GAA Accounting

The Journal of the Global Accounting Alliance

09/12/2014
by GAA Accounting
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Global Succession Survey Unveils Accounting Firms Have Work To Do

By Dom Cingoranelli, Bill Reeb and Michaelle Cameron

In May 2014, the Global Accounting Alliance, a federation comprising 11 of the world’s leading professional accounting organizations that represent approximately 800,000 members in over 180 countries worldwide, retained Harris Decima of Canada, a Nielsen Company, to conduct an online global survey on the current state of succession planning among firms that belong to the 11 member bodies. Of the 4,547 respondents, all worked in Public Practice and classified themselves as either a sole practitioner, managing partner/owner, partner, employee or consultant. After dissecting the information by groups, as well as looking at the data by country, the survey revealed some important insights regarding the landscape of succession management in the public accounting space. Continue Reading →

08/12/2014
by GAA Accounting
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Ireland’s New Companies Legislation will ring change in the New Year

By Daisy Downes

Some 13 years after its inception, Ireland’s new Companies Act is expected to be enacted before the end of 2014. Daisy Downes spoke Dr Tom Courtney, Chairman of the Company Law Review Group about the new legislation.

Why has it taken the Companies Bill so long from inception to enactment?

Assuming the Bill is enacted this year, it will have been 13 years since the CLRG unveiled the blueprint I mentioned. CLRG published heads of Bill in 2007 and it took a further five years to draft the Companies Bill which was published in December 2012. The necessary resources for drafting such a mammoth piece of legislation – which at 1,448 sections is the largest enactment in the history of the State – are scarce at the best of times in a jurisdiction the size of Ireland. It is also significant that the Bill was drafted at a time when there were never greater demands made on the Office of the Attorney General in terms of providing legislative solutions to Ireland’s economic crisis.

To what extent will the new legislation revolutionise company law in Ireland?

I think that many aspects of the Companies Act appear revolutionary to practitioners e.g. a one-document constitution, the absence of an objects clause for LTDs, the abandon-ment of Table A and the advent of statutory default governance provisions. I am not sure I would use the same term to describe the experience for businesses and other users of company law. I would like to think that the Act will confirm that Ireland is a good place to do business through the medium of the registered company, simplify company law as much as is possible and set out the law more clearly. If these outcomes, achieved by the repeal and reformed restatement of 32 enactments, are considered to be revolutionary, then the Companies Act will revolutionise Irish company law.

What are the most significant changes?

The changes can be broken down into structural and substantive. After the architecture of the Act – whereby the law applicable to each type of company is, for the first time, clearly delineated – the next most significant structural change is the abandonment of Table A in favour of the creation of a series of statutory defaults which will automatically apply unless a company’s constitution provides otherwise. The advent of a one-document constitution for the new model private company or “LTD” is also a significant structural change. As to substantive changes, the abolition of objects clauses for LTDs, and merge companies using the summary approval procedure, the codified statement of directors’ duties, the procedure for revising defective statutory financial statements, changes to registration of charges – the list goes on – are all important changes introduced by the new legislation.

Are Irish company directors ready for the change?

Company directors are only as ready for the change as are their accounting, legal and company secretarial advisers. For most directors and shareholders of private companies, the key action required will be deciding whether to convert the company to a designated activity company (DAC) or become a new model private company (LTD). And while there are new obligations (for a small number of companies, the directors’ compliance statement will be a new obligation) much of the Act is actually old wine in a new bottle. Advisers will play a key role in stewarding their corporate clients through the transition stage of the Act which is likely to commence on 1 June 2015.
What impact will the Companies Act have on foreign direct investment and in particular on Ireland’s competitiveness?

It is important that Ireland’s corporate framework supports competitiveness. FDI does not choose to come to Ireland because of our company law regime; however, FDI might choose not to come here and go elsewhere if it is not supportive. The Companies Act will give Ireland a state-of-the art code which is supportive of a decision to locate in Ireland. It simplifies the law, clarifies obligations of companies and their directors, it removes unnecessary bureaucracy and seeks to allow companies to engage in transactions provided the interests of creditors and shareholders are protected.

Do you anticipate further reform once this legislation is enacted?

Company law must always be kept under review and changes introduced at regular intervals, whether to match or exceed the support provided by competing jurisdictions or to address new mischiefs which come to light. The CLRG will continue and its current work programme, in addition to looking at whether company law compliance and enforcement is fit for purpose, will involve a review of issues which were not included in the Bill because they needed further development.

Dr Thomas B Courtney is a partner and head of the Company Compliance & Governance group in Arthur Cox. Tom has been the Chairperson of the CLRG since its inception and is the author of The Law of Companies (3rd ed; 2012) and editor of the forthcoming Bloomsbury Professional’s Guide to the Companies Act. Daisy Downes edits Accountancy Ireland. A fuller version of this article appears in the December 2014 edition of Accountancy Ireland which is available for in-App purchase through the Accountancy Ireland Magazine App.

