Chartered Accountants Regulatory Board

Transcription

1 Chartered Accountants Regulatory Board Annual Report

2 CONTENTS PART I: REPORT ON CARB S ACTIVITIES FOR Purpose, Mission and Values Objectives Chairman s Statement Director s Review Governance Financial Results Appendix A Financial Information Appendix B Functions of the Governance, Policy and Compliance Committees Governance and Policy Committees PART II: REPORT ON THE REVIEW OF THE AUDIT OF IMPAIRMENTS FOR IRISH COVERED INSTITUTIONS FOR FINANCIAL YEARS ENDED BETWEEN 30 SEPTEMBER 2008 AND 31 MARCH

3 PART I: Report on CARB s Activities For 2014 Purpose, Mission and Values Our Purpose To regulate members of Chartered Accountants Ireland independently, openly and in the public interest. Our Mission To deliver a regulatory system of the highest quality thereby enhancing the confidence of all stakeholders. Our Values We: Act in the public interest; Apply the highest standards of integrity and objectivity in all actions and decisions; Conduct our business in an open, transparent and courteous manner; Respect the rights of all stakeholders; Operate in an efficient and effective manner; and Respect and value each other as colleagues. Objectives In its Regulatory Strategy , the Board set the following objectives: Objective 1: Policy & Governance To be an effective, accountable and independent regulator, operating in the public interest, and operating to the highest standards of governance. Objective 2: Professional Standards To set Standards of Professional Conduct which are straightforward and clear; capable of being complied with and enforced; and are fair, proportionate and in the public interest. Objective 3: Discipline To ensure the thorough investigation of complaints concerning Chartered Accountants in a fair and proportionate manner to determine if any misconduct has occurred and take disciplinary action when required. Objective 4: Quality Assurance To ensure that Chartered Accountants provide services of the highest quality, competently, honestly and with integrity by operating a risk-based approach to monitoring through the annual assessment of information and periodic on-site inspection. Objective 5: Professional Authorisations To ensure that Chartered Accountants comply with their responsibilities to hold appropriate authorisations and registrations by operating an efficient and effective system of professional authorisation. In support of these objectives, the Board set a range of operational goals. The report on our other 2014 activities and achievement of objectives and goals follows; the report has been compiled under the following headings: Relationships and Communication. Standards of Professional Conduct. Professional Authorisations. Quality Assurance. Professional Conduct. 3

4 Chairman s Statement I am pleased to present the seventh Annual Report of the Chartered Accountants Regulatory Board (CARB). The Board of CARB is committed to delivering its responsibilities in an efficient and effective manner and in the public interest. In 2014 CARB continued to address a number of major projects which have been reported on to you previously. However, an update is appropriate. As readers will be aware, CARB appointed Mr John Purcell, as Special Investigator, to investigate the conduct of four members and one member firm, in relation to matters concerning Anglo Irish Bank. Mr Purcell completed his work in 2011 and his findings are available on the CARB website. However disciplinary hearings were adjourned at the request of the Director of Public Prosecutions (DPP) who expressed concern that the holding of public hearings by CARB and the publication of disciplinary findings might prejudice future criminal proceedings. CARB was eager to progress these cases to hearing before a Disciplinary Tribunal, however we considered it would be inappropriate to do so given the concerns of the DPP. Proceedings are continuing to take place before the Dublin Circuit Criminal Court. CARB also completed a review of the auditors of the Irish banking institutions covered by the Irish Government Guarantee Scheme in respect of the accounts for the 2008 year-end. The purpose was to determine whether the firms applied appropriate procedures in their audit work in the area of the valuation of loans and the provisions for the impairment of those loans and whether the audit firms complied with relevant standards, practice notes and other relevant legislation. This demanding review was carried out by CARB staff under the supervision of Mr David Spence, a distinguished international expert who has carried out similar projects. In addition to reports on each of the audits a high level report was produced by Mr Spence and adopted by the Board of CARB. This forms Part II to the Annual Report. Since its inception, CARB has attached great importance to its own independence in the service of the public interest and the generation of trust and public confidence in the accountancy profession. This independence encompasses both the composition of the membership of the Board and capacity for independent decision making. As part of the Institute s Strategy 2020 the Council of the Institute has committed to a review of the structure and delivery of its regulatory and disciplinary functions and new structural relationships have been proposed. The Board has engaged with Council in the development of the Institute s Strategy and looks forward to working further with Council on the new structure in line with CARB s continued commitment to regulate members of the Institute independently, openly and in the public interest. Once again I would like to acknowledge the hard work and commitment of the Board, the many members of the Committees, and our staff led by our Director, Ms Heather Briers. I would like to take the opportunity to thank them all; including those individuals who retired during the year. I look forward to our working together in the coming year. Don Thornhill Chairman 18 September

