Government endorses Report of Review Group on Auditing and approves establishment of Oversight Board on an Interim Basis

Mary Harney, Tánaiste and Minister for Enterprise, Trade and Employment today (Tuesday 23rd January 2001) announced that the Government has approved the establishment of an Oversight Board to supervise the regulation by the accountancy bodies of their members’ professional standards. The establishment of the Board was one of the key recommendations contained in the Report of the Audit Review Group. The Board will initially be established on an interim basis pending the drafting of the necessary company law legislation. Once this legislation is enacted the Oversight Board will be set up on a statutory basis.

The Tánaiste confirmed that the Government has agreed the implementation of eighty recommendations contained in the Report of the Review Group. These relate to the regulation of the audit profession, auditor independence, the auditing of financial institutions and the role of auditors in ensuring compliance with statutory provisions. Implementing these recommendations will involve legislative changes, as well as changes to the constitutions and professional standards of the main accountancy bodies.

Announcing the Government decision the Tánaiste said, "I welcomed the Review Group’s Report at the time of its publication last July and at that time stated my intention to bring a package of proposals to Government as soon as possible to seek approval to implement recommendations contained in the Report. I was extremely pleased with the comprehensive nature of the Report which is a fundamental examination of the practices, structures and rules of the auditing and accountancy profession. The recommendations that we are now implementing will bring about a process of renewal and reform in the professional standards and legislation governing the auditing and the accountancy profession".

The Tánaiste continued, "following from the publication of the Report I asked the professional accountancy bodies, the users of accountancy services and the public in general to make known to me their views on the Report and its eighty recommendations. Thirty four submissions, which were generally positive about the Report, were received by my Department up to the end of October. All of these submissions were carefully examined. I was particularly pleased that the comments from the accountancy profession were much more positive than those reported at the time of the Report’s publication".

The Tánaiste indicated that there are two main issues raised in a number of submissions that she intends to further consider during the drafting of legislation. They relate to the extent the new rules will apply to small and medium sized firms and whether some of the Report’s recommendations should be implemented by way of codes of conduct rather than in primary legislation. "My purpose", said the Tánaiste, "is to achieve an appropriate balance between new and necessary regulations and the cost to and burdens on business, particularly small businesses". This approach is also in line with Government policy in relation to regulatory reform and reducing red tape.

The Tánaiste stated her intention to make appointments to the interim Oversight Board which initially will be asked to assist the Department of Enterprise, Trade and Employment in drafting the necessary legislation to establish it on a statutory basis and to draw up a business plan. The accountancy profession, business sector, trade unions, users of financial statements and relevant Government Departments will be represented on the Board. No more than two members of the Board will be accountants.

The Tánaiste concluded by indicating that, "the implementation of the recommendations in this Report in conjunction with the provisions of the Company Law Enforcement Bill, including the establishment of an Office of a Director of Corporate Enforcement, will ensure we have a stronger company law compliance and enforcement regime in place in Ireland which will encourage a new culture of compliance among all sections of Irish corporate life".

The Review Group on Auditing was established by the Tánaiste and Minister for Enterprise, Trade and Employment. Ms Mary Harney, TD following from the PAC Parliamentary Inquiry into D.I.R.T. The Review Group was asked to examine current arrangements for the regulation of the accountancy profession, auditor independence, the auditing of financial institutions and the role of auditors in ensuring compliance with statutory provisions. The Group, which was chaired by Senator Joe O’Toole, met between February and June 2000 and its final Report was presented to the PAC on 11 July and was further discussed at the PAC on the 28 November 2000.