PART I—GENERAL OBSERVATIONS
MINUTE OF THE MINISTER FOR FINANCE DATED 24 SEPTEMBER 1974
REPORT DATED 23 JULY 1969
Fees for professional services in connection with building projects.
1. The Committee notes from the minute of the Minister for Finance that, as a result of discussions with the Restrictive Practices Commission and the Examiner of Restrictive Practices, the National Prices Commission have commissioned a consultant to carry out a study on this subject. The Minister has promised to keep the Committee informed of developments.
Difficulties in recruitment of Civil Service staff.
2. The Committee is pleased to note from the statement furnished by the Minister that the position in regard to the filling of vacancies has improved considerably and that the low level of vacancies in the authorised establishment at 1 April 1974 in certain General Service recruitment grades suggests that the difficulties in recruitment have been largely overcome. The Committee hopes that the improved recruitment procedures, which have been introduced, will ensure that a satisfactory staffing position will be maintained in the public service.
REPORT DATED 12 NOVEMBER 1970
Question of duplicate control of certain activities of the Department of Defence.
3. The Committee will await the further communication which the Minister has promised when the examination of the recommendations of the Review Group in regard to the Department of Defence has been completed. It notes that this may take some time as the issues involved are somewhat complex but hopes that every effort will be made to expedite the matter which was first raised by the Committee some four years ago.
Deficits on Voluntary Hospitals.
4. The Committee notes that its suggestion, that Exchequer moneys to meet voluntary hospital deficits should be issued directly to the hospital authorities out of ordinary subhead moneys rather than indirectly out of grant-in-aid moneys, has been adopted and is being implemented as from 1 April 1974.
Current expenditure on comprehensive schools.
5. The Committee notes that the Minister has been advised by the Department of Education that improved budgetary and cost control procedures for comprehensive and community school have been introduced as from 1 April 1974 and that returns of expenditure compared with forecast estimates under major expense heads will be furnished to that Department quarterly, a procedure which should ensure more effective control on the financing of those schools. The Committee also notes that the Minister intends to keep the effectiveness of these arrangements under review. In the circumstances it is prepared to accept the suggestion of the Department of Education, with which, it notes, the Minister agrees, and for the present it will not ask for the submission of annual accounts for each comprehensive school pending experience of the new control procedures. The Committee, however, would stress that it has reconsidered its recommendation in this matter on the understanding that State funds to meet expenditure on the comprehensive schools will continue to be made available out of ordinary subhead moneys and that this expenditure will remain subject to audit by the Comptroller and Auditor General and to its review.
REPORT DATED 13 JULY 1972
6. The Committee accepts that there is some divergence between its more recent statement that it “does not accept that there might be justification for exempting expenditure of certain grant-in-aid moneys from audit by the Comptroller and Auditor General” (paragraph 7 of its Report of 28 February 1974) and its earlier statement in paragraph 81 (1) (5) of the Report of 13 July 1972 which reads as follows:—
“(5) That the Comptroller and Auditor General have the right to inspect the books of a person or body which receives a Grant in-Aid unless a clear statement to the contrary is contained in the estimate presented to and agreed to by the Dáil”.
The Committee, however, would point out that it reached its more recent opinion in this matter following further consideration of the question of accountability for grant-in-aid moneys and in the light of the increasing use of this method of funding public expenditure.
The Committee notes from the minute of the Minister that at present all grants-in-aid are, in fact, subject to scrutiny by the Comptroller and Auditor General either because he is the auditor of the grantee or, in other cases, because he has the right to inspect the books and the accounts of the grantee, that there will be no change in this practice without sufficient reason and that any change will be brought to the notice of the Dáil.
The Committee is prepared to accept this position for the present. It would stress, however, that the fact that a grant-in-aid is subject to scrutiny by the Comptroller and Auditor General does not relieve the responsible Accounting Officer from satisfying himself that the moneys so voted have been expended strictly in accordance with the intentions of Dáil Éireann.
Recovery of moneys.
7. The Committee notes that the position under German law has not yet been fully clarified but that it is understood that the Attorney General is hopeful that he will be in a position to advise the Minister at an early date. It wishes to be kept informed in this matter.
REPORT DATED 28 JUNE 1973
Financial rationalisation in relation to State Funds.
8. The Committee notes that all Departments have examined the funds under their control and have found that there is at present no fund in respect of which any change would be appropriate.
Audit of Accounts of State-sponsored Bodies.
9. The Committee notes that the Department of the Public Service is engaged in discussions with Departments on proposals for a system of Parliamentary review of State-sponsored bodies, having regard to the aim of restructuring the public service on the basis of the Aireacht/ Executive Units concept and that on completion of these discussions there will be an early submission to the Government. The Committee would urge that an early decision be reached in this matter and wishes to be informed when this has been done.
Payments to Special Regional Development Fund (Grant-in-Aid).
10. The Committee notes that its comments about the county development teams have been noted by the Minister and that he will keep it informed of developments.
REPORT DATED 28 FEBRUARY 1974
Charging of expenditure to a subhead which did not make provision for it.
11. The Committee notes that the Minister concurs in its view that to charge a payment to a subhead which does not cover it contravenes an important principle of government accounting and that in this case his sanction should have been sought to account for the expenditure in a new subhead.
