Companies (Miscellaneous Provisions) Bill 2013: Report and Final Stages
I welcome the Minister of State, Deputy Sean Sherlock, to take Report Stage of the Companies (Miscellaneous Provisions) Bill 2013. Senators should note that the amendments in the name of Senator Sean D. Barrett on the numbered list of amendments should also be in the names of Senators Feargal Quinn and David Norris. Before we commence, I remind Members that a Senator may speak only once on Report Stage, except the proposer of an amendment who may reply to the discussion on it. Also, I remind Senators that on Report Stage each amendment must be seconded.
Amendments Nos. 1 and 6 form a composite proposal and may be discussed together, by agreement. Is that agreed? Agreed.
Government amendment No. 1:
In page 3, lines 11 and 12, to delete "section 26(4)" and substitute "sections 25, 26, 27, 43 and 44".
Amendment No. 1 is a drafting amendment made by the Parliamentary Counsel to the Long Title of the Bill so as to properly reflect the amendments to be made subsequently to the Personal Insolvency Act 2012. Amendment No. 6 inserts new section 9. The Bill amends a number of sections to the Personal Insolvency Act 2012 in regard to the determination of applications for a debt relief notice, DRN, and to facilitate the processing of these applications by the Money Advice and Budgeting Service, MABS, which provides the relevant approved intermediary for this process. The debt relief notice instrument is one of three new debt resolution processes in the Personal Insolvency Act 2012. It provides, subject to relevant criteria, for the write-off of qualifying debt up to €20,000, subject to a three year supervision period for debtors with essentially "no income and no assets".
The first amendment is to section 25 of the Personal Insolvency Act 2012 where it is proposed to delete the reference in the definition of debt that the debt must be payable within three years from the date of application. The effect of this deletion will be to allow the debtor to propose the inclusion of debt which does not become due until future dates such as term loans in the debt relief notice. The primary objective of the proposed amendment is to assist the MABS and its approved intermediaries in operating the debt relief notice process. The amendment is intended to respond to the following operational difficulties: first, calculating the exact amounts owing under term loans, hire purchase and lease arrangements and instalment orders which may have more than three years to run; and second, that a certain interpretation of the previous definition would appear to allow settlement of up to three years of such debts but then allow continuation of payments to creditors to resume in year four onwards. Such an outcome would run counter to the policy intention that all of the debts, other than the four categories of excluded debt, owed by the debtor must be included in a potential debt relief notice. Neither was there an intention of allowing differential payments to creditors, as all must be treated equally. The change to the definition of debt would capture all of the debts owed by the debtor. If these debts total less than €20,000, the debtor should qualify for a debt relief notice which, if approved by the court, is effective immediately. At the end of the three year supervision period associated with the debt relief notice, all debts are written off, no matter what the original term of a debt may have been.
Amendment agreed to.
Amendments Nos. 2 and 7 form a composite proposal and may be discussed together, by agreement. Is that agreed? Agreed.
Government amendment No. 2:
In page 3, line 13, to delete "130 and 141 of that Act" and substitute "130, 140A, 140B and 141 of that Act".
Amendment No. 2 is a drafting amendment made by the Parliamentary Counsel to the Long Title of the Bill so as to properly reflect the amendments to be made subsequently to the Bankruptcy Act 1988. Amendment No. 7 which inserts a new section 10 in the Bill provides for amendments to a number of sections to the Bankruptcy Act 1988. The amendments to sections 17, 105, 130, 140B and 141 of the Bankruptcy Act 1988 are similar and have the objective of seeking to reduce the costs associated with bankruptcy. The Insolvency Service of Ireland has proposed that it would provide cost free a facility on its website for a bankrupt to "notice" that fact, as required by law. Currently, only publication in Iris Oifigiúil and a daily newspaper circulating in the State is permitted. This change in regard to the giving of notice could save a bankrupt person a considerable amount. The amendments to these sections of the Bankruptcy Act 1988 will allow the Minister for Justice and Equality to prescribe how notice of the adjudication is to be given by the bankrupt. The essential change is to now include the option of using the website of the insolvency service for the notice, in addition to Iris Oifigiúil. This new option can help to allay some of the concerns about the costs of bankruptcy which have been raised in recent times.
The proposed amendment to section 140A of the Bankruptcy Act 1988 is in regard to the register of insolvency decisions arising from the operation of the EU regulation on insolvency proceedings. It will permit the relevant register to be maintained in electronic format, allow for it to be open to public inspection and an inspection fee to be charged. Essentially, this is a technical amendment.
The amendments to bankruptcy law provided for in the Bill will complete the current reform of bankruptcy legislation. I am informed by the Minister for Justice and Equality of his intention soon to make a number of statutory instruments, first, to commence the relevant parts of the Personal Insolvency Act 2012 and the Courts and Civil Law (Miscellaneous Provisions) Act 2013 pertaining to bankruptcy; second, to provide for the new rules of the superior courts in regard to bankruptcy procedures to provide for fees payable in bankruptcy; and, third, for the accounts to be maintained by the official assignee in bankruptcy necessitated by the transfer of that office from the Courts Service to the Insolvency Service of Ireland. I am also informed that the insolvency service will be developing information material on bankruptcy for its website.