5 Director s Review Introduction In 2011 CARB published its Regulatory Strategy which set out the Board s Strategic Framework to guide it in setting annual Strategic Priorities and Outcomes to achieve the objectives. In December 2013 CARB published its Operating Plan CARB has important public interest obligations which require it to keep the Professional Standards with which members and firms must comply up-to-date, to investigate complaints against members and firms and take disciplinary action when necessary and meet its monitoring obligations, the targets of which are in many cases set by statute. During 2014 the CARB team has continued to work towards meeting these challenging obligations. The most fundamental piece of work completed during the year was the bank review the report of which forms Part II to this Annual Report; the Chairman has discussed this in his Statement. Professional Standards CARB s objective is to set Standards of Professional Conduct which are straightforward and clear. The Standards of Professional Conduct are reviewed frequently and are updated whenever necessary. During 2014 CARB revised and/or updated: the Public Practice Regulations; the Audit Regulations (UK & Republic of Ireland); the Code of Ethics; the Investment Business Regulations; and Consumer Credit (Transitional Arrangements) Regulations. Corresponding amendments were also made to the guidance documents to the above standards where necessary. Review of Disciplinary Process This significant project commenced in September 2012 with the aim of devising and, ultimately, implementing a more effective, more efficient disciplinary process which: protects the public interest; is fair to members; is broadly consistent with the regimes adopted by other accountancy bodies and other professional bodies; utilises the resources available to best effect; and is capable of being responsive to changes in the profession and regulatory environment. As members may be aware, CARB must ensure that preliminary approval is forthcoming from relevant oversight authorities before proposals with regard to Bye-Laws can be put forward for members consideration at a special general meeting. Throughout 2014 CARB continued to engage with IAASA, DETI (NI) and the FRC in relation to proposals for a new and improved disciplinary process. Consumer Credit The regulation of consumer credit was transferred from the Financial Conduct Authority (FCA) to the Office of Fair Trading (OFT) on 1 April 2014 with the effect that credit-related regulated activities now fall within the scope of the Financial Services and Markets Act The Institute's Group Consumer Credit Licence has ceased and the new legislative and regulatory arrangements permit certain credit-related regulated activities under the Part XX regime to be carried out by eligible members of Designated Professional Bodies. CARB introduced new Consumer Credit 5

