Mr. Ian Drennan:

Before I defer to Mr. Hegarty on the latter part of the Senator's question, I need to say something on his earlier comments. We are violently in agreement that people's lives were destroyed. That is a given and we all accept that. I said earlier, and need to reiterate it, that the ODCE's remit under law is company law. The various investigations in which we were involved and subsequently resulted in trials, irrespective of what way those trials went, were concerned with alleged breaches of company law. There are parameters within company law. Company law was never intended to be designed to deal with the component or contributory factors that gave rise to some of those financial institutions becoming insolvent. This has been well documented. That is much more in the area of financial services law regarding the manner in which those entities were stewarded, the manner in which those entities were understood, appreciated, calibrated, mitigated and all those good things, which are squarely within the scope of financial services. In terms of company law, similar to tax law, there are clear parameters around it. Bringing a bank to its knees, to use that parlance, is unlikely, in the circumstances that gave rise to the issues about which the Senator spoke, to ever come within the remit of company law. That is financial services law.

Second, as the Chair has suggested we will not get into a particular issue but the area of audit is something about which I would be quite happy to speak to the Senator at length. An audit is a very misunderstood thing in terms of what it is that auditors are charged with doing. A corner shop is relatively easy to audit, that is quite straightforward. However, with a bank, where there are complex financial instruments and huge levels of judgments and estimates involved, the accounting standards were applicable and they in turn had come directly from the likes of Enron and the issues which arose as a consequence of that. These things must all be seen in the round. It does not lend itself to a straightforward analysis as these are complex issues. Those things must all be understood before one can start to think about the performance of auditors. I am not opining on that but I am saying that there are a huge number of moving parts around all those complexities, the fact that audit is not forward looking, it is rear looking. It is not a certificate that these financial statements are correct, it is an opinion based on a particular methodology. Those things all factor into it. Mr. O'Mahony may want to supplement my remarks as he is a member of the board of the Irish Auditing and Accounting Supervisory Authority, IAASA, which has a specific role in that area. There have been huge developments in recent years that I have probably lost touch with since I was there.

Before I hand over to Mr. O'Mahony, and give him a chance to formulate his thoughts, I will ask Mr. Hegarty-----