Previous News Items in 2009
Christmas opening arrangementsThursday, 24th December, 2009: The Authority will be open as follows over the Christmas period:
Reappointment of Board membersWednesday, 23rd December, 2009: The Minister for Trade & Commerce, Mr. Billy Kelleher, TD, has reappointed Ms. Karen Erwin as Chairperson of the Authority. The Minister has also reappointed the following Board members: • Mr. Michael Deasy (upon the nomination of the Irish Financial Services Regulatory Authority); • Mr. Tony Kelly (upon the joint nomination of the nine Prescribed Accountancy Bodies); and • Senator Joe O’Toole (upon the nomination of the Irish Congress of Trade Unions). CESR publishes seventh extract from its database of enforcement decisions taken by EU national supervisors of financial information (IFRS)Wednesday, 16th December, 2009: The Committee of European Securities Regulators (CESR) has today published a seventh extract from its database of enforcement decisions taken by EU national supervisors of financial information that participate in the European Enforcer Coordination Sessions (EECS). EU national supervisors monitor and review the financial statements of issuers and consider whether they comply with International Financial Reporting Standards (IFRS) and other applicable reporting requirements, including relevant national law. This extract can be accessed here. The EECS is a forum in which all EU/EEA national supervisors of financial information, whether CESR members or not, meet to share the reasons underpinning their accounting enforcement decisions, canvas members’ views on issues currently being dealt with and to identify issues which do not appear to be covered by financial reporting standards or which may be affected by conflicting interpretations for referral to standard setting or interpretive bodies such as the International Accounting Standards Board (IASB) or the International Financial Reporting Interpretations Committee (IFRIC). CESR has developed a confidential database of enforcement decisions taken by individual EU national supervisors as a source of information to foster appropriate application of IFRS. All decisions submitted to the database are considered as appropriate for publication, unless: • similar decisions have already been published by CESR, and publication of a new decision would not add any substantial value to the fostering of consistent application; • the decision deals with a simple accounting issue that, even having been considered a material infringement, does not in itself have any accounting merit; • there is no consensus within the EECS to support the submitted decision; • a particular EU National enforcer, on a grounded and justified basis, believes that the decision should not be published. In response to concerns about confidentiality and privacy laws, which vary between EU jurisdictions, extracts do not, usually, include the name of the issuer or the enforcer or any other details that would enable the issuer or its jurisdiction to be identified. IAASA is a member of the EECS and the Authority’s Head of Financial Reporting Supervision is also a member of the EECS’ Agenda Group. The most recent material published by CESR can be accessed here. CESR hosts discussion on the topic of the worldwide enforcement of IFRSTuesday, 8th December, 2009: Accounting enforcers from 33 countries, representatives of the International Accounting Standards Board (IASB) and auditors met in Paris at the invitation of the Commission of European Securities Regulators (CESR) on 3 and 4 December 2009 to discuss the enforcement of International Financial Reporting Standards (IFRS) and enforcement decisions taken around the world. This was the first such meeting to take place. Accounting enforcement authorities from the European Economic Area (EEA), including Ireland represented by IAASA, participated in the event, as did representatives from 10 non-EEA countries’ accounting enforcers (Brazil, China, Egypt, India, Japan, Mexico, South Africa, Turkey, Switzerland and the USA). Following the adoption of IFRS as mandatory for EU listed companies, CESR established a forum in which EEA accounting enforcement authorities can meet and discuss IFRS related issues on a regular basis – the European Enforcer Co-ordination Sessions (EECS). Whilst EECS meetings are conducted on a confidential basis, CESR has received many approaches from non-EEA countries, some of whom are in the process of accepting or adopting IFRS, interested in sharing experiences with their European counterparts. In response to such approaches, CESR organised this event, which examined, amongst other matters, the challenges supervisors face in enforcing IFRS globally. The CESR press release can be assessed here. Authority invites expressions of interest from providers of internal audit servicesThursday, 5th November, 2009: The Code of Practice for the Governance of State Bodies, requires