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Three large audit firms KPMG, EY and PwC, audited the 2008 accounts for the six Covered Institutions1 , and Deloitte audited those of Ulster Bank and gave unqualified audit reports to the effect that the banks’ financial records and statements were a true and fair view. Yet within a few months of providing those audit reports, the Government had to rescue the Covered Institutions through a blanket bank guarantee and a programme ultimately costing some €64 billion. That programme was funded by monies borrowed by the Government at highly unfavourable interest rates and involved substantial risk to the State.
This Chapter will examine how such a significant bailout was required for each of the six Covered Institutions in circumstances where unqualified audit reports had issued in respect of each of the Covered Institutions within the previous two years.
This requires consideration of the performance of external auditors in the lead-up to the financial crisis and of the following questions in particular:
As noted previously, in certain limited cases, the Joint Committee felt that engaging with certain relevant persons or directing that certain documents be furnished created too great a risk in terms of prejudice to criminal proceedings. Accordingly, the Joint Committee worked within these parameters in issuing its directions.
In order to assess this, it is necessary to understand the values and limitations of an audit. Critical in that respect are the following:
The limitations of an audit must be borne in mind in considering the substantive question of whether the external audits were conducted to the requisite technical standards.
Although the‘notes’are generally constrained by‘point in time’and‘look-back’, those features are also beneficial for enabling past risk to be described. Despite this, up to 2007,4 the ‘Notes to the Accounts’ in the Financial Statements relating to the Covered Institutions gave the reader little detail on the large loan concentrations in previous years.
The following table identifies the external auditors for each of the Covered Institutions from 2002 to 2010, being the time when the Troika Bailout Programme was put in place.
| Bank | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
|
AIB |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
|
EBS |
EY |
EY |
EY |
EY |
EY |
EY |
EY |
KPMG |
KPMG |
|
BOI |
PWC |
PWC |
PWC |
PWC |
PWC |
PWC |
PWC |
PWC |
PWC |
|
Anglo |
EY |
EY |
EY |
EY |
EY |
EY |
EY |
DT |
DT |
|
PTSB |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
|
INBS |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
KPMG |
N/A |
Source: All Auditors names taken from Published Annual Reports.
In the 9 years up to the Troika Bailout, the three large audit firms not only dominated the audits of Ireland’s Covered Institutions but they did so for extended, unbroken periods. During the same period, Deloitte audited the accounts of Ulster Bank
The Joint Committee was informed that the Chartered Accountants’ Regulatory Board (CARB)5 reviewed the 2008 audits of each of the Covered Institutions and, where relevant, some 2009 audits.6 This review was designed to determine whether the auditors of the Covered Institutions complied with the relevant auditing standards when carrying out the audit of the loans and the associated provisions for 2008/2009. The review did not set out to determine the appropriateness of the auditing standards.
Each of the witnesses who gave evidence to the Inquiry on behalf of the four large audit firms asserted that they had complied fully with the auditing rules and standards of the time.7
In October 2010, the European Commission issued a green paper entitled “Audit Policy: Lessons from the Crisis. ” The paper set out a series of proposals for improving the statutory audits of public-interest entities such as banks by enhancing auditor independence and making the statutory audit more dynamic. Amongst the key proposals set out in the green paper were:
Of special relevance to this Inquiry is the proposal in the green paper on debtor concentrations where it is recommended that, in future, an external audit of a financial institution should comprise a specific and detailed review of the institution’s loan book on behalf of the Financial Regulator or equivalent authority. Notably, the review could include analyses of loan concentrations which would be free from the constraints of the accounting standard IAS 39. Currently this proposal has not been brought into law in Ireland.
In addition, in order to further strengthen the auditors’ reporting to the Financial Regulator, as noted by Paul Smith, former Managing Partner of EY, these regulatory returns should be subjected to an independent third party audit, as is the current approach within insurance companies.
In evidence he said:
“Insurance companies are required to provide detailed information to regulators in their regulatory returns and to ask an external auditor to provide an opinion on those returns. It seems logical…that banks and other financial institutions could be subject to the same requirements. Their returns could be independently audited as well. That would improve the transparency of the system and increase regulators’ confidence in the information that financial institutions provide. It would also ensure … it would also serve to ensure that auditors were aware of current trends in the Financial Regulator.”8
The Joint Committee would strongly endorse this approach.
