The Government may require sporting bodies, charities and other organisations to regularly rotate their board members as well as their external auditors as a condition of future Government funding.
Taoiseach Leo Varadkar said the State could be "more active" on this after Social Democrats TD Catherine Murphy called for organisations to be obliged to change their external accountants following the revelation that the same firm had audited the embattled Football Association of Ireland (FAI) for 23 years.
Ms Murphy questioned why the State had not imposed an EU audit regulation, introduced three years ago, which would have prevented one firm being kept on for that length of time “or anywhere near it”.
Ms Murphy said that proof of regular rotation of external auditors should be required along with a tax clearance certificate before any Government grants are awarded. “Good governance requires such a system,” she insisted.
The Kildare North TD said the UK had introduced a system for grading audit firms, which was also used to ensure rotation and “it plans to publish the grades and past performance of the large audit companies”.
The UK had also introduced more powerful audit oversight, following the collapse of large firms including Carillion, which had school building contracts in Ireland, BHS and Thomas Cook, she added.
Britain “has taken lessons from the financial scandals. We must do the same.”
An external auditor is expected to have “independent eyes” on the accounts. “Can this really be the case” after Deloitte did the same job for 23 years for the same organisation,” she asked
The Taoiseach said he did not want to “cast aspersions on any particular audit firm, nor on the many thousands of very good people who work in that particular firm”.
But he acknowledged that Ms Murphy “makes a very good point”.
Mr Varadkar said “I honestly do not know” why the EU regulation did not apply in the FAI’s case “but I will check that out and provide the Deputy with a more detailed reply”.
Good governanace
He said it could be that the directive applied to organisations that were largely publicly funded “whereas this is a body that receives only a small proportion of its funding from the Government”,
He added that “it is a principle of good corporate governance that organisations should not be audited by the same people forever and ever and ever again.
“It is certainly something that Sport Ireland and other public bodies should examine as to whether it is made a condition of Government grant aid that auditors are rotated after a period of time.”
He said it should also apply to board members because a lot of charities, sporting bodies or local taskforces funded by the State “are on the board for ten, 20 or 25 years and this is not good corporate governance either”.
Both were “definitely areas where the Government could be more active in requiring turnover of auditors and turnover of board members as a condition of funding in future”.
