Following several corporate collapses, including the
collapse of Carillion and BHS, the UK competition watchdog has made proposals
that could split up the big four accounting firms.
The proposals also include compelling the big
accountancy firms to work with their smaller rivals. While the CMA (Competition
and Markets Authority) resisted calls for a split of the big four,
PricewaterhouseCoopers, EY, Deloitte and KPMG, it has said it might be an
option five years down the line if there are no significant improvements in the
Following its fundamental review of what it termed
“serious competition problems in the sector,” CMA’s final report recommended
that the UK government pass new laws that will compel big accounting firms to
put some distance between their auditing operations and their more lucrative
consulting divisions. Such laws, it says, would prevent conflict of interest.
To stoke competition, the CMA also called for
corporations across the UK to be forced to hire smaller “challenger” auditing
firms to analyse their books along with the big four. However, it proposed that
the largest and most complex organizations be excluded from this requirement.
But accounting firms have raised concerns and even
severely criticized some elements of these proposals. Business lobby group,
Confederation of British Industry, indicated that this move could undermine the
confidence in corporate Britain.
Marcus Scott, the chief operating officer of
TheCityUK, which represents financial services and professional firms, also
criticized the proposals. He said that such recommendations may make for good
headlines but are poorly focused. He further stated that “there was no evidence
that they would lead to genuinely enhanced audits.”
The CMA still insists that its blueprint will improve
the profession. Andrew Tyrie, CMA chair and former Tory MP supported the
blueprint and said that “people’s livelihoods, savings, and pensions all depend
on the auditors’ job being done to a high standard.” He pointed out that “too
many fall short – more than a quarter of big company audits are considered
sub-standard by the regulator. “This,” he said, “cannot be allowed to
Lord Torie also indicated that the government had also
received similar recommendations from three separate reports. This was a
reference to the recent Kingman review of audit regulation and the Brydon
review of audit quality and effectiveness, which, he said, “In large part, they
come to similar conclusions.” He further pointed out that “conflicts of interest
cannot be allowed to persist; nor can the UK afford to rely on only four firms
to audit Britain’s biggest companies any longer.”
According to the CMA, the fact that large accountancy
corporations are engaged to scrutinize companies’ book while at the same time,
earning huge fees for advising on corporate matters such as takeovers and tax
issues, has fueled several conflict of interest allegations.
To avoid conflict of interest, the CMA has proposed
that the auditing and consulting functions should be “operationally” separated,
with different leadership, management teams, accounts and even pay policies.
That means the two functions would no longer share profits or staff promotions.
Even bonuses would now have to be on audit quality.
The current accounting regulator, the Financial
Reporting Council, will perform a five-year progress review, even though the
Kingman review had recommended its replacement with a tougher successor.
According to the CMA, the option of a full, structural
split, which will compel accounting firms to split into two, entirely
independent outfits, should remain under discussions during this review period.
The CMA also said that any corporation that engages any of the big four
accountancy firms should also hire a “challenger” audit firm to spur
competition in the sector and help the smaller accounting firms grow.
The huge and most sophisticated corporations in the
UK, which would likely include banks such as Barclays and HSBC, would be exempt
from this requirement. However, EY, one of the big four firms has severely
criticized the proposals and said that they were a missed opportunity and
“risked the UK’s attractiveness for business.”
As far as EY is concerned, splitting up auditing and
accounting functions would undermine the quality of auditing since the firms
would then not be able to draw from critical skills, capabilities, and
investments in the company. It would effectively diminish the resilience of the
Commenting on the proposals by CMA, EY said that, “at
a time when the FRC [Financial Reporting Council] is reviewing corporate
reporting, and the Brydon review may change the scope of audit, it appears
ill-timed for the CMA to restrict the skills needed to deliver high-quality
audit now and in the future.”
KPMG also criticized the proposals for joint audits
and said that “shareholders, audit committees and the regulator must have total
confidence in the ability of these firms to complete this work before the
market can move ahead with this recommendation.”
With more customers worried about problems with their
orders, delivery costs, and increasingly preferring to choose fresh produce
themselves, online grocery shopping is set for slow growth in the UK, analysts
from Mintel have revealed. It seems many consumers remain reluctant to order
fresh produce online.
In a survey of 2,000 internet users, the private London-based
market research firm also found that at least 42% of older internet users have
never bought groceries online and had no intentions of doing so, at least not
in the immediate future.
Nick Caroll, the associate director of retail research
at Mintel indicated that alongside food discounters, online grocery shopping is
one of the fastest growing sectors in the overall grocery sector. But research
now shows that the number of online grocery shoppers is plateauing, and that
retailers are struggling to entice new customers to use their services.
