FREQUENTLY ASKED QUESTIONS

What is the Authority’s relationship with the State?

While the Authority operates through a company limited by guarantee, it is a State body by virtue of having been established by an Act of the Oireachtas (parliament) (the Companies (Auditing and Accounting) Act, 2003 (‘the Act’)). The Authority’s independence in the discharge of its functions is protected by its founding legislation. For further information on the Authority’s founding legislation, click here.

How is the Authority funded?

As provided for by the Act, 40% of the Authority’s funding is provided by the Exchequer (via the Department of Enterprise, Trade & Employment). The remaining 60% is provided jointly by the prescribed accountancy bodies, by way of a mandatory annual levy on those bodies. The prescribed accountancy bodies’ individual contributions to the Authority’s funding are determined by reference to an apportionment model agreed by the bodies and approved by the Board of the Authority and the Minister for Trade & Commerce respectively.

In addition, the Authority is required to maintain a Reserve Fund for the purposes of funding certain investigative and/or enforcement actions should the need arise. The Reserve Fund is currently funded by the Exchequer and by levies on the prescribed accountancy bodies in the foregoing proportions.

What is the role of the Authority?

The principal objectives of the Authority, which are set out in section 8 of Act, 2003, are:

to supervise how the prescribed accountancy bodies regulate and monitor their members;
to promote adherence to high professional standards in the auditing and accountancy profession;
to monitor whether the accounts of certain classes of companies and other undertakings comply with the Companies Acts; and
to act as a specialist source of advice to the Minister of auditing and accounting matters.

Further detail on the Authority’s role, functions and powers can be obtained here

What is the difference between a ‘Prescribed’ accountancy body and a ‘Recognised’ accountancy body?

(i) Prescribed Accountancy Body

A Prescribed Accountancy Body is any accountancy body that comes within the supervisory remit of the Authority. There are currently nine prescribed bodies. These are:

ACCA - Association of Chartered Certified Accountants;
AIA - Association of International Accountants;
CIMA - Chartered Institute of Management Accountants;
CIPFA - Chartered Institute of Public Finance & Accountancy;
ICAEW - Institute of Chartered Accountants in England & Wales;
ICAI - Institute of Chartered Accountants in Ireland;
ICAS - Institute of Chartered Accountants of Scotland;
ICPAI - Institute of Certified Public Accountants in Ireland; and
IIPA - Institute of Incorporated Public Accountants

Links to the prescribed accountancy bodies’ websites can be found here.

(ii) Recognised Accountancy Body

A Recognised Accountancy Body is an accountancy body that has been granted recognition under section 191 of the Companies Act 1990. By virtue of that recognition, a recognised accountancy body is permitted to authorise its members and/or member firms to perform audits under the Companies Acts, provided that those members and/or member firms satisfy certain additional conditions. There are currently six recognised bodies. They are:

ACCA - Association of Chartered Certified Accountants;
ICAEW - Institute of Chartered Accountants in England & Wales;
ICAI - Institute of Chartered Accountants in Ireland;
ICAS - Institute of Chartered Accountants of Scotland;
ICPAI - Institute of Certified Public Accountants in Ireland; and
IIPA- Institute of Incorporated Public Accountants

Links to the Accountancy Bodies’ websites can be found here.

How can I satisfy myself that a person and/or firm is properly qualified to provide auditing services to the public?

In order to legitimately act as an auditor under the Companies Acts (i.e. to audit the financial statements of a company), a person/firm must be a Registered Auditor. In summary, in order to become a registered auditor, a person/firm must:

be a member of a recognised accountancy body; and
have been authorised by that body to act as an auditor i.e. hold a valid practising/audit certificate.

The Companies Registration Office (CRO) maintains a register of all persons entitled to act as auditors and enquiries can be directed to that Office.

Alternatively, enquiries as to whether an individual/firm is qualified to act as an auditor can be directed to the recognised body in question, which will be happy to be of assistance. Certain of the accountancy bodies also provide information as to those of their members that are registered auditors on their websites. Contact details for each recognised accountancy body can be obtained here.

In addition to the foregoing, a small number of individuals who are not members of a recognised accountancy body are individually authorised to act as auditors. These authorisations were granted prior to 3 February, 1983 and were subsequently registered under the provisions of section 199(3) of the Companies Act, 1990. A list of those persons entitled to act as auditors by virtue of Ministerial authorisation can be accessed here.