6 (Transitional Arrangements) Regulations and Guidance to allow eligible firms to continue to provide credit-related regulated activities. CARB, ICAS and ICAEW submitted a draft DPB (Consumer Credit) Handbook to the FCA for approval and discussions are continuing. Once approval has been obtained the Handbook will replace the Consumer Credit (Transitional Arrangements) Regulations and Guidance. The Standards of Professional Conduct and related guidance are all available on CARB s website Submissions CARB meets regularly with the statutory authorities responsible for oversight of the profession and drafting legislation which impacts upon CARB s professional standards and regulatory and disciplinary functions. During 2014 CARB made submissions on a number of important areas, including: Insolvency: - Submission on the Insolvency Amendment (NI) Bill; and - Submission on the Insolvency Service consultation on strengthening the regulatory regime and fee structure for insolvency practitioners. Statutory Audit Directive and Regulation: - Paper to DBIS and DJEI (ROI) on the role of the professional bodies under the Directive and Regulation; and - Submission to the DJEI (ROI) on its consultation on implementing the Directive and Regulation. Money Laundering Supervision: - Submissions to Treasury in preparation for the Mutual Risk Assessment as part of the FATF Mutual Evaluation process. Investment Business: - Submission on Markets in Financial Instruments Directive II (MiFID II). FRC: - Submission on statutory enforcement powers of the Financial Reporting Council. IFAC: - Submission of Annual Compliance Plan. Professional Authorisations CARB continued to manage the applications for licences, registrations and authorisations and collect the various annual returns. A summary of the applications processed in the year is shown below. Granted 2014 Ceased 2014 Number at year end Practising Certificates ,430 Audit Registration Investment Business ROI Designated Professional Body Authorisation UK Insolvency Licence GB/NI Insolvency Practising Certificate ROI Annual Returns In addition the various annual returns must be completed by members and firms. 6

7 Once the returns are received by the professional authorisation team they are risk assessed. Summary details of the returns assessed in 2014 are included in the table below. Type of Return Number Assessed Firms Annual Returns 1,677 Individual Annual Returns 19,010 Quality Assurance All member firms and Insolvency Licence holders are subject to a monitoring visit to assess the firm s compliance with the Standards of Professional Conduct. CARB is committed to carrying out monitoring visits to firms and members providing services to the public adopting a risk-based approach. CARB has a number of statutory responsibilities including: Inspecting the work of registered auditors in accordance with the statutory cycles set out in Irish and UK law. Inspecting the work of firms authorised for investment business. Inspecting the work of Insolvency Licence holders under GB/NI legislation. Inspecting for compliance with the anti-money laundering legislation (UK and ROI). The Board determined that for 2014 the main priorities were to: Complete the bank review project; Ensure statutory monitoring obligations were met; Continue our monitoring regime for ROI Insolvency Practicing Certificate holders; Continue with our CPD monitoring programme; and Continue to work with our colleagues in ICAS to develop and implement a new risk based practice monitoring regime. A summary of the inspections carried out in 2014 is included in the table below. Inspection Type Number of Inspections Inspections Cleared in year 7 Satisfactory Not satisfactory Audit Investment Business ROI AML UK AML ROI Insolvency GB/NI Insolvency ROI 12 0* N/A N/A CPD Records *inspections were carried out in quarter 4 of 2014 the reports are due early In cases where the inspection results were not satisfactory, the Quality Assurance Committee (QAC) may impose restrictions and/or conditions, or can remove a licence of an individual or firm. In relation to audit inspections a total of 224 were carried out with 246 being cleared by the QAC

8 (this included reports brought forward from 2013). As in 2013, the majority of inspections undertaken in 2014 were to small, low risk firms who had not had an inspection for a considerable period of time as they were part of the old 10 year cycle. These firms were in many cases auditing very small companies eligible for audit exemption were it not for the fact that the company had been late filing its annual return with the Companies Registration Office. CARB were disappointed to note that the new Companies Act in Ireland will not address this issue thereby causing a needless financial burden on these small companies. The QAC and the Board were concerned to note that for 32% (40% in 2013) of firms the inspection demonstrated that audit quality was below that which would be expected. In cases where the QAC was not satisfied with the quality they have a range of options open to them: 39 firms required additional CPD to keep the members in the firms up to date on audit matters. In 25 cases the standard of work was so poor that the QAC deemed that the firms should not carry out statutory audits; o o In 24 cases the QAC allowed the firm to voluntarily surrender its audit registration; In one case the audit registration was withdrawn; In 35 cases, the firms were required to have external reviews carried out by another registered auditor or training organisation to ensure that the public was protected whilst the firm introduced new systems and procedures to undergo training to improve audit quality. In 51 cases a monetary penalty was imposed. CARB remains committed to the improvement of audit quality and immediately addressed this issue with a number of firms ceasing to be registered as statutory auditors and the remaining firms putting in place action plans with progress being monitored by the QAC. In addition a series of information updates were provided to firms in 2014 and this will continue in 2015 with the addition of a number of workshops to assist firms in improving audit quality. As the Chairman has reported, work on the Bank Review concluded in late 2014 with the QAC considering the reports on the individual financial institutions in The Report on the Bank Review is at Part II of the Annual Report. Discipline CARB is responsible for ensuring the proper investigation of complaints against members, member firms, affiliates and students of Chartered Accountants Ireland and taking disciplinary action when there is evidence that their professional performance has fallen short of the reasonable expectations of the public and other stakeholders. The procedures for the investigation of complaints are contained in the Institute s Disciplinary Bye-Laws. The main priorities in this area in 2014 were to: Complete the review of disciplinary procedures and amend the Bye-laws and regulations; and Manage the disciplinary process in an efficient and effective manner. The first objective is discussed under Professional Standards above. 8

