New law will boost powers to monitor and regulate auditors

A proposed new law due before the Oireachtas shortly will boost the powers of the agency that supervises auditors in the Republic.

The Government is planning to introduce a range of measures in coming weeks to tackle white collar crime and strengthen corporate governance. As part of the move it is planning to promote new legislation that will broaden the powers of the Irish Auditing and Accounting Supervisory Authority (IAASA), the agency that oversees the professional accountancy bodies.

The Tánaiste and Minister for Business, Enterprise and Innovation, Frances Fitzgerald, brought the new legislation, the Companies (Statutory Audits) Amendment Bill, 2017 to the Cabinet on Monday.

Part of its aim is to enhance the IAASA’s role to ensure effective monitoring and enforcement. These will include new powers relating to investigations and administrative sanctions.

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Accountancy bodies

The authority's role is to supervise how the nine key accountancy bodies, including the Association of Chartered Certified Accountants, the Institute of Chartered Accountants in Ireland and the Institute of Certified Public Accountants, regulate their members.

The IAASA has the power to get the courts to order an individual, a firm or one of the professional accountancy bodies to comply with rules or guidelines governing accountancy and auditing that it adopts.

The new law will, amongst other things, boost its power to monitor compliance with its rules and guidelines and enforce them where necessary.

It will also update the rules for auditors for credit unions and mutuals, which are governed by a number of laws, including the Industrial and Provident Societies Acts.

Single legal framework

The bill’s overall aim is to provide a single legal framework for statutory auditors and the requirements for audits themselves.

In recent years, questions have been raised about the role that banks’ auditors played in the build-up the financial crisis that triggered the last recession.

Earlier this year, Taoiseach Leo Varadkar asked the departments of justice and business to work together on new laws that would aid the State in tackling white collar crime and in boosting business standards.

The statutory audits bill is part of that package, and will be followed by other measures to be announced in coming weeks.

If the Oireachtas passes the bill, it will make an EU directive governing auditors part of primary legislation.