Credit Union Director Duties

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Credit unions have come under increasing scrutiny in recent years with more attention than ever focused on the duties of directors and the board. At a time of rapid change both within the credit union sector, and in the wider economy, keeping up to date is critical, explains Fiona O’Sullivan, Director, Audit & Assurance.

A Central Bank report published earlier this year shows that governance and risk management continue to challenge credit unions. The board of each credit union is responsible for its control, direction and management and must ensure that directors have the skills and expertise to adequately oversee operations — this includes being aware of the rules and regulations governing who can serve on the board, in what capacity, and for how long. Individual directors must be able to devote sufficient time to their roles and responsibilities and must keep up to date with their legal and regulatory obligations.

Improving standards

While governance standards are generally improving, the Central Bank report shows that 60 percent of risks identified in credit unions relate to governance and operational issues. Typically, these include failure to challenge internal audit, failure to adequately monitor the quality of risk management and compliance, and failure to adequately review the performance of individual directors, management and key staff. These problems occur in credit unions of all sizes, not just in smaller entities.

The report provides a useful summary of supervisory expectations:

  • An effective and comprehensive governance framework should be evident in the credit union, including clear accountabilities and an appropriate performance management framework for relevant officers and staff.
  • Effective engagement with internal audit, risk management and compliance functions should be evident. Boards should have an awareness, challenge and undertake action in relation to findings and issues identified by these functions.
  • Clear separation between the roles of the board (non-executive) and management (executive). This separation should be underpinned by clear roles, responsibilities, reporting lines and accountabilities.
  • A strategic, forward-looking focus at board level, with quality discussion and challenge of strategic plans and associated targets evident at board meetings. The ongoing monitoring and tracking of metrics to assess the implementation and effectiveness of the strategic plan is key to effective governance and driving the future direction of the credit union.
  • Appropriate and timely reporting to the board in order to support decision-making on key strategic issues. Such reports should be well understood at board level and there should be evidence of discussion, challenge and follow-up from the board in relation to such reports.

Risk governance

The report highlights the importance of internal audit, risk management and compliance, stating:

“Those credit unions demonstrating stronger governance have typically moved beyond a mere ‘tick-box’ compliance attitude to exhibiting a more integrated risk governance culture, with a strong awareness and understanding of the impact of unmanaged risk. Such credit unions are more likely to leverage appropriately the important supports to the board provided for in the 2012 enhanced governance framework of internal audit, risk management and compliance in order to provide them with an improved understanding of the risk profile of their credit unions so that they can drive the necessary changes and improvements.”

Directors should keep in mind that, as in other sectors, the risks that credit unions face continue to evolve as circumstances change.  Risk registers and policies must be regularly reviewed and updated to take account of regulatory, sectoral, economic and technology-related developments. Recent regulatory developments include the changes to the investment and liquidity framework being implemented in 2018. Emerging economic risks include Brexit while cyber risks include vulnerabilities in areas such as fintech, cloud computing, mobile technologies, the Internet of Things and ‘big data’. Directors are responsible for ensuring that these, and other existing and emerging risks are identified and documented and that appropriate plans are devised and implemented to mitigate them.

How we can help

Understandably, with the regulatory and compliance burden increasing and new and complex challenges emerging, credit unions and their directors need help to keep pace with developments. Crowleys DFK has more than 25 years’ experience advising clients in this sector and offers a broad range of specialist services, including governance support, to assist boards and directors to meet their legal and regulatory obligations.

For more information and to find out how we can help, please get in touch.

Talk to us

 

Fiona O’Sullivan
Director, Audit & Assurance Services
fiona.osullivan@crowleysdfk.ie

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Crowleys DFK Partner meets Minister Bruton

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Crowleys DFK Partner and Chairman of the Ireland Malaysia Business Association, Vincent Teo, had the pleasure of meeting Minister Richard Bruton, Minister for Education and Skills, and Ambassador Eamon Hickey, Irish Ambassador to Malaysia, at Enterprise Ireland’s business breakfast in Kuala Lumpur on Thursday, 20th September.

Minister Bruton addressed the local network of business and education leaders for Enterprise Ireland’s business breakfast as part of his five day education and trade mission to Malaysia and Indonesia.

“I am delighted to have the opportunity to greet an Irish Minister in my home country,” Vincent commented, “Congratulations to Ambassador Hickey and Enterprise Ireland on hosting a successful business breakfast.”

