Committee Reports > List of Committees > Dáil > 1988 > Committee of Public Accounts > Report - Appropriation Accounts 1984

AN COISTE UM CHUNTAIS POIBLÍ

(Committee of public Accounts)

Déardaoin, 4 Nollaig, 1986

Thursday, 4 December, 1986

The Committee met at 10 a.m.

Members Present:

DEPUTY FOLEY in the chair

Mr. P. L. McDonnell (An tArd Reachtaire Cuntas Agus Ciste) called and examined.

VOTE 3—DEPARTMENT OF THE TAOISEACH

Mr. P. ÓhUiginn called and examined.

504. Deputy G. Mitchell.—Could the Accounting Officer tell me about the annual grant-in-aid and is the concert hall now breaking even, making a profit, or what is the current situation?

Mr. Ó hUiginn.—That is a grant-in-aid which has been given annually from the outset to the concert hall. It originally started on the basis that the grant-in-aid was equivalent to about 65 or 75 per cent of the total expenditure of the hall. It is now down around 30 per cent. There is a minimum probably below which it cannot go in terms of ensuring that the concert hall does not become a purely commercial organisation. If it were forced entirely to be dependent on what it could take at the door there would be a certain amount of music and events of a certain quality which probably would not be commercial. They have succeeded in each year in almost breaking even. In the last year, I saw the accounts recently, they made a profit of about £3,000, so they really are not making large sums of money and on the other hand they are not losing large sums of money, they are about breaking even and the purpose of the grant is to ensure that they are able to cater for tastes which ultimately might not always be commercial.

505. Deputy G. Mitchell.—Could I ask what the turnover was for the National Concert Hall in the most recent year?

Mr. Ó hUiginn.—I would really have to have notice of the question. My feeling is that it is of the order of half a million; a figure of that order. In fact I now see that in 1984 it was £500,962.

Deputy G. Mitchell.—That is for 1984, for the year in question?

Mr. Ó hUiginn.—Yes.

506. Deputy G. Mitchell.—What are the attendances like? Is the Concert Hall booked out all the time? Is it used to full capacity?

Mr. Ó hUiginn.—Seat occupancy is generally in excess of 70 per cent.

Deputy G. Mitchell.—Have you any plans or does the concert hall board have any plans for the development of the sunken gardens behind the National Concert Hall?

Mr. Ó hUiginn.—There have been discussions about the possibility of having the State recover them from UCD, who have a licence to use these gardens. There is the intention that, while remaining in the custody and property of the State, it might be possible to envisage the concert hall, since it does adjoin these gardens, using the gardens for outdoor concerts, for example, in the summer. They are having discussions about that. No decisions have been made other than that consideration is being given to the matter, it is really a matter for the Office of Public Works rather than for my Department. We are aware that this question has been raised and discussions have taken place, about recovering the gardens from UCD, who now have very little presence in Earlsfort Terrace, so that the State would fully have the custody and occupation of the gardens.

507. Deputy G. Mitchell.—Have the corporation any ownership of any of the access points or any of the lands surrounding the gardens?

Mr. Ó hUiginn.—I do not think so. That is also a possibility which is tied up in this question, and again I am talking, Deputy, about matters outside my own Department and to be fully correct any questions would have to be addressed to the Office of Public Works, but I do understand that there have been discussions about the possibility that the corporation might be responsible for Stephen’s Green which ultimately could link up with the Iveagh Gardens.

Deputy G. Mitchell.—I might just say, Chairman, we did visit the Concert Hall two years ago and the idea of using the sunken garden for outdoor concerts is one which would be very attractive from a tourist point of view, and which would probably contribute to a reduction in the State subsidy.

Mr. Ó hUiginn.—I agree, Deputy. We did in our Department take an initiative in trying to press that ahead. As I have said, it has got to the point where the question of recovering the custody which UCD have, which is on a licence from the State, is being actively considered.

Deputy G. Mitchell.—So we may see outdoor concerts there before too long.

Mr. Ó hUiginn.—I would hope so. It is a perfect setting.

VOTE 5—AN COMHAIRLE EALAION.