Amendment agreed to.
I move amendment No. 3:
In page 5, between lines 11 and 12 to insert the following:
"(3) The Minister shall submit to the Oireachtas an annual estimate of the savings due to to the operation of this amendment.".
I welcome back the Minister of State, Deputy Sean Sherlock.
I also take this opportunity thank the Minister of State, Deputy Kathleen Lynch, who originally introduced the legislation in the House.
As stated on Committee Stage, there is agreement on all sides that we need a regime of financial services which will not get the entire country into the type of trouble into which the previous version got it in 2008. Were the Minister of State to succeed in his endeavour - he has our support in respect of it - such a regime would be a major asset to the country in the future. Senator Quinn and I have tabled a number of amendments designed to facilitate the development of such a regime.
Amendment No. 3 relates to instances where proceedings will be taken in the Circuit Court rather than in the High Court. We request that an annual estimate of the savings involved and a breakdown per case - with information on the total number of cases - be provided. It is good that we are going in the right direction and, as stated on Committee Stage, that the position would be quantified. It would also be useful to ensure that we will not revert to a situation where high costs might obtain. In other words, we should set a target with regard to the amount to be saved per case. If one were extremely concerned about costs, one might not want to engineer a situation whereby taking a case in the Circuit Court would cost one more than would be the case if it were taken in the High Court.
There are also concerns to the effect that legal costs relating to personal injury cases are eroding the savings that were made when the Personal Injuries Assessment Board, PIAB, was established. I agree with the Minister of State that there are savings to be made. However, it would be useful for the Oireachtas to be informed as to what will be the level of such savings and to be able to review the position in order to ensure that said level will be maintained. A responsible parliament should ask for information of this nature and assist the Government in fostering better standards of governance and public administration. If we have a goal, let us see whether we are moving closer to it. I hope we are doing so. The Minister of State has our support in the context of attaining that goal. I hope information will be made available in respect of how much it is hoped to save.
With so many things happening at present, including our escape from the troika, trying to put the public finances in order, there is a view to the effect that we have not sufficiently addressed the issues relating to the regulation of accountants. However, we cannot do everything at once. The public is still extremely annoyed with regard to what previously happened in the area of financial services. The Parliament must be vigilant and that is why I have tabled amendments Nos. 3 and 4. I will speak to the latter when the time comes. Parliamentarians would do society a service if they were to promote the making of both improvements and cost savings in this area.
I second the amendment. I cannot improve on what the Senator stated except to state that the words we used on Second Stage and Committee Stage were a reminder of the need for this legislation. We noted the need for this legislation. It is not enough to be reminded unless we are also reminded of the savings that are anticipated. The amendment states, "The Minister shall submit to the Oireachtas an annual estimate of the savings due to the operation of this amendment." That makes sense and I see no reason such an estimate should not be provided. I do not believe that providing it would give rise to any cost. Such an estimate would serve as a reminder of the savings which can be achieved. We spoke earlier about the high cost of litigation in Ireland and, in that context, facilitating these changes would make a great deal of sense. It is not just a question of saving money; time would also be saved. The recent case relating to Lissadell House in County Sligo served as a reminder of the high costs involved. I understand that the legal costs in said case amounted to something in the region of €7 million. That is a reminder of what can occur when a matter goes before the Supreme Court.
Senator Barrett explained the intent behind the amendment very well. In my opinion, the amendment is worthy of acceptance.
I will not be accepting this amendment, which proposes the insertion of a new subsection (3) into section 2. However, the latter amends sections 2 to 4, inclusive, of the Companies (Amendment) Act 1990. The addition of a further subsection to section 2, unrelated to any specified section of the 1990 Act, is not legally sound and would not achieve what is intended. Nor is the wording which refers to the operation of this amendment sound. The Company Law Review Group, in its report on examinership, recommended increasing the jurisdiction of the Circuit Court for examinership in respect of small private companies. The business organisations represented on the group - IBEC, ISME and SFA - were all supportive of this proposal. The report highlights the costs associated with the High Court procedure as a reason many SMEs do not currently avail of examinership.
It is not possible, as a result of the number of variables attaching to the examinership process, to quantify estimates of the savings which might accrue. For example, there may be different levels of legal representation in different cases. In addition, the number of applications to the court during the examinership process may - depending on the complexities involved - vary between cases. In every examinership there are two essential hearings before the court. The first of these relates to seeking the appointment of the examiner and the second to seeking confirmation of his or her report in which he or she will set out his or her proposals for a compromise or scheme of arrangement. There may also be a need for a hearing in order that creditors might have their say before the appointment of an interim examiner is confirmed. However, in the course of the examinership - and depending of the complexity of the circumstances in a particular case - there may be a need for the examiner to seek either direction from the court on various issues or permission to exercise certain powers. It is, therefore, impossible to estimate the number of occasions on which there will be recourse to the court during an examinership.
