Mr. Pat Houlihan:

As for what Deputy Calleary had to say, as I saw it, he pointed the finger at audit deficiencies. I am no apologist for audit firms or the like. The Department has policy responsibility for this area and neither fears nor favours any of the operators therein and we do not show any favouritism. Consequently, I am speaking in a neutral way here but none of the various reports on the financial crisis has been able to finger audit failure. A critique has even been made by the European Parliament of the impact assessment performed by the European Commission on these proposals and it pointed out that while audit was indicated or semi-alleged to have been a contributor in this regard, it was not actually pinpointed that it was. I reiterate I am not being an apologist but having dealt with these issues over a number of years, my feeling is the Commission has had these ideas in its head for a long time and to an extent, the financial crisis has given it the opportunity to air these matters, put them out there, get them considered and so on. There is an element of this and I reiterate I am not aware of any absolutely open-and-shut case of an audit being single-handedly responsible for the failure of credit institutions.

I must state the main failed credit institutions here were regulated by the Central Bank and it is not clear on whose side fault lies. While I do not apportion fault to anyone, they were supervised. Any prudential individual would not rely on a single strand such as audit. I imagine such individuals would have a second strand to their bow and would supervise and act as a prudential supervisor. This in no way is pointing a finger at the Central Bank but in some senses, it is a rebalancing of the equation. That is about as much as I would say for it.

In addition, there is an internal audit function in all these institutions. They also have responsibilities and it is not clear that they fulfilled or discharged their responsibilities. I am just throwing this out there.