Mr. P. Ó hUiginn further examined.

508. Deputy G. Mitchell.—Could we ask what exactly does the Comhairle do?

Mr. Ó hUiginn.—An Chomhairle is statutorily charged, in receiving a grant from the State, to foster all aspects of the Arts. It is independent in the allocation of the funds it gets. It makes its own decisions. It divides the money amongst all the various arts and have always insisted very much on their independence, which they have statutorily, in the allocation to the various applicants they have for their funds.

Deputy G. Mitchell.—Do they have any contact with any Department other than your Department? It is all directly answerable to the Minister for Arts at your Department?

Mr. Ó hUiginn.—Yes, they are basically answerable to the Minister for Arts and Culture but they do from time to time have other contacts. For example, they could very well have contact with the Department of Education in regard to discussions about advancing art in the curriculum, or with Departments, who might have involvements in some other way with culture, for example, the Department of the Gaeltacht.

509. Deputy G. Mitchell.—Do you have any knowledge if the Arts Council promotes exhibitions within communities, or does it spend its time grant-aiding other developed bodies? Does it encourage artists within communities to develop their skills and to display their skills and generally to operate on a community basis rather than on a national, organised body basis?

Mr. Ó hUiginn.—Very much so. It is a fundamental principle, certainly in recent years, of the Arts Council to assist the development of Arts and culture on a local basis. The Oireachtas has allocated some £600,000 under the Funds of Suitors Act for the development of Arts centres which will in practice be administered through the Arts Council. They have put up a list of centres, all community based and intended to be local foci of Art and culture.

510. Deputy G. Mitchell.—Are you aware, Mr. O hUiginn, that there is a very good Art College which operates on a correspondence basis from the UK but that there was one in Dublin which did not get off the ground, for lack of finance? I wonder is this something which the Arts Council might consider looking at because there are a number of people outside Dublin in particular who could benefit by proper correspondence courses in Art.

Mr. Ó hUiginn.—I certainly would be glad to draw the attention of the Arts Council to that suggestion and perhaps ask them to get in touch with you for further details. Basically, you understand, ultimately it will be a matter for their decision.

Deputy Mitchell.—Could you tell me how many staff they have?

Mr. Ó hUiginn.—About 21 or 22.

511. Deputy G. Mitchell.—What are the qualifications of their chief executive? Is he a curator?

Mr. Ó hUiginn.—He was originally an Arts Officer. He was promoted chief executive when the previous one, Mr. Colm Ó Briain, resigned about four years ago. He was already at that time an Arts Officer. There are grades of Arts officer in which there are five or six who cover various aspects of the Arts and could have a background or training or experience in that particular area of Art. I just cannot remember offhand, but I think Mr. Munnelly was in the area of contemporary Arts.

Deputy G. Mitchell.—Are you in a position to tell the committee what the up-to-date position is on the Ardagh Chalice?

Mr. Ó hUiginn.—You mean the Derrynaflan Chalice?

Deputy G. Mitchell.—Yes.

Mr. Ó hUiginn.—I would rather not comment since this is a matter which is still in the courts, is sub judice and is a delicate issue.

Deputy G. Mitchell.—It is with the Supreme Court now, is it?

Mr. Ó hUiginn.—Yes. It is too delicate a matter to discuss here.

Deputy G. Mitchell.—Right I will not press it.

The witness withdrew.

VOTE 7—COMPTROLLER AND AUDITOR GENERAL.

Mr. P. Graham called and examined.

512. Chairman.—Paragraph 1 of the Report of the Comptroller and Auditor General reads:

As in previous years the constraints imposed by the reduction in staff numbers in my Office have adversely affected the level of audit examination undertaken in 1984 and have delayed the audit of the accounts of some State-sponsored bodies and Departmental funds.

Mr. McDonnell.—Paragraph 1 is the one I want to comment on. You will see what it says. The committee, as you will recall, did consider this matter in some detail when dealing with the 1982 Accounts and Report and, following that, a special report was made to the Dail in January 1985. It is just the fact that it continues to have an impact on the work of my office and I, therefore, consider it my duty to continue to refer to the matter in my report. I want to emphasise that my sole purpose is to make you aware of the situation. You should not construe that as any kind of a demand; it is simply to inform the Committee of the position.

