Committee Reports > List of Committees > Dáil > 1945 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1942 - 1943

FINAL REPORT

PART I.—GENERAL OBSERVATIONS.

Minute of the Minister for Finance dated 21st March, 1945.

COMPENSATION BOUNTIES.

Explanatory details in Part III of Estimate.

1. The Committee notes that the Minister for Finance is unable to accept the views expressed in its Report dated 24th February, 1944, that the departure from the terms of Part III of the Estimate for Compensation Bounties should have been brought to the notice of the Dáil by the introduction of a Supplementary Estimate. He considers that the explanation given in Part III did not constitute a basis of calculation but was designed to indicate the purpose of the grant, and that the purpose of the grant remained unaltered, and he also points out that the Emergency Powers Order which enabled him to determine the rate of bounty was duly referred to in Part III of the Estimate. While the Committee still has some doubt as to whether there had been in this case a material divergence from the scheme of expenditure as described in Part III of the Estimate, in the circumstances in which it arose it will not pursue the matter further.

The Committee is of opinion that the explanation of a service given in Part III of an Estimate should be such as to cover fully and accurately the service as in fact operated.

SUPPLIES.

Temporary overpayment of Flour Subsidy.

2. The Committee notes that while the Minister for Finance agrees generally with its views that even a temporary overpayment of flour subsidy should be avoided, the difficulties attendant upon the determination of the precise allocation price of imported wheat which will ensure the agreed remuneration of the milling industry are such that the possibility of an overpayment cannot wholly be eliminated. It will be glad to be informed of the results of the examination of the millers’ accounts for the cereal years 1942-43 and 1943-44.

ARMY.

Physical checking of Army Stores.

3. The Committee is pleased to note that the Minister for Finance is satisfied that the existing regulations relating to the physical checking of Army stores are, in general, adequate, and that all steps which are reasonably practicable, are taken to ensure that these regulations are implemented.

Supply of Mine Casings.

4. The Committee notes the view of the Minister for Finance that consideration of the action to be taken in connection with the supply of the defective mine casings should be deferred until a decision on the ultimate disposal of the casings has been taken. It will be glad to receive a further report on the matter in due course.

PART II.—PARTICULAR ACCOUNTS.

Public Works and Buildings.

5. Attention was drawn to a case in which a supplementary grant of £92 10s. 8d. was made towards the cost of adaptation of a site for a school. The provision of a suitable site is normally the responsibility of the manager of the school, but in this case it was not discovered that the site provided by the manager was unsuitable because of a severe gradient until some progress had been made with the erection of the school, and it was then too late to abandon the site. In the original official report on the suitability of the site, the gradient was stated to be 1’ in 20’ whereas the actual gradient was 1’ in 5’. The Committee takes the view that there was a serious dereliction of duty in this case but it is informed that disciplinary action was taken against the officer responsible for the report which gave rise to the extra expenditure. Consequently it does not desire to offer any further comment.

Agricultural Produce Subsidies.

6. The Committee had under discussion the incidence of payments from the Vote for Agricultural Produce Subsidies in 1942-43 and from the Dairy Produce (Price Stabilisation) Fund in the succeeding financial year for allowances, etc., on dairy produce accruing in respect of the year 1942-43. A sum of £499,900 was provided in the Vote for Agricultural Produce Subsidies for the service of the year ending 31st March, 1943, for subsidies, allowances, etc., for dairy produce, but it became evident, when in September, 1942, the price of milk supplied to creameries was increased from 7d. to 9d. per gallon, that the vote provision referred to would be insufficient to meet the new commitments involved. It was accordingly agreed, in consultation with the Department of Finance, that the provision should remain unaltered and that any excess expenditure might be met from the Dairy Produce (Price Stabilisation) Fund, in which more than sufficient money was available. The Dairy Produce (Price Stabilisation) Act, 1935, however, limited the purposes for which the Fund might be used, and these purposes did not include the payment of allowances on dairy produce. Emergency Powers (No. 270) Order, 1943 (Statutory Rules and Orders, No. 122 of 1943) was accordingly made by the Government on 9th April, 1943, i.e., after the close of the financial year, to amplify the purposes for which the Fund might be used and to enable effect to be given to the arrangement referred to. No specific reference was made in the Order to any financial provision or payment. Following the making of the Order, the balance of the commitments in connection with the dairy produce programme for 1942-43 was charged against the Dairy Produce (Price Stabilisation) Fund in 1943-44 and, consequently, is not included in any vote appropriation account.

