Committee Reports > List of Committees > Dáil > 1945 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1943 - 1944

FINAL REPORT.

PART I.—GENERAL OBSERVATIONS.

Minute of the Minister for Finance dated 13th November, 1945.

AGRICULTURAL PRODUCE SUBSIDIES.

1. The Committee notes the Attorney General’s opinion on the legal aspects of the procedure followed in connection with the payment of allowances, &c., on dairy produce out of the Dairy Produce (Price Stabilization) Fund. It feels, however, that it is essential that the Dáil should be informed at the earliest opportunity in cases such as this where moneys voted for a particular service are supplemented by non-voted moneys and it notes that the estimate for Agricultural Produce Subsidies for 1945-46 indicates the amount which it is anticipated will be expended out of the Dairy Produce (Price Stabilization) Fund to supplement the Vote.

ARMY.

Deficiencies in Barrack Service Stores.

2. The Committee is pleased to note that arrangements have been completed under which the amounts recoverable from Army Units in respect of articles lost or damaged are brought into closer relation to the replacement cost of the articles concerned. It notes also that the reduction of certain unserviceable stores to waste before their disposal by sale is regarded as undesirable at present on financial grounds and that the matter will be kept under review.

Kit Deficiencies.

3. The Committee notes that outstanding questions regarding the accounting for items of clothing and necessaries which are subject to surrender by soldiers on discharge have been disposed of. It will be glad to be informed, in due course, of the decisions reached regarding deficiencies which occurred prior to the introduction of the revised arrangements.

SPECIAL EMERGENCY SCHEMES.

Production of turf for use in non-turf areas.

4. The Committee notes that the Minister agrees with its views regarding the desirability of instituting an adequate system of official check or inspection in cases where expenditure of public funds is entrusted to an outside agency and it will be glad to be informed when a decision on the matter has been reached.

PART II.—PARTICULAR ACCOUNTS.

Local Government and Public Health.

5. The attention of the Committee was directed to the circumstances connected with the recovery of a sum of £900 overpaid to a public utility society in grants made under the Housing (Financial and Miscellaneous Provisions) Act, 1932, in respect of the construction of certain flats Under Section 5 (I) (i) of that Act, grants may be made to any public utility society erecting flats in an urban area provided, inter alia, that the floor area of each flat is within the limits of 500 and 800 square feet.

The Committee was informed that the overpayment arose through a departure from the approved plans which resulted in a reduction by nine in the number of flats erected having the requisite floor area; that this was not observed by the appointed officer who was unable to enter some of the flats at the time of his inspection but who, nevertheless, gave a certificate on the prescribed statutory form that he had inspected each of the flats; and that the overpayment was brought to the notice of the Department by the society to whom the grant had been paid. It was stated that the officer concerned was employed in a temporary capacity and had since resigned.

The Committee views with grave concern the fact that the payment of grant in this case was based on a certificate which was subsequently found to be incorrect, and it trusts that all necessary precautions will be taken in future to ensure that the requirements of the Housing Acts and the Regulations made thereunder have been fully complied with before payment of grant is authorised.

Agriculture.

6. The Committee was informed that the Department of Agriculture, after consultation with the Department of Supplies, made advances of subsidy to fertiliser manufacturers amounting to £253,254 Os. 1d. in respect of the 1943-44 fertiliser season. The advances were based on estimates, and sums totalling £29,000 were subsequently refunded by the manufacturers. The Accounting Officer stated that in the season referred to, raw phosphates were being imported from Florida, and it was very difficult to estimate the cost of transport, while certain overhead expenses of the manufacturing concerns were less than anticipated.

In paragraph 8 of its Report on the Accounts for the year 1941-42, the Committee had occasion to refer to an overpayment of flour subsidy made in circumstances analogous to those referred to above, and while it appreciates the difficulty of assessing accurately the subsidy payable when making advances based on estimates, it trusts that every effort will be made to avoid overpayments of this nature in the future.

Transport and Meteorological Services.

