The alacrity with which the Institute of Chartered Accountants in Ireland (ICAI) reacted to the McCracken Tribunal Report is in sharp contrast to the accountants' reaction to the Beef Tribunal Report. Despite the serious questions raised in the Beef Tribunal Report about some of its members, the institute never reacted publicly.
Yet what was said warranted some kind of comment. This is what the Revenue investigators said to the Beef Tribunal about the under-the-counter payment of some £4.8 million. The payment was not discovered because of the system which "was very well and professionally put together" and "had been organised by a large organisation and it had been organised by professionals. . . .chartered accountants were involved in this and they had put a lot of thought into it". What has never been published before was the attempt by a well respected former president of the institute to have the issues debated. He considered the issues involved so serious that he tried to raise the matter, and other related issues, in a letter to Accountancy Ireland, the institute's journal, in 1996. Even though the letter had been vetted by senior counsel, its publication was turned down.
This was Accountancy Ireland's reply: "Because of the sensitivity of some of the issues you raise, I have taken advice from others within the institute. I understand from a disciplinary process which is currently underway and I'm sure you will appreciate that it would be inadvisable for the journal of the institute to publish anything which might seem to be pre-judging the outcome of that process in any way." Despite the accusations by the Revenue Commissioners, the Beef Tribunal, contrary to popular belief, exonerated the auditors, saying they acted in accordance with their responsibilities as set out in the accountants' legal, ethical and practical guidelines. These stated: "If an auditor discovers an act he believes to be illegal or questionable, he must report to, and obtain consideration of that act, from the appropriate level of authority within the entity. In certain cases, this may necessitate his reporting in such a manner as to bring the matter to the notice of the shareholders." The tribunal, however, added the rider that the auditors obligations should be extended to informing the Revenue Commissioners in cases of tax evasion. Apparently the institute considered the remarks of sufficient importance as to warrant a private disciplinary process which is understood to have involved 26 hours of oral hearings. Also, respondents put forward different views. But while the Revenue Commissioners did not attend, as requested, they restated their views.
One member was disciplined. But the institute never published his name and never issued a statement on the outcome. That was a big blow for transparency. It leaves many important questions unanswered which must cast a shadow over the ICAI. The approach to the hard-hitting McCracken Tribunal Report is much more enlightening. The ICAI acted with speed and said it would carry out a full investigation into whether any of its members are guilty of professional misconduct.
The members named in the report include former Taoiseach, Mr Charles Haughey, Dunnes Stores trustee, Mr Noel Fox, and the Dublin accountancy firm, Oliver Freaney, which acted as financial consultant to Dunnes Stores and was auditor to Michael Lowry's refrigeration company Streamline. The ICAI has refused to name which of its members will be investigated.
The ICAI probe will take the form of a quasi-judicial disciplinary hearing where some of its members will be called to answer questions in relation to their role in the transactions investigated by the tribunal. However, it is now likely to be postponed following the appointment of inspectors under section 19 of the Companies Act, 1990, by the Tanaiste, Ms Harney, to investigate the books of Celtic Helicopters, Mr Ciaran Haughey's firm, and Streamline.
The probe is still ongoing but it will not be surprising if those called before the hearing cite sub judica rules for their non-attendance. Ironically, the appointment of the inspectors whose findings are likely to be published well before any findings from the new tribunal, is likely to aid the accountants' probe. The inspectors, from the Department of Enterprise, Trade and Enterprise, have extensive powers of investigation which could be augmented by seeking the appointment of inspectors in the High Court, under section 8 of the Companies Act, 1990.
In contrast, the accountants' hearing has no subpoena powers and cannot discover documents. But the ICAI will be able to use the inspectors findings to decide on disciplinary procedures, if any, against its members. Full transparency is what is needed and that can only be good for the institute.
