Companies (Statutory Audits) Bill 2017: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

I will continue from where I finished. Section 7 implements an option in the European Union, EU, directive that was not previously exercised. It provides that the Irish Auditing and Accounting Supervisory Authority, IAASA, may add to the contents of the audit report. This will give IAASA the flexibility to ensure that Irish audit report requirements are kept up to date and in line with international best practice into the future.

Sections 9 and 10 are not related to the EU audit requirements but together introduce an important and urgent amendment to the current law on filing a company's annual return. The changes in the Bill effectively reinstate the rules that were in place prior to the 2014 Act but now in the District Court. This is because the number of orders granted under the current law is undermining advancements made in timely filing of annual returns. This is an important transparency measure and safeguard for third parties such as suppliers and other creditors who rely on the information supplied by annual returns.

Sections 16 to 45 are concerned with the functions and powers of, and the interactions between, the bodies charged with the various aspects of audit oversight. This is an appropriate point to speak about the nature of audit oversight and how it is arranged under the Bill. Public oversight of auditors encompasses five specific tasks. These are the approval and public registration of people and firms to act as statutory auditors; the adoption of auditing standards; the continuing education of auditors; quality assurance inspections of audit firms and auditors; and a system of investigations and discipline. Until June 2016, the oversight system was arranged with a number of competent authorities. The main examples were the Irish Auditing and Accounting Supervisory Authority, known as IAASA, and the six recognised accountancy bodies. With the introduction of the new EU laws, there has been a move to a structure with just one competent authority that is to have the ultimate responsibility for public oversight of audit. The Bill retains the designation of IAASA in this regard, which was introduced in the 2016 statutory instrument. This gives IAASA the responsibility for the oversight of all five tasks.

I welcome this change. It is clearer and reduces the possibility for gaps or conflicts. However, the recognised accountancy bodies have an acknowledged expertise and experience in the area of audit oversight. This has been built up over many years. They have made an important contribution to the development of audit as a profession and consequently it is right that we recognise that fact and secure their involvement into the future. For these reasons, the Bill takes an option in the EU directive and sets out the everyday management of some of the five tasks to be carried out by the recognised accountancy bodies. The model in the Bill follows from the one put in place in 2016 and introduces some new features to further support good co-operation and ensure effective enforcement. The recognised accountancy bodies conduct the approvals of all statutory auditors and oversee their continuing education. They also have responsibility for quality assurance inspections and investigations and discipline with respect to audits of businesses that are not public interest entities.

When it comes to the audits of public interest entities, IAASA is charged under the EU regulation with performing quality assurance inspections of those audits. Moreover, any investigations that arise from those inspections must be done by IAASA and any resulting disciplinary action is also a matter for IAASA. IAASA is also responsible for the adoption of auditing standards. The recognised accountancy bodies perform their tasks as a condition of being "recognised' and under the supervision of IAASA. Therefore, alongside provisions on the objects, governance, functions, funding and powers of IAASA are sections covering the recognition of the accountancy bodies and the grounds for that recognition. A key part of recognition is that the body carries out oversight tasks on its own members to the satisfaction of IAASA. Accordingly, the Bill provides powers for IAASA to direct or intervene in how the tasks are performed.

Section 28 enables IAASA to take a task back from a body on a case-by-case basis. Section 30 provides the mechanisms where a body is unable to perform an oversight task and allows another body to take over that task. Section 32 extends IAASA's existing powers to undertake certain inquiries to include an inquiry into how a recognised accountancy body performs the tasks. Section 33 provides for new settlement procedures which are designed to avoid the need for lengthy legal proceedings in cases where both parties agree. These changes in the oversight system are designed to ensure that IAASA has the appropriate capability to match the fact that it has ultimate responsibility. They are also intended to give flexibility, so that the recognised accountancy bodies and IAASA can work together to provide a streamlined and efficient service.

Sections 34 to 39 set out IAASA's investigation and sanctioning powers with respect to auditors. They also make some amendments to those powers with respect to other members of accountancy bodies that are not approved statutory auditors. Section 35 is detailed and provides for administrative sanctions. It includes rules on the application and publication of those sanctions and on appeals and reporting of breaches. Similar to earlier provisions, there are also new proceedings here for settlement by agreement, this time directly with auditors. These are not required by the directive, but are considered important tools to avoid lengthy and unnecessary legal proceedings. The maximum fine is €100,000 for an individual statutory auditor or per statutory auditor in the case of a firm, which could result in a fine of up to €5 million if a firm has 50 auditors. In the interests of fair procedures, these sanctions are subject to court approval unless they are agreed as part of the settlement process. The fines are increased from those in the 2016 statutory instrument. This section also includes additional administrative sanctions not contained in the directive in order to better align IAASA's powers with the sanctions the recognised accountancy bodies may apply to their members.

When it comes to directors of companies who have contributed to breaches of audit rules by a statutory auditor, the Director of Corporate Enforcement is the competent authority. The Bill provides sanctioning and investigation powers for the director that are similar to those of IAASA. The remaining sections here are technical, mainly relating to operational matters, such as exchange of information, avoidance of conflicts of interest and delegation arrangements within IAASA.

Section 51 inserts the new Part 27 into the Companies Act 2014. This Part contains 124 sections and is arranged in 21 chapters. In summary, this Part sets out in detail the rules governing how statutory audits must be carried out, the standards that auditors must meet and how IAASA and the accountancy bodies supervise those audits and auditors. With respect to the conduct of audits, this Part provides for IAASA to add to international auditing standards and to allow for a proportionate approach to small undertakings. There are also provisions on the additional report that an auditor must prepare in the case of a client that is a public interest entity. These provisions enable IAASA to add to the requirements of the report and state that the report must be given to the directors and they may submit it to regulators such as the Central Bank and the Revenue Commissioners. There are also obligations on public interest entities, for example, the requirement to have an audit committee. Some of the more high profile requirements of public interest entities, such as audit rotation and the cap on non-audit services, are provided for directly by the EU regulation.

The question of the mandatory period for the rotation of its statutory auditor by a public interest entity was considered thoroughly in the context of determining the approach taken in SI 312 of 2016 and it was decided that the appropriate period for Ireland was ten years. Members may recall that this is in line with the recommendation of the report of the Joint Committee of Inquiry into the Banking Crisis published in January 2016. An exceptional extension to this period of up to two years is permitted, subject to an application to and determination by IAASA.

The provisions in Part 27 include requirements that both IAASA and the bodies have quality assurance inspection regimes in place. They also provide for the investigation and disciplinary procedures of the accountancy bodies, the rules for the public register of auditors that is kept by the Registrar of Companies and the process for aptitude tests. Audit offences and the procedures for investigating and sanctioning auditors are also included. Measures on third country auditors are contained in this Part.

Finally, sections 53 to 72 make amendments to a number of legislative Acts to replace the term "public auditor" with "statutory auditor". This does not change the requirements of the audits to be carried out under these legislative Acts.

This brings me to the end of this substantial legislative measure. A small number of amendments are under consideration which I plan to bring forward on Committee Stage. Deputies may have other proposals for amendment and I look forward to debating those in due course. I commend the Bill to the House.

Fianna Fáil supports the Companies (Statutory Audits) Bill 2017 and will examine amendments to strengthen it further and to ensure there is proportionate impact on small and micro-sized businesses following its enactment. However, we have serious reservations about the loss of the audit exemption to small companies. I will return to this later.

