The accountancy profession will be happy to bask in Prof Percy's glowing findings but the report does little to restore public confidence in it.
It is hard to reconcile the findings that PricewaterhouseCoopers and Ernst & Young acted professionally in ignoring massive DIRT liabilities at AIB and ACCBank in the 1980s and 1990s with what was uncovered at the DIRT inquiry. Prof Percy is satisfied the accountants and auditors did everything expected of them by their profession. The public, and particularly investors with shareholdings in the firms they audit, should have greater expectations.
Prof Percy stresses that no individual accountant could have had access to the information that came to light during the DIRT inquiry. The firms accepted assurances by the two banks that they had won an amnesty from the Revenue Commissioners regarding DIRT that should have been deducted on bogus non-resident accounts in return for cleaning up this part of their business.
The inquiry established that no such amnesty had been granted, leaving the State's financial institutions facing a collective tax bill of £173 million (€219 million). At no point did either firm try to independently establish the terms of any such amnesty. Prof Percy said it would have been unlikely the Revenue would have confirmed this arrangement in writing had it been asked.
The report does little to reassure the public that such questions are now being asked. The ICAI is clearly relieved to be able to put the DIRT inquiry behind it. ICAI chief executive Mr Brian Walsh said the investigation, and its decision to make the findings public, provided further evidence of the profession's efforts to be accountable and open. The institute has little choice but to make these overtures in the changed regulatory environment in which it now finds itself. By the end of the month, the new Irish Auditing and Accounting Supervisory Authority will be put on a permanent statutory footing to oversee the profession.
The Tβnaiste, Ms Harney, is confident that this, combined with the recommendations of the review group on auditing, will help to restore public confidence. It would be fair to say it will go much further in achieving this than Prof Percy's report.