There is no typical examinership. The level of legal and other costs will be determined by the simplicity or complexity of a particular case. In light of the findings of the Company Law Review Group to the effect that "in the form currently available to small private companies (SPCs), is inadequate by reason of the costs involved which are prohibitive" and the acknowledgement that examinership is generally not a possibility for such companies because of the costs associated with the High Court procedure, it would be very difficult, if not impossible, to establish a base from which to measure future cost savings for other small companies arising from the use of the Circuit Court route instead.
There is no existing group which can be used for comparative purposes. Attempting to compare the costs relating to an examinership in the High Court in respect of a larger company with the possible costs for a small company in the Circuit Court would not be a meaningful exercise. There is no standard or comparator against which assessment can be made. Furthermore, the data relating to the cost of an examinership may not be publicly available and would need to be sourced from companies. This would impose an additional administrative burden on companies, which could not be compelled to provide the necessary information without the introduction of legislation. The Senator's amendment does address this particular issue. It is not unreasonable to assume, however, that taking an examinership case in the Circuit Court should be less costly than doing so in the High Court, particularly as the legal costs relating to the former and lower than those which obtain in respect of the latter. Access should also be improved by the proximity of the Circuit Court to the companies seeking to avail of the examinership process. There may also be less of a need to resort to the court during the examinership process if a particular case is less complex.
These are all factors which should result in lower costs for small companies using the examinership process in the future.
However, in the absence of data on the costs currently incurred by small companies in the examinership process because they do not seek examinership, it would be less than robust to attempt to estimate savings by a comparison of speculative costs in an unused High Court process and the proposed Circuit Court process given the variables I have outlined. I assure the Senator that we have given this matter consideration and studied his contribution on a similar amendment on Committee Stage. I have outlined all of the difficulties that arise in attempting to calculate savings that would accrue under this proposal.
On a general level, I remind Senators that Government policy on business is to provide for an operating environment in which obstacles that could impede its development are removed, where possible, and it is encouraged to develop and flourish. The proposal before us is firmly located in this category. The granting of the possibility of direct access to the Circuit Court to small business in the manner proposed offers businesses the opportunity to restructure their affairs and return to an even keel at a cost that is likely to prove more affordable than being required to take the High Court route. This is, therefore, an intrinsically laudable proposal and on that basis alone, it merits the support of the House.
With respect to Senator Barrett, I cannot help but feel that his proposed amendment has overtones of a measure to police legal costs. I do not consider that a company law measure such as this is the appropriate medium in which to pursue such an objective. Perhaps he will consider approaching the Minister for Justice and Equality on the issue as the amendment is not appropriate to the legislation before the House. On that basis, and with respect, I do not propose to accept it.
Where do we go from here? The next time a delegation tells the Minister of State's officials its proposal will save money, will he ask how much will be saved in order that we do not end up believing money will be saved without anyone having any idea how much? We must raise the standard of public administration to a higher level than that. Giving in to delegations and deputations has cost the country dearly. To give the Minister of State full credit, this measure will save money, although no one in the Department appears to have an idea how much.
As to whether it is appropriate for a Senator to raise this matter, it is a theme regularly dealt with by the National Competitiveness Council which reports to the Department. Will the Minister of State instruct the council not to discuss the high level of legal costs? It would be inappropriate for him to do so. Whoever advised him to say a Senator may not raise issues of cost in the House was utterly wrong. That is a major problem.
I object to the Senator's statement. People do not put words into Ministers' mouths. With due respect, we take advice and make a decision as to whether we accept it. As the Minister of State who is taking this legislation, having taken due regard, I will not accept the amendment. The issue the Senator raises regarding costs and oversight is a policy matter and not appropriate for the purposes of the legislation. I do not propose to say anything further. I thank the Acting Chairman, Senator Paul Coghlan, for allowing me to intervene.
We should do our business in the House better. The Minister of State has made a claim which he is unable to stand up in any quantitative way. While I support him in that claim, I wish we could jointly stand it up because the country has a problem with legal costs. I will raise the issue with the Minister for Justice and Equality, Deputy Shatter, and the National Competitiveness Council which has advised the Minister of State that legal costs are a problem. We have to move public policymaking on to a higher level than is evident here. The regulatory impact assessments that were supposed to be done to provide answers to these types of questions appear to have faded away recently. I see fewer and fewer of them being published. That remark is not directed at the Minister of State.
After all the mistakes we made and are now trying to correct, a more quantified and scientific basis for policymaking is needed. Writing a provision into a Bill and then stating, as the Minister of State did, that it is impossible to estimate its costs is a step backward rather than forward. This is not an isolated case because measures are regularly presented to the House that are supposed to generate benefits on which very little work has been done. Unfortunately, we are also presented with measures which generate costs that are subsequently shown to be excessive. We need more precision and quantification.
