JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 28 May 2003

Vol. 1 No. 12

Consultative Committee of Accountancy Bodies: Presentation.

Chairman

I welcome the delegation which comprises Mr. Terence O'Rourke, a representative of the Institute of Chartered Accountants in Ireland and acting president of the Consultative Committee of Accounting Bodies in Ireland, Mr. Brian Walsh, who is also from the Institute of Chartered Accountants of Ireland, Mr. Eamonn Siggins and Ms Cáit Carmody of the Institute of Certified Public Accountants in Ireland, and Mr. Roger Acton and Mr. Brendan Murtagh of the Association of Chartered Certified Accountants. This meeting has its origins in the letter to me of 24 March from Mr. Brian Walsh, who is joined today by the representatives of other groups to make a joint presentation. The document, which he forwarded to the secretariat last Friday, has been circulated to members. There will be ten minutes for an oral presentation after which members may ask questions. It is most timely that the delegation appears before us today as the Committee Stage of the Companies (Auditing and Accounting) Bill 2003 is scheduled to be taken in the Seanad this afternoon.

I draw witnesses' attention to the fact that members of the committee have absolute privilege but this privilege does not apply to witnesses appearing before it. While it is generally accepted that witnesses would have qualified privilege, the committee is not in a position to guarantee any level of privilege to witnesses appearing before it.

Mr. Brendan Murtagh

I thank members of the committee for giving us this opportunity to outline our views on the Bill. The accountancy profession welcomes the Bill and in particular the profession welcomes the recognition of the need for best practice in corporate governance. It acknowledges that this recognition has helped shape many of the clauses of the Bill.

Before moving to the substantive points of our submission it is worth recalling the origins of the Bill. The review group on auditing, on which the profession was represented, was established by the Tánaiste in 1999. It issued a detailed report in July 2000, containing 80 recommendations, which were accepted by Government. The Bill we are discussing today attempts to implement the recommendations of the review group on auditing. However, we have some reservations about the proposals in the Bill and Mr. Terence O'Rourke will outline the key matters we would like to bring to the committee's attention.

Mr. Terence O’Rourke

I want to briefly go through the main points of our written submission. I confirm that we welcome the Bill. We welcome the need for an improved strengthening of the regulatory structure of our profession and the supervised self-regulation that the RGA recommended and is enshrined in the Bill. We made that point to the review group on auditing. We commend the main thrust of the Bill and the main strengthening it does in a number of areas.

However, this morning we want to concentrate on the areas which we think need to be improved to achieve the objectives of having a Bill which works well and which helps Irish business to do good work, but also means that the standards of regulation in Ireland are equal to the best in the world. We do not want to go too far ahead of the best in the world because that affects competitiveness issues. We want to point out a few areas in which we believe there could be beneficial changes made to the Bill to help with the general broad thrust.

First, the issue of the structure of IASA and the balance of representation on the board has been raised a number of times. The board as proposed in the Bill has a limit of two accountants out of 13 members. We believe this needs to be rebalanced. We absolutely accept that the board should not be dominated by accountants and that, therefore, the majority of the board should not be accountants. We agree with that, but for the working of the board and for it to have a good understanding of the technical and practical business issues which arise, we believe there is merit in increasing the number of accountants allowed to be members.

We represent the profession which has members working in practice, but of the bodies represented here this morning the majority of our members probably work in business. They are financial directors, financial controllers and non-executive directors of companies. We believe it is not just the practising element of the profession which needs to be represented around the table of IASA, but those people experienced in business as well. Members of the committee will have seen submissions from IBEC and other bodies that would encourage the wider representation from business, including financial expertise which will inevitably mean accountants, so we would hope for that move.

We also think that it might be worthwhile working with IASA to make sure we can get the balance right on the board because inevitably there will be conflicts of interest between Government regulatory bodies represented on the board of IASA. There will be dual responsibilities on some of the members sitting around the table of IASA and we look forward to working with IASA to make sure those possible conflicts are well dealt with.