(i) Accounting for running costs and capital costs of Regional Technical Colleges.
(ii) Surrender of unspent balances by Vocational Education Committees.
12. The Committee notes that the Minister has been informed by the Department of Education that, since the commencement of the financial year 1971-72, the Vocational Education Committees concerned have submitted separate estimates and annual financial statements in respect of the Regional Technical Colleges. It also notes that the running costs and capital costs are being met from the appropriate subheads of the Vote for Vocational Education.
The Committee further notes that the Minister agrees that, excluding grants-in-aid, issues from subheads should be made only in respect of matured liabilities. It trusts that this fundamental principle of government accounting will be strictly adhered to by the Department of Education in future.
Changes in accommodation requirements in National Schools.
13. The Committee notes that the Minister has been assured by the Commissioners of Public Works that they will continue to take all possible steps, in conjunction with the Department of Education, to keep to a minimum the number of cases where belated changes in accommodation arise. It appreciates that, as stated by the Minister, with accelerated house building in new urban areas and with the development of central schools, changes in accommodation requirements may be inevitable at short notice in some cases. Nevertheless, it would suggest that with proper forward planning and full co-operation between the various agencies involved such changes could on occasions be avoided even in the special circumstances mentioned.
Cost/Benefit study of arterial drainage schemes.
14. The Committee notes that the cost/benefit analysis of drainage proposals for the Maigue Catchment has been completed and that the report is at the drafting stage. It wishes to be furnished with the report when completed.
Contribution due from University College, Dublin, towards the cost of works carried out at Central Heating Station, Government Buildings.
15. The Committee is glad to note that agreement has now been reached between the U.C.D. authorities and the Office of Public Works on the method of payment of the sums assessed as the capital contributions due from the College towards the cost of the new heating plant and electrical distribution system serving the College of Science.
Use of native fuels for heating of buildings erected for State occupation.
16. The Committee is glad to have the assurance of the Minister that, when designing buildings for State occupation, the Commissioners of Public Works provide as far as possible for the use of native fuels such as turf and anthracite coal. It accepts that there may be special circumstances which would require that a particular building be heated by electricity. Nevertheless, it finds it difficult to understand why only 4 of the 115 projects mentioned in the Report of 28 February 1974 contained heating installations designed to use native fuels (turf or anthracite coal). Having regard to the present severe fuel crisis and especially its very serious financial implications for the economy the Committee would urge that the efforts of the Commissioners be directed towards securing a much wider use of native fuels in buildings erected for State occupation.
Exchange of Government stocks between an Assurance Company and the Savings Bank Fund Deposit Account.
17. The Committee is pleased to note that instructions have been issued that
(1) in the unlikely event of a transaction of the kind referred to being found necessary again a detailed written record of the considerations involved should be kept; and
(2) in future all queries from the Comptroller and Auditor General are to be dealt with promptly.
Provision for wireless equipment.
18. The Committee notes that, in accordance with its recommendation, the provision for wireless equipment has been transferred out of the miscellaneous provision in Subhead B (Travelling and Incidental Expenses) of the Garda Síochána Vote and is now being accounted for specifically under a new subhead of the same Vote.
PART II—PARTICULAR ACCOUNTS
19. The Comptroller and Auditor General drew attention to a charge of £306,148 to Subhead H.—Superannuation and other Non-Effective Payments, in respect of ex-gratia pensions and to the absence of any note on the face of the relevant estimate drawing the attention of Dáil Éireann to the fact that provision was being made therein for such pensions which are extra-statutory in nature. The Accounting Officer in evidence stated that, while the subhead did not include a specific reference to ex-gratia payments, the Minister when moving the Estimate did inform the Dáil that it included money for ex-gratia payments. The Committee recalls an assurance given by the Minister for Finance in 1931 that if, in exceptional circumstances, it was proposed to award a pension not definitely covered by Statute or existing authority, no payment would be made until an Estimate expressly indicating the extra-statutory nature of the pension had been presented to the Dáil and passed. The Committee accepts that the failure in the present case to comply with this assurance was due to a misunderstanding of the position and it welcomes the statement of the Accounting Officer that the relevant estimate for the year ended 31 December 1974 would contain the necessary information. Nevertheless, it considers that the attention of Accounting Officers generally might be directed to the need for the strict compliance in future with the terms of the Finance assurance of 1931.
ROINN NA GAELTACHTA
20. Exchequer moneys for capital purposes are made available to Gaeltarra Éireann in two forms, (a) repayable advances which are issued from the Exchequer by the Department of Finance on the recommendation of Roinn na Gaeltachta and (b) grant-in-aid capital moneys which are voted annually by Dáil Éireann and issued out of this Vote by Roinn na Gaeltachta with the consent of the Department of Finance. Repayable advances are earmarked under the Gaeltacht Industries Acts to meet expenditure on buildings and plant for Gaeltarra’sown industries, on the purchase of land, on the erection of buildings for letting and on the purchase of shares in associate companies. Grant-in-aid capital moneys on the other hand are voted specifically by Dáil Éireann to meet expenditure on grants by Gaeltarra Éireann to associate companies and to small industries.
