When the going gets tough, corporate governance systems must stand firm, but often do not. Improving them is a priority across the world.  Despite widely adopted international financial standards for auditing and assurance, companies are still failing, and failing big. When German financial payments provider and DAX stock exchange member Wirecard AG collapsed a year ago, it admitted that EUR 1.9bn (USD 2.24bn) of the cash on its books did not actually exist. More recently in May this year, UK investment capital company Sapien Investment was fined GBP 178k (USD 245k) for failing to have in place the adequate systems and controls to identify and mitigate risk from fraudulent trading and money laundering. Other high profile failures of financial and corporate governance are widely documented. For its part, the International Auditing and Assurance Standards Board (IAASB) which is responsible for setting high-quality international standards for auditing, assurance, and quality, is introducing a revised quality management process for auditors and corporate finance chiefs which will take effect from December 2022. The new standards will provide greater public scrutiny of corporate finances and will strengthen public confidence in the global accounting professionals whose role is to apply the right checks and balances. But despite global standards such as these, there is no common model for best practice corporate governance per se. Countries and regions around the world have different levels of regulatory and business maturity, different cultural and business behaviours that impact on rules, leadership and decision-making. The good news is, there is plenty of commitment to improve. FAMILY TIES According to James Mathew, managing partner, UHY James Chartered Accountants, Dubai, UAE, “In the Middle East it is very common for countries to have family-owned businesses so the corporate governance structures are often driven more by family ties and values, cultural traditions and historical practices set in place by the founders. While such structures have the key elements of good governance, they may not necessarily be formal.” Factors such as trust in the spoken word instead of written agreements, board members selected from within a family, and hierarchical succession can all be difficult. “While a code of conduct is practiced, it may not necessarily be in writing. When commercial factors play a part in decision-making, the interest of the family is often an overriding factor, says James. “In the case of more influential family businesses, decisions are also influenced by key national initiatives announced by the rulers of the country.” However, efforts are being made to improve things. Like many countries in the Middle East where the major population comprises expatriates, the transient workforce and a multicultural working environment are additional common challenges for employers and employees. Of his own country, James remains positive: “the UAE has always taken the lead in implementing initiatives to support the setting-up and running of businesses.” ANTI-CORRUPTION EFFORTS Effective corporate governance should also be a bastion against corrupt business practice. In the South East Asian region there is a growing focus on anti-corruption with government pledges to fight malpractice. For example, China’s revised Anti-Unfair Competition Regulations means there is now a legal requirement for companies to have a compliance programme and this has implications for corporate governance practice, due diligence, accurate financial reporting and the appointment of compliance team members. In June 2021, Japanese electronic giant Toshiba’s shareholders voted to remove their chairman Osamu Nagayama after just a year in office, following an independent investigation into the company in a real test of Japanese corporate governance. The investigation found that Toshiba executives had colluded with Japan’s trade ministry to put pressure on international investors. The company is no stranger to corporate governance failures, having hit the headlines with 2015’s USD 1.2bn overstated accounting profits scandal, and has faced increasing demands ever since to enhance governance. The removal of Nagayama is therefore seen as something of a landmark. In the Republic of Korea, the Financial Services Commission (FSC) is promoting newly introduced legal measures to improve supervision of non-holding financial groups, a category previously overlooked by the country’s regulators despite such groups having an increasing capital management profile. The new rules will require self-inspection and assessment and transparent reporting to the FSC on group-wide risks. The authorities hope this will encourage better management practices as well as improve market confidence. Things are shifting in Africa too. The Kenyan government has implemented harsher corruption and bribery laws and there is a renewed focus on corporate governance issues in Nigeria where companies have been required to follow the Nigerian Code of Corporate Governance since January 2020. The Code’s recommendations include the composition of a board committee as a minimum of three members, the chairman of the board not being a member of any board committee, private companies having audit committees comprising only non-executive directors, and external audits. There is also a requirement for an externally facilitated Corporate Governance Evaluation. TOWARDS BETTER STEWARDSHIP Everywhere has, of course, been touched by the coronavirus pandemic and this will inevitably have an impact on corporate governance. According to Martin Jones, partner, UHY Hacker Young, UK, “It has made companies stand back and reassess their operations, supply chains and relationships with other stakeholders.” It has also led to greater resilience. “Most companies in the UK were able to adapt fairly quickly with technology in place to enable remote working procedures,” says Martin. “In terms of Annual General Meetings (AGMs), companies adopted a mix of ‘closed-door’, hybrid and virtual meetings depending on their circumstances.” Martin believes this is likely to change the traditional AGM format in the longer term. There are strong efforts being made across the world to improve governance and better protect from business failures. Progress can be slow, but it is generally positive. The global focus on climate, diversity and sustainability has pushed Environmental, Social and Governance (ESG) reporting to the fore, an additional encouragement for corporates to disclose non-financial performance alongside the numbers. With developed and developing economies working their way (albeit at different speeds) to carbon neutrality, as a response to government initiatives, global treaties and stakeholder pressure – not least the investment community – ESG should help boards everywhere to take a more holistic view of their business, which will in turn encourage more resilient organisational models. So it seems probable that we can look forward to better governance in the years ahead, despite the lack of a ‘one size fits all’ approach. Top-down enforcement improvements through tightening of regulations, financial and auditing standards, plus bottom-up pressures for greener accountability and transparency, are set to make a real difference. For more information about UHY’s capabilities, email the UHY executive office info@uhy.com  or visit www.uhy.com #2021 #ESG #LatestTopics #UHYGlobalIssue