Those who do not want public administration operating at this level are wrong. We are heavily in debt and still not balancing the books, yet we give in to every claim that savings will be made without having the purported savings quantified. This helps explain the reason we continue to borrow €1 billion per month. The purpose of the amendment is to ensure greater rigour in public policy.
Is the Senator pressing the amendment?
Yes, because we must move towards better ways to make policy.
Amendment put and declared lost.
I move amendment No. 4:
In page 13, between lines 6 and 7, to insert the following:
"(9) The Irish Auditing and Accounting Supervisory Authority shall report annually to the Oireachtas Committee on Finance, Public Expenditure and Reform on oversight and compliance in the audit sector, the ability of the sector to bear the costs of inadequate quality assurance standards and the adequacy of penalties for breaches of such standards.".
We are also working against a backdrop where we have been seeking to have the Oireachtas address certain accounting practices since at least 2008. People outside the House want us to introduce this measure. As I stated, important tasks of supervision in the area of audit and accounting have been neglected as a result of the work the Government and Oireachtas has been required to do. Some matters have been held up by the Director of Public Prosecutions and certain court cases are not due to be heard until next year.
We need to bring this matter into the public arena, a view that is shared by Ms Helen Hall, director general of the Irish Auditing and Accounting Supervisory Authority, IAASA. Ms Hall notes in the latest IAASA annual report that accountants' work is being inhibited and states the following:
These confidentiality provisions have had and continue to have an adverse impact on IAASA's advocacy role. We have had initial discussions with the Department on this matter and plan to engage further in 2013. The intention is to explore amendments to these confidentiality provisions as part of IAASA's consideration of the Companies Bill 2012, with a view to striking a balance between the protection of confidential information provided to IAASA and the desirability of transparent reporting on IAASA's activities.
The 2012 reports subsequently states: "For example, we view the provision of information on the results of our financial reporting examinations, without necessarily identifying the name of the issuer involved, as assisting in building an awareness of, and confidence in, financial reporting." As the Minister is aware, this goes back to 2008 when these problems struck the country. Ms Karen Erwin was chairperson of the Irish Auditing and Accounting Supervisory Authority at the time.
She stated in her annual report that what was happening increased risk levels and, in turn, significantly increased the risk of serious and lasting damage to public confidence in statutory financial reporting and the accountancy profession. I do not think the good reputation of the accountancy profession has been restored. The profession feels it is inhibited by section 31 of the legislation, which prohibits disclosure and discussion. The report contains redacted sections. It is like a red rag to a bull for Members of the Oireachtas to be given documents that are redacted. How are we supposed to make decisions? The Milliman report on the health insurance sector contained 55 vital sections that were blacked out. That is an insult to our democracy on the part of those who did the redacting.
Three prima facie cases are being pursued against one accountancy firm in regard to Anglo Irish Bank. The report of the commission on banking referred to the low standards observed in accountancy practices at the time. The Minister of State had to remove these sections from the Companies Bill, which while admittedly complex and lengthy is moving very slowly. I think it has been in gestation for three years at this point. We are moving this amendment in view of the cost to the economy of what has happened in Irish accounting, the slowness of the procedures and the extremely light penalties imposed thus far. In the last six months, six fines were imposed for an average fine of €1,500. The average costs in seven cases were €3,870. There were eight reprimands, of which four were severe and four were not severe. In view of the €64 billion we put into the banks on the basis of accounts prepared by these accountancy firms, which we read into the record on a previous occasion, Parliament has to respond in a more urgent way to ventilate the issue. The probable basis for all the troubles this economy has encountered is that we bought banks on the basis of the accounts which the Minister for Finance and his successors found to be inaccurate.
On a point of order, are we speaking to amendment No. 4?
The Joint Committee on Finance, Public Expenditure and Reform needs to get involved with the oversight and compliance regimes of the audit sector. Are the penalties sufficient? The penalties imposed between July and October appear to be minuscule compared to what happened among the larger accountancy firms in their preparation of banks' accounts. There are delays to the investigation of the claims of inadequate standards in Irish accounting. We have an extremely large bill which has set the country back. Is the quality assurance regime adequate and will the sector bear it?
Some of the activities are not investigated because they are not covered by the specified categories of companies. We cannot investigate the accountants for Newbridge Credit Union because it was not a listed company. Apparently Irish Nationwide Building Society fell into a similar category. We have to find a mechanism to assist us as parliamentarians in bringing these issues to the fore and showing our constituents that we are acting to deal with the abuses in this area. We are within a month of the sixth year of the crisis. Can the rest of Irish society bear the cost of inadequate quality assurance and penalties?
In a context whereby the authority is feeling constrained and has entered into discussions with the Department, very little has happened in the case of large companies since 2008 and considerable sums of the taxpayers' money have been paid out, I am tabling this amendment to strengthen the Government's hand by getting around the problem of delays in public ventilation of what is probably the most serious issue in our finances. Perhaps this will be the game changer because what we have done thus far has been expensive and has not satisfied the public in respect of regulation of financial services in Ireland. Yesterday we were debating a bailout of pension funds and last week we were discussing credit unions. In 2008, we were bailing out the banks. We have lost all our building societies. I would like all of these issues to be addressed by the authority in front of the Joint Committee on Finance, Public Expenditure and Reform because the public wants these issues to be ventilated.