the Authority, inter alia, “to have a properly constituted internal audit function or engage appropriate external expertise in this regard which should operate in accordance with the provisions set out [therein]”. Having regard to its scale, the Authority has decided to adopt the latter option in meeting the requirements of the Code. In that context, the Authority is now inviting expressions of interest for the provision of such services over the period 2010-2012 from suitably qualified individuals/firms. Further details can be found here. The closing date for receipt of expressions of interest has now passed. CESR publishes an analysis of compliance of European financial institutions with financial reporting disclosure requirements related to financial instrumentsTuesday, 3rd November, 2009: The Committee of European Securities Regulators (CESR) has published an analysis of the compliance of European financial institutions with financial reporting disclosure requirements related to financial instruments. For the purposes of the analysis, the 2008 year-end financial statements of 96 listed banks and/or insurers were reviewed, including 22 companies from the FTSE Eurotop 100 index. IAASA conducted the work from an Irish perspective. The report can be accessed here. CESR publishes report on its Standard No. 1Thursday, 1st October, 2009: The Committee of European Securities Regulators (CESR) has recently published a report on an updated self assessment and peer review on the application and implementation of CESR’s Standard No. 1 ““Enforcement of Standards on financial information in Europe” by EU National Accounting Enforcers. The report can be accessed here. CESR Standard No. 1 sets out 21 principles on which, in CESR’s view, harmonization of the institutional oversight systems in Europe may be achieved. Those principles deal with the definition of enforcement, the nature of the enforcer, the type of financial information concerned, the methods of enforcement, appropriate enforcement actions, coordination between authorities, and reporting to the public. While the Standard does not have legal status, EU accounting enforcers are expected to comply with the Standard. International audit regulators hold sixth meetingTuesday, 22nd September, 2009: On 14-16 September 2009 independent audit regulators from 29 jurisdictions participated in the sixth meeting of the International Forum of Independent Audit Regulators (‘IFIAR’). Details of the membership of IFIAR can be found on the IFIAR website www.ifiar.org. Since IFIAR’s last meeting in Basel in April 2009, the Accountancy Board, Malta, has been admitted to membership. The host for the meeting was the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. The meeting was chaired by Steven Maijoor, Chairman of IFIAR and Managing Director, Netherlands Authority for the Financial Markets, and Paul Boyle, Vice-Chairman of IFIAR and Chief Executive Officer, UK Financial Reporting Council. Representatives of the International Organization of Securities Commissions, the Basel Committee on Banking Supervision, the Public Interest Oversight Board, the World Bank and the European Commission participated as Observers on 15-16 September. Officers Members elected for a 1½ year term Paul George, Director of Auditing and the Professional Oversight Board, UK Financial Reporting Council, as Vice-Chairman. Members The Members approved the Capital Markets Board, Turkey, and the Commission for Public Oversight of Statutory Auditors, Bulgaria, as new Members, thus bringing the number of Members up to 34. The Members also agreed on further administrative procedures regarding the admission of Members and their continued compliance with the membership criteria. Audit Inspection Workshops Audit inspections remain a core area of focus for IFIAR. IFIAR will hold a fourth inspection workshop for Members in Paris on 9-12 February 2010. These workshops continue to provide an opportunity for the sharing of inspection techniques and experiences. The Paris workshop will also include an induction for new Members and Members that have only recently started inspections. Current market conditions Members updated each other on their work on issues related to current market conditions, including the actions they had taken individually to focus their inspection activities and to issue guidance on particular matters needing greater attention by auditors. Other issues relevant to auditor oversight Members updated each other on the arrangements in a number of jurisdictions requiring the registration, notification and oversight of the auditors of foreign issuers. The Members agreed on future work in relation to the ongoing dialogue with the six largest international audit networks. Investor Dialogue A dialogue session was held with a regionally diverse group of five investor representatives. Members received presentations and there was an exchange of views related