Presentation to Members of the Complaints, Disciplinary and Appeal Committees

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(No Transcript)
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• Presentation to Members of the Complaints,
  Disciplinary and Appeal Committees
• ICAI Training Day
• Radisson Hotel, Dublin
• 1 March, 2005
• Ian Drennan
• Chief Executive (Designate)

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Overview

• 2003 Act Overview
• The Authority Overview
• Objectives/Values/Assumptions
• Approach
• Going Forward
• Powers Sanctions

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The 2003 Act

• RGAs recommendations given the force of law by
  the Companies (Auditing and Accounting) Act,
  2003.
• The 2003 Act deals principally with
• 1. Provisions for the establishment of the
  Authority and
• 2. Other Measures to Strengthen the Regulation
  of Auditors, including
• statutory backing for prescribed bodies
  disciplinary procedures
• statutory backing for accounting standards
  requirement for the disclosure of accounting
  policies
• audit committees
• disclosure of auditors remuneration (analysed by
  audit, audit related and non-audit) and
• Directors Compliance Statements.

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The Authority

• While established by statute, and therefore a
  State body, the Act provides that the Authority
  will be constituted as a company limited by
  guarantee.
• Companys objects
• To supervise how the prescribed accountancy
  bodies regulate and monitor their members
• To promote adherence to high professional
  standards in the auditing and accountancy
  profession
• To monitor whether the financial statements of
  certain companies and other undertakings comply
  with the Companies Acts and
• To act as a specialist source of advice to the
  Minister on auditing and accounting matters.

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The Authority

• A Prescribed Accountancy Body is defined as
• a Recogised Accountancy Body or
• any other body of accountants prescribed by the
  Minister.
• A Recognised Body is one that has been granted
  recognition for the purposes of section 187 CA,
  1990 (i.e. for audit purposes)
• Currently 6 recognsied bodies i.e.
• ACCA
• ICAI, ICAEW, ICAS
• ICPAI
• IIPA

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The Authority

• Act provides that the Authority will derive its
  funding thus
• 40 from the exchequer and
• 60 from the Prescribed Bodies.
• Authority also has latitude to levy certain
  companies for Reserve Fund purposes.
• Reserve Fund is ringfenced and can only be used
  for the purposes of meeting expenses properly
  incurred in performing functions and exercising
  powers under sections 24 and 26 i.e.
  investigation and enforcement activities relating
  to members and companies respectively.

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The Authority

• Authority currently operating in interim mode.
• On formal establishment, Board will comprise 15
  directors, nominated thus
• 2 (including the Chairprson) nominated by the
  Minister
• 3 nominated jointly by the Prescribed Bodies
• 9 nominated by the following bodies (1 each)
• IBEC ICTU
  Law Society
• IAIM ISE
  Revenue
• Pensions Board IFSRA DCE
• Chief Executive Officer.
• A maximum of 5 of the 15 directors may be members
  of prescribed accountancy bodies.

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Authoritys Statutory Remit

• The Authoritys statutory remit, insofar as it
  directly relates to the prescribed bodies, can be
  broadly divided into the following categories
• Approval
• Supervision and
• Investigation/enforcement.

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Approval

• The Authoritys approval functions include
• Approval of bodies constitutions, bye-laws,
  regulations and standards, together with any
  subsequent amendments thereto.
• Granting of recognition for the purposes of
  section 187 CA, 1990 (i.e. for audit purposes).
• The attachment of conditions to recognition.
• Pre-approval of bodies regulatory and monitoring
  plans.

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Supervision

• The Authoritys supervisory functions include
• Supervision of the investigation and disciplinary
  procedures of each prescribed body, including by
  requiring access to its records and by requiring
  explanations about the performance of its
  regulatory and monitoring duties.
• Supervision of how each recognised accountancy
  body monitors its members and the performance of
  section 25 reviews of those members.
• Section 25 provides for the review of members of
  recognised bodies for the purposes of
  determining whether the body in question is, or
  has been, regulating its members in the manner
  approved.
• Review of bodies reports on their regulatory and
  monitoring activities.

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Investigation/Enforcement

• To conduct enquiries under section 23 into
  whether a prescribed body has complied with its
  approved investigation and disciplinary
  procedures.
• Where not satisfied that a prescribed body has
  complied with its approved investigation and
  disciplinary procedures, the Authority may impose
  sanctions on that body.
• To undertake investigations under section 24 into
  possible breaches (by a member) of the standards
  of a prescribed body.
• Where a member is found to have committed a
  breach of a bodys standards , the Authority may
  impose any sanction available to the body on the
  member.