7. The question of accounting for stores and equipment acquired for the service of the Shannon Airport was the subject of discussion before the Committee of Public Accounts in previous years, and the Committee is now informed that a complete system of accounts has been in operation since May, 1945. In explanation of the long delay in providing an adequate system it is stated that the absence of proper store accommodation had for a long time created difficulties in store keeping. The Committee would like to emphasize the principle that correct accounting for the receipt and issue of stores acquired for a particular service is no less important than is the accounting for the expenditure involved in their purchase. In this instance an adequate system of record and control of stores which were acquired and issued over a number of years was not set up until recently, though the possibility of loss should have been apparent. The Committee takes a serious view of the failure of the Department to advert to the importance of this matter, and it will be glad to learn that the system now in operation fulfils the essential requirements.

Unemployment Insurance and Unemployment Assistance.

8. Under the provisions of the Unemployment Insurance Acts payment is to be made from the Unemployment Fund and credited to appropriations in aid of the vote for Unemployment Insurance and Unemployment Assistance, in respect of the salaries and other expenses incurred in carrying the Acts into effect. The Committee was informed that the Department has approached the Department of Finance as to the procedure to be followed in determining the amounts to be transferred from the Fund. It will be glad to receive a further report on the matter in due course.

Food Allowances.

9. The Emergency Powers (Food Allowances) Order, 1941 (Fifth Amendment) Order, 1942, relating to the issue of vouchers exchangeable for bread, provides that where the date of issue of the vouchers, as shown thereon, is a date in any of certain specified weeks, the quantity of bread to be obtained by the recipient of the voucher shall be double the quantity obtainable in any other week. The Committee was informed that the audit had revealed that in some cases vouchers exchangeable for the larger quantities of bread did not bear dates within the specified weeks. It was explained that these vouchers did not bear the true date of issue but were otherwise correct. The Committee was also informed that the officers responsible for the issue of vouchers would be urged to exercise greater care in connection with the insertion of the dates of issue.

The Committee while accepting the explanations tendered views with concern the fact that in the issue of the vouchers in question the terms of the Statutory Order were not complied with. It feels, also, that the possibility of an excess charge on public funds cannot be ignored but in all the circumstances it does not wish to recommend that the sums charged to the vote in respect of these vouchers should be disallowed. It trusts, however, that the steps that are being taken by the Department will prove adequate to ensure that the provisions of the Order are strictly observed.

Posts and Telegraphs.

10. The attention of the Committee was directed to losses amounting to £1,790 Os. 2½d. and £2 5s. 6d. which occurred in connection with the issue of credit stocks of savings stamps and postage stamps for the use of savings associations, etc. It appears that these losses, which were due to, shortages in stocks, accumulated over a long period and that a satisfactory system of control had not been in operation. The Committee is informed that Court proceedings were instituted against the official responsible, that the Central Savings Committee has been dissolved and its functions transferred to the Department of Posts and Telegraphs, and also, that the issue of credit stocks of stamps to savings associations has been discontinued. The Committee, while concerned to note the absence of efficient control over a long period, does not desire to offer further comment in view of the action which has been taken.

11. In connection with the outbreak of fire at the Post Office Factory on 4th November, 1942, the Committee was informed that, for the year under review, the percentage which is added to direct labour costs to absorb overhead charges was not adjusted following the reduction in direct labour expenditure which resulted from the fall in production consequent on the fire. In consequence, there was a deficit of £4,251 as against overhead charges and the Accounting Officer has stated that the matter is under discussion with the Department of Finance. The Committee would be glad to be informed of the outcome when a final decision on the matter has been reached.

Wireless Broadcasting.

12. The system in operation for the control and custody of gramophone records has been the subject of correspondence between the Comptroller and Auditor-General and the Accounting Officer. The Committee understands that the whole matter is being re-examined with a view to the institution of a satisfactory system of record and control and it desires to be informed of the result in due course.

Primary Education.

13. Attention was drawn to the grant of superannuation allowance in exceptional circumstances to a teacher who had long service in an Industrial School but whose service was terminated in 1940 owing to the fact that the school premises were taken over for defence purposes. A new scheme extending to teachers of this class the benefits of the Superannuation Scheme enjoyed by National School teachers was made effective as from 1/4/1941, but the individual in question was debarred from those benefits as he had not been employed as a teacher on that date. Subsequently, the Department of Education approved of his appointment to another school, though he was then over 65 years of age, the normal age for retirement. After a short term of service he was retired and awarded a pension which, the Committee understands, he would have been granted had his service not been interrupted by the fortuitous circumstance of the closing of the school owing to the occupation of the premises by military forces. The Committee, while loath to condone any departmental action not strictly reconcilable with departmental regulations, in view of the special circumstances of this case does not wish to pursue the matter.

