IE Domain Registry (IEDR), the private company that operates the Republic's .ie internet domain name system, restated its financial accounts yesterday following a review and overhaul of the firm's finances.

IEDR, which recently removed its former auditor - Dublin-based firm BCW - said yesterday it had been forced to adjust its 2001 financial accounts in a move that transformed a €71,686 profit into a loss worth €460,083.

The company said in a statement published in its 2002 annual report that, among other causes, the adjustments arose from changes in accounting policy in relation to the treatment of intangible assets, deferred income, promotional stock and bad debts.

The statement said BCW was removed before the expiration of its term pursuant to section 60 of the Companies Act 1963. Duignan Carthy O'Neill was recently appointed auditors to IEDR.

The removal of the auditor followed the suspension of IEDR chief executive Mr Mike Fagan in October 2002. Last month, Mr Fagan resigned from IEDR after reaching a settlement with the domain registry.

Last night, Mr Colm Watters of BCW said he stood over his firm's audit of IEDR's accounts in 2001 and said the directors had conveniently ignored a letter expressing certain concerns that accompanied the accounts.

Meanwhile, IEDR's 2002 financial accounts also show that the firm reported a loss of €1.2 million, despite registering a 25 per cent increase in its business.

The financial review led to a number of once-off exceptional items having to be charged in the accounts, including €371,369 in respect of write-offs and bad debts provision.

A further €710,378 has been written off in respect of changes to the firm's accounting policy. It is now crediting revenue on an earned basis rather than an invoiced basis.

IEDR chairman Mr Seán Scanlan said in a statement that, since the end of 2002, there had been a strong turnaround, with it reporting a profit of €160,000 for the first six months of 2003.

"The outlook for the remainder of 2003 and beyond is very positive, with registered domains growing at 25 per cent a year," said Mr Scanlan.

The accounts show IEDR's current account was restructured in January 2003 with an amount of €100,000 transferred to a short-term loan account.

Repayment of the loan will begin on December 31st, 2003.