State failed to adopt EU auditing directive

EUROPE’S HIGHEST court has upheld a European Commission complaint against the Government over its failure to transpose a directive into Irish law on the auditing of annual accounts.

While the Government argued before the European Court of Justice that it was at “an advanced stage” in the adoption of measures due since mid-2008, the court found in favour of the commission’s action over the failure to fulfil all legal obligations under the directive.

Labour MEP Proinsias De Rossa seized on the ruling, claiming Government “negligence and sloppiness has contributed to the mess we are now in”.

The directive in question aims at high-level harmonisation of statutory audit requirements, laying down rules on the approval, continuing education and mutual recognition of statutory auditors and provides for their entry in registers accessible to the public.

The directive also fixes rules on professional ethics and independence, defines auditing standards, provides for the need for a system of quality assurance, systems of investigations and penalties and public supervision.

In addition, it provides a basis for co-operation both in the relations between EU member states and in the relations of states with non-EU countries.

The Government told the Commission in November 2008 it was in the process of drafting the necessary measures to comply with that directive and indicated that some of the fundamental elements of that directive were already transposed by provisions in force.

After the commission called on the Government early the following year to fulfil its obligations, the Government said it was at an advanced stage in the process of transposing the directive.

In its defence before the court, the Government called for the suspension of the proceedings pending completion of the legislative process.

It argued also that existing legislation put in place an independent quality assurance system which complied with the directive and provided a table listing the elements of the directive which were already transposed, either substantially or partially.

The court in its ruling said it was “common ground” that Ireland had not adopted all the measures necessary fully to transpose that directive.