Presentation slide from the ICSA Ireland Conference which took place on 17 May 2018.

1. #ICSAIreConf

2. Chair’s opening
remarks
Ruairí Cosgrove FCIS
President, ICSA Ireland
#ICSAIreConf

4. Leading Board Development

5. Avolon at a Glance
Aircraft Portfolio
$7.5bn
$46bn
Shareholder Equity
$5.2bn Available Liquidity
250 People
#3 in the World
8 Years Old

6. Board Credentials
NYSE / SZSE
Public to Private Equity
University Foundation
Subsidiary UK Regulated Bank
Multiple Start Ups

7. Life Cycle of a Board Member
Recruitment
Induction / On-going Learning
Contribution
Regular Assessment
Planned Exit
?





8. Recruit for…
Culture
Diversity

9. Individual Collective
Stable
Flexible
Inquisitive
Outcome-oriented
Consensus-driven
Process-Focused

10. Moving from “Compliant”
to “High Performing”
Gender Balance
Human Capital
Disrupter Mentality
Global Mindset

11. Helping Fix the Gender Imbalance
Quotas
Activist Investors
Men Only Diversity Training
The “Disappearing” phenomena
Network, Network, Network!
Get on the radar of Headhunters
Top Down Bottoms Up
- Remove Unconscious Bias

12. and Contribution…

13. Active Invasive

14. What Makes a Great Chair?
Humility & Ego Management
Availability & Presence
Patience & Reflectivity
Passion

15. Contribution
Continuity
“Continuity / Contribution” Conundrum
Most
Valuable
Withering
on the
Vine

17. NYSE – Highest Performing Boards
Time Frame 2007 – 2017 TSVR
Size 10
NED’s Majority
Gender 25% Female
Chair Only 2 with other commitments
Committee’s Mostly NED’s

18. Making “Great” a Reality
1. Better Recruitment/Engagement– Diversity is Key
2. Chair will become younger “40 Somethings”
3. People Agenda will be central >30%
4. Regular Independent Assessment

19. © A. Kakabadse 19
www.henley.reading.ac.uk©a.kakabadse
Andrew Kakabadse
Professor of Governance and Leadership
Henley Business School
Conflict, Paralysis or Engagement:
Critical Nature of Boardroom Dynamics:

20. © A. Kakabadse 20
1. Discretionary Action
– Oversight
– Stewardship
– Compliance
2. Boards Add Value?
– NEDs add value?
– Competitive advantage
– Differentiation
Shaped by:

21. © A. Kakabadse 21
Board Dynamics (UK)
• LOW TRUST – Executive Board Directors of Chairman/NEDs
Executives v NEDs
/NEDs
27 Sep 11

22. © A. Kakabadse 22
Board Dynamics (USA)
Average Companies (Majority)
• High inhibition
• Defensiveness
• Limited use of NED/external director capabilities
• Appointed from network
• Discouraged from talking to
– Staff/Management
• External Director portfolio extensive
• Strategy/board dynamics driven by CEO / President / Chairman
• Dismissive of CSR
• NOT DEVELOPMENT MINDED
• Legal culpability
• Sarbanes Oxley
– Gone too far
– May induce more ‘corruption’
Global Board Best Practice

23. © A. Kakabadse 23
Board Dynamics (Australia)
• Board Performance - Shared/cohesive views

24. © A. Kakabadse 24
3. Director Capability
- Scrutiny
- Compelling argument
- Engaging across misalignments
- Resilience
4. Chairman
- Bad Chairman Bad Board
- Good Chairman Good Board
- UK Government Study
- Need dynamic governance

25. © A. Kakabadse 25
Outcome
- Paralysis too many times
- Compliance with stewardship
- Diversity of thinking
- Board deep into Enterprise – Why?
- Working through fault lines
- Sustainability

26. Conflict in the
boardroom
Emer Daly, Chairman, RSA Insurance Island DAC
Andrew Kakabadse, Professor of Governance and
Leadership, Henley Business School
Gary McGann, Chairman, Paddy Power Betfair plc

27. Diversity in the
boardroom
Gillian Harford
Head of Diversity & Inclusion, AIB Group
An exercise in compliance or great business sense?

28. Why have Boards at all ?

29. Drivers and Enablers

30. How about Ireland?
3
0
TOP 10 COUNTRIES GENDER PARITY
0.874
0.845
0.842
0.815
0.800
0.797
0.786
0.786
0.781
0.780
Iceland
Finland
Norway
Sweden
Rwanda
Ireland
Phillipines
Slovenia
New Zealand
Nicaragua
Source: Global Gender Gap Index 2016, World Economic Forum
FEMALE LEADERS IN IRELAND
11% of CEOs 18% of senior
leaders
13% of board
members
8/68 Appointments
42%

31. Stakeholder
Expectations
53%Institutional Investors
(EY Global Trends)

32. Closing the Gap
• Raising Awareness
• Building the Pipeline
• Genuine Commitment to Diversity of Thought
• Targets v Quotas
• Know Why, Know Value, Know your Plan
• Measure Success – who’s failure is it if your Board does not attract
diverse interest !