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Crowleys DFK Partner meets the Irish Ambassador to Malaysia

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Crowleys DFK Partner and Chairman of the Ireland Malaysia Business Association, Vincent Teo, met with Ambassador Eamon Hickey, Irish Ambassador to Malaysia at the Embassy of Ireland in Kuala Lampur last week.

Vincent commented, “I am very grateful to have had the opportunity to meet Ambassador Eamon Hickey in the Embassy and for his continued support to our efforts in promoting bilateral trade relations between Ireland and Malaysia.”

“We plan to reach out to the relevant Ministries in Malaysia in the hope of hosting a ministerial visit to Ireland in the near future,” stated Vincent.

The objective of the Irish Malaysia Association is to support bilateral business links between Ireland and Malaysia. Crowleys DFK is a patron member of the IMA and is dedicated to supporting its development.

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Crowleys DFK Accounting Technician Trainee Showcased in Cork’s Evening Echo

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Jacky Lorimer, Accounting Technician Trainee in the firm’s Outsourcing Department, is showcased in the August 14th edition of Cork’s Evening Echo.

Working 4 days a week in Crowleys DFK and studying 1 day a week in Cork College of Commerce, Jacky has been able to get started on her dream career as a result of Accounting Technicians Ireland’s “Earn as you Learn” scheme.

Read or download a pdf version of the article here.

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Amendments to Dwelling House Exemption

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There were two amendments made to the Capital Acquisitions Tax Dwelling House Exemption by Finance Act 2017, in such cases where the recipient of the dwelling house is a dependent relative of the disponer.

A ‘dependent relative’ is defined as a relative who is permanently and totally incapacitated due to mental or physical infirmity from maintaining himself or herself, or who is of the age of 65 years or over at the date of gift or inheritance.

The position following the amendments is as follows:

  1. In the case of a gift or an inheritance of a dwelling house taken by a dependent relative, the dwelling house is not required to have been the only or main residence of the disponer.
  2. A gift of a dwelling house that becomes an inheritance as a result of the disponer dying within two years of making the gift can qualify for the dwelling house exemption, where the beneficiary is a dependent relative.

All other provisions to the exemption remain unchanged.

The amendments to the Dwelling House Exemption take effect from the date of passing of the Finance Act 2017, 25 December 2017.

Should you require any further details on the above, please contact a member of our Tax Department.

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Revenue Publishes Updated Transfer of Business Document

On 31st July 2018, Revenue published an updated Transfer of Business document, revising the previous document which was reviewed in December 2017.

There are significant differences between the two versions when it comes to which transfers of property come within the transfer of business (TOB) provisions.

 

The December 2017 document confirmed Revenue’s view that TOB applied:

  • where a property had been let on a continuing basis and was being sold to a tenant who is an accountable person; and
  • in the case of a vacant property that was let or partially let on a continuing basis in the past.

Whereas, the 31st July 2018 version confirms that TOB will not apply to:

  • “The transfer of a let property to the tenant…as the only asset being transferred in those circumstances is the property itself and the transfer of a property without any additional assets, which together with the property would constitute an independent undertaking…regardless of how the property had been used prior to its transfer”; and
  • “A transfer of [property], of itself, without any additional assets (such as a letting agreement), which together with the immovable good, would constitute an independent undertaking…regardless of how the [property] had been used prior to its transfer”.

Vendors, their solicitors and tax advisors should review all property transactions currently in progress to ensure the correct VAT treatment is being applied in light of this updated Revenue guidance.

For further assistance please get in touch.

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Crowleys DFK launches Overview Video on Foreign Direct Investment Service Offering

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Crowleys DFK is delighted to launch an overview video of the Firm’s Foreign Direct Investment service offering.

Edward Murphy, Partner and Head of Foreign Direct Investment and Siobhán O’Hea, Partner, Tax Services provide an insight into how Crowleys DFK can help foreign owned companies to set up operations in Ireland.

For more information on our Foreign Direct Investment service offering, please contact Edward Murphy.

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Avoiding VAT Pitfalls on Property Transactions

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  • VAT pitfalls on property transactions
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Crowleys DFK are currently running a series of CPD accredited VAT on Property briefings for solicitors in Cork and Dublin. The purpose of the seminars, presented by Tax Partner Siobhán O’Hea, is to raise awareness of common VAT pitfalls on property transactions.