9 In 2014, 15 of the 35 cases closed by the Complaints Committee with no case to answer were considered by an Independent Reviewer of complaints. In 10 cases, the Independent Reviewer found the decision of the Complaints Committee to be correct and two cases were referred back to the Complaints Committee to be re-considered. In the remaining cases the Independent Reviewer s report remained outstanding as at 31 December The number of complaints increased from 125 in 2013 to 163 in This included 69 complaints referred from the Quality Assurance Committee where members had continually failed to respond to requests for them to confirm they were in compliance with the CPD Regulations There were 178 cases closed in 2014 a summary of which is included in the table below. Complaint Closed by No case to answer Case to answer/ proven No further action Sanction agreed/ imposed Head of Professional Conduct Complaints Committee Disciplinary tribunal Appeal Tribunal Note: One further case was closed by the Complaints Committee with no finding as CARB was unable to trace the member. Where a case is proven the disciplinary body can impose a sanction, a summary of the sanctions are as follows: Committee/ Tribunal Reprimand Severe Reprimand Exclusion Complaints Committee Disciplinary Tribunal Appeal Tribunal In the above cases the disciplinary body can award fines and costs, these ranged from 200-6,000 for fines and ,000 for costs. In accordance with the CARB Publication Policy all decisions were published in Accountancy Ireland. In 21 (out of 23) the publication included the name of the member or firm. CARB Effectiveness CARB is committed to being an effective and accountable regulator, operating independently and in the public interest and operating to the highest standards of governance. In 2014 the main priorities were: To continue working with the Institute s Council and Strategy Development Board in further developing and clarifying CARB s independent role. To promote an effective working relationship with oversight bodies, particularly IAASA and the FRC including meeting on a regular basis. To engage with all relevant stakeholders to promote a better understanding of the regulatory role and responsibilities of CARB. 9

10 CARB s relationship with the Institute continues to be of great importance. Whilst CARB has been delegated its functions under the Institute s Bye-Laws and is operationally independent of the Council of the Institute, we continue to have many issues in common. The Chairman has reported on engagement with the Institute Council on the role of CARB. In addition CARB has continued to engage with the Institute and its members through: Regular meetings of the CARB / Institute Council; Liaison groups & working parties; Member briefings; CARB Website and CARB s Regulatory Bulletin. Working constructively with our oversight bodies is critical to CARB s success. During 2014 CARB met with its oversight bodies, IAASA, FRC, FCA, Central Bank and the Insolvency Services GB and NI to discuss important common issues. CARB also submitted reports on its activities, at least annually to these bodies and in relation to its money laundering supervision responsibilities to HM Treasury (UK) and the Department of Justice (ROI). CARB further engaged with these bodies where necessary through making submissions on consultations issued by them during the course of the year. CARB also participates in a large number of joint committees and working parties which regularly meet with the oversight bodies. During 2014, CARB was inspected by three of its oversight bodies; IAASA, FRC and the Insolvency Service. The Board is pleased to note that no major matters arose and as always, has taken account of recommendations made by the oversight bodies to enhance our procedures and where necessary, has implemented or has plans in place to implement, any such recommendations. Heather Briers Director 18 September