33. .
Charities Regulator Update
John Farrelly
CEO
Charities Regulator
ICSA Ireland Annual Conference
17 May 2018

34. Regulate, in the public Interest
Ensure compliance with the law
Support best Governance
A vibrant, trusted Charity Sector,
valued for the Public Benefit it Provides

36. Operating in such a way that it is easy for others to see what actions are
performed.
lifting the veil?

37. Regulatory Framework
Proportionate/Fit for Purpose Infrastructure
• Regulations: Draft Accounting & Reporting Regulations
• Codes of conduct, guidelines and model constitutions
Promote compliance by Charity Trustees
• New IT System to support registration, reporting, compliance
• Trustee ELearning
Clarity of Approach/Expectation
 Compliance with the law – Register & Report
 Assurance or Escalation – Investigations, sanctions & prosecutions

38. 2016 2017 Trend
Registered Charities 8003 9061
Charity Trustees ? 51,072
Applications received 294 908
Filed Annual Reports 75% 89%
Filed on Time 38% 57%
Concerns received 319 531 66%
Individual Charities 223 351
Concerns closed 129 461 257%

39. Concerns
2014 2015 2016 2017
Series 1 16 212 319 531
16
212
319
531
0
100
200
300
400
500
600
Concerns raised by year
2017 Concerns by category
Financial Control/transparency 30%
Legitimacy of charity 23%
Governance 23%
Other (fundraising/political
campaigning/CRA not primary
regulator)
24%

40. Emerging compliance issues
• Internal Financial Control
• Governance
• Conflicts of Interest
• Transparency, quality of disclosures - SORP
• Fundraising

41. Thank You

42. Go to Sli.do to post questions for
the panel
Enter event code #ICSA1
Is your board getting the
right information?

43. Is your board getting the right
information?
Jennifer Sundberg (Co-Chief Executive, Board Intelligence)
Chris Hodge (Policy Advisor, ICSA)
Dublin, 17 May 2018
In partnership with:

44. Average length of board packs by annual turnover

45. Average length of board packs by sector

46. Most common board pack challenges by annual turnover

47. Most common board pack challenges by sector

48. 55% of respondents said
“I do not have a clear mandate”

49. Effective board reporting: three tools
Board reporting calculator
Launch today!
Self-assessment tool
Coming in the summer
Guidance
Coming in the summer
Keep sending your top tips to: betterboardpacks@icsa.org.uk

50. Are you getting the right bang for your buck?

51. Introducing the Board Reporting Calculator

52. One Calculator, three parts
Writing Collating & Distributing Reading
USER INPUTS | ASSUMPTIONS

53. Writing: Inputs & Assumptions

54. Have a go, visit: BoardReportingCalculator.com

55. Conor Ryan
Group Company Secretary, Permanent TSB
Former President of ICSA Ireland (2014 - 2016)

57. What’s coming next?
Board reporting calculator
Available to use now
Self-assessment tool
Coming in the summer
Guidance
Coming in the summer

58. Improving
organisational and
individual effectiveness
Aidan Kearney
Psychologist, Carter Corson
Psychologists

59. Mind your own business
Aidan Kearney

60. • EXPECTATIONS….
•CONSEQUENCE
•CONTROL

64. If you’re thinking…
• PLEASE DON’T LET IT BE ME
• I REALLY HOPE THE MUSIC DOESN’T STOP NOW
• I DON’T KNOW ANY GOOD JOKES
• I HATE BEING PUT IN THE SPOTLIGHT

65. Reflection time
Something you did
recently that you
now wish had
happened
differently

67. Assumption

68. Meet your Brain
Limbic Lobe
Survival, reacting,
emotional memory
Frontal lobe
Executive function,
planning, Your CEO
Orbito-frontal cortex
Emotional thinking,
social behaviour

69. Cool system
• Higher order thinking
• Reflective
• Flexibility
• Slower
• Delaying gratification
• Evidence based

70. Hot system
• Survival response
• Impulsive
• Extremely Fast
• Powerful
• Towards and Away
• Limited evidence

71. Motivations / Drives

72. • Experience
• Reference
• Interpretation
• Frame

73. Drives
• Status
• Security
• Acceptance
• Control
• Authority
• Performance
What are drives are important to you?

74. USS Montana
What drives can you see in action?

75. How quick is quick?
……..the average
blink takes 0.1 secs

76. Programming your machine
Learning
Heuristic
Schema
Stereotype
Cognitive Bias

77. Cognitive bias in action
Horns and Halo effect
Fundamental Attribution Error – Heider
1958

78. Cognitive bias in action

79. RISK MATRIX
Trivial Minor Major Critical
Likelihood
Certain moderate high severe severe
Likely low moderate high severe
Possible low moderate moderate high
Unlikely low low moderate moderate
IMPACT

