CommentAccountants see the new Bill as an indictment, not an opportunity

Only those of us privileged to see their diligence at close hand are convinced of the secret and unacknowledged truth about accountants and auditors.

The vast, vast majority of them are immutably honest, scrupulously compliant and irredeemably law abiding.

Unfortunately, like many other professions at the moment, their reputation has been tarnished by the activities and decisions of a tiny minority.

The recently published legislation on professional self-regulation of accountancy bodies and changes in company law presents a marvellous opportunity for accountants to seize the moment and show the public that they are committed to cleaning up the image of their profession.

But what do they do?

Like lemmings heading towards the cliff edge they fail to see the obvious.

All the reportage of the response of the accountancy bodies has been about their concerns, objections and opposition to sections of the proposed legislation.

On the other hand, they fail to recognise that for the general public and the political world the real worry is that the proposed legislation might just be too little, too late.

One senior accountancy representative felt that I was both "unfair and ill-informed" in referring recently to the "tarnished reputation" of the accountancy profession.

It sounds like a sort of "say it isn't so, Joe" plea.

Maybe we should remind ourselves of where we all came from to this point.

The outraged response of the general public to the reported involvement of members of accountants and auditors at the core of some of the greatest financial scandals over the past decade should not be forgotten.

This is the basis for the damage to the reputation of the profession. And even though it may well be unfair to the upstanding members, the fact is that they have all been damaged and it is pointless shooting those messengers like myself who are trying to address it.

The DIRT Enquiry of the Public Accounts Committee was scathing of the accountancy profession. Time and again it fingered the accountants for complicity, omission or worse.

In the words of the Tánaiste, Ms Mary Harney, to the PAC: "Inquiries and Tribunals have shown a whole host of examples where there were very serious things happening in companies but that those in control of the company knew nothing people hiding behind a situation where they allege they just did not know."

Despite the fact that the recommendations of the Audit Review Group were quite far reaching and, I thought, comprehensive, the PAC was less than impressed or enthusiastic about the recommendations which I had outlined to them.

Their feeling was that our recommendations were far too benign.

The late Mr Jim Mitchell, chairman of the PAC, was particularly sceptical.

"What we have here is a pussy cat rather than a tiger, the teeth have already been pulled. Jail isn't mentioned and holding people to account is not mentioned," he said.

It was clear to everybody at the hearing that the committee had envisaged a much more draconian regime to emerge.

This was hardly surprising as the PAC members had, after all, been of the view for instance, that no auditing company should be allowed take on any non-audit work; that auditors be limited to five years with a company; and that self-regulation was not dependable.

These and many other aspects of the PAC report had been rejected by the review committee. Others had been modified.

Eventually, after lengthy explanations and rationalisations from myself as chairman of the review group and from the Tánaiste, the PAC reluctantly accepted the arguments and assurances we presented and agreed to our recommendations.

But not without reservations and injunctions and with an exhortation that they would want a much earlier review of the legislation than suggested.

It was Pat Rabbitte, seeking the early enactment of the recommendations of the Audit Review Group, in reference to the accountancy profession, who warned of "the rearguard action fought by an outraged profession, there will be quite a battle to water down the legislation. It's important that one's nerve is held."

Listening to the hue and cry emerging from the accountancy bodies in the past few weeks as they line up in skirmish formation to dilute the proposed legislation, all one can ask is "Was he right or was he right?" Prescience indeed.

It would now appear that the accountancy bodies are seeking to reopen old issues and re-engage in old wars. This cannot work.

In truth, no Bill is perfect and certainly there may be aspects of this one which need amending but for the accountancy bodies to be taken seriously they must shift attitudinally.

There must be a recognition of the road we have travelled since the scandals. There must be an acknowledgement that the Bill represents a genuine compromise for the non-accountant interest and an acceptance that the post-Enron world is demanding of much more accountability and responsibility in the world of accountancy.

The Bill has had a long gestation period which included inquiries, tribunals, public accounts, public and political debate, review group and interim board.

At each stage, there has been input from accountants. It is timely now to welcome the arrival of a new order.

Senator Joe O'Toole is chairman of the Audit Review Group and president of Irish Congress of Trade Unions