The Blayney Committee called some accountants to book, but it lacked realteeth, writes Joe O'Toole.
It is too easy to be cynical about the outcome of the Blayney inquiry. The public will hardly be overly enthusiastic about an enquiry established by accountants to investigate accountants. You can almost hear the sniggers.
Nonetheless there is some credit due to the Institute of Chartered Accountants in Ireland (ICAI). Following the reports of the tribunals they did take action and they did stick with it. They did put the cross-hairs on some of the most powerful members in the institute at a time when some of their targets had connections to the most powerful and influential in Irish political and business society.
They also went to the courts to defend their right to establish the inquiry That cannot have been easy, and, at the very least, their good intentions should be acknowledged.
Unfortunately, however, the good-intentions-paved route tends to lead in the wrong direction ultimately, and a more clearly defined protocol needs to be organised and put in place.
Indeed the Blayney Committee, set up by the institute in 1997 to look into the professional or business conduct of members and firms arising out of the McCracken tribunal (Dunnes payments), confirmed all our prejudices about the linkages and connections within the so-called golden circle.
It confirmed too that there was dirty work afoot and that some of the rich and powerful were steeped in it. It specifically underlined where audit and accountancy standards had been ignored or breached. All of this is laid out there for all to see in the report which has been published by the ICAI.
But it is from that point that they begin to lose credibility. Because after spending six years and €3 million producing the evidence and copperfastening the evidence, what did they do next? How were the recalcitrants punished?
Well they were put up against a wall and they were reprimanded and they censured. "Ouch." "Mercy." Not good enough.
Yes, they will have to cover most of the costs, but one can assume that the firms involved will pick up the tab and that no individual is going to suffer financially. From the public's point of view this is not enough and merely feeds cynicism.
From the perspective of the economy in general it is becoming increasingly evident that post-Enron global investment mangers and policy leaders will not risk investors' or stakeholders' money in corrupt countries. It is therefore in all our interests to clean up our act. There is a public interest involved here.
With regard to the clean-up, the accountancy bodies deserve some sympathy. After more than a century of protecting and raising standards in their profession and guiding their members through the normally anticipated ups and downs of professional life the recent scandals have been a real shock to the system. They are now been asked to take the toughest action against their own members. Will they do it? Should we not take the control of the ethics and standards of accountancy and more importantly, the disciplining of accountants, away from the profession itself?
Members of the professional accountancy bodies can hardly feel enthusiastic about paying large annual fees merely for the cutting of rods to beat themselves. Even accountants are human. It can be easily forgotten that despite media concentration on the bad ones the truth is that the vast majority of accountants and auditors are honourable, decent and scrupulously compliant professionals of the highest integrity.
There is a strong line of argument in that direction. On the other hand the accountancy bodies themselves, not surprisingly, argue that they are the best people to deal with these matters.
Political and public leaders have demanded that these issues be brought into the public domain and dealt with by non-accountants. The general public, they argue, is never going to be completely happy with the outcome of investigations into the activities of professionals carried out by their own professional body independently of all other interests.
The arguments are strong on both sides, but the logical conclusion points, I believe, to a bit of both. Undoubtedly accountants are the best equipped to identify the pockets and crevices which hide the evidence of corruption.
They may not be the most reliable, however, in meting out the appropriate punishments to their colleagues or in determining the public accountability of the accountancy and auditing profession.
The Companies Bill currently going through the Oireachtas reflects this view quite accurately. It proposes the establishment of an authority which will decide on the recognition of accountancy bodies and which will supervise those bodies particularly in respect of how they regulate their members. This supervisory authority will be required to satisfy itself that the investigations of the accountancy bodies into their members' actions have been conducted properly and will have the power to annul decisions of the bodies in certain circumstances.
The authority will also be competent to direct bodies to establish an investigation if it becomes aware of possible breaches in standards. Indeed the authority in extreme circumstances can undertake the investigation itself independently of the accountancy bodies.
The Bill also proposes changes in the relationship between accountancy companies and their clients and specifically protects the independence of auditors. It will require company directors to state specifically that their company is compliant.
The Blayney inquiry and the various tribunals, painful as they are, are no more than the birth pangs of a new and healthier Ireland. All of these changes should ensure that in the new Ireland we will have more trust and confidence in the world of business and commerce.
Right now it would be a mistake to scapegoat the accountancy profession. It would be wrong to see the Blayney inquiry as their epitaph. Their input is pivotal and should be valued and protected and their attitude to proposed new developments can help them win back public goodwill.
Senator Joe O'Toole was chairman of the Audit Review Group established by the Tánaiste in the wake of the DIRT inquiry to advise on the regulation of the profession.