Tánaiste responds to publication of Percy Report

The Tanaiste and Minister for Enterprise, Trade & Employment, Mary Harney, today (Friday 7 December, 2001) confirmed that she had received the report of Professor J.P. Percy, the Special Investigator appointed by the ICAI to enquire into matters arising from the Report Public Accounts Committee DIRT Inquiry. She said that Professor Percy's Report was currently being examined in detail in her Department.

The Tánaiste said "From a preliminary review of the Report's contents and conclusions there does not appear to exist a prima facie case of misconduct against any members or member firms of the ICAI. That, of course, is welcome."

However the Tanaiste notes that Professor Percy concluded that the external auditors (of banks) `followed the audit standards that were applicable at the time' (Paragraph 2.13).

She said "This once again underlines the serious weaknesses in the rules governing the audit and accountancy profession in place at that time. Those rules and regulations are now undergoing a process of reform as a result of the recommendations of the Review Group on Auditing which I established following from the PAC DIRT Report."

The Tánaiste continued "the Irish Auditing and Accounting Supervisory Authority (IAASA) has already been established on an interim basis and I intend to bring a general scheme of a Bill to Government before Christmas to establish the Authority on a statutory basis. That legislation will, in effect, implement the recommendations contained in the Report of the Review Group on Auditing."

"Once this legislation is enacted a much more rigorous and open regulatory regime will exist compared to what was in place in the period covered by Professor Percy's report. This is necessary if we are to restore public confidence in the audit and accountancy profession," she concluded.

Notes for Editors

It is envisaged that provisions contained in the new legislation will include the establishment of the Irish Auditing and Accounting Supervisory Authority (IAASA) on a statutory basis. Functions currently discharged by the Tánaiste in relation to the regulation and recognition of auditors and accountants will be transferred to IAASA which will have dedicated professional staff to undertake this function. It will also have enhanced powers to impose financial sanctions on accountancy bodies where regulatory failures occur and to undertake independent reviews of members of accountancy bodies. Accountancy bodies will have to submit and get prior approval of IAASA for their regulatory programmes and disciplinary procedures. The Tanaiste intends that this legislation will also include additional disclosure requirements on companies in relation to the fees paid to audit firms in payment for services other than audit services