As a policy response to the global financial crisis, the European Commission proposed an audit package of legislative reforms in 2011 to strengthen the independence of auditors and to ensure further transparency for the financial information of companies, while creating a single market for statutory audit services. The statutory audits Bill enshrines elements of the EU audit package proposals, comprising a 2014 EU directive and regulation, in primary law with respect to the regulation of statutory audits and auditors. However, there has been haphazard implementation of the EU audit package in Ireland. This has necessitated creating a single regulatory framework at this juncture to ensure coherence in primary legislation for statutory audits and practitioners.

With regard to white collar crime, the Government’s announcement last November that the statutory audits Bill would form part of the package of reforms to enhance powers to clamp down on white collar crime was disingenuous. In fact, the package being spun was a rehash of existing legislative proposals not enacted, which date back as far as 2013. White collar crime reforms have been a fig leaf under Fine Gael. In the 2011 programme for Government, many commitments were entered into in this area but were not delivered.

The collapse of the longest running criminal trial in history, involving charges against Seán FitzPatrick, represented a damning indictment of the Office of the Director of Corporate Enforcement, ODCE. Ministerial oversight of the ODCE under successive Fine Gael Ministers with regard to insufficient staff resources leaves, and has left, a lot to be desired. This was the biggest case the ODCE was ever involved in but it was left exposed. To this day, there has been no form of accountability. The intention to establish the ODCE as an independent agency to enforce company law has long been signalled and is overdue. The Minister, Deputy Humphreys, must honour the commitment she has given to publish an account of the investigative failures identified by Judge Aylmer and the steps that are being taken to address them as a result of the trial.

As I said, we have serious reservations about the loss of the audit exemption. This will impose an unnecessary administrative burden on the SME sector when the Government should be doing all it can to reduce the cost of doing business in Ireland. SMEs are the backbone of the domestic economy, with nearly 1 million people employed in approximately 238,000 active enterprises. Some 92% of all SMEs are micro-enterprises, having fewer than ten employees. The Government has turned a blind eye to the concerns of accounting practitioners and the SME community with the proposal in the Bill to change section 343(5) of the Companies Act 2014. This would result in the automatic loss of an audit exemption for companies that apply to the courts to extend their filing deadline. Currently, a company can apply to the District Court for an extension to file its annual return. If the court is content, an extension may be granted and the annual return is considered to be received on time.

The consequences of the late filing - penalties or loss of audit exemption - will not apply for that annual return. However, the Bill proposes that the application must be made via the High Court and that the District Court will only be empowered to waive the filing fee if a company is late in filing. Accounting representative bodies have strongly criticised the loss of the audit exemption for late filing. Although a strong regulatory environment to ensure compliance is necessary, any new laws must impact proportionately on small businesses. Although the audit exemption mainly applies to small and micro companies, the cost of applying to the High Court will be prohibitive and, according to the Institute of Certified Public Accountants, outside the financial capacity of most such companies. It would also place a disproportionate administrative burden on the SME sector, which is contrary to the Government policy of reducing costs for small businesses. Accountancy bodies have said the audit exemption loss for late filing is an overly punitive sanction and makes section 345 ineffective in all cases, including genuine force majeure circumstances. On a practical note, this would result in companies changing accounting firms at the very last minute due to the fact that many such firms are not registered auditors.

The Consultative Committee of Accountancy Bodies considers this administrative and financial burden to be:

disproportionate to the late filing offence for small companies. The cost and disruption which can arise from switching accounting services provider seems to us to be contrary to government policy to ensure Ireland remains an attractive business environment for companies of all sizes.

The Government will say that in 2016 there was a large increase in applications to the District Court for late filings and audit exemptions. It is likely that resulted from the very uncertain financial reporting environment for small businesses that year, which was due to the severe delay in the Government transposing a 2013 EU accounting directive. The Government was over two years late in enacting that directive in Irish law, which was alarming considering it is to the benefit of Irish SMEs as it simplifies financial reporting requirements and reduces the administrative burden and compliance cost on such companies.

We look forward to addressing the issues I have highlighted on Committee Stage.

As this is my first recent exchange with her in the House, I would like to congratulate the Minister for Business, Enterprise and Innovation, Deputy Humphreys, on her appointment before Christmas. I wish her well in her new role and look forward to working constructively with her on several issues under her remit over the remainder of the term. I thank the staff of the Oireachtas Library and Research Service for their work, assistance and briefing on this complex and lengthy Bill. As usual, their assistance was excellent and made our job far easier. Unfortunately, I was unable to attend a presentation on the Bill in the AV room but a very informative and helpful video was produced, which I watched.

The Bill stems from a European-wide reform of auditing practices, introduced in response to the financial crisis that crippled Europe and bankrupted this country almost a decade ago now. Although the financial crisis across Europe was severe, it was catastrophic in Ireland, primarily due to the mismanagement of our finances by Fianna Fáil and its totally laissez faire approach to regulation, to the benefit of its friends in the banks. The European reforms culminated in the EU audit package, which consists of regulation 537/2014 and directive 2014/56/EU, which amended a previous 2006 directive. The mandatory aspects of the directive and regulation were introduced into Irish law via Sl 312/2016. This Bill aims to enshrine the provisions of the statutory instrument into primary legislation, in addition to implementing the optional provisions of the audit directive and regulation, and to consolidate it all into one piece of legislation. The key aims of these reforms will place new obligations on statutory auditors designed to enhance their independence and the quality of their audits, place new and more stringent obligations on companies known as public interest entities and designate the Irish Auditing and Accounting Supervisory Authority, IAASA, as the competent authority with ultimate responsibility for the oversight of statutory auditors.

As all Members know, audits are incredibly important tools for determining through an examination of information such as bank balances, bookkeeping records and financial transactions whether an organisation is providing a fair and accurate representation of its financial position. That information is critical for investors, creditors and stakeholders of undertakings and it is crucial that it is accurate and reliable. Reform and changes are needed as a number of deficiencies in audit practices were identified in the aftermath of the financial crisis. The collapse of Anglo Irish Bank and the nationalisation of other Irish banks are clear and expensive reminders of how old auditing rules failed in financial institutions here. Problems were also identified in this area on a pan-European basis. An excessive familiarity between the management of a company and its audit firm was identified as risking conflicts of interest and posing a threat to the independence of statutory auditors and their ability to exert thorough professional scepticism. A lack of choice of audit firms due to the dominance of certain global players was also identified as a concern.

The majority of changes under these reforms will affect public interest entities, PIEs. These include companies such as banks, insurers and companies that are listed on the main market. The Bill will introduce the option of the State having the ability to designate an undertaking as a PIE if the undertaking is of significant public relevance due to its size, business or number of employees. It also seeks to strengthen the audit committee for public interest entities. These committees are established to provide a link between the board of a company and its auditors, serving as an intermediary to maintain a level of separation and independence between a client and its auditors. Another change is the ability of an auditor to provide other services such as tax, bookkeeping, payroll, valuation and management services to the client company. By restricting the other services an auditor can provide to a client company, conflicts of interest are reduced. I note that Ireland is to avail of an exemption in regard to certain tax and valuation services.