The role of auditors, if any, in identifying, assessing and reporting on risk, especially of a business critical nature, featured strongly throughout the Inquiry. The question arises as to whether the external auditors could have done more to flag emerging risks as regards the level of loan concentration in the banks? In the search for an answer, the assessment of external auditors provides a useful starting point.
Banks, through their Audit Committees, conduct periodic reviews of the effectiveness of external auditors. In the case of BOI, for example, it is noteworthy that, following review of PwC’s 2010 audit, the Group Audit Committee (GAC), commented that“the external auditors were performing effectively”even though it had“generally not been part of the terms of engagement of external auditors to look at a bank’s risk model.”9 It is difficult to reconcile the fact that BOI produced healthy financial statements, which had been audited, shortly before that bank required a capital injection from the Government of €4.7 billion. However, under IAS 39, as the auditors could not have due regard to future anticipated credit losses, this would appear to have caused difficulty with the criteria under which the financial statements were audited.
Clearly in this case, the GAC was challenged as well and to its credit, it sought to determine what guidance could be offered in order to avoid repeating the problems arising from inadequate loan impairment provisions.10
One of the purposes of this Chapter is to examine the question of what an external auditor could or should do if the auditor has serious concerns about a bank’s excessive exposure to land and development lending. A number of issues arise for consideration in this regard:
Limited role of an auditor: As already mentioned, the audit firms maintained that it was not their role to advise their clients on the risks attaching to a disproportionate reliance on property-related lending. Dargan Fitzgerald Audit Partner, EY, said:
“Disagreement with the bank’s commercial decisions [and drawing attention to the attendant risks] would not have been a basis to resign or qualify the previous year’s Financial Statements, unless, for example, those financial statements were misstated or there were corporate governance issues which had led the auditor to doubt the integrity of management.”11
Generic treatment: During the years leading up to the financial crisis, the‘Notes to the Accounts’did not raise alarm bells over property-related loan concentration levels or associated risks.
Loan provisions: A loan provision can be described as an expense to account for future losses on loans underwritten by a bank. Under the International Accounting Standard IAS 39, which was adopted by the Irish banks in 2005, only recognised losses – and not anticipated credit losses – can be provided for.
Since the financial crisis, IAS 39 has been heavily criticised on two grounds in particular:
When the downturn came in 2008, the financial institutions were not permitted by the rules of IAS 39 to make impairment provisions for all of the losses they were forecasting for subsequent years. Thus, instead of making provision in the audited accounts, AIB, for example, found itself having to disclose to the market in February 2009 that it expected to book further losses of between €4.6 billion (base case) and €6.7 billion (stress case) in 2009 and 2010. However, during Joint Committee questioning of the external auditors, it became evident that there is in fact an exception to the‘rainy day’rule that potentially could have been invoked.12
IAS 39 does not allow banks to create or hold general provisions in the good years to offset problems in the bad years. The concept of booking a“general provision”or increasing the provision amount calculated under the accounting standard through the“Incurred but not Recognised”(IBNR) criteria was raised with Paul Dobey, Partner at KPMG, during the Inquiry hearings.13 Paul Dobey explained that the IBNR can be used to calculate a provision, where a customer of a bank, who has funds and is currently up to date with their loan repayments, but who will have cash flow problems in the future and so may not be able to repay their outstanding loan.14 However, the use of IBNR, as outlined under IAS 39, to increase the loan provisions would not have resulted in the banks’ loan provisions matching the actual loss booked when the banks sold their loan portfolios to NAMA. The loan provision loss percentage adopted in the provision calculation under the“rules”of the IBNR must be based on previous loss experience. The level of loss experienced by the banks as a result of the loan portfolio transfers to NAMA was unprecedented.
An example of a provision calculated under IBNR criteria would be, where a bank had a number of home loans in a town and the borrowers were employed in a local factory. If it were announced that the factory was closing down, the bank would know that a certain percentage of these borrowers would not be able to repay their loans (a‘known unknown’). Under the IBNR criteria, the bank would be allowed to use its experience of a previous similar situation to extrapolate the default percentage and calculate the default rate. In short, the bank could make provision for such loan losses.
