Auditing body couldn't probe Anglo and IL&P transactions
A major gap in how companies are supervised stopped controversial events at Anglo Irish and Irish Life &Permanent (IL&P) being fully examined, it has emerged.
The main body which monitors company accounts in Ireland doesn't have the powers to monitor preliminary results announcements and doesn't have the powers to supervise the accounts of Irish Nationwide, EBS or Quinn Insurance.
The loans Sean FitzPatrick had with Anglo Irish Bank over eight years also fall outside the remit of the body due to a timing issue, it has now emerged.
The Irish Auditing and Accounting Supervisory Authority, in a section of its annual report, details the "limiting factors'' on its powers, many of which prevent the body from dealing with concerns over details given in the banks' financial statements during the financial crisis.
The organisation monitors whether company accounts comply with the Companies Acts, but there are a range of curbs on what the organisation can actually do. While the group has been in intensive contact with Anglo and IL&P over the so-called "circular deposits'' transactions in 2008 and other matters, a whole range of difficulties face the group.
For example, accounts released before January 2007 do not come within its remit, including FitzPatrick's loans with Anglo and how the bank accounted for them.
The first financial report from Anglo that comes within its remit was the six-month period ending March 31, 2008.
A number of financial companies are not even covered under the transparency regulations from which the body gets its powers. "Examples in this regard include EBS, Irish Nationwide Building Society and Quinn Insurance Limited. Accordingly, the authority has no statutory entitlement to review those entities financial statements,'' said the authority in its annual report.
Another serious gap arises in relation to preliminary announcements, trading statements and many other statements put into the market.
The organisation said this was "of significance'' in relation to Anglo Irish. For example, the preliminary results for Anglo released in December 2008 would have fallen outside its remit. These results were the ones supposed to include a full disclosure of the transactions between Anglo Irish and IL&P.
IL&P and Anglo have given the organisation commitments that their financial statements will be enhanced in future, providing more information on transactions with directors and deposits with other banks.