Walsh steers accountancy body through troubled waters

Brian Walsh has taken over the helm at the Institute of Chartered Accountants in Ireland (ICAI) at a challenging time for the profession. Not only must he tackle the typical issues facing most chief executives like recruitment and industry consolidation but he must steer the institute through the fallout from the various tribunals of inquiry under way.

By raising questions about the financial dealings of senior politicians and businessmen, the investigations have turned the spotlight on some in the accountancy profession as well. This, in turn, has thrown up other issues, including the profession's ability to regulate itself.

The ICAI's own investigation into the actions of some institute members named in the McCracken tribunal report, suspended since last summer, is due to resume shortly. Headed by former Supreme Court Judge, Mr Justice John Blayney, the inquiry was halted following a decision by Dunnes Stores auditors, Oliver J. Freaney and Company, to seek a judicial review of the committee's procedures.

The dispute was recently settled and Mr Walsh says the investigating committee has already met and will soon resume hearings. He expects the inquiry to be up and running again by the end of the month and hopes it should finish by the middle of the year. Whether it will be extended to cover evidence emerging from other tribunals, including the Moriarty tribunal which is dealing with payments from Dunnes Stores not dealt with by the 1997 McCracken tribunal, is something he cannot yet say. The ICAI is, however, monitoring the evidence as it emerges.

"When the [Moriarty] report is published, the investigating committee will consider it and if it feels there are indications that members broke the rules of the institute, it will launch an inquiry," Mr Walsh says.

The institute is also taking further measures to silence critics of its policing of the profession. At a special general meeting last Friday, members voted overwhelmingly to change the institute's bylaws to allow for greater transparency in its disciplinary procedures.

Mr Walsh say the institute receives an average of 80 to 100 complaints a year from members of the public or through its own monitoring system. Around half are dealt with by the ICAI's secretary while the remainder go to an investigating committee which decides if there is a case to answer. If there is, these go before the disciplinary committee which meets four to five times annually and hears about 25 complaints a year. Last year, one member of the institute was excluded and two others were suspended.

The new amendments allow for hearings such as the Blayney inquiry to be held in public and for greater publicity if action is taken against a member. Under the new rules, if an accountant is excluded or suspended or has his practising rights withdrawn, it will be published in the national press. At present, publication is confined to the ICAI's own publication, Accountancy Ireland.

A further change to the bylaws involves raising the ceiling on the fines that the institute can levy from £1,000 to £10,000 (€1,270-€12,697). In effect this means that if a firm is found to be in breach of the institute's rules, each partner can now be fined up to £10,000.

"The measures go as far as we can go at present," says Mr Walsh. "We have worked hard to achieve a balance between what was fair to the institute and fair to members."

Only 12 per cent of those in attendance last Friday voted against the proposed changes. The institute will now ballot all members across the world over the next three weeks. If carried, the proposals will then need approval from the Government and from Privy Council in Northern Ireland where the ICAI has 2,000 members.

The institute, which was incorporated by royal charter in 1888, is the oldest body of accountants in Ireland. It has 10,800 members in all and employs 85 people. Some 17 are employed full time in regulation, visiting all members and randomly examining files to ensure that they meet the institute's standards in areas such as auditing.

"Accountants have this image of being bean counters but this does not reflect what our members do"

Mr Walsh says he is satisfied that the institute's auditing standards, as laid down, are good and are constantly being reviewed while the institute takes a very pro-active stance in ensuring the standards are met. Last year, it withdrew audit registration from three firms because it was not happy with standards.

Mr Walsh says he was glad to see the record £3.5 million sterling (€5.09 million) fine recently imposed on Coopers & Lybrand, auditors to Robert Maxwell, by the British regulatory accountancy authorities for failure to keep adequate checks on Maxwell's publishing empire.

"It sends out a very clear message that self-regulating bodies are prepared to come down on firms that do bad work."

However, he believes auditing - once the mainstay of the accountant's business - will become less and less important, particularly if the new Companies Act allows certain companies to avoid the audit requirement. "Auditing work may retract but our members won't be too upset by that. It will allow them to do other work that may be of more benefit for clients."

Meantime, the profession faces a number of other challenges including, says Mr Walsh, the ability to continue to attract "the brightest and best".

"Accountants have this image of being bean counters but this does not reflect what our members do. They are involved in tasks such as advising on corporate restructuring."

The profession is also likely to see further consolidation, particularly as law firms move into areas like taxation. Already, PricewaterhouseCoopers (PwC) has announced plans to set up a standalone law firm which will be closely associated with its accountancy practice.

"We are likely to see a market-led move to multi-disciplinary practice," says Mr Walsh. This should not pose too many problems for the institute in its regulatory role as all member-firms are already obliged to ensure that non-members adhere to its rules.

But if accountancy practices can expect to see further consolidation, the same is not true of the five bodies now representing accountants in Ireland.

Streamlining them would have some obvious advantages, Mr Walsh says. It would be less confusing for the man in the street, easier for Government to deal with one body rather than four or five and could also deliver cost savings.

But he still believes it is unlikely to happen, mainly because of the different training routes and different cultures in the various bodies.

"I don't see it in the next five years. Numerous attempts have been made, all have failed and no one has the stomach for having another go," he says. The ICAI won't be instigating anything, although if there were developments in this direction in Britain it could have a knock-on effect here, Mr Walsh says.