The Comptroller and Auditor General reported on an application made by Gaeltarra Éireann to Roinn na Gaeltachta in February 1972 for repayable advances to meet expenditure on the erection of factories, on the purchase of shares in associate companies and on its own activities. Gaeltarra had already received its full allocation of repayable advances for the year 1971-72 but Roinn na Gaeltachta, with the consent of the Minister for Finance, issued a grant of £275,000 out of grant-in-aid capital moneys voted for that year. As it appeared to the Comptroller and Auditor General that grant-in-aid moneys had been issued for purposes other than those for which they had been voted he sought the observations of the Accounting Officer. The Accounting Officer informed the Comptroller and Auditor General that at the time the application for the repayable advances was received from Gaeltarra Éireann the Department was aware that Gaeltarra would not have spent the full grant-in-aid for 1971-72 by the end of that year but would spend the balance in 1972-73. At the same time it was known that Gaeltarra would have spent more than its allocation of repayable advances in 1971-72 and that the deficiency would be made good with the first issue of advances for 1972-73. The Accounting Officer maintained that the £275,000 grant-in-aid moneys were not issued for purposes other than those for which they were voted. As the Comptroller and Auditor General was not satisfied that the sum of £275,000 should have been issued from the grant-in-aid subhead he deemed it desirable to draw the attention of Dá il Éireann to the matter.
The Committee has considered this matter at considerable length. It accepts the assertion of the Accounting Officer, in reply to the Comptroller and Auditor General and repeated in evidence before the Committee and again in a memorandum subsequently submitted by him, that the £275,000 grant-in-aid capital moneys issued were not intended for purposes other than those for which they were voted. Nevertheless, it is not satisfied that this fact was clearly brought to the attention of Gaeltarra Éireann. The Comptroller and Auditor General stated before the Committee that the relevant file in Roinn na Gaeltachta contained no evidence to show that Gaeltarra had been informed that these grant-in-aid moneys were not to be used for the purposes for which the repayable advances had been sought. Moreover, he informed the Committee that he noted during the course of his audit of Gaeltarra’s accounts that the £275,000 had been originally treated in Gaeltarra’s books as repayable advances and had in fact been used temporarily as such. In the circumstances the Committee must accept that grant-in-aid moneys were used by Gaeltarra Éireann for purposes other than those for which they were voted and such use, even on a temporary basis, is to be deprecated.
There is another aspect of this transaction which concerns the Committee. The Accounting Officer in evidence admitted that, when he issued the £275,000 grant-in-aid moneys to Gaeltarra Eireann in February 1972, he was aware that Gaeltarra could not have used them for the purposes for which they were voted by the end of the financial year. The Committee cannot agree with the view of the Accounting Officer expressed in the course of his evidence that this was a “venial sin”. Moneys voted for the service of a particular year, which are not required for the service of that year, should be surrendered to the Exchequer and should not be issued to meet expenditure in a subsequent year. This is a fundamental principle of government accounting and its breach is a matter of concern to the Committee.
21. In the course of his examination the Accounting Officer informed the Committee that whereas the provision in Subhead F.—Office Machinery and other office supplies—in respect of rental and usage of Rank Xerox machines for 1971-72 was £25,000, the actual charge was £51,752. He explained that Rank Xerox machines can only be rented and that the rental paid was related to usage. The Committee understands that the terms negotiated with Rank Xerox provide for a discount in consideration of a not inconsiderable usage and it would wish to be informed whether the usage on which this discount is based is that of Government Departments only or whether it includes usage by other agencies of the public service, wholly or partially funded by the Exchequer.
In a note submitted for the information of the Committee the Accounting Officer indicated that the charges met by the Stationery Office for the rental and usage of Rank Xerox copiers in the year 1973 amounted to £110,342. This represents an increase of more than 100 % on the 1971-72 charge. In the light of the increasing cost of this service the Committee wishes to be assured that the strictest control is maintained over the usage of these copiers.
The Committee observes from the note submitted by the Accounting Officer that Departments are at liberty to purchase their own photocopiers—other than Rank Xerox—and that such photocopiers are selected by the Department of the Public Service following consideration of such matters as cost, potential usage, copying speeds, servicing and quality of end-product. The Committee wishes to be furnished with a statement indicating the extent to which photocopiers other than Rank Xerox machines are in use in Government Departments. It also wishes to be informed whether any study has been made of the costs of operating such other copiers in relation to the rental and usage charges of comparable Rank Xerox machines.
VALUATION AND ORDNANCE SURVEY
22. In the course of his evidence before the Committee the Accounting Officer pointed out that the contributions being paid by local authorities in respect of the expenses of the annual revision of valuations were fixed in an Act of 1874 and had not been updated since. In the light of the increase which has occurred in the cost of the revision of valuations over a century the Committee considers that a review of these contributions, in order to raise them to a more realistic level, is long overdue and it would urge that such a review be undertaken without delay.
GENERAL REPORT—BREACHES OF ACCOUNTING PRINCIPLES
23. The Comptroller and Auditor General drew the attention of the Committee especially to paragraphs 41, 52, 53, 58 and 67 of his Report in which breaches of long established principles of Government accounting are revealed. Paragraphs 52, 53, 58 and 67 arc concerned with the expenditure of moneys for purposes other than those for which the moneys had been voted by Dáil Éireann and paragraphs 41 and 53 deal with the charge in the year under review of payments which did not represent matured liabilities in that year. Each of these paragraphs was considered by the Committee when the Accounting Officer responsible appeared before it and is the subject of a particular comment in this Report. Because of the importance it attaches to strict compliance with the principles of Government accounting, which are fundamental to parliamentary control over the expenditure of voted moneys, the Committee wishes to make a general comment on the matter.
