Ireland prosecuted for failure to adopt EU auditing rules

IRELAND is being prosecuted through the European Court of Justice for its failure to adopt international auditing standards.

Another action is pending due to delays in cracking down on selective company reporting practices, characterised by the fiasco at Anglo Irish Bank last year.

On both counts, the Department of Enterprise, Trade and Employment has confirmed it has again deferred implementation of directives and missed summer time targets. The European Commission served a notice on the department on June 26 for both infringements.

It said European Court of Justice proceedings were initiated against Ireland because it had not implemented the Statutory Auditing Directive (2006/43/EC) one year after the final deadline.

And a separate reasoned opinion – a legal precursor to formal proceedings – was delivered against the country because it had not transposed the latest company law directive (2006/46/EC).

Commissioner Charlie McCreevy initiated the actions after the department failed to meet a series of deadlines Tánaiste and Enterprise minister Mary Coughlan had outlined in the Dáil.

Last year Ms Coughlan endeavoured to have both directives in place by in November/December.

This was moved to February/March, then June/July and up until recently the department committed to having the company reporting directive (2006/46) in place by July 31.

Yesterday, it confirmed neither was in place and both targets had been pushed out in spite of court proceedings.

The auditing directive (2006/43), which is the subject of the ECJ case, has been released for further consultation and will not be implemented until at least late 2009.

Ireland joined Austria, Italy and Spain in breach of the commission’s demands in this regard. Meanwhile, the department hopes to produce new draft regulations for the company law directive (2006/46) by early September.

A statement from the department claimed its failings do not reflect its track record: “It is fair to say that Ireland is very mindful of the importance of transposing EU instruments accurately and on time... Both directives are quite technical and complex in nature and required extensive and ongoing consultation to bring forward into satisfactory draft formats.”

The auditing directive (2006/ 43) establishes international auditing standards to police and harmonise the scrutiny procedures company accounts are subject to. It also demands the establishment of an oversight body for auditors.

The company reporting directive (2006/46) puts greater responsibility on directors to ensure accounts are transparent, include all off-balance-sheet arrangements, along with financial transactions with managers and detail company risks.

Senator Joe O’Toole (Ind), who sits on the board of the Irish Auditing and Accounting Supervisory Authority, said there is no reason the Department of Enterprise should have responsibility for matters which should be under the jurisdiction of the Department of Finance.