As the original and only provision for the payment of allowances on dairy produce was made in the Estimate passed by the Dáil, and was for the service of the year 1942-43, a doubt exists as to whether, when the Vote provision was unable to bear the full charge, the additional money required could properly be drawn from the Dairy Produce (Price Stabilisation) Fund without further reference to the Dáil. It appears to the Committee that when it was realised that the Vote provision was insufficient, the normal and well established course would have been to seek the sanction of Dáil Éireann by means of a Supplementary Estimate or Excess Vote for the provision of the sums required to meet the claims on the Vote to the end of the financial year, especially as at no stage was Dáil Éireann informed that the moneys provided in the Vote would be supplemented in any other way, and throughout the financial year the only source from which these claims could be met was the Vote for Agricultural Produce Subsidies. The Committee considers, therefore, that the opinion of the Attorney-General should be obtained regarding the legality of the procedure adopted.

7. The Committee had under discussion the allowance of 11s. 3d. per cwt. paid to creamery proprietors and butter merchants in respect of creamery butter cold-stored for use in the winter of 1942-43. It appeared that the allowance was based on an average period of cold storage of 26 weeks, but that for various reasons it was not found practicable to adhere to the original arrangements made, with the result that many concerns did not in fact keep butter in cold store for the full average period. Notwithstanding this, payment of the allowance of 11s. 3d. per cwt. was made in full.

The Committee is of the opinion that, in the altered conditions, an appropriate reduction in the rate of allowance should have been considered, and that, in any event, the Department of Finance should have been made aware of the changed conditions before any payment was made. In the circumstances, however, the Committee feels that the Department of Finance may consider favourably the giving of covering sanction for the extra expenditure involved.

Unemployment Insurance and Unemployment Assistance.

8. Under section 26 of the Unemployment Assistance Act, 1933, county borough councils and certain urban area councils are required to pay annually to the Minister for Industry and Commerce an amount calculated by reference to the rateable value of the area concerned and which is credited as an appropriation in aid of the Vote. A number of local authorities disputed their liability to contribute in respect of certain hereditaments in their areas. It was then decided that it was necessary to remove doubts as to the method of calculating the sums payable to the Minister, and accordingly the section referred to was amended by section 2 of the Act of 1940. This section provides that the rateable value for the purpose of calculating the contribution payable by any local council should, with certain modifications, be the aggregate amount of the valuations of all hereditaments in the area in respect of which any rate is payable. Section 5 of the Act of 1940 also provides that a certificate furnished to the Minister by the Commissioner of Valuation, stating the rateable value of the area to which such certificate relates, shall be conclusive evidence for the purposes of the Acts of 1933 and 1940 of the rateable value of the area concerned. The certificates were duly furnished by the Commissioner but the local bodies contended that he should have excluded from his certificates the valuations of small dwellings and certain other property on which no rates are payable. Legal opinion which was obtained on the matter upheld the contention of the local authorities regarding the exclusion of the valuation of the small dwellings from the Commissioner’s certificate and also indicated that the Act gave the Commissioner no power to amend his certificates, and that the only effective remedy would appear to be legislation. It was decided, however, not to consider the introduction of amending legislation to rectify the position until amendment of the Acts in other respects is under contemplation and, in the meantime, to accept the legal opinion regarding the exclusion of valuations of small dwellings in computing the sums payable to the Minister and to adjust any amounts which had, on the basis of the Commissioner’s certificates, been over-contributed by local bodies. Following on this decision fresh calculations of contributions were made, based on a statement supplied by the Valuation Office showing amounts to be deducted from the Commissioner’s certificates of valuations, and revised demands were made on local bodies in accordance with the reduced assessments.

In view of the terms of section 5 of the Act of 1940, which provides, as stated above, that a certificate from the Commissioner of Valuation shall be conclusive evidence for the purposes of the Acts, attention was drawn to the procedure adopted in computing the sums payable to the Minister. The present position in this matter is, of course, unsatisfactory and the Committee trusts that it will be found practicable to introduce the necessary amending legislation at an early date.

Repayment of Trade Loans Advances.

