Committee Reports > List of Committees > Dáil > 1976 > Committee of Public Accounts > Report - Appropriation Accounts 1973 - 1974

REPORT

PART I—GENERAL OBSERVATIONS

MINUTE OF THE MINISTER FOR FINANCE DATED 20 FEBRUARY 1976

REPORT DATED 12 NOVEMBER 1970

Question of duplicate control of certain activities of the Department of Defence.

1. The Committee notes that a Task Force representative of the Departments of the Public Service and Defence is considering the organisation of the Department of Defence, in the context of the recommendations of the Public Services Organisation Review Group, including the question of duplicate control of certain activities of the Department. The Committee will await further information on developments.

REPORT DATED 13 JULY 1972

Grants-in-Aid

2. The Committee notes that the Minister for Finance shares its concern that grant-in-aid moneys, and indeed all voted moneys, are expended strictly in accordance with the wishes of Dáil Éireann. It welcomes the Minister’s assurance that he will impose conditions on issues from grants-in-aid additional to those outlined in his Department’s existing instructions to Accounting Officers in any case in which this appears to him to be warranted.

Recovery of Moneys

3. The Committee notes that on 18 December 1975, the Minister informed Dáil Éireann that, because of the legal complexities involved, it had not been possible to bring this matter to a final conclusion and that, pending the outcome of certain steps which the Attorney-General had directed to be taken to recover the moneys, he was not in a position to make a fuller statement. The Committee also notes that the Minister will keep it informed of developments.

REPORT DATED 28 JUNE 1973

Audit of Accounts of State-sponsored Bodies

4. The Committee notes that the Motion to establish a Joint Oireachtas Committee of the Dáil and Seanad to review the activities of State-sponsored bodies engaged in trading or commercial operations was put down in Dáil Éireann on 8 December, 1975 and that it is expected that the Motion will be moved in the near future.

The Committee would be glad to be informed whether the Minister for the Public Service has yet completed his consideration of proposals regarding arrangements for the review of the activities of the non-commercial State-sponsored Bodies. The Committee is of opinion that these bodies should also be subject to continuous parliamentary review and that all State-sponsored bodies should be subject to closer scrutiny and control by Parliament and, in particular, by the Comptroller and Auditor General when such is requested by the Committee of Public Accounts.

Payment to Special Regional Development Fund (Grant-in-Aid)

5. The Committee notes that it will be kept informed of developments in relation to the further consideration of this issue in the overall context of the distribution of the functions of Government at sub-national levels.

REPORT DATED 23 JANUARY 1975

Roinn na Gaeltachta

6. The Committee notes that while the Minister considers that, in relation to bodies like Gaeltarra Éireann, grant-in-aid issues should be made only in respect of immediate requirements he would see no objection to an issue being made towards the end of a financial year in respect of expenditure accrued due by the grantee, provided the issue were called for by the grantee’s cash flow position. The Committee would be prepared to agree with this view on condition that the Accounting Officer is fully satisfied that the expenditure being accrued relates to the service of the year for which the grant-in-aid is provided. The Committee requests however that a suitable note in relation to each specific case be included in the relevant Appropriation Account.

Breaches of Accounting Principles

7. The Committee is pleased to learn that training courses in the principles of Government Accounting were provided in 1975 and attended by thirty-nine officers and that a further forty-six nominations had been received for courses scheduled for 1976. It notes that a booklet outlining financial procedures is in course of preparation and will be made available to new entrants in all Departments of the Civil Service and to existing staff who may be unfamiliar with accounting requirements.

The Committee sees this as the beginning of the solution of a problem about which it ‘has been very concerned and it notes that the Minister will keep it informed of developments.

Issues under the Taiscí Stáit Teoranta Act, 1963

8. The Committee notes that, having regard to the importance of complying with parliamentary requirements relating to the control of public moneys and especially the timely presentation of legislative proposals, steps will be taken to avoid a recurrence of the circumstances which gave rise to the irregularity to which it drew attention in paragraph 24 of its Report dated 23 January, 1975.