Free Environmental, social and governance reporting demands proof of corporate social and environmental credentials, and pressure is mounting for companies to act.  Responsible companies have been around since the dawn of capitalism, but in the last half century or so the concept of a social contract between business and society has taken on new prominence. Corporate Social Responsibility (CSR) is the idea that companies should act in ways that enhance society and the environment instead of damaging them. A socially responsible business might aim to adopt sustainable production processes, for example, or allow staff paid time off work to volunteer for local charities. Nobody forces businesses to adopt CSR practices, but it is increasingly in their interests to do so. According to one study, 88% of consumers in the US and UK want brands to help them live more sustainable lives. Further research suggests that millennials and the generations that follow them want to support businesses that share their social and environmental values. COUNTERING ACCUSATIONS OF SPIN Organisations are keen to advertise their CSR credentials, but what they do and how they record it is up to them. Corporate CSR measures can be genuine and impactful, but difficult to measure. The self-regulatory nature of CSR and a lack of consistency in reporting have led to accusations of corporate spin and ‘greenwashing’, and a sense that CSR has become a marketing tool for promoting symbolic gestures. For that reason, CSR is increasingly morphing into ESG. Environmental, Social and Governance (ESG) is an evolution of CSR that adds hard data to company pronouncements. Businesses do not just talk about their sustainable production processes, they prove it. ESG covers environmental impact, company culture and leadership – it takes into account diversity, inclusion and board composition, as well as green or philanthropic measures. While consumer pressure for more responsible business is still being applied, ESG shows that it is evolving from a voluntary ambition to something that is increasingly necessary. Joyce Bruce is sustainability and CSR manager at UHY Fay & Co in Spain, and says ESG reporting is one of the firm’s fastest growing areas. “In the Spanish market, some large companies – above 250 employees – are required by law to provide non-financial and sustainability reports. Almost all companies, and generally those with over 50 employees, are required to have and register a gender equity plan.” Joyce adds that ESG reporting, while clearly beneficial for corporate reputations, is often a prerequisite for participation in larger supply chains. Andrea D’Amico, partner at UHY Audinet Srl, UHY’s member firm in Italy, agrees that regulatory and consumer pressure for sustainability is filtering through the procurement process. “Large companies are imposing strict compliance requirements regarding sustainability on their production chains,” he says. “So it is a matter of survival.” In Malaysia, UHY group managing partner Datuk Alvin Tee has detected a greater focus on ESG since the start of the pandemic. “ESG practices have been more robust since Covid,” he says. “The pandemic has led to the adoption of more sustainability-focused business models. There are changing expectations of the role business plays in improving society and protecting the environment.” SUSTAINABLE RETURNS The pressure for ESG reporting is also coming from another, more unlikely, source. In 2020 the European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, published its Strategy on Sustainable Finance, which set out how the organisation aimed to embed ESG factors in its work. ESMA chair Steven Maijoor said financial markets were at a point of change and that sustainability factors were ‘increasingly affecting the risks, returns and value of investments’. This is an increasingly worldwide phenomenon. Datuk Alvin Tee says the Malaysian government is playing a greater role in ensuring the adoption of ESG initiatives by the corporate sector, often through the promotion of sustainable investment. The aim is to ‘facilitate and encourage greater growth of SRI (Sustainable and Responsible Investment) funds in Malaysia’, he adds. Despite the fact that ESG is a relatively new concept in the ASEAN region, he believes the adoption of ESG principles is capturing mainstream investor attention. Authorities have been joined by major investors in realising the value of sustainability as a driver of value. In May, Black Rock, the world’s largest asset manager, published an ESG Integration Statement, outlining its ‘firm-wide commitment to integrate ESG information into our investment processes’. Black Rock isn’t the only asset manager taking this approach. Investments that take ESG analysis into account now amount to a third of total US assets under management, while global ESG-data driven assets hit USD 40.5 trillion in 2020. Three quarters of institutional investors now consider ESG factors an integral part of sound investing. While some investors may be keen to promote environmental and social responsibility for their own reasons, all of them want the best return on investment. There is a growing sense within the investment community that sustainable businesses are simply the safest bets. Figures seem to support that view, at least for now. A market report published in April by S&P Global found that many ESG exchange-traded funds outperformed the S&P 500 index average in the year to March, in some cases by a factor of two. Some commentators say evidence is mounting that an ESG focus gives funds a competitive advantage. NO GUARANTEES Others urge caution. Adam Wing, a financial advisor with UHY Financial Planning, a service offered by UK member firm UHY Hacker Young, argues that long-term data on the performance of ESG funds is still thin on the ground, and that there is no guarantee that they will continue to outperform the market. Nevertheless, he agrees that impressive recent performance has pushed ESG-focused investing into the mainstream. “Over the longer term it remains to be seen whether ESG fund managers will identify the companies that will prosper in future, but with many more people thinking carefully about where to invest their savings, ESG investment is no longer a fringe area,” he says. Legislative changes will only add to the appeal of ESG-focused funds. “In the UK, financial advisers will soon be required to ask clients about their attitudes towards ESG when advising on suitable investments,” says Adam. “Younger investors are often seen as driving demand for ‘greener’ products. But these changes will mean investors of all ages will be asked to consider how their money is invested, and whether they want to bring ESG factors into the investment mix.” It’s not just publicly traded companies that stand to gain from increasing regulatory and customer focus on responsible business. Private investors do not need to be especially environmentally or socially minded to see the appeal of organisations that stay a step ahead of environmental and diversity laws and appeal to a growing number of consumers. In a recent study, 72% of private equity managers said they always screen target companies for ESG risks and opportunities at the pre-acquisition stage. Investors using ESG as part of their screening criteria are likely to become more typical as regulations tighten and more consumers make purchasing decisions based on a company’s overall ESG credentials, including supply chain sustainability. A GROWING DEMAND It is no wonder, then, that the UHY global network has seen an increase in ESG and CSR-related requests from client businesses. In Italy, Andrea and his team are seeing a growing demand for the preparation and auditing of non-financial reports, and helping businesses prepare tenders for EU-funded projects, which are increasingly focused on sustainability. UHY Malaysia offers clients tailored consultancy that includes setting KPIs for ESG initiatives and ESG reporting. In fact, ESG is becoming increasingly important in wider company reporting, with three quarters of year end reports setting out clear purpose beyond making money for shareholders, according to one recent study of 50 FTSE 350 companies. There is a wide disparity in the quality and depth of non-financial reporting. Accountants are key to ensuring sustainability information is always accurate and transparent, and the profession – through bodies like the International Federation of Accountants (IFAC) – is pushing for consistent global standards against which ESG claims can be judged. In Spain, UHY Fay & Co offers advice on disclosing and communicating ESG information, assurance of disclosures for EU compliance and sustainable supply chain management. Joyce says companies need to take professional advice before making ESG claims, or risk accusations of greenwashing or using green marketing to disguise unsustainable business models. “Stakeholder scrutiny on companies is intensifying,” she says. “Companies that greenwash will soon find themselves in situations of lost trust and then may find themselves with difficulties when it comes to accessing capital markets.” It is not just companies indulging in greenwashing that may find themselves in that position. The pandemic is likely to give the ESG agenda added momentum, as employees and consumers demand healthier workplaces, inclusive hiring policies and more sustainable business models. Environmental regulation will only get tighter as nations edge closer to carbon reduction deadlines. ESG reporting may soon be a critical factor in every company’s appeal to investors, public bodies and a growing number of concerned customers. For more information about UHY’s capabilities, email the UHY executive office info@uhy.com  or visit www.uhy.com #2021 #ESG #LatestTopics #UHYGlobalIssue

