Dinny McGinley (Donegal South West, Fine Gael)

The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, is unavoidably absent and cannot deal personally with this Bill, so he has asked me to deputise for him.

I wish to thank all the Deputies who spoke on the Bill for their helpful and interesting contributions to the debate, and for the level of support which was evident from what they had to say. On behalf of the Minister, I will respond to some of the issues raised in the House both last night and today. To begin with, it should be emphasised that this is not a new provision as such, rather it is one which extends the timeframe provided for the use of the accounting standards in question in sections 1 and 2 of the Companies (Miscellaneous Provisions) Act 2009.

Deputy O'Dea made some valid and knowledgeable points both in relation to accounting generally and to accounting standards. In particular, Deputies O'Dea and Ross raised general issues concerning audits on which the following observations are relevant. The subject of audits is active at EU level at present. In the wake of the financial crisis, the European Commission brought forward proposals in the audit area, in the form of an interlinked draft directive and regulation. These measures are aimed at addressing perceived weaknesses in the audit process shown up by the financial turmoil of the past number of years, and of delivering enhanced audit quality. The draft audit directive and regulation are being considered by member states in Brussels at present and the Minister's Department is participating in these negotiations. The European Parliament is conducting its own parallel examination of the measures.

The proposed regulation addresses itself to the audit of systemic entities or so-called public interest entities, a category that includes many institutions which were part of the financial crisis. These audit proposals seek to address a number of concerns, including the independence of auditors from their clients; possible absence on auditors' part of professional scepticism; and lack of top-end audit competition and choice. Another theme covered is that of the expectation gap between what it was anticipated the audit would do and what materialised from the audit process. This is just a flavour of these audit proposals. The negotiations in Brussels are expected to continue for a good part of the next year. To assist in formulating its policy position on these issues, the Minister's Department has consulted with stakeholders to obtain their views and has also established a contact group with relevant stakeholders which will meet regularly as negotiations progress in Brussels.

The Department's general approach is one of seeking proportionality in the measures to be adopted, with a focus on achieving the best possible audit quality. The expectation is that some kind of common approach will be worked out arising from negotiations at Council level over the next six to nine months or so. This would parallel consideration in the European Parliament. Given that Ireland will have the Presidency of the European Union from 1 January until 30 June 2013, the Department is likely to be overseeing progress at a vital stage of these audit issues. In preparation for Ireland's Presidency, the Minister will shortly be meeting with the chairpersons of various groups in the European Parliament, which examine various legislative proposals. From this he will be able to form a clearer view of the way ahead on this and other areas relating to his overall remit. Obviously, whatever package of measures is adopted by the EU will be incorporated in Irish legislation.

Another important factor in the audit equation is that of quality assurance in respect of the audit of public interest entities. Independent quality assurance of audit firms regarding public interest entity audits is an important step to rebuilding audit confidence dented during the financial crisis. The Department is currently finalising logistical aspects of the practical implementation of such a provision based on the EU Commission recommendation in the matter, which will entail direct inspections of relevant audit firms' files by the Irish Auditing and Accounting Supervisory Authority. This will require primary legislation, and it is the Minister's intention to make a submission to Government shortly for drafting approval for this.

Deputy Tóibín raised the issue of the desirability of developing links between the domestic economy and the FDI. In that regard, I would like to point to the action plan for jobs which provides for collaboration between Enterprise Ireland and IDA Ireland on maximising procurement opportunities with multinational companies.

Deputy Healy-Rae referred to setting up a scheme whereby community groups would be able to access audits based on a competitive pricing structure. This is not a policy matter for the Minister's Department, although the idea of shopping around might be explored. However, the position regarding audit exemption for companies which have formed themselves as companies limited by guarantee - which Deputies Michael Healy-Rae, Michael McGrath and Paschal Donohoe raised - is that entities with charitable status are governed by the Charities Act 2009 under the aegis of the Minister for Justice and Equality. They are answerable to their stakeholders, shareholders and funders. Many charities which formed themselves as companies have done so as companies limited by guarantee, CLGs. Due to their public membership structure, they cannot avail of an audit exemption. The 2009 report of the Company Law Review Group examined the issue of extending audit exemption to companies limited by guarantee. It made the following recommendations. Subject in each case to consultation with the Minister for Community, Rural and Gaeltacht Affairs and the charities regulator, the audit exemption regime contained in Part III of the 1999 (No. 2) Act be extended to such class or classes of CLGs which are charitable organisations within the meaning of the Charities Act 2009 so as to bring them into alignment with charitable organisations that are not companies provided that 10% of the members with voting rights can require an audit. The audit exemption regime contained in Part III of the 1999 (No. 2) Act be extended to all CLGs which are not charitable organisations subject to a veto right by any one member of the company and further subject to the requirement that audit exemption in respect of the following year shall be an item on the agenda of the annual general meeting.

The Minister for Jobs, Enterprise and Innovation, Deputy Bruton, proposes that provisions giving effect to the recommendations of the Company Law Reform Group in this matter be included in the companies Bill which it is proposed to publish in the second half of this year. I can assure Deputy Durkan that it is the intention to introduce the companies consolidation Bill later this year and to bring it before the Oireachtas at the earliest possible opportunity thereafter. The CLRG recommendations contemplate that any proposals in this context will be subject to consultation with the Department of Justice and Equality.

Regarding the second point raised by Deputy Healy-Rae concerning the putting in place of systems to protect sub-contractors, I understand that Senator Feargal Quinn has put forward a Private Members' Bill, the Construction Contracts Bill, which is currently being considered by this House and deals with issues such as those of concern to Deputy Healy-Rae. Company law does not afford an appropriate mechanism to deal with this issue in the form in which it most commonly arises.

Deputy McGrath expressed concern in his contribution about the amount of red tape which inhibits the creation of jobs and development. The Government is to create an environment in which more businesses can be established and expanded to create the jobs we so badly need. A crucial aspect of this will be a reduction in costs faced by business. The Government is taking urgent action to address the costs which are directly within its control.

On behalf of the Minister, Deputy Bruton, I again express my appreciation for Deputies' contributions to this debate and for their manifest support for the proposal. As already stated, many of the beneficiary companies have a presence in this country and provide valuable employment and they will be encouraged to deepen and expand their activities in Ireland in future years.

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