Agriculture—Córas Beostoic agus Feola

9. The Committee notes that accounts for all years up to 1973-74 have now been certified by the Comptroller and Auditor General and that when the accounts for the period April-December 1974, which are still the subject of audit queries, have been certified the backlog which arose because of delays over the 1971-72 accounts will have been cleared. The Committee further notes that the Minister expects future accounts to be submitted to the Comptroller and Auditor General within a reasonable period after the end of each financial year and it would hope that this expectation will be realised. Should there be any further delay by Córas Beostoic agus Feola in submitting its accounts for audit the Committee wishes the matter to be brought to its attention.

Supplementary Grants To Córas lompair Éireann

10. The Committee notes that the Minister for Finance is legally advised that the Appropriation Act constitutes the further legislation which it considers should be enacted to validate the issue out of voted moneys of grants in excess of the limits laid down in existing legislation. The Committee does not accept this view. The Appropriation Act merely appropriates moneys voted by Dáil Éireann for services described generally in part 1 of the relevant estimates. The Act does not appropriate moneys under the separate subheads within an estimate, nor does it purport to amend the provisions of existing legislation fixing the limits of grants to be made from voted moneys for specific purposes. Moreover if the principle now being advanced were accepted there would be no need for specific legislation to authorise the issue of grants out of voted moneys. The Committee would welcome an opportunity of studying the legal opinion received by the Minister and the submission on which it was based.

The Committee reiterates its view that where, because of urgency, an Estimate is introduced at variance with existing statutory provisions, the additional grant should be voted contingent on the enactment of legislation. The Committee consequently does not accept the contrary submission in the Minute of the Minister for Finance.

In paragraph 24 of this Report reference is made to further cases which were brought to the Committee’s attention during its examination of the 1973-74 Accounts and in which amending legislation required to validate payments from voted moneys in that year had not been enacted by February 1976. This is a cause of great concern to the Committee in that it amounts to an unlimited delegation of parliamentary functions to the administrative authorities.

REPORT DATED 30 OCTOBER 1975

Office of the Minister for Justice—checking of Insurance Cards

11. The Committee welcomes the assurance that Accounting Officers are being reminded of the necessity to ensure strict compliance with the instructions of the Department of Finance regarding the custody of insurance stamps and the checking of insurance cards.

Central Statistics Office

12. The Committee notes that the cost of office machines and other office supplies purchased for the Central Statistics Office is being met from a separate subhead in the Vote for that Office as from 1 January 1976.

It also notes that the general question of providing for office equipment under separate subheads is being examined and that it will be informed of the outcome.

Appendix 9.

Local Government

13. The Committee notes that the Minister shares its serious concern at the extent of motor tax avoidance and its view that the existing administrative procedures covering motor tax should be improved. At the Committee’s request the Accounting Officer has furnished information regarding the further measures taken in order to reduce the possibility of motor tax avoidance. The Committee notes the additional measures taken and requests that this matter continue to receive active consideration. It wishes to be informed of the effectiveness of the revised procedures in due course.

Public Works and Buildings

14. The Committee notes that Gael-Linn have now paid rent in respect of 7 Appian Way up to 31 January 1976 and that they propose vacating these premises as soon as they have acquired alternative accommodation.

It also notes that the Accounting Officers concerned are being advised of the Committee’s suggestion that when oral assurances on planning applications are given by local authorities confirmation in writing should be obtained.

Agriculture

15. The Committee notes the explanation by the Minister of the circumstances in which the loans to the meat industry were granted. It also notes that the repayment conditions attaching to the loans did not materialise up to the time the Export Guarantee Scheme was terminated on entry to the European Communities and that no other repayment conditions were attached to the loans at the time of issue. The Committee further notes the Minister’s statement that no suitable opportunity has since arisen in which the agreement of the meat industry to alternative repayment arrangements could be secured. The Committee must assume that when the loan scheme was being drawn up it was expected that the level of subsidy would reach a figure which would enable recovery of the loans to be effected and therefore it was not considered necessary to make alternative recovery arrangements at that time. The Committee does not accept that no suitable opportunity has since arisen to effect recovery of these loans and it wishes to be informed as to the legal position in regard to their repayment.

