Ross accuses Government of allowing auditing 'racket'
THE GOVERNMENT has been criticised for allowing the reappointment of KPMG as auditors of AIB when they were “obviously not giving value for money”.
Independent TD Shane Ross said it was very disappointing that the Government was allowing a “racket to continue” by allowing the four big auditing firms to divide up and pass around the auditing of State-owned institutions. He said KPMG had been in charge of auditing AIB for the last 10 years during the property boom and collapse and had “extracted” more than €50 million of “scandalous” fees from the bank.
That decade included “gross under-provisioning during the property frenzy and the collapse because property was overvalued on the balance sheet”.
Hitting out at the “scandalous fees”, he said the Government “could surely save money by cutting and capping audit fees”. There had to be a move to tendering, he said, and asked why the firm was granted the audit for Irish Life Permanent and “other banking basket cases owned by the Government”.
In advance of AIB’s annual general meeting yesterday, Mr Ross asked why the Government had “backed all resolutions for debate and passage” at the annual meeting. He accused the Government of accepting “highly questionable accounts” and of agreeing to the re-election of all the directors, including the publicly appointed directors.
The Dublin South TD questioned why the Government had not introduced a tendering system for auditors of State-owned financial institutions.
Minister for Public Expenditure and Reform Brendan Howlin, who was taking Leaders’ Questions, said he did not intend to make “good, bad or indifferent comments about specific audit firms but we are fundamentally examining the way we procure any service”. He insisted they were working “to ensure all services, whether audit or legal services, are properly tendered”.
Mr Ross however did not see “why we should be so coy about naming the auditors involved because they are responsible and receiving the money”.
KPMG had received €4 million last year alone. “This is a favoured company that has not performed up to scratch. It is a racket and is run by the big four auditors, who pass it around for years. It disappoints me that the Government, as full owner, is continuing to allow this racket to continue.”
There was an opportunity, he added, for the Minister to say it would not continue and that “auditing will be put out to tender for all State-owned banks and that he will insist the fees are lower”.
Mr Howlin insisted that “areas that were closed shops in the past in terms of audit services and more especially legal services are properly tendered for” to get better value. He had already had “discussions with private sector firms that have innovative ways of carrying out the tender process”.