Committee Reports::Final Report - Appropriation Accounts 1922

(1) The comments made by the Committee in their Second Interim Report in reference to faults due to the absence of an adequate accounting system apply with especial force to the Army Accounts. In paragraphs 34 and 35 of his Report the Comptroller and Auditor-General pointed out that anything like a satisfactory audit of the accounts for the period ending July 31st, 1922, was impossible, owing to the absence of accounts recording the purchase and disposal of supplies during the first four months of that financial year. The Army Finance Department was established as from the 1st August, 1922, and, though they were provided with a quite inadequate staff, the accounts from that date forward showed steady improvement.

(2) The Committee is of opinion that, in view of the faulty accounting inevitably arising out of the chaotic state of the Army during this period, no good purpose would be served by reporting in detail on every item brought to the notice of the Dáil by the Comptroller and Auditor-General. Speaking in general terms, the Committee considers that there does not appear to have been sufficient attention given, at the time of the establishment of the Army, to the necessity for a proper accounting system, by which requirements, purchases, prices and receipts could be properly recorded and checked. The explanation of this is to be found in the circumstances attending the transformation of the Irish Republican Army into the National Army of Saorstát Eireann, and the pre-occupation of the Provisional Government and the heads of the Army with other more urgent and serious matters arising out of the division of the Army into rival and conflicting sections. One consequence of this state of affairs was that there was no satisfactory check upon expenditure either as to prices, quality or quantity, purchases or receipts. It may be said that in this respect very much was left to the honour of the officers concerned and the honesty of the people with whom they had dealings. Considering the rapidity with which adverse conditions developed, perhaps no other course was left open. The Committee is forced to the conclusion, however, that not infrequently advantage was taken by trading concerns of the inexperience of the Army officers and obvious lack of check and counter-check which a more settled organisation must necessarily have provided.

While these general observations are intended to explain the reason why the Committee does not deem it necessary to report on every question which has been raised in connection with the Army accounts, there are some matters to which attention must be specially directed.

The Comptroller and Auditor-General reported that prior to August, 1922, out of total expenditure of £874,121, no less than £128,377 was unvouched or only partly vouched for, but that with the sanction of the Ministry of Finance this sum had been charged to the Appropriation Account. In regard to these unvouched sums, the Committee was informed that £100,000 represents pay for soldiers, and about £28,000 represents traders’ accounts. There appears no good reason to doubt that, notwithstanding the absence of vouchers, this money was in fact duly spent in the public service. We consider that the Ministry of Finance was justified in sanctioning this charge in the Appropriation Accounts.

The Comptroller and Auditor-General notes that “Army Abattoirs have been established at Dublin and the Curragh and agents appointed for the purchase of cattle.” The agents’ commission was originally fixed in January, 1923, at 10/- per head, but was reduced on May 1st, 1923, to 5/- per head. The Committee is of opinion that the agreement made in January to pay 10/- per head as commission to be reduced in May to 5/- per head, shows that there was lax supervision in the Quartermaster-General’s Department. Otherwise such excessive commission would not have been approved.

A number of cash registers (29), costing £80 to £95 each, were purchased out of Army Funds, and within the year following, were re-sold to the makers at about half the price they cost. At the date of the Comptroller and Auditor-General’s Report, the proceeds of the sale had been credited to the Army Canteen Funds, which was irregular. They have since been paid into the Public Funds.

The difficulty noted by the Comptroller and Auditor-General in the way of making a satisfactory check of income derived from lettings of Army lands owing to the fact that the material (title deeds and other records) necessary for the compilation of Rentals and Cash Accounts had not been handed over by the British Authorities, has been met to some degree by the receipt of certified copies of the original deeds.

The Committee considers that this matter should receive the special attention of the Department concerned, With a view to obtaining possession of all the deeds that relate to the National property and complete records of all lattings, leases, etc.

The purchases referred to under this head have been subjected to a close enquiry by the Committee, as will appear in the printed evidence. The observations made in paragraph (2) of this report apply forcibly to this account. Considered in comparison with a properly organised system, the procedure followed in regard to the purchase of goods from the trading firm in question could not be defended. There does not appear to have been any efficient control of the purchases made, or the price, quality or quantity of the goods delivered. The Army officer ultimately responsible for the purchases claims that nothing better could have been done in the circumstances and that, on the whole, good value was received. The Committee is not satisfied that sufficient care was exercised to ensure either that the goods supplied were required or that the prices charged were reasonable. They are further of opinion that the arrangements made with the firm for the supply of miscellaneous stores, amounting to a total invoiced price of £275,000, were unjustifiably loose and indefinite.

