Michael McGrath (Cork South Central, Fianna Fail)
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To ask the Minister for Jobs, Enterprise and Innovation his views on whether there is any potential for a conflict of interest in situations in which the firm acting as liquidator to a business is also the auditor or adviser to a business which is a debtor of the business in liquidation; and if he will make a statement on the matter. [16039/13]

Richard Bruton (Dublin North Central, Fine Gael)
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A liquidator may be removed by the court if it can be shown that the liquidator is not acting in the best interests of the liquidation. Under section 228 of the Companies Act 1963, in the case of a court ordered liquidation, a liquidator appointed by the court may be removed by the court on cause shown. In the case of a voluntary liquidation, pursuant to section 277 of the Companies Act 1963, the court may, on cause shown, remove a liquidator and appoint another liquidator. An application to the court for removal of a liquidator may be made by any person who has a legitimate interest in the outcome of the liquidation.

Pursuant to section 243 of the Companies Act 1963, during liquidation the court may make an order for the inspection of the books and papers of the company by creditors and contributories of the company. Additionally, in accordance with section 57 of the Company Law Enforcement Act 2001, the Director of Corporate Enforcement may, on his own motion or where a complaint has been made to him by a member, contributor or creditor of the company, request the liquidator to produce his or her books for examination. Failure to comply with this request is an offence.

In relation to the auditor of a company, auditors are subject to ethical requirements included in the APB (FRC) Ethical Standards for Auditors and in the Codes of Ethics adopted by the Recognised Accountancy Bodies (‘RABs’). The Codes of Ethics adopted by the RABs derive from the International Ethics Standards Board for Accountants’ (IESBA) Code of Ethics. In general the ethical requirements provide that an auditor should: take reasonable steps to identify any threats to his or her independence and/or possible conflicts of interest; evaluate any such threats including conflicts of interest; and take action to address any threats/conflicts of interest identified including not undertaking the work giving rise to the threat/conflict of interest if deemed appropriate.

If in dealing with an accountant or auditor who is a member of a prescribed accountancy body, a person, where not satisfied that the accountant or auditor has discharged his or her responsibilities fully and ethically, can make a complaint to the body in question, which must then apply its investigation and disciplinary procedures to the complaint.

Where these procedures have been exhausted, that person can make a complaint to the Irish Auditing and Accounting Authority (‘IAASA’). If IAASA has reason to believe that the body’s Investigation and Disciplinary Procedures may not have been complied with in that case, it may initiate an enquiry under the provisions of Section 23 of the Companies (Auditing and Accounting) Act 2003. Having completed such an enquiry, if IAASA is not satisfied that the body complied with its approved investigation and disciplinary procedures, IAASA may: annul all or part of a decision of that body relating to the matter, direct the body to conduct an investigation or a fresh investigation into the matter, require that body to pay to the Supervisory Authority an amount not exceeding €125,000

Under section 24 of the 2003 Act, following a complaint or on its own initiative, where, in its opinion, it is appropriate or in the public interest, IAASA can undertake an investigation into a possible breach of a prescribed accountancy body’s standards by a member. If such a breach is found by IAASA, it may impose any sanction to which the member is liable under the rules of the body and an amount towards the costs incurred by it investigating and determining the case.