Committee Reports > List of Committees > Dáil > 1967 > Committee of Public Accounts > Report - Appropriation Accounts 1965 - 1966

REPORT

PART I—GENERAL OBSERVATIONS

MINUTE OF THE MINISTER FOR FINANCE DATED 28th FEBRUARY, 1967

1. The Committee will await the further observations of the Minister for Finance on the following matters raised in previous reports:—

Report dated 12th November, 1964

Irregularities in claims for guarantee payments by certain cattle exporters.

Dwelling houses erected by Land Commission contractor— proceedings issued against sureties.

Report dated 10th March, 1966

Claims against St. Patrick’s Copper Mines, Ltd.

Report dated 17th November, 1966

Audited accounts of bodies which receive subventions from voted moneys.

Intermediate river drainage schemes.

Storm damage to glasshouses.

National Gallery—lending of pictures.

Overlapping of functions between An Foras Forbartha and the National Building Advisory Council.

Possibility of duplication of functions and overlapping of efforts in provision of technical assistance.

2. In its report dated 22nd February 1961, and in each subsequent report, the Committee mentioned the case of duplicate payments for water supplied to State-owned premises. But the question of recovery of the overpayments has not as yet been resolved. As this matter has apparently been dealt with in a dilatory fashion, the Committee expects the Minister for Finance to ensure that it is brought to an early conclusion.

3. Reference was also made in the report dated 22nd February 1961 to the control of electric current in soldiers’ married quarters and to the question of the service being taken over by the Electricity Supply Board.

It is disappointing to note that negotiations with the Board have not yet concluded. The Committee expects a full explanation.

Report dated 17th November, 1966

4. The Committee would like to know whether the second stage of the restoration of the Royal Hospital, Kilmainham has commenced; and, if so, whether having regard to previous experience, the contract makes provision for a scaling down of hireage charges for scaffolding, plant, etc.

5. The Committee is pleased to note that the unsatisfactory position regarding the income derived by the Commissioners of Public Works out of a letting of premises in O’Connell Street, Dublin has been corrected following an application for a renewal of the lease for a further five years and that in future the rent will be reviewed before further renewals. It also notes that Departments with property commitments are being asked to keep leases under review in order to avoid any future case of this kind.

6. The Committee notes the results of the examination by the Department of Finance of the incidence of overtime in Government Departments and that this matter will be kept under continuous review.

7. It would be of assistance to the Committee if notes in future Appropriation Accounts of overtime payments indicated the total amount involved.

8. Regarding the observations of the Minister for Finance on the question of the records relating to property administered by the Department of Defence, the Committee consider that there has been unreasonable delay in vesting in the Minister for Defence the properties described at “B” of the appended Minute. It accordingly wishes to be kept informed of progress in this matter.

PART II—PARTICULAR ACCOUNTS

Miscellaneous Expenses

Appendix IV

9. The cost of rebuilding the Abbey Theatre was provisionally estimated at £250,000 in April 1958. In July 1960 a quantity surveyor estimated the cost at £280,000 exclusive of professional fees but including the shell of the Peacock Theatre. The contract for the new building was placed later with the lowest tenderer at a figure of £309,773 with an estimated addition of £38,721 for professional fees and expenses making a total of £348,494. The final estimated cost is £650,000, an increase of £300,000 over the contract price plus fees, etc. Details of the increases are appended and may be summarised as follows:—

In its report dated 17th November 1966, the Committee recorded its concern about the growing trend to underestimate the cost of public works. The statement set out above suggests that the original plan was strikingly incomplete and that most of the additional work should have been foreseen and provided for in the original contract. The professional fees, etc., of £72,170 for a single project emphasise the point previously made by the Committee that as long as fees are measured against costs instead of against work performed, there is little incentive to economy. In this connection, attention is drawn to the appended statement (Appendix XLV) where fees of £106,000 were paid up to 31st March 1967 in respect of the reconstruction of St. Patrick’s Training College.

Health

10. The Committee receives from the Department a number of statements relating to expenditure, etc. by health authorities. It would like to be provided with these statements for future years as far in advance as possible of its examination of the Accounting Officer so that it may have sufficient time to study the information contained in the documents.

