The implementation of proposals from the Review Group on Auditing would create probably the toughest regulatory regime in the world for auditors and company directors, the Institute of Chartered Accountants (ICAI) in Ireland warned yesterday.
In a statement, the ICAI said the proposals would have to be carefully assessed for their impact on business competitiveness internationally and on the attractiveness of Ireland in the global marketplace.
"A balance will have to be achieved between over-regulation and the onerous compliance demands it brings, on the one hand, and the need for business to be able to operate effectively, on the other," said the statement.
Mr David Simpson, president of the Institute of Chartered Accountants in Ireland, said the proposals were onerous and could well add costs to Irish businesses.
He called on legislation to protect auditors making disclosures to a relevant authority, statutory backing for accounting standards and the establishment of a Financial Reporting Review Panel.
The Institute of Certified Public Accountants in Ireland strongly criticised several proposals in the report. Mr Eamonn Siggins, its chief executive, said there was a real danger the proposed Oversight Board would become more interventionalist in nature than oversight.
The proposal that the accountancy profession should pay 60 per cent of the costs of the Board was "patently imbalanced" when one considered the range of responsibilities which were inherited from the Department or added little value to the regulation of the profession, he said.
Mr Siggins also criticised the newly proposed reporting requirements on directors and auditors as too wide ranging. He said this recommendation showed little understanding of the operation of business and of the nature and scope of the audit function.
"It could clearly be viewed as a fundamental mistrust of business and auditors which, if implemented, will place Ireland at a serious disadvantage in terms of attracting overseas investment," he added.
The Irish Business and Employers Confederation said the review group had produced a balanced report which provided solutions to those identified possible weaknesses in the overall auditing function. It welcomed confirmation in the report of the important principle of delegated self-regulation but within an overall framework of supervision through the establishment of an Oversight Board.
"Its recommendations will produce a business environment which investors will recognise as not over-regulated but an auditing system which in practice operates to best international standards."
