Ernst & Young may face disciplinary hearing over Anglo Irish Bank
A professional disciplinary process in relation to Anglo Irish Bank's former auditor Ernst & Young (EY) looks set to resume following the end last week of criminals trial of three former bankers.
In 2011, accounting standards agency the Chartered Accountants Regulatory Board (CARB) parked the disciplinary process at the request of the Director of Public Prosecutions (DPP).
Previously, CARB had referred findings in relations to EY's audits of Anglo Irish Bank to a disciplinary panel following an initial inquiry by special investigator John Purcell, the former Comptroller and Auditor General.
The Purcell investigation made preliminary rather than definitive findings, but argued there was prima facie against EY in relation to three specific events at Anglo - including a claimed failure to refer in an audit report on Anglo Irish Bank's 2008 financial statements to transactions in September 2008 between Irish Life & Permanent (IL&P) and Anglo.
CARB was asked to stall that process while criminal trials linked to the banking crisis were before the courts.
Following last Friday's sentencing of three former bankers for a €7.2bn fraud involving the transfers between Anglo Irish Bank and Irish Life & Permanent, CARB said it will now seek guidance from the DPP about reopening its own process. "CARB remains in contact with the Director of Public Prosecutions following its original request that CARB refrains from taking any action until all cases currently sub judice have been concluded fully."
"CARB will resume contact with the Director of Public Prosecutions following (Friday's) events to establish next steps."
EY now faces the prospect of a professional disciplinary hearing which would potentially be held in public.
Last week, in hard-hitting language Judge Nolan questioned how as auditors EY had not known what was going on at the bank.
"It beggars belief that Ernst & Young signed off on the accounts," he said.
However, EY has argued that under Irish law, it was the responsibility of the bank and its then directors to ensure that financial statements met legal and accounting standards.
"We will vigorously defend our work before a hearing of the Chartered Accountants Regulatory Board's disciplinary panel, which will consider whether or not any such criticism is justified,'' Ernst & Young said at the time the initial process was halted.