Acting as an auditor while not qualified to do so is a serious criminal offence. In the event that a member of the public has reason to believe that a person/firm is acting, or has acted, as an auditor without being properly qualified to do so, the matter should be brought to the attention of:

IAASA;
the Office of the Director of Corporate Enforcement; and
if the person/firm is a member of an accountancy body, the accountancy body in question.

How do I make a complaint about an accountant or firm of accountants?

In the event that a member of the public has a complaint about their accountant/auditor, the matter should ordinarily be referred, in the first instance, to the relevant accountancy body. This is because it is the prescribed accountancy bodies that are, in the first instance, responsible for regulating their members. The role of the Authority is to supervise the manner in which the accountancy bodies perform their regulatory functions (including how they deal with complaints relating to members) and, if necessary, to take appropriate action to ensure that the accountancy bodies’ approved regulations and procedures are fully adhered to. However, given the Authority’s public interest remit, members of the public may of course refer complaints directly to the Authority if they so wish.

Each prescribed accountancy body has a formal system for dealing with complaints and, where necessary, for investigating alleged malpractice on the part of a member/member firm. Each of the prescribed accountancy bodies will furnish a prospective complainant with full details of their investigative and disciplinary processes on request (a number of the accountancy bodies make their procedures available on their websites). Contact details for each prescribed accountancy body can be obtained here.

How do I make a complaint about an accountancy body?

In the event that, for example, a member of the public is of the view that a prescribed accountancy body has not dealt properly with a complaint made in respect of a member or member firm, the matter can be referred to the Authority, which, as referred to above, is charged with supervising the manner in which the prescribed accountancy bodies regulate their members.

How will the Authority deal with a complaint relating to a member/member firm or an accountancy body?

Complaints relating to a member/firm of an accountancy body should ordinarily be referred, in the first instance, to the relevant accountancy body. Where a complaint is made directly to the Authority, the matter will be examined and, if appropriate, ordinarily be referred to the relevant accountancy body for attention, with the Authority then monitoring the manner in which the matter is dealt with as part of its ongoing supervision of the accountancy bodies’ regulatory processes and procedures.

While the foregoing details how the Authority will ordinarily deal with matters brought to its attention, as provided for by the Act, the Authority may elect, if it considers it appropriate, not to refer a complaint onward to the relevant accountancy body but rather to deal with the matter itself (for example, where the matter has a significant public interest dimension).

Where a complaint is made to the Authority regarding the manner in which an accountancy body has dealt with a particular matter (for example, a complaint or an appeal), the Authority will examine the matter and determine whether there is an issue of non-compliance with approved process and procedure and, if so, what action is required.

The powers of enquiry and investigation available to the Authority and the sanctions available to it in the event of a finding of non-compliance against a member/firm/accountancy body are detailed elsewhere on this website and can be accessed here.

Which entities come within the Authority’s financial statement review remit?

The Authority’s financial statement review remit derives from two sources, viz:

• the EU Transparency Directive; and

• section 26 of the Act.

(i) EU Transparency Directive

What is the Transparency Directive?

The Transparency Directive ((EC) 2004/109) is concerned with the harmonisation of information requirements applying to companies whose securities have been admitted to trading on a regulated market situated, or operating, within the EU (‘issuers’). Accordingly, the Directive applies to issuers of shares, debt securities, derivative securities and closed-ended investment funds admitted to listing and trading on the regulated market of the Irish Stock Exchange. The Directive sets out, inter alia, requirements regarding the disclosure of periodic and ongoing information, including issuers’ obligations relating to publication, content and timing of issuers’ financial reports.

The Directive has been implemented in Ireland through a combination of primary legislation (The Investment Funds, Companies and Miscellaneous Provisions Act, 2006) and secondary legislation (Statutory Instrument SI 277 of 2007 - Transparency (Directive 2004/109/EC) Regulations 2007).

What is IAASA’s role under the Transparency Directive?

Recital No. 28 of the Directive states that ‘A single competent authority should be designated in each Member State to assume final responsibility for supervising compliance with the provisions adopted pursuant to this Directive…Member States may, however, designate another competent authority for examining that information referred to in this Directive is drawn up in accordance with the relevant reporting framework and taking appropriate measures in case of discovered infringements;’.

