A chartered accountant has told the trial of former Anglo Irish Bank chairman Seán FitzPatrick that auditors are not required to view every single piece of information.
Mr FitzPatrick (68) is accused of misleading auditors about multimillion-euro loans between 2002 and 2007. He has denied all charges.
Kieran Kelly, an audit partner with EY (then called Ernst & Young) told Dominic McGinn SC, prosecuting, at Dublin Circuit Criminal Court that companies have a responsibility to produce financial statements that give a true and fair view of the state of affairs and profit and loss at the company.
He said the objective of an audit was to produce an opinion of whether the financial statements and accounts taken as a whole do indeed produce this true and fair view.
He told Mr McGinn auditors were entitled to assess all information necessary to carry out the audit but that in practical terms this did not involve auditors going through every single document.
“The auditor is not required to have viewed every single piece of information. He needs to plan an audit so he sees sufficient information.
“It’s the obligation of the auditor to obtain the information which supports the figures and the disclosures in the financial statements,” Mr Kelly said.
He said this information was generally of a persuasive character rather than a corroborative and that the auditor relied on explanations made to them.
Letter of representation
Dublin Circuit Criminal Court heard the auditor requires a “very significant” document called a letter of representation, which confirms the important pieces in the accounts, before the auditors sign off on the accounts.
The jury saw three representation letters, all signed by the accused and referring to the accounts for 2002, 2003 and 2004.
One letter, dated November 26th, 2002, stated that “at no time during the year and at year end the group or the company had no arrangements, transactions or agreements to provide credit facilities . . . for directors (or persons connected with them) . . . except as disclosed in note 45 of the financial statements”.
The court heard that note 45 in the 2002 accounts stated that loans to directors outstanding on September 30th, 2002, was €12 million for nine directors.
The 2002 representation letter, provided by Anglo to EY, also stated: “There have been no events since the balance sheet date which necessitate revision of the figures included in the financial statements or inclusion of a note thereto.
“Should further material events occur before the date of the AGM which may necessitate revision of the figures included in the financial statements or inclusion of a note thereto, we will advise you accordingly.”
The jury has previously heard evidence that the methods used to produce the statement of Mr Kelly provided as evidence in the prosecution were subsequently ruled “unlawful”. Lawyers for the accused have said the statement was produced by a process of coaching and “cross-contamination”.
Mr FitzPatrick, of Whitshed Road, Greystones, Co Wicklow, has pleaded not guilty to 27 offences under the 1990 Companies Act. These include 22 charges of making a misleading, false or deceptive statement to auditors and five charges of furnishing false information in the years 2002 to 2007.
The trial continues before Judge John Aylmer.