In terms of the role of IASA and its scope, we believe it should go wider than just the members of the professional bodies or the prescribed bodies, which is what the Bill sets out to do. We believe there is a public interest and a consumer interest in making sure that the profession of accountancy is encompassed within the scope of regulation and supervision, especially as audit scope increases. In other words there will be more and more companies in Ireland that will not require statutory audits. We believe that there will be more and more people who will be calling themselves accountants, offering services to businesses - especially small businesses - who may not be within the regulatory regime. The stronger and more effective the regulatory regime is, the more incentives there might be for some people to go outside it.

We welcome the ability to have the definition of accountant included in legislation in the interest of consumer protection and public protection. The issue was debated in RGA and we believe this should be considered further.

On disciplinary procedures within our profession, the structure of the Bill is that IASA would oversee continuing self-regulation of the profession. I was a member of the review group on auditing and we debated the balance between the profession continuing to carry out self-regulation and the need to have independent oversight. What we got in both the structure of the Bill and in the RGA is pretty much that. We believe that balance is delicate and we need to have oversight rather than doing. We need to have a balance between making sure the IASA can oversee the regulations, but does not get involved in them. If we have that structure of oversight, we will probably need to have a protection to stop IASA being dragged into all the little things because if IASA has the power, for example, to annul decisions of the disciplinary committees of the institutes, then every time anybody has a complaint against the institute they will run to IASA and say: "Please stop this and do all that".

That would almost make a nonsense of the supervised self-regulatory process, which has the benefit of experts involved in the area, who know the standards which should be applied. It would also result in my office becoming involved in too much detail. Accordingly, we propose a slight restructuring. We welcome the ability of IASA to review our processes and ask us to make changes to ensure they are up to scratch. We believe the power of intervention should not be used very lightly and we would welcome further limitations being placed on that in the Bill.

The Bill adds statutory weight to our disciplinary process. As the committee will be aware, we have had a couple of high profile, long-running disciplinary cases. One difficulty is that we cannot easily get non-members to give us evidence. We welcome the provision in the Bill for our committee to have the right to compel witnesses to attend. There is another provision which requires all our decisions to be confirmed by the High Court. That means that, every time we discipline a member, that decision cannot be confirmed except by going to the High Court. That will add extraordinary delay and some cost to our processes. Many minor transgressions need to be disciplined or fined but do not need High Court involvement. As the Bill is currently structured, all bodies authorised to audit would have to go through this process. That could mean, for example, that if the Association of Chartered and Certified Accountants had to deal with a situation involving a member who is a financial director of a company in Bombay, theoretically, it could not discipline that member without going to the High Court to have it confirmed. Changes will be needed in the Bill to make sure it works effectively. As it is currently structured, in my view, it will not work.

Compliance statements are another major issue in the Bill. We are not against compliance. We absolutely support the need for companies and their accountants, auditors and directors to be compliant citizens of the State and its laws. We welcome the focus on compliance and other recent reforms such as the corporate governance initiative in relation to the Stock Exchange and the introduction of the office of Director of Corporate Enforcement. While we welcome the thrust of compliance, we believe the manner in which the compliance statement is structured in the Bill will not work very well.

In today's Irish Independent, there is a summary of issues and concerns being raised by business people in this regard. There is a real concern that this will make Ireland look tougher than every other country in the world. The review group on auditing stated that we should be up with the best in the world but should be careful not to affect our competitiveness. At present, a Scottish Development Agency representative, with this Bill in hand, could point out to an American company the requirements it would have to comply with in Ireland but not in Scotland. We need to be very careful in putting in a good regime not to make it too tough.

The UK Act requires chief executives of only plcs to confirm that they present fairly their financial statements in all material respects. This Bill requires the directors of Irish companies, not just plcs from a turnover of €300,000 upwards, to go through a statement every year confirming that they have complied with all laws. That is fair enough. However, it is then necessary to deal with non-compliance cases by washing dirty linen in public. In the review group on auditing, we debated this matter and maintained that there is not a public interest in having every company confess all its sins in public. For example, a bank which may have transgressed inadvertently in one of its branches currently deals with the matter with the regulator of the Central Bank. If it has to publish details every time it does something wrong, that could damage confidence in the financial institution concerned.

