Committee Reports > List of Committees > Dáil > 1978 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1975

FINAL REPORT

PART I—GENERAL OBSERVATIONS

MINUTE OF THE MINISTER FOR FINANCE DATED 6 DECEMBER 1977

REPORT DATED 13 JULY 1972

Recovery of Moneys.

1. The Committee notes from the Report of the Minister for Finance on this matter laid on the table of the House on 24 May 1978 that the action taken in the German Courts to recover moneys paid to an arms dealer in West Germany was dismissed in February 1978 and that, acting on the advice of the Attorney General, the Minister for Finance has decided that nothing would be gained by lodging an appeal in the German Courts.

REPORT DATED 28 JUNE 1973

Payments to Special Regional Development Fund (Grant-in-Aid).

2. The Committee is surprised to learn that the inquiry into the appropriate organisation for the planning, co-ordination and discharge of the functions of Government at sub-national levels has not yet been completed and it urges that it be brought to a conclusion as quickly as possible. It will await further information on this matter.

REPORT DATED 30 OCTOBER 1975

Appendix 9

Local Government.

3. The Committee notes that, while some of the measures to reduce road tax evasion which were provided for in the 1976 Finance Act have already been introduced, there is, as yet, very little information available as to their effectiveness although there are some indications that the extension of the on-the-spot fines system throughout the country for non-display of a current tax disc has had a significant effect on the number of people taking out licences. It also notes that the other measures provided for will be introduced as soon as practicable but that all of the anti-evasion measures are subject to review in the light of the abolition of road tax on cars not exceeding 16 horse power.

The Committee further notes that the computerisation of motor vehicle registration was introduced in the Dublin and Cork Motor Tax Offices during 1977 and that the system will be extended to other motor tax offices throughout the country on a phased basis.

Agriculture—Recovery of Loans.

4. The Committee notes that the Attorney General has advised that the Minister for Agriculture has a satisfactory legal basis for pursuing recovery of the loans made to the meat industry and that the Department of Agriculture have been asked for their early views on the action that should now be taken. It is the Committee’s view that these loans which were made to the meat industry in 1972/73 have been outstanding for far too long and it expects therefore that their recovery will now be diligently pursued and the matter brought to a speedy conclusion.

REPORT DATED 24 JUNE 1976

Public Works and Buildings.

5. The Committee is concerned that two competitions held in 1976 and 1977 for the appointment of Professional Accountants Grade III in the Office of Public Works were unsuccessful. It notes that consideration is now being given to alternative means of adding to the cost accounting strength of the Office including the possibility of recruiting trainees who would be expected to acquire professional cost accounting qualifications. The Committee wishes to be kept informed of developments.

Payments requiring validation by specific legislation.

6. The Committee notes that, having re-examined the matter in the light of the earlier considerations adduced by it, the Minister would accept that in the case of the following four Votes the particular grants involved should preferably have been supported by specific legislation and that there should have been suitable notes on the face of the relevant enabling estimates:—

(i)Transport and Power: grants to C.I.E. additional to the fixed annual grants provided for in the Transport Act, 1964,

(ii)Local Government: payments in excess of the maximum house reconstruction grants provided for in the Housing Act, 1966,

(iii)Gaeltacht: payments of housing grants in excess of limits provided for in the Housing (Gaeltacht) Acts, 1929 to 1967,

(iv)Local Government: extra-statutory grants in respect of the adaptation of houses to meet the needs of the physically disabled,

(v)Superannuation and Retired Allowances: extra-statutory and ex-gratia pensions payments.

The Committee also notes that, in so far as the grants to C.I.E. are concerned, the relevant section of the Transport Act, 1964, which limited the payment of such grants when the question of legislative authority was raised by the Committee, has been repealed by the Transport (No. 2) Act, 1974 which envisages the payment of unspecified amounts to C.I.E. out of moneys provided by the Oireachtas.

The Committee further notes that:

(1) in regard to house reconstruction grants payable from the Local Government Vote and housing grants payable from the Gaeltacht Vote, the Minister fully endorses the Committee’s comments and furthermore considers that the necessary validating legislation should be introduced before the end of the year in which the payments are made, a procedure which, in the light of the Committee’s comments, was followed in the case of a supplementary estimate for the Local Government Vote in July 1977; and

(2) while the existing legislation did not preclude the Dáil from voting the moneys required to meet the payment of housing adaptation grants for the physically disabled and of the extra-statutory and ex-gratia pensions the Minister now considers that in such cases it is desirable that the grant additional to the statutory grant should where possible be provided for in the same corpus of legislation as the existing statutory grant so that that legislation would reflect the full extent of Exchequer assistance.

The Committee has already noted in its Interim Report on the 1975 Appropriation Accounts that the necessary legislation—the Superannuation and Pensions Act, 1976—has been enacted in order to validate the pension payments and it now notes that the Department of Finance is taking up with the Departments concerned the question of legislation to cover the other services commented on by the Committee.

When the Secretary of the Department of Finance appeared before the Committee on 15 December 1977 in his capacity as Accounting Officer the Committee took the opportunity of clarifying a matter of interpretation which arose in relation to the submission made to the Attorney General by the Department of Finance on 14 September 1976, a copy of which had been made available to the Committee.

In that submission reference was made to Section 6(1) of the Transport Act, 1964 which provided that

“the Minister shall in the financial year of the Board beginning on the 1st day of April, 1964, and in each subsequent financial year of the Board make to the Board, out of moneys provided by the Oireachtas, a grant of two million pounds”.

The submission to the Attorney General stated:

“The provision in Section 6 (1) of the Transport Act, 1964 was in the nature of a guarantee to C.I.E. that, subject to ratification through the Vote system and the Appropriation Act, a fixed annual grant of at least £2 million would be made. Given that provisions regarding voted moneys in legislation other than the Appropriation Act cannot be regarded as more than an expression of intention and since in the case of C.I.E. the Transport Act, 1964 did not stipulate that a grant of ‘not more than £2 million shall be made’, in the Minister’s opinion the Oireachtas was not precluded from varying or modifying its intention by making provision in the Transport and Power Votes for once-off grants additional to the fixed annual grant laid down in the 1964 Act”.

