Results 18,701-18,720 of 27,945 for speaker:Michael McGrath
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Yes it was. Thank you.
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Thank you very much. I would like to welcome Mr. Smith and Mr. Fitzgerald here today. Can I just start by asking Mr. Fitzgerald to outline the structure of a typical audit team that you would have led in respect of EBS, and to give us some insight into the level of skill and experience within this group ... and to state your opinion, whether you believe that there was sufficient banking and...
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Thank you. Can I ask, when did EY secure the audit of EBS? When was the first year?
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Mr. Smith, are you aware?
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: And when was that?
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Okay. Right up to and including 2008?
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: And given that EY had the audit for that length of time, do you think it creates any difficulty in terms of the closeness of relationships, the knowledge that you would have and the fact that working so closely with the same people over a long period of time would have an impact on your independence for example or on the quality of the work being carried out?
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Okay. The final taxpayer bill, as such, for EBS was in the region of €1 billion. Given your knowledge of the accounts of EBS and the business model pursued, can you give us your view on how those losses arose? Were they substantially related to the property and development loan book which was grown considerably since 2005 or how much of it do you believe was mortgage related? Can...
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Okay. The 2008 financial statements, in note 11, do break down the loans and advances to customers and as far as I am aware, that was the first time that there was such a breakdown. For example, the figures that are provided for commercial development finance, home loans, retail, buy-to-let, commercial buy-to-let. I don't see a corresponding breakdown in the 2007 accounts. Would that be...
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: So, just to clarify that, additional disclosure in the 2008 financial statements didn't arise from any change in accounting standards, for example. It was a decision made by the directors and supported by the auditors. It wasn’t as a result of any change in accounting practice.
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: If you could, please-----
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: -----that would be helpful. Just to look at the issue of the losses that did arise. There is a breakdown, as I say. The total loans and advances to customers was about €17 billion across the group at the end of 2008. Home loans, €13 billion. Retail buy-to-let, €1.5 billion. Commercial buy-to-let, €600 million. What’s the difference, just to...
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Okay. And then under, let’s say, property development, commercial is listed at about €1.2 billion and development finance at about €500 million. So, at the peak, EBS’s loan exposure to commercial and development finance was in the region of €1.7 billion to €1.8 billion.
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Is it of that order, as you understand it. And so, then the overall bill for recapitalising EBS is accounted for by heavy losses on the commercial and development finance book but also buy-to-let mortgages, both retail and commercial.
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Okay. And were you involved in the decision to make additional disclosure in the 2008 financial statements as regards the exposure of EBS to development and property for example? There is disclosure there, significantly above and beyond what was there in 2007. Was that a decision of the directors? Or, was it a decision that you encouraged or advised would be made in the course of the...
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Okay. Just a final area I’d like to touch on, Mr. Fitzgerald, is IAS 39, which has come up time and time again in terms of impairment provisioning. It is to tease out the wriggle room, if any, that you would have as an auditor in advising directors how to make provisions in accordance with IAS 39. My question for you is whether the application of IAS 39 is absolutist as such or...
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Yes.
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: Okay. What the regulations state, as I read them, is "In the extremely rare circumstances in which management concludes that compliance with a requirement in a standard or an interpretation would be so misleading that it would conflict with the objective of financial statements set out in the Framework, the entity shall depart from that requirement in the manner set out in paragraph 18 if...
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: It is provided for in the regulations.
- Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)
Michael McGrath: It does say "extremely rare circumstances". My question is ... is really asking you to confirm ... it isn't necessarily specific to the audits you did, but that, and you mentioned it earlier on, the IAS 39, no more than any other accounting standard, is not absolutist in nature and that, while the discretion is extremely narrow, the auditor does have some discretion to depart from a standard...