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Surge in accounting cheats sparks probe into firms nationwide

A MASSIVE investigation has been launched into a surge of false and illegal accounting practices at thousands of businesses across the country, the Irish Independent has learnt.

The revelation comes before the publication of a report into the banking crisis, which focuses on the role of high-profile auditors that failed to spot dubious accounting practices being carried out at some of the country's banks.

The corporate watchdog, Paul Appleby, is now investigating illegal activity in a range of companies, where individuals have pretended to be auditors to companies and illegally signed-off on their accounts.

About 40pc of all new complaints in the Office of the Director of Corporate Enforcement now relate to this practice, the Irish Independent has confirmed.

Company accounts must be signed off by qualified and registered auditors to meet business regulations.

This means people are potentially trading with companies they believe to be in a financially healthy state, but which in fact could technically be in serious financial trouble.

Mr Appleby is entitled to bring charges against the individuals involved because using non-qualified auditors is a breach of the Companies Act 1990 and a criminal offence.

The issue of people pretending to be qualified auditors and signing off accounts emerged after the Companies Registration Office (CRO) conducted a review and discovered a major problem.


It has passed the details to Mr Appleby's office.

Initial indications are that at least 84 people are involved, which represents 5.5pc of all auditors working in Ireland.

Other areas being looked at in the investigation include:

  • Several cases in which accountants put their own name to auditors' reports and described themselves as "auditors and accountants" although they were not on the register of auditors.
  • Instances where accountants forged the names of legitimate auditors, including one case in which an accountant used the names of three different registered auditors on the accounts of 22 companies.
  • A number of cases in which accountants carried out and signed audits as a favour to a client who couldn't afford to pay a qualified auditor.
  • One individual who has already been prosecuted by Mr Appleby is now operating under a pseudonym and is continuing to audit the accounts of up to 30 companies.
  • One individual who is signing auditors' reports and using the address of a legitimate auditor and bringing the reputation of the legitimate auditor into disrepute.
  • One case in which a company secretary downloaded a template of an auditor's report from the CRO website and added the name of an accredited auditor.

Mr Appleby's office and the CRO both emphasised that investigations were ongoing and it was not possible to be definitive on the scale of the problem until inquiries made further progress.

However, if the 80 or so individuals all submitted 10 sets of accounts each, that would bring the total number of firms involved towards 1,000.

But accountants familiar with the area said several thousand companies could have benefited from the practice over several years.

The CRO has already demanded that companies that have used non-registered auditors send in their accounts afresh.

The decision as to whether criminal charges are brought is a matter for Mr Appleby's office, which is made up of forensic accountants and gardai. It is not thought that there are any implications for the Revenue Commissioners at this point.

People can only act as auditors at companies if they are approved by a recognised accountancy body, have done the appropriate amount of training and have the correct qualification, known as a 'practicing certificate'.

It is not clear how the unregistered individuals are finding a way around the system.

The CRO said that it was looking at finding "practical solutions" to stamp out the abuse of the system.

Irish Independent