Governing the Corporation Conference

Queen’s University, Belfast

21 September 2004

Reforming the Regulatory Environment in Ireland

Paul Appleby

Director of Corporate Enforcement

Introduction

• Corporate Regulation in Ireland up to 2001

• Emerging Business Scandals and their Effects

• Mission/Goals of the ODCE

• Some Personal Observations

Corporate Regulation in Ireland

• Company Law and its Influences– UK Legislation– EU Legislation and– Domestic Circumstances

• The Primary Regulators up to 2001 – Minister for Enterprise Trade and Employment– Registrar of Companies– Recognised Accountancy Bodies– Sectoral Bodies

Emerging Scandals and Effects

• Tribunal of Inquiry (Dunnes Payments)– Findings– Company Investigations– Investigation of Auditors/Accountants’ Conduct

• Tribunal of Inquiry (Planning Payments)

• National Irish Bank Inquiries

Emerging Scandals and Effects

• Review of Company Law Compliance/Enforcement– Findings: “a culture of non-compliance”

– Recommendations:• Strengthen company law enforcement

• Establish an independent Director of Corporate Enforcement

• Set up a standing Company Law Review Group

• Company Law Enforcement Act 2001• ODCE and CLRG established

Emerging Scandals and Effects

• Inquiries into Deposit Interest Retention Tax– Critical Parliamentary Inquiry– Recommendations

• Review Group on Auditing– Self-Regulation/Structures– Auditor/Client Relationships

Emerging Scandals and Effects

• Companies (Auditing & Accounting) Act 2003– New Irish Auditing and Accounting Supervisory Authority

– Directors’ Compliance Statements• Company Law, Tax Law and Other Enactments having a material

effect on the financial statements

• Consultation Paper and Draft Guidance for Directors from ODCE

– Auditors’ Review of Directors’ Compliance Statements • Opinion : are they fair and reasonable?

• Draft Bulletin for Auditors from the Auditing Practices Board

Emerging Scandals and Effects

• New Financial Services Regulatory Authority– Wider Remit– Consumer Focus– Substantial Fining Capability

• Restructuring of Revenue Authorities– Regionalisation Project

Mission/Goals of the ODCE

• Encouraging Improved Compliance• Uncovering Suspected Breaches• Prosecuting Detected Offences• Sanctioning Improper Conduct in Insolvent Situations• Quality Customer Services

Mission/Goals of the ODCE

• Encouraging Improved Compliance – Basic Information for Stakeholders on Duties – Specific Guidance on New Obligations– ‘Outreach’ Activity

Mission/Goals of the ODCE

• Uncovering Suspected Breaches– Auditor Reporting of Indictable Offences– Complaints from the Public– State Authorities via Information Gateways– Media/Public Information

Mission/Goals of the ODCE

• Enforcement Actions– Convictions secured for offences, including

• Accounting/Record Deficiencies

• Undesirable Persons

• Disclosure Failures

– Formal Investigative Powers used for search, production orders, arrest/detention, etc.

Mission/Goals of the ODCE

• Sanctioning Improper Conduct in Insolvencies– Restriction of Company Directors– Remedial Orders against Liquidators– Disqualification Applications Planned

Mission/Goals of the ODCE

• Quality Customer Services– 37 full-time staff of accountants, administrators,

lawyers and police working in teams– 2004 Budget of €4.25 million– Website Compliments

Mission/Goals of the ODCE

• Initial Impact of ODCE (2003)– Good awareness of the Office – Positive support for educational initiatives– Compliance levels have increased– Enforcement activity yet to achieve its full potential

Personal Observations

• Review of Past Experience– State had failed to regulate effectively– Professional Conduct was not supported– Little Prospect of Sanction for Misconduct– Flawed Accountability Framework in Practice

Personal Observations

• New Situation– Directors, etc. open to sanction by ODCE and others– Auditor/Director relationship fundamentally changed– Unscrupulous Directors in Insolvencies face High Court– Creditors’ Situation has improved– Better Information Disclosures to Market– Reinforcing Good Practice in other areas

Personal Observations

• Firm but Fair Regulation– ‘Carrot and Stick’ Approach

– Supporting Compliance

– Encouraging Voluntary Rectification

– Sanctioning Misconduct

Personal Observations

• Effective and Balanced Regulation protects:– The public from fraud– Employees, traders and suppliers from irresponsible conduct– State revenue and the taxpayer’s interest– Investors and credit institutions from bad debts– Legitimate business from fraud-based competition– Reputation

Personal Observations

• Quality Regulatory Environment– Progress has been achieved– Conditions for enterprise development are positive– Risks of unscrupulous conduct being minimised– Continuing support of Government desirable– Outlook is favourable for further improvements

End of Presentation

Thank You