Free trade has started flowing across Africa thanks to the African continental free trade area, but implementation challenges remain.  Thanks mainly to the Covid-19 pandemic, the last year has seen a slowdown in global trade and put the brakes on the free movement of goods and services. Factories and ports were closed for some of that time and, when businesses and borders reopened, they did so cautiously. The UK’s withdrawal from the European Union (EU) at the end of 2020 only added to the sense of a global economy in retreat. But one region is swimming against the tide. In what the World Economic Forum (WEF) calls a ‘game changer’ for the continent, the African Continental Free Trade Area (AfCFTA) was officially launched on 1 January 2021 and promises to revolutionise cross-border commerce in the region. Wamkele Mene, secretary general of the AfCFTA Secretariat, said the agreement represented ‘our hope for Africa to be lifted up from poverty’. AfCFTA certainly looks like an impressive achievement. The agreement has created the largest free trade area in the world measured by the number of countries participating, connecting 1.3 billion people across 55 nations with a combined gross domestic product (GDP) valued at USD 3.4 trillion. Its ambitious aim is to lift 30 million people out of extreme poverty. That is not a pipe dream. According to World Bank figures, full implementation of AfCFTA would boost Africa’s income by USD 450 billion by 2035 and increase the continent’s exports by USD 560 billion. It would see wages grow by around 10% for both skilled and unskilled workers. PROMOTING CROSS-BORDER BUSINESS If these hopes are fulfilled, AfCFTA could be the economic pact Africa desperately needs. Currently, the continent accounts for just 2% of global trade. Only 17% of African exports are intra-continental, compared with 59% for Asia and 68% for Europe. AfCFTA will smooth the path of cross-border business by eliminating 90% of tariffs and drastically reducing non-tariff barriers by cutting red tape and simplifying customs procedures. It will create a free market for goods and services. And according to the WEF, changes brought about by the agreement could reshape economies across the region, ‘leading to the creation of new industries and the expansion of key sectors’. African countries would trade more easily with each other and become more globally competitive. It is hoped that the agreement will reduce the incidence of illegitimate and fraudulent transactions, bolstering government revenues. It is also hoped that AfCFTA will cushion Africa from the worst effects of the pandemic slump and allow local economies to ‘build back better’. As Ghanaian president Nana Akufo-Addo recently said “The destruction of global supply chains has reinforced the necessity for closer integration amongst us so that we can boost our mutual self-sufficiency, strengthen our economies and reduce our dependence on external sources.” NEW OPPORTUNITIES In other words, AfCFTA is a big deal, and UHY member firms on the continent are optimistic that it will create new cross-border opportunities for their clients. Mwai Mbuthia, founding partner at UHY Kenya, says reduced or eliminated tariffs will drive new intra-African trade. “From a Kenyan perspective, the introduction of AfCFTA means 66% of tariff lines have immediately become duty free,” he says. “On top of that, 24% of tariff lines will be gradually reduced over the next five years. That will help drive trade and mean Kenyan exporters will be much keener to do business with customers in other African states.” Lawrence Etukakpan, head of business development at Nigerian member firm UHY Maaji & Co, agrees. “The agreement is expected to create new opportunities and boost the African economy. Presently, Nigeria has an unemployment rate of 33% and we hope the AfCFTA agreement will help reduce the rate of unemployment as a result of intra-regional trade, especially in manufactured goods and services including banking, entertainment and information technology.” Lawrence sees particular opportunity in the export of professional services like insurance, banking, accounting, construction and real estate development to less advanced African neighbours, with benefits for all parties. And he also believes AfCFTA will create stronger flows of Foreign Direct Investment (FDI). “There are several factors that have affected the inflow of FDI capital to Nigeria,” he adds. “These include limited economies of scale, weak purchasing power and poor infrastructural development. But with AfCFTA in place, an investor can set up manufacturing hubs in the country and from here export goods to member nations, especially in West and Central Africa. Nigeria is located in the geographical centre of this subregion.” FURTHER INVESTMENT REQUIRED So the promise of AfCFTA is great, both for the continent more widely and individual nations within it. But nobody is expecting a quick fix. The agreement may officially have come into force in January, but many of its benefits will take years to materialise. In many cases, large investments are still needed to create the conditions on the ground that allow free trade to flourish. Wamkele Mene made the same point in a recent interview with the Financial Times: “If you don’t have the roads, if you don’t have the right equipment for customs authorities at the border to facilitate the fast and efficient transit of goods… if you don’t have the infrastructure, both hard and soft, it reduces the meaningfulness of this agreement,” he said. Lawrence believes the situation in Nigeria echoes that point. “High transportation costs coupled with poor road and rail infrastructures are some of the major obstacles,” he says. “The cost of transporting goods across borders is extremely high and traders encounter bureaucratic bottlenecks that could frustrate trading.” Sam Thakkar, CEO of UHY Thakkar & Associates, Uganda, agrees that for his country, AfCFTA presents a mix of opportunities and challenges. Uganda is a young nation – over 60% of the population is below the age of 30 – and has recently started to exploit its oil and gas reserves. The country has had experience of managing regional economic integration as part of the East African Community (EAC). “Therefore, opening our doors to a wider audience in Africa will no doubt lead to accelerated development of the nation,” he says. Despite that, Sam admits to a ‘mixed bag of emotions’ over the agreement. “We have ongoing issues just within our regional EAC community so adding more states under the African Economic Community band will have to be slowly and carefully applied,” he says. “Regional economic communities work differently to the policies laid out by AfCFTA. In East Africa we have our own customs union as well as our own free trade zones. These tariffs may conflict with the tariffs and schedules under AfCFTA and cause confusion when it comes to the application of various policies.” This is a crucial point. AfCFTA is not the first attempt by African nations to create free trade zones. Instead, it aims to supersede piecemeal regional agreements that exist in various parts of the country. These agreements may be limited in scope and sometimes dysfunctional, but layering AfCFTA over the top is likely to cause administrative confusion, at least in the short term. DRIVING CROSS-BORDER AMBITIONS Still, the general consensus is that AfCFTA is necessary and, with the pandemic undermining already fragile economies, timely. “Uganda can benefit enormously from its participation in AfCFTA but must also ensure that infrastructure development, immigration, logistics and energy and IT are improved to make the cost of doing business efficient,” says Sam. His words would find an echo in many of the 36 countries that have so far ratified the agreement and that can now trade with each other under its regulations. With the promise of lower costs and reduced bureaucracy, AfCFTA is likely to make cross-border expansion a more attractive proposition for many of the UHY network’s African clients. Lawrence adds that his firm’s membership of a transcontinental and indeed global network will make the process of establishing international operations even more efficient for ambitious client businesses. “We will be helping companies who want to establish their businesses across national borders by working with our fellow member firms outside Nigeria. By working together, we can help clients take full advantage of this agreement. We will be further solidifying partnerships with other firms in the region for this purpose,” he says. There will undoubtedly be bumps in the road, but AfCFTA has gained wide acceptance in Africa in a short space of time. Only one African nation – Eritrea – is yet to sign the agreement, and ratifications continue at an impressive pace. Meanwhile, negotiations on various details of protocol are ongoing, with agreements expected this summer. AfCFTA will take time, investment and commitment to be truly effective, but most experts believe the effort will be rewarded. The world’s largest free trade area is likely to prove a large step forward for African economic integration, and ultimately for African prosperity. For more information about UHY’s capabilities, email the UHY executive office info@uhy.com  or visit www.uhy.com #2021 #Agriculture #LatestTopics #UHYGlobalIssue