The audit regulation also introduces enhanced cooperation between competent authorities across EU member states, in addition to the establishment of an EU body, the Committee of European Auditing Oversight Bodies. It is intended that the option to add to the requirements of an audit report is to be exercised in the Bill by giving the lAASA the power to lay down additional requirements to the contents of the audit report in the future should it see the need to so do. That is important as more detailed information provided under increased requirements will result in more transparent and informative audit reports.

Prior to the introduction of SI 312/2016, a number of competent authorities were designated for the purpose of public oversight, including the IAASA, the Registrar of Companies and recognised accountancy bodies. Article 23 of the directive now sets out that a member state will designate only one competent authority, which in Ireland will be the Irish Auditing and Accounting and Supervisory Authority. The Bill will allow the IAASA to delegate tasks under the directive to other authorities or bodies, although the IAASA retains ultimate responsibility.

The former Minister for Business, Enterprise and Innovation, Deputy Fitzgerald, cited the Bill as one aspect of the recently announced measures to enhance Ireland’s corporate, economic and regulatory framework. All measures that aim to govern and police the corporate environment are welcome as Ireland has a shameful history of allowing companies and individuals in some institutions to flout the law, bring the country to ruin and face no repercussions. The Minister, Deputy Humphreys, may be aware that I have raised serious concerns about the way in which white collar crime is currently investigated in this country. To say that it is done poorly would be an accurate understatement. My concerns centre on the performance and functioning of the Office of the Director of Corporate Enforcement, ODCE. I recently highlighted that it has brought no prosecutions or achieved any convictions in the past two years; in 2017 it only had 35 staff and five gardaí to police all white collar crime in Ireland; it has surrendered almost €6 million of its designated funding back to the State in the past three years; and it has only brought 43 prosecutions in the past decade, which is a shockingly low number over that period of time. I have also previously raised concerns about the number of director restrictions that the previous Minister, Deputy Fitzgerald, cited as being work done by the ODCE. Figures provided to me in a previous exchange indicate that some 886 restrictions were carried out by the ODCE, which is very questionable. The Bill will not give the ODCE more responsibility. However, the problems in that organisation are a discussion for another day.

This Bill will designate another body, the Irish Auditing and Accounting Supervisory Authority, IAASA, as the competent authority for oversight of statutory audits. IAASA will be responsible for ensuring the new standards and regulations concerning auditing in Ireland are met and it is imperative that the IAASA has the resources, personnel and oversight required to effectively monitor and police the new rules. This is something on which I will be following up.

The Minister will notice in our future exchanges that I am strongly in favour of holding criminals who sit in boardrooms to account in the same way other criminals are held to account. I note with concern that in the recently published legislative programme for the spring-summer Dáil session, the companies (enforcement) Bill, which aims to overhaul the Office of the Director of Corporate Enforcement, ODCE, is listed under the section for all other legislation and not under priority legislation. Having witnessed the collapse last May of Seán FitzPatrick’s trial due to the botched investigation by the Office of the Director of Corporate Enforcement investigation, I thought this would have made reform of the agency all the more urgent.

The numerous problems and failings I have highlighted to the Minister regarding the functioning of the ODCE provide more evidence for the imperative to restructure the agency. The Oireachtas Joint Committee on Business, Enterprise and Innovation has sent an invitation to the ODCE to appear before it and, subject to legal approval, hopefully will get a chance to probe these problems further. I urge the prioritisation of the companies (enforcement) Bill to ensure white collar crime begins to be investigated and prosecuted effectively.

I want to highlight an issue of concern with section 9 of the Companies (Statutory Audits) Bill 2017. This section deals with the issue of audit exemptions and in particular the proposed significant change that where a company fails to file its annual return on time in the Companies Registration Office, the current option of applying to the District Court for an exemption would be removed. The Companies Act 2014 introduced the option, under section 343(7), for a company to apply to the District Court for an extension of time to file its annual return and, if obtained, it retained its audit exemption. Section 9 of the Companies (Statutory Audits) Bill 2017 repeals this section 343(7) of the Companies Act 2014. I recognise the importance of companies complying with their legal obligations with regard to the publication of financial information and I consider that in most circumstances the ten-month period allowed for preparing and filing this information should be sufficient. Some SMEs, however, will find themselves in this situation for a range of reasons and will be impacted by this change. Businesses have contacted Members to express their concern over this aspect of the Bill, and I have previously highlighted this matter in parliamentary questions to the Minister. At this stage of the legislative process, I wish to highlight the strong concerns SMEs have raised about this aspect of the Bill and to flag that I may propose some amendments to this section on Committee Stage. I have a concern about the effect Brexit will have on the Bill. The EU audit package was developed only a few years ago, but at that time it was assumed that Britain would be in the EU for the foreseeable future. Many audit firms in Ireland have major operations in Britain and work on an all-island basis. Has the Minister received assurances that Britain will maintain these new standards that are to be introduced after the UK leaves the EU, to ensure undertakings find it easier to implement changes and to maintain a harmonisation of high standards?

As for the optional provisions relating to the sanctioning powers and disclosure to the public, is the Minister satisfied that the powers to be implemented under this legislation are sufficient to act as an adequate deterrent?

The briefing paper on this Bill, helpfully put together by the Oireachtas Library and Research Service, indicates that of the six options in the investigations and sanctions section, the State is to implement two of these and will leave aside four. In particular, the publication of sanctions under Article 30c.3 is not to be exercised.

I welcome the Bill brought before the Dáil with the intention of strengthening auditing practices in line with our European colleagues. Sinn Féin will support the Bill, despite the EU audit package reforms being diluted as they progressed through the European legislative process. These reforms, however, aim to have more oversight and higher standards for the auditing process, which is welcome.

If Fianna Fáil had focused on such measures when it was in power, the total economic collapse of the State could have been avoided. I hope this legislation will prevent a repeat of the Fianna Fáil failures in this area that compounded the financial crisis in 2008, which resulted in the emigration of hundreds of thousands of our citizens and a decade of hardship for many others. I commend the Bill to the Dáil.

The Labour Party will be supporting this legislation. I welcome the Minister to her brief and I also wish to let the House know that I have been appointed as spokesperson in this regard. The Minister now faces three Limerick spokespersons from the Opposition but whether that bothers her, I am not quite sure.

In welcoming this legislation I thank the Oireachtas Library and Research Service because I needed its guidance and data to understand a lot of the technicalities. It is a long Bill with much technical detail in it. The overall purpose of the Bill is very important and I very much welcome it, along with the EU audit package on which the Bill is based. Some of the measures are already in place but the Bill, while consolidating the legislation, also brings in new measures.

In some ways this is closing the door after the horse has bolted because of the failures that led to the economic collapse and the fact that we did not have appropriate oversight and regulation at that time. There was a very cosy relationship between the former office of the Financial Regulator and the big banks and lenders. The issue concerning the ODCE has already been raised by previous speakers and I support their calls to beef up that office. I also agree with the other comments with regard to the collapse of the trial of prominent bankers.

It is important to make the point that this kind of regulation is welcome, in this case in respect of the auditing of large companies and especially the financial institutions. I wonder, however, if we had had more of this oversight in the past, whether it would have saved us from the economic collapse and the effect it had on the State and the people. We need transparency and really good auditing, particularly for the kinds of bodies to be covered by this legislation.

