The  Bill to set up the Irish Auditing and Accountancy Supervisory Authority (IAASA) on a statutory basis and to reform the regulation of the accounting profession has been published in draft form by the Tánaiste and Minister for Enterprise, Trade and Employment, Ms Harney.

The draft follows recommendations for the reform of the regulation of the accounting profession produced by the Review Group on Auditing which was set up by Ms Harney in February 2000 and reported in July 2000. The group recommended a new, more independent regulatory framework including the establishment of the IAASA.

Explaining the publication of the draft, Ms Harney said: "Recently I have received a number of queries asking how and when I intend to implement the review group's recommendations and I felt that it made sense to make publicly available the draft Bill in advance of the actual text being finalised by the Attorney General's office.

"I would hope to be in a position to publish the official text of the Bill during the lifetime of this Dáil," she said.

The Review Group on Auditing (RGA) was set up when the Dáil Public Accounts Committee investigating the DIRT scandal outlined a number of areas which required further review. When she set up the review group to look at these issues, Ms Harney added in an overall review of the accountancy profession. This followed concerns arising out of revelations at tribunals including the McCracken tribunal.

Under a number of headings, the draft scheme sets out the details of the establishment of the IAASA, how its board will be composed and its funding, staffing and accountability.

It states that records held or created by IAASA will be subject to the provisions of the Freedom of Information Act.

An interim IAASA board set up in April 2001 has been assisting the Department in developing proposals for the new regulatory framework and in drawing up the draft scheme for the Bill.

The draft scheme for the Companies (Audit and Accountancy) (Amendment ) Bill sets out the regulatory powers proposed for the IAASA which will take over the powers currently held by the Minister.

The IAASA will be able to intervene in firms' disciplinary procedures and to undertake independent investigations and reviews.

The Institute of Chartered Accountants in Ireland (ICAI) said it "particularly welcomed" the provision that would give accountancy bodies statutory backing for their disciplinary processes.

"When the legislation is eventually enacted, we will move to a new model of supervised self-regulation and it is essential that the bodies have all the necessary powers to conduct inquiries," chief executive Mr Brian Walsh said.

Mr Walsh said there were a number of areas "where, with further discussion, the heads could be improved". These areas included the application of new reporting requirements to small and medium sized firms, the ability of IAASA to supervise effectively all "accountants" and the funding of the proposed Financial Reporting Review Panel.

ICAI said it was disappointed that the proposed directors' compliance statements would apply to SMEs because it would increase the burden of regulation on them. The draft heads do not contain enough specific provision which will enable supervision of accountants to the extent envisaged by the RGA, according to the ICAI.

This is because the Bill does not cover individuals who are not members of any accountancy body but call themselves accountants, and, while under the draft heads IAASA will be able to prescribe accountancy bodies as being subject to its remit, it does not give guidelines or criteria for such prescription.

On the proposal that the accountancy profession will contribute to the funding of inquiries into compliance of company accounts with Companies Acts, ICAI said it fully supported IAASA carrying out these inquiries but did not consider it appropriate to ask the accountancy profession to fund it. The profession "will resist efforts to make it fund this activity".

The President of the Institute of Incorporated Public Accountants, Mr David Moloney, said the new board should look very closely at firms that advise clients as well as audit their books. It should also ensure compliance with international standards.