Compliance law could be costly

A new law placing the onus on directors to ensure that companies comply with their legal obligations will result in extra costs for some businesses, the State's corporate enforcer said yesterday.

When it comes into force, the Companies (Auditing and Accounting) Act, 2003, will require directors to publish compliance statements and compliance policy statements with their companies' annual accounts.

The statements will detail how the businesses manage compliance with company and tax law and other relevant legal requirements. Auditors will be required to police the statements.

Director of Corporate Enforcement, Mr Paul Appleby, told an Audit Committee Institute of Ireland briefing that the act's purpose was to focus directors' attention on their companies' compliance with key legal obligations.

Mr Appleby said the law was an attempt to raise the bar of Irish corporate conduct and prevent a recurrence of the problems that have tarnished the State's business reputation in the past.

"I have little doubt that it will give rise to additional costs for some of the affected firms," he said.

"But there will also be benefits in terms of improved market transparency, lower business risks, enhanced attractiveness for business growth and investment and, less attention from Government regulators for those who are in a position to confirm a clean compliance record."

Mr Appleby recently issued a draft guide to help directors and management meet the responsibilities that will be imposed on them.

He is seeking feedback and has called on all interested parties to respond to his office.

He told the gathering that the decision on when it would come into force was a political one.

However, he said that the guidance paper canvassed views on this issue and added that he intended passing any recommendations he received to the junior minister, Mr Michael Ahern, who will make the decision.