The Government approved the draft scheme of a Bill to implement the recommendations of the review group on auditing last December. This legislation will include provisions to reform the regulation of and rules governing the accounting and auditing profession. Most significantly it will establish the Irish auditing and accounting supervisory authority on a statutory basis to supervise the regulation of the accountancy profession by the professional accountancy bodies.
The collapse of Enron in the US lead to fundamental questioning of the practices of the auditing and accounting profession, auditor independence, the quality of accounting standards and corporate governance structures within companies. The Bill, which is at advanced stage of drafting by the parliamentary counsel, contains provisions relating to all of these concerns.
In the light of the Enron affair my Department, in consultation with the interim board of IAASA, revisited the provisions in the draft Bill to ensure that the auditing and corporate governance failures associated with the Enron case are adequately dealt with in it. I am satisfied that this is the case in the light of information available on the collapse of Enron at this stage.
As well as the specific provisions in the legislation that will bring much greater transparency to the relationship between auditors and their clients, IAASA will also have specific powers to monitor the rules and standards of the professional accountancy bodies in relation to auditor independence to ensure that they are achieving their stated objectives and that they continue to be at the forefront of best international practice. For example, IAASA, if it considers it appropriate, will be able to compel accountancy bodies to amend their rules and standards in the light of the findings of the ongoing investigations in the US in relation to the role of Enron's auditors or any other developments at national or international level.