Supplies.

14. The Committee had under review the circumstances in which 98 000 £1 shares of Irish Shipping, Ltd. were transferred from Grain Importers (Éire) Ltd, to the Minister for Finance for a nominal consideration, The share capital of Irish Shipping Ltd. is £200,000, divided into 200,000 shares of £1 each, and Emergency Powers (No. 72) Order, 1941, made in March, 1941, empowered the Minister for Finance to acquire shares in the Company not exceeding £200,000 in value and provided that all moneys from time to time required by the Minister to meet payments required to be made by him to the Company in respect of any shares subscribed for or taken up by him under the Order should be paid out of moneys provided by the Oireachtas. Under this Order, the Minister purchased shares amounting to approximately £102,000, the sum required being provided by vote of the Oireachtas in 1941-42—No. 74 Shipping. The balance, £98,000, of the shares issued was purchased by Grain Importers (Éire) Ltd. out of surplus funds remaining in its hands which would otherwise have been applied towards reducing the flour subsidy payable from voted moneys. At a later date, by direction of the Department of Finance, the 98,000 shares held by Grain Importers (Éire) Ltd., were transferred to the Minister for a nominal consideration.

The Committee was informed that Grain Importers (Éire) Ltd. is a temporary body and that its Memorandum and Articles of Association provide that, on winding up, its surplus assets shall be surrendered to the Minister for Finance for the benefit of the Exchequer. It feels, however, that no justification existed for anticipating this arrangement and that the terms of the Emergency Powers Order mentioned should have been strictly adhered to, in which case the funds required for the purchase would have been provided from voted moneys and the transaction thereby brought to the notice of the Dáil as had been done in the case of the shares purchased by the Minister for Finance in the first instance. The adoption of this procedure would also have ensured that the amount received by Grain Importers (Éire) Ltd. for the shares would have been immediately available towards reduction of the flour subsidy.

Army.

15. The governing regulations provide that payment of ration allowance shall not be made to officers in receipt of rations in kind, or of a nightly rate of subsistence allowance, and attention was drawn to certain cases in which payments were made for periods for which either rations in kind or nightly subsistence allowances had been issued. It appeared that the claims for such payments were supported by certificates furnished by the officers concerned, and countersigned by the respective quartermasters, that neither rations in kind norsubsistence allowances had been received for the periods in question. The Committee has been informed that the amounts overpaid have been recovered and it notes that the military authorities were satisfied, after investigation, that the certificates were submitted by the officers in good faith and without intention to defraud. It is noted that a revised form of certificate containing a more unequivocal declaration is being adopted. The Committee considers that in view of the considerable payments from public funds which are based on the certificates of military officers their attention should be directed to the strict necessity for ensuring the accuracy of any certificates furnished by them.

16. In connection with the provision of clothing for the Forces for the year under review the Department of Finance sanctioned the purchase of such additional articles as would, when added to the quantities on hands—including orders outstanding—on the 1st April, 1943, provide full requirements for the estimated strength for a period of twelve months from that date. It appeared, however, that contracts were placed on the basis of the gross requirements for the year, less estimated stocks on hands on the 1st April, but that, in the case of some articles, the actual stocks on hands at at the beginning of the year were considerably greater than the estimated quantities which were taken into account in calculating the year’s requirements. Accordingly, the purchases were very much in excess of the quantities authorised by the Department of Finance. The Committee has been informed that the matter has been adjusted by modification of the demands for subsequent years. It wishes to emphasise, however, the necessity for strict adherence to any conditions imposed by the Department of Finance in according sanction for expenditure.