The Attorney General’s Office on 22 September 1976 agreed with that interpretation. The Committee could not, on any account, accept this view i.e. that a statute of the Dáil should be regarded as nothing more than “an expression of intention”. It was therefore concerned lest the submission to the Attorney General and the agreement of his Office with the views expressed therein might, despite the later views of the Minister for Finance expressed in the Minute of 6 December 1977 on the Committee’s Report for 1974, be regarded as having some authoritative precedental content for the future. The Committee was assured by the Secretary of the Department of Finance that the submission to the Attorney General was merely an internal administrative document given to the Committee for its information but having no significance as a precedent or an interpretation that should be regarded as a precedent and that it did not rank in status with the Minute of the Minister for Finance.

The Committee wishes to record its acceptance of this assurance.

The debate on this issue has gone on for a number of years and the Committee trusts that the principle which it sought to have established has now been unequivocally accepted and that it will never again have occasion to raise this matter.

Office of the Revenue Commissioners—steps to improve the position in regard to Tax Collection.

7. The Committee notes that, as the Chief State Solicitor and the local State Solicitors are now dealing with penalties for the non-delivery of returns etc., the Revenue Solicitor will be able to concentrate on the purely enforcement area in the larger cases. It also notes that it is hoped that these new procedures should have the effect of inducing a higher degree of compliance with the requirement to submit returns, thus reducing the number of cases in which estimated amounts are referred to the County Registrars for collection. The Committee accepts that as a result of Section 30 of the Finance Act, 1976, there is now considerable inducement to pay tax at an early date thus reducing both the number of estimated assessments going to the County Registrars and the number of cases recalled because of the admission by the tax inspector of late appeals. The Committee is pleased to learn that present indications are that these reductions are substantial even though it is, as yet, too early to quantify them in absolute terms.

Agriculture—Delays in Collection of Monetary Compensatory Amounts.

8. The Committee notes that the amount of MCA charges outstanding in the cattle and beef sector was further reduced to £0-9 million at the end of October 1977 compared with £2-5 million approximately in November 1976, that every effort is being made to collect this outstanding debt as quickly as possible, that legal proceedings have been instituted against 26 debtors resident in the State and that, while a number of these cases have been settled, legal action is still current in 13 cases. It also notes that legal proceedings have been instituted against 13 debtors resident outside the State and that proceedings will be commenced in further cases if necessary. The Committee is glad to learn of the changes in the arrangements for collection of MCA’s on exports of live cattle and beef and on purchases of intervention beef which have been introduced in order to prevent further arrears arising and it trusts that, as a result, there will not be a recurrence of this problem.

REPORT DATED 21 APRIL 1977

Garda Síochána—Extent of Overtime Payments.

9. The Committee notes that its general comments on the extent of overtime payments from the Garda Síochána Vote are accepted by the Minister for Finance as being valid and that the strength of the Force is being increased significantly and that this may be expected to further reduce the amount of overtime expenditure.

Office of the Minister for Education—National Council for Educational Awards.

10. The Committee notes that the Minister has been informed by the Department of Education that care will be taken in the future in relation to the financing of new bodies such as the National Council for Educational Awards to select the most practicable method which will not cause accounting difficulties and will maintain adequate financial control. While the Committee welcomes this assurance it wishes to point out that its recommendation in this matter was intended to be of general application and it therefore feels that all departments which may be involved in sponsoring such bodies should be made aware of its views. It expects the Department of Finance to have a measure of responsibility in selecting the most practical method of financing these bodies.

The Committee welcomes the Minister’s action in again reminding Accounting Officers of the rule governing the surrender of surplus moneys to the Exchequer at the end of each accounting period unless such moneys have been provided as a grant-in-aid.

Primary Education—Scheme of Adaptation and Extension for a National Teacher Training College.

11. The Committee notes that the Minister for Finance shares its concern at the lack of communication and co-operation in this case between the Building Unit and the Primary Branch of the Department of Education which led the Committee to agree with the Comptroller and Auditor General that the financial control exercised over this scheme was seriously deficient. It welcomes the assurance given by the Minister for Finance that the general policy of competitive tendering for public works contracts remains unchanged and will be continued. It suggests that, because of the importance of this principle and lest there be any danger that other Departments might not attach sufficient importance to the necessity for strict compliance with it, the Minister might take the opportunity of reminding all Accounting Officers of their responsibilities in this matter. The Committee will await further information regarding the final cost of the project and the question of seeking a contribution from the College authorities towards the expenditure incurred. It notes that the matter of securing an indenture from them guaranteeing exclusive use of the premises for teacher training is receiving attention and it wishes to be informed when this has been obtained.

Secondary Education—Local Contributions towards Capital Costs of Community Schools.

12. The Committee notes that the Minister for Finance has approved a proposal put forward by the Department of Education in relation to procedures for the payment of local contributions by Vocational Education Committees. It also notes that the delay in finalising the matter is mainly due to further difficulty with regard to acceptance by the ecclesiastical authorities of the arrangements for payment by them of local contributions arising from objections to the deed of trust now being encountered from teachers’ organisations. The Committee must point out that, as stated in its report of 21 April 1977, it was informed by the Accounting Officer in December 1976 that, in so far as the local ecclesiastical authorities were concerned, the matter of the local contribution had been resolved and that the difficulty then lay with the Vocational Education Committees. The Committee is therefore perturbed to learn that the position now seems to have been reversed, with the main difficulty shifting back to the ecclesiastical authorities, and it wonders whether it can expect further protracted delays in resolving this problem. It will await with interest information as promised on the progress being made towards finding a solution.

The Committee notes that it has already been impressed on the Department of Education that, in the case of future community schools, no irrevocable commitment should be entered into until firm arrangements have been made to secure the appropriate local contribution. It also notes that the attention of Accounting Officers is being drawn to the Committee’s comments on the need in future cases involving local contributions to ensure that expenditure of Exchequer moneys is not incurred until such time as the local contributions have been collected or their collection satisfactorily guaranteed.

Secondary Education—Construction of Sports Complexes.

13. The Committee notes that the attention of Accounting Officers is being drawn to its comments in regard to the need for obtaining the prior sanction of the Department of Finance for expenditure from voted moneys and its trusts that as a result it will not have occasion to refer again to this matter.

Office of Public Works—Government Offices at Athlone and Castlebar.