The Joint Committee formed the opinion that the management teams within the banks arguably had the capacity to ensure that critical business risk would feature in the deliberations during audit. Alan Merriman, Director of Finance, EBS, said:
“If management in any bank or any building society felt that the loan loss provisions under IAS were shy or weren’t appropriate, it was open to management to share that through voluntary disclosure or other data. So, tables giving statistics on loan defaults, tables giving insights about future expected losses, they were all open to banks, regulators, everybody, to try and get that type of information.”15
Notably though, he added that, despite the external auditors having had no difficulty with impairment provisions being made on the development finance book for the 2008 accounts, the Central Bank and Financial Regulator raised this as an issue:
“… they [the Central Bank and Regulator] were concerned that our provisioning might cause wider difficulties for the other banks and we were cautioned at the highest of levels to be very sure that what we provided was really needed.”16
The audit concept of “going concern” needs to be explained as it is one of the fundamental assumptions underpinning the basis on which Financial Statements are prepared. Points of note include the following:
Financial Statements, which are prepared on a going concern basis, state, in effect, that the business entity will continue to operate into the foreseeable future without the need or intention on the part of management to liquidate the entity or significantly curtail its operational activities.
Prior to approving Financial Statements prepared by management each year, the board of a financial institution is required to assess the appropriateness of the going concern basis. This involves:
The auditors assess and conclude on the appropriateness of the Directors’ conclusion in adopting the going concern basis for the preparation of the Financial Statements by the directors. Of particular note is that the auditors form a view as to whether there are material uncertainties about a financial institution’s ability to continue as a going concern which need to be disclosed in the statements and referred to in the audit report.
When assessing whether the external auditors appropriately reviewed and assessed the future business viability of the banks, a number of considerations arise:
Up to and including 2006, the assessment of the external auditors of the Covered Institutions was that the going concern basis of preparation of the banks’ Financial Statements was appropriate. Those assessments took account of available economic assessments and forecasts.17
The auditors and other witnesses referred to the sense of economic security and favourable outlook enunciated by widely respected sources of authority in the pre-crisis period. Brendan McDonagh, CEO of NAMA, described the connection between positive commentary and the feel-good factor in the following terms:
“All we had were publicly available documents such as credit rating agency reports, market updates, annual reports and broker/analyst reports. Not surprisingly, by reference to this published material from respected and financially literate commentators from 2005 to 2007, one could conclude that, while there were risks, there were no strong warning signals of the financial carnage that would ultimately emerge.”18
In 2007, economic conditions began to deteriorate and, as they did, audit firms became increasingly concerned about the effects of the worsening financial markets on the liquidity and funding positions of banks. In this regard, extensive loan reviews on the property and construction loan portfolios were conducted, identifying the top exposures and determining whether appropriate judgement around provisioning had been taken.19 Similar detailed analyses of the quality of loans where conducted in the other banks with data showing details of deterioration.20
Given the unfolding economic circumstances and the fundamental property lending and funding challenges being faced in 2007 and into 2008, greater emphasis came to be placed on the preparation of detailed going concern status by the banks’. This included contingency liquidity plans and greater Bank Audit Committee oversight in order to satisfy auditors that the going concern basis of preparation of a bank’s Financial Statement was appropriate.21
The Financial Reporting Council (FRC)22 issued two reports, one at the end of 2008 and the other in October 2009, providing comprehensive guidance to Directors on how to fulfil their responsibilities with regard to going concern assessment.23
General auditor concerns about the impact of the developing financial crisis on the Covered Institutions’ audits led the four largest audit firms in Ireland, Deloitte, EY, KPMG, and PwC, to meet as a group with the Financial Regulator in early 2008.24 Issues considered during this meeting included auditor-regulator communications, bank liquidity, asset valuations, provisioning and 100% mortgages.25
On occasions, some audit firms interacted directly with the Financial Regulator and the Department of Finance prior to finalising their opinion on the going concern preparation of a particular bank’s Financial Statement.26 The purpose of this was to ensure a full understanding amongst the authorities of the risks now evident in the financial system and of the actions being taken by the Financial Regulator, the Central Bank and the Irish Government to address these risks, especially through the availability of Emergency Liquidity Assistance (ELA).
