Friday 9 December 2016

Ex-Anglo auditors fail in bid to block inquiry

Emmet Oliver and Tim Healy

Published 14/05/2011 | 05:00

Ernst & Young, the auditors to Anglo Irish Bank before it collapsed in 2009, suffered a major blow yesterday when its attempt to halt a probe into its performance and conduct was comprehensively rejected by the High Court.

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The reputation of the accountancy firm, one of the so-called "big four", is on the line in an investigation by John Purcell, who was appointed by the Chartered Accountants Regulatory Board (CARB).

Mr Purcell is assessing whether there is 'prima facie' evidence to take disciplinary action against the firm, which is no longer auditing the books of Anglo.

After losing the case yesterday the firm may also have to pay the costs of CARB.

Ms Justice Mary Irvine ruled yesterday that the firm was out of time and had shown no arguable grounds entitling it to bring proceedings to "effectively torpedo and thus fatally terminate" the two-year investigation by Mr Purcell, the former Comptroller and Auditor General.

The judge also ruled the firm had advanced no arguable case for proceedings to prevent a report by forensic accountants FTI into the conduct of the accountants as auditors to Anglo being forwarded to CARB in the event of a finding by Mr Purcell that Ernst & Young is liable to disciplinary action.

Ernst & Young said it was disappointed with the decision.

"We have no issue with active, constructive and comprehensive participation in any investigation of our work as statutory auditors to Anglo Irish Bank. We have co-operated fully with CARB's investigation to date and support its desire to maintain high standards within the accountancy profession."

Among various claims in its application for leave for judicial review, the firm alleged the investigation to date was unfair because reports leading to Mr Purcell's appointment did not contain valid "complaints" as they failed to set out specific allegations, including of misconduct, or to refer to codes of conduct, rules, regulations and professional standards.

Complaint

If a "complaint" had to be set out as required by Ernst & Young, the vast majority of complaints made by people, even if wholly meritorious on their facts, could never be investigated, the judge said.

Mr Purcell, she noted, was appointed by the Complaints Committee of CARB on foot of various matters in media reports, including a claim by an accountancy expert that Ernst & Young should have spotted that former Anglo chairman Sean FitzPatrick had engaged in a process of temporarily concealing directors' loans by transferring them to another bank prior to Anglo's year end.

The bye-laws under which Mr Purcell was appointed render members of the Institute of Chartered Accountants of Ireland (ICAI) liable to disciplinary action in a wide range of circumstances and the definition of "complaint" was drafted in wide and clear terms to include any behaviour which may be suspect, the judge said.

Any act or default likely to discredit a member of the Institute, the Institute itself or the accountancy profession, or the inefficient or incompetent performance of accountancy duties, left that member open to disciplinary action.

Irish Independent

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