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Expert warns on high level of non-audit fees
The Sunday Business Post 26 June 2005
Eamon Quinn
A leading international adviser to institutional
investors has flagged its concerns about the high level of payments to
auditors for non-audit work by Irish companies.
Manifest, a corporate governance research service for large shareholders,
said the disclosure of the payment in the Irish market of non-audit fees
has fallen short of what is required by the Combined Code - the rule book
of best corporate practice subscribed to by the Irish Stock Exchange.
Alan Brett, research manager at Manifest, said that the payment by DCC of
non-audit fees to auditors PricewaterhouseCoopers was at “quite a
significant'' amount.“Audit fees were €982,000 and non-audit fees were
€2.4 million,” Brett said. “On an ongoing basis over the past three years
non-audit fees have been 1.8 times for audit work.”
Brett said large shareholders at DCC's annual general meeting on July 5
would wish DCC to disclose its policy on the types of work that auditors
cannot undertake.
DCC has not disclosed in its annual report what the non-audit fees were
paid for. Nonetheless, Manifest has commended DCC for disclosing the level
of fees it pays its auditors in the first place.
“The fact that they are disclosing the level of non-audit fees is quite
good,” Brett said.
“We have noted in the last week or so that a lot of companies in Ireland
had made no disclosure about the payment of non-audit fees.”
In research on C&C, Manifest said the drinks firm had failed to disclose
the fees paid to auditors for non-audit work.
“It makes a decision difficult on behalf of shareholders in deciding
whether or not the auditors are truly independent,” Brett said.
The research firm also highlighted potential breaches of the Combined Code
by other companies hosting AGMs in the coming weeks.
In research on Bank of Ireland, Manifest noted that non-executive director
Donal Geaney was a partner in a property firm that rents New Century House
in Mayor Street in the IFSC to the bank at an annual rent of €1.97
million. The bank had said in its annual report that the lease was entered
into before Geaney's appointment to the board of governors.
On IFG, Manifest has warned that “significant issues'‘ surround the
independence of non-executive directors at the company.
“There is only one out of the 11 directors on the board who is genuinely
independent,” Brett said. “Across the board there is a whole raft of
issues.”
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