11 Governance Legal Structure The Chartered Accountants Regulatory Board (CARB) was established in accordance with the provisions of the Bye-Laws of Chartered Accountants Ireland (the Institute). Specifically, Bye- Law 41 sets out the functions to be carried out by CARB on behalf of the Institute. CARB is mandated by the members of the Institute. The Council of the Institute is charged, on behalf of the members, with ensuring that the Board achieves its objectives as set out in the CARB Regulations issued by the Council in accordance with the provisions of the Bye-Laws. The Board The Board has 12 members, seven of whom are not members of any recognised accountancy body. The Board has ultimate responsibility for leading CARB. It sets strategic and operational goals, develops policies and procedures to ensure its objectives are achieved, and ensures that the committees and executive are operating efficiently and effectively and in accordance with the policies and procedures set by the Board. The Board also has systems in place to ensure that its members, committees and staff act independently and with integrity and that any conflicts of interest are identified and managed. The Board had four formal meetings and one strategic planning meeting in The Board has delegated regulatory functions to a number of committees. Clear terms of reference for these committees are included in the Corporate Governance Framework. The terms of reference set out the authority under which the committees carry out their overall responsibilities, their specific functions and the policies and processes they follow. The Board and committees are supported by a full time executive, headed by a Director. The Director reports to the Board on policy and strategic issues, operational matters and performance against strategic objectives. The Director is responsible for staff recruitment, performance management and ensuring the policies agreed by the Board and the decisions of its committees are carried out effectively and efficiently. Appointment and Reappointment At its annual appointment meeting, held on 1 May 2014, in accordance with the CARB Regulations, the following members resigned and, as being eligible for reappointment, were reappointed by the Board: a. The Board approved the formal retirement of Dervilla Donnelly and Pat McArdle, pursuant to Regulation 8.2 of the CARB Regulations and the re-appointment of Dervilla Donnelly and Pat McArdle pursuant to Regulation 8.4 of the CARB Regulations; b. The Board approved the formal appointment of Paul W O Connor and Jennifer Cullinane pursuant to Regulation 8.5 of the CARB Regulations; c. The Board noted the formal retirement of Leo Martin and Terence O Rourke, as agreed for succession planning purposes. The Committees The committees, to which the Board has delegated specified functions, are divided into Policy and Compliance Committees. The Policy Committees work on behalf of the Board and include members of the Board. The Compliance Committees operate under the provisions of the relevant Standards of Professional Conduct and, for reasons of fairness, operate and reach their 11

12 decisions independently in relation to individual cases. Details of the Committees are included in Appendix B. The Executive In order to efficiently and effectively deliver its functions and achieve its objectives, CARB has an executive team of 32 people. The executive team operates under the Director and five member management team. The management team is committed to working with the Board to deliver its goals and objectives and to ensure its vision is achieved. Click on each of the following for full details of the Board, Committees and Executive. Internal Control CARB is committed to applying best practice in corporate governance, ensuring that there is proper accountability between the Board, the committees and the executive and that the interrelationships between the Board, the Institute and oversight bodies are clearly understood. The Board has established a Governance and Risk Assessment Committee to oversee and advise the Board on effective governance, to monitor and evaluate the risks facing the Board, to establish and review the Board s systems of internal controls and to report to the Board on the operation of the Board, its committees and staff in relation to their relevant mandates. Summary Report of the Governance and Risk Assessment Committee The Governance and Risk Assessment Committee met on four occasions during The Committee has delegated authority from the Board to carry out the duties and responsibilities as set out in its Terms of Reference as detailed within the Corporate Governance Framework. The Committee addresses these responsibilities on an on-going basis and the business conducted by the Committee during 2014 is summarised below. The Committee continued to focus on the implementation of the Risk Register. In particular, the Committee sought to ensure the continued integration of the Risk Register within the operational functions of CARB. This is highlighted by the regular review of the controls within the Risk Register, such as, the review of the Technical Security Testing of and the review of the Revenue Cycle within CARB. The Technical Security review formed part of the Institute s Internal Audit Plan 2013 focusing on a major review of the IT and Security operations throughout the Institute including CARB. The Committee has overseen the progression of the implementation of the recommendations from this review which are relevant to CARB. The ongoing progression of Project Aspire (the new Aptify system due to go live in 2016) has continued to be the focus of the Institute s IT Department. The Revenue Cycle will be reviewed in In addition, the Committee revisited the structure of the current Risk Matrix within the CARB Risk Management Policy and agreed to further develop this in 2015 to trial a numerical risk analysis. As reported last year, in response to the Internal Auditor s review of the overall role of the Governance and Risk Assessment Committee, the Committee commenced a review of its own effectiveness which included the completion of a Self-Evaluation Questionnaire by the Committees within CARB and also by the individual members of the Governance and Risk Assessment Committee. Finally, in recognising CARB s continued commitment to regulating members of Chartered Accountants Ireland in the public interest, the Committee continued to monitor quarterly 12

