Committee Reports > List of Committees > Dáil > 1953 > Committee of Public Accounts > Report - Appropriation Accounts 1950 - 1951

REPORT

PART I—GENERAL OBSERVATIONS.

MINUTE OF MINISTER FOR FINANCE DATED 23rd JULY, 1952.

Public Works and Buildings.

1. The Committee is pleased to learn that the Minister agrees with its recommendation that whenever the Commissioners of Public Works find it impossible to inspect buildings abroad prior to purchase, a technical report on the property should be made available for their consideration.

2. Regarding the purchase of certain dredging plant by the Commissioners of Public Works the Committee notes that the Minister has been advised that it is not possible to make an accurate estimate of the cost of reconditioning floating plant until the vessels are examined in dry dock and that even then the estimate may be considerably exceeded as the result of hidden defects discovered when a vessel is opened up. The Committee desires to point out, however, that the cost of rendering the plant in question fit for service, including the purchase of necessary auxiliary plant, was initially estimated at £33,000 whereas the final estimate amounted to £126,000. In view of the extent of the discrepancy between these figures the Committee is not yet convinced that adequate consideration was given to the matter before purchase was effected. It tends to be confirmed in its doubts by the statement that at the time the plant was acquired it was believed that suitable auxiliary craft would be available at reasonable prices. It would have thought that the obtaining of definite information on this point would, as a matter of course, have been precedent to purchase of the plant. It notes that the Commissioners of Public Works have decided to recommend its disposal at the best price obtainable, and it desires to be informed in due course of the ultimate financial effect of the whole transaction.

Defence.

3. The Committee is pleased to note that the Minister has received an assurance from the Department of Defence that in any future case in which that Department proposes to acquire premises, a full and careful examination of the building will be made by a competent technical officer with a view to ascertaining its precise condition, and that the full facts will be reported when the Minister’s sanction for the proposal to purchase is being sought.

Supreme Court and High Court of Justice.

4. The Committee notes that, in deference to its views, the authority of Dáil Éireann will be sought by way of supplementary estimate for treating as a final charge against voted moneys the unrecouped balance of an advance to make good certain deficiencies in estates of minors.

Aviation and Meterological Services.

5. The Committee appreciates that, as the amount of subsidy payable could not be determined until a few days prior to the close of the financial year, there were difficulties in the way of taking a supplementary estimate. It considers that, had time been available, this would have been the proper course to adopt, as it is not disposed to agree that, where adequate savings are available on a vote generally, this, in itself, justifies the exercise of virement to cover substantial excess payments on a particular subhead.

Transport and Marine Services.

6. The Committee is glad to note that the Minister will have regard to its view that should any future case arise in which an estimate is introduced which is at variance with existing legislation the position will be made clear by means of an explanatory note on the face of the estimate.

CHANGES IN ESTIMATES.

7. The Committee has had under consideration two cases in which the information given in former years in estimates was materially altered. Contrary to established practice it was not advised beforehand of these changes, and consequently had no opportunity of reviewing their effects.

The first case related to the notes of “Extra Remuneration,” i.e., any additional remuneration, pension or allowance received by officials from public funds in addition to their normal salaries. For some years such emoluments in excess of £30 had been noted, but in the year under review this limitation was increased to £50. The higher minimum figure was also adopted for the notes of extra remuneration appended to the appropriation accounts in cases in which it was not possible to have them inserted in the estimates. The Committee was informed that in view of the depreciation in the value of money it was thought desirable to make this change and accordingly an instruction had been incorporated in the estimates circular issued to Accounting Officers. In the circumstances the Committee does not object to the raising of the £30 limit to £50.

In the second case the detailed statements of new works and of maintenance, etc., charges, hitherto appended to the estimate for Public Works and Buildings, were replaced by summarised statements showing only the estimated total expenditure proposed to be incurred on behalf of each Department. The statement of actual expenditure on new works, etc., appended to the appropriation account followed the form of the estimate, and gives no information regarding the individual works undertaken for each Department. The Committee was informed that the reason for the change was to effect economy in printing and in time and expense. While the Committee is of opinion that the statements of new works formerly appended to the estimates and appropriation accounts for Public Works and Buildings could with advantage be curtailed by the omission of details of the smaller items, it feels that the information previously furnished regarding major works should be continued, and it suggests that future estimates and appropriation accounts should include particulars of any work estimated to cost £4,000 or over.

On the general question of reference to the Committee of Public Accounts of proposals for altering the form of estimates the Committee accepts the assurance given by the Accounting Officer of the Department of Finance that it will be consulted beforehand whenever any material variation in the estimates is contemplated in the future.

PART II—PARTICULAR ACCOUNTS.

Superannuation and Retired Allowances.

8. The attention of the Committee was drawn to an award of an annual allowance of £900 11s. Cd., together with a lump sum payment of £2,401 9s. 4d., which was made by way of compensation under section 6 of the Superannuation Act, 1909, to an officer who had been removed from office for the purpose of facilitating improvements in the organisation of his Department by which greater efficiency and economy could be effected. The Committee was informed that the officer concerned was subsequently appointed to another pensionable post in the Department at his former salary, the annual allowance being suspended during the period of re-employment and the lump sum being retained by him subject to deduction from any lump sum that might become payable on ultimate retirement.