During this period (2008 and 2009), various external Bank audit reports commented on the worsening economic conditions, citing in particular the unpredictability of asset values, the significant deterioration in property loan portfolios, the loan loss provisioning in an illiquid market and the need to conduct extensive loan reviews, particularly on large exposures.
Yet despite the absence of strong language in the audit report commentaries prior to 2007,27 the option to reflect the significant and accelerating uncertainties in the audit commentary was not taken and only ‘Notes to the Accounts’, the preparation of which are the responsibility of the directors, were made. Accordingly, it was necessary to extrapolate the risks associated with the business models adopted by the banks from the reports.
More fundamentally, Modified Audit Opinion, including an‘Emphasis of Matter’paragraph – a note indicating significant uncertainty or concern – was not raised in any of the accounts for 2007, 2008 or 2009 of any of the Covered Institutions to draw the reader’s attention to the severe difficulties unfolding and gathering pace in the banks over that period.28
For all the Covered Institutions, the going concern basis of preparation was considered appropriate in the 2008/2009 Financial Statements. That position was underpinned by assurances received from the Department of Finance including the Government Guarantee.29 As Dargan Fitzgerald said, the Guarantee had become“a key factor”when assessing the bank’s going concern designation.30
It was not until 2010, when the assurances provided by the State Guarantee ceased, that Emphasis of Matter started to appear in banks’ annual accounts31 e.g. those of AIB and EBS. This suggests that the provision of the State Guarantee influenced the behaviour of the external auditors in their assessments of the banks’ going concern designation. Terence O’Rourke, former Managing Partner of KPMG, gave evidence was to this effect:
“In respect of the financial year 2010, when the general bank guarantee had expired and all of the previous assurances from the Central Bank and Department of Finance in relation to the continued support of the banks were no longer available to us, KPMG modified our audit opinions.”32
NAMA provided detailed evidence on what it regarded as poor lending practices and controls on property-related lending by the Covered Institutions (see Chapter 9, NAMA). Excessive exposures to a small number of major debtors, massively over-valued loans, extensive non-performing and under-performing loans, significant interest roll-up, weak and sometimes non-existent collateral, and risky reliance on solicitors’ undertakings were amongst the main deficiencies referred to by NAMA.
NAMA imposed an aggregate haircut of almost 58% across all loans transferred to it whereas the banks had estimated that the loan discounts would be 30%.33 From the perspective of external audit, a number of factors must be considered:
1. Property-related exposures
Of particular relevance in this context is a term called ‘Own Funds’ . This is a critically important prudential monitoring ratio designed to prevent over-exposure to any one sector or series of related sectors.
The Central Bank’s Licensing and Supervision Requirements and Standards for Credit Institutions (the “Standards” ) provided in the pre-crisis years that a credit institution should not have risk assets (e.g. loans issued) amounting to more than 200% of shareholder funds ( ‘Own Funds’ ) in any one sector of business or economic activity. Where considered to apply to two or more separate sectors, the Standards provided that the limit was 250%. In its totality, the Irish financial system over-extended the limits by a considerable margin.
John McDonnell, Partner with PwC, gave similar evidence in relation to the audits of the BOI’s accounts, citing adherence to prevailing rules and regulations and the introduction of IFRS 7 reporting requirement in January 2007 as having led to a “substantial increase” in information on loan disclosures.34
2. Challenge to the banks’ business strategies
Auditors have asserted that it is not their role to report critical risk in a bank to the Central Bank/ Financial Regulator, nor is it their role to question any client’s business model and/or strategy. During the Inquiry, the auditors who gave evidence were questioned in relation to this position.35
For example, John McDonnell was asked whether there was any consideration given to the fact that it may be an issue of interest to the Financial Regulator that one of the main banks in Ireland had, for example, 44% of its non-mortgage related lending in property and construction.