81. Any
Questions?

82. Stay in touch…
Barons Court, Manchester Road, Wilmslow, Cheshire, SK9 1BQ
01625 526 979
akearney@cartercorson.co.uk
@cartercorson @aidankearney10
Carter Corson Business Psychologists

83. Go to Sli.do to post questions for
the speaker
Enter event code #ICSA2
Companies
Registration Office and
Company Law
technical briefing

100. RockSALT Ltd
Presentation Impact
Hugh Vivian
17th May 2018

101. Performance coaching
Improve your work performance
through improved verbal communication
= greater confidence, clarity & conviction

103. Rocksalt’s approach – A B C
A = Awareness

104. Last time you thought about your
impact when presenting?
Last time you received feedback?

105. “You cannot improve
unless you are aware of your
present situation.”
Abraham Lincoln

106. Rocksalt’s approach
A = Awareness
B = Behaviour

107. So what?

108. Rocksalt’s approach
A = Awareness
B = Behaviour
C = Commitment to act

109. “What makes the difference between a
good presentation and a mediocre one?”
Why are some presentations more
impactful than others?

110. Sender ReceiverPerceive
r

111. Voice – lots of elements
Cadence
Tone
Inflection
Modulation
Speed
Rhythm
Pitch today, we’ll focus on …

112. Volume

113. Too loud = Correct volume
Your perception Their perception
Your volume

114. Commitment
Volume feels too loud to you?
= perfect volume
for your audience

115. Your content
… huge bearing on
presentation’s success
... or failure

116. Your route to mediocrity
Content heavy
they can’t keep up
Speak too quickly
Too much info on slides
audience can’t listen and read
& slides shouldn’t be your notes
Stress – too much content
no impact
they will switch off
Not memorable, no impact ….
all very mediocre

117. Your route to high impact
‘Less is more’
they can keep up
Measured speed
Summary slides
audience can listen then read
slides prompt your big brain
Appropriate content
high impact
they are engaged
Memorable, high impact ….
confident & clear presentation

118. Commitment?
“Not enough content?”
= Perfect for audience
& will prevent ‘content car crash’

119. Non-verbal communication
“The big give away”
or body language

120. Posture – stand tall
Non-verbal communication
Hands – Use them, couple of rest positions
& beware repeat movements
Eye contact – scan (2 secs) & don’t flit

121. Commitment?
Aware of your body language?
Note it, as a reminder…
and practise new habit

122. Who are you most concerned about when presenting?
You
Nerves … who are you concentrating on?
You

123. Stop it!!
Why are you there?
For the audience
Who should you be concentrating on?
The audience
Who should you be engaging with?
Them!

124. Commitment
Innately, we think more about ‘me’
Instead, focus your attention on …
connecting with the audience!

125. Summary
RockSALT’s A B C of performance development
Volume – speak up
‘Less is more’ content = measured & memorable
Non-verbal – manage your hands & eyes
Look out – focus on them not you

126. Any questions?
Thanks very much for your participation

127. hughvivian@rocksalttraining.com
+44 7887 644764
Like to chat / receive further info?
Please contact:

128. © ACCA PUBLIC
ICSA
Technical Update
May 2018
22/05/
2018
ACCA Ireland1
3
2

129. © ACCA PUBLIC
Agenda
Accounting and audit issues in the
• Companies Acts 2014,
• Companies (Amendment) 2017
• Companies (Accounting) Act 2017.
Review of
• Companies (Statutory Audit) Bill 2017
• Courts and Civil Law (Miscellaneous Provisions) Bill.

130. © ACCA PUBLIC
Audit and Accounting Issues
Companies Act 2014

131. © ACCA PUBLIC
Subordinating Intercompany loans
Holding company
Investment in subsidiary 500
Intercompany loan 100
600
Share capital 150
Reserves 450
600
Subsidiary
Fixed assets 500
Intercompany loan creditor (100)
400
Share capital 500
Loan capital
Reserves (100)
400
Subordinate the loan
600
0
600
150
450
600
500
Nil
500
500
100
(100)
500

132. © ACCA PUBLIC
Companies Act 2014 - Directors Loan
Company balance sheet
Assets 200
Directors loan (500)
(300)
Share capital 100
Reserves (200)
(300)
Subordinate the loan
Assets 200
Directors loan 0
200
Share capital 100
Directors loan 500
Reserves (200)
200

133. © ACCA PUBLIC
S366 allows for revised accounts
This was not available before
Just needs a directors meeting not an AGM to approve
Can be one page or the whole accounts.
Revision of Accounts

