The Chartered Accountants Regulatory Board has been asked to formally investigate the conduct of KPMG as auditors of Irish Nationwide Building Society, whose collapse cost the State €5.4 billion.
Sinn Féin finance spokesman Pearse Doherty has written to Carb to ask it to examine audit reports, prepared for the failed building society by KPMG in the financial years 2006 until 2009, under seven different headings.
Mr Doherty said he believed it was “an entirely inappropriate conflict of interest” that KPMG, formerly the society’s auditor, was now acting as its liquidator. “KPMG have acted in a professional capacity to Irish Nationwide for over 20 years and the over-arching basis for my complaint is a matter of profound public and national importance,” he said.
“I trust Carb will investigate it fully.”
Alleged failures
Mr Doherty asked Carb to investigate whether KPMG failed "to detect, highlight and investigate the extraordinary poor lending practices in place in Irish Nationwide" as well as its "lack of internal controls" between 2006 and 2009.
The Sinn Féin TD asked Carb whether KPMG had detected, highlighted or investigated the “extent of chief executive/management override in Irish Nationwide”.
He also asked the body to examine whether KPMG had detected or highlighted in its audit reports, issues around IT controls and IT systems in Irish Nationwide.
'Doubtful debts'
In addition, Mr Doherty outlined questions in relation to the preparation of Irish Nationwide's 2009 accounts and how it had made "provision for bad and doubtful debts".
A spokesman for Carb said: “Carb responds to all correspondence directly. The standard procedure with complaints is that Carb will write back to the complainant, acknowledge the complaint and set out the procedures.”
All complaints are reviewed, he said, at a complaints committee meeting every six weeks to “assess the complaint as to whether it requires investigation.
“If another related investigation is ongoing, the Carb complaints committee may defer its investigation until that process has concluded.”
Mr Doherty wrote earlier this month to Minister for Finance Michael Noonan for an update on comments made on February 26th by KPMG as special liquidator of IBRC (which includes Irish Nationwide) to the Dáil's Finance Committee.
At this meeting, KPMG said the previous board of Irish Nationwide had decided not to take legal action against it as auditor, but to pursue an action against the former board of the society led by its chief executive Michael Fingleton.
KPMG said it planned to “shortly be announcing a different arena for managing the litigation . . . that independent group can make a decision on whether it feels it necessary to include KPMG.”
Statute of limitations
Mr Doherty told Mr Noonan he was anxious this proceeded quickly as he was concerned "the statute of limitations during which KPMG would have to answer for any alleged wrongful auditing expires in a short period".
Mr Noonan’s reply on March 12th said: “The special liquidators are fully aware of the urgency of the matters due to the statute of limitations issue and the independent person appointed will deal with this issue as part of their appointment and I will provide an update to you on that in due course.”
A spokesman for the special liquidator of IBRC declined to comment.
