NAMA boss turns spotlight on auditors

THE chairman of the National Asset Management Agency, Frank Ryan has controversially questioned the auditing role of accountants in the run-up to the collapse of the banks which are currently transferring €80 billion in bad and doubtful loans to NAMA.

Given what has gone on, it was hardly credible for auditors to say “it is not its responsibility to draw attention to significant risks that may become evident in the course of its audits, such as, for instance, the extraordinary concentration of risk that developed at a number of Irish financial institutions during the 2004-2007 period.”

Mr Ryan made his comments in a speech to the Institute of Certified Public Accountants annual conference in Maynooth, Co Kildare, yesterday.

Stressing they were personal comments, the former head of the Revenue Commissioners, said “those who carried out audits of the financial statements of these institutions must at the very least examine their performance before they absolve themselves of responsibility”.

“I would question whether it is sufficient anymore for audit practitioners to contend that it is not their function to comment on the business strategies or ethical behaviour of their clients,” he said.

Geoff Meagher, president of the Institute of Certified Public Accountants, said the auditing profession is highly regulated with auditors operating to international rules and regulations set by international bodies such as IFAC.

“Within these regulations it is not the role of the auditor to comment on business strategies or the ethical behaviour of the client.

“These are matters for the company boards and ethical behaviour is also addressed through corporate governance codes,” he said.

On NAMA, Mr Daly said it was absolutely not the case that it would simply recover the money it had paid out and then absolve developers of their remaining debts.

NAMA reserves the right to recover money from developers if they recover the capacity to pay debts in the future, he said

He expects the discount on the second tranche of loans transferring to the agency not to change “enormously” from the first batch.

The discount on the first transfers was 50%.

About €13 billion of loans will probably transfer to the agency from banks in the coming weeks.

The bad bank will complete all transfers by next February.

The bank has acquired loans with a face value of €15.3 billion from state-owned Anglo, AIB, Bank of Ireland, Irish Nationwide Building Society and EBS for €7.7bn.

In a follow-up comment to Mr Daly’s address in Maynooth, Taoiseach Brian Cowen said: “I have every confidence that he will do an excellent job, and he has made it clear that any suggestion that it’s a bailout for developers is totally wrong.”