134. © ACCA PUBLIC
Companies Act 2014
If you are regulated by the Central Bank in any
way – then you are no longer “small” (or micro)
• No abridged accounts
• No audit exemption
• You must do a cash flow
• You can’t use PAASE

135. © ACCA PUBLIC
Long term loans need to be discounted
Financial instruments have to account for the time value of
money.
FRS 102 used to require discounting for interest free loans
• Concessionary loans – don’t discount
• “cost” allowed when loans from owner/directors/close
family member
Discounting still required for intergroup loans

136. © ACCA PUBLIC
FRS 102 - other items
• Performance grants (new option)
• Capital grants post to income in year performed
• Investment property
• Gains and losses in IP to p/l

137. © ACCA PUBLIC
Less €34m
plus €34m
Moving from Grants on “accrual” to Grants
on “Performance” example

138. © ACCA PUBLIC
©ACCA
•Re-valued fixed assets - provide for the inherent CGT
•Cost 1m
•Revalued to 2m
•New rules: Provide for inherent CGT of 300k
•Old rules: Don’t provide for inherent CGT
Deferred Taxation

139. © ACCA PUBLIC
Audit and Accounting Issues
Companies (Accounting) Act 2017

140. © ACCA PUBLIC
micro small medium
Turnover €700,000 €12m €40m
Gross Assets €350,000 €6m €20m
Employees 10 50 250
Companies Act 2017 limits – single company
2 of 3
Gross assets - turnover is time apportioned
2 year rule applies

141. © ACCA PUBLIC
Companies Act 2017 limits holding company
Small Medium
Turnover €12m (€14.4m) €40m (€48m)
Gross Assets €6m (€7.2m) €20m (€24m)
Employees 50 (50) 250 (250)
Gross OR (consolidated)
2 of 3
Gross assets - turnover time apportioned
2 year rule applies

142. © ACCA PUBLIC
Companies (Accounting) Act 2017
Accounts
•Micro Schedule 3B (or 3A or 3)*
•Small Schedule 3A (or Schedule 3)
•MediumSchedule 3 (2014 Act)
•Large Schedule 3 (2014 Act) + additional
•Groups (small) Schedule 4A
•Groups (not small) Schedule 4 + additional
* deemed to be T&F

143. © ACCA PUBLIC
Holding company is not small
Do a consolidation and Company accounts will be:
• Consolidated balance sheet
• Consolidated p/l
• Single company balance sheet
• Notes and policies
Filing in CRO for holding: full consolidated accounts
Filing in CRO for subsidiaries
• Do irrevocable guarantee and file consolidated (plus audit the holding); or
• File subsidiaries accounts

144. © ACCA PUBLIC
Unlimited Companies
Unlimited companies with limited holding companies
•Designated ULCs must file accounts in CRO
•Designated ULC’s:
• ULC holding with ltd subsidiary – 2022
• Ltd holding with ULC subsidiary – now
• Note there is quite a wide definition in the Act
• 1/1/2017

145. © ACCA PUBLIC
SI 94 of 2018
FRC designated as the standard setter for Ireland
No more “promulgation”
From 21 March 2018

146. © ACCA PUBLIC
Accounting
Micro FRS 105
Small FRS 102(1A)
Medium and large FRS 102
Any size may use IFRS

147. © ACCA PUBLIC
Micro company Accounting

148. © ACCA PUBLIC
Micro Entities
Tiny p/l
Tiny B/S (use the exact format in Act)
Audit exemption declaration
Directors signatures
Accounting policies
Micro company statement
X 6 notes

149. © ACCA PUBLIC
Micro Entities
Notes required by Act
1.Dividend paid
2.Reconciliation of reserve movements
3.Security given for debts
4.Guarantees and financial commitments
5.Nominal value of own shares / treasury shares held
6.Loans to directors S307

150. © ACCA PUBLIC
Micro entities
• May have additional notes
• May not change the prescribed accounting policies
• Optional appendices with more information
• Abridged micro accounts
• remove p/l,
• Remove any appendices
• remove any additional notes

151. © ACCA PUBLIC
Micro entities / FRS 105 - summary
The Accounting policies you MUST adopt
• No revaluation of assets
• Investment property at cost less depreciation
• Own use property at cost less depreciation
• Investments at cost
• Must be going concern

152. © ACCA PUBLIC
Micro entities / FRS 105 - summary
• No deferred tax,
• No related party disclosures,
• No post balance sheet events
• No political donations
• No directors report,
• No names of directors

153. © ACCA PUBLIC
Example
front cover
for FRS 105
accounts

154. © ACCA PUBLIC
Small

155. © ACCA PUBLIC
Small company / FRS 102(1A)
Main reduction is there is no need for a cash flow