In the briefing paper provided to Members and commissioned by the Oireachtas Library and Research Service I found the list of stakeholders in the appendix very interesting. They are certainly big beasts and the list includes the Central Bank of Ireland, Chartered Accountants Ireland and the Chartered Accountants Regulatory Board, the Institute of Certified Public Accountants in Ireland, the Association of Chartered Certified Accountants, PwC, KPMG, EY, Deloitte, Mazars, the Irish Stock Exchange, the Irish Funds Industry Association, BlackRock, Banking & Payments Federation Ireland, Smurfit Kappa, Aer Lingus, the Irish Tax Institute and the Revenue Commissioners. Between them all there is a lot of money involved in their kinds of business. This legislation is really important, therefore, in ensuring that there is absolutely proper financial regulation. The stakeholders' comments are included on the various elements we are discussing today. In considering the reasons for reform of the rules governing statutory audits, the briefing document states:

The new rules address a number of shortcomings observed in respect of audit practices:

- Deficiencies, and in some instances misstatements, in audit reports have been observed by the competent authorities of Member States.

- Doubts have emerged among investors on the credibility and reliability of the audited financial statements of banks, other financial institutions and listed companies, as highlighted by the economic and financial crisis. It is understood that this has limited the ability of investors to rely, with confidence, on reports of statutory auditors.

This reference to investors and stakeholders is interesting because I believe the public and public representatives also need this level of transparency. These issues should not just be the preserve of a certain elite that understands the language and some of the loopholes that existed in the past. The briefing document also notes "An excessive familiarity between the management of a company and its audit firm, risks of conflicts of interest, and threats to the independence of statutory auditors can challenge the ability of statutory auditors to exert thorough professional scepticism." We need to ensure there is thorough professional scepticism when it comes to auditing companies, especially those that control a lot of money.

The briefing document also notes "[a] lack of choice of audit firms emanating from high concentration levels in the top-end of the audit market". Again, this is about not just having a small number of bodies that basically control the market. Effectively, that is not competitive. It can also mean that these small number of bodies control the kind of auditing that is done. The briefing document further notes "[a] systemic risk as the audit market is effectively dominated at the top end by four networks". I think that would be worrying to any of us. Therefore, it is welcome that this is being addressed.

I had to go to the glossary a few times to understand all the terms, for example, IAASA and PIE. PIEs are public interest entities. These are of "significant public interest because of their business, their size, their number of employees or their corporate status being such that they have a wide range of stakeholders". Obviously, they are of public interest and, therefore, I think the public interest is paramount in all of this. It is not just about restoring investor confidence; it is also about restoring public confidence.

The briefing document notes:

The main objectives of the reform are to:

- ensure further transparency in respect of the financial information of companies;

- provide statutory auditors with a strong mandate to be independent and exert professional scepticism;

- contribute to a more dynamic audit market in the EU; and

- improve the supervision of statutory auditors and the coordination of audit supervision by competent authorities in the EU.

All of that is very important.

To refer to the issue raised by the previous two Deputies around SMEs and the audit exemptions and extensions relating to late filing, etc., a balance is needed between the burden on small business and the requirement to have oversight and good governance. We need to get that balance right. I have not been lobbied by small businesses, as others have, but I am willing to listen to them. However, it is important that we get the balance right and that we ensure good governance and proper oversight in all companies. As others will be proposing amendments, I assume we will be returning to the issue at a later stage.

Under the theme of independence and objectivity, the briefing document states:

The Audit Directive notes some of the threats to independence as being:

- self-review, self-interest and advocacy;

- financial, personal, employment, business or other relationships with the audited entity;

- holding a material and direct beneficial interest or engaging in any transaction with financial instruments of the audited entity (except interests owned indirectly through diversified collective investment schemes);

- acceptance of gifts with a value higher than considered trivial or inconsequential;

- acquisition by merger with or acquisition of the audited entity by another entity which results in interests or relationships which may compromise the independence after the effective date of the merger or acquisition.

As public representatives, it is important that we, first, have some grasp of this and, second, ensure that we hold bodies such as IAASA, which is the body that will be over all of this, to account and ensure that they have the necessary powers and strengths to carry out their work. The briefing document states that the policy implications will require that "audit reports [are] more detailed and informative and their work will be more closely monitored with strengthened audit committees". That relates to public audit reporting.

This probably will not get a large amount of public attention but it is very important. As I say, I am not too sure to what extent the public will be watching. However, when one reads the list of stakeholders at the back of the briefing document, people with power and money and influence will be watching. It is, therefore, important that we as public representatives represent the public interest in this regard.

I welcome the Bill. We will be supporting it and I look forward to further debate.

I call Deputy Mattie McGrath. He has 20 minutes.

I am not sure if Deputy Healy-Rae is coming.

Déanaim comhghairdeas leis an Aire freisin. I congratulate her on her appointment and wish her well. One never knows where I might bump into her. The last time it was down in the sleepy Nire valley over the holidays. She was most welcome there. I hope she had a good stay at what is a small business of a great business woman. God rest her late husband who was a great friend of mine. They worked very hard. There is a personal touch as well. I hope the Minister and her colleagues enjoyed their stay.

I am happy to speak on the Companies (Statutory Audits) Bill which seeks to transpose EU Directive 2014/56 into Irish law. I note from the document commissioned by the Oireachtas Library and Research Service that an EU audit package updated existing EU law on statutory audits in three main areas: the framework for public oversight; the obligations on statutory auditors when auditing the financial statements of their clients; and the obligations on public interest entities with respect to the appointment of, and interaction with, their auditors.

In particular, the audit directive was aimed at improving audit quality and included measures to strengthen the independence of statutory auditors. The audit regulation was directed at the statutory audits of public interest entities. The mandatory provisions and a number of the optional provisions of both the audit directive and the audit regulation were transposed into Irish law in 2016 through SI 312 of 2016. It is now proposed that the remaining optional provisions of the audit directive and audit regulation, which could not be transposed into Irish law by way of secondary legislation, will be given effect in Ireland by way of primary legislation, that is, through this Bill.

All of this sounds fine and dandy and, indeed, who can argue with a process that attempts to outline in a more specific way the general obligations imposed on public interest entities? I note provision will be made for enhanced reporting requirements that will facilitate the IAASA in carrying out its necessary oversight responsibilities. I worry about all these agencies and quangos. They are mushrooming despite promises by Taoisigh and many others that we are going to cut them out. Fine Gael came into Government in 2011 stating that it would banish them, but it must have put fertiliser on them because they are spreading and mushrooming the same as a right crop of weeds, and they cannot be stopped. The cost of them all is what worries me, as well as the ineffectiveness of most of them. They do not seem to know what they are at or if they are coming or going or what are their duties or roles. I say that not lightly or flippantly. I say that seriously.

My difficulty, as with so much of the legislation in this area, has to do with enforcement. We can have all the IAASAs we want, and we have acronyms of all shapes and sizes, but if we have no enforcement and they are toothless, fruitless and useless, as are many of the regulators, what good are they? We are just creating optical illusions to the effect that we are doing something about white collar crime and poor audits and accountability. We are ticking the boxes but we are not shaking the boxes or putting our hand down into the boxes to see what is inside. We are just ticking boxes and getting it out the gap for another while. It might be a small while but it is just not effective and there is no comeback or payback to the State and, above all, the taxpayers on the street. Mrs. O'Brien, Tommy O'Neill, Joe Bloggs and whoever are the people who are paying the piper all the time. They are the ones who are aghast to see what has happened in this country with the repeated cycle of bust and boom.