to audit quality, structural risks of the audit market and audit firm transparency and governance. It was decided to establish a working group to develop an ongoing dialogue with representatives of the investors to discuss mutual interests in relation to audit quality. Dialogue with other international organisations Observers updated the Members on their activities. Further, Arnold Schilder, Chair of the IAASB, provided the membership with an update on the current work of the IAASB. Views from individual Members were exchanged on the application and implementation issues related to ISAs. Funding of IFIAR’s administrative and organisational resources The Members agreed on the IFIAR budget and the membership fee for 2010. The Members agreed to establish a legal entity to facilitate the collection and disbursement of membership fees. Next Plenary Meeting IFIAR will hold its next plenary meeting in Abu Dhabi on 22-24 March, 2010 at the invitation of the Abu Dhabi Accountability Authority (ADAA). Authority issues final Section 24 RegulationsWednesday, 9th September, 2009: The Authority has issued Regulations governing the conduct of Investigations under section 24 of the Companies (Auditing and Accounting) Act, 2003. The Regulations supersede Interim Regulations previously issued by the Authority. The Regulations can be accessed here. The Authority has also issued a Feedback Paper, which sets out a summary of the principal views expressed by respondents to the associated consultation exercise together with the Authority’s analysis thereof. The Feedback Paper can be accessed here. Authority launches third Annual ReportThursday, 2nd July, 2009: The Authority has today launched its third Annual Report. A copy of the associated press release can be found here. Authority designated as competent authority for the purposes third country auditor transitional provisionsFriday, 26th June, 2009: IAASA has been designated as competent authority for the purposes of the European Communities (Transitional Period Measures in Respect of Third Country Auditors) Regulations 2009 (Statutory Instrument No 229 of 2009). Under the Regulations, which give effect to European Commission Decision 2008/627/EC of 29 July 2008, auditors and audit entities from certain third countries (i.e., certain non-EU Member States) may continue to issue audit opinions that are valid under EU law for a transitional period provided that they first provide the Authority with certain specified information. Further information can be accessed here. Under the Regulations, the Authority shall (i) make public the names and addresses of such third country auditors and audit entities; and (ii) draw attention to the fact that the third counties concerned have not yet been recognised as equivalent under the Directive 2006/43/EC (i.e. equivalent in terms of the requirements of Article 45 of Directive 2006/43/EC). Invitations for Expressions of InterestFriday, 19th June, 2009: The Authority has today invited expressions of interest in the provision of financial reporting expertise and in appointment to enquiry/ investigation committees. The closing date for receipt of such expressions has now passed. Authority to co-host meeting of EU financial reporting enforcement authoritiesWednesday, 17th June, 2009: The next meeting of the European Enforcer Co-ordination Sessions (EECS) will be co-hosted by the Authority and the Financial Regulator in early July. The EECS’ membership comprises EU Member States’ financial reporting enforcement agencies. The role of the EECS, which operates under the auspices of the Committee of European Securities Regulators (CESR), is to facilitate cooperation and coordination amongst Member States’ financial reporting enforcement authorities, thereby promoting the consistent enforcement of IFRS across the European Union. Financial Regulator issues a Guidance Note on issuers’ periodic financial reporting obligations under the Transparency RegulationsWednesday, 22nd April, 2009: In its capacity as the central competent administrative authority for the purposes of the EU Transparency Directive, the Financial Regulator has issued a Guidance Note on issuers’ periodic financial reporting obligations under the Transparency Regulations. A copy of the Guidance Note can be accessed here. The Financial Regulator’s document makes reference to the Authority’s Guide to the financial reporting requirements of the EU Transparency Directive, which can be accessed here. Easter opening arrangementsThursday, 9th April, 2009: The Authority’s offices will be closed tomorrow, (Friday) and Monday next, 13th April. The offices will reopen on Tuesday, 14th April, 2009. Consultation on the European Commission Recommendation on external quality assurance for statutory auditors and audit firms auditing public interest entitiesFriday, 13th March, 2009: The Department of Enterprise, Trade & Employment has launched a public