156. © ACCA PUBLIC
Small company / FRS 102(1A)
• Accounting is FRS 102
• Reduced number of notes, but needs to show a true
and fair view
• Abridgement is simply to remove the directors report
and p/l

157. © ACCA PUBLIC
Small company - abridged
2014 Act
•Balance sheet
•Accounting policies
•About 10 notes
2017 Act
•Balance sheet
•Accounting policies
•All notes

158. © ACCA PUBLIC
Medium

159. © ACCA PUBLIC
medium and large
medium
•No abridged accounts, file full accounts (2017)
•Abridged accounts allowed under 2014
•Consolidation required if a group

160. © ACCA PUBLIC
Implementation issues
Companies Accounting Act 2017
Checklists and pro forma accounts needed for:
• Micro
• Micro abridged (just delete the p/l)
• Small
• Small abridged (2017 Act and 2014 Act different)
• Small group
• Medium and large (2017 Act and 2014 Act different)
• Medium and large group
……Large box of Solpadine and a lie down

161. © ACCA PUBLIC
Companies (Amendment) Act 2017
Extending the availability of US GAAP in Ireland

162. © ACCA PUBLIC
©ACCA
Key take away
22/05/20
18
• 4 different sets of GAAP rules
• FRS 105 is nonsense
• More disclosure in CRO

163. © ACCA PUBLIC
What is New - Auditing

164. © ACCA PUBLIC
Irish Auditing Standards

165. © ACCA PUBLIC
New auditing standard
post June 2017 year ends
New audit report wording
Tougher ethical rules
Can’t be auditor and trustee
No hospitality or gifts
Tax advocacy tightened
PAASE still available
More assurance given on going concern

166. © ACCA PUBLIC
New format of audit report
• Opinion
• Basis for opinion
• Conclusions relating to going concern
• Other information
• Opinions on other matters prescribed by the
Companies Act 2014
• Matters on which we are required to report by
exception
• Responsibilities of directors
• Auditors responsibility
• Disclaimer
What is an audit Web link Reference to appendixoror

167. © ACCA PUBLIC
Companies (Statutory Audit) Bill 2017
Bringing SI 312 of 2016 into primary law
• Regulation of auditors
• Restricting audit exemption
• Abolishing “public auditors”
• Late annual return audits to be prospective

168. © ACCA PUBLIC
IFRS

169. © ACCA PUBLIC
Current rule is:
• Operating leases – off balance sheet
• Finance leases – on balance sheet
Proposal by accounting standards setters to make almost
all leases, finance leases
Lease accounting

170. © ACCA PUBLIC
And they are measured differently
over time

171. © ACCA PUBLIC

172. © ACCA PUBLIC
Charity Accounting
Overview

173. © ACCA PUBLIC

174. © ACCA PUBLIC
Charity Accounting Overview
• Change coming
• Accounting: FRS 102 or 102 1A
• Can’t use FRS 105
• SORP is still optional
• Audit required by Revenue at 100k turnover (proposal to
change 100K to 250K)
• Registration with CRA – CRA number
• Registration with Revenue – CHY number

175. © ACCA PUBLIC
Courts and Civil Law (Miscellaneous
Provisions) Bill 2017
• CRA will be allowed to set accounting requirements for
companies
• i.e. SORP can be imposed
• Audit exemption controlled by CRA not companies act for
charities
• 100k to 250k audit exemption limit expected

176. © ACCA PUBLIC
Implementing the SORP
Normal
Company
Accounts
SoFA
Analysis
by fund
Additional
notes
Analysis by
function
+

177. © ACCA PUBLIC
Charity Accounting Overview
Issues
• Collecting data and analysis
• Slicing and dicing data 3 ways
• Payments to key management
• Payments to directors
• Payments to connected persons for management role
• Performance grants

178. © ACCA PUBLIC
Related parties
A. any charity trustee and custodian trustee of the charity;
B. a person who is the donor of any land to the charity (whether the gift was made on or after
the establishment of the charity); and
C. any person who is:
1. a child, parent, grandchild, grandparent, brother or sister of any such trustee (A) or donor
(B) of land;
2. an officer, agent or a member of the key management personnel of the charity;
3. the spouse or civil partner of any of the above persons (A, B, C1 and C2);
4. carrying on business in partnership with any of the above persons (A, B, C1, C2 and C3);
5. a person, or a close member of that person’s family, who has control or joint control over the reporting charity;
6. a person, or a close member of that person’s family, who has significant influence over the reporting charity.
‘Close member of a person’s family’ refers to:
a. that person’s children or spouse;
b. the children, stepchildren or illegitimate children of that person’s spouse or domestic partner;
c. dependents of that person; and
d. that person’s domestic partner who lives with them as husband or wife or in an equivalent same-sex relationship.
The Charity SORP 2015

