Oliver Freaney & Co, the company which acted as auditors for Michael Lowry's refrigeration business, Streamline, said yesterday that it viewed with dismay a Institute of Chartered Accountants in Ireland (ICAI) statement warning that steps would be taken to ensure co-operation with the Blayney Inquiry into possible professional misconduct of some of its members.

The response from Freaney's followed an assurance by Mr Sean Dorgan, the chief executive of the ICAI that client confidentiality would not be breached in any investigation of its members carried by the Committee of Inquiry.

Mr Sean Dorgan gave the assurance after Freaney's, one of the companies being investigated by the Committee of Inquiry, said that inspectors were refused access to their files because a process to protect client confidentiality had not been agreed.

The ICAI warned Freaney's that failure to co-operate with the committee, established as a result of the findings of the Dunnes' Payments to Politicians tribunal, was unacceptable. The ICAI confirmed that on three occasions last week two inspectors, part of a monitoring unit operated by the institutes in Ireland, Scotland and England and Wales, were refused access to audit files. A spokesman for Freaney's said that, on legal advice, the inspectors had not been allowed entry because client confidentiality had to be protected and no examination process had been agreed. "It is about due process," he said.

The ICAI statement reads: "The institute will not accept any failure by a member or member firm to co-operate fully and expeditiously with the Committee of Inquiry as they are required to do so.

"All necessary steps will be taken to ensure full co-operation and remove any obstruction from the inquiry." Following yesterday's meeting of the Committee of Inquiry, Mr Dorgan said that the Blayney Inquiry was an inquiry into the conduct of members or member firms.

"It will not at all inquire into the affairs of clients of members or member firms.

"There has never been any question of infringing client confidentialities. That has never been an issue in the hundreds of inspections conducted every year by ICAI inspectors.

"It has not been breached and it will not be breached in this case," he said.

The spokesman for Freaney's said the institute's statement was viewed with dismay and was "at best disingenuous and at worst damaging to the interests of this company".

He said that lawyers for Freaney's had met with the Committee of Inquiry's counsel to discuss the legal concerns raised. "Both parties agreed to discuss the matter over the coming week", he stated.

Deloitte & Touche, which has not yet been approached by inspectors but is also being investigated, said that clarification was being sought by their lawyers on the legal parameters of the investigation. "It is totally different to the Freaney's case. There has been no attempt by inspectors physically to come down.

"As soon as the clarification is received by Deloitte's lawyers, they will be allowed in," he said.