Walk the Talk: It's Time for Joined-Up Government
Author:
Brian Walsh
[Fulltext] In the office I where I trained, when an articled clerk was between jobs, or otherwise did not have a lot to do, he / she was usually told to bring Companies Office forms up to date. This was a tedious task which involved the drafting of AGM Minutes and the completion of annual returns since they were last lodged, which could have been five or six years previous. It was a good office, and the approach to company secretarial work was no different to that taken by most offices at that time and for many years afterwards. The reason was, of course, that the law was not enforced and, as a result, the work did not get prioritised. This culminated in a situation whereby the Companies Office Report for 1999 showed that only 13% of companies had filed their Annual Returns on time. Something had to happen, and it did, with the enactment of the Company Law Enforcement Act 2001. This Act introduced the concept of an "annual return date" and provided for the Registrar of Companies to levy fines in respect of failure to file the required return.
That is all very well, and nobody in this Institute would suggest that the legislation was unnecessary. However, what we do expect is that the Companies Registration Office would be given the necessary resources by Government to handle the increased levels of activity which the enactment of the Act has created. We now have a situation whereby it is virtually impossible to get through to the Office, if you do get through you go onto voice-mail and when you leave a message it is either not returned or it is returned at a time when the call cannot be taken. In addition, there is a huge backlog in getting the information received onto files. This level of service is not acceptable from an Office which is now imposing heavy penalties for non-compliance with its procedures.
Auditor's Duty to Report
The first Report of the Company Law Review Group (CLRG), published in February 2002, noted there were three separate proposals requiring that corporate abuse be reported to the authorities. These are set out in the Company Law Enforcement Act, referred to above, the Criminal Law (Theft & Fraud Offences) Bill 2000 and the Companies (Audit & Accountancy) (Amendment) Bill 2001. The CLRG strongly maintains it is important that the requirements of the three items of proposed legislation should be both consistent and enforceable.
They are definitely not consistent and some parts are, in our view, unworkable, which must raise a question mark over whether they are enforceable.
The auditing profession recognises its duty, in the public interest, to report breaches of company law and fraud in certain circumstances. However, there must be clear thinking on the part of the legislators on such matters as:
-The primary responsibility of directors to ensure compliance with law and the prevention of fraud.
-The primary purpose of an auditor's work, i.e. to express an opinion on the financial statements.
-The difference between forming an opinion and having a suspicion that an offence has been committed.
In June 1999, the Government published a Report on Regulatory Reform; last August we had an OECD Report on the same topic. In February 2002, the Government produced a comprehensive Consultation Paper on Better Regulation, one of the aims of which was to ensure that Regulation is "not overly burdensome and is properly enforced".
There is an inconsistency here. On the one hand, the Government is making all the right noises about sensible regulation, but in practice it is not doing anything to facilitate it. The CLRG Report may be a breakthrough - hopefully it will receive the priority and attention it deserves. Some joined up Government is definitely overdue.
Accountancy Ireland Vol 34 No 2 April 2002