Office of the Minister for Education—National College of Art and Design

16. The Committee notes the efforts being made by the Accounting Officer of the Department of Education to secure the preparation by the College of accounts from 1 May 1972 to date, and their submission for audit. It wishes to be informed when the matter has been regularised.

Secondary Education—Site at Falcarragh, County Donegal

17. The Committee notes that the Minister agrees with its views on the procedures followed by the Department of Education in connection with the purchase of a site for a community school in Co. Donegal and that he has been informed by that Department that these views have been noted and that action will be taken accordingly in all future cases.

PART II—PARTICULAR ACCOUNTS

INDUSTRY AND COMMERCE

18. The Comptroller and Auditor General drew the Committee’s attention to the arrangements made for the purchase of the Ardmore Film Studios by Radio Telefís Éireann arising out of a Government decision in July 1973. A sum of £457,473 was charged to this Vote in respect of the repayment with interest of advances of £433,500 provided from the Central Fund for the purchase of the studios. The Government had directed that any surplus land attaching to the studios should be sold and the Accounting Officer had informed the Comptroller and Auditor General that it would not be possible to identify the studios’ exact requirements in terms of land until the board of the proposed State company to run the studios had been appointed and had considered the matter. He added that proposals were being formulated to incorporate the company and to appoint a board of directors in advance of the enactment of legislation in relation to the film industry which will include provisions in regard to this company.

The Comptroller and Auditor General informed the Committee that the company had since been incorporated under the Companies Act, 1963 and that the lands and premises had been transferred to it by Radio Telefís Éireann with effect from 1 July 1975. The Accounting Officer informed the Committee that if surplus lands were found to be available they would be sold but that he could not say immediately how the moneys realised would ultimately be disposed of. He added that the comments of the Comptroller and Auditor General had been brought to the notice of the company who had been asked to decide as soon as possible what lands would be surplus to their requirements.

As the purchase money in this case was provided out of the Central Fund the Committee urges that the question of the sale of surplus lands and the disposal of the moneys realised be actively pursued. It wishes to be kept informed of developments.

19. The Committee noted that provision was made under Subhead A—Salaries, Wages and Allowances—for the normal Civil Service staff of the Department and also for technical advisors, experts and consultants such as are employed by the National Prices Commission. The Committee suggested that it might have a clearer view of the expenditure from the Vote if provision for such specialists were made under a separate Subhead. The Accounting Officer, in the course of his evidence, undertook to consider this suggestion and the Committee awaits his further views on the matter.

PUBLIC WORKS AND BUILDINGS

20. The Comptroller and Auditor General drew the Committee’s attention to the delay in establishing the final cost of work carried out by the Office of Public Works to improve landing facilities at Reen Pier, Castletownshend, Co. Cork. The project was approved in 1968 on condition that twenty-five per cent of the cost of the work, then estimated at £16,000, would be borne by Cork Co. Council. The work was completed in December 1971 but the final cost, £27,311, was not established until March 1974, resulting in a delay in claiming the balance of the contribution from the County Council which had paid £4,000 in 1969. The Accounting Officer had informed the Comptroller and Auditor General that the delay in computing the final cost arose from a number of factors including inter-job resource transfers, accounting difficulties and shortages and shortcomings in staffing. The County Council had since paid its full contribution and the Accounting Officer had assured the Comptroller and Auditor General that he is now satisfied with the adequacy of the procedures and controls for establishing reliable final cost figures in schemes such as this which involve a local contribution. In evidence the Accounting Officer stated that the basic cause of the delay was the acute shortage of cost accountants. The Office of Public Works had tried repeatedly to recruit more of them but had failed. It had also tried training its own cost accountants by bringing in trainees but some of these had left for more highly paid positions outside the Public Service. The Accounting Officer added that there had been such a demand outside for such accountants over the years that they simply were not interested in coming to work for the State. There was still a slowing down of the work of his Office because of the shortage of cost accountants and, while everything possible was being done to counteract this, that work was not proceeding as quickly as the Accounting Officer would like.

