The Institute of Chartered Accountants in Ireland

ABAF Annual General Meeting

24th April 2008

Simone Doran, Director on behalf of

Vincent Sheridan

President

Welcome

• Thank you for the invitation• Apology for change of face• Overview of the economies of N.Ireland and the UK• Challenges for the Profession• Global Impacts for professional bodies • ICAI• Lisbon Treaty

Irish Economy

1997 2007

GDP = EU average GDP +35%1.4m at work 2.1m at work (12.5%

foreign)€330m roads investment €1.7bnR&D investment €220m €1bnChild Benefit €38pm €160

Between 2002 and 2007 GDP growth averaged 5.3%

Irish Economy today

Economy slowing down but still strong

• GNP Growth forecasts range between 1.6% and 2.8%• Debt/GNP ratio end 2007 was 26%• Unemployment 4.5% (participation rate 69% - target 70%)• CPI inflation 5%• Falling house prices, slowing construction sector • 6% GNP p.a. committed to National Development Plan• National Pension Reserve Fund €21.3bn (since 2001)

Northern Ireland

• Political developments 2007 have led to new confidence.• Record employment levels• Overdependence on public sector and transfers from the UK• Executive committed to economic development• ICAI active in Varney debate – 12.5% Corporate Tax Rate.• Mid-April Agreement between NI Executive and Irish Government on IFSC sub-offices locating in N. Ireland. Irish Regulator and RoI tax. Skills shortages in RoI offset.

UK Economy – short-term indicators

•GDP rose by 0.6% in Q4 2007, 2.8% higher than Q4 2006

•Debt as percentage of GDP – 36.7% end March •Employment rate – 74.9%•29.51m at work end Feb., highest since 1971•CPI at end March, 2.5%

Three major UK economic events

• Northern Rock crisis – Bank of England provided guarantees to

stabilise the situation safeguard depositors protect the system

• February – legislation introduced to take Northern Rock into a temporary period of public ownership

• Special Liquidity Scheme, introduced this week.

The Profession – Challenges

Regulatory environment IAASA – established 2006 ODCE – established 2002 Financial Regulator and FSA Professional Oversight Board

Business Regulators – Energy, Communications, Transport, Health & Safety Authority, National Employment Rights Authority, Data Commissioner, etc. Ombudsmen – FS, Public Services, etc.500 state agencies, boards, authorities and quangos in Ireland (Fine Gael) Chartered Accountants Regulatory Board

CARB - unique

• Chartered Accountants Regulatory Board, est. 2007.• Chaired by former Financial Regulator,

Dr. Liam O’Reilly• More than 50% of Board members are non-

accountants• Oversight of Chartered profession in Ireland• Funded by but operationally independent, of ICAI.• Responsible for regulation, quality assurance and

disciplinary processes.• €4.5m budget

The Profession - Challenges

• Regulation of the Term Accountant ICAI secured Ministerial support for regulation of the term “Accountant” in Ireland. Precise recommendation awaited in CLRG Report (May/June 2008) CCAB campaign UK, under discussion, less progress.

• ICAI Student intake grown from under 1,000 to 1,700+ over last 4 years

All accountancy bodies in Ireland growing Demand still intensive, despite “slowdown”

The Profession - challenges

• 8th Statutory audit directive – many aspects already in UK via FRC and in Republic via IAASA, but transposition awaited in RoI.• McCreevy Audit package

recommendation on auditor liability public consultation on ownership of audit firms recommendation on quality assurance of audits of listed companies

• Auditor Liability, current situation can be agreed by contract in UK No LLPs in RoI auditors not allowed incorporate. RoI awaiting CLRG report, but hopeful of positive outcome.

The Profession - Challenges

• New Anti-Money Laundering Guidelines arising from 3rd AML Directive in place in the UK, awaiting implementation in RoI.• New Companies Act UK in place.• Consolidated Companies Legislation in the RoI due for publication later 2008 by CLRG.• IFRS simplification – standard for SMEs, supported by ICAI• EU simplification proposals ¯ exemptions for small companies from filing financial information and establishment of micro-entities. Genuine debate yet to take place in UK or RoI.

Globalisation and the Profession

Ernst & Young proposed merger of European and Asian firms implications for professional bodies?

Existing international co-operation: Common Content Initiative (7 Institutes) FEE IFAC – ICAI chairs Education & Ethics. Boards

member of PIAB. Global Accounting Alliance – 9 institutes XBRL

ICAI Profile

•16,691members at 31st Dec. 2007.11,149 RoI 66%3,972 UK and NI 24%267 in Europe 2%1,303 rest of world 8%

• Business Members 60%• Gender 69% male• Student recruitment profile, 53% female (trend over last ten years)• 68% membership aged under 44

ICAI Financials

• Reserves now stand at €16m• Sub increases 2% for 2008• New leased training centre & office in Belfast• €50m training centre & office being developed

in Dublin• Healthy Financial position

Latest ICAI Headline Activities

Publishing – Commenced 2006• 35 publications by June 2008• Provide technical information to members & general information to a wider

audience.• Enhance CA Brand • Raise profile of ICAI & its members Lifelong Learning• 13 post ACA qualifications with 6 already launched• Use of technology – eCPD, Harvard ManageMentor Plus, Nelson Croom.• My CPDWebsite • New interactive website to be launched end May.Tax Services • Unique on-line consolidated Irish taxation resource

Lisbon Treaty

Ireland only country consulting its electorate• Irish referendum on Lisbon Treaty not confirmed but believed to be 12th June.• ICAI Council in March agreed to support the yes campaign.• Key concern – CCCTB• Treaty confirms national veto in the area of tax.• Some countries could decide to adopt CCCTB but cannot force it on others.

• Thank you very much