
the two countries, Ambassador He FDI also include property, according instance in banking’, notes PwC’s De
Xiangdong said Chinese investors ‘are to partner Marcus Purcell. He notes Sales. ‘We expect to see movement in
in a good mood’ about Ireland, with that Irish investors also need help in financial services, international business
Chinese foreign direct investment China, with outward investment often services and technology sectors,’ he says.
(FDI) into the Republic exceeding matching inward. Business and investment have
€128m from January to June, up 75% also been encouraged by Irish beef
compared with the first half of last year. Trade surplus exports being allowed into China
This additional Chinese investment Ireland has become one of the few from 2018, the establishment of direct
is more impressive given that global EU countries to record a trade surplus flights to Ireland, the Central Bank of
investment by Chinese companies fell with China: the value of bilateral Ireland’s 2015 clearance of Irish funds
60% in the first half of this year to $20bn, trade in goods and services between to access Stock Connect, which links
according to data published by Baker Ireland and China amounted to the Shanghai, Shenzhen and Hong
McKenzie with the Rhodium Group. €17bn last year, according to figures Kong stock markets, and the bank’s
Investment into Europe as a whole from from the Department of Foreign Affairs, approval of the Bond Connect mutual
January to June 2019 fell by 26% to having more than doubled over the past bond market access programme,
$9bn, the lowest figure since 2015. five years. which allows international investors to
However, over the same period Brexit is part of this success. It has access the Mainland China Interbank
Ireland’s pharma and tech talent pool encouraged Chinese companies to Bond Market (CIBM). These have all
has lured investments from Huawei look outside the UK for access points to sparked ‘an increased number of visiting
Technologies and Wuxi Pharmaceuticals. European markets, according to Purcell. business delegations to Ireland beyond
Likewise, the country’s position as a Given Ireland’s proximity to the UK, its first-tier cities [Beijing, Shanghai and
food exporter has proved attractive, Guangzhou] in China’, says De Sales.
while aircraft leasing continues to However, not all Chinese investments
attract Chinese FDI into Ireland, given into Ireland are big-ticket corporate
the country’s leading position as an ‘PwC has sent two deals. Brian Geraghty, audit partner at
aircraft hub. Irish employees Crowe, has advised on a visa investment
‘PwC has sent two Irish employees programme which in the past granted
to China to focus
to China to focus on aircraft leasing residency to Chinese nationals investing
and tax, and to be closer to our
on aircraft leasing €500,000 in Irish indigenous businesses.
clients; and we’ve also had PwC China and tax, and we ‘The figure is now raised to €1m per visa,
employees move to Ireland,’ says have also had PwC so it’s less attractive,’ notes Geraghty.
Enwright De Sales, PwC Ireland tax China employees Crowe has also advised Chinese buyers
partner and leader. ‘We also continue on some smaller hotel deals.
move to Ireland’
to recruit Chinese employees, and Crowe in Dublin has been acquiring
Irish employees who have worked more skills and knowledge on the
20 Accounting and Business November/December 2019
IE_YCorp_China_FDI.indd 20 15/10/2019 13:35China’s investment in Ireland
Recent examples of Chinese FDI deals include:
* Emerí Nutrition invested $60m in an infant formula facility in County Meath.
* China Reinsurance purchased the Irish unit of Chaucer Insurance for $40m.
* China’s HNA Group bought Dublin-based aircraft leasing company Avolon for
$2.5bn in 2016, selling a 30% stake to Japan-based financier Orix in 2018.
* Chinese biopharma company WuXi Biologics is investing €325m in a
manufacturing facility in Dundalk, County Louth – now under construction.
Chinese economy and regulations.
* Figures supplied by the Chinese embassy in Ireland indicate that more than 20
Chinese companies are operating in the Republic, employing about 2,000 people.
