Purcell to assess Ernst and Young

INVESTIGATION:JOHN PURCELL, the former comptroller and auditor general, has been appointed by the accountancy regulator to investigate directors' loans at Anglo Irish Bank and the performance of the bank's auditors, Ernst & Young.

Mr Purcell was appointed a special investigator by the Chartered Accountants Regulatory Board, a regulatory body set up by the Institute of Chartered Accountants in Ireland (ICAI), to investigate possible breaches of its professional conduct rules in relation to Anglo.

The ICAI said Mr Purcell would inquire into Mr FitzPatrick’s loans which, on occasion, exceeded €120 million and were not disclosed to shareholders or the bank’s auditors, Ernst Young, over a period of eight years.

Should Mr Purcell’s report identify matters of concern, the ICAI will convene a disciplinary tribunal. This can impose a range of sanctions, ranging from a reprimand to exclusion from the institute, and a maximum fine of €30,000 per partner.

As special investigator, Mr Purcell has the power to compel people to give evidence and to request access to documentary evidence.

Separately, the complaints committee is examining the involvement of ICAI members in relation to transactions between Anglo and Irish Life and Permanent. The ICAI has been in contact with other statutory agencies involved in a series of investigations into issues arising from Anglo, including the Office of the Director of Corporate Enforcement.

It is not yet clear whether Mr Purcell will have access to documentary evidence held at other statutory agencies or the Department of Finance.

Mr Purcell is entitled to seek an extension of his terms of reference, suggesting that he will have the capacity to follow an emerging chain of evidence.

There is no deadline for him to complete his investigation, although an ICAI spokesman suggested that it would require “a number of months”.

Ernst & Young broke with convention yesterday to comment on the audit opinion of its client. In a statement, it confirmed that it had signed off on the bank’s accounts without qualification and stressed that its opinion had not changed since the bank’s preliminary results in December 2008.

The figures in the re-issued financial statements do not differ from those results; a greater level of detail has simply been included, it noted.

Ernst & Young also added a second “emphasis of matter” to its auditing report: “A number of ongoing reviews by external bodies are continuing and the impact of any outcome from these investigations on the financial statements cannot be determined at this time,” the auditors said.