Mintel revealed that online grocery deliveries
comprised around 7% of the whole sector, valued at £12.3 billion and with a
projection of 10% by 2023. According to the forecasts, sales were expected to
rise to £19.8 billion. However, if the research is anything to go by, this is
unlikely to materialize. 45% of consumers polled said they had shopped for
groceries online, down from 49% in the previous year.
Mintel found some evidence of disparity between the
younger, more enthusiastic people and the older more sceptical shoppers who
regarded online grocery shopping with suspicion. Only 35% of shoppers aged 45
and above had ever used online shopping for their groceries. It is now emerging
that the older shoppers are getting more reluctant to join the online grocery
shopping revolution, and that their reluctance is now growing. The number of UK
shoppers aged 45 and above who have never bought groceries online and have no intention
to do so has now increased from 34% in 2015 to 42% in 2018.
But there may be other potential issues as well. About
1 in 4 reluctant shoppers thought the delivery charges for online shopping were
too high. 18% quite disliked being subjected to minimal order quantities or
values, a common requirement for most online stores. Further complaints
revolved around missing products, receiving goods that were so close to their
expiry dates, incorrect substitutions, and late deliveries.
According to the research, online shoppers in the UK (63%)
said that they have had at least one issue with an order in the past one year. For
online stores who also operate traditional brick and mortar stores would not be
too worried about this because grocery shoppers are likely to go back to the
store if they run into challenges with their orders.
Mintel’s research indicated that a great majority of
shoppers (73%) said they just preferred heading out to the store and picking
out fresh groceries for themselves. This might be a great concern moving
forward given the thin margins that traditional brick and mortar stores now
Big food retailers have increasingly relied on online
grocery shopping as an important element of their business strategy. Most
notably in recent days, Marks and Spencer £750 million deal to acquire a 50%
share of Ocado’s retail business. It was a clear indication that Marks and
Spencer, which has struggled in recent times, wanted an immediately scalable,
rough and ready platform to strengthen its online business and grow its sales.
High street retailers will for the first time get at
home delivery service. Overall sales in the high streets have fallen in recent
times due to the overall challenging conditions. The lack of a reliable online
delivery system has been chief among the challenges. This is hardly surprising
as Mintel’s research revealed that more than two thirds of online shoppers in
the UK have had an issue with at least one of their orders in the past year.
However, Mintel now points out that not all retail
shopping trends are working in favour of the internet. Online shopping services
are best suited to some of the traditional big basket weekly shopping routines,
especially at a time where many consumers are shopping on a top-up basis or
Large, basket-style shopping, which online grocery
shopping best supports does not quite fit with the current shopping habits.
Other innovative service offerings such as same-day delivery targeted towards
immediate meal solutions could drive growth in the sector. Once hailed as a growth
area for many retailers, online grocery shopping may be losing its shine after
all, at least in the UK.
Paschal Donohue, Ireland’s minister for finance, has
declined to comment on emerging reports that the European Commission is taking
a closer look at Google’s Irish tax regime.
Sources familiar with the matter indicated that the EU
is now scrutinizing how the technology giant uses its operations in Ireland to
help cut down its corporate tax obligations within the trade bloc.
Sources close to the matter say the review was only
preliminary and may not necessarily lead to a full-scale investigation into the
firm’s Irish operations. An EU investigation, it seems, is not quite imminent
and Irish authorities are bullish that the preliminary conversations are
sufficient to avoid a more in-depth probe of Google’s tax arrangements.
Google declined to issue a statement on the matter as
did the European Commission. But a source revealed that Margrethe Vestager, the
EU Competition Commissioner, discussed a potential issue with Pascal Donohue,
Ireland’s minister for finance. “I can’t comment on any matters in relation to any
particular company. That is the role of the European Commission to comment on
any investigations they may or may not be considering,” said Mr. Donohoe.
Mr. Donohoe was speaking in Washington where he was
attending the World Bank Spring meetings. He indicated that the Irish
government has had a good relationship with the European Commission and that
and that it was up to them to determine what kind of probes they feel are
required across the EU.
Last year, Bloomberg reported that officials from the
European Commission had held in-depth talks with Irish authorities on whether
Alphabet Inc, Google’s internet-search unit complies with rules limiting tax
perks provided by individual governments of member states in the trade bloc.
While no formal investigations have been launched as
yet, the report comes amid a clamp-down at the EU and OECD level on some of the
tax practices of digital companies. Mr. Donohoe indicated that the issue of tax
was something that was always contested and that Ireland was also engaging in
the debate. “It is a debate we are participating in,” said the minister for
finance, adding that he expected to see “further change take place in relation
to the taxation of the digital sector.”