17. In connection with harbour dredging operations which were undertaken during the year, the sanction of the Department of Finance was obtained for the hire of a dredger for a period of six months at a rent of £30 per week and it was estimated that about 1,000 tons of silt would be removed each week. The dredger was inspected afloat prior to acceptance but under-water examination subsequent to delivery disclosed certain defects which were repaired at a cost of £100, the vessel being out of commission for over two months in consequence. Having regard to the terms of the hireage agreement, which provided that the vessel should be inspected prior to delivery and that the rent should be due and payable whether the dredger was in use or not, the Department was held to be liable for the cost of the repairs and for the payment of rent for the period during which the repairs were being carried out. It appeared from reports furnished at the end of the hireage period that only 2,600 tons of silt had been removed and the cost, including operational expenses, amounted to £1,174.

The Committee cannot regard as satisfactory the arrangements made in connection with the project. It appears that whilst it had been represented to the owners when the agreement was being negotiated that rent should not be payable for any period during which the dredger could not be worked owing to abnormal circumstances over which the Minister had no control, it was not found possible to define such abnormal circumstances with precision and accordingly no such provision was included in the agreement. Nor was any question raised of including in the agreement a reservation as to the Department’s liability to make good undisclosed defects, it being assumed from the general results of the examination of the vessel afloat that the under-water portion of the ship was also in good condition.

Reference was also made to the fact that an alternative vessel which was available for hire at a much cheaper rate was not regarded as suitable as it was equipped for dredging by the grab method only and it was considered that the work could be done more efficiently by suction. The dredger which was hired was equipped for both methods but it appeared that, for technical reasons, it was not possible to employ the suction equipment and it was stated that this position could be ascertained only under actual working conditions.

Having regard to the extent by which the unit cost of the operations exceeded that contemplated when the proposals were being submitted to the Department of Finance the Committee desires to learn whether the covering sanction of that Department has been obtained for the expenditure incurred.

18. Reference was made to certain stores which were purchased for general Army purposes during the year although quantities of similar stores, which had been purchased in connection with an air-raid precautions scheme which had been abandoned, were held in stock. The Committee was informed that it had been decided as a matter of policy to retain the air-raid precautions stores and it accordingly makes no comment on the purchases referred to. It trusts, however, that every effort will be made to utilize or dispose of surplus stocks when circumstances permit.

19. A grant paid under Section 46 of the Air-Raid Precautions Act, 1939, to an essential undertaker, a public company, was based on the Company’s expenditure on wages and materials together with an addition of 66½ per cent. of the wages bill for overheads. The regulations governing the approval of such expenditure for purposes of grant—Air-Raid Precautions (approval of Expenditure by Essential Undertakers) Regulations, 1940 (Statutory Rules and Orders, No. 180 of 1940)—provide that only net expenditure actually and specifically incurred in respect of a matter included in an essential undertaker’s scheme shall be admissible, and the question was raised whether the addition for overheads did not include a margin for profit. The Committee is informed that the percentage added to the wages charge provided only for general maintenance and administrative costs, and no element of profit was included. In view, however, of the terms of the governing order which permits of approval only of direct expenditure actually incurred, it has some doubt as to the admissibility of any such overhead charges for purposes of the grant and will be glad to be furnished with the views of the Minister for Finance in the matter.

Public Works and Buildings.

20. The attention of the Committee was directed to a case in which a contractor defaulted after he had been granted an extension of time to complete his contract, and the Commissioners of Public Works, saving been advised that failure to notify the contractor’s sureties of this variation of the terms of the contract released the sureties from their obligations, agreed to accept from the contractor a payment of 2s. 6d. per week in settlement of their claim of approximately £300. The Commissioners were subsequently advised that the earlier legal opinion on which they had acted may not have been sound, but that the acceptance of a compromise settlement in any event released the sureties from their obligations. A sum of £59 16s. 0d. was due by the Commissioners to the defaulting contractor under another contract, but a legal opinion was obtained to the effect that the Commissioners had no right to withhold this sum against their claim as it had not then been determined. The Committee observes, however, that at the date the payment of £59 168. 0d. was made the Commissioners were committed through the contractor’s default to additional expenditure amounting to at least this sum.

In the opinion of the Committee it is important that the legal issues raised in this case should not be left in doubt, and it considers it desirable that they should be referred to the legal advisers for their opinion.

(Signed) LIAM COSGRAVE,

Chairman.

29ú Samhain, 1945.