Matters of compliance are often of a very delicate nature in which lawyers may need to become involved. It is sometimes very unclear as to whether there is non-compliance. If we have to publish all instances of non-compliance against a broad range of legislation - we understand the requirements in relation to company and tax laws - that may affect companies, including environmental, safety and competition laws, all matters of extreme complexity, we believe that represents a step too far. That may be used by our competitors in other countries seeking foreign direct investment to portray Ireland as not operating a level playing field.

We recognise that auditors have a role in this matter and we support their involvement in confirming the compliance statements of directors. We also seek further provisions which will probably not be included in this Bill. There are a number of situations where auditors are required to act as whistleblowers, including reporting to the Director of Corporate Enforcement on breaches of company law, the obligation to report to the Garda on instances of fraud, new money laundering responsibilities to be added soon and responsibilities under the Central Bank in relation to financial services reporting. Not all of those requirements are consistent, each having been developed under its own legislation and in its own context. Auditors are faced with a plethora of different structures for whistleblowing. We would welcome a consistent, coherent approach whereby auditors can support the public interest and do their job in an economic, efficient and sensible manner for Irish business and the public.

I wish to refer to two further matters. We welcome the provision in the Bill with regard to companies having audit committees. Strengthening corporate governance is a good idea. We are not sure about widening that requirement to include private companies. Indeed, that is also recognised in the Bill, which suggests that while private companies should have them, they can refrain from doing so and simply explain their reasons for it. The onus is placed on large private companies to give an explanation. One could have a large private company in which the two shareholders were the two directors and they would still have to have an audit committee. That does not make much sense. Japanese companies investing in Ireland will have a subsidiary set-up in this country. They like to be compliant with the law. Although they may have just two directors in an Irish subsidiary controlled from overseas, they will have to have an audit committee. They may regard that as impractical but will not want to say they do not have an audit committee or are not complying with the law. While we believe it should be encouraged, there should not be a requirement in law for large private companies to have audit committees.

There is a detailed list of sensible roles and responsibilities for audit committees but we do not consider it sensible to put them into legislation as the requirements for audit committees change over time. There has been considerable development in the last five to ten years. In the UK and the US, those requirements are put in a code of practice, rather than in law which takes time to change. We would be happy to work with ODCE or IBEC and others in drawing up an acceptable code. However, we believe it is dangerous to put it in law.

Finally, I wish to refer to the review of financial statements. The Bill proposes a provision for plcs and large companies to be examined for compliance with the law and accounting standards. A very good example of that type of regime has existed in the UK for the last ten years, involving a financial reporting review panel which has worked very well. We support the provision of a financial reporting review panel but I wish to make two points. First, I am not sure that IASA is best placed to do the review because it would have to make the decision as to whether a company complies with accounting standards. I am not sure that a body not consisting of accountants would be the appropriate forum. It could be done by a sub-body or a body overseen by IASA but I am not sure IASA is the right "court" for that task.

Second, the detailed procedures are, again, set out in law whereas we believe that might be best done outside of law because of the process which has to be followed. There is a UK example and a Europe-wide requirement for review of financial statements is about to be brought into operation at EU level. Rather than having to amend the law every time there are changes in this area, especially with the introduction of international accounting standards, we believe the process for the review should be taken from outside the Bill.

Those are the main points we wish to make and we will be glad to answer any questions from the committee.

Senator Leyden

I welcome this very prestigious and representative delegation. The Bill has gone through Second Stage in the Seanad, where I already put forward many of the points which have been raised today. I believe the exemption level should be raised from €3.5 million to €4 million for small companies. A figure of €300,000 now represents one small builder building one house per year. It is just not practical. I suggested to the Tánaiste that there should be provision to raise the level by ministerial order to keep in line with inflation. It could be set at a level of, say, €2.5 million, €3 million or €4 million, as may be agreed and moved forward over time.

We received excellent submissions from the delegation's colleagues in the profession and I believe the Tánaiste should be supportive of them. We cannot allow ourselves to be made less competitive than our counterparts in Northern Ireland. That is very important. We must ensure there is a level playing pitch. I fully agree with the comment that the Scottish development authority may use this situation in an effort to divert prospective investment opportunities. I welcome the submissions by the delegation and will convey them to the Tánaiste again today.