Mr. Donohue particularly pointed out OECD’s forthcoming
work on digital taxation. The intergovernmental economic organization
headquartered in Paris will, by the end of the year, publish its roadmap on
taxing the digital economy. It is also expected to come forward with more
details of its plans before the summer.
The EU had previously made unsuccessful attempts at
introducing EU-wide digital tax policies. According to the finance minister,
the move could have resulted in reciprocal measures from other parts of the
world if the European Union had acted unilaterally.
Several big technology giants, including Apple,
Google, and Facebook, have their European operations’ base in Ireland which
provides a lower basic corporate tax rate as compared to other EU member
states. Ireland has continually resisted efforts by other EU member states to
align tax rates and tax calculations across the trade bloc.
Therefore, Vestager’s probes have opened up other
avenues for the EU to intensify pressure on low-tax member states, including
Ireland, Netherlands, and Luxembourg. The risk is that these states may lure
firms away from other member states.
Until recently, Google has seen little scrutiny of its
Irish operations, and whether they violate the EU’s state-aid arrangements. The
EU has also targeted Amazon.com for its tax deals with Luxembourg. However,
Apple has received more scrutiny in recent times, with the technology giant
ordered to pay around €13 billion for its deals with Ireland that helped reduce
its effective corporate tax rate. Ireland and Apple have appealed the decision.
Google’s European is in Dublin and its sprawling
campus, which is dubbed Googletown, is located close to the south docks. Google
landed in Ireland back in 2003, and with only 100 employees. The firm now
employs about 7000 people in Ireland.
According to company records, the firm recorded a
profit of €1.2 billion from revenues of €32.2 billion. Therefore, it paid about
€167 million in corporate tax.
Ms. Margrethe Vestager, EU’s competition commissioner,
has been at the forefront of Google’s regulatory woes in Europe. She even
stepped up an anti-trust probe as soon as she took office back in 2014 which
her predecessor had been willing to bring to an end.
Mr. Donohue is due to present an update to his cabinet
counterparts on the latest economic forecasts for the country when he returns
to Dublin on Tuesday. He will also outline the Department of Finance’s
projections for both this year and the coming year.
Even in the modern era of tablets, laptops, and smartphones,
the president insists that human contact is still critical.
President Michael D. Higgins called out to people to make
the time to meet up talk if they were to tackle Ireland’s crisis of loneliness.
He spoke about the crucial need for physical interactions and “human
connection” in the digital age.
The 9th president of Ireland, who is also a poet, was
speaking at Dublin’s Convention Center on April 13, 2019, during a celebration
of 175 years of the Society of St. Vincent de Paul. Higgins pointed out that
human contact was now more crucial than ever since society was now dealing with
a huge loneliness problem.
“How we meet and speak with each other matters a
lot,” said the president and that “we live at a time where more and
more of our interactions with others are encountered in a digital space, be it
laptops, tablets or phones,” said the president. Indeed, more than ever
before, we now have more opportunities to connect through technology. However,
even as we are in the most interconnected period in human history, we are also
lonelier than ever before.
Higgins pointed out that despite all the great
technological advances, human contact is still something that defines us as a
race. Whether it is through conversations, face-to-face interactions or simply
just taking the time to have a chat with someone, human contact defines us as a
In his speech, the president highlighted the positive
impact of technology, most notably the internet, but then also indicated that a
purely digital life presents challenges. He further agreed that there is no
denying the practical and positive contribution of the digital world, particularly
for those who constantly struggle with balancing work and family commitment on
a daily basis.
Research consistently shows that loneliness can lead
to various illnesses and a 50% increased risk of early death. Research has
shown that simple acts, such as holding the hand of a loved one, cuddling, or
visiting friends and family are just as important to our well-being as drinking
more water and exercising. Some research indicates that loneliness is even more
dangerous than obesity or smoking 15 cigarettes a day.
The Society of St. Vincent de Paul had a day of
thanksgiving to mark its foundation anniversary in Ireland. Other guests at the
function included Regina Doherty, Minister for Employment Affairs and Social
Protection, and Brian Cody, hurling manager for the Kilkenny senior team.
Mr. Higgins said that people were facing a myriad of
challenges in Ireland and that their lives are affected by “low income and the
effects of debt, unemployment, educational disadvantage, poor health,
relationship breakdown, bereavement, addiction, violence, loneliness,
disabilities, overwhelming caring responsibilities, and other challenges.”
He also pointed to the growing rich and poor income
inequality gap and said that “Despite the measures that may suggest an
improvement in our economy, there are still too many people in Ireland
struggling, too many living in consistent poverty.” The president insisted that
this has to change.
