The impact of non-audit services provided by external auditors to audit clients, such as tax advice and consultancy, on the external audit process was one of the issues examined by the recent review group on auditing. Following from the Committee of Public Accounts DIRT report, I established this review group to examine a number of issues in relation to the regulation and operation of the auditing and accountancy profession. The report of the review group was presented to the Committee of Public Accounts on 11 July last.
I am aware that when considering whether auditors should continue to be permitted to provide such non-audit services to audit clients the review group took into account international developments in relation to auditor independence. Both the Securities and Exchange Commission in the US and the EU Committee on Auditing were examining the issue of auditor independence at the same time as the review group.
The review group concluded that Ireland should be at the forefront of international best practice in establishing rules governing auditor independence and made a number of detailed recommendations to safeguard against the threats posed to auditor independence by the provision of non-audit services.
The SEC in the US approved its new rules concerning auditor independence on the 15 November last. The SEC's new rules, which do not impose an outright ban on auditors providing non-audit services to audit clients, are consistent with the recommendations of the review group on auditing.