In the context of the foregoing, while the Financial Regulator is the central competent authority for the purposes of the Transparency Directive, IAASA has been designated a separate competent authority for the purposes of the financial reporting monitoring and enforcement role described above (i.e. Article 24(4)(h) of the Directive). Thus, IAASA – through its Financial Reporting Supervision Unit – will be responsible for monitoring affected issuers’ compliance with the financial reporting framework requirements set out in the Directive as transposed into Irish law and taking appropriate action where non-compliance is identified from the effective date as set by the Minister for Trade & Commerce.

(ii) Section 26, Companies (Auditing and Accounting) Act, 2003

At this time section 26 has not been commenced and, accordingly, the Authority does not currently have a statutory remit in this area.

On commencement of section 26, the following companies and other undertakings will come within the Authority’s financial statement review remit:

all public limited companies (whether listed or not);
all subsidiaries of public limited companies;
private companies limited shares that, in both in the relevant financial year and the immediately preceding financial year, meet the following criteria:
- balance sheet total (i.e. total assets) exceeds €25m; and
- turnover exceeds €50m;
a private company limited by shares that is a parent undertaking, if the parent undertaking and all of its subsidiary undertakings together, in both the relevant financial year and the immediately preceding financial year, meet the criteria set out above;
each subsidiary undertaking of a parent undertaking referred to in the preceding bullet;
certain other undertakings and their subsidiary undertakings that satisfy the aforementioned criteria, including unlimited companies and partnerships whose members having unlimited liability are themselves limited companies.

What does ‘Complies with the Companies Acts’ mean in the context of the Authority’s statutory remit to monitor the accounts of certain classes of companies and other undertakings?

This is a complex area and what follows is a brief summary only. It is always advisable to obtain professional advice where in doubt as to directors’ and companies’ obligations in this regard.

Statutory duty to prepare financial statements

The Companies Acts 1963 to 2006 require the directors of all companies to prepare accounts (otherwise known as financial statements) on an annual basis. The directors are responsible for ensuring that the company maintains proper books of account and for the preparation of financial statements which give a ‘true and fair view’ of the company’s profit or loss during the period in question and of the company’s state of affairs (i.e. its assets and liabilities) at the end of that period.

True and Fair View

The term ‘true and fair view’ is not defined in law. However, it is generally accepted that financial statements give a true and fair view when they have been prepared in accordance with:

(i) the Companies Acts and any other applicable law; and

(ii) applicable accounting standards.

Applicable Accounting Standards

IFRS Accounts
For all accounting periods beginning on or after 1 January 2005, all Irish listed companies are required to prepare their consolidated (group) accounts in accordance with International Financial Reporting Standards (IFRS). The interaction of IFRS accounting standards and Irish law is dealt with in detail in the European Communities (International Financial Reporting Standards and Miscellaneous Amendments) Regulations, 2005. The effective date for the application of IFRS to debt listed parent companies is deferred to accounting periods beginning on or after 1 January, 2007.
Companies Act Accounts
All other Irish companies may, if they so wish, prepare their consolidated and individual financial statements using IFRS. They are not, however, required to do so. Those that do not opt for IFRS are required to prepare what are known as ‘Companies Act Accounts’ (i.e. as opposed to IFRS Accounts). Companies Acts accounts are accounts prepared in accordance with the formats and accounting rules of Irish company law and applicable accounting standards. Applicable accounting standards in this context are the accounting standards issued by the UK Accounting Standards Board (ASB) for use in Ireland.
Alternative Bodies of Accounting Standards (ABAS)
Certain other Irish entities (investment companies) are permitted to prepare their financial statements using alternative bodies of accounting standards, specifically those of the United States of America, Canada, and Japan.

How do I make a complaint about a company’s financial statements?

In the event that a member of the public has reason to believe that an issuer’s periodic financial reporting is not in compliance with the relevant reporting framework (e.g., as regards adherence to company law or applicable accounting standards) a complaint may be directed to the Authority. Complainants should, however, note that, due to the Authority’s statutory confidentiality obligations, it may not be possible to keep complainants apprised of the progress and/or outcomes of complaints made. Further information regarding issuers’ financial reporting obligations can be obtained here