Mr Paul O'Connor, from Dublin, a partner at PricewaterhouseCoopers (PwC), has been elected as President of Chartered Accountants Ireland at the Institute's AGM today at Chartered Accountants House in Dublin.
Mr O'Connor succeeds Mr Tom Fitzpatrick as the 83rd President of the Institute which was founded in 1888. Mr John Hannaway, a partner in PwC Belfast, becomes Deputy President and Mr Austin Slattery, County Clare, of Slattery & Partners becomes Vice President.
Right to left: Austin Slattery, Paul O'Connor, John Hannaway and Tom Fitzpatrick.
Addressing the AGM Mr O'Connor discussed the relevance of the current financial reporting model and announced two initiatives in relation to audit - the establishment of an audit working group to consider possible future changes to the scope of the statutory audit in advance of publication of the European Commission's Green Paper on Auditing and that the Institute would convene a Future of Audit forum bringing together stakeholders to discuss these issues. Mr O'Connor also pointed out that any expansion of the scope of an audit would have to be accompanied by reform of the existing liability regime for auditors and within the context of global and European standards.
Extract from Mr O'Connor's remarks to the AGM:
"We need to play our part in looking at the relevance of the financial reporting model. Company financial statements have become more complex and less understood than ever before. Their primary role is to communicate on stewardship and financial position, to deal with the past. Yet for investors and other users of financial statements, their main concern is with the future.
Much has been done in improving non-financial disclosures in financial statements, in particular in areas such as corporate governance, CSR and sustainability. Yet key areas such as strategy, risk and future prospects are not as well dealt with. We will work with regulators and standard setters to consider whether current difficulties can be addressed by extending or improving the information in financial statements. The lack of established frameworks, for preparers to benchmark the quality, consistency and extent of disclosure is a real problem. It has taken us twenty years to get corporate governance disclosures to where they are today so I would not underestimate the challenge.
The underlying numbers being reported are also coming in for scrutiny. Specific aspects of our accounting framework, such as fair value accounting and recognition of loan losses are already the subject of detailed consideration by the standard setters. Users still favour a fair value model, but in a period of volatility and uncertainty it is always going to throw up difficulties for preparers of financial statements. The G20 have asked the International Accounting Standards Board to look again at the impairment model for loans and other financial assets. We need to contribute to this debate rather than run our own side show. We have bought into global standards and we have to apply those standards.
The start of the credit crisis showed us how interconnected our world is and how dependent our economy is on the global economy. If we are to return to a level of modest growth it will be based, in part, on exploiting trade and investment opportunities in the global marketplace. If we shun global standards we run the risk of cutting off these opportunities.
We also need to respond to the questions on the relevance and role of independent audit. There has been recent public comment about the role of audit in the banking crisis in Ireland. We have commented and will continue to comment to correct any inaccuracies that appear in the public media.
I believe that existing auditing standards, independently set by the Auditing Practices Board, provide an appropriate framework for audit quality. The Treasury Select Committee has considered the banking crisis in the United Kingdom and the role of audit there. They have concluded there is no evidence of systemic audit failure. I share that view.
That is not to say that the role of audit should not be examined to see if it can be made more robust or provide more comfort. At a time when this issue of audit is being considered at a UK and an EU level where we have the proposed green paper, we should look to engage in that discussion on a future role for audit.
I add a word of caution, that any additional comfort could only be possible against an appropriate framework and with amendment to the existing liability regime for auditors. It is neither appropriate nor fair for auditors to extend the comfort that they provide when they bear financial liability for not just their own failings but for failings of directors, management and others.
Today we have announced plans to contribute to the Future of Audit debate in this country. We have established a working group chaired by Ronan Nolan, a Council Member of Chartered Accountants Ireland and a member of the Auditing Practices Board. The Group will undertake its work to inform discussion around the European Commission's Green Paper on Auditing.
We will also be inviting representatives from key stakeholder groups to a Future of Audit Forum here in Chartered Accountants House. The purpose of the forum will be to have an informed and open debate about financial reporting and the comfort provided by the current statutory-based audit, what user expectations are and scope for extending the role of the audit. We hope that these initiatives demonstrate our willingness to engage with the current debate in a meaningful way.
Ends
Reference: Ronan O'Brien, Chartered Accountants Ireland Communications Director, 087-2304070.