I note from the explanatory memorandum to the Bill that section 931 deals with fair procedures and the possibility of referral to the Director of Corporate Enforcement, with the more significant sanctions for audit breaches being subject to confirmation by the High Court. That is a sentence in itself. We only have to look at the recent experience with our own banks and financial institutions to recognise the massive deficits at the heart of our corporate enforcement system.

There are monumental deficiencies and inaction. There are many financial regulators from the Central Bank down and their staff. There is the Office of the Director of Corporate Enforcement. They all have layers of management, senior, middle and junior and some of the Garda Síochána are involved in their processes as well but what did they achieve? They slept while Rome was burning. There was no accountability and no one held to account, which was worse altogether. The Minister comes from a county with a very strong business ethos and she worked in the credit union. I was amazed when I first travelled to Monaghan and the Border counties at the amount of industry and initiative in private business there from furniture making to mushroom growing, turkeys and poultry farms.

The ducks as well but there is too much ducking now. That is what is wrong. There is only one duck farm left in Emyvale but there are a lot of people ducking around here and in these organisations. They think they cannot be found. They are not being found and will not be found because no one is looking for them, apart from the eejits outside here paying taxes. I do not mean that in a bad way about the poor unfortunate taxpayers. They are well able to duck and they are well able to suck eggs but they are not able to do their business. That is why I worry about this as well and will it change one iota.

Not even a detailed package of measures contained in the Government's report, entitled Measures to Enhance Ireland's Corporate, Economic and Regulatory Framework, a right mouthful, seems to have worked in combatting serious white collar crime in this State, because there is no follow up. They are nice statements in flowery glossy reports and documents to tell the EU we will tick another box and do this or that. Dúirt bean liom go ndúirt bean léi. That is what it is all about. There is no real, meaningful and tangible result. I do not see any major breakthrough. That is what the Government document states. That report is gathering dust on top of the last one and the ones before it. The next one will go on top of it.

We are still grossly under-resourced in this area. In many ways it is not being addressed with the urgency that it requires. The Minister must know that because she sees the diminishing business, especially in rural Ireland. Today on Questions on Promised Legislation I brought up the latest Economic and Social Research Institute, ESRI, report which shows that over 52% of economic activity takes place here in the capital, Baile Átha Cliath, and the concerns of the Organisation for Economic Cooperation and Development, OECD. I am not anti-Baile Átha Cliath. I spoke about the water today but to fix the leaks it would not need the water from the country. Let it be self-sufficient.

If we keep pumping everything into business here it will destroy Cavan, Monaghan, Tipperary and even Kildare which is close to Dublin, and every other county because all the big business interests are coming in here. I know this because I met the head of the Industrial Development Authority, IDA, in New York on the eve of Paddy’s Day last year. He said it cannot get companies to go outside Dublin, to Limerick, Galway or Waterford or anywhere. Everything is Dublin-centric. That is very bad because of the pressure on housing, roads infrastructure and quality of life. The Minister's boss has gone to Davos. I hope he brought that report with him to read on the plane because this is alarming and it has been said by several economic bodies and experts. It did not have to be said by anybody because we can see it, when we try to drive in or out of the capital. We need to rectify that and get a regional balance. The Taoiseach told me this morning about people wanting to live in Dublin. They cannot live in the country because they will not get planning permission. We have more directives and guidelines on where people can live or not in rural Ireland. Regional development needs to be examined.

As an example of the under-resourcing I point to the report of the Law Reform Commission in 2016 commenting on the Oireachtas Committee on Public Accounts', PAC, Interim Report on the Committee's Examination of Bank Stabilisation Measures 2013. Where did we hear that before? In its report PAC noted the lack of provision for reckless trading for financial services and called for an examination of the need for "a provision which would provide for presumptive liability or presumptive sanctions for directors of failed financial institutions". They were two fine reports, one in 2013 and 2016, with a lot of presumptions but no actions. What did we do about it? I did not see anyone held accountable. This is the problem. The committee also suggested that current systems, structures and procedures for investigating directors suspected of corporate wrongdoing should be reviewed and streamlined, and that the Law Reform Commission should review relevant aspects of the law in respect of enforcement against individuals. Has any of this happened? I accept that this is a very complex area, but I can give one example of where people might lose faith that we are taking the audit process seriously from a public policy point of view even at State level, within the EU. The research document provided to us ahead of this debate refers to Article 34 of the 2013 Accounting Directive which refers to situations in which "in the course of audit, he, she or it has identified material misstatements in the management report, and shall give an indication of the nature of any such misstatements". It calls them "misstatements". Can we not just be honest and name them as what they most likely are, potential corruption, within the audit review? To return to our well-documented history, the financial regulators gave clean bills of health to the Irish banking sector, an audit performed by some very well-known accounting firms that turned out to be utter rubbish. Many of them were brought in afterwards to give advice on how to get those banks back on the road. One would think we are all illiterate, dumb and blind.

That is the way it has happened. It is one thing to have all these fine auditing rules and directions in place but the real issue is what happens when we need to enforce the rigours of the law. We need to get real and deal with the Bill. Small business people are put to the pin of their collars every day of the week. We heard auditors from the EU this evening at the Oireachtas Joint Committee on European Affairs. Departments roll out directives, reams of paper, regulations and rules for all the ordinary people, whether it be the Road Traffic (Amendment) Bill 2017 or the directives on spreading slurry or any issue relating to health and safety. I am all for health and safety but it is totally over the top because it incurs costs for small business people, the self-employed or those employing between five and ten people, who are trying to stimulate businesses. They have fought through the recession. We are told there is a bit of an upturn but they cannot see it. They are smothered with paperwork. The Minister should talk to people in her own county. I am sure she listens to them every day of the week. They are choked and smothered. There are statutory audits and this Bill but we are getting nowhere. We are not tackling the serious serial offenders in corporate and big business, gnó mór. There is a monopoly in the beef industry - one business which controls the whole industry. I compliment Seamus Maye who has written many reports on this. The farmer does not see a bit of profit on the whole hindquarter of the animal. There is a fodder crisis in the west and probably in the Minister's county too because there was no summer and no crops saved. We are trying to send out fodder but the prices are controlled by a cartel in the beef industry.

We have the same problem with milk conglomerates. They started off in Monaghan, Tipperary, Kerry and everywhere else around the country as small farmers groups that came together. That turned into the likes of Avonmore, in Tipperary, and Glanbia, and those companies abandoned every rural community and closed every little creamery and co-op. One might have to travel 30 miles now to find a co-op in order to get supplies. These companies abandoned the ethos and spirit of self-help and the ethos of the great people who set up the co-operative movement. The conglomerates have shareholders, AGMs and profits.

The problem also exists in the concrete industry. There have been many decent, hardworking people in family businesses driven out of the concrete industry so that one or two companies can control the whole market. It is a racket, and there is a cartel in operation. I have gone to Cement Roadstone AGMs in recent years. Some of the shareholders are happy, but what is happening all over the world with these companies is unsavoury to say the least. What went on in the Wicklow Mountains with the small companies there and in the case of families in Tipperary that I gave employment to for decades is disgraceful. There is a monopoly in place.

