The Revenue Commissioners' call for a new State agency to act as a watchdog for the accountancy profession - following the failure of auditors to the State's financial institutions to detect the widespread use of bogus accounts to avoid DIRT - may seem bizarre.

After all, State agencies were sadly lacking themselves in the 1980s and 1990s. The inquiry into DIRT by the Dail Committee of Public Accounts concluded, "given the Revenue's conviction about bogus non-resident accounts, it was a serious lapse on the part of the board of the Revenue Commissioners not to have taken an industry-wide initiative with a view to getting the financial institutions to apply the law".

On Central Bank's role it said "the bank knew of the problem . . . bogus non-resident accounts were breaches of exchange control and the Central Bank took no action".

So why should a new State agency fare any better? It would, or at least should, because the climate for disclosure and transparency has thankfully changed. The Revenue's call, however, is not radically different to the submission to the Review Group on Auditors, by the Institute of Chartered Accountants in Ireland (ICAI). The Revenue, for example, favours the retention of self-regulation by the profession but says some "external audit" is also required in the form of a State supervisory role with powers with two objectives in mind. First, that standards and guidelines laid down by the professional bodies are adequate and in accordance with best practice. Second, that those standards and guideline are being applied on the ground.

The Revenue suggests the watchdog role could be taken up by the Office of the Director of Corporate Enforcement, the new company law enforcement office recommended by the McDowell report. The ICAI naturally wants the retention of the self-regulation role but its main recommendation to the review group set up by the Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, is the establishment of an independent body to oversee the existing regulatory regimes operated by the accountancy bodies, similar or affiliated to that which operates in the UK. The UK body is funded by the accountancy bodies but does contains no accountants.

Following the Revenue submission, it is now highly likely there will be a separate supervisory body - an independent body or a statutory body - to act as watchdog for the accountancy profession. The setting up of either should allay disquiet about some auditing procedures.

The thrust of the Revenue submission is enlightened and demonstrates how that body has, over the years, moved from a secretive unhelpful tax collector into a visible and open organisation. It also knows about the vulnerability of some sectors.

The Public Accounts Committee, for example, suggested an auditor should serve for only five years, a move the ICAI resisted. The Revenue says maximum period desirable "from an independence standpoint", could be disruptive and costly, particularly for smaller companies. An alternative could be a rotation of audit partner but "there would need to be an exemption for smaller companies".

The auditor's role in the smaller company keeps creeping up in the submissions. And it is clear that such would need an exemption should maximum periods be laid down.

As with other submissions, the Revenue calls for separate disclosure of non-audit fees. This is rarely disclosed but the Revenue's submission states "non-audit fees usually contribute a very substantial proportion of an audit firm's total income. Of itself, this can give rise to tensions and conflict of interest situations". Tax inspectors, as practitioners on the ground, know what is going on and that statement is revealing.

The Revenue submission says for large companies there should be an appropriate upper limit on non-audit fee as a proportion of total fees. It also suggests an audit firm should have a limit of what fees come from one company, or group of companies.

While acknowledging the auditing profession in the Republic has generally promulgated high professional and ethical standards, the submission notes that auditing standards are not just a matter for shareholders and creditors. It rightly argues there is a wider public interest, such as the efficient working of capital markets, the deterrence and identification of fraud and the underpinning of tax compliance.

These, of course, come under the remit of the majority of auditors but any auditors not taking them on board, would be undermining the profession's code of best behaviour.