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Objectives

• In discharging its remit, the Authority will seek
  to achieve the following objectives
• To enhance confidence in the regulatory and
  monitoring processes governing members of the
  auditing and accountancy profession
• To protect and promote the public interest
  through effective, independent oversight and
• To ensure the constitutions, bye-laws,
  regulations and standards of the prescribed
  bodies conform to a common high standard
  consistent with international best practice.

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Values/Assumptions

• The discharge of the Authoritys remit will be
  predicated on the following values and
  assumptions
• The Authority will act in an independent and
  impartial manner.
• Responsibility, in the first instance, for the
  regulation and, where applicable, monitoring of
  bodies members continues to reside with the
  prescribed bodies.
• The Authoritys processes and procedures for
  exercising its statutory functions will be open,
  transparent, publicly available and widely
  communicated.
• In determining the nature and extent of its
  supervisory activities, the Authority will seek
  to employ risk assessment methodologies.

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Approach

• In discharging its functions, the Authority will
  adopt the following approach
• Each prescribed body will be the subject of a
  thorough initial review.
• As part of that review, each bodys systems,
  practices and procedures etc. will be ascertained
  and documented.
• Confirmation of the accuracy of the Authoritys
  understanding of each bodys systems, practices
  and procedures will be sought.

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Approach

• Reviews will encompass, inter alia, examination
  of
• Constitutions/Memorandum Articles etc.
• Bye-laws
• Regulations
• Rules of Professional Conduct
• Ethics
• Applicable Standards

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Approach

• Complaints handling procedures
• Investigative processes and procedures
• Disciplinary processes and procedures
• Appeals processes and procedures
• The examination of the foregoing will include an
  examination of, inter alia
• Complaints disposal by the Secretary
• Consent order cases
• Special investigator cases, where applicable
• Cases referred to the Independent Reviewer
• Committees determinations and sanctions imposed.

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Approach

• Admissions and licensing processes and
  procedures, i.e. granting, renewal, revocation of
  certificates and authorisations etc.
• Monitoring processes and procedures, including
• selection and risk assessment methodologies
• monitoring cycles
• monitoring emphasis and programmes and
• follow-up to unsatisfactory monitoring visits.

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Approach

• Bodies processes and procedures will be compared
  and any significant different emphases,
  deficiencies etc. identified.
• Any deficiencies addressed as appropriate.
• Board approval for bodies constitutions,
  bye-laws, regulations and standards etc.
• The scope and frequency of subsequent reviews of
  each body will be determing having regard to
  appropriate risk factors, including, inter alia,
  results of previous reviews.

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Going Forward

• In addition to initial reviews of each body, the
  following work will be undertaken
• Examination of, and Board approval for, bodies
  annual regulatory and monitoring plans.
• Review of bodies annual regulatory and
  monitoring activity reports.
• Performance, on an ongoing basis, of risk based
  reviews of the bodies, with follow up action as
  appropriate.
• Attendance at bodies hearings periodically as
  observer.
• Monitoring, on an ongoing basis, of the adequacy
  of the bodies practices and procedures in light
  of international developments.

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Going Forward

• Accept and examine applications for Recognised
  Body status.
• Attach, and continue to monitor adherence to,
  conditions to recognition.
• Arrange for the regulation and monitoring of
  individually authorised auditors by the
  recognised bodies.
• Examine proposals for, and/or require, amendments
  to bodies constitutions, bye-laws etc.
• Develop relationships with the Authoritys
  counterparts in the EU and further afield.
• Undertake any necessary statutory
  enquiries/investigations.

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Powers Sanctions

• Section 23
• The Authority may, for the purpose of determining
  whether a prescribed body has complied with its
  approved investigation and disciplinary
  procedures, enquire into
• A decision not to undertake an investigation
• The conduct of an investigation
• Any other decision by a body in relation to a
  possible breach by a member.
• For the purpose of such an enquiry, the Authority
  may
• Inspect, and take copies of, all relevant
  documents in the possession or control of a body
  and
• Require a body to explain why it reached a
  decision referred to above and/or to explain how
  it conducted its investigation.

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Powers Sanctions

• If not satisifed after completing its enquiry
  that the prescribed body complied with approved
  investigation and disciplinary procedures, the
  Authority may
• Advise or admonish the body
• Censure the body by doing one or more of the
  following
• Annulling all or part of a decision
• Directing the conduct of an investigation or the
  conduct of a fresh investigation
• Requiring the body to pay the Authority a sum not
  exceeding 125,000.
• Any sanction imposed by the Authority must
  subsequently be approved by the High Court.
• The body has a right of appeal to the High Court.

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• End of presentation.
• Thank you.