Qns. 35, 38-49

11. Expenditure by health authorities on drugs and medicines amounted to £1.9 million for 1965-66 an increase of £300,000 over the previous year and of £600,000 over the year 1963-64. There is no satisfactory explanation for this substantial rise all over the country in the cost of drugs, etc. save that more of the modern proprietary drugs and medicines are being prescribed than are their therapeutic equivalents. To arrest this trend the Department has supplied all dispensary doctors with a booklet showing the names of proprietary articles and the names of their therapeutic equivalent, but it seems that a large number of doctors prefer to prescribe sophisticated modern preparations.

It is not possible to keep a check on wastage of drugs because doctors are not required to keep a record of what they take out and how it is disposed of. Complaints about wastage which were investigated by the Department were not substantiated; nevertheless the rising cost of drugs has caused anxiety and the Department was instrumental in having a circular letter on the subject issued by all the health authorities.

A couple of health authorities operate central pharmacies and, instead of the dispensary doctor or the small hospital requisitioning supplies from the contractors, they are ordered by the central pharmacy and in this way some control is exercised over stocks held by the smaller units. But regular stock and store accounts are not kept and in the absence of such records inspection by medical inspectors of the Department does not greatly assist in closer control. The accounts of the health authorities are audited by local government auditors but again the absence of records precludes investigation.

The Committee consider that the question of control poses complex problems. It appreciates that a considerable amount of the time of highly skilled doctors is occupied with purely clerical work and it would not wish to add to this burden. Possibly the provision of clerical assistance would make more time available for purely medical work and enable effective records to be maintained. This is a matter that might be explored by the Department with the interested parties.

Qn. 50

To some extent, the rather steep rise in the cost of drugs and, medicines has been attributable to their being provided free to persons other than those who have medical cards. This practice has been operating for two or three years in respect of people who are deemed to be eligible by health authorities for this facility on the basis of its being a hardship on them to provide drugs and medicines for a member of their family. In many cases dispensary doctors have private patients whom they consider would not be able to pay for expensive drugs and they exercise discretion by issuing a supply from the stock under their control without causing the patients to make application to the health authority.

The Committee is of the opinion that there is a certain amount of wastage that could be avoided; and while it believes that the best possible care and treatment should be provided for patients every feasible effort should be made to eliminate waste of every kind.

National Gallery

12. The Director of the Gallery in the course of his evidence complained about having to surrender to the Exchequer the unspent balance of £500 out of the grant of £2,500 for the conservation of works of art. The surplus arose because materials ordered had not been delivered in time for payment in the financial year and the liability would have to be met out of the following year’s grant. This is a new service and the experience has shown that it could more appropriately be provided for by way of Grant-in-Aid. The Comptroller and Auditor General and the Department of Finance see no objection to this course and the Committee recommend accordingly.

Public Works and Buildings

13. In 1961 the Commissioners of Public Works sought to purchase half an acre of land in Galway as a site for a fisheries research station, but the matter fell through in 1963. At that stage the Fisheries Division suggested that a site of 4½ acres near Merlin Park, Galway might be considered and following protracted negotiations this site was purchased in 1966 for £9,000 plus fees.

The Comptroller and Auditor General in the course of his investigation of this transaction noted that the Minister for Health had sold in 1961 three sites of 9, 10 and 11 acres for £400 each not far from the 4½ acre site in question. On further inquiry he found that originally 340 acres were purchased at Merlin Park out of Hospitals Trust Funds; that 150 acres transferred to the health authority with the new sanatorium included land surplus to requirements which it was decided to leave with the authority to prevent undesirable development. He was informed that the lots of 9, 10 and 11 acres referred to above had been sold prior to inquiries by the Office of Public Works.

The Committee was told that though is is the practice of the Commissioners to advise other Departments of property that is for sale, they were unable to say whether the Department of Health had consulted them in the instance in question. Their architects looked for a suitable site for the research station for a long time before the 4½ acre site was recommended; the Commissioners were under constant pressure and this left them no option but to proceed even though 4½ acres was in excess of requirements.