In 2018, the World Economic Forum highlighted
Ireland’s soaring wealth inequality, placing it eighth out of 30 countries in
its Inclusive Development Index. According to the report, Ireland was still
facing “high income inequality and soaring wealth inequality” even though the
median living standards had risen moderately.
Just last month alone, the number of homeless people
crossed the 10,000 mark for the first time in history. The Department of
Housing revealed that there were about 6,480 adults and 3,784 children and
dependants who accessed emergency accommodation during the week of February 18th,
The Fr Peter McVerry Trust even disputes these figures
and says they are quite modest. The Dublin-based charity trust, which was set
up to reduce homelessness, drug misuse and social disadvantage, points outs
that these figures did not even include the people sleeping rough, the ones
couch-surfing, homeless people in hospitals and prisons, those in direct
provision centres, and domestic violence refugees.
President Higgins indicated that there was a great
need to continue to make Ireland a more equal place to live and work in where
caring for each other, our children, older people, and people with disabilities
is a core value and one that is equally supported. “We need to make Ireland a
place where individuals, families communities can participate fully in work and
society, and where a strong economy helps to support the kind of society that
we wish to live in,” the president said.
The president’s overall message seemed to propose
that, even in an increasingly digital age, we can beat loneliness, one
conversation at a time.
Mark Zuckerberg the CEO of Facebook met with a number of TD’s this week to discuss the regulation of the internet and the safeguarding of kids and the vulnerable from online issues. The meeting was hailed as a success and a failure in equal measure.
The company has come under scrutiny in recent weeks. In part due to the streaming of the NZ terrorist attack and a class action lawsuit taken by former employees in the US. This may be followed by a similar lawsuit in Ireland.
Zuckerberg has been meeting with regulators across the world in recent weeks and is trying to put a face to Facebook and its policies. He has recently voiced his approval of the involvement of regulators and government bodies in the issues of free speech and information across the numerous platforms under the Facebook umbrella. He wrote recently, “Lawmakers often tell me we have too much power over speech and, frankly, I agree,” he wrote in the ‘Sunday Independent’ and ‘Washington Post’ last week. “I’ve come to believe that we shouldn’t make so many important decisions about speech on our own.”
The main focus of his meeting in Ireland was to discuss regulatory issues and to discuss Facebook’s position in regards to misinformation and recent scandals which have impacted trust in the company. Of course, there was issues and positions he took which did not sit well with many, including Facebook’s position on GDPR regulations brought about by the EU.
Facebook in Ireland
While a meeting between Zuckerberg and regulatory bodies in Ireland was welcomed it will hardly affect the continuing expansion and operations of the company in Ireland. As one of the largest employers in the silicon docks and with plans for further expansion, the visit by Mr Zuckerberg could be viewed as nothing but a press trip to bolster the companies reputation.
Only in January did Facebook announce plans to lease the ground of the current AIB HQ. This expansion will coincide with a recruitment drive aiming to bring in or hire a further 1000 people bringing the companies number to just over 5000 in the Dublin region.
With such strong ties in Ireland Facebook, whille listening to the regulatory bodies will still be under the umbrella that is Zuckerberg and Facebooks.
One area that was a hot topic was Facebook’s move of over 1.5 billion of its users away from Ireland so they would not be affected by the EU’s GDPR introduction. This is while he is now on a tour highlighting the need for more regulation.
Along with this his defensiveness and sometimes apparent aloofness to the impact of regulations on the platforms he heads, Mr Zuckerberg did not seem at odds with the regulators. As a company owner, he is free to do as he chooses, it is his sometimes contradictory approach which has caught some people off guard.
What he said about GDPR “GDPR is as important for what it doesn’t do, which is require companies to localise data and store systems data in a given country,”.
“We can take this for granted in a country like Ireland or in the US where there’s a strong rule of law and respect for human rights. But in a lot of the places around the world, those aren’t a given. What we see is that there are some competing visions for how the internet goes and what the future of that will be. We see a lot of pressure in a number of countries localising data in a way that could put people’s data more accessible to governments and in harm’s way.”
This can be taken as both a warning and a threat as he is correct in the fact that there are far less scrupulous entities who would use the information the Facebook controls.
Adrian Weckler commented on the visit, “He also wanted to shore up morale among Irish staff, often in the firing line in successive, unending PR scandals and privacy crises”. This is most likey party due to the recent CPL scandals. Staff have voiced their disapproval at inadequate training and preparations in regards to some of the material they view online.
Overall Mr Zuckerbergs visit was seen as both a charm offensive and also a step in the right direction in regards to regulations. Progress can of course not be made without the input of one of the worlds towering tech and information figures.