08/12/2014
by GAA Accounting
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Fusion of Digital and Print Delivers Added Value in Member Magazines

By Daisy Downes

Much has been made of the threat that digital publishing poses to print magazines. While the focus of debate in the publishing industry tends to concentrate on issues like the quest to monetise digital publications, another interesting consideration for membership magazines is the opportunity digital technology offers to deliver additional value for readers

Slideshows, audio interviews, video and web links all have a part to play in enhancing content and are useful aids for adding life and interest to technical articles. Equally valuable is the opportunity that digital provides to package previously published content — sometimes called ‘evergreen’ content — and link relevant articles in a way that makes them more readily accessible print ever could.

Accountancy Ireland App digital examples

Accountancy Ireland App provides easy access to relevant related content from the archives.

At Chartered Accountants Ireland, Accountancy Ireland magazine’s ‘Select Series’ of App-only editions and shows how a single page can be used to present six previously published articles through a single user-friendly interface. One click brings the reader into the full text and one click takes them straight back to the App.

As a members’ magazine, an important consideration in developing the Accountancy Ireland Magazine App was that editions would be free to Chartered Accountants Ireland members and that everyone else should have to pay to access the content. Subscriptions and single copies are offered for in-App purchase by ‘non-members’ while members can access all editions free of charge by logging in.

Other magazines are also innovating and experimenting with digital. The Economist magazine publishes a successful audio edition and Harvard Business Review successfully mines its archive of ‘evergreen’ content and leverages social media to develop new business. The latter is particularly interesting because unlike most business magazines it derives more revenue from subscriptions than from advertising.

Only the brave attempt to predict the future but for now, at least, it looks like a fusion of digital and physical may prove the best way forward for business magazines.

Daisy Downes is the editor of Accountancy Ireland magazine, the official journal of Chartered Accountants Ireland.

08/12/2014
by GAA Accounting
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EU Audit Reform : Chartered Accountants Ireland urges DJEI to monitor implementation across the EU

Aidan Lambe, Chartered Accountants Ireland

Aidan Lambe, Chartered Accountants Ireland

Chartered Accountants Ireland has called for the roll-out of the EU’s audit reform measures to be consistent across Member States. After four years of debate, discussion, and negotiation, the new EU measures aim to underpin auditor independence and encourage greater competition within the audit market for public interest entities (PIEs)  banks and credit institutions, insurers and listed entities.

Commenting from Paris, where he was participating in a European conference on the implementation of the new measures, Aidan Lambe, Director of Technical Policy at Chartered Accountants Ireland, said that the Institute is supportive of any measures aimed at increasing confidence in the role of audit and awareness around what auditors do and has been seeking independent State supervision of audits of PIEs.

The EU Audit Reform legislation means that mandatory rotation of audit firms will be introduced for all public interest entities in the EU, with listed companies and banks to rotate auditor firms after 10 years. As all Member States move to transposition in their own countries, a consistent implementation and workable solution is critical – particularly with regard to audit firm rotation for large companies operating across many EU jurisdictions.

Mr Lambe urged Ireland’s Department of Jobs, Enterprise & Innovation to monitor closely the implementation of the reform throughout the EU and said that the sooner companies and auditing firms have clarity on implementation, the more time they will have to prepare.

Key measures in the audit reform package are:

  • Mandatory rotation of audit firms (for PIE audits) – a maximum of every 10 years (extendable to 20 following a public tender);
  • Introduction of a ‘blacklist’ of non-audit services which an auditor is prohibited from providing to PIE audit clients;
  • Introduction of a monetary cap on fees that auditors may earn from permitted non-audit services;
  • Independent inspection (by a State agency) of audits of PIEs – typically performed by the larger audit firms;
  • An effective end to the era of ‘self-regulation’ by the vesting of all regulatory and supervisory powers to a public oversight body – IAASA. Although some lower risk functions may be delegated back to the professional bodies.

Audit reform will also bring additional restrictions on the non-audit services that audit firms can provide to clients. These changes are significant, apply to all EU public interest entities and may cause complexity for business, whatever their size.

Notes:
For details of the Department of Jobs, Enterprise & Innovation consultation on EU audit reform measures, see www.djei.ie
For EU Commission FAQ sheet on audit reform see http://ec.europa.eu/

[This article originally appeared in the Accountancy Ireland Magazine App Select Series No 3. Check your App Store for further information]

05/12/2014
by GAA Accounting
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Pricing Issues for Midsize and Large Firm Sales

By Joel Sinkin and Terrence Putney, CPA

Big deals come with more complexity, but size has its advantages.

It’s no simple task for accounting firm owners to figure out how much they should be paid when they are looking to sell. The job is especially complex for firms with at least five owners. Continue Reading →

05/12/2014
by GAA Accounting
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Not-for-profits Delve into Risk Management

By Jack Hagel

Many not-for-profits lack the resources to implement a holistic approach to risk across the enterprise. So it’s no surprise that they often lag behind public companies in implementing enterprise risk management (ERM). Continue Reading →