On the evidence before it, the Committee find it very difficult to accept that a cheaper site could not have been procured for the fishery research station. Indeed, the price paid seems to have been out of all proportion to current land values. The Committee would also like to know how the site has been utilised and whether any of the land is available for disposal for the benefit of the Exchequer.

14. Reference was made in previous reports to the conversion of Templemore Barracks to a training depot for the Garda Síochána and to the unsatisfactory procedures that caused concern to the Committee. The latest evidence reveals that final payments estimated to be between £10,000 and £20,000 have been held up because of defects in the swimming pool, that though these have been remedied there is a possibility of recurrence, and that the Department of Justice has engaged an independent consultant to examine the design and construction of the pool and to furnish a report. Because State funds have been heavily committed for this project the Committee are anxious to be kept informed.

15. The Comptroller and Auditor General drew attention to three cases where the cost of certain works was grossly under-estimated. One was repairs, etc., at the North Wing of the Royal Hospital, Kilmainham—original estimate £40,000, expenditure, £180,000; the second was installation of a passenger lift in the Office of Public Works —original estimate, £4,000, expenditure, £16,000; the third case was eradication of dry rot in Limerick Custom House—original estimate, £7,000, expenditure, £28,000.

While the Committee accept the explanations of the difficulties encountered which had not been foreseen, and notes the assurances that the architects are constantly reminded of the importance of realistic estimates, it would like to invite attention to paragraph 19 of its report dated 17 November 1966 in so far as it relates to the undermining of financial control through unrealistic estimates of projected expenditure. The Committee also wish to express concern at the too frequent occurrence of underestimation.

Social Welfare

16. Section 2 of the Social Welfare (Miscellaneous Provisions) Act, 1965 provided for an increase of 10/- weekly in old age pensions (noncontributory) where yearly means did not exceed £26 5s. 0d. and of 5/- where means lay between £26 5s. 0d. and £52 10s. 0d. These increases were to become effective from 1 August, 1965 and had been provided for in the Budget. The Department’s accounting records did not include information to identify pensioners within these means groups, so in order to comply with the time requirements to make the increased payments from 1 August it was necessary to utilise information from records prepared previously for statistical purposes. In the course of a test check of the increases paid the Comptroller and Auditor General discovered a number of overpayments and in reply to his inquiries he learned that the statistical records had proved unreliable; that action was being taken to recover the overpayments; and that a full investigation of all cases in the categories in question was in progress. The results of the investigation, recently communicated to the Committee disclose that there were about 1,100 cases involving overpayments of £14,000. The Committee trusts that steps have been taken to ensure that accurate information shall be available in future for financial and accounting purposes so as to avoid a recurrence of the difficulties which have been under consideration.

The Committee also feels that in attempting to recover the overpayments hardship must have been inflicted on pensioners who accepted the increases in good faith and urged the Ministers for Social Welfare and Finance to remit the overpayments. It is pleasant to record that these Ministers concurred with the view of the Committee, and that the overpayments will be written off.

Posts and Telegraphs

17. The Comptroller and Auditor General in the course of his report had a number of comments to make on the growth of suspense accounts. This matter crops up from time to time and in the Department of Posts and Telegraphs the sums involved are usually substantial. The well established principle is that expenditure coming in course of payment should be charged against the appropriations for the year in which payment is made. Suspense accounts with debit balances constitute a shortage of cash and previous Committees have expressed their emphatic disapproval of delays in clearing such accounts. In his report the Comptroller and Auditor General observed that the total expenditure by the Department on freight during the year 1964-65, amounting to £67,644 and £44,466 of the amounts paid in earlier years, met from departmental balances, remained charged to suspense accounts. The Department’s explanation was that the delay in clearing the accounts was due to staffing difficulties.

Freight accounts were paid promptly, but the examination of details and apportionment of charges had to be postponed. The Committee has been assured that the accounts to which the Comptroller and Auditor General referred have since been cleared and that the matter will be kept under regular review.

18. The Committee wishes that the Commercial Accounts of the Post Office services should be available as far in advance as possible of its examination of the Accounting Officer so that there may be an opportunity of studying the details.

