Anglo Irish Bank's Head of Internal Audit, Walter Tyrell, has told an Oireachtas Committee that the movement of loans by former chairman Seán FitzPatrick into and out of the bank would only have been known by Mr FitzPatrick himself and the executive of his account.

Mr Tyrell also told the Joint Committee on Economic Regulatory Affairs that loans were tested by random sampling and Mr FitzPatrick's loans were never selected although a loan he held with a partner was.

Fine Gael's Kieran O'Donnell said it was amazing that all directors' loans were not tested.

He said the revelations around the loans had caused irreparable damage to the financial system and they should have been picked up by the internal auditors.

Frank Daly, the newly appointed Government nominee to Anglo's board, said work was under way to ensure such events never happened again.

Earlier, the committee chairman criticised the failure of Anglo Irish Bank's external auditors to appear before the committee.

Last night Ernst & Young said it would not be appropriate to appear because the secret loans to directors issue is still under investigation.

Michael Moynihan said the secret loans at Anglo Irish Bank had destroyed faith in the financial system.

He said he was extremely disappointed the external auditors had refused to appear before the committee.

Ernst & Young said it received legal advice that it would not be appropriate to appear before the committee.

It said on the basis of information it received from Anglo's management it believed its audit had been up to scratch.