VAT on property can be a complicated area but it is vital to thoroughly investigate the potential VAT impact before embarking on any property transaction, Siobhán advises.

“We are seeing problems crop up in many different situations. For example, more people have got involved in letting property in recent years and this is an area where VAT issues can often arise. While lettings are exempt from VAT, landlords can opt to tax the letting and charge 23% VAT on the rent. This can be advantageous if the landlord wants to claim repayment of VAT incurred on the acquisition or development of the property, however it is important to be aware that there are restrictions. For example, you cannot opt to tax the letting if the property is occupied for residential purposes or occupied by the landlord or a person connected with the landlord.

“On sales of commercial property, liability to VAT depends on whether the property is considered ‘new’. There are Revenue rules governing the definition of ‘new’ for property VAT purposes. Generally, the supply of older properties is exempt from VAT however, in some circumstances, the vendor and purchaser may jointly opt to have the transaction subject to VAT.

“Where property is supplied in connection with an agreement to develop the property, these transactions are always taxable.

“In our experience, there are VAT pitfalls in many every day property transactions and these can prove very costly for clients. This is why Crowleys DFK are running these seminars for solicitors. It’s an opportunity to raise awareness and to help ensure common mistakes are avoided,” Siobhán concluded.

For further information on Crowleys DFK VAT briefings, please get in touch.

Talk to us

Siobhán O’Hea
Partner, Tax Services
siobhán.ohea@crowleysdfk.ie

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The Importance of a Company’s Registered Office

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Choosing an appropriate location for a company’s registered office arises under the Companies Act 2014. It is the duty of each director and secretary of a company to ensure the requirements are complied with.

The location must be disclosed publicly on the Companies Registration Office (CRO) website.

It must be an actual physical location within the State. A post office box number is not sufficient.

Company statutory registers must be kept at a Company’s registered office and members of the public can inspect registers at that location. Documents may be delivered by hand to the registered office.

It is the address to which all legal notices, including correspondence from the CRO and at times the Revenue Commissioners, may be sent.

Any document will be validly served on a company by leaving it at, or sending it by post to the registered office of the company.

Crowleys DFK’s Corporate Compliance team have been providing a professional registered office facility for a number of years through offices located in Cork and Dublin.

For further information please contact Emma Dunne, Manager of our Corporate Compliance Department.

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U.S. Tax Reform and it’s impact on Ireland

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President Trump signed into law H.R. 1, originally known as the “Tax Cuts and Jobs Act”, on 22 December 2017, resulting in the most significant U.S. tax reform in over 30 years.

The key business measures in the U.S. tax reform package are:

  • The corporate income tax rate is reduced to 21% from 35% with effect from 1 January 2018.
  • There is a move to a full dividend exemption regime for dividends from non-US companies, requiring a 10% holding.
  • As part of the transition to a participation exemption regime, a one-time mandatory tax will be imposed on foreign earnings retained outside the US. This “deemed repatriation” tax applies in respect of any company in the world (including Ireland), if it is controlled by either a U.S. company or by U.S. citizens. This includes either:

(a) any company where the shares are owned (directly, indirectly or constructively) 50.01%+ by US shareholders, or

(b) where 10% of the shares are owned by a US corporate shareholder.

  • The deemed repatriation tax rates for the transition to a territorial tax system are 15.5% for earnings held in cash or liquid assets and 8% for the remainder.
  • There will be a minimum tax on profits arising to foreign subsidiaries of US multinationals from the exploitation of intangible assets, known as “global intangible low-taxed income” (GILTI).
  • A “base erosion anti-abuse tax” (BEAT) will be adopted. The BEAT will generally impose a minimum tax on certain deductible payments made to a foreign affiliate, including payments such as royalties and management fees but excluding cost of goods sold.
  • Interest deductions for tax years beginning after 31 December 2017 are restricted to 30% of EBITDA (earnings before interest, tax, depreciation and amortisation). For tax years beginning after 31 December 2021, the limitation will be 30% of a measure similar to EBIT (no add-back for depreciation and amortisation).
  • Other provisions target cross-border transactions, including revised treatment of hybrids and a new special tax incentive for certain foreign-derived intangible income.

Any business with U.S. connections should consider what exposure to U.S. tax (if any) may exist in light of the above changes.

Should you require any further details on the above, please contact Edward Murphy, Head of Tax Services.

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