The Committee notes that, with one exception, all the breaches brought to attention by the Comptroller and Auditor General on this occasion relate to moneys for which the Secretary of the Department of Education was the Accounting Officer responsible. It recalls that in recent reports it was necessary to draw attention to similar breaches of Government accounting principles in relation to the expenditure of voted moneys by the Department of Education. The Committee is concerned lest these frequent breaches may be due to a lack of a proper appreciation by the staff of the Department of Education of the importance of the accounting principles involved or indeed to a lack of an adequate knowledge of these principles.
The Committee also notes that a number of the breaches to which its attention was drawn were made with the prior consent of the Department of Finance. The Secretary of that Department assured the Committee that his Department fully subscribed to the accounting principles mentioned by the Comptroller and Auditor General and that any breach of these principles would not be condoned by it. In regard to the subject matter of paragraph 67 of the Report of the Comptroller and Auditor General the Secretary of the Department of Finance apologised for the fact that his Department approved the issue to Gaeltarra Éireann of capital grants from the Vote for Roinn na Gaeltachta instead of authorising the issue of a repayable advance from the Central Fund.
The Committee has discussed this matter at considerable length. It wishes to stress once more the importance it attaches to the strict compliance on all occasions with the principles of Government accounting which, as already mentioned, are fundamental to Parliamentary control over the expenditure of voted moneys. It suggests that this may be an appropriate time to bring this matter to the notice of all accounting officers. On a wider plane it would like to be assured that there are suitable facilities available to public servants, especially new entrants to the public service, to obtain a sound knowledge of the principles of Government accounting. It would welcome the observations of the Department of Finance and of the Department of the Public Service on this matter.
ISSUES UNDER THE TAlSCÍ STÁIT TEORANTA ACT, 1963
24. The Committee discussed the circumstances in which Taisc Stáit Teoranta breached the provisions of the Taiscí Stáit Teoranta Act, 1963, by exceeding the statutory limit of £7-5 million on the company’s aggregate borrowings not repaid. The Comptroller and Auditor General drew attention to an arrangement made by the Department of Finance which enabled the company to obtain bridging moneys from the Industrial Credit Company from October 1971 onwards pending the enactment of legislation establishing Fóir Teoranta, the company which subsequently replaced Taiscí Stáit Teoranta-£962,326 was provided by the Industrial Credit Company under this arrangement up to 31 March 1972, bringing the aggregate borrowings of Taiscí Stáit Teoranta at that date to £8,450,302, that is, £950,302 in excess of the statutory limit.
In addition to enabling Taiscí Stáit Teoranta to exceed its statutory borrowing limit the arrangement made by the Department of Finance also enabled the company, even though it had already exhausted its Central Fund borrowing powers, to borrow indirectly from that Fund in so far as the bridging moneys made available to it by the Industrial Credit Company were eventually financed by Central Fund advances.
The Accounting Officer informed the Comptroller and Auditor General that the arrangement made for the provision of bridging moneys to Taiscí Stáit Teoranta was necessitated by the delay in the enactment of the legislation to establish Fóir Teoranta. In his evidence before the Committee the Accounting Officer stated that the Bill to establish Fóir Teoranta was introduced and circulated in October 1970, 12 months before the breach of the Taiscí Stá it Teoranta Act referred to by the Comptroller and Auditor General which took place in October 1971. He further stated that in spite of repeated reminders, oral and written, about the urgency of having the legislation enacted in good time the Bill was not enacted until January 1972. He added that in the meantime the Minister for Finance had decided that the Department had no option but to make ad hoc arrangements under which the Industrial Credit Company would provide bridging moneys to Taiscí Stáit Teoranta.
The Committee accepts the submission of the Accounting Officer that his Department had taken the necessary steps to ensure that the Fóir Teoranta Bill was ready in good time and that it had no function regarding the timing of the enactment of legislation. It also accepts that, if bridging moneys had not been made available to Taiscí Stáit Teoranta under the ad hoc arrangement made by the Department of Finance, the company would have been unable to deal with a number of urgent applications for financial assistance and that there would be grave danger that, in the absence of this assistance, the concerns in question might have been in substantial financial difficulties and employment might have been imperilled. Nevertheless, the Committee cannot accept that it should have been necessary to breach the provisions of an Act of the Oireachtas in order to make this financial assistance available. It finds it difficult to understand why the necessary amending legislation to increase the borrowing powers of Taiscí Stáit Teoranta was not passed in good time.
25. In 1967 the Department of Finance sanctioned the provision of financial assistance, estimated at £505,565, to extend the Dairy Science buildings at University College, Cork. Tenders submitted in 1969 for the work indicated that the cost would exceed £1 million and, as a result, a re-assessment of the project was undertaken at the request of the Department of Finance. Contracts had been placed in 1968 and 1969 for the demolition of old buildings to provide a site and for trial borings and the preparation of foundations. In October 1971 it was decided to relocate the Dairy Science buildings as part of a proposed overall development plan for the College at a revised estimated cost of £630,000. The Accounting Officer informed the Comptroller and Auditor General that approximately £217,000 had been expended on works on the abandoned site and as the latter was of the opinion that part of this expenditure, at least, was nugatory he considered that attention should be drawn to the matter.