Deputy Howlin

I join with colleagues in welcoming such a prestigious delegation to make a presentation to the committee. It occurred to me when they came in that I am glad I am not paying their hourly rate. I have read the submission and the detailed submissions which each of the professional bodies sent to us. It strikes me that there are five issues and I wish to pose five separate questions. The genesis of all of these proposals is concern with accounting practices that have emerged from tribunals of inquiry and elsewhere in a way that puts the professional bodies on the back foot in terms of what they can say to us. Like politicians in the past, they must appear to be in favour of all reforms.

Although they say they welcome the Bill, in the submission, the professional bodies also state that it will lead to an increase in bureaucracy and red tape, create confusion and increase costs, which is not exactly full support. Some of the comments made by the business community outside this House that, for example, it would stifle business, require us to take a measured look at what we are doing because the requirement of being seen to reform can sometimes do damage. I say that as a general point and would like the delegation to honestly address the Bill in that context.

My second question concerns the membership of IASA which seems to be a core part of the presentation. Section 6 of the Bill sets out the membership of the board. To clarify, is the delegation saying that 40% of the board should be accountants and that, therefore, the entire board should be increased to a set number, or are there designated bodies in the Bill that the delegation is suggesting should be deleted?

My third question is with regard to the issue of oversight. In thinking about this, the model I much prefer leads into my other point about disciplinary procedures. It is necessary to have a comprehensive definition of "accountant" - not an easy thing to deal with. I dealt with the issue while in the Department of the Environment and Local Government when I tried to legally define the word "architect". Though many people draw plans, who is legally responsible? Does everybody who builds a small house extension require a qualified architect? It is a difficult issue and accounting will be equally so. Nevertheless, we need a restriction that says in legal terms that there are qualifications required of those who hold themselves to be accountants. Is the delegation saying that the legal title would be legally defined and restricted to those who are members of a defined professional body and who have undergone a defined training process?

That leads into the fourth point I want to make, which concerns disciplinary procedures. We all draw from our own experience and, in that regard, the other hat which I wore was as Minister for Health. As a result of holding that office, I am familiar with the Medical Council as an oversight body regarding fitness to practice medicine. Many accountants are not as critical as doctors but, in some instances, may well be with regard to financial wellbeing if not medical wellbeing. However, what is proposed here is an amalgam of bad practice. In other words, the authority to self-regulate and to determine breaches is being left to the professional bodies, yet there is to be an appeals system that can knock that aside and overview it. It is neither fish nor fowl. Would it not be preferable to take the Medical Council model in its entirety and not have the professional bodies carry out the analysis? There would be an appropriate committee of IASA to handle complaints and make determinations that would then only be appealable on a point of law to the High Court, as is the practice.

My final question - I am sorry to take so long but it is an extremely important Bill - is in regard to an issue with which I have grave concerns, namely, the requirement for company directors to make compliance statements and for directors to state that a company has complied with all relevant obligations. The difficulty with this is multi-layered. For example, I do not know how many committee members are also members of voluntary directorates of arts groups. It is very important for prestigious people in business to be able to associate with arts groups. How many serious business people will allow themselves to become directors of an arts group which requires them to sign off at the end of the year that everything has been complied with? They might run foul and find themselves under investigation, or be restricted as company directors for a totally voluntary input. The same logic could well apply to the good practice of established company directors lending their names to small, start-up companies which might fail but should be encouraged to exist in an enterprise environment. I have serious concerns and would be interested to hear the delegation's observations in that regard.

Mr. O’Rourke

The Deputy is fair to say that we welcomed the Bill and then read out a list of complaints about it. If we simply said that we welcomed the Bill, others might say that was fine. However, we wanted to draw attention to the practical workings of some minor items. If we have gone overboard in drawing attention to some of the deficiencies, I apologise.