John McDonnell replied:
“…the Regulator has its own regular returns [from the banks] … and those returns deal with various concentration risks. So the Regulator has its own mechanism to be well aware of what the banks do … So, the fact that we see something in our work which as part of our audit doesn’t lead us to report per se to a Regulator in that situation because the Regulator has its own framework.”36
The belief that the Financial Regulator already had the requisite information may, in some instances, have influenced the nature of the content reported by external auditors. Client confidentiality considerations may also have inhibited auditors from reporting critical risks arising from a client’s business model or strategy – a situation which is different in the UK.37
Nonetheless, it is clear that avenues were open to external auditors to bring matters of significant importance to the attention of the Financial Regulator. In this regard, John McDonnell said:
“we have an obligation to report certain matters to the Financial Regulator…it’s only if something comes to our attention….when we are completing our work as auditors…looking at risks of material misstatement in the financial statement.”38
Dargan Fitzgerald said:
“the auditors were constrained by client confidentiality and could only have divulged confidential information to the Financial Regulator in limited circumstances, such as where there had been a regulatory breach.”39
In the lead-up to the financial crisis, formal and informal engagements were taking place across a number of management strata, including top management level. This was supported by significant financial reporting, including copies of findings arising from discussions between the external auditor and the Audit Committee as part of each reporting cycle.
There were also formalised guidance procedures, such as Auditing Practice Note 19(1), which is designed to assist auditors in applying audit standards of general application to particular circumstances and settings. Included in Practice Note 19(1) is guidance for circumstances where:
“…the auditor concludes that a matter does not give rise to a statutory duty to report but nevertheless feels that in the public interest it should be brought to the attention of the Financial Regulator.”40
3. Interest roll-up
Loans in respect of ‘interest roll up’ amounting to €9 billion were transferred to NAMA.41 These types of loans arose from the borrower either having been offered an ‘interest repayment holiday’ by the bank or where the borrower was not able to make an interest repayment on their loan.
The external auditors were not questioned on the treatment of interest roll-up in the accounts, nor were they asked to comment on the evidence given by NAMA in this regard. However, in response to a question from the Joint Committee as to when a loan could be regarded as impaired under IAS 39, Paul Dobey said:
“well, non-payment of capital or interest, in accordance with the contracted terms. That’s difficult, as you can understand, in relation to loan where there’s roll up of interest”42
It is not apparent whether or not the external auditors identified interest roll-up loans, where the borrower was not able to make an interest repayment, and/or insisted that these amounts be included in the loan provisions of the bank.
4. Valuation Methodologies
In the 18 months to 2 years leading up to the transfer of impaired assets to NAMA, significant haircuts were being noted on the banks’ values. From the evidence of witnesses, it is clear that the ultimate discount applied by NAMA did not come as particular surprise.43
While it is true that differences in methodology and timing issues influenced the scale of the discounts applied by NAMA, it would appear that poor and non-existent collateral for property-related loans may have been of some significance.44 From an audit perspective, a recommendation – even if informally conveyed – to senior management to probe the underlying collateral of a very large loan(s) would have been warranted in certain circumstances, such as new market indicators casting serious doubts on the reliability of a valuation.
IAS 39 was adopted by the Irish banks in 2005 for the calculation of their loan impairment (‘provision’) figure. Unlike its predecessor, Irish GAP, IAS 39 does not allow for a general amount to be set aside for unknown bad debts.
Whatever the merits of that restriction in general business settings, IAS 39 was referred to by Eugene Sheehy as“a totally nonsensical accounting standard from a banking point of view”and Michael Buckley said that probably“99% of people in the banking industry held this view as well.”45 Notwithstanding the consensus amongst bankers on the serious shortcomings, this IAS 39 was widely adopted, in Ireland and abroad. However, there were exceptions, for example the United States and Spain.46
When asked by the Joint Committee whether he thought IAS 39 becoming IFRS 9 in 2018 was 15 years too late, Frank Daly, Chairman, NAMA, replied:
“It is. And again, certainly as a lay person, I’d find it difficult enough – and I’m not an auditor and I’m not an accountant … the problem seems to have been recognised two to three or maybe more years ago. It’s a puzzle to me as to why it is taking so long to actually… because it will only kick in in respect of reporting periods after 1 January 2018.”47
Brendan McDonagh, CEO, NAMA, also stated that a fatal flaw of IAS 39 was that:
“…they [the banks] weren’t obliged to recognise those losses [losses on loans acquired from institutions by NAMA]…at 31 December 2009 because under IFRS effectively the NAMA event had not yet happened. It was something that was going to happen after 31 December, and that is the fatal flaw in IAS 39.”48
Eugene Sheehy said that the United States regulator had advised that, while compliance with IAS 39 was advisable, it could in fact be ignored. Consequently, US banks did just that, and ignored it. It also appears that a similar position was adopted by the Spanish banks because the Spanish Regulator had advised that banks had already made additional provisions.49
Jim O’Leary, Economist and board member with AIB Group, estimated the AIB’s losses across the cycle at 0.35%, whereas Nick Treble in 200950 estimated a charge of 0.66% on average for the years 2008 to 2010. In reality, the average provision for that period turned out to be 4.7% - some 7 times greater than Treble’s estimate. Thus, Jim O’Leary concluded that it was the unexpected loan losses – not the expected ones – that brought down AIB.51
On the basis of evidence provided to the Inquiry, it seems clear that the external audits of the Covered Institutions were conducted in accordance with the standards and rules of the time. However, as the auditors were precluded from taking account of anticipated future losses, the audited Financial Statements did not identify, describe or report on critical business risks in the financial services sector.