In their reports dated 9th December, 1937, and 16th February, 1939, former Committees of Public Accounts commented on two similar awards which had been made under section 6 of the Act of 1909 and section 7 of the Superannuation Act, 1859, respectively. In the latter report the view was expressed that a change in personnel alone should not necessarily be regarded as satisfying the conditions of greater efficiency and economy prescribed by the section, and the Minister for Finance, in his minute dated 27th November, 1939, intimated that the doubts so raised would be borne in mind in any similar case that might arise in the future. The Committee will accordingly be glad to learn what factors there were in the present case which did not arise in the cases previously commented on.

The Committee wishes also to refer to the retention by the officer of the lump sum element of the compensation. It considers the principle unsound by which an officer remains in enjoyment of the lump sum portion of his compensation award notwithstanding his re-employment in a pensionable position at his former salary.

Defence.

9. Advances amounting to £34,800 8s. 0d. were made under contracts placed with a foreign firm in February, 1949 and March, 1950, for the supply of equipment, none of which was delivered as the contractor had been unable to obtain the necessary export licence. It appears that, owing to the military importance of the equipment, the Minister for Defence was reluctant to cancel the contracts as he feared that such action would interfere with any priority which the payments had established and might, in fact, prejudice the prospects of ultimate delivery. The Accounting Officer stated, however, that the contractor had been asked, failing delivery of the material, to refund the sums advanced, together with interest, and the Committee will be glad to be informed in due course of the outcome.

Army Pensions.

10. The Defence Forces (Pensions) Scheme provides that, in order to qualify for the gratuity payable to a married officer on retirement, the officer should have been either in occupation of married quarters or in receipt of lodging, fuel and light allowance at the married rate during the two years ending on the date of retirement. Consequent upon the discontinuance of lodging, fuel and light allowance arising out of the consolidation of pay and allowances as from 1st April, 1950, certain married officers who retired during the year did not fulfil the conditions required for the award of retirement gratuities and payments were made on an ex-gratia basis with the sanction of the Department of Finance. The Committee was informed that the earliest opportunity would be taken to amend the scheme and it will be glad to learn when this has been done.

Transport and Marine Services.

11. The attention of the Committee was drawn to the payment of £1,000 by way of subsidy to the company operating the shipping service between the City of Galway and the Aran Islands. Section 2 of the Aran Islands Transport Act, 1946, provides that the Minister for Industry and Commerce may enter into a contract for the operation of a shipping service between the City of Galway and the Aran Islands and pay a subsidy for the operation of the service subject to the terms of such contract. It appears, however, that contracts were not completed for the years 1950 and 1951 owing to the refusal of the company to sign agreements for these years unless certain provisions, which related to the transfer of the S.S. “Dún Aengus” to the Minister without incumbrance in the event of the company ceasing to use it on the Galway-Aran service on termination of the agreement, were deleted. The Committee understands that it was considered essential in the public interest that the operation of the service should be continued, but that the company could not carry it on owing to its unsound financial position. Consequently the Minister authorised the payment of subsidy to the extent necessary to enable the company to continue operating the service until August, 1951, when it was transferred to Córas Iompair Éireann.

The Committee appreciates the difficulties which rendered necessary the payment of subsidy although no contract had been entered into with the operating company as required by section 2 of the Act. It feels, however, that as the conditions under which the payment was made were not strictly in accord with the provisions of the Act the position should have been brought to the notice of Dáil Éireann by a note appended to the appropriation account.

Public Works and Buildings.

12. A site at Clondalkin for a new engineering repair workshop and store required to meet the expanding volume of repair work arising from arterial drainage schemes was purchased in June, 1948, at a cost of £2,640. In February, 1949, a contract was entered into for the purchase, for £7,893, of five steel framed buildings for use as temporary accommodation pending the erection of permanent premises. These temporary buildings were, in fact, never erected at Clondalkin and it is understood that four of them have been used elsewhere. Certain development work was carried out on the site, and the initial contract amounting to £15,784 18s. 0d. for structural steelwork for the permanent buildings was placed in September, 1949. Early in 1950, however, it was decided to abandon the work at Clondalkin and instead to negotiate for the acquisition of premises at Inchicore. These premises were eventually leased for a term of 50 years from 2nd April 1951, at an annual rent of £13,500 plus rates. The contract for the structural steelwork was terminated on payment of £8,974 16s. 9d. to the contractor and, in all, the outlay on the abandoned work, apart from the cost of the site, amounted to approximately £21,000.

The Committee is concerned to note that although it appears that the projected workshop and store was very urgently required and the site at Clondalkin was acquired in February, 1948, no real progress had been made on the provision of buildings, either temporary or permanent, when the decision to abandon the work was taken early in 1950. Apart from the direct loss to public funds arising from the payment of £8,974 16s. 9d. on the termination of the contract for steelwork, it is by no means clear that some of the expenditure on development work will not prove to have been ineffective. The Committee notes that negotiations are in progress for the disposal of the site, and it desires to be informed in due course of the ultimate loss involved in the decision to abandon the original scheme.