‘We are dealing with such queries as
how to establish a business in China,
organising an “employer of record” legislation that increases the scrutiny (Ireland’s biggest individual trading
for foreign workers moving to China, of foreign mergers and acquisitions for partner), could the Sino-American
and structuring Chinese corporate potential national security risks’. trade war complicate matters for Irish
holdings for maximum flexibility. Crowe But Keogh thinks Chinese business with China? ‘Possibly at the
refers groundwork on Irish investments investments in Ireland are less likely to multinational level and in areas of
into China to its local partner Ruihua,’ be restricted by regulatory concerns embargoed or levied products, but
says Geraghty. over security, given they are largely not significantly for Irish exporting
focused on the medical, pharma, businesses,’ says Geraghty. However,
Security worries education, fintech, tourism, agriculture EY’s Purcell says that while the trade
Indeed, some financing may have been and environmental protection sectors. war has not ‘specifically changed’
deterred by increased scrutiny on China- ‘These pose significantly lower security Chinese work undertaken by Irish
based deals by both governments, risks as they do not give access accountants, ‘it has had an impact on
and controls on unsound investments to critical technologies, sensitive the overall climate for investing, and
by the Chinese government, says information or influence over critical is a consideration when assessing
Warren Keogh, director of management infrastructure,’ he says. investment opportunities’. AB
consulting at RSM Ireland. He notes Given the high interdependency
the impact ‘of proposed or passed new of the Irish economy with the US Mark Godfrey, journalist
November/December 2019 Accounting and Business 21
IE_YCorp_China_FDI.indd 21 15/10/2019 14:59A second chance
The financial crisis has prompted a radical and innovative approach to personal debt,
insolvency and bankruptcy in Ireland, as Cormac Keating explains
The legacy of unsustainable personal So far, nearly 8,000 debtors with aim to keep the debtor in their family
debt caused by the financial crisis of almost €10bn of debt have been home. A PIA is by far the most common
2008 led to the introduction of the returned to solvency, and the legislation solution, accounting for 40% of the total
2012 and 2015 Personal Insolvency has acted as a catalyst for credit solutions sought. ISI research has found
Acts and the creation of the Insolvency institutions to directly enter into more that the three most popular restructures
Service of Ireland (ISI) in 2013. than 120,000 informal alternative are split mortgages, term extensions
ISI’s vision is to provide ‘a fresh repayment arrangements. and principal reductions. The average
start for people in debt’ through four Personal insolvency arrangements principal reduction per family home
statutory solutions (see box below). (PIAs) deal with mortgage debt and is around €120,000, and 95% of those
entering a PIA remain in their home.
A key benefit of the new regime is
Personal insolvency and bankruptcy solutions that a debtor has the same protection
and can chose an insolvency solution
Solution Level/Type Income Assets Required irrespective of the type of creditor (main
of debt intermediary pillar banks, investment funds, credit
Debt relief notice Under €35,000 Under €60 Max €400 Approved unions, utility companies, etc), which is
per month intermediary important in the light of ongoing loan
Debt settlement Unsecured only No max No max Personal sales to investment funds or so-called
arrangement insolvency vulture funds.
practitioner
The initial slow take-up reflected the
Personal Secured and No max No max Personal simple reality that such a radically new
insolvency unsecured insolvency
arrangement practitioner regime takes time to bed in. Debtors
Bankruptcy Over €20,000, No max No max None were unaware of the extent of the
secured and help available, while the main credit
unsecured
institutions were initially worried about
moral hazard and strategic default,
22 Accounting and Business November/December 2019
IE_YCorp_Insolvency_Changes .indd 22 14/10/2019 14:40and were slow to engage. Information
events and advertising campaigns have Approved debtor arrangements
accordingly been run to increase debtor
Number of debtors
awareness, and ISI has worked closely
1800
with credit institutions to emphasise the
1600
benefits of dealing with personal debt in
1400
a structured way.
1200
1000
Developments
800
Since 2012 the personal insolvency
600
regime has continued to evolve, with a
400
particular emphasis on ensuring debtors
200
are given every chance to remain in
0
possession of their family home. The
2013 2014 2015 2016 2017 2018
more important policy developments
include the following: Insolvency arrangements Bankruptcy
* ISI has issued insolvency
arrangement guidelines on living
expenses – a debtor is entitled to a such section 115A cases have been economic conditions pose a number
reasonable standard of living that brought since 2015, 400 of which of important challenges for the
meets their physical, psychological have so far been decided (60% in personal insolvency regime – and more
and social needs. favour of the creditor and 40% in importantly for the return to solvency for
* Agreements have been struck with favour of the debtor). those tens of thousands of households
all relevant stakeholders to make it
* The bankruptcy term has been that remain in deep mortgage arrears.
Improving conditions will, in turn,
easier for a debtor to reach a debt reduced to one year.
settlement arrangement (DSA) or
* The 2016 introduction of the Abhaile perhaps reduce the focus on the
difficulties faced by those who remain
PIA with their creditors. mortgage arrears resolution service
There have also been amendments to (recently extended for a further indebted and may make it increasingly
the legislation, as follows: three years to 2022) allows a debtor difficult for those debtors to remain in
* A debtor can seek a court review, to secure the services of a personal their family homes as creditors seek to
recover a more valuable security.
in certain circumstances, where insolvency practitioner (PIP) for free.