13 reports from the Professional Conduct Department on the involvement, actual or potential, of members of Chartered Accountants Ireland in financial public concern cases. Oversight CARB is responsible for the regulation of Chartered Accountants. The Institute is a recognised professional body under the relevant Companies Acts in the Republic of Ireland, Great Britain and Northern Ireland, the Financial Services and Markets Act, 2000 in the UK, the Investment Intermediaries Act, 1995 in the Republic of Ireland, and under insolvency law in Great Britain and Northern Ireland. The Standards of Professional Conduct set by the Board and the manner in which the Board ensures compliance with the Standards is subject to independent oversight by the following statutory bodies and agencies. The Financial Conduct Authority The Irish Auditing and Accounting Supervisory Authority The Central Bank The Financial Reporting Council The Insolvency Service (GB) (DBIS) The Insolvency Service (NI) (DETNI) 13

14 Financial Results CARB is funded by the Institute and its costs and income are included in the Consolidated Financial Statements of Chartered Accountants Ireland for the year ended 31 December Those Financial Statements have been subject to audit. The Board is mindful of the need to operate efficiently and effectively including the management of the financial resources available to it. The costs incurred by the Board in 2014 are detailed below. They fall into two main categories; the direct costs of regulation and the costs of support services provided by the Institute. The main components of direct costs are the costs of staff directly assigned to the Board, administrative costs incurred directly by them and monitoring and publication costs. Also included in this category is a substantial sum for the fees charged by oversight bodies; compensation schemes and the direct costs of disciplinary cases which can vary substantially depending on the number and complexity of cases. The policy of the Institute is that the costs of discipline (not funded by fines and other disciplinary charges) are funded by a charge against members generally and collected by the Institute. For this reason, the tables below show disciplinary costs separately. All other expenditure is funded by invoices issued directly by the Board to practising members and firms. Overview of Results for Detailed financial information is included in Appendix A. The total costs of regulation are summarised below. Costs Year to 31 December Staff Costs 2,498,444 2,827,826 Other Operating charges (excluding public concern 2,466,435 2,339,434 case costs) Total Costs (excluding Public concern case costs) 4,964,879 5,167,260 Public Concern Case Costs 2 2,078, ,107 Total 7,043,041 5,732,367 Funding Year to 31 December CARB 3,826,875 3,719,245 Institute (including public concern case costs) 3,143,006 1,551,415 Transfer to Designated Funds 73, ,706 Total 7,043,041 5,732,366 The actual costs of regulation (before public concern cases costs) for 2014 were 4,964,879 compared to the expected costs of regulation of 4,700,966 (an unfavourable variance of 263,913). 1 All figures have been supplied by the Accounts Department of the Institute. 2 This does not include an amount of 1,386,088 (2013: 222,461) for the bank review which is included in the costs of monitoring. See Appendix A, Note 5. It does include costs of 1,386,000 for two cases conducted by FRC in relation to member firms in the UK. * The costs disclosed above are incurred directly in the running of CARB s regulatory and disciplinary activities. 14