9. The Committee had under consideration guarantees under the Trade Loans (Guarantee) Acts given by the Minister for Industry and Commerce with the approval of the Minister for Finance for loans to a certain company. A loan of £1,600 was guaranteed in May, 1935, and a further loan of £3,000 in 1937. Both sums were advanced by a bank which was secured by a First Mortgage Debenture on all the assets of the company. In respect of the first loan of £1,600, one instalment of £160 had been repaid at the date the second loan was guaranteed, leaving a balance of £1,440 outstanding. The arrangements made with the bank provided for the repayment of this sum, together with the amount of the second loan of £3,000, by ten annual instalments of £444. Payment of the first instalment, which fell due in October, 1938, was postponed for one year, but towards the end of 1939 the company was found to be insolvent and a receiver was appointed by the bank as debenture holder. Following realization of the assets the total amount paid over to the bank by the receiver was only £92 11s. 1d. and, in fulfilment of the guarantees given by the Minister, a sum of £4,632 11s. 10d., being the balance due for principal and interest on the loans, was advanced from the Central Fund and paid to the bank in February, 1941. This sum was repaid to the Central Fund from the vote in the year under review.

Under section 1 of the Trade Loans (Guarantee) Act, 1924, the Minister for Industry and Commerce, after consultation with an advisory committee nominated by him in conjunction with the Minister for Finance, may, subject to the sanction of the Minister for Finance, guarantee the repayment of principal and payment of interest on any loan raised for the purposes set out in the section. The applications made by the company for guarantees of the two loans were referred in due course by the Minister to the advisory committee. That committee in the case of the first loan decided that in view of the financial history of the principal promoter of the company and of other considerations it could not recommend the Minister to give his guarantee. In regard to the second loan the advisory committee stated that, taking all the aspects of the case into consideration, including the fact that the history of the company’s operations to date were not calculated to inspire confidence in its ultimate success, it also could not see its way to recommend the Minister to give the additional guarantee sought.

In all the circumstances, the Public Accounts Committee finds it difficult to understand why the guarantees were given in this case, having regard to the adverse opinions of the advisory committee and the history of the undertaking, and the Committee desires to be informed whether any part of the amounts advanced under either guarantee was utilized for discharging debts due to any money-lending concern.

Army.

10. The Committee has had again under consideration the position regarding deficiencies of Barrack Service Stores which was referred to at paragraph 10 of its last Report. Stocktaking of some of the more important items of these stores has since been completed and the cost price of the deficient articles has been calculated as £21,961, 10s. 10d., their value at the time of the loss being assessed at one-fourth of that amount, or £5,490 7s. 8d. Arrangements by which a moiety of this latter sum is to be recovered from Army Welfare Funds have been agreed to by the Department of Finance.

The cost price was ascertained by reference to vocabulary rates which were promulgated in 1941 and which were ruling when the deficiencies were discovered in December, 1942. It is realized that in determining the cost price on this basis the Department was acting in accordance with the relevant Regulations. It is pointed out, however, that in a period of rising prices it would appear to be desirable to have vocabulary rates revised as frequently as possible in order that the value of articles lost or damaged, as assessed for recovery from units or individuals, may be related as closely as possible to the cost of replacement.

Reference was made to the fact that there was evidence that the value of some of the deficient articles at the time of loss was estimated at more than 25 per cent. of their cost price and the Department of Finance considers that the adoption of that percentage has resulted in an under-valuation. The Committee understands that, whilst the amount recoverable from Army Welfare Funds will remain unaffected, the cash value of the stores deficient will be re-assessed with a resulting increase in the amount to be written-off. It will be glad to be informed of the actual figures when the matter has been finally adjusted.

The Committee is concerned at the nature and extent of the losses disclosed, whilst realizing that they were very largely due to the conditions prevailing in the earlier stages of the Emergency period and to the inexperience of the military officers responsible for stores. It is understood that the system under which certain unserviceable stores were reduced to waste before being offered for sale has been altered and that such stores are now disposed of as complete articles. Whilst it is recognized that the destruction of articles of clothing is undesirable under present conditions it is suggested that a reversion to the former system, when more normal conditions prevail, would facilitate the tracing of such Army property as might pass into unauthorised hands.