14. The Committee accepts the view that it is part of the normal work of the Office of Public Works to provide a planning service and that, in so doing, expenditure may be incurred on the preparation of plans which are not proceeded with. The Committee would agree that such expenditure should not normally require the specific sanction of the Minister for Finance or noting in the Appropriation Account but it expects that exceptional cases involving relatively large expenditure or presenting unusual features will be so noted. It notes that the Minister is considering the matter in consultation with the Commissioners of Public Works with a view to making appropriate arrangements in this regard and that it will be informed of the result.

Agriculture—Charging of Expenses arising out of Market Intervention.

15. The Committee notes that invoices from cold stores in respect of handling, freezing and storage charges on beef which entered the stores after 1 January 1977 are being fully checked before payment is made as are invoices in respect of refrigerated transport used to convey intervention beef to cold stores (mainly abroad) since the autumn of 1976. It also notes that progress has been made in checking invoices relating to the year 1974 which had been paid in full pending later check and that efforts were being made to have the clearance of invoices relating to 1975 and 1976 which had been paid on the same basis completed in 1977. The Committee attaches great importance to the clearance of these arrears of work and it wishes to be kept informed of developments. It would also like to be informed whether, in view of the time lag involved, any difficulties were encountered in establishing the correctness of amounts invoiced and whether any overpayments occurred because of the payment of invoices in advance of checking.

Agriculture—FEOGA Accounts.

16. The Committee notes that the Department of Agriculture is pressing on with finalisation of the 1974 FEOGA Accounts and that these accounts, together with those relating to 1975, are expected to be completed early in 1978. The Committee is seriously concerned at the delay in finalising these accounts and it reiterates the statement made in its previous report that there is a danger that the longer the final agreement with the EEC is delayed the more difficult will be the solution of any problems which may arise and the greater the likelihood of consequential losses falling as a charge on the Exchequer. A delay of three years in clearing these accounts is, in the Committee’s opinion, far too long and, in view of the other difficulties relating to EEC expenditure referred to in paragraph 15, it wonders whether the Department of Agriculture is fully equipped to handle the complexities of market intervention with all its attendant activities which, as the Accounting Officer informed the Committee, are the equivalent of a large-scale commercial operation. The Committee wishes to be kept informed of the progress being made to bring the FEOGA Accounts up to date.

The Committee notes the position in regard to the differential between the interest rate paid from the Vote on borrowed moneys and the rate allowed by the EEC in recoupment and it appreciates that the allowances for intervention expenses (storage, transport, interest etc.) are intended as a package so that a loss on one item might be made up on another.

Social Welfare—Overpayments of Non-Contributory Old Age Pensions.

17. The Committee notes that, as a result of a restructuring of procedures in the Department of Social Welfare, the three sections dealing with Non-Contributory Old Age Pensions now operate with greater co-ordination and apply cross-checks specifically designed to eliminate duplicate book issues and duplicate arrears payments, the main source of the overpayments referred to by the Committee. It also notes that since the pressure of work arising from the 1973 and 1974 Social Welfare Acts ceased the staff have familiarised themselves with the new procedures which are now understood to be working satisfactorily. The Committee is glad to learn that the Department of the Public Service is impressing on Departments preparing legislation with administrative implications the need to give adequate consideration to these implications.

Delays in furnishing information to the Comptroller and Auditor General.

18. The Committee notes that the Minister for Finance is impressing on Accounting Officers the overriding need to facilitate the Comptroller and Auditor General and the Committee in the discharge of their functions by promptly responding to all requests for information and that particular attention is being directed to the Committee’s concern at the delays which have occurred from time to time in obtaining the sanction of the Department of Finance for revised limits for capital expenditure.

PART II—PARTICULAR ACCOUNTS

CLEARANCE OF CASHED PAYABLE ORDERS BY THE PAYMASTER GENERAL

19. The Paymaster General’s Office is a participant in the Central Exchange which provides for the clearance of cheques, payable orders etc., between the participants. The rules require that payable orders drawn on the Paymaster General’s account be presented at the Exchange in the same manner as cheques and that the accounts of the presenting banks be credited immediately with the value of the orders presented. The rules also require that orders subsequently rejected by the Paymaster General be returned directly to the presenting branch within three days of their first presentation at the Exchange. The necessary adjustments in respect of rejected orders are also effected through the Central Exchange.

In October 1973 sums totalling £3,983 were credited to two banks in respect of 31 documents purporting to be payable orders which on subsequent checking were identified as forgeries. The checking of these in the Office of the Paymaster General, by computer processing, was not completed until 13 November 1973 and the banks then disputed the right to effect recovery on the grounds that the rejected orders had not been returned within the period provided for in the rules of the Exchange. The Accounting Officer had informed the Comptroller and Auditor General that the Central Data Processing Services of the Department of the Public Service which process orders drawn on the Paymaster General’s account had been asked to revise the existing computer system so as to permit of compliance with the clearance requirement. He had stated that, while non-compliance involves loss of right to pass a debit through the Central Exchange, the Paymaster General—apart from the case mentioned—had continued to pass such debits successfully through the Exchange. He had also stated that the claim for recovery of the amounts involved in this case was still being actively pursued, notwithstanding the objections raised by the banks and on the basis that, in any event, the Paymaster General can pursue the claim outside the Central Exchange by reference to banking law. The law officers had been asked for advice in the matter from this point of view.

While the amount involved in this case, £3,983, is relatively small the Committee is concerned that, because of delays in the Paymaster General’s Office, the recovery of public moneys paid out on forged documents is in jeopardy. As long as these delays continue there is, in the Committee’s view, a danger of repetition with the possibility of large sums being involved. The Committee would therefore like to be kept informed of the progress being made to eliminate these delays. It would also welcome information on the outcome of the case referred to in the Comptroller and Auditor General’s Report when the legal advice sought by the Department has been obtained.

OFFICE OF THE MINISTER FOR EDUCATION

20. In its Report for 1972-73 the Committee expressed serious concern at the failure of the National College of Art and Design to submit its accounts annually to the Comptroller and Auditor General for audit as required by Section 15 of the National College of Art and Design Act, 1971. In the recent Minute of the Minister for Finance dated 6 December 1977 the Committee was informed that Accounting Officers were being reminded of the necessity to ensure, in so far as they can, that State-sponsored bodies and other organisations for whose funding they have a measure of responsibility submit their accounts for audit without undue delay. At its meeting on 2 February 1978 the Committee was concerned to learn that the delay in submitting these accounts was continuing. The accounts for 1975 had been submitted to the Comptroller and Auditor General but had not been certified by him because a number of matters required further consideration. The Accounting Officer in evidence explained that the onus for producing the accounts is on the Board of the College and that, while the Department of Education has been pressing them to be more expeditious in producing the accounts, he does not feel that the matter is the responsibility of the Department or of the Accounting Officer. He indicated that he was, however, quite prepared to continue to bring all possible pressure to bear on the Board of the College as he had been doing for some time.