The Committee must express its concern at this situation in which shortage of specialist staff results in a slowing down of the operations of the Office of Public Works which in turn is more than likely to result in increased costs to the State. The Department of the Public Service has a responsibility in this matter and the Committee would welcome its views.

SECONDARY EDUCATION

Appendix 7.

21. The Committee noted that a saving on Subhead J.1.— Comprehensive and Community Schools—Running Costs—arose because a number of accounts were not presented in time for payment within the financial year and it asked the Accounting Officer for his further comments. He subsequently furnished a note to the Committee outlining the reasons for the late submission of these accounts. He indicated that eleven new schools came into operation in 1973-74 and that some of them experienced difficulty in balancing their monthly accounts and submitting them to the Department. There was also delay by firms in submitting their accounts to the Boards of Management of the schools. This resulted in a substantial carry-over to the next financial year. The Accounting Officer added that monthly expenditure from school budgets was now being more closely monitored by the Department with a view to ensuring that any carry-over of payments will be minimised as far as possible. The Committee trusts that the accounting arrangements for these schools are now satisfactory.

VOCATIONAL EDUCATION

Appendix 8.

22. The Comptroller and Auditor General drew the Committee’s attention to the arrangements made for the provision from this Vote of assistance to students desiring to pursue non-degree courses in Regional Technical Colleges. Normally such assistance is provided by Vocational Education Committees from the grants paid to them from Subhead A. When it was decided to provide further moneys for this purpose from the Vote the Department of Finance directed that it would be provided in a new Subhead—1.2.—opened for this purpose. The total of £305,600 issued for this service in the year was shared between two subheads—£120,000 from Subhead I.2. and £185,600 from Subhead A. The Committee agrees with the view expressed by the Comptroller and Auditor General that, in the interests of proper accounting, full provision should have been made for this service under a single subhead and it welcomes the assurance of the Accounting Officer that it has been agreed with the Department of Finance that Subhead I.2. will be removed from the Vote in 1977.

HIGHER EDUCATION

23. The Committee considered paragraph 36 of the Report of the Comptroller and Auditor General which drew attention to issues to An tÚdarás um Ard-Oideachas from the grants-in-aid provided for capital purposes. The total amount provided—£2,480,000—had been issued in full and resulted in the Authority having a cash balance in excess of £700,000 on hands at 31 March 1974 and for some time thereafter. The Comptroller and Auditor General stressed that it was important that money should not be issued from the Exchequer either before it is required to meet matured liabilities or in larger sums than the service for which it is issued requires, and he explained that although the Authority had earned £40,000 in bank interest on the moneys it had on hands during the year he was concerned that it would cost the Department of Finance a good deal more than this to borrow these moneys. The Accounting Officer explained the circumstances which gave rise to the situation to which the Comptroller and Auditor General drew attention and he outlined the arrangements which were being made by his Department with the Authority to prevent a recurrence. He felt that, by co-operation between the Department of Education and the Authority, these arrangements would be successful. The Committee has had occasion in previous reports to refer to the question of issues being made from voted moneys in excess of the immediate requirements of the grantee and it wishes to emphasise yet again how essential it is that sponsoring Departments and grant-aided bodies should co-operate fully in order to achieve economy of balances which is fundamental to good financial management.

PAYMENTS REQUIRING VALIDATION BY SPECIFIC LEGISLATION

Qn. 172.

Qns. 375-379.

Qns. 399-409.

24. The Comptroller and Auditor General drew the Committee’s attention to further cases in which amending legislation required to validate payments under schemes covered by specific enactments had not been passed. These payments included grants of contributory and ex-gratia pensions to the widows and children of certain public servants (Vote 12—Superannuation and Retired Allowances), new grants towards the cost of adaptation of houses and increased reconstruction grants (Vote 26.—Local Government) and increased housing grants in Gaeltacht areas (Vote 36.—Roinn na Gaeltachta).