What happened to Seán Quinn? We can like him or lump him, but he provided plenty of employment in his area. I visited his place when I was in Monaghan, Fermanagh and Derrylin a long time ago. I saw the industry he provided. There were 400 trucks. The sand was moving. He provided employment there. There was obviously greed involved, with his gambling in financial businesses - not gambling in the other sense of the word - but he got little support from the Government. I met him at the time it happened. What is going on now? The place is a shadow of what it was before.

There are 700 jobs there.

Thank God. How many were there before he left? How many self-employed subcontractors were working for him?

There are 700 jobs there now, and it is growing.

He supplied that many, but had no help from the previous Government, of which Deputy Humphreys was a member from 2011 to 2016. Thankfully, there are 700 jobs left. However, there were a couple of thousand jobs at one point, not counting all of the self-employed people. Throughout the country, there are many laws for the little people but no laws for the others.

Consider the situation during the sham trial of the bankers. Not one was prosecuted successfully. In America, any bankers who commit crimes are locked up and behind bars. They are entitled to their good name and are innocent until proven guilty, but here the Office of the Director of Corporate Enforcement, ODCE, made pathetic efforts to prosecute bankers. This included the shredding of hundreds of files by an employee in the DPP's office. It would not be seen in a thriller movie. In another trial that is taking place at the moment, the jury has been dismissed. Nothing has come from these trials except huge costs to the State and huge payments to firms of lawyers. Nobody has been prosecuted. These were sham trials. This is happening before our eyes every day of the week.

I have a list in my pocket of small businessmen who were in court yesterday. I met a man and woman from Cork yesterday evening who asked me to mention their names. They were Mr. and Mrs. O'Brien. They came out of the court and said they wanted to jump in the river. They were in business since 1980. They were trying to raise their family. I have a court list which shows that there were 122 or 123 cases like that from yesterday alone. Think of the inefficiency of that alone, where all of those people had to come into court on the same day at the same time. The barristers and solicitors were with them and they had the meters turned on. The Minister understands that phrase. The 122 or 123 cases were listed for yesterday alone. It is the same for the next four days again. These are ordinary people, many of whom are trying to cut a deal in respect of their debt and provide the banks with perhaps 70% of what they owe. The banks will not accept it from them, but there are vultures - friends of the banks - waiting to buy for 17%, 20% or 25%. I put forward a motion here, along with Deputy Fitzmaurice, before the budget which, if accepted, would have added a 50% penalty or surcharge to those vulture funds when they are buying properties of distressed businessmen or farmers from the banks. The banks would not do business with these people but they would sell to their cosy cartel friends for practically nothing. A 50% surcharge such as we suggested could go to the Exchequer and be used to provide beds in hospitals, more infrastructure, more teachers - whose services are badly needed - and orthodontic treatment. It could also be used to provide for the people who are being bussed to the North by Deputy Danny Healy-Rae and Deputy Michael Collins to have their cataracts treated. What is happening? Nothing. Those companies can do what they like because there is one law for the rich and one law for the poor.

I have serious concerns about this legislation. I will be tabling many amendments. I look forward to debating it on Committee Stage.

I have to begin with the most important thing that is affecting so many small companies throughout the country. First, however, I must declare that I have an interest in a family plant hire firm. I must write it up and leave it here because I seem to be telling this story every day, and several times on some days. My brother also has a small shop, so I have to declare those interests.

Small sole traders and small hardware suppliers, different kinds of people who are only barely existing in many places - they are family units working together and trying to keep their houses and families going - seem to be getting an awful doing on a constant basis from larger companies which go bust. After a few months or maybe a year, those big companies are up and running again but the poor small companies are left behind. They do not get paid and they have no redress. It is not a level playing field as far as those companies are concerned. Many of these small operators do the work but they are only classed as subcontractors because the big, principal contractors get the jobs. The reason for this is that there is a pre-qualification requirement that a company has to have a certain amount of millions of turnover. For many jobs, this means that there are only four or five people who can actually tender for it. If these companies do not take proper care in their operations or if they have tendered incorrectly they will catch the small fellow.

A few years ago one such company went bust. It provided accounts before Christmas to show that it had €4.5 million worth of rolling stock. By St. Patrick's Day of the following year, it was bust and many small business people who had borrowed and who were trying to keep going were left without their money. I hope someone is listening to me. Those people grouped together and wrote to the Director of Corporate Enforcement, who, at that time, was Mr. Paul Appleby. They explained how much this principal contractor had in assets and how he had acquired the assets. The Director of Corporate Enforcement wrote to the receiver who was appointed by the principal contractor. The latter got his solicitor to write to this unfortunate group of people to challenge them to prove what they were saying. I would have thought that it would have been in the interests of the Director of Corporate Enforcement to find out if what these people were saying was right, but that is not what happened. They had to withdraw under pressure from the principal contractor's solicitor. Is it a fair country we are operating in? We feel that the receiver was appointed by the principal contractor that was going bust. It should not happen that way. A receiver should be independently selected by the Director of Corporate Enforcement in the interests of fairness to everyone.

That was not fair because those poor people were left without their money. That principal contractor is back working again and he still has all the assets he acquired through the company he let go bust. That is happening day after day to the small fellows because they cannot survive. The big conglomerates are catching the small fellows, so to speak. The big companies are able to siphon off assets and come up with many other ways of surviving and getting back in action again. The small operators have to abide by all the rules and regulations. They are out there doing the work, abiding by all the health and safety regulations and so on. In many cases, they are personally responsible if anything goes wrong. The principal contractor can get away with that under the guise that it was the small operators who were doing the actual work on the ground, and often ends up not paying them at all. Many people believe that is very wrong and that the Director of Corporate Enforcement or that section of the law is not holding these principal contractors to account.

The multinational supermarkets represent unfair competition for small shops throughout the country. They have offers which tempt the customers to shop in them. In time, they will have a monopoly and there will be no small shop in rural areas like Sneem, Gneevgullia or Scartaglin. If someone wants to make a simple purchase in the morning like a bottle of milk, they may have to drive ten miles to the nearest big supermarket.

Mention was made earlier of Seán Quinn. When that case happened a number of years ago, many people looked up to Seán Quinn in terms of the employment he provided. I do not agree with Deputy Mattie McGrath that he gambled. I believe he did not gamble. It was clear that Anglo Irish Bank falsified its yearly accounts to show it had much more on deposit than it had. Seán Quinn took its word and invested in more shares. That was the mistake he made, but he was led by the yearly accounts, which were clearly falsified. We have not heard of anyone sorting that out yet. As I understand it, Seán Quinn has not got any fair play in that regard.

Vulture funds were mentioned also. I know of a family living over their business that owed €900,000. A vulture fund now has that case and it will not sell the business, which is actually a home, back to the owners for what they owed.

The vulture fund has told them they must get out. That is very wrong. I know of other cases where the people who got into trouble are prepared to pay back what they owe, with interest, and the vulture fund will not take it. As Deputy Mattie McGrath said, the vulture fund must have favourites or an idea that it can squeeze more money out of somebody else, but that is so wrong. We talk about fair play and law and order but there is no law and order when we see things like that happening.

Something needs to be done about the way principal contractors are appointed, the reason they have unfair advantage and the way they are leaving many sole traders behind and not paying them. I am talking about the owners of small shops, small hardware stores, service suppliers, petrol stations where vans get diesel and so on. These are people who went out and worked for them in the dark and in the rain only to find that they are owed €20,000, €30,000 and €40,000. The amount is not long mounting up when fittings, parts or whatever are taken into account. They are left behind, and it is a crime. It is actually stealing from good living, hard working people.