179. © ACCA PUBLIC
http://circulars.gov.ie/pdf/circular/per/2014/13.pdf
Circular 13/2014
• Project by project I&E
• Salaries in bands
• All grants received by project
• Details of each funding source
• Details of each grant
• Analysis of expenditure by specified
category
• Cash and accrual analysis of grants
• Restricted or non-restricted funds
• Can be in an appendix

180. © ACCA PUBLIC
Theft and Fraud in Charities
• S59 of the Charity Act
• Where, in the course of, and by virtue of the carrying out of, his or her duties in relation
to a charitable organisation, information comes into the possession of a relevant person
that causes him or her to form the opinion that there are reasonable grounds for believing
that an offence under the Act of 2001 has been or is being committed, the relevant person
shall, as soon as may be, notify the Authority in writing of that opinion and provide the
Authority with a report in writing of the particulars of the grounds upon which the
opinion was formed.
Applies to:
Auditor, trustees; an investment business firm
any person assisting in preparing accounts for the charity

181. ©ACCA
Introducing
ACCA-X

182. ©ACCA
ACCA-X Courses
22/05/2018186

183. © ACCA PUBLIC
CONTACT
aidan.clifford@accaglobal.com
01 4988907
www.accaglobal.com

184. © ACCA PUBLIC

185. The Hygiene Factor:
Getting more out of your meetings
Richard Sheath
17 May 2018

186. Sort out the boardroom

187. Take a break

188. Manage the break

189. Manage the flow

190. Plan the seating

191. Know who you’ve got

192. Think “culture”

193. Invite the right people

194. Avoid page-turning

195. Change the agenda

196. The Agenda: does this look familiar?
200
Board Agenda
1. Approval of Minutes
2. Matters Arising
3. Health & Safety
4. CEO Report
5. CFO Report
6. COO Report
7. “Deep dive” (1): Business Unit leader
8. “Deep dive” (2): Investment proposal
9. Risk
10. Analyst report/shareholder register
11. “Governance” issues
12. AOB

197. Agenda: Is the Board is looking backwards?
201
Board Agenda
1. Approval of Minutes
2. Matters Arising
3. Health & Safety
4. CEO Report
5. CFO Report
6. COO Report
7. “Deep dive” (1): Business Unit leader
8. “Deep dive” (2): Investment proposal
9. Risk
10. Analyst report/shareholder register
11. “Governance” issues
12. AOB
• What’s happened: delivery versus
target, process & system issues
• Breakdown of performance:
product/business line; geography
• What’s happened
• Statistics
• Incident
investigation
• What I’ve been
doing/who I’ve met
• What’s happened:
markets, contracts,
successes, problems…
• Market
movements
• Financial results
versus budget
• “This went up,
this went down”
• What we do
• Where we’ve got
to
• Where we’re going
• Principal risks
• Risk heat map
• Key risk indicators??

198. The Agenda: a few tips
202
Ten Top Tips
1. Think about what you’re trying to achieve
2. Focus on what people want to discuss/what
matters
3. Drop the reporting
4. Let the CEO set the scene
5. Come back to the “touchstones”
6. Put the big themes first
7. Inject life into the Forward Agenda
8. Involve the right people
9. Beware the pre-meetings and “briefings”
10. Schedule breaks

199. © Independent Audit Limited 2018
CONTACT:
Richard Sheath: +44 (0)20 7220 6583 | richard.sheath@independentaudit.com
4 Bury Street | London | EC3A 5AW | +44 (0)20 7220 6580 www.independentaudit.com
Registered in England number 4373559 Registered Office One Glass Wharf Bristol BS2 0ZX

200. williamfry.com
Financial Services Sector:
Governance, Risk and
Compliance
Mike Frazer
Consultant, William Fry

201. • About me
• What are the CBI's stated priorities?
• What is the CBI thinking about?
• From the perspective of an Independent Non-Executive Director
Contents

202. • Currently:
–Consultant in the insurance/reinsurance practice at William Fry
–Independent non-executive director of a non-life insurance company
–Director of a pension scheme trustee company
–Director of a professional body
• In the past:
–CEO / Executive Director of a life reinsurance company
–Deputy Head of Insurance Supervision at the Central Bank of Ireland
• In total:
–Over ten years' experience as a member of various Boards …….
About me

203. • "Strategy 2021 – We Want to Hear Your Views" (published 9 May 2018)
1. What should be considered by the Central Bank in responding to the current and
emerging risks in the economy and the wider financial system?
2. What should the Central Bank focus on in terms of the regulation of firms and
markets?
3. What should be considered by the Central Bank in respect of its financial conduct and
consumer protection role?
• Deadline 9 June 2018 – get writing!
What are the CBI's stated priorities?

