Monday 5 December 2016

IMF puts bar on auditors that did the banks' books

Number of firms prevented from working on new stress tests to get 'fresh, independent view' of situation

Emmet Oliver Deputy Business Editor

Published 18/12/2010 | 05:00

Ajai Chopra[ left] Dept Director of the IMF European Department pictured as he made his way to the Central Bank HQ on Dame Street yesterday .Pic Frank Mc Grath
Ajai Chopra[ left] Dept Director of the IMF European Department pictured as he made his way to the Central Bank HQ on Dame Street yesterday .Pic Frank Mc Grath

Irish accountancy firms and auditors who've worked with the Irish banks during the past three years have been barred from doing key stress tests on behalf of the Central Bank and the IMF.

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The IMF has instructed the Central Bank and Financial Regulator to do a new "diagnostic study'' of bank balance sheets to identify how adequate current capital levels are.

But according to the IMF report on Ireland's rescue package -- published yesterday -- this study "should not be conducted by an audit or consultancy firm that has provided such services to the banks in the last three years''.

The head of the Ireland mission at the IMF, Ajai Chopra, told the Irish Independent the curbs on firms who worked with the Irish banks before was not a reflection on these firms.

Speaking from Washington, Mr Chopra said: "It is simply to get a fresh independent view.'' He said a range of loan portfolios would be looked at, including mortgages and whether these loans could survive a significant interest rate rise.

The IMF has also told the Central Bank here to hire a specialised firm to help "oversee the consistency and integrity of the exercise".

"These examinations should cover all relevant assets, liabilities and off-balance sheet items, including foreign subsidiaries when relevant. They should provide a thorough assessment of the adequacy of monitoring and reporting of all relevant risks,'' said the Washington-based organisation.

A large number of Irish and international accountancy practices have been working at the banks in recent years since the financial crisis began.

PwC has been used the most, but work has also been undertaken at the Irish banks by Ernst & Young and KPMG.

A large number of accountants and investment banks have also worked for NAMA or the Department of Finance.

Irish Independent

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