The problem here, as the Committee sees it, is that while the legislation setting up the College provides for public accountability, there appears to be no legal way to compel the College authorities to submit their accounts annually to the Comptroller and Auditor General. The Committee is therefore concerned that, despite the best efforts of the Accounting Officer, delays may continue to occur and it wonders whether some way can be found to compel the College authorities to fulfil their statutory obligation in this matter.

21. The Comptroller and Auditor General drew attention to a discrepancy between the expenditure of the National Council for Educational Awards for 1975 as shown in the Council’s records, £195,688, and the expenditure as shown in the Appropriation Account, £182,000. The Accounting Officer had informed the Comptroller and Auditor General that the Council had been told on different occasions during 1975 that the financial allocation in the relevant Subhead for the Council’s expenses for the year, £182,000 should not be exceeded and he insisted that the charge in the Appropriation Account, £182,000, reflected accurately the amount issued from the Vote to the Council in 1975 and, accordingly the responsibility of the Department of Education in relation to payments to the Council in that year.

The Comptroller and Auditor General explained that he considered the charge in the Appropriation Account for 1975 to be understated. The relevant subhead provided for the expenses of the National Council for Educational Awards and therefore any expenditure incurred by that body in respect of matured liabilities in 1975 should have been included in the Appropriation Account for that year irrespective of whether the total of such expenditure was greater or less than the amount provided in the estimate.

The Committee agrees with the views of the Comptroller and Auditor General in this matter. In its report on the Appropriation Accounts for 1974 it had occasion to refer to a discrepancy between the expenditure of the National Council for Educational Awards and the charge to the Subhead. It is concerned that it finds it necessary to refer in this Report to another discrepancy.

It notes from the recent Minute of the Minister for Finance that the National Council for Educational Awards has been designated as an institution of higher education and is now financed through the Higher Education Authority. The Committee hopes that this method of financing will ensure that the accounting difficulties which arose in 1974 and 1975 will not be repeated.

INSTITIÚID TEANGEOLAÍOCHTA ÉIREANN (GRANT-IN-AID)

22. Payments to Institiúid Teangeolaíochta Éireann in 1975 amounted to £84,700, being £82,000 provided in the original estimate and £2,700 provided in a supplementary estimate taken in December of that year. The accounts of An Institiúid for 1975 showed a cash balance of £70,000 with outstanding liabilities of £23,000 leaving a surplus of £47,000. The Accounting Officer had informed the Comptroller and Auditor General that issues to An Institiúid are based on the amount provided in the estimate as a grant-in-aid which in turn is based on forecasts furnished annually to the Department of Education. The demands of An Institiúid for funds are subject to close examination by the Department and to reduction as considered necessary. The original estimate for 1975 had provided for certain items of expenditure which, in the event, were not incurred. The supplementary estimate taken in December 1975 represented the amount due to An Institiúid for increases under the terms of the National Wage Agreement. The Comptroller and Auditor General stated that the matter at issue was one of achieving economy of balances of public moneys. While An Institiúid placed its surplus funds on deposit in the bank there was every likelihood that the interest received would not meet the cost to the Department of Finance of raising such funds.

The Committee must take a serious view of this matter. It will be recalled that in previous reports the Committee pointed out that moneys voted for the service of a particular year which are not required for the service of that year should not be issued to meet expenditure in a subsequent year. Even allowing for the outstanding liabilities of An Institiúid at the end of 1975, it is obvious that more than half of the grant-in-aid provided should not have been issued from the Exchequer. It welcomes the assurance of the Accounting Officer that there will not be a recurrence of this problem.

PRIMARY EDUCATION

23. The arrangements for the payment of these salaries provide that when a teacher notifies the Department of Education that he has not received his salary payable order he is requested to sign a declaration that, on the understanding that a duplicate order is issued, he will return the original order to the Department if he subsequently receives it. Overpayments of salaries occurred because some teachers cashed both the original and duplicate orders and the Accounting Officer had informed the Comptroller and Auditor General that, where this occurs, it is the policy of the Department to deduct the entire overpayment from the next salary payment to the teacher. However, as payable orders remain valid for some months it might not be possible to verify immediately whether or not the original had been cashed and the Department had no option but to issue a duplicate on receipt of the declaration from the teacher. Of the total number of cases in which duplicate orders are issued, very few arise where both original and duplicate are cashed. To guarantee against this ever happening the Department would have to wait until the original order was out of date before issuing the duplicate. As the Department’s present system of recovering overpayments seemed adequate the Accounting Officer did not consider such action necessary.

In discussion the Comptroller and Auditor General suggested that, in cases such as this, the original order should be cancelled at the same time as the duplicate was being issued. This, in his view, was the normal procedure. The Accounting Officer stated that the Department cancelled the orders as early as they could but that the Paymaster General’s Office regards orders as current for six months. He agreed however. that if the original order was cancelled when a duplicate was being issued the Department would have no further responsibility in the matter.

It seems to the Committee that the Accounting Officer is relying on the Paymaster General’s procedure for the automatic cancellation of orders which are out of date whereas the Comptroller and Auditor General is referring to the procedure whereby Departments can initiate action to cancel specific orders at any time after they have been issued. The Committee sees no good reason why the procedure referred to by the Comptroller and Auditor General cannot be followed in the case of primary teachers’ salaries and it suggests that the Department of Education does so in the future.

24. The Comptroller and Auditor General drew attention to the lack of adequate security arrangements for the custody of blank and pre-printed payable orders used for the payment of primary teachers’ salaries. The Accounting Officer had informed him that consultations were taking place with the Office of Public Works regarding the provision of a strongroom and that, in the meantime, procedures had been laid down to ensure the safe custody of these orders. The Accounting Officer explained that, as the cost of providing a strongroom in the premises presently being used by the Department would be of the order of £12,000 to £13,000, the Office of Public Works wanted an assurance that the Department would be continuing to use these premises. It was expected however that the Department would soon be moving to other premises and that a strongroom would be provided in the new premises. The Committee accepts that it would not be feasible or practical to provide a strongroom in premises which will soon be vacated but it trusts that there will be no undue delay in providing such an essential security requirement in the new premises.

