The Role of Auditors in Spotlight Again

High Court papers have been lodged on behalf of the FAI over matters relating to Deloitte’s handling of the audit of the Association in the later years of its 23 year relationship.

The company resigned from its position at the AGM of 2019 following significant criticism and a central role in questions over how the FAI accounts had got into such a mess.

In a statement issued yesterday they say that while not willing to comment on legal issues they wanted to reiterate “that we take our statutory obligations as auditors very seriously and have acted accordingly, including reporting to the relevant authorities in accordance with our professional and legal obligations where necessary.”

“We have a robust audit process that is in line with those obligations. As a statutory audit firm, we are bound by strict obligations of confidentiality in respect of audited entities.”

The clean bill of health that an audit gives was cited as reason behind Sport Ireland’s continued provision of grants and distribution of Government funding at a time when the Association was in crisis underneath the water line.

Writing in an editorial on Sport for Business on December 18th last year we said that “Sport Ireland’s position is that as a funding but not a regulatory body they rely on the independent opinion of auditors to state that the Board and the organisations they are passing money to have been keeping proper financial records and maintaining a sustainable model.”

“Deloitte’s filing of an H4 form suggesting the FAI had acted contrary to these practices was one of the major body blows that created the perfect storm that unravelled what had clearly been building up over the best part of a decade.”

“The reason for their discomfort is not that they blew the whistle, that is their role when needed. The problem is the 21 years of accounts they saw no difficulty with since 1997.”

“That was the first year they came on board as Auditors. In 2018 their fees were an extraordinary €250,000.”

“It is not yet known what they will charge against the 2019 accounts or whether they will be in a position to do so.”

“An Taoiseach Leo Varadkar said the previous day in the Dáil that it was good governance to rotate Board directors and auditors so it is highly likely that one of the other major firms like PwC or KMPG will be brought in to the FAI.”

“The GAA accounts last year were audited by PwC but before that Mazars had been on their rotation.”

“The IRFU may need to look afresh as Grant Thornton have been their regular auditors going back to 2003, the furthest records we could easily access this morning.”

“Auditors say that they rely on the Board of Directors to sign off on the veracity of statements and accounts over which they then look.”

“The outside world and funding bodies including the government though look to the auditors to do more than take somebody’s word for it. A level of due diligence is expected and demanded. The existence of lucrative and long term relationships are probably not the best basis for this trust.”

Putting the issue before the courts will give rise to further questions over the actual role of Auditors in general and whether Directors signing off on accounts is sufficiently robust when such significant fees are being paid.

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