In regard to the payments out of Vote 12 the Accounting Officer, in evidence, informed the Committee that it was originally intended to introduce specific legislation to provide for these payments but subsequently it was decided to prepare a consolidation measure to cover the whole superannuation code which goes back to 1834. The consolidation measure took a good deal longer to prepare than the original specific legislation would have. However it was hoped to introduce it, if not during the current session, then during the next session of Dáil Éireann. The Accounting Officer pointed out in regard to the payments referred to in the Report of the Comptroller and Auditor General that no such payment was made without a supplementary estimate being passed and he regarded this as his authority to pay, but the matter was to be eventually covered by legislation.

The Accounting Officer for the Vote for Local Government told the Committee with reference to the extra-statutory adaptation grants and increased reconstruction grants paid out of that Vote that he was relying on the Appropriation Act to validate these payments as a temporary expedient but that there was a clear intention to produce a Bill which would validate them. No supplementary estimate was introduced to provide for these payments as the subhead provision in the original estimate was sufficient to cover them and they did not involve a major departure from the scope of that particular subhead.

The Accounting Officer for Vote 36.—Roinn na Gaeltachta indicated that the payment of housing grants in excess of the statutory limits to which the Comptroller and Auditor General had drawn attention had been going on for a little over three years. Legislation to validate these payments was ready but there was difficulty about arranging to have it brought before Dáil Éireann. He added that the relevant housing legislation which fixed the statutory limits for these grants goes back to 1929, long before Roinn na Gaeltachta was established, and that, while his Department made grants under various schemes, the housing grants were the only ones which were covered by specific legislation.

In its report dated 23 January 1975 the Committee stated its considered opinion that grants voted in addition to statutory grants should themselves receive statutory approval. Paragraph 10 of the present Report comments on the views of the Minister for Finance, as contained in his Minute dated 2 February 1976, on that opinion and is relevant to the payments now under consideration. The Committee will postpone further comment on these payments also until it has had an opportunity of studying the legal advice obtained by the Minister in relation to the earlier matters. However it feels constrained to criticise the long delay in bringing amending legislation before Parliament to validate extra-statutory payments in those cases where it has been agreed that such validation is necessary.

OFFICE OF THE REVENUE COMMISSIONERS

25. The Committee heard evidence from the Accounting Officer regarding the problems arising in the collection of revenue. He explained that, with the substantial increase in the charge and the difficulties the taxpayers were facing through a recession, collection was becoming very difficult. In the event of failure to collect the amounts assessed the question of enforcement arises, either by recourse to the Sheriff (or county registrar) or through the Revenue Solicitor. He added that the work going to both of these sectors had increased enormously, that, in order to try to ease the burden on the county registrars, assistants to the Collector General had been appointed in some districts. These call on defaulters and urge them to pay their tax and this had reduced the number of cases going to the county registrars by 35 to 40 per cent of what it would otherwise have been. Nevertheless, the Accounting Officer was concerned regarding the future. Whereas the number of cases going to the county registrars some six or seven years ago was of the order of 3,000 it is now of the order of 20,000 or more.

This information also gives the Committee cause for concern and it asks that further steps be taken to deal with the problem of collection. The assistants to the Collector General referred to by the Accounting Officer were appointed in less than half the districts and had achieved a substantial improvement in the situation. It appears to the Committee that there might be scope for the extension of this or a similar arrangement to other districts.

COMPARISON OF VAT RETURNS WITH ACCOUNTS SUBMITTED FOR INCOME TAX PURPOSES

26. A limited test check by the Comptroller and Auditor General of the procedures in operation for the collection and verification of value-added tax seemed to indicate that no reconciliation was being made between the taxpayer’s declared turnover for value-added tax and the turnover revealed in audited accounts submitted for income tax purposes, although such a reconciliation was envisaged as one of the controls on the accuracy of the declaration submitted in connection with the payment of value-added tax. The Accounting Officer pointed out that such a comparison, which is regarded as a vital check, could be fully effective only if value-added tax figures were available for the full twelve months of the accounting year and that, as most income tax assessments were based on the preceding year’s profits, practically all assessments for 1973-74 and many for 1974-75 would be based on years which would not include twelve months value-added tax. The Accounting Officer added that it was expected that the check would be fully effective for 1975-76 assessments.