Dialogue is essential for effective communication with our clients and important for successful business relationships. At UHY Farrelly Dawe White we also believe two-ways communication build trust with our clients.  One of the signs that a relationship may be breaking down, is when dialogue stops and as a consequence regular communication and engagement is disrupted. Both personal and professional relationships are similar, in that mutual trust and understanding are crucial, and both are prone to leach away over time unless the parties involved actively work to maintain them. Cementing Relationships  In accountancy, for example, there is always a risk that a relationship may drift. At the start of a contract, dialogue is regular and frequent, as the scope of work is agreed, benchmarks are set and timelines negotiated. In this honeymoon period, regular communication is a priority for everyone concerned. As the relationship matures, that urgency can fade. The work becomes routine. As long as the tasks remain the same and are carried out satisfactorily, it is easy to believe that nobody feels the need for that random, off-diary chat. In client relationships spontaneity can start to feel like an unnecessary use of valuable time. At UHY, I believe our member firms work hard to resist this tendency towards drift – indeed, I frequently hear how our longstanding clients value their ongoing relationships with our member firm professionals. If the last couple of years have taught us anything, it is that nothing cements relationships like regular dialogue. During the pandemic, UHY member firms around the world reported a range of positive outcomes for clients from unprompted, off-diary contact. Talk is cheap – and valuable To be clear, these are not sales calls or scheduled quarterly meetings. They might involve nothing more than a quick call to ask how the client is coping, or an unprompted email pointing them to a new source of Covid-related advice. Clients are appreciative of this attention, and often initiate these contacts themselves, if only because they are grateful for the opportunity to talk to someone who listens and understands. What the pandemic shows us is the obvious – but sometimes underappreciated – value of honest and spontaneous dialogue. To me, this is too important to let disappear with the pandemic. When provider and client talk regularly, freely and without the time and subject matter constraints of a scheduled meeting, good things invariably happen. At the very least, you build mutual trust. Talking through current challenges together reconfirms your relevance. Clients get to better understand your business and the value of service and expertise at their disposal. You show that you understand their world, and can keep them abreast of developments that might impact or benefit their business. Dialogue is never wasted   Dialogue is a two-way street, and these occasions give both parties the opportunity to listen. Developing keen listening skills is important. By listening, we may each discover opportunities to add more value to the relationship. Dialogue is never wasted. Open, honest conversations encourage clients, for example, to tell you what they need (beyond the basic stipulations of your contract), what they really value in your relationship, and the best way you can deliver your services. Our member firms in the UHY network strive to achieve this kind of partnership in every engagement, to be the kind of professional provider a client can confide in, turn to for advice, solicit a recommendation from and look to when they want to be challenged or inspired. Ambitious businesses have always benefited from professional service experts who offer ideas and insight as well as competent technical skills. In short, they want trusted advisors. Creating closeness Both clients and advisors can make it easier for dialogue to flow. For example, swapping direct contact details, rather than generic ones. If you are located in the same city, it might mean meeting for a coffee every now and then. Or setting up a chat or instant message group, so either party can fire off a quick question by text when picking up the phone is not an option. In my experience, clients also appreciate the sharing of relevant economic and industry news and the chance to discuss any implications for them specifically. And for accountants today, social media can be a great way to stay front and centre of your clients’ thoughts. Blogs, publications and newsletters all help. Dialogue enables empathy and responsiveness to client needs. It provides a platform to offer value beyond tax or audit expertise. And it opens up the path to becoming a trusted advisor. Listening, empathy, understanding and ideas are enabled through dialogue which is why I believe it is the key to successful long term client relationships. For more information, contact Alan Farrelly, Managing Director, UHY Farrelly Dawe White Limited alanfarrelly@fdw.ie #2021 #HR #LatestTopics #UHYGlobal

On 12 October 2021, The Minister for Finance Paschal Donohoe introduced the budget and spending measures proposed for 2022. Find out what new measures were announced and how they might affect you and your business. Budget 2022 Highlights Download our Budget 2022 Highlights Budget 2022 Video We also have a video to view with a brief summary on Budget 2022 Watch our Video Highlights Contact our team with any queries you have Contact our Tax Team Today Call Us +353 42 933 9955 Email Us info@fdw.ie #2021 #Budget #Budget2022 #BusinessinIreland

Business Resumption Support Scheme (BRSS) Applications open until 30 November 2021. The details of the Business Resumption Support Scheme (BRSS) are set out in Finance (COVID-19 and Miscellaneous Provisions) Bill 2021. BRSS will support businesses that were significantly impacted throughout the COVID-19 pandemic, even during periods when restrictions were eased. The support will be available to eligible businesses who carry on a relevant business activity. Your business must be able to demonstrate a significant reduction in trade during the period 1 September 2020 to 31 August 2021. Eligible businesses can make a claim to Revenue for a payment known as an Advance Credit for Trading Expenses (ACTE). Applications under the scheme may be made between early September 2021 and 30 November 2021. Scheme Rates The Advance Credit for Trading Expenses (ACTE) payment will be calculated as three times the sum of: 10% of the average weekly turnover of the reference period up to €20,000 and 5% of so much of the average weekly turnover of the reference period that exceeds €20,000. The ACTE payment will be subject to a maximum payment of €15,000. Eligible Businesses The Business Resumption Support Scheme (BRSS) will be available to eligible businesses that carry on a trade, or trading activities. This includes: companies sole-traders, or self-employed individuals partnerships charities* approved sporting bodies* * BRSS is available in respect of a trade carried on, which would be chargeable to tax but for available Income and Corporation Tax exemptions. To be eligible for BRSS, the: profits of the trade, or trading activities of the business, must be chargeable to tax under Case 1 of Schedule D business must possess a valid tax clearance and continue to maintain tax clearance for the duration of the application period. Our Tax Team can assist you in making your application. Contact our UHY FDW Care Team and they will arrange a free consultation with our experts. +353 42 933 9955 susanmcgeough@fdw.ie #2021 #BusinessinIreland #Covid #GrantScheme