Defence

19. Military personnel, equipment, etc., were made available to a film company making a picture in County Wicklow. Originally it was estimated that the cost would be of the order of £30,000 but as filming proceeded requests were made for additional services and when the operation was completed the ultimate amount due to the Department was assessed at £90,000. While the Forces were engaged, £35,000 was received in instalments from the company, but the Department’s final claim was disputed and a revised claim for £79,000 had been made. The Committee regards it as important to emphasise that in its view payment should have been made in advance of the provision of services.

Local Government

20. The accounts relating to Motor Vehicle Duties, etc., collected by local authorities are audited by Local Government Auditors whose reports come under the scrutiny of the Comptroller and Auditor General. One of these reports indicated that the standard of administration in a local taxation office was unsatisfactory. The Committee learned that the matter was under investigation and it would like to be informed of the outcome.

Stationery Office

21. Urgent bookwork printing for the Stationery Office is dealt with by a panel of four contractors under a five year contract. For 1960-65 prices ranged from 33⅓ per cent. to 50 per cent. over schedule rates. It was noticed by the Comptroller and Auditor General that more than half in value of the printing in this category was entrusted to the firm whose price was highest. The Accounting Officer explained that his office placed orders with the firm which was in a position to meet stringent delivery dates.

An incentive above ordinary rates is unavoidable where the work is urgent; but urgency could arise from neglect to place an order in good time at normal contract rates. This seems to have happened in some instances to which the Comptroller and Auditor General drew attention. The Committee formed the impression that the contract procedures were complex and time consuming and that there was need for reform. It notes the progress that has been made by reducing the number of forms in use and the elimination of unsatisfactory contractors. It trusts that every effort will be made to improve the service.

Appendix XXXV

22. The Comptroller and Auditor General reported that two address-card cutting machines were hired for the Revenue Commissioners in November 1961 pending the purchase of similar machines for permanent use. These were delivered in June, 1962 at a cost of £91 each, but the hired machines were not returned until May, 1963 when charges accrued amounted to £468. The claim for hireage, received from the contractor in May, 1963, was not settled until February, 1966 the delay being attributed to the practice whereby the Stationery Office obtains through the Revenue Commissioners the sanction of the Department of Finance for the payment. The Comptroller and Auditor General also observed that there was a considerable number of other claims for hireage of office machinery for the Revenue Commissioners which were overdue for payment at 31 March, 1966, and he was informed that these were held up either because further information was required from the Revenue Commissioners or that Department of Finance sanction had not been received.

Taking first the matter of the prolonged hire of the two address-card machines, the Committee is astonished at the lack of liaison between the Stationery Office, the Office of the Revenue Commissioners and the Department of Finance. The first mentioned did not know about the retention of the machines beyond June 1962, until they received a bill for the charges in May 1963 and the Department of Finance, whose authority for payment was required, was not informed until December, 1965. The explanation for the long delay is unacceptable. It appears to the Committee that the role of the Stationery Office was confined to the payment of accounts; that in the instance in question, and in the other cases referred to by the Comptroller and Auditor General, the selection of the equipment for purchase or hire by a Department was subject to approval of the organisation and methods section of the Department of Finance and that the involvement of three Departments weakens efficiency in administration and financial control.

While the Committee is pleased to record its appreciation of the advances that have been made to improve efficiency by the introduction of the most up-to-date office equipment in the Office of the Revenue Commissioners and indeed in other Government Departments, it is particularly concerned with accountability and financial control, and now that a weakness in this field has been identified, it trusts that remedial measures will be taken.

Transport and Power

23. The cost of erecting the principal buildings at Cork Airport was £476,007 compared with an original estimate of £195,000 later increased, when tenders had been received, to £287,500. Three reasons were given for the increased expenditure—(1) because of the urgency of the project the contract was placed before specialist services could be planned in detail; (2) variations became necessary during the progress of the contract; (3) realistic advance estimation is only possible by thorough pre-planning and in this case time did not permit. Elsewhere in this report reference has been made to the importance of realistic estimates in the sphere of financial control and the Committee hopes that due notice shall be taken of its observations.