We welcome the Bill and think it important for the reasons the Deputy has outlined. It has been drawn up in the context of some not so good things which happened over the years and it is in no one's interest that such things happen again. Therefore, we are supportive of a Bill that deals with this area. I welcome that there will be a process for reviewing accounts, the emphasis on compliance and the need for structured audit committees. While we are not concerned in regard to those issues, our concerns centre on matters which the Deputy raised and it is in that regard that we voiced complaints, not in regard to the main thrust of the Bill.

On membership of IASA, there is a current ban on any more than two of the bodies but we do not suggest that they should not be represented there. However, at present, if IBEC, the Stock Exchange or the Revenue Commissioners want to put forward an accountant, they cannot. We were quite happy to have all the bodies properly represented there, representing the broad public interest and all of the stakeholders. We debated that in the RGA and said that was the right group in that context. However, if such organisations want to put forward somebody financially knowledgeable, we think that there should be no restrictions. I am not trying to stack the decks with lots of accountants from the accounting bodies but to seek to have those bodies represented. That is the reason we are seeking a figure of up to 40% as is the case, for example, in the context of the Sarbanes-Oxley Act, on the US oversight body which has two accountants for every five members.

Chairman

Would that be a good example in regard to your profession?

Mr. O’Rourke

The American Congress took very serious issue with accountancy and business practices in the US and put in a very strong regime. Therefore, we believe it is an appropriate place to consider.

Chairman

Are you saying that we should take our best practice from the US in this regard?

Mr. O’Rourke

No. The UK also has a regime in place and accountants are involved in many similar structures in Europe also. This is a worldwide practice. The Sarbanes-Oxley Act is on people's lips because there was a lot of publicity about it last year. It is one of a number of measures.

To confirm what Deputy Howlin said, we would welcome that the word "accountant" be defined in some way. There are difficulties in that turf accountants and legal cost accountants would have to be dealt with. However, if somebody calls himself or herself an accountant, others should know who they are dealing with. We would welcome a definition of the term as suggested by the Deputy.

Mr. Brian Walsh

With regard to disciplinary procedures, we agree with Deputy Howlin. The board did not seem able to make up its mind whether it was a doing board or a supervisory board. We believe it should be a supervisory board. It should approve the rules which we adhere to in our disciplinary processes and, if we comply with those rules, it should live with the outcome of decisions made by the disciplinary tribunal set up under those rules.

If the board can annul decisions or conduct its own investigations, we believe that it will become the port of first call for many complainants, as Mr. O'Rourke said. Deputy Howlin believes that the board should do the whole thing and that others should do nothing.

Deputy Howlin

I am seeking clarity on the question. The proposition I am propounding is the Medical Council model, whereby the fitness to practice committee is the disciplinary authority, rather than the IMO, although this is subject to a review. A code of practice has been devised by the Medical Council, which upholds the rules of the profession. The model I am suggesting involves removing powers from the professional bodies. I am asking for the ICAI's observations on it.

Mr. Walsh

We believe that regulation is best carried out by the professional bodies, that is by those who understand the profession and who know the business. The model of supervised self-regulation, which is the best model, involves no cost to the State.

Mr. Roger Acton

The concern that was initially expressed in relation to the profession arose from a distinction between process and outcome. As was previously mentioned, there was a concern that the doing board cannot be mixed with an oversight board. Our experience illustrates that there is a need for clear guidelines, a clear set of criteria and, most importantly, a set of rules that is agreed with the superior regulator, which is the Department of Enterprise, Trade and Employment. The rules have been agreed. An annual report, which is submitted by each of the professional bodies, clearly outlines the process that has taken place. This system seems to work quite well. The concern that was initially expressed in relation to the scope of IASA was that the superior authority or regulator - IASA, in this case - could agree a set of procedures with each professional body. If the professional body did not like the outcome, having gone through the procedures, we got into a grey area. Some clarity is needed in such circumstances to ensure we do not allow a double jeopardy position, or the compromise of natural justice.

It is important to make the point that the three professional bodies and others that are recognised by the Department agree with the Department's rules for regulation and discipline. It is important not to lose sight of the fact that the rules have worked pretty well, in the main, and that an annual reporting procedure is in place. The Department has expressed itself satisfied with the reporting procedure.