I second the amendment. It has been explained very well by Senator Barrett. We live in a democracy in which the Oireachtas is elected. We have neglected the supervisory role that the Oireachtas should play. This amendment is an ideal way to address that issue. I served on a previous finance committee approximately five years ago. If we had this power then we would have ensured that the IAASA appeared before us at least once per year. That is the sort of power we require now if we are to have a democracy that works. On that basis, it is essential that we make this amendment. Senator Barrett put his finger on the problem. I urge the Minister of State to accept the amendment. He explained why he was not enthusiastic about the previous amendment.
I look forward to hearing what the Minister of State has to say on this amendment and I urge him to say that he can accept it.
I do not believe anybody in the House disagrees with the spirit of the submission made by the Senators. All of us agree there was a malaise and a morass regarding auditing and accountancy in a particular period but in dealing with the specific amendments I must be cognisant of whether they are applicable to the legislation before us and I would say that the last amendment was certainly not.
On this amendment, notwithstanding the robust case made by Senator Barrett which is a commentary on the lack of robust auditing and accountancy proceedings, the case we would make is that it is unnecessary and I do not propose to accept it for the following reason. Under section 22 of the Companies (Auditing and Accounting) Act 2003, not later than four months after the end of each financial year, the Irish Auditing and Accounting Supervisory Authority, IAASA, must make a written report to the Minister of its activities during that year. The report must be prepared in such a manner and form as the Minister may direct. The Minister shall ensure that a copy of the annual report is laid before each House of the Oireachtas not later than six months after the end of the financial year to which it refers.
Additionally, under section 22(4), the chief executive officer and the chairperson of the Irish Auditing and Accounting Supervisory Authority shall give evidence to the Committee of Public Accounts, when required to do so, on the following matters: the regulatory and propriety of transactions recorded or to be recorded in its accounts; the Irish Auditing and Accounting Supervisory Authority's economy and efficiency in using its resources; the systems, procedures and practices used by the Irish Auditing and Accounting Supervisory Authority for evaluating the effectiveness of its operations; and any matter affecting the Irish Auditing and Accounting Supervisory Authority that is referred to in a special report of the Comptroller and Auditor General. Whenever requested to do so by any other committee appointed by either House of the Oireachtas or appointed jointly by both Houses, the chief executive officer and chairperson of the Irish Auditing and Accounting Supervisory Authority shall account to the committee for the performance of the functions and the exercise of the powers of the Irish Auditing and Accounting Supervisory Authority.
The provision relating to quality assurance in the Bill is strictly confined to empowering the IAASA to impose a levy on statutory auditors and audit firms of public interest entities to defray the costs to it for carrying out the functions of external quality assurance in respect of those public interest entities. Additional functions relating to the European Union recommendation on external quality assurance are proposed to be conferred on the IAASA in the Companies Bill 2012 while the balance of the related functions will be conferred to IAASA by amendment to existing regulations.
An additional requirement will be that the IAASA reports annually on the overall results of the quality assurance system. Quality assurance is the regular inspection of statutory auditors and audit firms to ensure that systems are in place that will allow for consistently high quality audits. It is important to distinguish between the audit process itself and the quality assurance function. An audit is an independent examination of the financial statement - what used to be referred to simply as "accounts" - of a company or other entity which results in the expression of an opinion by the auditor on whether the financial statements have been prepared, in all material respects, in accordance with an applicable reporting framework and on whether the financial statements give a true and fair view of the profit or loss for the financial year, and the financial position at the end of the financial year.
In Ireland, audits are conducted in accordance with international standards on auditing, that is, both for the United Kingdom and Ireland. International standards on auditing are issued by the International Auditing and Assurance Standards Board. The UK and Irish version, reflecting a small number of modifications, is issued by the Financial Reporting Council.
An audit opinion relates to the results of a specified period and the position as at a specific historic date. It does not constitute an opinion on the financial health of the company in question nor is it nor can it ever be a promise or guarantee of the future viability of the entity.
Quality assurance is the regular inspection of statutory auditors and audit firms to ensure that systems are in place that will allow for consistently high quality audits. The scope of inspections includes an assessment of auditors' compliance with applicable auditing standards and independence requirements, a review of the internal quality control system of the audit firm and the testing of selected audit files.
The proposed transfer of the quality assurance function from the recognised accountancy bodies to the IAASA in respect of the audit of public interest entities is in line with best international practice. For example, the United States has such a system under the Sarbanes-Oxley Act, to which Senator Barrett referred on Committee Stage, as have Canada, Japan and Australia.
Within the European Union at least six member states have moved to this independent quality assurance system, including the United Kingdom, Germany and France, and smaller ones such as Belgium and the Netherlands. This system is acknowledged as the best way of ensuring the necessary independence of the quality assurance process.
