Written answers

Tuesday, 11 February 2014

Department of Jobs, Enterprise and Innovation

EU Regulations

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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266. To ask the Minister for Jobs, Enterprise and Innovation further to Parliamentary Questions Nos. 316 and 317 of 21 January 2014 and in view of material published by the EU Commission impact assessment (details supplied) sets out the key costs arising from a central element of the Commission proposals on the audit of public interest entities, if he will review his reply in which he states that the costs of implementing the EU audit measures in the public interest entities to which they apply cannot be quantified; if he will instruct his Department to review the cost implications as set out in the Commission impact assessment; if he will estimate on the basis of that review the cost implications to business here and request the Joint Committee on European Union Affairs to carry out a full examination of the cost implications, the potential impact on foreign direct investment into and the potentially negative impact on graduate recruitment of these proposals; and if he will make a statement on the matter. [6685/14]

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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267. To ask the Minister for Jobs, Enterprise and Innovation if his attention has been drawn to the fact that, on the basis of figures contained in the European Commission’s impact assessment of 30 November 2011 on the Commission proposals for a regulation on specific requirements regarding statutory audit of public interest entities, the costs of doing business in Europe could rise by over €16 billion as a consequences of implementing just one element in the Commission proposals, the mandatory firm rotation; and if he will make a statement on the matter. [6686/14]

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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268. To ask the Minister for Jobs, Enterprise and Innovation if his attention has been drawn to the fact that reputable European and American business organisations (details supplied) have registered their concern regarding key provisions of the EU Commission proposals for a regulation on specific requirements regarding statutory audit of public interest entities, in particular Article 33(2) of the proposal on the basis that the provision will increase costs for companies, increase the risk of audit error, undermine audit quality and cause particular difficulties for multinationals operating across multiple jurisdictions; if he will request the Joint Committee on European Affairs to examine these concerns and the concerns that have been expressed in many independent studies on the issues raised by the Commission proposals; and if he will make a statement on the matter. [6687/14]

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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269. To ask the Minister for Jobs, Enterprise and Innovation if his Department has carried out any review of the likely impacts on graduate and other recruitment to the audit industry of the European Commission proposals for a regulation on specific requirements regarding statutory audit of public interest entities, in view of the fact that the audit profession and, in particular, the Irish offices of the major audit companies, are among the highest recruiters of graduates from Irish universities; and if he will make a statement on the matter. [6688/14]

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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270. To ask the Minister for Jobs, Enterprise and Innovation if his attention has been drawn to the fact that the recent decision of the US House of Representatives overwhelmingly to support a Bill (details supplied) that specifically prohibits the US Public Company Accounting Oversight Board from introducing the types of measures that will be imposed in the EU by the Commission proposals for a regulation on specific requirements regarding statutory audit of public interest entities; if he is further aware that the Canadian Public Accountability Board and CPA Canada issued a report in May last which included a finding that the mandatory rotation of audit firms or mandatory retendering of the audit would not contribute to the enhancement of audit quality and that the UK Competition Commission in a report issued in July last also opposed the concept of mandatory audit firm rotation; if he will indicate the basis on which he and his Department have taken a line that contradicts so many international authorities in this area; and if he will make a statement on the matter. [6689/14]

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I propose to take Questions Nos. 266 to 270, inclusive, together.

These draft audit measures are currently in the process of adoption by the EU Institutions, following which they will require to be given effect by Member States. In these circumstances, it is unclear as to the purpose to be served either by an extrapolation of costs based on estimates in the EU Commission documentation which accompanied its original proposals, which differ significantly from those which emerged from the process of negotiation, or of referral to the Oireachtas Committee on EU Affairs on the basis indicated. Obviously, it is open to the Committee in question to examine such matters within its purview as it considers appropriate.

It is difficult to envisage that graduate or other recruitment to the audit profession will be adversely affected by these audit proposals, in particular as enhanced audit provisions are entailed. The differing points of view regarding these audit proposals are moot at this point, as are positions adopted in other non-EU jurisdictions, in a situation where the focus required is on making the necessary arrangements to give effect to the EU measures when enacted. In this connection, the Department will be consulting with all of the stakeholders shortly after the adoption by the EU of the instruments in question.

The UK Competition Commission in October 2013, having confirmed that competition is restricted as regards the supply of audit services to large companies there, published measures to open up the UK market to greater competition. One of these is a requirement that FTSE 350 companies must put their statutory audit engagement out to tender at least every ten years. This is consistent with the provisions of Article 33 of the draft Audit Regulation relating to the duration of the audit engagement. Officials of my Department appeared before the Oireachtas Joint Committee on Jobs, Enterprise and Innovation on 16 October and 18 December 2012 for the purpose of its scrutiny of these EU audit proposals.

Arising from the scrutiny process, the Joint Committee wrote to the EU Commission and the EU Parliament in the matter on 15 March 2013, remitting its report and a political contribution on the audit proposals, stating that the Joint Committee “Concludes that reform of the audit sector is necessary in the context of the recent past and therefore welcomes, in broad terms, the Commission’s proposals”. As regards the issue of auditor rotation the Joint Committee stated that it “Supports the concept of mandatory rotation of auditors to ensure independence in the performance of the function and the avoidance of any perception of long-term closeness between client and auditor.”

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