Daylight robbery.

In a short space of time, these principal contractors are back in action again.

Much more needs to be done to rectify the wrongs that are being meted out to small suppliers, small operators, sole traders and families that work together to try to keep their household going because they get left behind when these fellows decide to pull the plug. They have everything organised, hid away, put in other people's name and so on. More people must be employed to follow up these people to ensure that they get what they deserve for the wrongs they do to others.

I wish the Minister the best in her new position. She will be a loss to her previous Department. We might have crossed swords many a time but, in fairness to her, she was helpful and she did her best. We could have a row, but she always came back and talked to the person. I am aware that in her new role she is involved with the credit unions. I would encourage her, as a person who knows them inside out and, I believe, who ran one successfully, to bring her counterparts and our Minister for Finance on board to make sure that credit unions have a future and are given more leeway. In light of the businesses we are talking about this evening, it is no good having money in one's account if one cannot get it out.

I am aware that strong auditing is needed but every week we come into this House we adopt some new European Union regulation. As a country, can we not have our own process, especially when it comes to taxes and auditing? The more we incorporate all these EU rules and regulations, the more we are probably heading for a different tax base. We need to hold on to our 12.5% rate but I am fearful that we are being undermined from the back by different rules and regulations. I know that through statutory instruments or whatever legislation is going through the Oireachtas now that the Minister is trying to blend things together, but every week we come in here to deal with some statutory instrument or EU regulation with which we have to be compatible. I believe in transparency, having proper due procedure and making sure that everything can be audited correctly.

I wonder, however, why we constantly adopt everything Europe throws at us.

The Minister talked about small and medium companies and then she talked about larger companies. No one is better placed than the Minister to know about the one worry I have, given where she is from. A lot of small businesses around the country kept the door open and the light on during the recession and they employ one or two people in local towns. They are ferociously important to their areas. I worry about more red tape, paperwork and regulation. It costs them money. The more powers are created, the more paperwork must be done. To be blunt, it costs more money. I fear for many of these companies, including small companies on the construction side. I am not criticising Irish Water, but I note that at one time smaller companies which did €50,000, €100,000 or €200,000 worth of work were able to tender for local authority contracts. We are told how great LAQuotes is, but the statistics tell us that it has reduced the number of people who are fit to tender. The smaller operator who might have two or three employees cannot withstand the amount of paperwork and forms they have to fill in to get through the LAQuotes or eTender process.

I had a debate about costs with a person from Irish Water the other day. One has to be realistic looking at the price of jobs now when the cost of a four inch pipe, for example, has increased massively in the past two or three years. That is because we have pushed out the tidy and efficient small companies and let a smaller number of larger operators come in. Basically, that means less competition. In business, small is beautiful. Small companies around the country are efficient and they give steady employment. They keep going. One will not hear of a big bang in those small companies compared to what happens when one large operation goes. I worry that with this legislation we are going down a road which puts more expense and paperwork on those companies. That is fine if one is Google or any of the larger operators. They have audit firms and tax experts who tell them how to do X, Y and Z. The smaller company paying €2,000 or €3,000 a year to get its books done cannot afford to have all these so-called experts. SMEs provide a good service to this country and employ massive numbers of people.

I do not doubt that we need a certain amount of regulation. That was touched on earlier. While we have seen over the past few weeks problems where a company in another country's construction sector has gone bust, we have also seen tenders for schools given out to companies here which did not have a great record ten or 12 years ago but were let back into the game again. Unfortunately, things may not have worked out. When we are looking at these things, do we not look at the track record? Should a book not be kept with a history of whether the subcontractors of those companies were paid? As was rightly pointed out earlier, when the big guy goes, it is the small subcontractor, or "subbie" as we call them, with a few workers who is stung. We do not seem to be tackling that. Some companies which have gone into receivership were planning for the future. Notwithstanding the Office of the Director of Corporate Enforcement and other bodies which are supposed to watch over this, one finds at creditors' meetings that Revenue gets first call and everyone else has to sit on the fence and wait to see if there is any few bob left. Most times, nothing comes. We need to ensure that we scrutinise some of those companies that go into receivership because, unfortunately, it is the smaller operators who are getting caught.

I have stated my fear of rising expenses for smaller companies. When one looks at bigger operators, including the likes of the vulture funds which came into the country and pay €250 on however many millions in profit, they have been given breaks which have not been given to the smaller operator. Some of these companies, in particular the vulture funds, are out of control, but nothing is being done about them. I have an instance where a person is willing to provide the money he owes over the next year. They want expenses and high interest for the second part of it, which interest constitutes daylight robbery in my opinion, but they will not give an answer. At the same time, they have rung an auctioneer to sell the piece of ground. If that is not thuggery, nothing is. The client is willing to pay the expenses, which they are not sparing to be blunt. If it were me, I would stare at them a bit tougher, but some people are not in that position.

Vulture funds are in this country doing that to our own. If they are buying a lot of this stuff for 30% or 40% of value, they are going for 100% and interest. Even if one is going to give it to them, they will still try to put a person through the humiliation of telling an auctioneer to keep things going until the fund has made up its mind. That is deplorable and it is causing mental health problems, especially in the farming community, but nothing is being done. If one gets onto the Central Bank, one will get a lovely letter that such a one is regulated. Notwithstanding all of the regulations, these people get away with paying €250 tax. I acknowledge that some loopholes are being closed, but they will screw the Irish people over.

They want to make €3 from every €1 they put in. They take this approach even for the person who is willing to sit down with them and do a deal. The people doing that are putting in massive expenses for receivers and other things and still they will not give an answer. That is a matter of record. They will not give an answer; they will keep pondering it. They will keep telling the receiver to leave it and to tell the auctioneer to keep going to try to really humiliate the person concerned. That should not be allowed in any country. We are bringing in legislation on a different issue this evening because we are doing it for accountability and audits. How do we control people who are out of control?

I wish the Minister luck in her new position. I ask her to bring the matter to the Department of Finance. She understands it from her background with the credit unions and dealing with people and their money. We can give out about everyone in the world and everyone who took out loans. We can say they were struggling. We can give out about every builder in the world. At the end of the day, sooner or later, we have to face up to one reality. Whether it is this year or next year, we have to give our people a chance to get back on the road to being able to contribute to their country. If one is in between the devil and the deep blue sea, one is not achieving one's potential and one is not in a frame of mind to achieve it. The State needs to wake up to some of these things.

When she is replying, will the Minister clarify if what is proposed will cost SMEs? I am talking about small set-ups and the cost of audits? Will it cost them a lot more money? That is my concern. It is fine to bring in reams of legislation but I worry that SMEs may be placed in such a situation. When some people are doing audits, they have to have their accountants and the whole lot there with them. All of these things cost money. The Minister said settlement figures can be reached and that is great providing both parties are reasonable.

