Auditors bring 10 cases to attention of watchdog

Auditors have reported 10 instances of suspected indictable offences to the Director of Corporate Enforcement since November last when new legislation came into effect.

Seven of the reports concern failure to make filings to the Companies Registration Office. The remaining three concern non-filing issues.

A spokesman for the new agency would not say what type of suspected non-filing offences are involved. All of the reports are being investigated.

Indictable offences are ones where prosecutions must be approved by the Director of Public Prosecutions and go for trial before a jury. Such cases are heard in the Circuit Court.

Since November 28th, 2001, auditors have been obliged to report cases of suspected indictable offences to the office of Mr Paul Appleby, the Director of Corporate Enforcement. In February 2002 when he launched consultation papers on the issue Mr Appleby said his office had not as yet received any reports from auditors.

The new provision covers all new audits since November 28th, 2001, and all audits which were being conducted on that date. Mr Appleby said in February that he thought auditors were awaiting the issuing of guidance notes from their representative bodies before making reports. He issued consultation papers in February as part of a process of liaising with representative bodies, a process which will end with his issuing guidance notes. He has not yet done so.

The Institute of Chartered Accountants in Ireland has issued draft guidance notes regarding the issue.

Mr Appleby has said that the new obligation on auditors covers officers and agents of a company "whether or not the questionable behaviour" relates to the company being audited. An auditor "cannot close his or her eyes to what emerges from non-audit work".

The filing of reports by auditors is one of the mechanisms by which it is envisaged that the Office of the Director of Corporate Enforcement will become aware of possible breaches of company law. Another is through the obligatory filing of reports by liquidators, a provision likely to come into effect next month.

Since it came into being the office has taken five cases in the District Courts.

There were two cases last month. In one the defendants, James F Cotter / James F Cotter & Co, Galloping Green, Stillorgan Road, Co Dublin, pleaded guilty to contravening Section 187 of the Companies Act 1990, which determines the circumstances in which persons are legally qualified to act as auditors. Each defendant was fined €100.

In another case, Mr Anthony Kelly and Mr Bartholomew Kelly, both of Kilkee, Co Clare, and directors of Crag International Trading Co Ltd, had their case dismissed.

The defendants were alleged to have failed to keep proper books of account. The case was dismissed on grounds set out in the Companies Act whereby they had "reasonable grounds for believing and did believe that a competent and reliable person was charged with the duty of ensuring that those requirements were complied with and was in a position to discharge that duty".

In March, Moranstown Haulage Ltd, Mr Adrian Munnelly, and Mr Martin Munnelly, all of Ballynacargy, Mullingar, Co Westmeath, pleaded guilty to not keeping proper books of account. A fine of €100 was imposed on each defendant as well as prosecution costs and witness expenses.

In February, Ad Frame Media Ltd was convicted of an offence under the Companies Act 1963 and fined €25. In January, Mr Vincent and Ms Sheila Mayock, Ballina, Co Mayo, were each fined €100 for offences under company law involving registers of directors' interests and registers of members. Each was fined €100 and Mr Mayock was ordered to pay various costs which exceeded €1,200.