Peadar Tóibín (Meath West, Sinn Fein) | Oireachtas source

Gabhaim buíochas do na finnéithe as an chur i láthair chruinn sin. In response to a point made by Mr. Houlihan, it is probably the job of Government to make sure that the worst excesses of the cyclical nature of the economy are reduced and that it uses all the financial tools necessary to reduce those swings in the cyclical nature. This is possibly one of the tools that can be used. It is an understatement to say that there is reputational damage done to the auditing industry with regard to what has happened in the past number of years. There seems to be a conflict between the job of working for a client and being the guarantor of the accounts. There is an expectation in terms of the giving of a true and fair view of a company's accounts and it is our job to work on behalf of the citizen to reduce the gap in terms of that expectation. To do that, we need to find a way for auditors to give a clear view of the health of a company and to be able to provide a forecast service by saying this is the health of a company and if X, Y and Z economic circumstances were to arise on the horizon, this is how the company would be able to deal with those. That did not happen during this crisis because banks got certain guarantees and six months later those banks collapsed.

The issue of accountability is important. Many of the professions in Irish society would have direct accountability. For example, when I worked as a management consultant such consultants would have taken out professional indemnity because if their advice were in some way to have had a negative effect on their clients, they would have been accountable for that. At the last meeting John Moynihan said that auditors could be sued by shareholders but that it was not easy to do so. It is important there is not only accountability to society in general but to shareholders, creditors and the public purse. We probably would have dealt with businesses which gave credit to other businesses which they believed were fully healthy and would be able to deal with the economic turmoil in that regard. What can be done to bridge that expectational gap to ensure there is full direct accountability and even to make it easier for shareholders to sue auditors in the future? How would direct regulation contrast with the system currently in operation where there is slightly indirect regulation? Ms Erwin mentioned that there would be a broader definition of what is meant by PIEs and she might give some detail on that.