Provision is made for raising fines but I hope it will not just screw the small set-ups. I do not mind about the big set-ups. Many of them are well able to afford it. If there are one or two people working with someone in a small set-up, I can guarantee that they are paying a fair bit more than €250 tax in a given year. People who were attracted into the country and are turning over millions are able to get away with things that are intolerable as a result of loopholes. It has been exposed here by many Deputies. The ODCE needs to be well set-up with facilities and manpower in order that it might identify some of the stuff that is going on. I worry at times if there have been special purpose vehicles to copy what the Government did seven or eight years ago. Is that going on in order to facilitate people who are starting another chapter and leaving subcontractors broke? The Government needs to consider companies tendering under eTenders, especially for school buildings, because there is a schedule and it needs to be done quickly. There should be some clause put in so that if subcontractors are not paid or are treated poorly, they can have some body or adjudicator to report it to, which would prevent bigger operators from getting the jobs. It would put manners on them for once in their lives. A lot of blackguarding is done by the larger companies against small subcontractors.

Will the Minister also comment on the EU regulations? Do we have to absorb everything? If they were our own, that would be grand, but why do we have to keep absorbing reams of paperwork out of Europe? Every place one goes now, they talk about all the stuff that comes from Europe that they have to comply with. With regard to tax harmonisation, is this a brick at the backdoor to sooner or later try to come in the front door? They will have all the pillars set up, including the 12.5%, and then they will say that Ireland has the same auditing as them.

Money for smaller companies around the country needs to be increased. Many SMEs are in trouble. They are small set-ups. They might be living over a shop or a pub, especially in rural parts, and they need some facility to address this. We can do whatever we want and say whatever we want about them but at the end of the day, they can employ people and that is what a country needs. They can turn over a new leaf in their book but they need a facility to do it. What is happening a lot is that once they get into any debt at all, they are blacklisted and cannot raise money elsewhere. I am talking about a sound financial system and that everything is gone through to make sure it is right. It is hard to take. Some of the SMEs might have a loan of €200,000 or €300,000, which was bought at 30% or 40%, and these so-called vultures are back after them for the 100%. They are finishing people in business and jobs. That is all I have to say on the matter. I thank the Minister.

I thank the Deputies for their good wishes. I also thank Deputies Niall Collins, Quinlivan, Jan O'Sullivan, Mattie McGrath, Danny Healy-Rae and Fitzmaurice for their valuable contributions to the debate on the Bill. I particularly welcome their general expression of support for the overall objective of the Bill, as well as for many of its key features such as further enhancing the powers of IAASA as the competent authority with ultimate responsibility for oversight and having a straightforward, national legal framework for statutory auditors and audited entities.

In reference to the point Deputy Niall Collins raised regarding the ODCE, I am conscious of the shortcoming identified by Judge Aylmer in his ruling in the case of DPP v. Seán FitzPatrick has been the subject of significant concern. It is important to understand what factors led to such mistakes being made and we must take appropriate steps to address these shortcomings and ensure they are never repeated. While I cannot publish Judge Aylmer's report, I intend to publish, as soon as possible, an account of the investigative failures identified by the judge and the steps being taken to address them. These include ongoing reform within the ODCE and the establishment, as announced by Government in November, of the ODCE as a new, independent company law enforcement agency to provide greater autonomy to the agency and ensure it is better equipped to investigate increasingly complex breaches of company law.

To respond to Deputy Quinlivan who also raised that matter, the heads of Bill to establish the ODCE as an agency is a priority and is due to be published by the end of June. The final Bill will be published by the end of the year.

I want to reassure Deputies that organisational reforms of the ODCE were commenced in 2012 in order to ensure a more efficient and effective use of its resources. These included reorganising the structures of the office, recruiting additional expertise, including six forensic accountants, a digital forensics specialist and two enforcement portfolio managers. As senior level vacancies have arisen, there has been a reconfiguration of the skill sets, competencies, roles and responsibilities associated with those posts in order to better reflect the organisations needs. This reconfiguration has fundamentally amended the investigative procedures used by the office leading to members of An Garda Síochána taking the lead in all criminal investigations and fostering a greater culture of risk management. The ODCE annual report for 2016 points to a number of key successes during the year.

Several Deputies referred to the loss and audit exemption proposed in the Bill. I am already aware of concerns about the amendment of the audit exemption provision. I have received some representations on behalf of small business regarding the removal of section 347 of the Companies Act 2014. I brought forward this amendment in the Bill because I consider it an appropriate and necessary measure to protect the interests of users, people who look at a company's financial statements, perhaps people who are doing business with the company. Sometimes they are small companies themselves. Nevertheless, I will consider the points made by the Deputies.

Deputy Quinlivan mentioned Brexit. I cannot say for sure but indications from the UK's Financial Reporting Council are that it intends to maintain high standards.

I agree with Deputy Jan O'Sullivan that one important objective of this Bill, and the EU regulation alongside which it sits, is to ensure and support independence and scepticism between auditors and their clients. The caps on non-audit services and rotation every ten years are very important. I believe the public interest is taken into account regarding the new powers and administrative sanctions of IAASA. The ten-year rotation whereby a company must change its auditor is at the lower end of terms that we could have chosen.

Responding to Deputy Mattie McGrath, the White Paper on measures to enhance Ireland's economic corporate regulatory regime was published in early November. It has several actions, each assigned to a Department - Finance, Justice and Equality or Business, Enterprise and Innovation - each with a detailed timetable. The Government is committed to meeting these actions.

There are also other developments and a number of avenues that are being pursued in respect of white collar crime. The Law Reform Commission is examining aspects of it and the Company Law Review Group, which is under my remit, is examining enforcement of company law.

IAASA is not a new quango or agency. It was established in 2003 and has built up expertise over time. The Bill gives IAASA the ability to impose higher fines than previously so that it is certainly not a toothless organisation.

The Bill is designed to enhance enforcement with new powers, for instance, adding to standards, to issue directions to accountancy bodies. Most of the key changes on audit in the Bill are aimed at improving audits of public interest entities which are usually big companies.

Deputy Danny Healy-Rae mentioned several issues. One of the protections for small businesses is having access to information, financial and otherwise, on the companies they supply and do business with. They need to know that they are doing business with a company that is financially sound. It removes some of the risk when they can see that companies are financially sound and the likelihood is that they will honour any commitments into which they have entered. That is one reason the Bill addresses timely filing by companies with the proposed changes to the loss of audit exemption. We want companies to file their accounts on time.

To respond to Deputy Fitzmaurice, almost all small companies in Ireland qualify for the audit exemption. This Bill does not change that so there is no additional cost. The Companies (Accounting) Act 2017 simplifies financial reporting obligations for small companies and raises the threshold so that more companies qualify for the audit exemption and the reduced reporting regime.

The thrust of this section of the Bill is to get companies to file their accounts within the ten-month time limit from the end of the financial year. We do not want companies running late so that when they submit information, it is historic and of no use to anyone. That is the purpose of the relevant part of the Bill. Prior to the legislation passed in 2015, the Companies Registration Office, CRO, granted 497 waivers in 2014. When it went to the District Court there was 1,200 applications of which 1,109 orders were granted for late filing. In 2017, there were 1,067 applications of which 832 applications were granted. The numbers of those not filing accounts on time increased significantly. All we are asking is for them to file their accounts on time. They continue to have an audit exemption.

The Bill avails of several options which could not be taken in secondary legislation. The cumulative aim of these options is to improve audit quality. These will only be of use once the Bill have been enacted. I hope that we can bring the Bill through this House efficiently and I look forward to Members' continued engagement on this important legislation. I am happy to work with everyone to produce the best possible legislation that will provide both the necessary oversight and protections with minimal burden on small businesses.

Question put and agreed to.