A system where the professional bodies execute the quality assurance function on its member auditors and audit firms of public interest entities is considered to lack the requisite degree of independence. In the EU new legislative proposals on audit are currently at an advanced stage of consideration and these proposals include a mandatory requirement for member states to have the quality assurance of auditors and audit firms which conduct audits of public interest entities carried out by public oversight bodies such as the IAASA. The US Public Company Accounting Oversight Board is understood as not considering that it can place the same level of reliance on audit reports of public interest entities produced in jurisdictions which do not have an independent oversight system of quality assurance as those which do.
Among the additional functions that will be conferred on the IAASA to enable it to undertake the proposed quality assurance functions are powers to take disciplinary actions or impose penalties in respect of auditors and audit firms. The intention is that these powers of sanctions and penalties will be proportionate and dissuasive.
Does Senator Barrett wish to make a final comment on the amendment?
I believe this amendment is necessary. The Minster of State referred to the Committee of Public Accounts which, as he pointed out, audits the authority's accounts, resources, systems and procedures. The faults lie not in how it accounts for the relatively small amount of money it spends but in the general economy as a whole. I referred to what Helen Hall, the chief executive, said in her recent address. I draw the attention of the Minister of State to the authority's 2010 report which states, "The Commission finds it unfortunate that sufficient timely and challenging auditor dialogue was not used to influence the banks' business models and lending practices." That is set out on page 3 of IAASA's report. It is its account of the commission of investigation into the banking sector in Ireland. That was stated in the 2010 report and we are now heading towards 2014. There are plenty of members of that committee, not least its chairman, who would have wanted to address the issue that "it was unfortunate that sufficient timely and challenging auditor dialogue was not used to influence the banks' business models and lending practices" before we got into so much trouble.
It was unfortunate that sufficient timely and challenging auditor dialogue was not used to influence the banks' business models and lending practices before we got into so much trouble. What we have has not worked sufficiently quickly. The House is regularly asked to address reports on financial institutions that have failed and to put the burden onto the taxpayer, which has caused so much misery in the country. We are seeking this dialogue in this amendment, which will not happen unless the House wants it to happen, and that is why I put it in the legislation. We have do everything better in this area and I am here to assist the Minister of State in that regard. Had we been more attentive in the past - and by the past I mean any year since 2010, when some of those regulations were written - and had we ventilated these issues, it would have been far better for the country. I am including myself in this. The only accountants I have seen before the finance committee have been the ones seeking further tax breaks in the budget for their clients while hardly acknowledging that we were trying to solve a budget deficit. If we had a surplus, they would be delighted to give us ways to spend it in the interest of their clients. We have not called them to account on these matters and society is the poorer for it.
The Seanad divided: Tá, 18; Níl, 23.
- Barrett, Sean D.
- Byrne, Thomas.
- Cullinane, David.
- Daly, Mark.
- Leyden, Terry.
- MacSharry, Marc.
- Mooney, Paschal.
- Mullen, Rónán.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O'Sullivan, Ned.
- Quinn, Feargal.
- Reilly, Kathryn.
- van Turnhout, Jillian.
- Walsh, Jim.
- White, Mary M.
- Wilson, Diarmuid.
- Zappone, Katherine.
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Eamonn.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D'Arcy, Michael.
- Gilroy, John.
- Henry, Imelda.
- Higgins, Lorraine.
- Keane, Cáit.
- Moloney, Marie.
- Moran, Mary.
- Mulcahy, Tony.
- Mullins, Michael.
- Naughton, Hildegarde.
- O'Donnell, Marie-Louise.
- O'Keeffe, Susan.
- O'Neill, Pat.
- Sheahan, Tom.
Tellers: Tá, Senators Sean D. Barrett and Feargal Quinn; Níl, Senators Ivana Bacik and Paul Coghlan.
Amendment declared lost.
I move amendment No. 5:
In page 13, line 17, after “regulations” to insert “notified to the Oireachtas”.
I again welcome the Minister of State, Deputy Sherlock. We referred to the matter before the last 28 seconds of the match on Sunday. The Bill states that: ""third-country auditor” has the same meaning as in Regulation 3 of the Regulations of 2010." I wish the words "notified to the Oireachtas" to be added. The Minister of State might recall that two of the countries on the black list were New Zealand and Bermuda. We briefly discussed New Zealand. The New Zealand Institute of Chartered Accountants has mutual recognition agreements with Canada, Australia, England, Wales, Hong Kong, Ireland, Scotland, South Africa and the United States. The Bermudans are trained by the Canadians who have some of the highest financial standards to which we seriously aspire and envy. I do not know how those two countries got on the black list. I did not know it until the Minister of State, Deputy Kathleen Lynch, told me when she was before the House.
