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The Institute of Chartered Accountants in Ireland ABAF Annual General Meeting 24 th April 2008 Simone Doran, Director on behalf of Vincent Sheridan President
Welcome • • Thank you for the invitation Apology for change of face Overview of the economies of N. Ireland the UK Challenges for the Profession Global Impacts for professional bodies ICAI Lisbon Treaty
Irish Economy 1997 2007 GDP = EU average 1. 4 m at work GDP +35% 2. 1 m at work (12. 5% foreign) € 1. 7 bn € 160 € 330 m roads investment R&D investment € 220 m Child Benefit € 38 pm Between 2002 and 2007 GDP growth averaged 5. 3%
Irish Economy today Economy slowing down but still strong • GNP Growth forecasts range between 1. 6% and 2. 8% • Debt/GNP ratio end 2007 was 26% • Unemployment 4. 5% (participation rate 69% - target 70%) • CPI inflation 5% • Falling house prices, slowing construction sector • 6% GNP p. a. committed to National Development Plan • National Pension Reserve Fund € 21. 3 bn (since 2001)
Northern Ireland • Political developments 2007 have led to new confidence. • Record employment levels • Overdependence on public sector and transfers from the UK • Executive committed to economic development • ICAI active in Varney debate – 12. 5% Corporate Tax Rate. • Mid-April Agreement between NI Executive and Irish Government on IFSC sub-offices locating in N. Ireland. Irish Regulator and Ro. I tax. Skills shortages in Ro. I offset.
UK Economy – short-term indicators • GDP rose by 0. 6% in Q 4 2007, 2. 8% higher than Q 4 2006 • Debt as percentage of GDP – 36. 7% end March • Employment rate – 74. 9% • 29. 51 m at work end Feb. , highest since 1971 • CPI at end March, 2. 5%
Three major UK economic events • Northern Rock crisis – Bank of England provided guarantees to Ø stabilise the situation Ø safeguard depositors Ø protect the system • February – legislation introduced to take Northern Rock into a temporary period of public ownership • Special Liquidity Scheme, introduced this week.
The Profession – Challenges ü Regulatory environment Ø IAASA – established 2006 Ø ODCE – established 2002 Ø Financial Regulator and FSA Ø Professional Oversight Board ü Business Regulators – Energy, Communications, Transport, Health & Safety Authority, National Employment Rights Authority, Data Commissioner, etc. ü Ombudsmen – FS, Public Services, etc. ü 500 state agencies, boards, authorities and quangos in Ireland (Fine Gael) ü Chartered Accountants Regulatory Board
CARB - unique • Chartered Accountants Regulatory Board, est. 2007. • Chaired by former Financial Regulator, Dr. Liam O’Reilly • More than 50% of Board members are nonaccountants • Oversight of Chartered profession in Ireland • Funded by but operationally independent, of ICAI. • Responsible for regulation, quality assurance and disciplinary processes. • € 4. 5 m budget
The Profession - Challenges • Regulation of the Term Accountant Ø ICAI secured Ministerial support for regulation of the term “Accountant” in Ireland. Ø Precise recommendation awaited in CLRG Report (May/June 2008) ØCCAB campaign UK, under discussion, less progress. • ICAI Student intake grown from under 1, 000 to 1, 700+ over last 4 years Ø All accountancy bodies in Ireland growing Ø Demand still intensive, despite “slowdown”
The Profession - challenges • 8 th Statutory audit directive – many aspects already in UK via FRC and in Republic via IAASA, but transposition awaited in Ro. I. • Mc. Creevy Audit package Ø recommendation on auditor liability Ø public consultation on ownership of audit firms Ø recommendation on quality assurance of audits of listed companies • Auditor Liability, current situation Ø can be agreed by contract in UK Ø No LLPs in Ro. I Ø auditors not allowed incorporate. Ø Ro. I awaiting CLRG report, but hopeful of positive outcome.
The Profession - Challenges • New Anti-Money Laundering Guidelines arising from 3 rd AML Directive in place in the UK, awaiting implementation in Ro. I. • New Companies Act UK in place. • Consolidated Companies Legislation in the Ro. I due for publication later 2008 by CLRG. • IFRS simplification – standard for SMEs, supported by ICAI • EU simplification proposals ¯ exemptions for small companies from filing financial information and establishment of micro-entities. Genuine debate yet to take place in UK or Ro. I.
Globalisation and the Profession Ernst & Young Ø proposed merger of European and Asian firms Ø implications for professional bodies? Existing international co-operation: Ø Common Content Initiative (7 Institutes) Ø FEE Ø IFAC – ICAI chairs Education & Ethics. Boards member of PIAB. Ø Global Accounting Alliance – 9 institutes Ø XBRL
ICAI Profile • 16, 691 members at 31 st Dec. 2007. Ø 11, 149 Ro. I 66% Ø 3, 972 UK and NI 24% Ø 267 in Europe 2% Ø 1, 303 rest of world 8% • Business Members 60% • Gender 69% male • Student recruitment profile, 53% female (trend over last ten years) • 68% membership aged under 44
ICAI Financials • • Reserves now stand at € 16 m Sub increases 2% for 2008 New leased training centre & office in Belfast € 50 m training centre & office being developed in Dublin • Healthy Financial position
Latest ICAI Headline Activities Publishing – Commenced 2006 • 35 publications by June 2008 • Provide technical information to members & general information to a wider audience. • Enhance CA Brand • Raise profile of ICAI & its members Lifelong Learning • 13 post ACA qualifications with 6 already launched • Use of technology – e. CPD, Harvard Manage. Mentor Plus, Nelson Croom. • My CPD Website • New interactive website to be launched end May. Tax Services • Unique on-line consolidated Irish taxation resource
Lisbon Treaty Ireland only country consulting its electorate • Irish referendum on Lisbon Treaty not confirmed but believed to be 12 th June. • ICAI Council in March agreed to support the yes campaign. • Key concern – CCCTB • Treaty confirms national veto in the area of tax. • Some countries could decide to adopt CCCTB but cannot force it on others.
• Thank you very much