SECONDARY EDUCATION

25. As a result of shortcomings in the system of accounting for salaries paid to secondary, comprehensive and community school teachers incorrect charges were made in the Appropriation Accounts in the years 1974 and 1975. These arose because of failure by the Department of Education to pay over promptly to the Departments and other agencies concerned the deductions made from the salaries in respect of income tax, social insurance, voluntary health insurance, etc. Moreover, reconciliations between amounts deducted and amounts paid over were not being carried out on a regular basis.

The Accounting Officer informed the Comptroller and Auditor General that these deficiencies in the accounting procedures were due to (1) pressure of work, shortage of staff and staff changes, (2) changes in regard to the payment of social welfare contributions as from 1 April 1974, (3) insufficient information on the schedules of salary payments and (4) the changeover of the financial year to a calendar year basis in 1974. He stated that the accounting system had been improved in order to ensure that, in future, remittances would be made on a monthly basis to the agencies concerned and that every effort was being made to effect reconciliations between amounts deducted and amounts paid over. It had not been possible however to adjust the incorrect charge in 1975 as the year was closed when the matter was brought to his notice but from 1976 onwards deductions from the salaries of these teachers were being charged correctly. In discussion the Comptroller and Auditor General pointed out that failure to reconcile on an ongoing basis the total of deductions made under each head with the total paid over to the relevant receiving agency could mean that the Department would not know at any particular point of time whether they stood in a credit or debit position in relation to that agency.

It appears to the Committee that there were difficulties in making the accounting system within the Department of Education function properly. The Accounting Officer admitted that this was true in respect of 1975; the pressure in this area at that time was such that the accounting procedures were not adequate and there had, in fact, been a breakdown. He was hoping however that computerisation would prevent this happening in the future.

The Committee must express its concern that such a breakdown should have occurred. It could not agree that this situation should be allowed to continue for any length of time and it therefore urges that all possible steps be taken, if this has not already been done, to ensure that the deficiencies which led to this breakdown will be permanently eliminated from the Department’s accounting procedures.

26. Full incremental salary was paid to secondary, comprehensive and community school teachers for periods of absence on maternity leave even though the rules governing the payment of salaries to such teachers provided, with effect from 1 January 1975, for the deduction of any amount of social welfare maternity allowance payable to them for such absence. The rules did not make any provision for the deduction of social insurance benefits payable to such teachers entitled to full pay when absent on ordinary sick leave. The Accounting Officer had informed the Comptroller and Auditor General that the Department’s procedures had been amended to ensure that in future the deductions in respect of maternity benefit would be made as intended by the rules and that consideration was being given to the action which might be appropriate in the case of fully insured teachers granted maternity leave with full pay in the period 1 January 1975—31 July 1976. He had also indicated that it was proposed to introduce the necessary amendment of the rules with effect from 1 August 1976 to provide for the deduction of social insurance benefits from salaries of teachers who are entitled to full pay during ordinary sick leave.

The Comptroller and Auditor General explained that he had raised these matters because there seemed to be an element of double benefit involved.

The Committee notes the action taken by the Department of Education to eliminate what might be regarded as the payment of a double benefit to certain teachers. As it considers that the matters raised here may have wider implications throughout the public service it would welcome the views of the Minister for Finance.

VOCATIONAL EDUCATION

27. Payments made to Vocational Education Committees in respect of annual grants and in respect of the running costs of the Regional Technical Colleges represent the full amount of estimates furnished by the Committees and approved by the Department of Education. Variations between estimates and actual expenditure, ascertained when accounts certified by the Chief Executive Officers are received in the Department, are taken into account in determining the amount of subsequent payments to be made to the Committees. These accounts are subject to audit by Local Government auditors and are made available to the Comptroller and Auditor General. Information furnished to the Comptroller and Auditor General by the Accounting Officer indicated that the audit of the accounts of the 38 Vocational Education Committees and of the 8 Regional Technical Colleges was very much in arrears. The Comptroller and Auditor General explained that he did not audit the accounts of these Committees or of the Regional Colleges administered by them but accepted the certificates of the Local Government auditors as evidence that the voted moneys paid to the Committees had been expended on the purposes for which they were voted. He also stated that information given to him in June 1977 by the Accounting Officer suggested that the position regarding the audit of these accounts had further deteriorated. In evidence the Accounting Officer admitted that this was so but stated that it was a question of the burden on the Local Government auditors. The Committee takes a serious view of this matter. It considers that it is essential that the Comptroller and Auditor General should have the certificates of the Local Government auditors in these cases in order to satisfy himself that the payments from voted moneys to Vocational Education Committees are properly expended by them.

FISHERIES

28. The estimated cost of an improvement scheme at Killala Harbour, towards which a contribution of 25% was payable by Mayo County Council increased from £26,800 in 1969 to £98,000 in 1973. In that year work was suspended because of difficulty in reaching agreement with the County Council on the amount of its contribution towards the cost of further reinforcement works. In August 1975 the overall cost of the project was estimated at £179,500. Steel sheet piling to the value of £20,000, approximately, which had been ordered by the Office of Public Works for this project and delivered to the site in late 1974, was still on the harbour site in April 1976 but work on the project had not been resumed. The Accounting Officer informed the Comptroller and Auditor General in June 1977 that no further progress had been made towards the completion of the project because of the difficulty in reaching agreement with Mayo County Council as regards the amount of its contribution. The Comptroller and Auditor General informed the Committee that the revised estimate for the completion of the scheme was of the order of £230,000 and that the expenditure already incurred when the work was suspended was in excess of £140,000. In evidence the Accounting Officer agreed that, while discussions had taken place between the Department and the Office of Public Works, no real progress had been made since 1973 and there was a danger that storm damage to the harbour could result in the work already done being brought to nought. There had been a reluctance on the part of the Local Authority to put further money into this project and this raised the question of whether the moneys already spent should be written off and the improvement scheme at Killala Harbour abandoned completely. The Accounting Officer explained that the increase in the estimated cost was not due entirely to delays. The scope of the work now proposed had widened considerably from that originally intended. While marine works are notorious for presenting difficulties of estimation there were particular problems in this case which only became apparent as the work progressed. The steel sheet piling which was still on the site was not subject to deterioration. It had been bought at a favourable price and it was considered wise to stock it in anticipation of this work going ahead. The Committee considered this case at length. It must express grave concern that the failure of the County Council to pay an increased contribution has put the completion of this work in jeopardy. The Committee shares the anxiety of the Department that the work already done, if left uncompleted, could be rendered useless. It deprecates the action of this local authority, or indeed of any local body, which, having entered into a commitment to contribute towards the cost of a project, fails to meet that commitment because of unforeseen expenditure arising after the works have commenced and in the expectation that the Exchequer will meet more than its fair share of the increased expenditure.