There is wisdom in the Oireachtas which could help the decision-making process and notify people that as far as Members of the Oireachtas are concerned – certainly this one – there appears to be an anomaly in the classification of a third country auditor as being in some way inferior. The list that was read out by the Minister of State, Deputy Kathleen Lynch, included New Zealand and Bermuda, which was somewhat of a surprise for both those countries. There is wisdom in these Houses, between the 60 Members in the Seanad and the 166 Members in the other House. We would never have found it out had it not been for the Minister of State, Deputy Kathleen Lynch. It does not do any harm for the Oireachtas to ponder how country X got on the list. Ireland has links in many countries due to this being the most internationalised economy in the world. We might have some information that is useful in the discussion. Otherwise, New Zealand and Bermuda could still be on a list of countries in which we judge the procedures to be unsatisfactory. I have asked some accountants and they did not know of any reason for the two countries to be on such a list. These things happen and if the Oireachtas were notified it might do nothing or it could make the arguments I have made. That is the purpose of the amendment. The more people who are in the loop, the more feedback one will get. I raise the issue following my surprise to find those two countries were on the list.
I second Senator Barrett’s amendment. The point he makes is that anyone can make a mistake. We had an interesting visit today from scholars benefitting from the George Mitchell scholarship. I remember when the Bill setting up the scholarship was going through the House. The purpose of the scholarship was to enable students to study in the State, the main objective which was peace. I brought to the attention of the Minister that surely if students were coming to Ireland to study peace, the terms of the scholarship should not be limited to the Twenty-six Counties but it should involve all 32 counties.
It had gone through the Dáil unnoticed, but was noticed in the Seanad and changed. The point I am making is that anybody can make a mistake. In this case, it appears a mistake was made by including Bermuda and New Zealand, although no harm was done in the long term. This is the sort of thing that could be overcome by acceptance of this amendment. The Houses of the Oireachtas would be "notified". This is a simple amendment which does not need major discussion or anything other than assent. All the amendment does is add the words "notified to the Oireachtas". I believe that would solve the problem. I urge the Minister of State to accept the amendment.
Is it appropriate for me to ask Senator Barrett to flesh out some of the points he made regarding the amendment he wishes to press? Perhaps he could send me a note on any practical mechanisms through which we could look at this again, without prejudice.
I refer to the question raised by Senator Barrett on Committee Stage concerning the situation of New Zealand under the decision of 13 June 2013 implemented by the Commission. The Commission is not commenting on the quality of audit in any of the countries listed in the annex. It simply states there is not enough information for it to assess the equivalence of the oversight systems.
Recycle 2 of that decision includes the statement:
The Commission has carried out assessments of the public oversight, quality assurance, investigation and penalty systems for auditors and audit entries of the third countries and territories listed in the Annex to decision 2011/30/EU. The assessments were carried out with the assistance of the European Group of Auditors Oversight Bodies. The public oversight, quality assurance, investigation and penalty systems for auditors and audit entities for those third countries and territories were assessed in the light of the criteria set out in Articles 29, 30 and 32 of Directive 2006/43/EC which govern the public oversight, quality assurance, investigation and penalty systems for auditors and audit firms of the Member States.
Recycle 4 states:
Bermuda, Cayman Islands, Egypt, Mauritius, New Zealand, Russia and Turkey have established or are in the process of establishing public oversight, quality assurance, investigation and penalty systems for auditors and audit entities. However, information about the functioning and the rules governing such systems is not sufficient to carry out an equivalence assessment.
I hope this gives some clarity regarding the point raised by Senator Barrett.
In regard to amendment No. 5, I am sympathetic to the principle of the amendment proposed by Senator Barrett. However, I am informed that the amendment as proposed does not achieve the outcome the Senator seeks, which is to have a requirement for regulations made under this section to be laid before each House of the Oireachtas. It has not been possible to have an appropriate amendment drafted, within the applicable deadlines, to enable me to table an amendment today and in the interest of not delaying the progress of the Bill, I propose incorporating the measure into the Companies Bill 2012. The intention is that the requisite amendment will be included as an amendment in that Bill. On that basis, I hope Senator Barrett understands we will not accept his amendment.
In response to a point Senator Barrett raised previously on the substantive Bill, the committee powered through 1,400 sections in two days in an efficient manner. I acknowledge the role of officials and public servants involved in the process. While the Senator has made a point about the number of years it has taken, it moved through the committee expeditiously, because it is very much a cross-party Bill. It is a consolidating piece of legislation and there was agreement from all political sides on the need to ensure we dealt with it efficiently. We probably set a record in dealing with 1,400 sections in 24 hours, not a bad way to do business in the House.
I ask Senator Barrett to take on board the points I have made in regard to amendment No. 5. I am confident his concern will be covered in an amendment to the Companies Bill.
I thank the Minister of State for his graciousness in regard to amendments Nos. 4 and 5. I am sure we will have further discussion on the issue. We were all agreed before we took the division that this area needs to be confronted. Earlier we had tributes to former Senator McGlinchey who spoke for 12 successive hours. I congratulate the Minister of State on dealing with 1,400 sections in 24 hours. I thank him and will be delighted to co-operate in regard to the points made. There is a wisdom in these Houses and perhaps somebody does business in New Zealand and finds the accounts reliable, and similarly in Bermuda. The issue of Bermuda came to my notice because in diplomatic terms we class Canada and Bermuda together. Our ambassador in Canada also serves Bermuda. That alerted me to the connection between the accountants and that they are of the same calibre. This information is in the House and can assist the Minister of State.