Talent Management: Has the pandemic changed the way you recruit and retain your top business talent? If it has not done so yet, it probably should. Companies are facing unprecedented challenges with their workforce management. From recruitment to development to retention, the world of work is changing fast. Income pressures, working from home and personal wellbeing have been put under the spotlight. Employers and their clients alike will need to adapt and engage with the risks and opportunities that now present themselves. According to one report, one in four workers are considering resigning in the wake of the pandemic. Research for Microsoft suggests that 40% of employees globally are thinking about handing in their notice. The fact is, Covid has fundamentally reworked the rules. Employee expectations have changed, and businesses that fail to grasp this fact risk losing good people, may struggle to recruit, and find themselves without the skills they need in a post-pandemic world. Conversely, employers who recognise change and embrace it may find themselves with a competitive advantage and an inflow of talent. Here are just a few of the ways work has changed in the last 18 months, and what they mean for your talent management strategies: Remote working Most obviously, many employees have got used to working from home. They may not want to do it all the time , and there are business benefits to having employees in the same physical space on at least one or two days a week. But flexible work is here to stay for many organisations, often in ‘hybrid’ form. If you do not offer it, and competitors do, attracting top talent and keeping yours, could be much more difficult. Wellbeing According to the Microsoft study I referenced above, exhaustion and burn out are leading many employees to start contemplating a simpler life. High productivity during the pandemic has masked the fact that many employees feel overwhelmed, isolated and anxious. Businesses need to recognise this fact. Those that heighten their focus on employee wellbeing are likely to reap the rewards of greater loyalty and higher retention rates. A corporate culture that judges performance on the quality of work employees produce, rather than the time they spend at their desks, is likely to win out in the “new normal”. Competition It will not have gone unnoticed by your most valuable employees that a new acceptance of home working means the pool of businesses they could work for has grown exponentially. Quite simply, they no longer have to live within commuting distance of work. While this could threaten the stability of your team, it is also an opportunity. Some of our member firms are already finding that the ability to recruit new staff outside the office catchment has widened. Others like the idea of being able to open smaller regional offices to support hybrid working. Naturally these are new considerations that may enhance your strategies – they will not replace the core motivations of having an employee-centric company culture. Flexible working is certainly part of that, but you might also consider other benefits that employees consider of real value, like continual learning opportunities and enhanced parental leave. Technology The pandemic has proved technology’s worth to the extent that, according to a recent McKinsey survey , Covid has accelerated many businesses’ digital transformation strategies by three or four years. Businesses that do not keep up risk losing talent to those that do, because your employees want those digital tools. They want easier communication and collaboration, and they want automation that takes dull and repetitive “drudge” work away and leaves them free for more creative or challenging tasks. Organisational change As a professional services provider we know you rely on us having the right people in the right places to help you successfully meet business challenges. There is no doubt that for the accountancy profession, accelerating technology adoption provides challenges of its own. Game-changing technology like artificial intelligence, deep data analytics, cloud accounting and, in the future, blockchain technologies, require a new injection of skills and expertise into professional businesses like ours, and talent strategies will need to reflect the changing shape of organisations. Some experts predict that effective professional practices will shift from a traditional hierarchy (pyramid) to a more diamond shape, with a ‘fat middle’ of specialists recruited and developed to manage a wide range of products, processes and technologies, enabling partners and experienced audit and accounting managers to focus on client relationships. This makes for a very different career path compared to traditional rungs of the ladder, and I am already seeing this in our own network as member firms realign their people strategies and business models to best meet the needs of clients. Our collaborative culture Over the 35 years that the UHY network has been operating, our member firms have created a global culture that promotes collaboration between colleagues, regardless of geography. When clients need specialist expertise, or partners need fresh ideas to invigorate their business, our people can call on an international network of colleagues for assistance. Help is only ever a call or email away and this has been critical during the pandemic. I truly believe our collaborative culture makes for a better client service; it also makes UHY member firms better places to work and develop a career. For more information, contact Alan Farrelly, Managing Director, UHY Farrelly Dawe White Limited alanfarrelly@fdw.ie #2021 #BusinessGuide #HR #UHYGlobal

With an IPO in the pipeline, online horticultural supply company iPower turned to UHY for professional and timely support. Lockdowns have seen many of us take to our gardens, lavishing time and money we might otherwise have spent on restaurants and holidays – and in the US the gardening boom has fuelled an already buoyant sector. One beneficiary was iPower, a hydroponics and gardening product supplier based outside Los Angeles, California. iPower supplies nutrients, growing mediums, hydroponic equipment, power-efficient lighting and more, selling through its website and third party e-commerce channels like Amazon, eBay and Walmart. The business sources products from popular brands and has also established inhouse branded products, marketed under the iPower and Simple Deluxe labels. The business has grown since it was founded in 2018, but 2020 was particularly successful, continuing into 2021. Around 75% of sales revenue in 2020 was from Amazon, where the business experienced 87% growth. Sales through Walmart grew by 200% year-on-year during the same period. Against this background, co-founder and CEO Lawrence Tan and his team felt the time was right to push iPower to the next level. “The hydroponic and gardening industry is quite fragmented, and retail outlets tend to be smaller family enterprises in a single location,” says Lawrence. “We intend to take advantage of current market conditions by providing consumers with a one-stop shopping experience where they can satisfy all their horticultural needs and have the products shipped directly to their door.” The business decided that the logical next step was an IPO (Initial Public Offering), and iPower turned to US member firm UHY LLP’s team in Orange County, California, to help prepare the business for public listing. THE IPO AUDIT The right professional support is crucial for the complexity of IPO preparation. For the registration statement businesses need to show financial audit reporting for the last two or three fiscal years based on the size of the business. Public businesses are subject to Securities and Exchange Commission (SEC) regulations, which means financial reports issued as a private business are usually insufficient for IPO registration. Pre-IPO financial audits need to demonstrate compliance with publicentity accounting principles and meet additional SEC disclosure requirements. Naturally, when iPower was considering an accounting firm to conduct the pre-IPO audit, it looked for one with specific experience of this type of specialist work. The company considered a number of accountancy firms but chose UHY LLP because of its wide experience of auditing mid-market clients for the purposes of IPO. “The expertise that was most valuable to us was the firm’s extensive experience of auditing publicly traded companies,” says Lawrence. Another deciding factor was the trust that had built up between UHY audit principal Crystal Li and iPower’s vice president of finance Alice Wu during discussions around earlier projects. iPower officially launched its listing in the second half of 2020, with the IPO set for the following May. This gave the UHY audit team, led by Michael Burke, audit partner, Crystal Li, audit principal and Yu-ta Chen, audit manager, little room for manouevre. However, they completed the job on time and the financial audit report was issued in November 2020. A QUICK TURNAROUND Lawrence was impressed with the results. “The UHY team completed the initial two-year audit – to be included in the first SEC registration statement filing – within 60 days. They then completed all the filings to help us complete the listing on the NASDAQ stock exchange.” With the help of UHY, iPower became a public company on May 14, 2021, with gross IPO proceeds of USD 16.8 million. The share price rose 15% on the first day of listing. More importantly, Lawrence believes the IPO has created a firm foundation on which to grow the business into the leading hydroponic and gardening equipment supplier in the US. He has no hesitation in recommending UHY to businesses considering their own public listing. “I’m confident in the future and would recommend UHY to other businesses that need a highly professional team,” he says. “We’re happy with everything they did – they’ve set a very high standard for others to follow.” For more information about UHY’s capabilities, email the UHY executive office info@uhy.com  or visit www.uhy.com #LatestTopics #Retail #2021 #CaseStudy #UHYGlobalIssue