The Accounting Officer stated in evidence that originally University College, Cork, set out to rebuild their experimental creamery and dairy science buildings on the old site. At a later stage when the Higher Education Authority, which has a function in relation to the funding of the universities, and the Building Unit of the Department of Education became involved they took a look at the whole planning of University College, Cork, because there was a great deal of building to be done in addition to the dairy science buildings. It was accordingly decided to re-arrange the siting of the academic and experimental buildings and this resulted in the abandonment of the original site. The Accounting Officer added that this decision was one in which the University College authorities, the Higher Education Authority, the Department of Education and the Department of Finance were all involved.
The Committee shares the view of the Comptroller and Auditor General that, as a general rule, nugatory expenditure of public moneys is to be deprecated. It considers that in the case of capital projects such expenditure can usually be avoided by proper advance planning. However, the Committee accepts that there were special features in the present case which made the avoidance of some nugatory expenditure difficult. Moreover it takes note of the fact that the decision to re-site the new buildings enabled the overall building programme to be planned to far greater advantage. In all the circumstances the Committee does not wish to comment further on this matter.
26. The Comptroller and Auditor General brought to the notice of the Committee the failure of Córas Beostoic agus Feola, a State-sponsored company financed by way of grant-in-aid from the Vote for Agriculture, to submit its signed accounts for 1971-72 for certification by him as auditor of the company. He explained that there was a delay in regularising some items in these accounts brought to notice during the audit which had been completed as far back as December 1972 and that he had recently sought the assistance of the Accounting Officer with a view to having the matter expedited.
The Accounting Officer informed the Committee that as soon as he was approached by the Comptroller and Auditor General he spoke to the company officials and discovered that there was a number of matters which required the sanction of the Department of Finance before the company’s accounts for 1971-72 could be cleared. He stated that he had obtained the necessary sanctions from that Department and had passed them to the company. He further stated that if the company had brought its difficulties to the notice of his Department at an earlier date he could have approached the Department of Finance much earlier and tried to get the difficulties eliminated. The Accounting Officer added that he was hopeful that the accounts for 1971-72 could be signed and sent to the Comptroller and Auditor General shortly and that the company’s accounts for 1972-73 and 1973-74 would be sent for certification before the end of 1974.
The Committee is at a loss to understand why the accounts of this State-sponsored company for 1971-72 had not been submitted to the Comptroller and Auditor General for certification by June 1974. It notes that, although the audit of these accounts was completed and the items requiring to be regularised were brought to notice in December 1972, no approach appears to have been made by the company to the Department of Agriculture with a view to having the necessary Finance sanctions obtained and that it was left to the Accounting Officer, following the approach made to him by the Comptroller and Auditor General early in 1974, to take the initiative in the matter. The Committee takes a very serious view of the dilatoriness of the company in submitting its accounts for certification. It is hopeful that the outstanding accounts have now been cleared and it wishes to stress the importance it attaches to the prompt production of audited accounts by all State-sponsored bodies.
27. The Comptroller and Auditor General sought the observations of the Accounting Officer in regard to a case in which 41½ acres of land acquired in 1963 for the relief of congestion was still occupied by the vendor at 31 December 1971. In his reply the Accounting Officer outlined the special circumstances which had prevented the Land Commission from taking action for recovery of this land. He indicated that proposals for a settlement with the vendor had recently emerged which involved the allotment back to the latter of the lands acquired in 1963 in exchange for an area of another holding of his property. He added that the Land Commission would incur no loss on this transaction and that as a result of the increase in land values since 1963 it could be possible to re-sell the lands obtained in exchange at a considerably enhanced price.
The Committee was concerned that the Land Commission, instead of disposing of land promptly, might be tempted to hold it for a time with a view to obtaining an enhanced price. The Accounting Officer in evidence assured the Committee that, while it is not always possible to dispose of land as promptly as they would wish, there was no deliberate holding on to lands with a view to obtaining enhanced prices. At the request of the Committee he subsequently furnished in relation to all lands allotted in 1973-74 particulars of the year of acquisition, the purchase price and the resale price. He pointed out that the purchase price of land was the market value at the time of purchase and was either agreed with the owner or fixed by the Appeal Tribunal. He stated that the Land Commission has regard to current value and that resale prices are fixed in relation to the annuity for which the land is security. He added that the rate of an annuity depends on the interest rate of Land Bonds current when the lands were bought or acquired and that, accordingly, the resale price of land is largely governed by the category of Land Bonds current when the land was bought or acquired.
The Committee has considered the particulars furnished by the Accounting Officer in relation to the lands allotted in 1973-74. It notes that only in about 10% of the resale cases listed was the resale price substantially higher than the purchase price. In the vast majority of cases there was very little difference, if any, between the resale price and the purchase price. On the evidence submitted by the Accounting Officer the Committee is satisfied that the Land Commission as a general rule does not charge enhanced prices for land which it resells.
