Chartered Accountants President: current audit can do more

Feb 03, 2020

 Annual Dinner speech emphasises leading role of Chartered Accountants in Irish business 

annual dinner 2020
Pictured (l-r) at the 2020 Annual Dinner were Institute President Conall O’Halloran with Guest of Honour and Lifetime Achievement Award winner, Lochlann Quinn.

The President of Chartered Accountants Ireland, Mr Conall O’Halloran FCA, has said that audit in its current form does not meet public expectation and that the gap between expectation and reality has, in part, contributed to a breakdown in trust between the profession and wider society, particularly in the context of the UK market.

In making the comments to over 850 business leaders and industry representatives as guests of the Institute’s annual dinner (Friday, 31st January 2020 at the Convention Centre in Dublin), Mr O’Halloran distinguished recent issues and events in the UK from the Irish market, stating; “I am confident that this is a different market, that the large audit firms in Ireland are absolutely committed to maintaining and enhancing their reputations for audit quality and committed to working with our regulator, IAASA.”

“Nevertheless, trust is damaged when the public suspect that the profession is acting out of self-interest. It is damaged when the public expects more of us than we believe we are required to do.”

“On the point of self-interest. I believe this emanates from a perception that the big firms use audit as a loss leader to sell additional consulting services to clients. As regards the large public company market in Ireland, this is absolutely not the case – nor has it been for many years.”

“Our own recent research supports the fact. It shows that fees paid to the auditor for non-audit services amounted to just 7%. This compares to a maximum threshold of 70% permitted by EU legislation.”

Mr O’Halloran observed, “Society at large has rightly questioned what is the true value of audit if it doesn’t express an opinion on a company’s viability?”

Referencing the Chartered Accountants Ireland submission to the UK’s Brydon report on audit effectiveness and quality, Mr O’Halloran said, “I believe that society and legislators can expect more than the current audit product is designed to deliver. We made this point directly to Sir Donald in our submission, and again when we met with him in London last November.” 

“We indicated that auditors could, and indeed should, express their own views on a company’s prospects and also to report on their assessment of a company’s long-term viability. We did that because it is up to us to take the lead in redefining what we can deliver. We are committed to working with Government and IAASA to ensure audit evolves and responds to the needs of both business and wider society.”

One in four Irish PLC board members a Chartered Accountants

The profession enjoys a leadership position at Irish PLCs according to an analysis by the Institute examining the qualifications of board directors, with Chartered Accountancy the most prevalent qualification held as cited in the annual reports published. Across some 57 Irish Publicly Listed Companies, one in four board members is a Chartered Accountant. This is a higher percentage than any other profession or qualification and outnumbers all other accounting qualifications combined by more than three to one.

At 88%, the majority of PLCs (50 out of the 57 companies surveyed) had at least one Chartered Accountant on their board, with 38 of these companies (67%) having two or more Chartered Accountants as board members. Some 70% of the Finance Directors are Chartered Accountants, with the qualification also held by one in five (20%) Chief Executives. 

The President of Chartered Accountants Ireland noted that the profession had enjoyed considerable success in training business leaders, with members succeeding at the highest level of business in Ireland and globally. He further stressed; “by taking the lead, we can ensure that we remain a vibrant profession, and that we continue to attract our brightest graduates and provide them with the best business education available.”

ENDS

Notes to Editors

Reference:

Brendan O’Hora, Director Members, 086 243 2428

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