As the world goes ever-further digital, cybersecurity services and advice for businesses of every size is becoming more critical. In January 2021 the World Economic Forum published the Global Risks Report, its annually depressing read of things that can and might go wrong with the world. Among the highest likelihood risks of the next ten years were digital power concentration, digital inequality and cybersecurity failure. It is worth remembering that back in 2006 the same report warned that ‘lethal flu, its spread facilitated by global travel patterns and uncontained by insufficient warning mechanisms, would present an acute threat’. So the report is definitely one worth taking seriously. ACCELERATED RISK Research from McKinsey has shown that the Covid-19 crisis accelerated digitalisation in ways nobody could have ever predicted. Consumers have headed online in their droves and companies have responded rapidly. Video has replaced coffee-shop meetings and conferences and cloud accounting solutions have seen a boost. McKinsey found that companies moved 40 times faster than they thought possible before the pandemic to implement remote working solutions. The cybersecurity implications are eyewatering to consider, but cannot be ignored – particularly in light of recent cyberattacks, including one that shut the largest US gas pipeline and jeopardised supplies to major US cities. There is also risk from software bug-related internet outages, like the one from infrastructure provider Fastly that knocked out many of the world’s biggest websites. Incidents like this serve to highlight how increasingly vulnerable we are as digitisation increases. Research from SEO agency Reboot suggests that the Fastly outage could have lost Amazon as much as USD 32million in sales. THREATS IN 2021 The majority of cyber threats this year will fall broadly into three areas, says cybersecurity specialist Norman Comstock, managing director of UHY Consulting, part of UHY Advisors, US. The first is phishing – attempts to obtain sensitive information or data, such as usernames, passwords, credit card numbers or other sensitive details by appearing to be a trustworthy entity in a digital communication. Secondly, there is ransomware – a type of malware that employs encryption to hold a company or individual’s information to ransom. And thirdly, business email compromise (BEC) is a cyberattack involving the hacking, spoofing, or impersonation of a business email address. “Ransomware and business email compromise have been increasing over the past few years,” says Norman. “So far this year we are getting four times as many reports from our US customers experiencing significant attacks, and across many industries. The dollar amount of ransom is creeping up too, making it difficult for some businesses to recover control and resume normal operations.” There are multiple risks contributing to the rise in incidents. The advent of ransomware as a ‘service platform’ makes it easy for unskilled bad actors (those with criminal intent) to seek a high return on investment by renting ransomware platforms to target vulnerable companies. “The fact that ransom is being paid emboldens the threat actors to execute more ransomware campaigns,” says Norman. Colonial Pipeline paid USD 4.2million in ransom after significant disruption and concerns for public safety. VULNERABLE SOFTWARE The number and severity of software vulnerabilities is also growing. The challenge is to patch known vulnerabilities, as ransomware platforms are not overly sophisticated. Much of the ransomware relies on poor security hygiene – unpatched vulnerabilities, misconfiguration of software, insecure network protocols, not closing unnecessary networking ports, insecure coding practices, or users failing to recognise phishing attempts. More recently, Norman Comstock says he has seen small banks, law practices, healthcare and manufacturing clients hit with BEC. “Our forensic review revealed that their Microsoft 365 mail had been compromised primarily because multifactor authentication was not configured or inadvertently disabled. Customers using Microsoft 365 mail should review their configuration and turn on multi-factor authentication to reduce BEC risk.” Data and system backups are also worthy of close attention. “Whether backups are done on premises or to the cloud, all companies should verify that their backups are periodically tested to ensure recovery. This will minimise costly exposure and perhaps the need to pay a ransom,” he says. To make matters worse, none of these risks is diminishing. In fact, reports suggest that hackers are getting smarter. EXPERT ADVICE While many accounting firms, consulting firms, and IT vendors offer some aspect of triage to identify security risk, small and mid-sized businesses often do not have dedicated security teams. This means they rely on products and third-parties to help identify risks and implement protective technologies. “What is generally missing or ineffective in this approach,” says Norman “is the personnel, technology and process to detect unexpected network, account, or system activity.” And naturally, the slower the detection the slower the response. But, he adds, “The response should involve investigation, confirmation, communications and corrective actions to disrupt hacking activities. This is critical, as protective controls are fallible and detective controls may be under resourced, leading to undetected and unresolved hacking activity and longer and costlier recovery.” According to Dr Anuraag Guglaani, management consulting partner at UHY James Chartered Accountants, Dubai, United Arab Emirates, who leads the firm’s strategy, transformation, automation and cybersecurity services, “A combination of poor governance through incomplete information security policies, coupled with nonsecurity conscious users who make errors,” are the main reasons for cybersecurity breaches. He says businesses are seeing wide-ranging threats including data theft, financial loss after ransomware attacks, system disruptions that cripple businesses, and reputational risk after news of an attack spreads to the public. In Italy, UHY Audinet Srl partner, Andrea d’Amico, is establishing a wider IT auditing service alongside developing the firm’s own cybersecurity safeguards. “We know that IT security, cybersecurity, IT governance and IT auditing are becoming critical lines of service for our clients,” says Andrea, citing fast-growing technological developments and increasing operational dependency on technology. “We already perform IT audits supporting the internal audit, and offer compliance and risk management, as well as supporting financial statement audits.” Cybersecurity expertise is increasingly available to UHY clients thanks to centres of excellence such as these in the US, UAE and Italy, as well as UHY’s global proactive knowledge sharing infrastructure. This means clients anywhere in the world can benefit from the latest advice, tools and implementations, including the US National Institute of Standards and Technology (NIST) Cybersecurity Framework, a voluntary framework of standards, guidelines and best practice in managing cybersecurity risk in five key stages – identify, protect, detect, respond and recover. For more information about UHY’s capabilities, email the UHY executive office info@uhy.com  or visit www.uhy.com #Cybersecurity #LatestTopics #2021 #CaseStudy #UHYGlobalIssue #Technology

