My colleague, the Minister for Jobs, Enterprise and Innovation, has responsibility for company law including the legislative regime relating to auditing and accounting. The Companies (Auditing and Accounting) Act 2003 provides for the establishment of the Irish Auditing and Accounting Supervisory Authority. Its functions include supervising how the prescribed accountancy bodies regulate and monitor their members and promoting adherence to high professional standards in the auditing and accountancy professions. I understand the Department of Jobs, Enterprise and Innovation is working on the implementation of the European Commission's recommendation on the external quality assurance of statutory auditors and audit firms of public interest entities. The practical implementation of the recommendation will include direct inspections of relevant audit files by the Irish Auditing and Accounting Supervisory Authority. In addition, the Department of Jobs, Enterprise and Innovation is involved in EU negotiations on two proposals in the audit area, in which there is a focus on the provision of specific requirements regarding the statutory audit of public-interest entities. The definition of "public-interest entities" will include a wider range of financial service providers than heretofore.
In so far as my own Department is concerned, the Central Bank of Ireland has issued an Auditor Protocol which provides a framework to allow the Central Bank and the auditing profession to exchange relevant information on a timely basis with the aim of enhancing the regulatory and statutory audit processes. The framework governs communication between the Central Bank and auditors, providing a structure for bilateral meetings between the Central Bank and auditors and trilateral meetings between the Central Bank, auditors and the audit committee or independent non-executive director of regulated entities. The Auditor Protocol came into effect this year and will apply, in the first instance, to those firms which are rated high impact under the Central Bank's new regulatory risk model, PRISM. The implementation of this protocol follows on from the Nyberg report, which recommended that auditors should have a regular, compulsory dialogue with its clients' senior management and boards on the business model, strategy and implementation risks. The report also recommended that the result of such discussions should, at least when clearly relevant, be communicated to the Central Bank. The Central Bank (Supervision and Enforcement) Bill 2011 is to be amended to make provision to support this closer engagement between auditors and the Central Bank.
