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Institute censures two accountancy firms over audits

Two of Ireland's leading accountancy firms have been “censured” by the Institute of Chartered Accountants in Ireland (ICAI).

The institute yesterday published the findings of the Blayney Committee, set up in 1997 to look into the professional or business conduct of members and firms arising out of the McCracken (Dunnes payments) tribunal. Censure was the toughest finding available to the process.

Deloitte & Touche, Oliver Freaney & Co, and a former partner in Oliver Freaney, Mr Noel Fox, were all censured.

Mr Michael Irwin, a former chief accountant with the Dunnes Stores group, was reprimanded, a less serious finding.

The firms and accountants also have to pay their costs. The committee did not refer any of the members whose work it reviewed to the institute's disciplinary committee. That committee has the power to remove a member's licence to practise.

The institute yesterday published the findings of the Blayney Committee, and also of an appeal committee set up to hear appeals against the Blayney Committee's findings. The eight-page set of findings follows a six-year process that cost an estimated €3.2 million. Costs of €2 million are to be recovered, with Deloitte & Touche paying €1.2 million.

The former managing partner of Deloitte & Touche, Mr Paul Carty, was successful in an appeal against findings of the Blayney Committee. Accordingly, there were no findings against him.

In the case of Deloitte & Touche, the findings concerned audits conducted for the Dunnes Stores group and for Celtic Helicopters.

In the case of Oliver Freaney and Mr Fox, the findings concerned work done for Dunnes Stores. In relation to Mr Irwin, the finding concerned invoices which Mr Irwin “knew to be false” being passed into the accounting system of Dunnes Stores (ILAC) Ltd, “knowing that their passing into the system was likely to cause, or facilitate, the wrongful evasion of tax and the missstatement of financial accounts”.

The Tánaiste, Ms Harney, welcomed the findings and described them as “robust” and as “obviously very serious for those concerned”.

The chief executive of the institute, Mr Brian Walsh, said the public findings were “very serious” for those affected.

Deloitte & Touche, in a statement, said it welcomed the successful outcome of its appeal of the Blayney Committee findings.

“The Appeal Committee has established that no issue of professional misconduct arose in relation to the firm and determined that the firm's former managing partner, Mr Paul Carty, had no case to answer.”

It said it noted the “technical nature” of the findings against Deloitte & Touche, which related to work for private companies.

It also noted that the substance of the work carried out by Deloitte & Touche was not called into question.

Oliver Freaney & Co said it noted the completion of the Blayney inquiry and related appeal.

“This was a very comprehensive inquiry and no findings were made in the majority of areas.”

It said it accepted the two findings made in relation to Oliver Freaney and its audit work for Dunnes Stores.

One finding concerned the independence of audit work conducted for the Dunnes group.

“It is important to note that the firm has not been found, as a consequence of any lack of independence, to have acted in any way improperly in its audits.”

In relation to an audit of Dunnes Stores (ILAC) Ltd, the firm said the finding “relates to a matter where there was deliberate deception of the company and of the firm as auditors to the company”.

Mr Irwin could not be contacted last night. A finding by the Blayney Committee censuring Mr Irwin was reduced to a finding reprimanding him by the appeal committee.

The independent Blayney and appeal committees were established by the institute as part of its regulatory function. The committees conducted their business in private, although with an observer present from the Department of Enterprise, Trade and Employment. Recent changes mean such committees will, in future, hold public hearings.

Ms Harney said the Irish Auditing and Accounting Supervisory Body, which is being set up, and new structures in the ICAI, “should ensure that these sort of activities won't go undetected in the future”.

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