Mr. Eamonn Siggins

Deputy Howlin's fifth question related to the compliance statement. The Deputy's first statement referred to an increase in bureaucracy and red tape and the stifling of business. I am sure I took an accurate note of the Deputy's comments.

Deputy Howlin

For the avoidance of doubt, I was quoting from the submission.

Mr. Siggins

We contend that most of the increase in bureaucracy, red tape, costs and the stifling of business will result specifically from the additional element - the compliance statement - to which the Deputy referred in his fifth question. The additional imposition on directors to state compliance with all relevant legislation is a particularly onerous and difficult requirement for directors to comply with, as the Deputy has pointed out. I would also like to add that it is a difficult issue for auditors to give an opinion on subsequent to the directors. Auditors may have to revert to legal advice because of the unlimited quantum of legislation that is available under this draft. This, in turn, will add costs and layers of bureaucracy to the audit process.

Deputy T. Dempsey

I will add an addendum to Deputy Howlin's questions. The speakers have clarified some of what I intended to ask. Is there a definition of what an accountant should be that is acceptable to the different branches, representing different types of accountants? Should the Government define what an accountant is or should the respective bodies decide what constitutes a practitioner?

Deputy Hogan

We would not be here to discuss this legislation if it were not for the fact that things were not right in the past. We are starting from there. The review group has made various recommendations in relation to compliance. As small businesses encounter problems as a result of bureaucracy and costs, I advocate that the audit exemption limit should be substantially raised in line with the rate in the UK. The level of compliance with existing company tax laws means that it should be possible for accountants and the Revenue Commissioners to do their job without an auditor being involved and adding to the costs.

I agree with the definition of "accountant" that has been suggested. The problem of definitions is encountered in all professions by everyone who can put a plaque on the wall outside their offices. If one is a lobbyist, an auctioneer, an insurance broker or an accountant - I declare a vested interest in that regard - one encounters a grey area from a consumer protection point of view. This is separate from one's legal obligations when one calls oneself something.

I wonder how the Blaney inquiry is getting on. It has been proceeding for a good while and it would be nice if there were an outcome from it before the legislation is passed. A report may indicate the gaps in the existing legislation that need to be filled. I am sure that a number of areas will be identified.

There is a big difference between general accountancy practice and the practice of the big four. How can the obligations of the big four be reconciled with those of accountancy practice generally? It is a conflict that we should bear in mind as we deal with this legislation. Perhaps the audit exemption is the way to go. There are large and small companies.

Conflict of interest is an area that we will bear in mind on Committee Stage. When reviewing financial statements in the context of this Bill, we should bear in mind that 40% of the board of IASA are accountants or have some other form of financial expertise. Perhaps there are some other interested parties. Is it not a good thing, from IASA's own point of view, to have it at arm's length? When conflicts of interest are being resolved, there is an obvious pressure on the professional bodies to do everything to police their own members. With respect, I have to say that the best practice has not always been observed by the professional bodies in the past. I would like to know if we can work something that will allow professional bodies a licence to do the right thing in relation to discipline. Perhaps the powers associated with IASA are one way of doing it.

There is a temptation for people to say that good regulation did not exist in the past when we allowed professional bodies to do it. Although the review group did not decide to do so, I am sure it must have been tempted to provide for statutory regulation. I ask the delegation to provide good reasons that there should not be statutory regulation. I am referring the matter back to the delegation in that respect. There is a need for a reassurance that the profession will be able to police matters that have come into the public interest arising from the beef tribunal and the DIRT inquiry.

I am interested in the operation and procedures of public hearings and I would like to hear the delegation's views in that regard. I can foresee many problems in relation to the compliance statement for non-executive directors. I am a non-executive director of a company. Although I do not have a notion of what goes on between the executives of the company on a day-to-day basis, I am obliged under this legislation to have such information. I would have to leave the Oireachtas to learn everything that happens on a daily basis, as one would want to be in charge of a company to comply with what is proposed. One will have to know about every financial transaction. It is bad enough to mind people in one's own company at a distance, but now one will have to mind them and to sign a compliance statement to be in accordance with the law. The chairman and the managing director of a company are charged with and are responsible for managing the affairs of a company.

