The pending implementation of the 2014 revised EU Audit Directive and Regulations underpinning the Deputy’s question was first brought to the attention of my officials in the Department of Finance in respect of the potential impact for NAMA in May 2016 by officials within the Department of Jobs, Enterprise and Innovation (DJEI) responsible for transposing this directive into Irish law. DJEI made contact with my Department and the Office of Comptroller and Auditor General ("C&AG") regarding the implementation of statutory audit obligations in the 2014 revised EU Audit Directive and Regulations prior to their transposition into Irish law via SI 312 of 2016 and the Companies Act 2014.
My Department engaged over a number of months with DJEI, the Office of the C&AG and NAMA on this matter. My Department also sought legal advice from the Office of the Attorney General regarding this Directive. The Directive requires that certain companies, including NAMA, must be audited by a Statutory Auditor within the meaning of the Directive. This audit requirement is separate from and in addition to the audit requirements set out in the NAMA Act which remain in effect. It was also confirmed that the C&AG was not a Statutory Auditor within the meaning of the Directive.
I understand that both NAMA and the Office of the C&AG each obtained separate legal advice which concurs with this position. Hence, the C&AG's audit of the statutory financial statements of the NAMA Group entities from the financial year ended 31 December 2016 onwards does not fulfil the requirements of the Directive.
I am advised that the C&AG believes that, at a minimum, a change in legislation would be required in order to become a 'statutory auditor'.
In this regard, cognisance would also need to be given to the particular features of the Constitution which safeguard the independence of the role.
As a consequence, the NAMA Group entities were required to appoint a Statutory Auditor to satisfy the Directors’ obligations under Section 333 of the Companies Act 2014 for the year ended 31 December 2016 and all years thereafter. NAMA launched a tender for the services of a statutory auditor and, arising from this, Mazars were appointed by the NAMA Board in May 2017. I am advised that the tender documentation for this appointment are publicly available on the e-tenders website, should the Deputy wish to review them in detail.
The appointment of a statutory auditor does not override, nor breach, the C&AG's obligation to audit NAMA and NAMA Group Entities for each year end in accordance with Section 57 of the NAMA Act. However, it does mean that there will be a dual audit of NAMA’s accounts –by both its statutory auditor, Mazars, and separately by the C&AG.
In this regard, the Deputy will note that NAMA’s tender document requests that tenderers “should seek to maximise audit efficiency for NAMA and in this regard consideration should be given to making use of the working papers of the C&AG (if available) and similarly the Statutory Auditor should consider the provision of their working papers to the C&AG for their audit”.
I understand that NAMA and the C&AG have worked constructively together to address these changing audit requirements while remaining faithful to their respective obligations under various pieces of legislation.