consultation on the European Commission's Recommendation on external quality assurance for statutory auditors and audit firms auditing public interest entities. The Department's consultation document can be accessed here. Appointment of Enquiry CommitteeFriday, 13th March, 2009: The Authority has appointed an Enquiry Committee to investigate allegations made against the Institute of Chartered Accountants in Ireland (‘the Institute’) in an article in the Sunday Independent Newspaper of 7 January 2007 headed “KPMG: the great Houdinis” with particular reference to the prima facia case found by the Preliminary Enquiry Committee of the Authority that the Institute “has failed to comply with its approved investigation and disciplinary procedures” in relation to a complaint made against its member KPMG. Further details of this Enquiry are to be found here. The closing date for receipt of submissions has now passed. The Authority’s press release in this regard, together with the editors’ note, can be downloaded here. Appointment of Special Investigator to examine certain matters relating to Anglo Irish BankFriday, 20th February, 2009: The Complaints Committee of the Institute of Chartered Accountants in Ireland (ICAI) has appointed former Comptroller & Auditor General, Mr John Purcell, as Special Investigator to examine certain issues concerning directors loans and other matters at Anglo Irish Bank and to investigate possible breaches of ICAI Bye-Laws and rules of professional conduct by its members/member firms. The ICAI is one of nine Prescribed Accountancy Bodies supervised by the Authority. At its meeting of 23rd December 2008, the Board of the Authority decided to appoint a senior staff member to observe the ICAI’s response to recent developments at Anglo Irish Bank Corporation. Due to the preliminary nature of its enquiries, the Complaints Committee does not meet in public. The ICAI press statement can be accessed here. Company Law Review Group endorses Authority proposals for amendments to company lawThursday, 22nd January, 2009: In its 2007 Annual Report, which has been published today, the Company Law Review Group (CLRG) has endorsed the Authority’s proposals for certain amendments to the Companies Acts. Authority proposals for legislative amendmentsSpecifically, the Authority had advocated: • the amendment of section 23 of the Companies (Auditing and Accounting) Act, 2003, thereby permitting the Authority to recoup costs associated with the conduct of investigations into whether prescribed accountancy bodies have failed to comply with their approved investigation and disciplinary procedures; • the amendment of section 27(4) of the Companies (Auditing and Accounting) Act, 2003, thereby providing expressly that Authority staff may be delegated to conduct preliminary enquiries under sections 23 to 26 of that Act; • the amendment of section 31 of the Companies (Auditing and Accounting) Act, 2003, thereby empowering the Authority to share otherwise confidential information in certain circumstances with specified classes of persons/entities rather than with individually named persons/entities as is currently the case; • the amendment of section 33 of the Companies (Auditing and Accounting) Act, 2003, thereby enabling the Authority to indemnify its agents; and • the amendment of section 110A of the Company Law Enforcement Act, 2001, for the purpose of permitting Authority officers to provide evidence in certain legal proceedings by way of certificate evidence as opposed to by way of oral evidence. Authority recommendations regarding legal recognition of the term ‘Accountant’The CLRG also examined the Authority’s recommendations regarding statutory recognition of the term ‘accountant’ - which were tabled to the Minister for Trade & Commerce during 2007. Having considered that matter, a majority of the CLRG’s membership has: • accepted the consumer protection issue identified by the Authority; and • endorsed the Authority’s analysis in favour of affording the term ‘accountant’ statutory recognition. The full text of the Authority’s recommendations is this regard can be found in Chapter 5 of the Authority’s 2007 Annual Report. Auditors’ liabilityHaving considered the issue of auditors’ liability, the CLRG has recommended that: • the current ban on audit firms being permitted to incorporate should be removed; and • a statutory cap on auditors’ liability should be introduced, with the quantum of such a cap to be determined by the Minister for Trade & Commerce following consultation with relevant stakeholders, including a cross section of audit firms, their clients and insurers. The Authority’s views on this matter are set out in full in the CLRG’s Report. In summary, the Authority is of the view that the current arrangements, i.e., whereby audit firms are jointly and severally liable for losses incurred in circumstances where they are less than fully culpable, are inherently