They consider, however, that in the light of the evidence available respecting the terms under which, the firm was operating, the Minister for Finance was justified in sanctioning the final settlement of the account.

The Committee recommends that special enquiry should be made to ascertain whether the system now prevailing in respect to the purchase of supplies for the Army is proof against excessive prices or the buying of goods which are not required.

The Committee’s attention was directed to a series of accounts relating to the purchase of chemicals and ammunition from a firm in London, and about which a dispute arose. During the course of the enquiry it transpired that a settlement of the dispute was being effected on terms which appear to us difficult to justify. Considerations that warranted the Committee in approving of the sanction given to the settlement of the account dealt with in paragraph (7) of this report do not apply here. Some of the purchases in question extend into the month of April, 1923, long after the Army Finance Department had been set up, and the settlement of the matters in dispute has only recently been arrived at. The salient features of the case as presented to us are as follows:—

The firm in question contracted with the Army to supply chemicals for explosives, e.g.—

Chlorate of Potash,

Barium Nitrate,

D.N.T.

It does not appear that any agreement was made in respect of price. Chemicals had been supplied by the same firm prior to the signing of the Treaty. We have records that up to the end of April, 1923, there was delivered in Dublin—

The Committee has no information respecting the prices paid for chemicals delivered before the signing of the Treaty.

During the period covered by those deliveries the current price for Chlorate of Potash quoted in the Chemical Trade Journal fell gradually from £39 6s. 8d. per ton to £28 per ton, though £56 per ton was charged to the Army for the total supply, irrespective of the date of delivery. We have no information as to the current market price of Barium Nitrate or D.N.T., but we are of opinion that enquiries in this matter ought to have been made before any settlement of the account was considered. The invoicing of D.N.T. at 2/- per lb. for bulk consignments (one consignment weighing as much as 11 tons) suggests the need for such enquiry.

In addition to the quantities set out above, there was in store in London until recently—

Chlorate of Potash, 11 tons 4 cwt;

Barium Nitrate, 9 tons;

D.N.T., 5 tons 8 cwt.

—the ownership of which appears to have been in dispute. The settlement of the disputed account has involved the acceptance of delivery of these chemicals at the prices quoted above. The Committee is of opinion that in the absence of any binding contract in respect of prices, the market price at time of delivery should have been a ruling factor when making this settlement.

The same firm was also concerned with the sale to the Army of the following arms, namely:—

The rifles were never delivered. The firm in question never had possession of them, but a sum of £2,250 has been charged to the Army as having been paid on account of the purchase of the rifles—“for the sole purpose of obtaining an option from the Disposals Board.” It appears to us that if the option was in fact secured, it was a transaction between the firm and the Disposals Board, and the Disposals Board presumably would be bound to complete the transaction if called upon, or, in the event of their not doing so, that they should refund the price paid for the option. The Army authorities have testified that they were unable to get the rifles; they were never offered for delivery. The Committee cannot see the reason for accepting responsibility for this sum of £2,250.

In connection with this matter, and the settlement of the account—as referred to in the evidence of the Secretary to the Department of Finance —it appears to the Committee that, apart from the merits of the case, insufficient care was exercised in accepting liability for the sum of £2,250 on the mere statement of the claimant that such sum had been paid by him without the production of any vouchers or proof that the money had, in fact, been paid.

Another item in this disputed account refers to the purchase of five Hotchkiss guns. The price charged for these was £1,000, though the evidence of the officer responsible at the time of purchase, is to the effect that the price arranged was £750, which was the price paid for the guns by the suppliers. In charging £1,000 for these guns the profit—£250—was, in the Committee’s view, grossly excessive.

The preceding paragraphs have reference to purchases made mainly during 1922-23, the year with which the Committee’s enquiry is specially concerned. Payments against these goods have been made over two subsequent years, and in the ordinary course would come Under the scrutiny of the Comptroller and Auditor-General during those years. The Committee has, however, felt bound to follow the enquiry beyond the accounting year of 1922-23. If enquiry had been deferred until the accounts of subsequent years came before the Committee on Public Accounts, it would have been belated. They, therefore, wish to draw attention to the facts that have come under notice.

The Committee is of opinion that a closer investigation than they have been able to give to this account is required and that all the facts affecting the case should be presented to the Public Accounts Committee.

(Signed)

DÁIL EIREANN.

AN TUARASGABHÁIL DEIRIDH O CHOISTE NA gCUNTAIST PUIBLI.

BLIAN 1922-23.

FINAL REPORT OF THE COMMITTEE OF PUBLIC ACCOUNTS.

YEAR 1922-23.