Willie O'Dea (Limerick City, Fianna Fail)

I do not believe I will need 30 minutes. I thank the Minister of State for his contribution. When considering any legislation, Members must consider it in context and against the backdrop against which it is being introduced. In this case, one part of the backdrop is persistent and devastating unemployment and emigration, as outlined in the recent report by the Central Statistics Office, which is a problem that appears to be worsening steadily. Another part of the backdrop is the uncertainty, despondency and - it is not too strong a word to use - despair that has been visited on the Irish people by the political leadership or rather the lack thereof by some people from outside this country. The latest example in this regard was the recent slapstick performance in Brussels in which €100 billion, that is, 100,000 million euro, changed hands to calm the markets and succeeded in so doing for all of two hours. This is the backdrop against which this legislation is being introduced. Against such a backdrop of high and persistent unemployment, as well as debilitating uncertainty, one point stands out. Approximately 1.75 million people are employed gainfully in this country and economy at present and as the Minister of State observed, one in seven of them is employed as a result of foreign direct investment. My part of the country has considerable experience of foreign direct investment and I can state, without fear of contradiction, the vast majority of jobs provided as a result of foreign direct investment are well-paying and have contributed enormously to the surrounding economy.

The purpose of the Bill before the House is to consolidate certain aspects of the aforementioned foreign direct investment in the hope of expanding on it and from that perspective, I certainly am supportive of the Bill and find it difficult to argue against it. Many of the foreign companies and multinationals that have invested in this country undoubtedly have done so to make profits for themselves and their shareholders. They have made a decision to locate here for reasons that have little to do with feelings of love or sentimentality towards Ireland and everything to do with their own interests. Nevertheless, as I have stated, the other side of that coin is they are providing much-needed, gainful and productive employment in Ireland and are helping the Irish economy to survive through a traumatic period. Consequently, my party and I can understand fully the necessity for this Bill. I will take this opportunity, in passing, to congratulate the Industrial Development Authority, IDA, on its continuing success. However, I note that in so far as attracting industry or investment into Ireland is concerned, the authority is heavily focused on Europe and North America. For example, of the 61 new investments announced by the IDA last year, only four or five came from outside of the aforementioned two areas and it will be necessary to broaden our horizons in that regard.

In so far as the details of the Bill are concerned, the accounts of a company are meant to show its financial health. This phenomenon of the financial health or financial status of a company can be measured in different ways and there is no uniform method of measurement. The position in Ireland at present is that the Irish generally accepted accountancy principles, GAAP, are in use. These are practically identical to the generally accepted accountancy principles of the United Kingdom. As the Minister of State mentioned in his speech, there is an international standard, namely, the international financial reporting standards, IFRS, which is generally applicable to countries within the European Union. All the different member states, such as France, Germany, Ireland, the United Kingdom etc., have accounting systems which are slight variations of the IFRS. Were one to apply the pure international IFRS system to any particular company in any particular period, while it may throw up a different result for the first year or two to the national standard in use here, this would be a temporary phenomenon. On the other hand, my understanding is an attempt is being made to extend the IFRS system to Irish companies. While it appears to be confined to major companies at present, my understanding is some variation thereof is being applied to middle-ranking companies in Ireland. In any case, it is a particular system that one can co-ordinate and apply to different European Union member states because the systems are so similar. The ambition had been to bring about a convergence between that standard, which for convenience I will refer to as the European Union standard, and the American way of producing accounts or measuring the financial health of a company. It had been hoped to achieve a form of convergence or alignment between the two systems that would allow the present exemptions in the 2009 Act to be phased out. Unfortunately, as the Minister of State has indicated, the timetable within which this could be done has proved to be wildly optimistic and from what I have read recently, there is a certain element of uncertainty as to whether this goal ever will be achieved, which would be unfortunate.

However, were the Government not to proceed with such legislation and to impose the requirement immediately, it would result in negative consequences for those companies that are investing in this country and are providing gainful and well-paid employment for the people. The Minister of State has outlined some of these consequences, such as, for example, the cost of putting in place this system quickly. I do not refer simply to the financial cost as the amount of red tape would be enormous for companies that would be better employed expanding their businesses and providing more employment, hopefully here in Ireland. In addition, my understanding is even if the American multinationals to which this legislation applies were obliged to produce accounts here under the Irish accounting system, they also would be obliged to produce accounts under the American accounting system because to remain compliant in that country, they must still report to its Securities and Exchange Commission. One need not emphasise how difficult that would be and how much red tape would be involved. While unnecessary costs would be involved in so doing, there is a more significant consequence, which is that the accounting system in the United States is very different to that which pertains in Europe and this can lead to very different results for the same company within the same accounting period. For example, I read recently about the example provided by Daimler-Benz, which is a major German public company. When applying the European accounting system to a recent period, it showed a profit of DM 615 million, whereas applying the accounting system of the United States to the same period for the same company showed a loss of DM 1,800 million. The two systems are very different and forcing a company to produce two different set of accounts showing wildly different results for the same period has profound consequences. It has consequences for the confidence of investors and potential investors in the company, as well as to that of those who would trade with the company. It would not be going too far to state it has the potential to have a highly destabilising effect on such companies, which surely is the last thing Members wish to do to enterprises that, for whatever reason, are providing gainful employment and are helping to sustain Ireland's economy through a rocky period.

Consequently, I supported the Bill and recognise its necessity. I note the Minister of State's reference, in his concluding remarks, to the new companies legislation, which I believe contains 1,400 sections. I cannot wait to begin debating the aforementioned 1,400 sections.

One of the matters the Minister mentioned would be dealt with in the first part of the new companies legislation, which is germane to the topic we are discussing, is the responsibilities and duties of auditors. I will not delay the House unduly but we are all aware of the shortcomings and difficulties that have arisen in regard to how auditors of major companies and financial institutions in this country have fallen short, in recent times, of what I would regard as a proper standard for auditors. The test for what an auditor's responsibilities are was laid out by the House of Lords more than 100 years ago, acting in its capacity as supreme court of the United Kingdom. The court stated:

An auditor is not bound to be a detective or approach his work with a suspicion or a foregone conclusion that there is something wrong. He is a watchdog but he is not a bloodhound.

I do not believe anybody could accuse some of the auditors I have in mind, who have produced some of the results I have in mind, of being bloodhounds and it would be stretching the English language to breaking point to describe them as watchdogs. If I could take the canine analogy to its logical conclusion the word "poodle" springs to mind. The fact is-----

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