The Committee cannot express too strongly its concern at the impasse which appears to have been reached in this case and which has not only jeopardised the completion of the scheme but has also resulted in materials purchased at considerable cost to public funds remaining unused over a number of years. It urges therefore that all possible steps be taken to resolve the dispute between the Department and the County Council and it wishes to be kept informed of the outcome.

ROINN NA GAELTACHTA

29. The Committee discussed again the payment by Roinn na Gaeltachta of housing grants in excess of the statutory limits. It was informed by the Accounting Officer that grant rates had been further increased in 1977 without statutory authority. While the Committee is satisfied that the Minister for Finance in his latest Minute has accepted that the Appropriation Act is not sufficient statutory authority for such increased payments it is concerned that the irregularity is continuing. This raises another important issue which, in the opinion of the Committee, should not be lost sight of.

Accounting Officers have particular responsibilities in relation to voted moneys entrusted to them. They should not spend or seek to spend moneys without proper authority. There is a prescribed procedure to be followed if an Accounting Officer is required, as a matter of policy or for any other reason, to make payments for which, in his opinion, he does not have such authority.

The question also arises whether the Department of Finance is acting responsibly in giving sanction year after year for payments which are obviously extra-statutory. The Committee would hope that the necessary amending legislation which, it understands from the Accounting Officer, has been ready for some time will be introduced without further delay.

LOCAL GOVERNMENT

30. The completion by Local Government auditors of the audits of the housing services accounts and the motor tax accounts of the local authorities has fallen considerably into arrears in recent years. The Accounting Officer had explained to the Comptroller and Auditor General that the delays had arisen because of staff shortages in the Local Government audit service aggravated by difficulties in filling vacancies in that service. The Comptroller and Auditor General stressed that it is important that these audits should be completed as promptly as possible so that the correctness of the amounts of housing subsidy paid from the Vote can be established. He pointed out that he also relies on the reports of the Local Government auditors when verifying the accuracy of the amounts of motor vehicle duties brought to credit of the Exchequer.

The Accounting Officer, in evidence, stated that there had been a considerable improvement in the auditing of the housing services account since the date of the Comptroller and Auditor General’s report. He also explained that there was a long history of recruitment difficulty in relation to the grade of Local Government auditor and that, up to fairly recently, the number of qualified candidates coming forward from the open competitions was quite small. A more recent competition had produced a bigger field of candidates than any of the competitions held since June 1973. The Department had also introduced a new grade of trainee assistant auditor for which a competition was being arranged and, pending the holding of this competition, a number of executive officers had been assigned to audit duties so that there would be an improvement in the clearance of arrears of audit. A number of additional posts had been authorised in the grade of auditor but neither these posts nor the authorised posts in the grade of trainee assistant auditor had yet been filled. The Accounting Officer agreed that the recent changes in regard to the taxation of motor cars and the change in the housing subsidy arrangements would reduce the volume of work to be carried out by the Local Government auditors but he felt that an assessment of whether there were sufficient resources to carry out the work satisfactorily could not be made until the effect of all these changes became apparent. While the Committee recognises the efforts being made by the Department of the Environment (formerly Local Government) to bring these audits up to date it must express its concern that there is still a large volume of arrears. The reports of the Local Government auditors on these accounts are essential to the work of the Comptroller and Auditor General and the Committee therefore wishes to be kept informed of the progress being made to bring these audits up to date.

31. The Government decided in 1973-74 that the Exchequer would, over a four year period, progressively assume full responsibility for the deficits of local authorities arising from the provision of local authority housing for letting and that the rates contribution for this service would be phased out. In 1973-74 and 1974 the Department paid the deficits which the local authorities estimated to be payable by the Exchequer under the new arrangement and the amounts so paid were to be adjusted when final claims showing the actual deficits were received from the authorities. It appeared that, on the basis of final claims subsequently received, overissues amounting to £734,618 were made to 58 local authorities in 1973-74 and overissues amounting to £680,847 were made to 56 local authorities in 1974. In 1975 the local authorities were again paid the full amount of their estimated deficits even though the Department was aware, when paying them in December 1975, that there had been overissues in the earlier years. The Accounting Officer had informed the Comptroller and Auditor General that when the 1975 payments were being made in December 1975 cognisance was not taken of the data in the final claims for the earlier years because, at that stage, these claims had not been audited by the Local Government auditors. Moreover, it was clear that because of undercharges made by some local authorities the deficits shown in these final claims were understated and would have to be adjusted, thereby reducing or eliminating the apparent overissues. The Accounting Officer had also informed the Comptroller and Auditor General that arrangements were being made to have all final claims submitted by local authorities and certified by the Local Government auditors as soon as possible so that the precise amount of the overissue could be established in each case. The appropriate adjustments would then be made in the next subsidy payments due to the local authorities concerned. The Accounting Officer had further stated that, in the light of the experience of the change in the subsidy system, the Department proposed to inform local authorities that, with effect from 1 January 1977, subsidy payments on account would generally be based on 90% of estimated claims pending certification of final claims.

The Comptroller and Auditor General stated that he was concerned that any overissues of voted moneys should be recovered at the earliest opportunity. In evidence the Accounting Officer informed the Committee that overissues amounting to £665,000 had been established in 48 of the 58 cases relating to 1973-74 and overissues of £675,000 had been established in 48 of the 56 cases relating to 1974. Virtually all of these established overissues were recovered in 1977 by deduction from ongoing subsidy payments. The Accounting Officer also stated that as from 1 January 1977 the basis on which housing subsidy is payable was changed fundamentally and that more clear-cut arrangements have facilitated more accurate estimation.