28. The Committee considered at some length the procedures for the authorisation of capital expenditure out of the votes for which the Secretary of the Department of Education is the Accounting Officer. The matter arose during the consideration of a paragraph in the report of the Comptroller and Auditor General in which attention was drawn to the issue of grants towards the cost of erection of the Church of Ireland Training College in excess of the limit approved by the Department of Finance for this project. The Comptroller and Auditor General informed the Committee that whereas the approved limit was £371,810 the Department of Education had made payments which amounted to £441,530 at 31 March 1973. He added that he found this disturbing especially as the Department of Finance had categorically refused in 1969 and again in 1970 to sanction any further capital expenditure out of public moneys on this project.
The Accounting Officer furnished the Comptroller and Auditor General with copies of correspondence which his Department had with the Department of Finance in regard to this matter. The letter from the Department of Finance stated that its specific approval for capital payments to individual training colleges was not required provided the capital estimate for such colleges as a whole was not exceeded and that there was no major deviation between the amount expended and the amount approved for each college.
The Accounting Officer in evidence before the Committee observed that when the Department of Finance stated in 1969 that it was not disposed to authorise any further capital expenditure on the Church of Ireland Training College the refusal was in the context of an application made by the Department of Education for sanction to purchase additional land adjacent to the College. He stated that the increase over the original estimate was mainly due to inflationary effects on building costs and that if his Department had to seek sanction for price increases in the case of each individual project, hundreds of applications would need to be made to the Department of Finance each year to cover inflationary increases for primary, secondary, vocational and community schools as well as regional colleges, training colleges, etc. He added that if the Committee took the view that specific sanction should be sought for the excess expenditure in the case of the Church of Ireland Training College he would have an immediate application made to the Department of Finance.
The Committee was concerned to ascertain to what extent the Department of Finance had delegated to the Department of Education authority to spend sums on various capital projects within the limit of the overall global figure of finance provided for these capital projects. As there appeared to be some doubt about the matter the Committee asked the representative of the Department of Finance to furnish a memorandum to clarify the position. The Committee understands from this memorandum that the control now exercised by the Department of Finance on the building programme of the Department of Education differs with regard to (a) aggregated building programmes such as primary schools, secondary schools and universities and (b) “one-off” building projects such as teacher training colleges, the National College of Physical Education, the Remand School at Oberstown, etc. It notes that once a total capital budget for education is agreed within the total capital programme this budget is allocated by the Department of Education over the different areas in accordance with its own priorities subject to prior specific Finance sanction in regard to “one-off” projects and in regard to primary and second level schools involving a change in the normal standard of accommodation for such schools.
It further notes from the memorandum that the authority delegated by the Department of Finance to the bnilding unit of the Department of Education with regard to aggregated building programmes is analogous to that which has been delegated for many years in relation to primary schools under the Office of Public Works. The memorandum also points out that the Department of Education does not enjoy quite the same measure of delegated authority with regard to “one-off” projects. Such projects are designed to fulfil particular needs within the education system and in each case prior specific authority must be got from the Department of Finance and the Finance sanction will specify the total capital sum that may be expended on the institution. The memorandum adds that in relation to projects financed wholly from State funds excesses arising because of increases in material costs and wage rates from the date of placing the contract may be met by the Department of Education without further recourse to the Department of Finance.
The Committee considers that the delegation of authority to the Department of Education in regard to capital expenditure on aggregated building programmes involves a fundamental departure from the position which existed over many years in the matter of the financial control exercised by the Department of Finance over the expenditure of voted moneys. The Committee had full knowledge of the delegated authority enjoyed for many years in regard to primary schools under the Office of Public Works and had always regarded it as exceptional. The Committee is of the opinion that it should have been officially informed of this extension of delegated authority to the Department of Education in the matter of capital expenditure on aggregated building programmes and it now wishes to learn whether any such delegated authority has been extended to other Government departments.
In regard to the expenditure on the Church of Ireland Training College the Committee accepts that this is a “one-off” project as defined in the Finance memorandum, which was funded in part by the Governing Body of the College. As the project was not wholly financed out of State funds the Department of Education was not entitled to meet excesses arising from increases in material costs and wage rates without having further recourse to the Department of Finance. The Committee is concerned that the Department of Education appears to have extended its delegated authority to cover this “one-off” project and it requires the observations of the Department of Finance on this matter.
29. The Comptroller and Auditor General drew attention to advance payments totalling £9,500 which were made by way of grants to St. Patrick’s College, Maynooth, and to certain teacher training colleges in respect of courses for principal teachers due to be held in July 1972. As these payments did not represent matured liabilities in the year 1971-72 they should not have been charged against the provision made for the service of that year.
The Accounting Officer informed the Comptroller and Auditor General that difficulties had arisen in regard to the provision of accommodation for the proposed courses and in order to avoid disruption of the whole schedule of in-service courses it was necessary to make advance payments to secure the premises and to enable certain urgent improvements to be carried out in one case.
The Committee notes the circumstances in which these advance payments were made. It finds it somewhat unusual that it should have been necessary for the Department of Education to make advance payments to the four institutions concerned in order to ensure that accommodation would be available for training courses especially when this involved a breach of a principle of Government accounting. The Committee is seriously concerned at this breach especially as it is aware that its predecessors in their Report dated 28 February 1974, found it necessary to call attention to a somewhat similar breach by the Department of Education. It notes the steps since taken by the Accounting Officer to prevent such breaches in the future and it trusts that these will prove successful.