204. "In terms of our regulatory priorities for 2018, in addition to the Tracker Mortgage
Examination, managing the impact of Brexit is a major task. We expect to see an increased
number of firms that want to establish a presence in Ireland. We also required regulated
firms already here to have robust plans to deal with Brexit in whatever shape it materialises,
especially those companies with exposure to the United Kingdom. In this regard, the level of
preparation by some firms is a concern. We also continue to highlight the potential Brexit-
related risks to the economy, the financial sector and individual firms.
We closely monitor developments in the mortgage market. Our macroprudential toolkit - and
in particular the mortgage measures – are central to increasing the resilience of banks and
borrowers and avoid the risks of credit-house price spirals emerging. A high priority remains
tackling the outstanding stock of non-performing loans in the banking system."
Remarks by Philip R Lane, 9 May 2018
What are the CBI's stated priorities?

205. Annual Performance Statement 2017 – published 15 May 2018
• 2018 Strategic Priorities
–Brexit
–Consumer Protection – "Regulated firms act in the best interests of consumers"
• Tracker Mortgage Examination
• Enhanced mortgage switching measures
• Intermediary inducements
• Culture
–Prudential Supervision
• Increased focus on on-site supervision
• Cross-sectoral inspections on governance, culture & operational risks
• IT & Cyber Risk – new centralised team
What are the CBI's stated priorities?

206. 2018 Strategic Priorities continued
• Prudential Supervision
–Banking
• EBA/SSM 2018 Stress Tests
• Credit risk
• Regulatory reporting
• Operational Risk, Business Models &
Pricing
• Reducing NPLs
What are the CBI's stated priorities?
–Insurance
• Risk management frameworks in
Groups
• Cross-border business model analysis
• Reporting, Data Quality & Governance
–Asset Management / Securities and
Markets
• Operational, governance, conduct and
IT risks
• MIFID II
• Product Governance
• Fees
• Disclosure and research

207. Diversity
"There was a time when I wouldn’t have believed in targets or quotas, but I now see them as a
necessary part of the picture. Now, that may seem inconsistent with my earlier view that merit
should be the primary factor. But in a sense, tools like targets or quotas are not about artificially
levelling the playing field – they are to ensure access to the field in the first place. We will not
achieve gender diversity in governments without greater female representation in national
parliaments to begin with. You won’t get diversity in firms unless you determinedly encourage or
implement change."
Speech by Sharon Donnery, 4 May 2018
What is the CBI thinking about?

208. Brexit
"We are saying to boards and chief executives – you need to mandate your staff to think through
the plausible scenario of a hard Brexit. You need to be costing it and you need to be putting
timelines on it now. You need to encourage your risk managers to be realistic about that worst-
case scenario and not make optimistic assumptions about what Governments and legislators
might do to solve your problems for you."
"We recently wrote to all the insurance companies that we supervise to ask them about their
Brexit preparations. Of the 197 responses we received, 38 companies deemed that Brexit would
have a high impact on their business model and 12 a medium impact. The remaining 147 –
almost three quarters - think Brexit will have little or no impact on them. Given the level of
uncertainty and the range of challenges we have heard about today, this is an astounding
number."
Speech by Ed Sibley, 12 April 2018
What is the CBI thinking about?

209. Culture
"The Central Bank will conduct a review of culture in the five main retail banks in 2018. The
review will be underpinned by the enhanced CPRA Model, which facilitates the Central Bank in
determining how firms identify and manage consumer risks, including the risk that a firm’s culture
does not promote and support the protection of consumers. The Central Bank is working with the
Dutch Central Bank (De Nederlandsche Bank), recognised leaders in the supervision of
behaviour and culture."
CBI Annual Performance Statement 2017 – published 15 May 2018
• The CBI now employs an organisational psychologist – regular articles appearing related to risk
culture
What is the CBI thinking about?

210. Definition of Risk Culture:
"The system of values and behaviours present in an organisation that consciously and
unconsciously shapes the consideration of risk at all levels in the organisation"
The 4 elements in the CBI Risk Culture model:
• Leadership – The commitment to risk management that leaders show through what they say
and do
• Governance – The awareness among staff of their responsibilities and accountabilities, the
appropriateness of policies and level of adherence to same
• Decision Making – The validity and reliability of information feeding into the decision making
process, the aggregation of same and the reward system in place
• Competency – The consideration given to acquiring and developing robust risk skills in the firm
and the allocation of resources
(Taken from CBI Insurance Quarterly Newsletter December 2017)
What is the CBI thinking about?