The Committee shares the concern of the Comptroller and Auditor General that any overissues of public moneys should be recovered as quickly as possible. It is therefore disturbing to find that overissues established at some £1.3 million were only being recovered three to four years after they had been made and that in some cases the amounts overissued have not even yet been established. The Committee notes the statement by the Accounting Officer regarding the improved arrangements which came into operation in 1977 and it trusts that, as a result, overissues of this magnitude will not recur. It would, however, welcome up to date information showing for each of the years 1973-74, 1974, 1975 and 1976 (1) the number of cases in which overissues have been established and the amounts thereof, (2) the amounts recovered and (3) the number of cases, if any, in which amounts overissued have not yet been established.

PUBLIC WORKS AND BUILDINGS

Appendix II

32. The Comptroller and Auditor General drew attention to a number of apparent irregularities in the vouching of issues of diesel oil at a local centre of the Office of Public Works where construction work on a fishery harbour was being carried out for the Department of Agriculture and Fisheries on a repayment basis. These comprised the alteration of the quantities of diesel oil entered on stores requisitions, the issue of diesel oil for a particular machine far in excess of its estimated consumption and the issue of diesel oil to a vehicle in respect of a period when it appeared to be “off-hire” i.e. not in use. Moreover, no equipment was available for dipping the fuel tanks at this centre. The Accounting Officer had informed the Comptroller and Auditor General that it had been established that the alteration of the stores requisitions were made by the storekeeper who had concluded that a discrepancy between the book balance and the actual balance of diesel oil on hands was due to undermeasurement of issues. In regard to the issues in excess of the estimated consumption of a particular machine, the quantity shown as having been issued represented the normal consumption of that machine for the period but, through an erroneous procedure which arose from a misunderstanding by the storekeeper, the plant maintenance records had been incorrectly completed. In both of these cases the Accounting Officer was satisfied that there was no question of misappropriation. In regard to the issues to the machine which appeared to be “off-hire”, this machine was, in fact, working during some of that period but through an oversight this had not been recorded. In evidence the Accounting Officer explained that there was only one storekeeper at this centre. Through an omission he was not supplied with the normal instructions to storekeepers and when he found a discrepancy, instead of investigating it, he altered the records. This in the opinion of the Accounting Officer was probably due to inadequate training but he assured the Committee that there was no question of dishonesty. He added that as these were temporary works the stores would not be equipped with a meter for continuous measurement but a dipstick which was missing at the time of audit had since been restored to use.

While the Committee accepts the explanations offered by the Accounting Officer in these cases it is very surprised that the discrepancies did not come to light until discovered by the staff of the Comptroller and Auditor General. This would appear to suggest serious weaknesses in the systems of supervision and control at this local centre. The Committee would like to be assured that such weaknesses do not exist at other local centres.

HEALTH

33. The Comptroller and Auditor General’s Report drew attention to shortcomings in the financial administration of the Health Boards as revealed in the reports of the Local Government auditors on the accounts for the years 1971-72 and 1972-73. These shortcomings included deficiencies in internal controls, inadequate standards of accounting and recording, incomplete records of land and buildings, incorrect treatment of balances taken over from former health authorities and high levels of interest on bank overdraft. In one case the auditor reported that the documentation supporting a very high percentage of payments made in 1971-72 was less than that demanded to conform with the requirements of public accountability. The Comptroller and Auditor General also drew attention to delays in the completion of the audits of the accounts of the Health Boards for 1973-74 and subsequent years. By January 1978 the position had not improved to any great extent.

In evidence, the Accounting Officer agreed that the financing of the Health Boards and their accounting arrangements had given rise to certain difficulties. He accepted that the criticisms listed in the report of the Comptroller and Auditor General were justified. He explained however that the period to which these criticisms related was a transitional one. The Health Boards which had been set up to a rather quick timetable had not yet recruited their own accounting staff. Much of the accounting work was being done on an agency basis by the staff of the local authorities who had formerly been responsible for the health services. Moreover, the work was not yet centralised because the Health Boards were taking over the accounting arrangements of a number of former health authorities. In addition there was a considerable volume increase in the health services. Since that time, however, each Health Board had introduced an internal audit system and the method of dealing with payments had been improved to a considerable extent by centralisation. Specialist consultants had already been engaged in the case of one Board to advise on further improvements and it was intended to seek the advice of consultants in the case of two other Health Boards in 1978. The Accounting Officer stated that he was therefore fairly satisfied that the Health Boards were now much better equipped to exercise internal controls on expenditure than they had been in 1971-72 and 1972-73.

On the question of inadequate standards of accounting and recording the Accounting Officer stated that, in the early years, the Health Boards followed a system of accounting which had been operated within the local authorities and which, it was accepted, was not entirely satisfactory. A working party representative of the Department, the Health Boards and the Local Government auditors had been set up as the result of which an agreed standardised form of accounts had been introduced for all Health Boards from the beginning of 1977. This standardised form of account will facilitate the completion of the audit of the Health Boards’ accounts. In regard to the incomplete records of lands and buildings the Accounting Officer informed the Committee that some difficulties had arisen about the ownership of certain lands. The legislation setting up the Health Boards provides that lands formerly held by local authorities solely for health purposes would be transferred automatically to the Boards together with certain other lands designated by the local authorities but in a few cases there had been some dispute about whether some properties should be transferred. The standardised form of accounts includes a balance sheet giving the valuation of the lands and buildings owned by the Health Boards. The Accounting Officer added that, from a practical point of view, the question of ownership would only be of significance in the event of disposal of property and that this does not arise very often. In regard to the incorrect treatment of balances taken over by the Boards from the former health authorities the Accounting Officer stated that this arose in the case of one Health Board only and related to the balances existing in the books of the local authorities at the time the Health Board was set up. He assured the Committee that there was no duplication of grant payments arising from the treatment of these balances and it was only a matter of a liability being taken over by the Health Board in one year rather than in another.

In regard to the high level of bank interest the Accounting Officer explained that it was not a question of excessively high rates of interets being paid but that, in relation to the total expenditure of the Boards, the overdrafts were too high. The Accounting Officer accepted that this was so but indicated that over the years since the setting up of the Boards there had been a considerable improvement in the position. Under the arrangements approved for the payment of grants to the Health Boards there are always balances due to the Boards from the Vote at the end of the year. As health expenditure increased these balances also increased and boards found it necessary to resort to Bank borrowing to meet their commitments. In recent years the Department had attempted to clear these old balances and was taking adequate measures to keep the bank overdrafts of the Boards down. In regard to the criticism that the documentation supporting some payments was not up to the standard required for public accountability the Accounting Officer stated that this applied to one Health Board which at the time had particular difficulties in relation to accounting and to office accommodation. The Accounting Officer stated that, while at one point two thousand vouchers were missing, all but one hundred and thirty of these were ultimately recovered and he was satisfied that there was no question of fraud. He added that the administration of this Board is at present up to the standards required.

