State watchdog suddenly widens probe into top accountancy body
A HIGH-LEVEL independent probe into the activities of Ireland's top accountancy body, the Institute of Chartered Accountants of Ireland (ICAI), has suddenly been widened by the State's watchdog. The probe was launched following a Sunday Independent article.
Last year, the government watchdog, the Irish Auditing and Accounting Supervisory Authority (IAASA), launched a full inquiry following complaints in the Sunday Independent business section into the self-regulating ICAI's disciplinary actions.
A preliminary inquiry team, which included Director of Corporate Enforcement Paul Appleby, had already found that the ICAI's complaints committee had a prima facie case to answer for the conduct of its proceedings.
Last week, the scope of the inquiry into allegations in the article (headed 'KPMG the Great Houdinis') was widened to include other ICAI activities which have come to light.
The original complaint was made to the ICAI about auditors KPMG, one of its most powerful members. For two years in a row KPMG had failed to notice a €1m tax liability owed by its clients National Toll Roads, the operators of the M50 toll bridge.
An alert staff member in the Comptroller & Auditor General's office spotted the error. Fifteen months later, the ICAI's complaints committee found unanimously in KPMG's favour. They maintained that KPMG's mistake was an "isolated" incident.
But a subsequent appeal to one of the ICAI's independent reviewers resulted in the complaint being referred back.
Following the successful appeal, the ICAI's same complaints committee rejected its own independent reviewer's verdict and confirmed its earlier finding in favour of member firm KPMG.
However, the state watchdog's preliminary inquiry found a prima facie case existed that the accountancy body had failed to comply with its own investigation and disciplinary procedures. In particular, it reported that the ICAI complaints committee appeared to have failed on at least two occasions to comply with the "quorum and composition requirements" laying down the need for a quorum of six members present, the majority being non-members of the institute. The watchdog also said there were further apparent flaws in the accountancy body's disciplinary procedures.
According to a letter sent by the watchdog to this newspaper, the widening of the scope of the inquiry follows examination of "supplementary documents and information which the ICAI forwarded to the inquiry committee".
Last night, the watchdog refused to reveal the content of the new documents handed over by the ICAI .
The findings of the inquiry could have important implications for self-regulation in the accountancy profession.