Expert insight and analysis for world business The 11th edition of UHY Global magazine is now available to read online . UHY Global draws on the knowledge of UHY’s network of member firms to provide insight and expertise for today’s global business community in a thought-provoking, upbeat and engaging read. Topically wide ranging, each feature demonstrates the breadth of expertise of UHY colleagues across the world. Our culture of collaborating across borders means we can offer you joined-up international support in over 100 countries. UHY Global magazine highlights this wide-ranging and diverse experience, exploring the issues and challenges of international business, themes that you may well be grappling with in today’s uncertain world. For example, the regular Perspectives feature this time brings UHY experts together for a roundtable discussion on the future of agile working. Now that the pandemic has flipped the norm of ‘going to the office’ into something much more fluid and uncertain, it has become a big issue for businesses. UHY member firms from the UAE, Poland, Israel, Argentina and the US debate the topic. Other features focusing on the effects of the pandemic look at the new priorities for the countries of Central America to achieve the structural change they need to prosper; the post-Covid challenges facing global supply chains; and whether Covid will turn out to be a catalyst for a more equitable and sustainable globalisation. Issue 11 also includes: Global news updates A profile of Antonis Kassapis who leads UHY’s member firm in Cyprus An appraisal of keeping a global accountancy network resilient A look at the re-emergence of football – and the story of a historic team in Poland A celebration of UHY colleagues around the world serving their clients and communities. UHY Global online also gives you hyperlink access to source reports, additional narrative and direct contact details of UHY contributors – so if you want to find out more about any of our topics, UHY Global online makes it easy. If you prefer an offline read, the print version is downloadable as a PDF . Contact our team with any queries you may have T: +353 42 933 9955 E: info@fdw.ie #2021 #BusinessAdvisory #UHYGlobalIssue

The global economy is waking from its Covid slumber, but what will drive recovery? We suggest three post-pandemic drivers of growth According to the Organisation for Economic Cooperation and Development ( OECD ), many national economies will recover to pre-pandemic levels in 2022. Globally, gross domestic product (GDP) will grow 5.8% this year, the OECD forecasts. This is more promising than its previous forecast in December, which predicted GDP growth of 4.2%. While this is good news for the wider economy, businesses will want to know how it translates to their own sector. The global economic outlook may be positive, but the recovery is likely to be uneven. Here, we consider three factors likely to drive the post-pandemic rebound, and what they might mean for different parts of the economy. ONE: Consumer spending This is the big one. In many countries consumers are sitting on large reserves of cash they were unable to spend during lockdown. An unprecedented 6-20% spike in savings rates across China, the US and Western Europe in 2020 suggests that consumers have the disposable income to drive post-pandemic recovery. That is already boosting economies in the Middle East, where oil production is beginning to recover. Many African economies are also starting to rebound . The OECD agrees about the potential for a “rebound of consumption, notably of services.” Leisure, hospitality and retail are clearly the big winners here, but the ripples will be felt through manufacturing, food production, logistics and more. On the downside, the big loser could be international travel and tourism. There is a chance that the consumer boom will have faded before borders are fully unlocked. So how sustainable is a consumer-led recovery in the longer term? Quite simply, we do not know. Consumers around the world are spending money on restaurant meals and cinema tickets as economies open up, to “make up for lost time.” How long this spending spree will last depends on how much the pandemic has altered behaviour. Nervous consumers may want to keep larger savings pots for peace of mind after the pandemic experience. If more people switch to permanent home working, retail and hospitality that serves the daily ebb and flow of commuters may suffer. TWO: tech-led productivity surge One potential driver of growth is the fact that, post-pandemic, we are all a bit more efficient at doing what we do. That is not because of any Covid-induced superpower. It is simply because companies have been forced to adopt new technology and processes during the pandemic that would otherwise have taken years to become fully accepted. We have also noticed across the UHY network that Covid-19 has pushed some client businesses to adopt process innovations that were technologically possible, but largely under-utilised before the crisis. The story is largely about technology, though pandemic home working may also have hastened the decline of inefficient and rigid top-down company hierarchies. The uptake of cloud computing, automation and robotics, among others, has been marked – one study suggested companies digitised many activities 20 to 25 times faster than they had previously even thought possible. Economists have calculated that these innovations could result in 1% labour productivity growth to 2024, leading for example to per capita GDP increases of around USD 1,500 in Spain and USD 3,500 in the US. They say this would be a “stunning outcome” but accept that it depends on these innovations filtering down through entire economies, and not being limited to large ‘superstar’ companies. But regardless of the exact result, many sectors such as ICT, healthcare, construction and retail, seem likely to record the biggest gains. THREE: The green economy Governments around the world have expressed the desire to “build back better” after the pandemic. At the same time, populations have lived through a global crisis, with citizens of wealthier nations experiencing empty supermarket shelves and limitations to freedom for perhaps the first time. Looking ahead, environmentalists hope Covid has brought home the realities of crisis management in a very real way – and consequently a fresh perspective on uncontained climate change. Whether that will prove true is unknown, but governments have responded to the pandemic with a range of fiscal stimuli for green infrastructure projects. In the United States, this faces a long battle to get through Congress, but President Biden’s recent USD 2 trillion stimulus package for the US economy includes significant investment in public transport, clean power and energy-efficient buildings. Around the world, governments from Chile to Canada say they are putting climate action at the heart of post-pandemic ‘build back better’ strategies. There is a caveat: environmentalists argue that many of these announcements mask more damaging actions , like financial support for fossil fuel companies and airlines through the pandemic. But regardless of the environmental outcome, post-pandemic growth seems likely to be driven to some extent by either direct government investment in sustainable infrastructure or preferential treatment (often through tax incentives) for green businesses. Green manufacturers and construction companies stand to gain most here, though the sustainable energy and transport sectors will also benefit significantly. Good advice is crucial In all these sectors, good advice will be crucial for businesses looking to thrive in a changed, post-pandemic world. As part of a global network with vast experience in a wide range of sectors, we can help companies and entrepreneurs find new investment, tap into government support and benefit from tax incentives. Operating in every major economy, our UHY colleagues around the world provide the on-the-ground expertise businesses need when moving into new international markets. For more information, contact Alan Farrelly, Managing Director, UHY Farrelly Dawe White Limited alanfarrelly@fdw.ie #2021 #BusinessGuide #Covid #UHYGlobal

