The special investigator appointed by the Institute of Chartered Accountants in Ireland (ICAI) has exonerated members of any wrongdoing regarding events uncovered by the DIRT inquiry.

In his report, Prof Ian Percy found there was no basis on which any of its members, primarily at PricewaterhouseCoopers (PwC) and Ernst & Young, could be prosecuted for professional misconduct. ICAI chief executive Mr Brian Walsh said it marked the end of the inquiry for the profession.

PwC acted as auditors to AIB but failed to provide in the bank's accounts for potential DIRT liability on the basis that it had an amnesty with the Revenue Commissioners. The bank subsequently paid £90 million (€114 million), the biggest tax settlement in the State's history, to the Revenue Commissioners on bogus non-resident accounts it held for customers in the 1980s and 1990s.

Ernst & Young was auditors to the then State-owned ACCBank, which paid £21 million following an extensive audit by the Revenue.

Mr Percy did not accept that his findings were at odds with the report by the Dβil Committee of Public Accounts (PAC) report, which investigated DIRT tax evasion. At the heart of his inquiry was whether the two firms acted professionally in accepting that AIB and ACCBank had secured a tax amnesty with the Revenue Commissioners and did not have any further DIRT liabilities. The PAC report concluded that no such amnesty ever existed.

PwC managing partner Mr Bill Cunningham welcomed the report: "We are very pleased with the findings. We always believed we did a good audit."

A spokesman for Ernst & Young welcomed the report's clear vindication of its position.

The Tβnaiste, Ms Harney, welcomed the fact that no basis for prosecutions had been found but added that the report confirmed serious weaknesses in the reporting standards at that time.

"Those rules and regulations are now undergoing a process of reform as a result of the recommendations of the Review Group on Auditing established following from the PAC DIRT report." Fine Gael deputy leader Mr Jim Mitchell, chairman of the PAC DIRT inquiry, reiterated its shock and disappointment at the complacency of auditors in reporting potential tax liabilities at the State's financial institution.

"The PAC was severely taken aback and quite shocked at what we saw as a very poor performance by members of that profession" he said yesterday.

Prof Percy interviewed all ICAI members who appeared before the PAC but did not meet representatives of the Revenue. He was satisfied members had acted in "a way that was expected of them".