11. In his Report on the accounts for the year 1925-26 the Comptroller and Auditor-General referred to the method of accounting for items of personal clothing issued to soldiers, and to the desirability of including the value of such items as were deficient in the amounts written-off annually. It was then stated by the Accounting Officer that such articles became the property of the soldier on issue and that the question of writing-off deficiencies did not therefore arise, and the Committee was satisfied that the matter was being dealt with in accordance with the relevant regulations. The Comptroller and Auditor-General has again referred to the matter by reason of the special considerations which arise in relation to men enlisted for the duration of the Emergency. It appeared that, in order to reduce the loss consequent upon the provision of personal clothing for soldiers who might serve for only short periods, regulations were issued under which Durationists on discharge were permitted to retain only certain of the articles of personal clothing which had been issued to them. These regulations appeared to imply that the remaining articles should be returned to store but no change was made in the accounting system and the value of the articles not returned is not disclosed in the Account. The Committee has been informed that revised clothing regulations which will clarify the position are in course of preparation.

12. Reference was made to certain motor vehicles which had been seized by the Revenue Commissioners owing to attempted illegal exportation and which had been deposited at a military post pending conclusion of the legal proceedings arising out of their seizure. The vehicles depreciated considerably whilst in military custody and the Committee has been furnished with a statement on the matter by the Revenue Commissioners. It appears that owing to the large number of lorries which were under seizure at the time considerable difficulty was experienced in having them suitably housed. The vehicles under notice were transferred to the military post for safe custody but the post was not properly equipped for their accommodation and they remained exposed to the weather during the prolonged period which elapsed before the legal proceedings were concluded. In addition when their disposal was possible the vehicles were deficient of a number of parts but responsibility for the deficiencies could not be fixed. They were ultimately acquired for Army purposes at prices related to their depreciated values. The Committee has been informed that the Army authorities accepted no responsibility for the vehicles which were merely being housed at a military post in the absence of alternative accommodation. It appreciates the difficulties experienced in providing accommodation for the large number of vehicles under seizure but it cannot regard as satisfactory the arrangements made under which a loss arose whilst the seizues were in military custody.

13. Defence Force Regulations provide that the cost of repairing damage to occupied buildings, caused by wilfulness or neglect, shall be recovered from the troops concerned. It appeared that the sanction of the Department of Finance had been obtained for payments of compensation to the owners of certain premises for damage caused during military occupation, subject to recovery from the occupying units of so much of the cost as was regarded as being attributable to avoidable damage.

The general question of the type of damage for which troops should be held liable was subsequently reconsidered by the military authorities and as a result the amounts assessed in the particular cases under notice were considerably reduced. The Committee has been informed that the matter is still under consideration in the Department, and that the sanction of the Department of Finance will be sought for any revision of the assessments that may be adopted; it will await a further report on the matter.

14. Attention was drawn to payments of grants to Local Defence Force Funds in respect of persons who either had resigned or been discharged from the Force prior to the qualifying date or had not attended for several months previously. The Committee is concerned to note that certificates had been furnished by the responsible officers that the persons in question were active members of the Force on that date and that a large number of overpayments to Unit Funds resulted. It has been informed, however, that the submission of incorrect claims was due to the fact that the local records were incomplete but that considerable improvement in this regard has since been effected.

15. Considerable quantities of waste turf were written-off during the year and it was noted that the percentage of waste varied greatly at different posts. The Committee appreciates the difficulties which arise in accounting for stocks of peat fuel, and it is recognised that it is not possible to apply uniform standards in dealing with it. It trusts, however, that every effort will continue to be made to eliminate waste as far as possible.

Special Emergency Schemes.

16. Attention was directed to expenditure amounting to £239,365 9s. 3d. incurred in connection with a scheme for the production of turf. The Turf Development Board, Limited, acting as agent for the Special Employment Schemes Office, took over the duty of carrying out the scheme, and the approved arrangement for recoupment to the Turf Development Board of the expenditure on wages and other outgoings provided for periodical examination and verification by officers of the Special Employment Schemes Office of the accounts of the expenditure. However, an examination of the accounts was not made by officers of the Special Employment Schemes Office until some time after the close of the financial year and the charge to the vote was based on an account certified by a firm of auditors who had been engaged by the Turf Development Board.

The Committee, while noting that the subsequent inspection showed that the scrutiny carried out by the auditors was of a comprehensive nature, and that the procedure adopted by them in relation to the accounts was considered to be adequate, is of the opinion that a system of official inspection or check during the currency of the work is essential where, as in this case, expenditure of public funds is entrusted to an outside agency.

(Signed) JAMES M. DILLON,

Chairman.

26th April, 1945.