unjust and inequitable. In that context, the Authority is of the view that reform of auditors’ liability is merited. With reference to the proposal that a predetermined cap on liability be introduced, the Authority is of the view that the level at which such a cap might be set would have to be carefully considered having regard, inter alia, to: • an objective assessment of the risk of a claim (or claims) being filed against an Irish audit firm that is (are) of sufficient magnitude to threaten the existence of the firm; • what level such a claim (or claims) would have to be at to threaten the existence of the firm concerned; • the structures of the firms that the measures are seeking to protect – for example, before setting a cap level, information would, in the Authority’s view, be required as to the extent to which an Irish firm could be liable for meeting a claim filed against another member firm of the network – this goes to the heart of assessing the risk of a ‘catastrophic’ claim that could directly threaten the existence of an Irish audit firm; • the level of any cap should, while seeking to prevent a failure that would be injurious to the public interest, not seek to remove to an inappropriate degree the risks associated with statutory audit, which is a profitable business; • the possible adverse effects on audit quality of setting cap levels too low; • whether it is appropriate to set differing levels of cap depending on, for example, whether the client company is listed or unlisted or on the size of the client; • other interested parties’ views (including investor and shareholders’ groupings and representatives). In its contribution to the CLRG’s Report, the Authority also: • advocated that any cap on liability introduced should not extend to protect against instances of fraud or intentional/wilful misconduct; • drew attention to the fact that, while liability reform will be of some assistance in rendering it easier for, so called, ‘mid-tier’ audit firms to compete for the audits of the largest companies, there are other barriers to such firms’ entry to that subset of the market and, therefore, liability reform alone will not address the current levels of concentration in the upper end of the audit market; and • advocated that any proposals for liability reform should also have regard to the recently published EU Commission Recommendation on Quality Assurance which, along with the recently published Commission Recommendation on Auditors’ Liability, forms an integral part of the Commission’s overall package of audit related measures. (Commissioner McCreevy’s speech of 19 December, 2007 to the European Parliament regarding his proposals for an audit package can be accessed here. As alluded to above, the EU Commission has recently issued a Recommendation to Members States on the issue of limitation of statutory auditors’ liability. In that document, the Commission has recommended that, before adopting measures designed to limit auditors’ liability, Member States should take into account the impact any such limitation of liability on financial markets and investors and on conditions for access to the market of statutory audit for listed companies, as well as the impact on audit quality, insurability of risks and the companies to be audited. CLRG Report The full text of the CLRG Report can be accessed here. IAASA publishes observations on year end financial reporting issuesFriday, 16th January, 2009: The Irish Auditing & Accounting Supervisory Authority (IAASA) has published its observations on selected year end financial reporting issues affecting entities listed on a regulated market and whose home Member State is Ireland. Set against a backdrop of continuing market uncertainty and the financial reporting challenges associated therewith, the document has been developed with a view to providing information and assistance to issuers’ Boards and Audit Committees. The document also provides details of certain of the areas that are likely to be the focus of IAASA’s financial reporting review activity during the coming year. The document can be accessed here. Changes in Authority Board membershipThursday, 15th January, 2009: The Minister for Trade & Commerce, Mr. John McGuinness, TD has appointed Mr. Tadhg O’Connell and Mr. Brian Shiels to the Board of the Authority. These appointments have been made on foot of the expiration of the terms of Mr. Jim Kelly and Mr. Pat Houlihan respectively. Mr. O’Connell has been appointed upon the nomination of the Revenue Commissioners while Mr. Shiels is a Ministerial nominee. The Minister has also reappointed Ms. Marie Daly, Mr. Sean Hawkshaw and Mr. Brendan Kennedy to the Board upon their having been re-nominated by the Irish Business & Employers’ Confederation, the Irish Association of Investment Managers and the Pensions Board respectively. |
Irish Auditing & Accounting |
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