The Committee must express grave concern that in some cases the accounting and recording procedures of the Health Boards were so defective as to warrant serious criticism by the auditors. It notes that the vote expenditure in 1975 on grants 10 the Health Boards amounted to £135,000,000 and it considers that with expenditure of this magnitude the need for effective controls and correct accounting procedures should be obvious. The Committee therefore expects that no time will be lost by the Department in ensuring that whatever deficiencies have existed up to now will be eliminated. The Committee is of the opinion that the difficulties of the Health Boards in the earlier years of their existence arose in the main from the lack of proper financial controls and accounting procedures and it therefore considers that in future, when it is proposed to set up new agencies to administer services involving the expenditure of Public funds, it is essential that effective arrangements be made well in advance for such controls and procedures. The Committee also notes that the audits of the accounts of the Health Boards are in arrears. It regards this as a very unsatisfactory situation and it urges that all possible steps be taken to bring these audits up to date without delay.

34. The Reports of the Local Government auditors on their audit of the accounts of the Health Boards for 1971-72 and 1972-73 indicated that health contributions payable by certain categories of farmers under the terms of the Health Contributions Act, 1971 had not been audited by them in some regions. The Reports also indicated that in some of the regions where these contributions had been audited, the accounting arrangements for their assessment and collection were unsatisfactory.

In regard to the checks carried out by the Department of Health on the assessment and collection of these health contributions the Accounting Officer had informed the Comptroller and Auditor General that under the Health Act, 1970 the assessment of liability is a matter for the Chief Executive Officer of the Health Board in each case. The Department nevertheless maintained an overall supervision of the situation in regard to general levels of assessment.

Arrangements had been made with the Health Boards to have the contributions received by them remitted to the Department on a regular basis and individual cases of delay in making these remittances or apparent shortfalls in the amount actually collected are taken up with the Health Boards concerned.

The Accounting Officer had also stated that the Department monitors on an overall basis the collection vis-á-vis estimated yields and it was aware that one Health Board at least had taken legal action against defaulters. In regard to the question of audit the Accounting Officer had stated that discussions were to be held regarding the audit of the health contributions in the regions where they had not been audited by the Local Government auditors and that in the cases where the Local Government auditors had expressed dissatisfaction with the accounting arrangements the matter had been brought to the notice of the Boards concerned.

It was the intention, as part of a general review of the accounting and internal audit systems of the Health Boards, that deficiencies of this type would be remedied as soon as possible. The new form of accounts being prescribed for the Health Boards would include these transactions thereby ensuring that they would be duly audited.

In regard to the question of collection of contributions from farmers by the Health Boards the Accounting Officer explained in evidence that there had been difficulty in relation to the level of collection but that the position had improved considerably in recent years. In the year up to October 1975 the level of collection was approximately 45% but in the year up to October 1977 the amount collected was estimated to be about 80% of the amount collectable. In some cases Health Boards had prosecuted defaulters. The Department and the Health Boards were endeavouring to improve the rate of the collection from the farmers but the achievement of 100% collection was difficult. The Health Boards were encouraged to take legal action to enforce payment but it was doubtful whether it would be an economical proposition to take legal action in all cases. While the Committee recognises the difficulties associated with the collection of these contributions it considers that the aim should be to achieve a 100% collection in all regions and it urges that all necessary steps be taken to seek to reach that aim. It would welcome information giving for each year since 1971-72 the approximate level of collection for the various regions and the estimated total of arrears for each region.

GENERAL

Comptroller and Auditor General

Qns 2, 14, 417–424

35. When the Accounting Officer for this Vote was before the Committee it took the opportunity of again questioning him about the staffing position in the Office of the Comptroller and Auditor General. The Committee was aware from the Minute of the Minister for Finance on its 1974 Report that an increase in staff had been authorised by the Minister for the Public Service and it was anxious to learn whether the position was now satisfactory. The Accounting Officer explained the difficulties of recruiting a fairly large number of additional staff simultaneously and the problems caused by having to do so. He informed the Committee that a proposal had recently been made to the Department of the Public Service that, rather than have a repetition of the situation which arose in 1976 and 1977, the work-load of the Comptroller and Auditor General’s Office should be reviewed regularly and that, if necessary, extra staff be provided to cope with additional work according as it arises. The Committee considers this to be the correct approach to ensuring the effective functioning of this Office.

Explanations for saving or excess on subheads

Qns 36-44, 374, 375, 389, 390.

Appendix 10

36. The Committee observed that explanations given by some Accounting Officers of the causes of variation between expenditure and grant were far from adequate. In some cases the explanations merely stated that the expenditure was greater than the estimate or less than the estimate, a fact that would be obvious from the account itself. There was no effort made to identify the reasons why the expenditure was greater or less which is what the Committee expects the explanations to do.

Previous reports of the Committee which referred to this matter emphasised that explanations should be framed in sufficient detail to cover the significant facts of each case and Accounting Officers were informed at that time of the need to append adequate explanatory notes to Appropriation Accounts.

The Committee wishes to reiterate these comments and suggests that the attention of Accounting Officers might be drawn once more to this matter.

Provision of secretarial service for the committee

Qns 2, 14, 169, 387, 388

37. The Committee is concerned that the staff made available to provide it with a secretarial service is inadequate. It has the part-time services of only one officer of the Houses of the Oireachtas staff who is also responsible for the Questions Office. It is the Committee’s view that the work-load of the Questions Office has increased in recent years and that it is therefore becoming more and more difficult for the officer in charge of that Office to provide the Committee with the service to which it is entitled. In discussion the Accounting Officer for the Department of Finance agreed to bring the Committee’s views on this matter to the notice of the Department of the Public Service and the Accounting Officer for the Vote for the Houses of the Oireachtas undertook to convey them to the Ceann Comhairle. The Committee trusts therefore that the staffing difficulty in this area will be rectified as soon as possible.

PADDY O’TOOLE

Chairman

15 June 1978