Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

We are now one decade on since the financial crash and one of the key questions at the time was where were the auditors and where were their warnings. It strikes me that the same question can be applied now in the context of the FAI and the scandal around its debts.

Deloitte was its external auditor for 23 years. One of the points of having an external auditor is to have independent eyes on the accounts. Can this really be the case after 23 years of doing the same job for the same organisation? The Financial Reporting Council in the UK states year on year familiarity with clients can lead to accountants taking the same approach even when business conditions change, thereby underlining the need for rotation if good governance is to be prioritised. Financial information which was published recently during the unfolding of the FAI saga showed some startling adjustments to the FAI accounts for previous years. For example, in 2016 an originally reported profit was adjusted from €2.344 million to €66,000. In 2017, a profit in the accounts of €2.8 million was adjusted to the point that it ended up being a loss of €2.9 million. This is in addition to the fact that a Revenue audit in 2019 revealed an underpayment of taxes and, together with interest and penalties, led to an additional liability of €2.3 million. It begs the question as to whether the FAI would have managed to secure the tax clearance certificate it needed to access Government grants.

The Taoiseach was a Minister with responsibility for sports. He knows that Government grants are paid on foot of a tax clearance certificate in addition to audited accounts. Should we now look at a system whereby organisations are required to show evidence of audit rotation with inbuilt time limits for each audit period before a rotation is required? Good governance requires such a system. The UK has introduced a system of grading its audit firms. This is also used to ensure rotation. It plans to publish the grades and past performance of the large audit companies. It has also introduced more powerful audit oversight. The introduction of the grading system was on foot of the collapse of large firms such as Carillion, BHS and Thomas Cook, proving the UK has taken lessons from the financial scandals. We must do the same.

Does the Taoiseach accept there is an issue with the same external audit firm having an audit contract with the same organisation for 23 years or anything near it? The EU statutory audit regulations of 2016 are supposed to introduce this and I do not understand why it has not happened. Will the Taoiseach support making such a rotation system a prerequisite for Government grant funding in addition to tax clearance certificates?

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