American companies come here seeking advice from various reputable groups about who they should hire as non-executive directors and they will not touch that with a barge pole if they have to sign this compliance statement. That is an element of debate which concerns the delegation. Perhaps we can come up with a compromise to deal with the issues which will arise from the role of non-executive directors.

Mr. O’Rourke

I will start with the definition of "accountant" raised by Deputy Dempsey and Deputy Hogan. We would be quite happy for the Government to make a decision on a matter of public interest. It should not be made by the accounting bodies themselves. We would be happy for the Government to recognise accounting bodies' procedures and examinations as qualifying an accountant. I ask the Government to identify which bodies can authorise people to call themselves accountants.

I appreciate the support of Deputies with regard to the raising of audit exemption limits which is something necessary to get the balance right in business. As Senator Leyden said earlier, the limit of €300,000 is far too low for small businesses. We are happy for it to go to €1.5 million, but if it went to the £3 million to £4 million level obtaining in the United Kingdom we would be happier still. The European Union would allow a turnover level of €6 million or €7 million. We would be happy to discuss that with the committee, but a significant increase would address many of the issues raised.

Mr. Walsh

I seem to have been bringing people up to date on the Blaney report for the last three or four years.

Deputy Hogan

Mr. Walsh is getting good at it.

Mr. Walsh

Mr. Blaney completed and submitted his report in May 2000, but under the institute's by-laws there is an appeals process under which his findings were appealed. The appeals committee is almost on the point of concluding its work, but the managing partner of one of the firms involved sought leave for a judicial review last year. In a High Court hearing last July, an agreement was made that the appeals committee would continue with its work while giving an undertaking not to publish anything until such time as the judicial review was withdrawn or concluded. The judicial review is still in place and we cannot publish anything at the moment. If it is withdrawn, we could publish within weeks and before the end of the summer. If it goes ahead, we might be looking at a time frame of 18 months to two years. There are certain aspects of the report which may be published in the event of the judicial review going ahead.

Deputy Hogan

It would be helpful if certain aspects of the report were published in advance of the legislation coming before the Dáil. Matters will arise in it which would help us to come up with a balanced resolution of some of the issues of debate on sections of the Bill. A considerable amount of work has gone into the inquiry and it would be in the interests of the accountants' bodies to see certain things in legislative form arising from it.

Chairman

Do you anticipate a question on the Order of Business?

Deputy Hogan

No.

Chairman

That is fine.

Mr. Walsh

The Deputy made a comment on regulation generally. We would be the first to admit we have learned from the tribunals we have seen since the mid-1990s. We have taken action on foot of them and we have had open disciplinary hearings since 2000, of which there have been about 20 at this stage. We have increased the level of sanction we can impose on members from £1,000 to €30,000 per partner in a firm. We have a much higher level of publication and of naming of names. Our regulation was always effective, but it was not visible before. It is now.

Mr. Murtagh

To elaborate on the issue of disciplinary hearings, while the bodies have different rules, ACCA has had open hearings for a number of years at this stage. It is the body's policy to invite representatives from the Department of Enterprise, Trade and Employment to attend them.

To refer back to the conflict of interest issue, I was not sure there was clarity on the point. One of the issues we have is that the composition of the board of IASA may lend itself to conflicts of interest as it stands. People sitting on the board who are responsible for the development of regulation may subsequently be responsible for the enforcement of that regulation. It may be in contravention of natural justice that someone who sets the rules is then responsible for policing them.

Chairman

I thank the delegation for attending the first meeting of this new committee. We look forward to working with delegates over the next four and a half years. If there is something of importance delegates feel is in the national interest and the interests of their profession which they wish to discuss with the committee, I will be pleased, as chairman, to facilitate them.

Mr. O’Rourke

I appreciate that.

Chairman

It has been a difficult morning as the Order of Business was under way in both Houses. We are looking at the schedule. When delegates return they may face many more questioners.

The joint committee went into private session at 10.26 a.m. and adjourned at 10.34 a.m. sine die.