Results of probe into RSA 'must be shown to public'
The results of a probe into financial issues at the Irish arm of UK insurer RSA must be made public, according to a highly influential institutional shareholder advisory group.
UK-based PIRC (Pensions & Investment Research Consultants), which advises investors with more than £1.5 trillion (€1.8trn) worth of assets, has said the problems at RSA – which also owns the 123.ie business here – highlight the need for firms that only provide accountancy functions, rather than also engaging in consultancy services.
RSA shares plunged after it was forced to inject €100m of fresh capital into its Irish subsidiary's reserves this month and said the issues at the unit would hit the group's overall bottom line.
The Central Bank had flagged concerns with RSA's Irish business back in August.
Accounting firm PricewaterhouseCoopers (PwC) has been appointed by RSA to undertake a comprehensive review of the insurer's Irish business.
The review will focus on the "financial and regulatory reporting processes and controls" within the Irish business and group, according to RSA. PwC is due to report back by the end of the year.
PIRC has demanded that the report be made public and has questioned the independence of Deloitte, which had audited RSA's accounts.
"It is essential that a proper review of any failings of the Deloitte audit of RSA Ireland – and hence RSA Group – is made public," said PIRC, adding that questions also arise in relation to board appointments of former audit firm executives.
PIRC points out that Deloitte recently resigned as RSA's auditor because the accountancy firm secured a significant consultancy contract with the insurer. PIRC noted that Deloitte said in the middle of May that it was resigning as RSA auditor because it had been "recently invited" to tender for consultancy work with RSA Scandinavia.
PIRC said that RSA's 2012 group accounts were signed off by Deloitte in February this year, when it was reported that KPMG would be replacing Deloitte as RSA auditor.
While Deloitte said in May it had been "recently" invited to tender for RSA consultancy work, PIRC says that Deloitte must in reality have been invited to tender well in advance of February.
"What the Deloitte-RSA episode reveals is that substantial promises of consultancy work not yet disclosed in the accounts can be lurking in the background," said PIRC.
PIRC said shareholders may also need to focus attention on RSA's audit committee. PIRC previously recommended RSA shareholders vote against the company's audit committee chairman, Alastair Barbour, who had retired from KPMG in 2011 and was appointed to the RSA board in 2012.