Batt O'Keeffe (Cork North West, Fianna Fail)
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Arising from a process of random sampling of audit reports filed in 2010, the Companies Registration Office (CRO) identified a number of audit reports which appeared to have been signed by persons who were not at the time notified to the CRO by a recognised body of accountants as holding an audit practising certificate from such a body. Neither were the persons signing the reports among those individuals authorised directly by the Minister to act as auditor. The CRO has also identified other examples of non-compliance including, for example, cases where accountants or others have signed off on audits using the names of legitimate auditors.

Where the CRO identifies a set of accounts in respect of a company which include an audit report signed by an auditor or audit firm that does not appear on the register of statutory auditors, it returns the Annual Return to its presenter, highlighting the deficiency and the annual return is deemed not to have been delivered unless a rectified and correct return is filed with the CRO within the subsequent fourteen days. In cases where the CRO is notified by a statutory auditor that his or her name has been used on an audit report which was not prepared by that auditor, the CRO notes the report and awaits the outcome of any relevant ODCE investigation or prosecution to decide the status of the Annual Return filed in respect of the company in question.

Where relevant, the CRO has passed details of suspected cases for investigation to the Office of the Director of Corporate Enforcement (ODCE), which is the designated summary prosecutor under the Companies Acts. The ODCE currently has approximately 20 case files open in this area (originating from a variety of sources, including the CRO), a number of which are at an advanced stage of investigation. It expects that criminal proceedings will be initiated in a number of cases during 2011.

Since 2003, the ODCE has successfully prosecuted 14 unqualified individuals on 83 charges for purportedly 'auditing' company financial statements in breach of Section 187 of the Companies Act 1990. These ODCE investigations and prosecutions have received the support of the CRO which provides, for example, certified evidence for the Courts including the offending 'audit' opinion on the financial statements.

With a view to finding a method of identifying Annual Returns which include an audit report which has not been signed by an auditor on the public register of statutory auditors at the point of entry, the CRO has engaged in a series of meetings with the Recognised Accountancy Bodies to examine possible electronic solutions to this matter. It is intended that a final decision on a solution will be reached as quickly as possible and subsequently implemented in the CRO.

Batt O'Keeffe (Cork North West, Fianna Fail)
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I propose to take Questions Nos. 91 and 114 together.

In April 2009 my Department initiated a public consultation on the Industrial and Provident Societies Acts. Arising from this consultation my Department has prepared a general scheme of a Bill which will be submitted to Government shortly for approval. This Bill is aimed at addressing a number of practical difficulties currently being experienced by co-operative societies in relation to the present legislation.

It is not proposed to include, at this stage, a provision for audit exemption for societies. The issue of audit exemption was raised during the public consultation process but the general view which emerged from that process was that it would be better to deal with the complex and technical area of auditing in a more comprehensive modernising measure in which the whole area of financial reporting and governance could be addressed. The concept of audit exemption, which is a feature of the Companies Acts, has never been part of the Industrial and Provident Societies Acts.

The ILO recommendation 2002 (R193) will be considered in the context of a wider review of the Industrial and Provident Societies Acts. I am confident that the proposed Bill and the wider review of the Industrial and Provident Societies Acts will enhance the capacity of the cooperative sector and will contribute to its economic and social wellbeing into the future.