Mr. Martin Sisk:

It is an interesting subject, to say the least, and in light of the financial collapse, it is even more interesting in a way. Statistically, there are approximately 35,000 members of prescribed accountancy bodies in this country. That is a great number of people working in the economy in that sense of the word, whether they are providing, as the Deputy said, business services or taxation services before we even get near the auditing side of things. They are providing an invaluable service to their local communities, local small businesses and so on. There are a vital cog in the economy. Then there are 3,500 accountants who are much more tied into the auditing side of things and 1,500 firms that are registered as statutory auditors.

As a result of EU directives that have come into play recently from June 2016, and I will be very interested to see what progress has been made on this issue, IAASA now has an obligation and the responsibility of inspecting, investigating and directly overseeing the performance of the statutory auditors, the big firms. Up to now it did not have that responsibility. There are eight big firms that carry out the audits of entities that sell and trade in marketable securities on the open market. I am referring to all the credit institutions, in effect, all the banks, and all the insurance undertakings, so we are talking about all the insurance companies. IAASA, for the first time, is now the direct regulator of that issue. Under those EU regulations, there are rules specifying that these firms can only audit, say, a bank for a limited period of time. The maximum period they can audit a bank now is ten years. They can possibly apply for an extension of another two years but that is it. A bank, insurance company or one of those big firms trading in securities has to change its auditors, effectively, after ten years. Up to now that rule did not exist. There were no specific rules like that.

Another other issue is the rotation of the individual partners within the audit firms.

There are new rules about that as well which are much stricter. Up to now, those obligations were not there. I will be interested to see how that initial process has progressed. In addition, I will be anxious to see that it is enforced quite strongly and quite rigidly as we go forward.

The bigger question on the smaller firms is a difficult one. I agree there is a perception that there are conflicts of interest, left, right and centre. I would be anxious, perhaps, in due course, subject to discussing this with the board and the staff in IAASA, to examine the possibility of widening that set of rules to come down the chain to the smaller firms. There are practical issues involved. In any rural town, there are only so many firms. Local communities, understandably, would be anxious to still use those local firms rather than having to off, 50, 60 or 100 miles away, to another firm. It is an ongoing dilemma.