creditors reject a PIA, removing the
* With the assistance of the Legal Arguably, the need for ISI and
the suite of insolvency solutions it
so-called bank veto and increasing Aid Board, Abhaile is funding a
the chances of a PIA proposal solicitors’ panel to provide legal aid provides are more important in these
being accepted. More than 1,100 to debtors so they can bring section circumstances where debt restructuring
115A cases to court. will lead to a second chance with
The evolution of the personal greater opportunities for debtors. ISI
insolvency process continues. In 2017 a would like to encourage accountants to
Under a PIA, the consultation began under section 141 direct any debtor who may be seeking
average principal of the 2012 Personal Insolvency Act, advice about debt problems to make
with suggestions requested on how contact with ISI, either through the
reduction per
to improve the legislation. ISI made a website www.backontrack.ie or the
family home is comprehensive submission (available information line at 076 106 4200, or by
around C120,000, at www.isi.gov.ie) and is awaiting the directing them to a PIP.
and 95% of PIA outcome of the Department of Justice ISI is also happy to run information
debtors remain in and Equality’s deliberative process. sessions, locally and regionally. AB
Economic circumstances have
their home
changed dramatically in recent years. Cormac Keating is head of policy,
While welcome, these favourable regulation and corporate affairs at ISI.
November/December 2019 Accounting and Business 23
IE_YCorp_Insolvency_Changes .indd 23 14/10/2019 14:40Relief agency
Tax reliefs are designed to make saving into a pension an attractive option, but there
are growing pressures for an overhaul of the regime to ensure a wider safety-net
The end of the tax year presents an Ireland is one of just two countries part treatment is of little to no consequence,
opportunity to tie up financial loose of the Organisation for Economic Co- while for the very highest earners, it
ends and, as many accountants will operation and Development without provides a generous saving subsidy that
know, a brief but intense focus on such a system in place. may arguably not be needed.
pension planning is often part of this. A recent report from NUI Galway Lead author Dr Emer Mulligan says
There are good reasons why this is may put additional pressure on the the research shows a ‘clear need to
so. As a recent article in The Irish Times government to speed up the reform investigate the true cost to the taxpayer’
put it: ‘Pensions are in a league of their process, as it suggests abolishing the of the current system, adding ‘it does
own when it comes to tax-efficient current tax relief system as part of efforts not appear to be achieving its objective
investments,’ a fact attributable to the to ensure pension security for a broader of increasing pension coverage’. The
significant tax reliefs allowed by the base of private-sector workers. report may already be said to have the
Revenue on pension contributions. The Pensions in Ireland: The perspectives ear of government, as it was launched
amount allowable is staggered by age, of Irish citizens and implications for by Fine Gael TD Kate O’Connell, who
moving from 15% of total salary for the Irish pension system and reforms said the report was further evidence
those under 30 to 40% for those 60 and of a pension system that was ‘not fit
over. While changes in the last decade for purpose’, and that its findings ‘will
have make the regime less generous certainly impact our political and public
than it was (notably a reduction in the ‘The suggestion debate on this matter’.
salary cap from €254,000 to €115,000), that reducing
they have not diminished its overall
income tax relief Challenges to reform
appeal to the majority who avail of it. While there is broad consensus that
Attractive as it is, there is growing
would somehow pension planning is poorly understood
debate around the effectiveness of tax lead to more people by the general public, not everyone
relief in addressing Ireland’s ballooning having adequate agrees radical reform of the current
pension requirements. Government pension pots tax regime is the way forward. ‘Pension
statistics point to just 35% of private- research conclusively finds the large
is flawed’
sector workers funding their own majority of people do not understand
pensions, meaning some two-thirds do how pensions work and find them too
not, with a further significant percentage complicated,’ says Michael McKenna,
likely to not be saving enough. is based on conversations with what its chief operating officer, Standard
The consequences of this may be authors say is a representative range Life International. He argues that
felt sooner rather than later. A report of citizens on the pension system. a combined educational approach
published in early 2019 suggests that Unsurprisingly, it finds views on it are between industry, government and
by 2030, one in six people in Ireland influenced by factors such as work employers is needed to address this.
will be over 65, an increase from the experience, health, income and age. The McKenna says he joins those
one in eight today; while by 2055, report pointedly concluded that it found welcoming the move to auto enrolment
1.4 million people will eligible for the ‘only a minority were knowledgeable and believes it will benefit those on
state pension, compared to 600,000 about and understood how the tax lower incomes significantly. However,
in 2015. A shift to auto-enrolment, system and pension system interacted’ on the question of abolishing current
where employees are automatically and throws light on what it sees as a tax reliefs, he says: ‘The suggestion
enrolled in workplace schemes, has key tension in the current regime: for that reducing income tax relief would
been mooted in response to this, and those on lower incomes, favourable tax somehow lead to increased retirement
24 Accounting and Business November/December 2019
IE_YCorp_Pensions.indd 24 14/10/2019 14:46You can also read