30. The Comptroller and Auditor General drew the attention of the Committee to the use of a suspense account over a number of years to meet the cost of prefabricated building units for use in primary, secondary and vocational schools.
Moneys recovered in respect of units for use in primary and vocational schools are credited to this account and at 31 March 1972 the balance outstanding amounted to £283,795, due mainly from vocational education committees. The Comptroller and Auditor General considered that the use of a suspense account for this purpose over a number of years was not to be recommended as there was a danger that it might lead to laxity of financial control. Moreover, the use of this suspense account meant that moneys voted by Dáil Éircann for secondary education were being used temporarily for primary education or vocational education purposes for which they had not been voted.
The Accounting Officer informed the Comptroller and Auditor General that the provision of these prefabricated units under a bulk purchase scheme was initiated following the introduction of the free post-primary education scheme to meet accommodation requirements which, because of urgency and lack of capital, could not be met by the provision of permanent accommodation. He also stated that these arrangements were made to enable prompt payments to be made to contractors.
The Committee is well aware of the size and urgency of the problem of additional school accommodation which faced the Department of Education following the introduction of the free post-primary education scheme. Nevertheless it expects that the financial procedures introduced to meet the problem should be based on the accepted principles of Government accounting. It considers the criticisms made by the Comptroller and Auditor General in the present case to be well founded and it requires the Department of Education to take note of them.
REFORMATORY AND INDUSTRIAL SCHOOLS
31. Subheads A and B of the Vote for Reformatory and Industrial Schools make provision for the payment of capitation grants in respect of children in residence in Reformatory and Industrial Schools respectively. The Comptroller and Auditor General drew attention to the charge to these subheads of sums totalling £10,000 and £39,000, respectively, which were issued by way of grants towards the cost of reconstruction and renovation of four industrial schools. He considered that these grants were not a proper charge to the capitation subheads.
The former Accounting Officer informed the Comptroller and Auditor General that capitation grants payable to reformatory and industrial schools were intended to make a provision towards the cost of the repair, improvement and adaptation of buildings as well as towards the general costs of maintenance of children and the salaries of the staff. He also stated that it was considered that the most appropriate arrangement would be to fix the rate of capitation grant at an amount which would meet the needs of the generality of cases and to pay additional amounts from subheads A or B in cases involving exceptional expenditure. The Accounting Officer in evidence before the Committee reiterated the views which his predecessor has forwarded to the Comptroller and Auditor General.
The Committee has some difficulty in accepting the evidence of the Accounting Officer. In the first instance it would not justify the issue out of the capitation provision for reformatory schools of a grant towards the reconstruction and renovation of an industrial school. Moreover, the Committee is aware that the provisions voted by Dáil Éireann under Subheads A and B are based on specific numbers of children and on specific rates of capitation per child. The lump sum grants made towards the reconstruction and renovation of premises were made in addition to the grants paid at the approved capitation rate in respect of the children in residence in the four schools concerned. This would seem to imply that a higher rate of capitation was being paid or that an increased number of children was in residence in the case of these four schools. The Committee has received no evidence to support either of these alternatives.
The Committee notes that a new subhead—Subhead J.—Adaptations and Improvements to Industrial Schools—was opened in this vote by way of supplementary estimate in 1973-74 and, as it considers that the opening of such a special subhead to take the charge for reconstruction and renovation grants is the correct method for dealing with these grants, it does not propose to pursue the matter any further.
32. A grant of £15,000 was paid out of Subhead B.—Industrial Schools—towards the cost of running a course in child care. The Comptroller and Auditor General considered that such a grant should not have been made out of a provision voted specifically for capitation grants to industrial schools and he asked the Accounting Officer whether consideration had been given to the opening of a special subhead to provide for this grant. The Accounting Officer in his reply stated that as the course was designed for persons involved in the field of child care in industrial and reformatory schools and as the expenses of such special training in the case of an individual trainee would in the ordinary way have to be met by the school authority out of capitation grants it was considered legitimate that the grant towards the expenses of the course should be met out of Subhead B.—Industrial Schools. The Accounting Officer added that a new subhead had been opened in the vote in 1972-73 to provide grants for such courses. The Committee considers that the grant of £15,000 in 1971-72 should not have been made out of Subhead B and that a special subhead should have been opened with the sanction of the Minister for Finance to take this charge. It notes that such a subhead was opened in 1972-73.
In regard to the issue of the grant of £15,000 to the course organisers the Comptroller and Auditor General observed that £10,000 had been paid out up to 29 February 1972 and that, although some £8,200 of this remained unspent at that date the balance of the grant, £5,000, was issued in March 1972. He sought information from the Accounting Officer as to the evidence on which the £15,000 was charged in full as having been spent in the service of the year 1971-72. The Accounting Officer informed him that in March 1972 the conductors had considerable commitments in respect of the course, that a full statement of accounts would be provided by them and that in deciding the grant to be made in respect of the 1972-73 course the Department would have regard to the unspent balance of the 1971-72 grant.
