There was a definite ripple of excitement at the ICAI’s AGM last month as the Chain of Office passed to Terence O’Rourke.
Head of Audit at KPMG, Terence enjoys a well-earned reputation as one of the ‘heavy-hitters’ within the profession. Bright, articulate, and with the courage to embrace difficult challenges, he is a popular and charismatic choice to lead ICAI in the year ahead.
Having been closely involved with research conducted amongst ICAI members, he also knows more than most that CAs are proud of their qualification and believe that preserving and enhancing the quality of their brand should be the principal focus of the ICAI. He shares that pride and intends to make it the keystone of his presidency.
A more relevant Institute engaged with business and society
With a fundamental review of the strategy, goals and values of the Institute already underway, Terence is looking forward to the report of the Strategic Review Group led by David Simpson that is scheduled to report to Council in November.
He is keen to get started on constructing what he describes as “a more relevant Institute and a more relevant profession that will better serve the needs of Irish business and of society”.
Engaging with society will be a key theme of his presidency and is something that he is passionate about.
“CAs often seem to feel that our economy owes them a living. After all we are the premier body and we have a strong reputation both within Ireland and abroad for the quality of our product -the newly qualified Irish Chartered Accountant. But for CAs to prosper in our society, we need to understand that we need to invest in our society, to put something back in recognition of the fine living Irish business gives most CAs. We have a duty to be aware of the major issues in society and to play our part, with our special skills and our unique experience. This will involve examining ways we can help those who do not have the privilege of our first class qualification. Whether that be by way of more pro bono work, through encouraging a more robust examination of the issue of corporate and social responsibility by Irish companies and accounting firms, or helping better the very stretched voluntary sector who battle the health, education and social problems that continue to plague Ireland. We could also seek to be more supportive of the many bodies in Ireland that help people in other countries battle famine, disaster and other longer term developmental issues.”
Open, constructive engagement
Terence also intends to make sure that the profession engages with business and society in a more open and constructive manner: “Engagement means speaking out on the issues where we have competence and views not just the issues that directly affect members but also on other issues where we can also contribute to business and society.”
Asked for examples of some of those issues, he cites electronic voting as an example: “While it might have been difficult for us to contribute objectively to that debate without being accused of being party political, the implementation of new electronic systems is precisely an area where CAs have tremendous experience, views and expertise.”
“Similarly, the Minister of Education is carrying out a fundamental review of what kind of education system we should be building to cater for Ireland's needs over the coming decades. Again CAs, themselves proud graduates of an historically fine education system and engaged in reviewing how our own skills should be best taught and examined, have got to have views on what further changes need be made to Ireland's primary secondary and third level educational systems.”
The vigorous contribution that the Ulster Society of Chartered Accountants has made in Northern Ireland where it has an impressive track record of sponsoring ground breaking research in areas such as economic development and entrepreneurship may serve as an example for ICAI, Terence says.
Renewing the financial audit promise
As Head of Audit at KPMG, it's no surprise that Terence identifies financial audit as another key theme for his presidency. He is keen to renew the promise of what financial audit can contribute to Irish companies and Irish business.
“The disciplines of audit, with its privileged access to the inner working of Irish companies, has honed the skills and insights of most CAs. But of late the value of audit has been questioned and many accountancy firms are seriously considering, in the face of increasingly difficult regulation, whether they want to be involved in audit at all.
“If there is one thing that Enron, WorldCom, Parmalat has taught us, it is that the audit is highly valued by investors and other participants in the capital markets. They are tremendously disappointed when questions about audit quality arise. So we have had a strong affirmation of the continuing need for a quality audit product.
“On the other hand, auditors face intolerable burdens of unlimited liability, and, the real issue here, vastly disproportionate exposure to loss and claim, when compared with the realistic contribution that a good audit can bring to preventing and detecting financial wrongdoing.
“Additionally, in Ireland, auditors are also now burdened with a back-breaking plethora of statutory responsibilities for identifying and reporting on issues such as fraud, breaches of company law, money laundering - with an impossibly wide definition of what constitutes the proceeds of illegal activities- and tax malfeasance.
“Duties with different threshold levels for triggering reports, to different bodies with different expectations. An impossible mishmash that reflects no credit on our legislators attempts to come up with a more efficient and effective way of improving corporate compliance.”
Calling for a renewal of the social contract that is the statutorily imposed obligation of audit Terence said he would commit the profession to redoubling its efforts to ensure a more effective audit that we have had up to now - "an audit that does not shy from its duty to search out fraud; an audit that delivers real assurance where it can.”
But he acknowledges that expectations must be realistic. “There are ways in which we can further improve the audit process and the audit outputs but we have to continue to be clear that even the most effective audits cannot catch all wrongdoing. Audit can never detect all collusive misconduct. But auditors should have as a goal, the ability to demonstrate, to all who question their work, that all audits are done to the same high standards and that they are carrying out their side of the renewed social contact.”
No one is better placed to move this challenging agenda forward. It looks like a busy year for him personally, and a landmark one for the profession. We wish him well.
(C) Accountancy Ireland. Vol 36. No 3. June 2004.