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Never Trust An Institute

Posted on: March 15th, 2009 2 Comments

NEVER, never, trust an “institute”. The Institute of Chartered Accountants in Ireland (ICAI) ranks with the financial regulator as the winner of the wooden spoon for watchdogs.

The ICAI boasts such illustrious members as Charles Haughey, DCC’s Jim Flavin, even recent heroes like Anglo’s trio of Sean Fitzpatrick, David Drumm and Willie McAteer. Boring old accountancy bodies seem to attract such interesting people. Sean was even on the institute’s council while he was burying all those loans.

Meetings must have been exciting. The institute runs a complaints procedure. Please do not laugh.

Two years ago I lost a complaint to the institute against KPMG, the auditors that twice missed a €1m error in the accounts of NTR. The State had lost €2m in taxes while KPMG’s client made the gain.

My complaint seemed doomed. The cards were all stacked against me. It was unanimously rejected by this body’s “independent complaints committee”. One of the main reasons was that the offence was of an “isolated” nature. It had only happened twice.

I was genuinely puzzled, but not surprised. I thought they could have done a little better than that. So I appealed.

The reviewer found in my favour.

Game, set and match? Was KPMG, one of the biggest funders of the institute, to be fined?

Not at all. The accountancy body’s complaints committee merely reconvened and rejected its own reviewer’s findings. Not Guilty. The appeals procedure was a fig leaf. Such findings were not in the script.

KPMG, one of the big four accountants, walked away.

Luckily there is a higher body. Last week the Irish Auditing and Accountancy Supervisory Authority took a look at the carry-on. They held a preliminary enquiry into the conduct of the institute’s watchdog.

Last week they found that the institute had a prima facie case to answer.

They have launched a full inquiry. Watch this space. The ICAI’s complaints committee is going to have to account for itself. Perish the thought. Surely all those meetings behind closed doors are not going to be exposed to public gaze?

On Friday night I decided to find out who chaired the wretched institute’s complaints committee today. Well, lo and behold, none other than the former Financial Regulator. No, not poor Paddy Neary, but his predecessor, Liam O’Reilly.

Mr O’Reilly has somehow escaped attention in the recent controversies. Not only was he the regulator in highly sensitive times , he was also a board member of Irish Life when they were being so helpful to Anglo in window dressing its accounts. He is still there .

We are likely to hear a lot more of Mr O’Reilly in both capacities.