The Committee regards the reconciliation between the turnover figures in value-added tax returns and the figures in income tax returns as being vitally important for the purpose of control and verification of value-added tax returns and would welcome information about the progress made towards its introduction.

FORESTRY

27. The Comptroller and Auditor General drew attention to payments made under a contract in the sum of £5,566 for the production of a documentary film with a proposed screening time of thirty-five to forty minutes. Payments amounting to £3,500 on foot of the contract were made in advance of delivery which took place in June 1973. The film was found to be unsatisfactory in some respects and was re-edited and shortened by another firm to a screening time of fourteen and a half minutes at a cost of £960. A further payment of £1,000 was made to the original contractor in July 1973 when it was already known that the film was not satisfactory. The Accounting Officer explained that this payment was made under an agreement terminating the contract and that it was fully justified having regard to the amount of work involved and the quantity of material surrendered to the Department, which in fact made it possible to complete a satisfactory film within the budget. As the end product was satisfactory and met all the objectives the Department had in mind, the Accounting Officer considered that the payment could not be regarded as nugatory. The Committee accepts that a film was produced within the budgeted amount but it must point out that this amount was fixed on the basis of a film of thirty-five to forty minutes. The Committee would have expected that, had a film of fourteen and a half minutes been commissioned in the first instance, the budgeted amount would have been substantially less.

MISCELLANEOUS APPROPRIATIONS-IN-AID

Qn. 567.

28. In the course of its examination of the Appropriation Account for the Vote for Forestry the Committee observed that a sum of £61,337 was brought to credit under Appropriations in Aid— Miscellaneous. The Committee considers that this is too large a sum to be shown under the general head “Miscellaneous” and it recommends that, in future, details of the principal items comprising the total amount under this head should be given in an explanatory note to the subhead.

The Committee is aware that details of miscellaneous receipts are noted in some Appropriation Accounts and it requests that this matter be brought to the notice of all Accounting Officers. The Committee also considers that in the case of miscellaneous provisions in debit subheads in the Estimates, it is essential that sizeable sums should be broken down so as to give information regarding the nature of the expenditure proposed.

AGRICULTURE

29. The Comptroller and Auditor General drew attention to delays which had occurred in the collection of Monetary Compensatory Amounts due from exporters of agricultural produce from Ireland. Under the arrangements made for Ireland’s accession to the European Communities these amounts, when they relate to exports to non-member States, accrue to the benefit of the Exchequer during the transitional period ending in 1978. The Accounting Officer explained that staff problems contributed in some measure to the delays and also that difficulties in determining the exact Common Customs Tariff heading of one product caused additional delay in establishing the amounts due, but he added that the amounts mentioned in the query by the Comptroller and Auditor General had been collected. In evidence the Accounting Officer stated that the difficulty arose mainly from the fact that this was a new system originating in arrangements made in Brussels and that it took some time to set up the necessary machinery to make these collections. To some extent it had been possible to resolve the difficulty, but not in all areas, and some problems still remained in relation to collecting these amounts, while the cases referred to by the Comptroller and Auditor General had been cleared up changes in currency rates at a later date gave rise to another set of Monetary Compensatory Amounts and it was in this area that they still had problems. The Accounting Officer added that the amount remaining to be collected could be of the order of £5 or £6 million and it was the Department’s aim ultimately to collect this money.

The Committee is concerned at the very large amount owing in this case which, in effect, represents an interest-free loan to the exporters. It hopes that the collection of these moneys will be vigorously pursued and that the matter will be quickly brought to a satisfactory conclusion. The Committee wishes to be kept informed of developments.

VIVION de VALERA,

Chairman

24 June 1976.