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Established by ICAI last year, and now operating independently in the public interest, the Chartered Accountants Regulatory Board has recently completed its first year in operation. Accountancy Ireland spoke to Director, Heather Briers.

How would you describe your first year in operation? All the usual words apply, ‘busy’, ‘challenging’ and – as always with anything new – ‘difficult’ and ‘rewarding’ in equal measure. CARB was formally established in April 2007 under the Chairmanship of Liam O’Reilly. Initially the new Board had to get to grips with understanding the regulatory framework it adopted from ICAI, setting up its own governance structures, engaging with stakeholders and agreeing future working relationships with ICAI and oversight bodies such as the Irish Auditing and Accounting Supervisory Authority (IAASA) and in the UK, the Professional Oversight Board (POB). We developed a strategic plan covering the three years 2008-2010 which we published at the end of last year. All in all it was a very satisfactory and successful first year but with a lot more work to do.

CARB was set up to protect the public interest – what is your sense of public perception of the Board? I think in 2007 the public would have had little knowledge of CARB and, in fairness, our focus has been to build relationships with the oversight bodies and ensure they understand our aims and objectives and support what we are seeking to do. The public generally become interested in what the regulator does when it affects them personally – which, in our case, is usually when they make a complaint against a CA. They wish to be assured that their complaint is dealt with fairly and impartially and without delay. CARB’s role is to provide that assurance. We have developed a Communications Plan and revised our policy on the publication of decisions. Our role is to run an effective regulatory process. Obviously that requires that the public know who we are and undoubtedly that will develop over time. Clearly we will continue to publish key documents like our Strategic Plan and Annual Reports. We may also have cause to comment on broader regulatory developments emanating from Governments or the European Union.

Are complaints being made directly to CARB or are they mostly referred by ICAI? In 2007 they mostly came through the Institute but in 2008 they generally come directly to CARB – including being addressed to me as Director and the Chairman. It is likely that complainants have looked at the CARB website or the ICAI website and are aware that CARB now regulates Chartered Accountants.

Has the volume of complaints increased? The level of complaints has remained fairly steady over the last 3-4 years and the nature of complaints remains consistent. In 2007 we received 119 complaints and 58% of these were resolved without the need to go before the Complaints Committee. In these types of cases complainants are usually looking for assistance in dealing with their adviser and we try to resolve the matter to the satisfaction of all concerned. For obvious reasons, most of the complaints we receive are about the work of members in public practice; however, where complaints are made against members in business they are often very high profile and attract media attention. Conducting our investigations in the full glare of publicity can sometimes be difficult but it does not change our objective to operate a fair and impartial disciplinary regime that respects the rights of all parties involved in the process.

The Board has expressed its opinion that the low level of complaints (119 out of a population of 16,500) demonstrates a high level of professionalism and compliance. However, where there is evidence that standards are below what the Board expects then disciplinary action will ensue. The only way to ensure that the reputation of CAs is not undermined is for them to continue to demonstrate high levels of compliance, integrity and professionalism in all they do. Problems are sometimes exacerbated if members fail to deal with the process in a timely fashion.

Where a complaint is upheld is it ever envisaged that a complainant might receive compensation? At present this is something that we are not empowered to do, for anumber of reasons which relate to the fact that the professional accountancy bodies are not statutory bodies. Awards of this nature are reserved to statutory bodies or the Irish courts. However, the disciplinary regulations were last subject to amajor review and revision in 1999 and in its strategic plan the Board has already stated that 2009 will be a year in which it intends to actively challenge all existing regulatory concepts and identify any necessary changes. A full review of the continuing appropriateness of the disciplinary regulations will form part of this review. In undertaking the review we will, of course, seek the opinions of all interested parties.

What is your approach to monitoring? One of CARB’s six strategic objectives is to ensure CAs provide services of the highest quality, competently, honestly and with integrity. It does this by operating a risk-based approach to monitoring through the annual assessment of information and periodic inspections.

Traditionally this has revolved around the submission of annual returns by members in practice and the firms through which they practice and by periodic inspection visits to practices. This approach will continue in 2008 and onwards but we will be making some refinements to the process to reflect the fact that the services provided by members’ firms continually evolve.

CARB believes that the purpose of regulation is to support public confidence by ensuring that high standards are applied. It is in the interest of the Board to assist compliance and we do this by offering such guidance and support as we can, for example through the CARB website. We also believe that our monitoring visits can be educational. We provide firms with action plans to help them address any issues that may have arisen during the course of a visit.

And CARB’s monitoring role is being extended to cover Continuing Professional Development? Yes, the introduction of ICAI’s new CPD Regulations this year is a major change. Whilst the regulations they replaced required all members to maintain their competence, what is new is that for the first time compulsory monitoring of compliance will now apply to all ICAI members. There is information about the new regulations on the CARB website.(1) I know that the Life Long Learning and Support department at ICAI is working hard to support members by developing aids to compliance, such as My CPD Manager, for all members.(2)

As well as monitoring individual members, you also monitor ICAI firms in areas like investment business. Roughly how many firms are involved in providing investment advice? We currently regulate 720 firms who provide investment business advice to their clients. These firms provide different types of services but only a small number of firms provide extensive investment business advice through their CARB authorisation. This is because we only regulate firms who provide investment business services in an ‘incidental’ manner which means they must have an ongoing client relationship and provide more than IB advice to th client. The income they earn must be no more than 20% of their total practice income. Some firms do provide a much greater level of investment business advice but they are directly authorised by the Financial Regulator in Ireland or the Financial Services Authority in the UK. There are other services which appear to the client to be investment business but which may not fall within the scope of the investment business legislation. However, as they are carried on within the practice they fall within CARB’s regulatory remit. An example would be advising on investment in property schemes which can, in certain circumstances, fall outside the legislation. The Board expects the same high standards of integrity and professionalism from firms providing these services to clients.

Now that audit exemption has been introduced do you think more firms will move into advisory areas like investment business? What challenges does that pose for CARB? I have always strongly supported the introduction of the higher level of audit exemption and would like to see it extended further in Ireland where, unlike the UK, small low risk companies limited by guarantee cannot take advantage of the exemption. Firms should see this as an opportunity to review the nature of services they provide to clients and introduce new value added services which meet all their business needs.

This includes the area of investment business where firms are best placed to know the exact needs of the client now and in the future and will act in the client’s best interest. For CARB, we must continually review and refine our monitoring approach and ensure that we maintain the necessary expertise – both of our staff and of our committees – to fulfil our obligations effectively. The Board is committed to ensuring this is the case.

1 www.carb.ie 2 See pp 56-57 of this issue.