Arguably, however, the banks could have brought such risks to the attention of the auditors and the banks could have then have included them in‘Notes to Accounts’.
The disconnection between the audit function and risk assessment enabled healthy Financial Statements to be issued very shortly before the banks required re-capitalisation. The Financial Regulator received these healthy reports, which had been audited, and it appears that no issue was raised by the Financial Regulator as to the nature of these reports. It appears to the Joint Committee that a closer alignment between the audit function and risk analysis could have heightened awareness across the financial system much earlier than it did.
In 2007 and 2008 in particular, it would appear that there was a compelling argument for strong direct language in the audit report commentaries to reflect the significant and accelerating uncertainties. However, the absence of this language does not amount to a failure to adhere to IAS 39.
In the accounts for the years leading up to 2007 and 2008, when the banks were concentrating their lending“assets”on loans to the property and construction industry at record rates, there were few‘notes to the accounts’informing the reader of the potential risks involved with this strategy. Therefore, the audited accounts provided little information as to the implications of the risks undertaken.
In evidence, the auditing firms maintained that it was not their role to advise client financial institutions on the risks attaching to a disproportionate reliance on property-related lending. Nor did they believe that it was their role to challenge the banks on their business models. That, they argued, would have strayed beyond their sphere of responsibility and competence as auditors.
On the regulatory side, there was passivity. The inadequacy of IAS 39 for banking was not challenged, let alone flexed for the unique conditions pertaining in Ireland up to the crash. The particular characteristics of IAS 39, along with the limitations in the methodology of an audit, played a significant part in masking critical business risk within individual banks and, more widely, systemic risk across the entire financial system.
Chapter 2 Footnotes
1. See Glossary of Terms for the definition of the Covered Institutions.
2. See Chapter 9, NAMA.
3. Known as financial reporting standards (IFRS), these are set by independent international bodies, apply in 280 jurisdictions and are underpinned by national and by EU Regulations.
4. IFRS 7 – From the 1 Jan 2007 Financial Statements were required to make more detailed disclosures.
5. This Board was established by the Institute of Chartered Accountants in Ireland to regulate its members, in accordance with the provisions of the Institute’s bye-laws, independently, openly and in the public interest. The CARB is responsible for developing Standards of Professional Conduct and supervising the compliance of members, member firms, affiliates and students, PUB00415.
6. Paul Dobey, Partner, KPMG, transcript, INQ00105-009.
7. Paul Smith, former Managing Partner, EY, transcript, INQ00116-004; Terence O’Rourke, Partner, KPMG, transcript, INQ00105-004; John McDonnell, Partner, PwC, transcript, INQ00117-027; Gerry Fitzpatrick, Partner, Deloitte, transcript, INQ00103-006.
