Audit work at main banks around time of crash was "satisfactory", report finds
Audit work carried out at the main banks by accountancy firms around the time of the crash was "satisfactory" and met international standards, according to a long awaited report.
The report was commissioned by accounting standards agency the Chartered Accountants Regulatory Board (CARB) to look into how auditors signed off on accounts that failed to foresee or account for the subsequent spectacularly big losses from bad and risky loans at lenders including Anglo Irish Bank.
"The Report has found that the audit work was satisfactory, with the audit firms generally complying with the relevant contemporary international auditing standards, but that a number of improvements needed to be made by the firms concerned to clearly demonstrate the challenges and scepticism applied in reaching their conclusions," CARB said.
Improvements have now been made to the auditing standards, CARB said.
The research looked at audits in 2008 and 2009 by: KPMG of AIB, Irish Nationwide Building Society (INBS), and Irish Life and Permanent (Il&P); Ernst & Young (EY)'s audits of Anglo Irish Bank and EBS; and PwC at Bank of Ireland.
"Our overall conclusion is that while the auditors demonstrated that they had satisfactorily applied appropriate audit procedures and the financial statements complied with the international accounting standard applicable at the time, the key accounting standard itself was unsatisfactory," the report's lead author David Spence said.
Mr Spence is an an outside expert who was brought in to lead the review.
The chairman of CARB Dr Don Thornhill said the review was the first of its kind anywhere in the world.
"The Banking Institutions covered by the Government Guarantee were at the centre of the crisis which hit Irish society and the economy from 2007/2008. The Board considered that it would be remiss if, in the public interest, we did not conduct a thorough review of the role of the auditors of the relevant banks during this critical period," he said.