15 The main reasons for the variance relate to costs of the bank review which extended throughout 2014 (unfavourable variance of circa 250,000) offset by costs savings in other areas of regulation and discipline. At 31 December 2014, CARB employed 32 staff (2013: 33) of whom 10 (2013: 10) were inspectors; this excludes one full time inspector operating as a consultant. There was one vacant inspector position at the year end. The costs of oversight in 2014 include the total charge levied by Central Bank, and the insolvency oversight authorities; one third of the costs allocated to the Institute for the FRC and IAASA are charged to CARB. The basic costs of the FRC are currently shared equally between listed companies, DBIS and the profession. The profession s share is allocated between the accountancy bodies. The costs of IAASA are shared 40% by the government and 60% by the prescribed accountancy bodies, which includes the Institute. All Board members received an annual fee for their membership of the Board. In addition, the non-accountant members of the committees received a fee for meetings attended. Each committee member spends on average 100 to 150 hours annually on committee affairs. The monitoring costs include the amount paid to ICAS for the monitoring of insolvency practitioners, which CARB subcontract to them; and the cost of assisting CARB in its audit monitoring programme due to the bank review project. 15

16 Appendix A Financial Information Summary of Costs and Funding TOTAL COSTS: Note Regulation Discipline Total Total Staff Costs 2,005, ,584 2,498,444 2,827,824 Direct Costs 1 891, ,565 1,229,661 1,190,249 Allocated Costs 2 364,744 29, , ,605 Administration Costs 3 658, , , ,583 Total Costs 3,920,495 1,044,384 4,964,879 5,167,261 FUNDED BY: Note Regulation Discipline Total Total CARB 6 3,763,125 63,750 3,826,875 3,719,248 The Institute 82, ,913 1,064, ,307 Transfer to designated regulatory funds 6(i) 58,660-58, ,849 14,500-14,500 (9,143) Total Funding before 3,919,216 1,045,663 5,167,261 public concern case costs 4,964,879 Public Concern case costs - 2,078,162 2,078, ,107 Total Funding 3,919,216 3,123,825 7,043,041 5,732,368 NOTES Note 1: Direct Costs Note Regulation Discipline Total Total Fees Charged by Oversight 4 341, , ,159 Bodies Investigation & Discipline - 338, , ,175 Monitoring Costs 5 512, , ,852 Other: Compensation Scheme 14,500-14,500 8,579 Joint Audit Register 4,758-4,758 4,265 Professional Indemnity 3,095-3,095 3,182 Insurance Other 14,596-14,596 14,037 Total Direct Costs 891, ,565 1,229,661 1,190,249

17 Note 2: Allocated Costs Chartered Accountants Ireland support services Regulation Discipline Total Total Accommodation Costs 202,704 29, , ,708 Depreciation 40,378-40,378 40,378 Computer Expenses 114, , ,345 Other 7,496-7,496 7,174 Total Allocated Costs 364,744 29, , ,605 Note 3: Administration Costs Regulation Discipline Total Total Board Costs 213, , ,377 Recruitment Costs Communications 49,574-49,574 43,022 Other: Telephone/Postage/Stationery/ 112,968 34, , ,760 Photocopying/Publications Legal and Professional Fees 29,462 8,918 38,380 39,581 Committee Costs 28,057-28,057 30,816 Travel 194,198 2, , ,169 Training 11,893-11,893 4,677 Sundries 5,308 1,870 7,178 6,903 Functions/Hospitality & Marketing 14,198-14,198 4,728 Other Independent review Bad Debts - 136, ,224 82,550 Total 658, , , ,583 Note 4: Fees to Oversight Bodies Regulation Discipline Total Total IAASA and FRC 296, , ,944 Insolvency Oversight Bodies 18,329-18,329 17,929 Investment Business Oversight Bodies 27,249-27,249 29,286 Total 341, , ,159 17