The Committee is concerned that this grant was issued and charged in full in the year 1971-72 although there was no evidence to show that it had been fully expended in the service of that year. It notes that the grant was paid out of an ordinary subhead and not out of a grant-in-aid subhead. Any balance unspent at 31 March 1972 should, therefore, have been surrendered to the Exchequer. As this was not done and as the Committee understands that there were no vouchers available to support the charge in 1971-72 it must assume that the Department of Education regarded the grant as a grant-in-aid. In this connection the Committee wishes to point out that it is an established principle of Government accounting that grant-in-aid provisions may not be increased without the approval of Dá il Éireann.
The Committee notes that a full statement of accounts in respect of the course was promised and it wishes to be informed whether such a statement has yet been furnished.
UNIVERSITIES AND COLLEGES AND DUBLIN INSTITUTE FOR ADVANCED STUDIES
33. The Comptroller and Auditor General sought an explanation from the Accounting Officer in regard to the charge to Subhead L.— College of Physical Education (Grant-in-Aid) of £92,632 expended on development work on the site of the Limerick Institute of Higher Education notwithstanding that specific provision had been made in Subhead G.2 for the Institute’s site development costs. The Accounting Officer explained that the Limerick Institute of Higher Education and the National College of Physical Education are being developed on the one site and that there was no way by which a precise apportionment of site work costs could be made between the two institutions.
While the Comptroller and Auditor General agrees that the joint development of the sites for the Institute and the College, together with the provision of common services and facilities, should make for savings he is concerned that the absence of an apportionment of expenditure on site development and common services and facilities would make the monitoring of the capital cost of each of the two institutions impossible and that it could be difficult for him to satisfy himself that the cost of the College of Physical Education was kept within the figure approved by the Department of Finance.
The Committee appreciates the problem created by the absence of a proper apportionment of the costs of site works and of common services between the two institutions. It notes that the Accounting Officer in his evidence insisted that the two institutions share a common site although it is aware that two separate, if adjoining sites, were purchased and two separate fees paid to the auctioneers. If the sites are now being developed as one the Committee considers that it would make for more efficient control of expenditure if the total provision for site works and common services were made under one subhead and included in full in the capital cost of one or other of the two institutions. If this solution should not prove feasible at this late stage of the development the Committee suggests that some reasonable basis of apportionment of the expenditure involved should be worked out.
TRANSPORT AND POWER
34. An additional grant of £4,464,000 by way of assistance to C.I.E. was voted by Dáil Éireann on condition that £1,918,000 of the sum voted would be repaid by the company to the Exchequer as interest on capital advances. In the course of his audit the Comptroller and Auditor General observed that only £1,496,825 of the total interest due was paid and he asked the Accounting Officer for his observations. He explained that C.I.E. was unable to pay the full amount of interest because it did not have sufficient moneys, that funds envisaged when the Estimate was passed were not available to the company for the payment of the balance of interest, £422,591, and that the Board considered it prudent to withhold this sum. While the Committee appreciates the financial problems besetting C.I.E. it is concerned that the company in the present case deliberately refused to comply with the specific condition on which Dáil Éireann voted the additional grant. It must insist that the decisions of Parliament should be paramount in financial as in other matters.
35. Annual grants for C.I.E. are voted in accordance with the provisions of the Transport Act, 1964. Additional grants were voted for the company in 1970-71 in accordance with the provisions of the Transport Acts of 1969 and 1970. The additional grant of £4,464,000 voted in 1971-72, to which reference was made in the previous paragraph, received no such specific statutory approval. In this connection the Committee notes that the Public Accounts Committee in paragraph 12 of its Report dated 20 March 1952 expressed the opinion that in any future case in which the introduction of an estimate at variance with existing statutory provisions became necessary such variation should be expressly mentioned and explained on the face of the estimate. The Committee further notes that the Minister for Finance in his minute of 23 July 1952 gave an undertaking that regard would be had to the views of the Committee on this matter.
The Accounting Officer stated that legislation was not considered necessary because it was made clear on the face of the estimate that the grant being voted was additional to the statutory grant. He added that the Minister for Finance had been consulted and that the Minister held that the undertaking given to the Committee in 1952 had been complied with in the present case. The representative of the Department of Finance added that with regard to the enactment of legislation his Department would take the view that the sum involved appeared subsequently in the Appropriation Bill which became the Appropriation Act for that year and this would give statutory cover for the payment.
The Committee is of the opinion that there is a matter of principle involved in this case. It considers that grants voted in addition to statutory grants should themselves receive statutory approval. In this connection it is unable to understand why it was considered valid to pay an additional grant in 1971-72 without the sanction of legislation when it was considered necessary to make specific provision for such grants paid in 1970-71 in two Transport Acts. Moreover, it recalls that in relation to one of these latter additional grants the relevant estimate indicated that it was being voted “contingent on the enactment of legislation”. The Committee finds itself in complete agreement with the views expressed in paragraph 12 of the Report dated 20 March 1952, quoted above.
Furthermore in regard to the claim by the representative of the Department of Finance that the authority of the annual Appropriation Act was sufficient in this case it wishes to reiterate a view expressed by its predecessors in the Report dated 20 March 1952—
“The Committee cannot accept, without qualification, the view that it is open to the Dail to vary or modify the provision of a statute by way of a Supplementary Estimate which afterwards receives confirmation in an Appropriation Act”.
VIVION de VALERA
23 January 1975.