Moves to tighten drastically the Republic's corporate governance regime risk frightening away overseas investors, a lobby group for accountants warned yesterday. Edward Power reports.
Rather than creating a better business environment, strict compliance obligations set out in the controversial Companies (Auditing and Accounting) Bill 2003 could, if implemented in their present form, deter multinationals and hand a competitive advantage to countries challenging for inward investment, cautioned the Consultancy Committee of Accounting Bodies in Ireland.
Although at pains to emphasise its support for the principles embodied in the draft legislation - which provides a framework for the Irish Auditing and Accounting Supervisory Authority - the organisation told the Oireachtas Committee on Enterprise and Small Business that measures in the Bill were so onerous they would diminish the State's attractiveness to investors.
The enforcement regulations as envisaged are far stricter than those in many similar jurisdictions, surpassing in places even the stringent requirements of the US Sarbanes-Oxley Act, the delegation said.
If implemented without amendment the Bill will lead to an increase in bureaucracy and red tape, create confusion relating to reporting responsibilities of company auditors and increase the costs to business, predicted the committee.
"The cumulative effect of all this is likely to result in Ireland becoming a less attractive place for companies to do business," said Mr Terence O'Rourke, deputy president of the Institute of Chartered Accountants in Ireland.
The delegation criticised plans to require company directors (excluding those of businesses exempt from audits) to make an annual statement confirming that firms complied with all "relevant obligations".
It is unrealistic to expect directors to vouch that a company discharged every duty under not only tax and company law but competition, environmental, health and safety and employment law, Mr Roche said.
He also questioned the wisdom of giving the supervisory authority power to overrule disciplinary rulings of professional accountancy bodies.
"The Bill's failure to provide a definition of 'accountant' " was attacked - a criticism acknowledged by members of the Oireachtas committee.
"Anyone in this country can call themselves an accountant," said Senator Paul Coghlan, Fine Gael Seanad spokesman on Enterprise, Trade and Employment.
"There is no restriction on somebody without any qualification setting up shop in the main street and putting the sign 'accountant' above their door."