24. Since the Airport opened in 1961 repairs to the windows to prevent leaks had to be undertaken, at a cost of £6,000. The Comptroller and Auditor General was told that these leaks were due to exceptional weather conditions at the Airport’s exposed position of 600 feet above sea level and not to faulty design nor bad workmanship, but he felt that the weather conditions at the site should have been known when the design of the windows was being planned. The Committee share this view and wishes to record its dissatisfaction with the explanation given for this expenditure.

Office of the Revenue Commissioners

Appendix XXXVI

25. In paragraph 26 of the Committee’s previous report mention was made of the checks applied by the Revenue Commissioners on the returns received from registered persons of taxable turnover. During the year under review a total of 48 cases showing discrepancies were reported for prosecution and of these 22 were settled on the basis of payment of outstanding turnover tax and interest, together with a sum for compromise penalties; in the remaining 26 cases successful penalty proceedings were taken. The total amount of additional turnover tax brought to light and collected as a result of the discovery of discrepancies during the year amounted to over £50,000. The Committee would like to be informed of the extent of the departmental audit for all districts including Dublin and whether further discrepancies have been discovered.

Agriculture

Appendix XXXIX

26. The scheme of grants for calved heifers commenced on 1 January 1964 and provided for the payment of a grant of £15 for each additional calved heifer kept by herd owners above their normal herd replacements. The total grants paid from the commencement of the scheme to 31 March, 1966 amounted to £5,761,950 representing grants for 384,130 calved heifers. The Comptroller and Auditor General observed, from departmental statistics based on the half-yearly census of cattle population, that the number of milch cows increased by only 245,000 between January 1964 and January 1966. Because the discrepancy in the numbers could represent expenditure over £2 million, he had asked whether that increase could be reconciled with the number of grants paid.

The Accounting Officer explained that the number of herds earning grants represented about half the number registered under the B.T.E. Scheme, that all the cow herds which showed an increase would have been included in the scheme; that herds that did not participate were either static or had shown a decline; and that another factor affecting the numbers was that during the period in question 64,000 cows were slaughtered under the B.T.E. Scheme thereby causing a temporary decline or operating against an increase in numbers in many herds. Twenty five claimants were prosecuted for making fraudulent claims and convictions obtained in 20 of these cases.

The Committee is not entirely satisfied that the discrepancy between the number of heifer grants paid and the overall increase in the cow population has been adequately explained and it wonders whether a suitable formula could be devised which would enable these figures to be more closely reconciled. It has been stated that there was a small reduction in cow numbers at January, 1967 as compared with January, 1966 which is disturbing in the context of the projection contained in the Second Programme for Economic Expansion.

27. Reference was made in paragraph 32 of the Committee’s report dated 12th November, 1964 to the absence of the accounts of An Bord Bainne for the year ended 31st March, 1963. On the 13 April, 1967, when the Committee was examining the Accounting Officer it was told that although the accounts for the year ended 31 March, 1966 had been audited and reported on by the Comptroller and Auditor General in November, 1966 they had not been presented to the Oireachtas and were not available to the Committee. It appeared that the provisions of sub-section 3 of section 48 of the Dairy Produce Marketing Act, 1961 regarding the presentation of accounts had not been complied with, and while the Committee notes that they have since been presented, it deprecates the delay and expects that in future accounts will be available in good time for consideration.

28. Questioned by the Committee regarding the accounts of An Bord Gráin, the Comptroller and Auditor General stated that in the course of his audit he noted that An Bord was charged bank interest on its overdrafts during the period of the bank strike which coincided with the time of year when it would normally make substantial lodgements. The loss to An Bord due to the inability to make lodgements was £9,000 and the Comptroller and Auditor General requested that the banks should be approached to remit this charge. The banks received £114,000 in interest from An Bord during the year, but they refused to reduce the interest for the period of the strike. Clearly the banks deserve censure, but something more requires to be done, through legislation if necessary, to protect the public including the taxpayers from being held to ransom in similar circumstances that might arise in the future.

DENIS F. JONES,

14th July, 1967