At the start of the pandemic, manufactures and retailers struggled to source the parts and products they needed as the global supply chain ground to a halt. A year later, what lessons have been learned?  When coronavirus spread rapidly around the world in the early months of 2020, the effects on global supply chains were immediate and obvious. Health services quickly ran short of personal protective. equipment (PPE). Supermarket shelves emptied of staple foods such as rice and pasta as consumers rushed to stock up on store cupboard essentials. While these shortages made headlines around the world, behind the scenes manufacturers faced their own supply chain challenges. When China went into lockdown early in the pandemic, many businesses struggled to source the equipment and components they needed. As the crisis spread across the globe, supply chains crumbled. Morito Saito, vice president and director at UHY FAS Ltd, Japan, says that in the early months of the pandemic procurement was a major headache for small and medium-sized businesses in particular. “These businesses could not source the quantity of parts they needed, and they did not know when logistics would recover and parts would be available again, causing great uncertainty. In addition, they did not have the diversified network that could step in and immediately arrange replacements.” In Brazil, too, manufacturers suffered as Chinese workshops shut up shop. Carlos Bernardo Gonçalves, corporate finance partner at UHY Bendoraytes & Cia – Auditores Independentes, Brazil, talks of a perfect storm created by a scarcity of supply and the exchange rate depreciation of the Brazilian real at a time of global uncertainty. “We also had some cases of clients who suffered from the lack of components and raw materials, especially in areas such as clothing and electronics manufacturing, which had China as their largest supplier,” he adds. Around the world, businesses were hit from both sides. As markets shrunk, companies had to fight for every new piece of business, only to see efforts to fulfil hard-won orders hamstrung by malfunctioning supply chains. BACK TO NORMAL? The situation a year later is much improved, at least on the supply side. Despite many northern hemisphere nations having endured a winter wave of Covid-19, PPE shortages are not a pressing concern and supermarkets remain well stocked. Manufacturers in many countries might be struggling, but that is more from a dearth of customers than a scarcity of parts and components. So, is the supply chain crisis over? Is it back to ‘business as usual’ for manufacturers and retailers who have in recent years favoured lean and ‘just in time’ procurement policies? The pre-Covid supply chain was focused on rapid delivery and reducing the costs involved in stockpiling parts and products, but priorities may be shifting. Many experts say it is time for a re-evaluation of our reliance on the kind of complex international supply chains that struggled in the face of a global crisis. According to these voices, Covid should act as a wakeup call for the global procurement sector. They argue that the pandemic has provided an opportunity to redefine best practice in warehousing and logistics and create stronger supply chains that are better able to withstand global shocks. They argue that resilience should replace cost as the primary criteria of a functioning procurement strategy. That is partly because the Covid pandemic is by no means over, and partly because global supply chains were stretched to breaking point even before Covid-19. Global warming is leading to more of the extreme weather events – floods, fires, hurricanes – that make ‘just in time’ delivery harder to guarantee. Then there are geopolitical threats, most recently highlighted by the US-China trade war. Research completed before the pandemic found that companies already expected disruption to production lines for one or two months every three to four years. As the researchers noted, “the fact is that the world has more shocks.” RISKY COST CUTTING Modern supply chains were created for cost and efficiency, not for resilience. But even stock markets may be starting to re-evaluate the idea that the most valuable companies are those that are best at cutting costs. Lutfey Siddiqi, a visiting professor in practice at London School of Economics’ foreign policy think tank LSE IDEAS, believes that the ‘de-globalisation’ associated with the pandemic “has challenged the value of hyper-efficient, super-optimised supply chains… cost cutting is no longer an unequivocal indicator of returns; it may actually signal increased risk and reduced resilience.” In other words, lean and complex supply chains may make companies less attractive to investors in future, because they are inherently vulnerable. But how to make supply chains more resilient? Using digital tools and AI to model the effects of various shocks and diversify supply accordingly is one potential solution. Insisting that suppliers implement disaster recovery planning is another. One idea that has gained considerable support since the start of the pandemic is the ‘onshoring’ of supply chains, which simply means sourcing more parts and materials closer to home. This reduces the risks associated with shipping goods thousands of miles and gives national governments the power to step in and support producers of vital materials who may be struggling. British economist and author Paul Ormerod believes the pandemic has made the idea of domestic procurement more attractive. “The crisis has obviously led to geopolitical connections being reconsidered in a pretty fundamental way,” he says. “The concept of bringing manufacturing back (to the UK) is underpinned by this as well as by the fragility of links which emerged during the crisis.” Is onshoring realistic? Many national governments think revitalised local supply chains can help post-Covid economic recovery. The PPE crisis at the start of the pandemic highlighted the risks of relying on distant producers for vital materials, and at the same time showed that it was possible to create new domestic supply chains almost overnight. Alan Farrelly, UHY Board member and managing director of UHY Farrelly Dawe White Limited, Ireland, says local production of PPE was quickly accelerated as the country’s over-reliance on China became clear. “The fact that Ireland needed to acquire 15 years of average annual supply from China during the first half of 2020 showed the need to become more self-sufficient,” he says. “In the race for supply, quality was compromised, and the fact that alternatives have now been sourced more locally could be the way of the future, for PPE and other vital products or materials. In a short space of time Ireland had to create a new industry, and that will allow the country to become more self-sufficient should the need arise in future.” In the Netherlands, too, there are hints that businesses in some sectors are trying to source parts and components closer to home. “I have heard from Dutch companies in the high-end electronics industry (dominated by low volume and high complexity) that are looking for opportunities to make supply chains more resilient through more regional sourcing,” says Paul Mencke, partner at Govers Accountants/Consultants, Netherlands. In that case, ‘regional’ sourcing would likely mean the EU, though Paul’s own experience is instructive. The pandemic struck just as the Eindhoven office was having the glass roof in its atrium. replaced, forcing a long delay as the Italian supplier stopped work for an extended period of lockdown. AN EVOLVING STORY While shortening supply chains may increase resilience to some extent, no supply chain is invulnerable. There are other issues with local procurement. Morito Saito says that, while Japanese authorities promote domestic procurement by subsidising the purchase of new factories and equipment, in reality local production will struggle to compete with Chinese imports on price. Nevertheless, there is evidence that Japanese businesses are aware of the need to diversify their supplier base. “Some domestic manufacturers have begun to move their supply chains from China to Thailand, as well as Vietnam and Indonesia, and are further strengthening their local procurement and production systems,” Morito says. But he adds that many Southeast Asian countries have some way to go before they can match China’s advanced manufacturing capabilities, and that China will remain the preferred supplier of a wide range of industrial materials and components in the short term. In Brazil, Carlos Bernardo Gonçalves agrees that supply chain management is changing thanks to the pandemic, but through evolution rather than revolution. Sectors that are now considered of national importance – the production of basic medical supplies being one – may benefit from public investment and other stimulus measures to encourage self-sufficiency. In other areas, “companies will start to consider the risk of global pandemics and other shocks in supply chain decision-making, tending to geographically diversify suppliers even if margins are reduced,” he says. Carlos adds that, for business to become more resilient in the long term, investors and stock markets will have to reward organisations for strengthening supply chains without punishing them for increased costs. But change is clearly needed, and the early signs are positive. Manufacturers and retailers are realising that relying on a single supplier on the other side of the world for a vital component or popular product represents a huge business risk. Supply chain shocks are likely to become more common. One positive outcome of Covid-19 would be the widespread re-evaluation of what constitutes best practice in supply chain management. For more information about UHY’s capabilities, email the UHY executive office info@uhy.com  or visit www.uhy.com #Covid #LatestTopics #Manufacturing #Retail #2021 #UHYGlobalIssue