Dear Eddie,

Further to my letter to you on 11 August and our subsequent discussion on the phone on 13 August, I have decided to stick to my decision to resign as chairman of the IFA Audit Committee. I acknowledge the views expressed  by you and also by the General Secretary, Pat Smith, that my concerns would be addressed and that I should reconsider my decision.

However, I think it is preferable to appoint someone with qualifications and experience in Accountancy / Auditing. All that study, qualifications and work experience of people in that profession must account for something! Such a person also has the advantage of being independent from IFA and its personnel, both voluntary and staff.

However, as we discussed, I am happy to pass on my thoughts on some issues which we were starting to examine in the AC, and which the new committee may wish to put on their agenda. I hasten to add that we were not at a stage to make recommendations on these issues, and it would be wrong to conclude that we had identified any problems. This is no more than a work agenda, but may be helpful to a new chairman coming from outside IFA.

First, I wish to comment on two general issues.

I think the operation of the AC to-date should be looked on as a learning experience.  I feel that all parties now agree that the AC should have a sufficient degree of operational independence.  Thus the clause in the current Terms of Reference regarding the attendance by the General Secretary and Financial Controller should be changed so that their attendance is only by invitation from the AC.

I also wish to state that my decision to resign was not based on any findings by the AC regarding any financial irregularity in IFA. There were no such findings.

My overriding recommendation is that the Audit Committee should continue, with the two changes already referred to, a qualified and independent chairman, and adequate operational independence. I believe the other members should continue to be the Treasurer and immediate past Treasurer.

I had not discussed with my two colleagues, Jer and JJ, how decisions would be reached in the AC in the event of disagreement. Based on some experience I have on the Employment Appeals Tribunal which consists of three-person panels, my suggestion is that decisions should be on the basis or either consensus, or majority of any two members. The AC’s recommendations should go to the Executive Board.  It should be remembered that they are only recommendations.

The following are the main issues we intended to have a look at in the AC during the remainder of 2014:

·      Review the level, timing and method of financial reporting in IFA, taking account in particular of the primacy of the Executive Council.

·      Review internal financial controls to ensure that all expenditure is authorised and that the method of authorisation is robust.

·      Review IFA’s code of practice and training programmes for Committee Chairmen and Staff in order to minimise the risk of litigation by Regulators and Commercial firms.

·      Review the maximum time limits for payment of expenses to ensure that claims can be verified (currently €1.2m of estimated expenses by Committee and County Chairman are unclaimed).

·      Examine the issues that may arise from changes to accountancy standards which are to apply from January 2015.

I wish to expand on the final point on the list; these views are my own as the item has not been discussed by the AC, other than a short discussion at a meeting with Deloitte in May. The new accountancy standard (FRS 102) is to apply from 1/1/2015. One significant change is that transactions between IFA and related parties will have to be recorded in the accounts.  One such related party is “key management”.

In giving some consideration to the implementation of this change, it is apparent to me that there is a lack of accountability in the setting of levels of financial remuneration for the two most senior office-holders, i.e. the honorarium to the President and the pay and benefits of the General Secretary.  I have already mentioned this issue to you informally, as an issue that needs to be addressed by IFA.between IFA and related parties will have to be recorded in the accounts.

I know we both agree that IFA (like Caesar’s wife in the popular quotation) must be above suspicion, because of the responsibilities it bears.  It is obvious that the Association needs to maintain the confidence of the very large membership base and needs to ensure that the Association’s work is not eroded by negative publicity.  To maintain confidence, there should be clear accountability for all major decisions in relation to the governance of the Association.  Whereas the rules in relation to elections and policy formulation are clear and transparent, the same is not the case in relation to top-level remuneration.

I believe that there is a compelling case for the establishment of a Remuneration Committee in IFA which would have responsibility for setting the levels of financial reward for the top two office-holders at least.  The membership should most likely be drawn from senior elected officers, with the possibility of an external expert as well.  It should not include the President and General Secretary for obvious reasons.

While the external auditor, Deloitte, can be expected to provide advice on the implementation by IFA of the accountancy rules changes, I believe that this does not remove the need for a Remuneration Committee.

Finally, I overlooked in my earlier letter to acknowledge the cooperation and support for the AC provided by Ken Heade, and I wish to do so now.

I hope this letter is of benefit to you and the Association.

Yours sincerely,

Con Lucey.


Pat Smith, General Secretary

Tim O’Leary, Deputy President

Jer Bergin, Honorary Treasurer and member of the AC

JJ Kavanagh, member of the AC.

Ken Heade, Financial Controller.