13. Tenders for improvements to a national school were received on 1st December, 1949, but acceptance of the lowest tender at £1,683 7s. 6d. was deferred until 22nd March, 1950, owing, it was stated, to uncertainty regarding the availability of money in the vote to meet the expenditure. The latest date for completion of the work under the terms of the contract was 26th August, 1950, but it was not begun by that date as the contractor had undertaken other work before the acceptance of his tender was notified to him. He was finally released from his contract in September, 1950, and a contract was placed with the next lowest tenderer, who completed the work in September, 1951, at a cost of £2,067 14s. 3d. The Committee finds it difficult to appreciate the reason given for deferring the placing of the initial contract since it understands that it is the practice to collect and expend the local contribution before voted moneys are drawn upon, and it regards as unsatisfactory the delay of over twelve months in the completion of this relatively small work.

14. The Committee was informed that stocktaking of machinery and stores held by the Commissioners for use on arterial drainage schemes had not been carried out since 1947. The Accounting Officer stated that stocktaking is normally undertaken every three years and that the delay was caused by the very big increase in the variety and volume of stores handled and the inadequacy of storage facilities. The Committee wishes to stress the importance of the periodical physical check of stores as an essential feature of any system of control. It notes that suitable accommodation has now been acquired and that a complete stocktaking is in progress, the results of which would be reviewed by the Comptroller and Auditor General in the course of the audit of the accounts for 1951-52.

Health.

15. The Committee had under review payments of grants to health authorities under the provisions of the Health Services ( Financial Provisions) Act, 1947. To arrive at the amount of the grant for any year it is necessary to determine the standard expenditure, as defined in the Act, for that year, and pending such determination payments on a provisional basis have been made to the health authorities.

The Committee was informed that the standard expenditure for the years 1948-49 to 1950-51 has been determined in respect of 17 of the 31 health authorities. It understands that the delay in the remaining cases was due to the necessity of awaiting the receipt of statements of expenditure by the health authorities certified by Local Government auditors. It trusts, however, that the standard expenditure for the remaining authorities will be determined and the necessary adjustments of all provisional payments effected with as little further delay as possible.

Lands.

16. The Comptroller and Auditor General drew attention to the case of an officer who had, over a period of about three years, submitted fictitious receipts for car hire in support of his claims for travelling expenses. Of a gross loss of £1,343 14s. 3d., arising from this officer’s irregularities, a sum of £1,231 2s. 10d. has been charged to the accounts for the years 1947-48 to 1949-50, £100 6s. 0d. remains charged to suspense, and the balance, £12 5s. 5d., represents a sum improperly withheld by him from the Department. The Committee understands that a balance of salary amounting to £39 2s. 8d. due to the officer has been retained and that a sum of not less than £500 would have been due to him for journeys undertaken in the course of his official duties.

The Committee is concerned that a fraud of this nature could be carried on undetected for such a long period and notes the Accounting Officer’s assurance that every possible step has been taken to safeguard against the occurrence of similar frauds in the future.

Local Government.

17. Non-statutory contributions amounting to £55,495 15s. 2d. were made to local authorities from subhead I. 1. of the Vote for Local Government in recoupment of additional loan charges arising from the increase in the rate of interest from 2½ per cent. to 3¼ per cent. per annum on certain loans issued from the Local Loans Fund. These loans are repayable by fixed annuities over a term of years. The Comptroller and Auditor General pointed out that the Department of Finance minute authorising the non-statutory contributions appeared to contemplate the recoupment to the local authorities of the additional amounts actually paid by them following the recalculation of the annuities, whereas the contributions paid by the Department, which represented the difference in the interest contents of the annuities, were appreciably greater. The Committee recognises that the excess payments would ultimately be offset by the operation of reduced contributions in later years and that there would be no loss to State funds over the whole period of repayment of the loans. It considers, however, that the method adopted is unsatisfactory as it resulted in payments being made to local authorities in excess of the additional loan charges arising from the increase in the rate of interest, and as there is no guarantee that provision would be made by Dáil Éireann for payment of the non-statutory contributions during the full currency of the loans. It understands that the matter is being reviewed by the Departments of Finance and Local Government and will be glad to be informed of the outcome in due course.

Agriculture.

18. The attention of the Committee was drawn to the inadequacy of the system of accounting for machinery and stores purchased for the Land Rehabilitation Project. The Accounting Officer stated that it was not found possible in the early stages to organise properly a full system of recording owing to the pressure of work involved in getting the project under way and to the shortage of staff with the necessary store accounting experience. Whilst the Committee appreciates the difficulties attendant upon the inception of the project it desires again to emphasise that adequate accounting and stocktaking arrangements are essential for the effective control of stores. It notes that a system has now been brought into operation which is considered satisfactory, and that the position would be reviewed by the Comptroller and Auditor General in the course of the audit of the accounts for 1951-52.

(Signed) W. A. W. SHELDON,

Chairman.

26th February, 1953.