The Registrar of Friendly Societies has said credit unions have no option but to develop their computer systems despite the unfortunate experience of the ISIS project on which €34.3 million (£27 million) was lost.

In his report for 2000, Mr Martin Sisk also warned all auditors of credit unions that where it comes to his attention that an auditor has failed to perform his functions adequately, he will take appropriate action.

"Where the registrar has evidence that a person has acted as public auditor of a credit union while not in fact being a public auditor within the criteria of the Companies Acts, details will be forwarded to the appropriate prosecuting authority. Appropriate action will also be taken where it appears that a person is acting as an auditor in circumstances suggestive of an attempt to circumvent the objectives of the legislation."

The report did not state why Mr Sisk felt it necessary to make the warning other than to state that "in the light of ongoing experience, the registrar considers it important that he repeat what he has to say" on the subject of auditors.

Mr Sisk also said too many credit union boards selected auditors primarily on the basis that their fees were lower than their competitors. "This criteron should never be used in the selection process. Some credit unions which have selected their auditors on that basis have come to regret their decision."

On the issue of the ISIS project, Mr Sisk said that for the Irish League of Credit Unions, the year 2000 was dominated "by the trials and tribulations relating to, and the ultimate demise at a cost of approximately £27 million of" the project.

The original estimate for the centralised computer system which would link the various member credit unions was €50.8 million. When it emerged that a loan of €7 million from the league's Savings Protection Scheme was being used, Mr Sisk sought a meeting with the league company running the project. "This turned out to be a very unsatisfactory meeting from the registrar's point of view in terms of the responses he received to the questions he raised."

The report states that by April 2000 it was clear that the estimate for the project had risen to €86.4 million. Mr Sisk said that in December 2000 he stated the project was "dead in the water" and that the loss to the league could be up to £38 million.

"The registrar takes absolutely no pleasure in knowing that his forecast was correct but instead shares the great sense of sadness that is felt in the Irish credit union movement as a result of the failure of this project."

Mr Sisk emphasised that despite the "unfortunate and costly" ISIS project, credit unions have no option but to continue to upgrade their computer systems "whether individually or in groups in order that they may continue to develop and grow". The ISIS project was an attempt to set up a system which would link all the league's member credit unions.