8. Paul Smith, former Managing Partner, EY, transcript, INQ00116-005.
9. Group Audit Committee Meeting Minutes 6 August 2010, PWC00449-003/004.
10. Group Audit Committee Meeting Minutes 6 August 2010, PWC00449-003/004.
11. Dargan Fitzgerald, Audit Partner, EY, transcript, INQ00116-007.
12. Paul Dobey, Partner, KPMG, transcript, INQ00105-044/046.
13. Paul Dobey, Partner, KPMG, transcript, INQ00105-045.
14. Paul Dobey, Partner, KPMG, transcript, INQ00105-045.
15. Alan Merriman, former Finance Director, transcript, EBS, transcript, INQ00137-013.
16. Alan Merriman, former Finance Director, EBS, statement, AME00002-007.
17. Terence O’Rourke, former Managing Director, KPMG, transcript, INQ00105-005.
18. Brendan McDonagh, former Director of Finance, Technology and Risk, NTMA, transcript, INQ00090-003/004.
19. Paul Dobey, Partner, KPMG, statement, PDO00001-004.
20. Gerry Fitzpatrick, Partner, Deloitte, transcript, INQ00103-007.
21. Terence O’Rourke, former Managing Director, KPMG, statement, TOR00001-011.
22. The FRC sets the standards framework within which auditors, actuaries and accountants operate in the UK. It also sponsors the UK Corporate Governance Code (for companies) and the Stewardship Code (for investors). The FRC monitors the implementation of these standards and promotes best practice by companies and professionals through the issue of guidance and publication of leadership papers.
23. Terence O’Rourke, former Managing Director, KPMG, statement, TOR00001-008.
24. Arranged via the Institute of Chartered Accountants of Ireland (ICAI), Paul Dobey, Partner, KPMG, transcript, INQ00105-041; John McDonnell, Partner, PwC, transcript INQ00117-012/016.
25. General Auditor Concerns in early 2008, Nyberg, 3.7.1, PUB00156-072.
26. Paul Dobey, Partner, KPMG, transcript, INQ00105-042; John McDonnell, Partner, PwC, transcript, INQ00117-015.
27. Gerry Fitzpatrick, Partner, Deloitte, transcript, INQ00103-055/056.
28. Nyberg, Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland, Chapter 3, External Auditors, paragraph, 3.2.8. PUB00156-068.
29. Paul Dobey, Partner, KPMG, transcript, INQ00105-018; John McDonnell, Partner, PwC, transcript, INQ00117-059; Dargan Fitzgerald, Partner, EY, transcript, INQ00116-016.
30. Dargan Fitzgerald, Audit Partner, EY, statement, DFI00001-002.
31. Nyberg, Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland, Chapter 3, External Auditors, Sect 3.1.2, PUB00156-067.
32. Terence O’Rourke, former Managing Director, KPMG, statement, TOR00001-011.
33. Brendan McDonagh, former Director of Finance, Technology and Risk, NAMA, transcript, PUB00331-044.
34. John McDonnell, Partner, PwC, transcript, INQ00117-052.
35. Paul Smith, former Managing Partner, EY, transcript, INQ00116-004; Paul Dobey, Partner, KPMG, statement, PD00001-003.
36. John McDonnell, Partner PwC, transcript, INQ00117-054.
37. Public Accounts Committee, PUB00072-061.
38. John McDonnell, Partner PwC, transcript, INQ00117-054.
39. Dargan Fitzgerald, Audit Partner, EY, transcript, INQ00116-007.
40. The Audit of Banks in the Republic of Ireland - Nyberg, Chapter 3, External Auditors, Sect 3.4.1, PUB00156-070/footnote 74.
41. This is considered in Chapter 9, Establishment, Operation and Effectiveness of NAMA.
42. Paul Dobey, Partner, KPMG, transcript, INQ00105-044.
43. Paul Dobey, Partner, KMPG, transcript, INQ00105-013. The discount is considered at Chapter 9, Establishment, Operation and Effectiveness of NAMA.
44. Neither AIB nor BOI were expressly given an opportunity to accept or challenge the evidence given by NAMA regarding the extent of the haircut needed. See Chapter 9, Establishment, Operation and Effectiveness of NAMA.
45. Eugene Sheehy, former Group Chief Executive, AIB, transcript, INQ00133-045/046; Michael Buckley, former Group Chief Executive, AIB, transcript, INQ00133-045/046.
46. Paul Dobey, Partner, KPMG, transcript, INQ00105-033/034.
47. Frank Daly, Chairman, NAMA, transcript, PUB00331-060.
48. Brendan McDonagh, CEO, NAMA, transcript, PUB00331-020.
49. Eugene Sheehy, Group Chief Executive, AIB, transcript, INQ00133-047.
50. Nick Treble, CRO, Presentation at Board Seminar, Title of Paper Why has the Credit Crisis hit AIB so Hard?, AIB02691-044.
51. Jim O’Leary, Economist, AIB, statement, JOL00001-019.
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