Dáil Éireann Debate, Tuesday - 19 June 2012
287 Deputy Billy Kelleher asked the Minister for Jobs, Enterprise and Innovation his plans to update and modernise company law in order that the accounting profession will be obliged to give an accurate account of the financial state of a business in view of the recent collapse of financial companies including banks; and if he will make a statement on the matter. [29598/12]
Amharc ar fhreagraThe onus in company law is for the Directors of companies to prepare the accounts of companies on an annual basis. There is a requirement for these accounts to give a "true and fair view" of the financial position and performance of the company. Accounting rules such as International Financial Reporting Standards (IFRS) adopted by the EU are required to be used in the preparation of the consolidated accounts of companies admitted to trading on a regulated market, in order to give a true and fair view. IFRS standards are set by the International Accounting Standards Board (IASB) an independent standard-making body. It is the function of external auditors to express their opinion as to whether these accounts provide a true and fair view.
In the wake of the financial crisis, perceived shortcomings were identified as regards an accounting standard relating to the fair valuation of financial assets, and these were addressed in a new standard. Issues also arose in relation to loan loss-recognition, and these are being examined by the IASB, with the intention of revising this standard. As regards the functions of external auditors, EU Commission proposals in the aftermath of the financial crisis to improve audit quality are currently being considered at Council Working Group level in Brussels.
In addition, my Department is currently finalising logistical aspects of the practical implementation of a Quality Assurance provision in respect of the audit of Public Interest Entities, based on the EU Commission Recommendation in the matter. This will entail direct inspections of relevant audit firms' files by the Irish Auditing and Accounting Supervisory Authority. This will require primary legislation, and it is my intention to bring proposals to Government on this matter shortly.
