Standards of the time ‘found wanting’

Since the crash, critics have raised questions about the spectacular breakdown of the huge web of controls over banks.

Three official reports and the Dáil’s Banking Inquiry have addressed certain aspects of the crisis, but did not focus in any great detail of why internal audit committees approved the advance of billions of euro in commercial and residential property loans.

Critics remain perplexed about the massive failure of internal and external checks that were supposed to protect the country from the failings of the banks. For its size, Ireland’s banking crash was the world’s costliest.

Yesterday, it was the turn of the Chartered Accountants Regulatory Board to provide answers. 

Its report took five years to complete and finds external auditors — the big accounting firms who were paid large fees to conduct audits of the lenders — were not to blame. 

They were hamstrung by the accounting standards of the time, the report finds. The board gives the context of the audits it reviewed as the crisis deepened in 2008 and 2009.

“During this period the Irish economy and its banking sector experienced a combination of severe disruptions which ended an extended period of exceptionally strong growth.

“The auditors had to deal with the implications of this unprecedented set of circumstances while conducting the audits, during which the effects of the disruption to the markets, particularly the property markets, were unclear.

“This was an extremely challenging context for the audits, particularly as the scale and nature of problems emerged during the period of the audits,” it said.

Amid the deepening international crisis, the report provides details of a meeting in December 2008 between the Chartered Accountants Regulatory Board, The Irish Auditing and Accounting Supervisory Authority and the Big 4 accounting firms about the “appropriate approach to the 2008 audits” including loan impairments.

The untested accounting standards of the time “were found wanting”, the report finds. Following the banking inquiry, there may be exhaustion about further investigations. The board report focused and has exonerated the external auditors.

Many questions remain about the internal conduct of the banks during the boom, and why so many highly-paid watchdogs failed so spectacularly at the onset of the crisis.


Kya deLongchamps meets the man who is opening a new chapter on his native FermoyVintage View: Opening a new chapter on Fermoy's story

Demi Isaac Oviawe is an actress from Mallow, Co Cork, best known for her role in The Young Offenders TV series, and a stint on Dancing With The Stars. She is also this year’s Cork County Culture Night Ambassador, which takes place tomorrow.A Question of Taste: The Young Offenders' Demi Isaac Oviawe

My cousin Curtis (don’t worry he’s not Curtis Curtis) has always been more like a brother to my sister and I and when he became a father at 26 we pretty much stole his son, Skyler, from him to claim him as our own.Mum's the Word: It pays to play with our children – we just need to use our imagination

Young Isabel Fynn has suffered for years from the debilitating itch caused by eczema. Her mother Carol tells Helen O’Callaghan what lengths the family have gone to in order to ease her daughter’s distress.Scratching beneath the surface of a skin affliction

More From The Irish Examiner