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C&AG will no longer be Nama’s sole auditor as outside firm to be hired

The State’s Comptroller and Auditor General (C&AG) will no longer be sole auditor of Nama’s group entities, with the bad bank now drafting in a firm to undertake statutory audit work for the next three years, when the agency expects to be wound up.

The C&AG has previously defended its role as Nama’s only auditor and insisted that it could continue to do so despite new EU rules introduced last year.

The appointment of a statutory auditor to all of Nama’s subsidiaries – which effectively comprise all its operations – comes after the C&AG, the State’s financial watchdog, and Nama clashed last year following the 2014 sale of a €1.6bn portfolio of Northern Ireland loans. The sales process was dubbed Project Eagle by Nama.

Since Nama’s inception in 2009, its accounts have been audited only by the C&AG. However, Nama said that under the Companies Act, 2014, the C&AG is no longer deemed to be a statutory auditor, except for companies not trading to make a profit.

The C&AG had previously argued that Nama was not specifically created to make a profit. As such, the C&AG had maintained that Nama was a not-for-profit organisation for which it could continue to be the statutory auditor.

But that is no longer the case.

“The C&AG is not in a position to audit the statutory financial statements of the Nama group entities for the financial year ended 31 December 2016 onwards,” Nama noted in a request for audit tenders published yesterday.

The appointment may extend beyond the end of 2020, if required, according to Nama.

However, Nama must also continue to submit annual accounts to the C&AG for each Nama group entity and the Nama group itself for audit by the watchdog under the terms of the Nama Act.

A Nama spokesman said audits by the new statutory auditor and the C&AG would now take place in parallel.

Last September, a report by the C&AG claimed that the sale of the Project Eagle loans by Nama resulted in a loss to the agency of up to £190m (€219m). The loans were sold to US firm Cerberus following a controversial bidding process, where the C&AG insisted Nama deviated from its normal loan sale process.

The Government then established an enquiry into the sales process. Findings of that enquiry by the Public Accounts Committee (PAC) were published just last week. It found that the Project Eagle sales process was “seriously deficient”.

PAC chairman Seán Fleming said Nama was unable to show that it got “value for money for the Irish State”. Nama ceo Brendan McDonagh has rejected criticism of the Project Eagle sales process.
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