Sweeping changes in the way the accountancy profession is policed are to be introduced following the failure of auditors to identify and report on widespread tax evasion and fraud.
The State's largest accountancy body, the Institute of Chartered Accountants, warned yesterday that the proposals, which will be brought to Government by the Tanaiste in October, would leave its members and company directors facing the toughest regulatory regime in the world.
Among the changes - recommended by an audit review group chaired by the Independent senator, Mr Joe O'Toole - is the establishment of a new statutory "oversight" board with wide-ranging supervisory powers.
The profession itself will have to fund 60 per cent of the new board's estimated annual budget of £1.5 million with the remainder provided by the State. The Institute of Certified Public Accountants criticised this proposal as patently unbalanced.
Some 80 recommendations compiled by the group appointed by Ms Harney were presented to the Dail Public Accounts Committee yesterday with the objective of plugging "the holes" which facilitated DIRT tax evasion in the 1980s and 1990s. Ms Harney has made it clear that she sees the reform as a direct response to the findings of tribunals and Government inquiries during the past three years.
"Accountants were given the enormous privilege of self-regulation, something which is not given to every group in this country, but this clearly was not working," she told the committee.
The report says the eight-member oversight board should be able to oversee and initiate disciplinary hearings and impose fines of up to £100,000 where an accountancy body is deemed to have failed effectively to supervise its members.
However, the employers' federation, IBEC, and the Small Firms Association welcomed the recommendations and disputed claims that they would mean additional costs for businesses.
Ms Harney has allowed two months for representations on the report before legislation is drafted. Further discussions will take place between the various bodies and her Department in September.
Mr O'Toole said the recommendations went a long way to wards thwarting "fraud and skul duggery", but only time would tell how effective they were.
The report makes recommendations to ensure auditors remain independent of their clients by capping the amount of fees they can earn from a single client.