I thank the Minister of State for his kindness and consideration. I will not push this amendment as it would be extremely churlish of me given the Minister of State has said it will appear under another guise. That may happen very quickly given the committee has moved so fast on the Bill.
Amendment, by leave, withdrawn.
Government amendment No. 6:
In page 13, between lines 26 and 27, to insert the following:
“Amendment of Personal Insolvency Act 2012
9. The Personal Insolvency Act 2012 is amended —
(a) in section 25, by substituting the following definition for the definition of “debt”:
“ ‘debt’, in relation to a debtor, means a debt for a liquidated sum that, on the application date, is payable either immediately or at some certain future time;”,
(b) in section 26, by deleting subsection (4),
(c) in section 27(6), by substituting the following for paragraph (a):
“(a) the information contained in the debtor’s Prescribed Financial Statement is true and accurate in all material respects, and”,
(d) in section 43(3)(b), by substituting the following for subparagraph (v):
“(v) the procedural requirements specified in this Chapter were not complied with;
(vi) the specified debtor, by his or her conduct within the period of 6 months ending on the application date, arranged his or her financial affairs primarily with a view to being or becoming eligible for the issue of a Debt Relief Notice.”,
(e) in section 44(3), by substituting the following for paragraph (f):
“(f) the procedural requirements specified in this Chapter were not complied with;
(g) the specified debtor, by his or her conduct within the period of 6 months ending on the application date, arranged his or her financial affairs primarily with a view to being or becoming eligible for the issue of a Debt Relief Notice.”.”.
Amendment agreed to.
Government amendment No. 7:
In page 13, between lines 26 and 27, to insert the following:
“Amendment of Bankruptcy Act 1988
10. The Bankruptcy Act 1988 is amended —
(a) in section 17 by the substitution of the following for subsection (2):
“(2) The Court shall cause notice of the adjudication to be given as soon as may be in the prescribed manner in the Iris Oifigiúil, and—
(a) in at least one daily newspaper circulating in the State, or
(b) by the publication of the notice on the website of the Insolvency Service of Ireland.”,
(b) in section 105, by the substitution of the following for subsection (2):
“(2) On an adjudication under subsection (1) the Court shall proceed as in bankruptcy and cause notice of the adjudication to be given forthwith in the prescribed manner in the Iris Oifigiúil, and —
(a) in at least one daily newspaper circulating in the State, or
(b) by the publication of the notice on the website of the Insolvency Service of Ireland,
and the petitioner shall be subject to the jurisdiction of the Court in the same manner as any other bankrupt, and any proposal which may have been made or accepted or approved shall be void.”,
(c) by the substitution of the following for section 130:
“Arranging publication of notice without authority
130. A person who —
(a) arranges for or causes the publication of a notice under this Act —
(i) in the Iris Oifigiúil,
(ii) in a newspaper, or
(iii) on the website of the Insolvency Service of Ireland, without authority under this Act, or
(b) arranges or causes the publication of such a notice, knowing that the contents of such notice are false in a material respect,
shall be guilty of an offence.”,
(d) in section 140A —
(i) by the insertion after subsection (1) of the following subsection:
“(1A) The register referred to in subsection (1) may be kept in electronic format.”,
(ii) in subsection (3) by the substitution of the following for paragraph (c):
“(c) any fee prescribed for that purpose by the Insolvency Service of Ireland.”,
(iii) by the substitution of the following for subsection (5):
“(5) The register shall be open to public inspection on payment of such fee (if any) as may be prescribed for that purpose by the Insolvency Service of Ireland.”,
(e) in section 140B(1) by the substitution of —
“in the prescribed manner —
(i) in the Iris Oifigiúil, and
(ii) in either —
(I) at least one daily newspaper circulating in the State, or
(II) on the website of the Insolvency Service of Ireland.”,
“in the prescribed manner in Iris Oifigiúil and in at least one daily newspaper circulating in the State.”,
(f) by the substitution of the following for section 141:
“Publication of certain notices to be evidence
141. A notice published pursuant to this Act —
(a) in the Iris Oifigiúil,
(b) in a daily newspaper circulating in the State, or
(c) on the website of the Insolvency Service of Ireland,
shall be evidence of the matters contained in the notice.”.”.
Amendment agreed to.
Government amendment No. 8:
In page 13, line 34, to delete “Section 6” and substitute “Sections 1, 5, 6, 9, and 10”.
This is a drafting amendment to section 9 which was recommended by the Parliamentary Counsel. It is designed to correctly reference those sections which come into effect on the enactment of the Bill.
Amendment agreed to.
Bill, as amended, received for final consideration and passed.
Sitting suspended at 3.50 p.m. and resumed at 4.30 p.m.