18 Note 5: Monitoring Costs Regulation Discipline Total Total Insolvency 119, ,051 78,511 Audit 58,624-58, ,799 Bank Review 334, , ,542 Total 512, , ,852 Note 6: Analysis of Funding Regulation Discipline Total Total Regulatory Fees Firms 2,380,616-2,380,616 2,373,175 Practising Certificate Fees 934, , ,425 Affiliate Fees 99,857-99,857 97,704 Regulatory Penalties etc. 86,512-86,512 65,782 Insolvency Licence Fees 102, ,896 96,670 Insolvency Practising Certificate 136, ,327 30,235 Fines and Costs - 63,750 63,750 76,535 Compensation Levy ,722 Bank Interest ,000 Sundry 20,000-20,000 - Regulatory Visit reschedule 2,829-2,829 - Total 3,763,125 63,750 3,826,875 3,719,248 Note 6(i): Transfer to Designated Funds Regulation Discipline Total Total Equalisation 58,660-58, ,849 Compensation Fund 14,500-14,500 (9,143) Total 73,160-73, ,706 18

19 Note 7: Public Concern Case costs: The Institute is liable to pay the costs of public concern cases related to members or member firms which have been initiated by the Complaints Committee of Chartered Accountants Regulatory Board (CARB) in Ireland and the Conduct Committee of the Financial Reporting Council (FRC) in the UK. The FRC Conduct Committee is responsible for operating and administering the independent disciplinary scheme covering members or member firms of the Institute and certain other accountancy bodies in the UK. The Institute makes provision for estimated costs of current cases, to the extent that there is an unavoidable present obligation, arising from a past event, based on estimates provided by CARB and the FRC. The Institute considers the adequacy of the provision through a review of past case cost estimates and discussions of current cases with relevant individuals. However, the accuracy of these case cost provisions is subject to a significant degree of judgement and is dependent on assumptions made about the progress of cases and assessment of information provided by CARB and the FRC. Provision is also made for the costs to complete enquiries initiated by the Irish Auditing and Accounting Supervisory Authority (IAASA) under section 23 of the Companies (Auditing and Accounting) Act, The S.23 cases relate to IAASA enquiries into compliance by prescribed accountancy bodies with their approved investigation and disciplinary procedures. The provision at 31 December 2014 includes 945,000 (2013: 1,183,000) in respect of three cases involving members/member firms under the jurisdiction of CARB. The provision includes 1,666,000 (2013: 280,000) for two cases conducted by the FRC in relation to members/member firms in the UK. IAASA S.23 cases amount to 80,000 (2013: 105,000). 19

20 Appendix B Functions of the Governance, Policy and Compliance Committees Governance and Policy Committees 3 Committee Governance Governance and Risk Assessment Planning, Budget and Performance Nominations Committee Summary of Functions Develop and monitor the Board s Corporate Governance and Risk Management Policy Develop Strategic Plans and Annual Reports including the associated budget on behalf of the Board and to review the performance of the executive. Ensure that there is a formal procedure for the appointment of new, appropriately experienced and qualified, members to the Board. Policy Professional Standards Develop and amend professional standards on behalf of, and for the approval by, the Board. Compliance Committees Committee Quality Assurance Committee Insolvency Licensing Committee Quality Assurance Review Committee Quality Assurance Appeal Committee Complaints Committee Disciplinary Committee Appeal Panel Summary of Functions Deliver professional authorisation and monitoring functions Deliver professional authorisation and monitoring functions in relation to insolvency practitioners in GB/NI Hear reviews of decisions of the Quality Assurance Committee and the Insolvency Licensing Committee Hear appeals against decisions of the Quality Assurance Review Committee Investigate complaints against members, member firms, affiliates and students and determine if there are prima facie cases of misconduct. Hear cases referred by the Complaints Committee. Hear appeals against decisions of Disciplinary Tribunals. 3 Details of the members of the committees are available on the or here. 20

21 PART II: Report on the Review of the Audit of Impairments for Irish Covered Institutions for Financial Years Ended between 30 September 2008 and 31 March 2009 Part II of the Annual Report has been published separately and is available on 21