211. • Get the basics right!
• Good quality and timely information on CBI statements / relevant direct
correspondence
• Transparency, openness and a willingness to answer questions
• A "compliance culture" is no longer enough
• Ever-increasing expectations
From the perspective of an Independent Non-Executive Director

212. What keeps us awake at night?
"The responsibility for ensuring the accuracy of regulatory returns submitted to the Central Bank
lies with the Board and Senior Management; in particular, in respect of the annual returns there is
a requirement for a directors' accuracy certification …. It is the Central Bank's intention to follow
up directly with those that have signed the accuracy certificates on instances where inaccuracies
are evident in the next annual submission.“
Letter from Sylvia Cronin to all insurance and reinsurance undertakings, 16 April 2018
From the perspective of an Independent Non-Executive Director

213. williamfry.com
Mike Frazer
Consultant
mike.frazer@williamfry.com
T +353 1 6395079

214. Subsidiary Governance:
An opportunity not a burden
Richard Sheath
17 May 2018

215. It’s not that simple

216. It’s not that simple
Regulatory expectations
Statutory
requirements
Matrix structures
Global policies
MIS structure
Degree of autonomy Strategic direction
Independence
Escalation
Remuneration
2nd & 3rd Lines
Role
Accountability
Culture
Attitudes
Symbiosis
Effectiveness
Value

217. It’s a two-way street – and an opportunity
You need to look what flows - or
needs to flow - in each direction…
And not forget to look beyond
compliance and build in…
ASSURANCE
CULTURE
LEADERSHIP
Adding up to …
VALUE!

218. Helping each other
The Group and the Subsidiary board need to have a clear understanding
Clear expectations around the Board’s
role
DIRECTION, INFLUENCE & AUTONOMY
ASSURANCE FROM A LOWER LEVEL
Empowerment and support
Understanding of responsibilities and
context
Independent oversight
Comfort and early warning
Insight

219. Adding value

220. Getting clarity – and a better strategy
It’s not a one-way imposition of strategy: be realistic but realise the value too
Clear direction
Objectives and local milestones
Independent assessment
Expertise: local and more
Insight closer to the ground
STRATEGIC FRAMEWORK & OBJECTIVES
CHALLENGE AND LOCAL INSIGHT
Accountabilities

221. Helping to see who is accountable

222. Checking the risk appetite makes sense
Make sure the risk appetite is appropriate and applicable
“locally”
Translation to subsidiary level
Linkage to strategy and targets
Checking management understanding
Judging local suitability (risk, culture…)
Staying close to the regulators
Tie-in to remuneration and culture
RISK APPETITE & CAPITAL ALLOCATION
CHALLENGE & MONITORING

223. Strengthening the control framework
Keeping close to the application of controls and standards “on the
ground”
Clarity of standards and expectations
Coherence and quality
Check on “local” applicability
Judgement of compliance and control culture
Interpretation for the local regulators
Support in interpretation and application
GROUP POLICIES & FRAMEWORKS
LOCAL INTERPRETATION & APPLICABILITY

224. Global reach – local application

225. Applying the “sniff test”
Sensing when things aren’t quite right – and letting people
know
Group-wide values and behavioural standards
Support (training, review, surveys…)
Insight into local differences and requirements
“Smell test” and early warning
Knowledge of local management
Group-wide examples and enforcement
ETHICS & BEHAVIOURAL CODES
UNDERSTANDING OF CULTURAL DIFFERENCES

226. Seeing how it’s working in practice
Judging the relevance and how the organisation is responding
Group-wide resources
Best practice and learnings
“Local” support for 2nd & 3rd Lines
Lower level interpretation and flagging
Management accountability
Specialist capability
CONTROL & ASSURANCE RESOURCES
SUPPORT FOR EMBEDDING

227. Some other typical issues
Remuneration Are Group-level processes transparent to the Board?
Are awards communicated to the NEDs?
SLAs Is the Subsidiary getting the right level of service?
Where are the risks and how are they managed?
Communication Are the governance bodies talking to each other?
Is the cross-membership what’s needed?
Membership Is there enough truly independent oversight?
Is executive cross-membership appropriate?
Effectiveness
How is effectiveness being assessed?
What level of assurance and dependency can be leveraged?
Duplication Are there just too many meetings?
Is management time being used effectively?
Management
Information
Is the “cut” supporting subsidiary oversight?
What’s the linkage to subsidiary strategy and risk appetite?

228. Getting a view of effectiveness
Seeing where the problems are – across the Group and locally too
Self-
assessment at
Subsidiary and
Group level:
• Boards
• Committees
• Audit, Risk &
Compliance
• Risk culture

229. © Independent Audit Limited 2018
CONTACT:
Richard Sheath: +44 (0)20 7220 6583 | richard.sheath@independentaudit.com
4 Bury Street | London | EC3A 5AW | +44 (0)20 7220 6580 www.independentaudit.com
Registered in England number 4373559 Registered Office One Glass Wharf Bristol BS2 0ZX

230. 2019 conference
#ICSAIreConf
Join us again at the
Printworks, Dublin Castle on
Thursday 16 May 2019 for the
next ICSA Ireland Conference