512. Deputy Naughten.—First, I wonder could we have the number of staff employed at present in that office?

Mr. Graham.—The authorised establishment is at present 92 and at the moment we have 89 staff serving in the office.

Deputy Naughten.—Was 92 the maximum number of staff you had at any time?

Mr. Graham.—Yes.

Deputy Naughten.—Over the last five years?

Mr. Graham.—No, the maximum number we would have had over the last five years would have been 96. The imposition of the embargo in 1981 fixed the maximum authorised establishment at 96 and it has been decreasing from 96 over the past five years so that there is the present authorised figure of 92. This was finally established by a Government decision in July 1986 as our current authorised establishment.

Deputy Naughten.—So you lost four posts as a result of the embargo and you have three unfilled as a result of it, is that correct?

Mr. Graham.—Yes.

513. Deputy Naughten.—Could the Comptroller and Auditor General inform the Committee what direct effect he sees the reduction of staff having on his work and the functions of his office?

Mr. McDonnell.—I think I have explained it succinctly there. It has delayed the audit of the accounts of some State-sponsored bodies and departmental funds as well as having adversely affected the level of audit examination throughout the Departments. Might I say that I think I am right in saying that we did have an authorisation in July 1980 for a staff of 101. As the accounting officer said, the number serving was 96. Before we got our staff up to the authorised number, the embargo took effect and things started to work in reverse. The effect simply is, as I said, that the level of audits to be conveyed throughout the Departments, bearing in mind the increase in the scope of Department’s work and the increase in the activity of Departments, has had to be curtailed. It is simply a question of what we can reach rather than necessarily being what we might like to reach.

512. Deputy Naughten.—In dealing with the Appropriation Accounts which we are discussing today or, indeed, the ones which are being done at present, do you find it difficult to do the level of audit and examination that you would feel that you should be doing?

Mr. McDonnell.—Yes, there are areas which we have not been able to examine which we would have liked to examine.

515. Deputy Naughten.—How concerned are you from an audit point of view of not being able to go into these audits in as great a detail as you would like?

Mr. McDonnell.—I am quite concerned. I think the Committee’s Report in 1982 reiterated this at that time. We went into it fairly fully and there were a lot of areas where we said we would have liked to do more work but were not able. That situation is simply continuing.

516. Deputy G. Mitchell.—Is it true that the office of the accounting officer operates on the legislation largely passed in 1866 but updated by legislation of 1921, 1923 and the Constitution of 1937? Is it not a fact that mostly your powers derive from legislation of 1866?

Mr. Graham.—That would be true, Deputy.

517. Deputy G. Mitchell.—Are you aware that in 1983 the United Kingdom Parliament passed a National Audit Office Act updating the powers of the Comptroller and Auditor General in the UK and the powers of the public accounts committee there?

Mr. Graham.—Yes, certainly we would be aware of the developments in the UK.

518. Deputy G. Mitchell.—Has there been any move to update the powers of the Comptroller and Auditor General in this country to your knowledge in recent times?

Mr. Graham.—I, as accounting officer and secretary of the office, am not aware of any official approaches relating to developments of that nature. I am aware certainly from the Estimates debate this year on the Office of the Comptroller and Auditor General that reference was made in the debate to the fact that the legislation governing the powers of the Comptroller and Auditor General was — I think the phrase was — being looked at. That is as much as I know.

519. Deputy G. Mitchell.—Yes, I raised that question. Your function, Mr. Graham, extends purely to an attest function. In other words, whether it is value for money or not is really not any of your business, is that right? You are not allowed to check if it is value for money; it is purely an attest function?

Mr. Graham.—Under the legislation that is still in force that is the position

520. Deputy G. Mitchell.—So that if the Dáil votes £10 million for a ship and it costs £30 million all you can report is that it overran by £20 million; you cannot say whether it was only valued at £5 million?

Mr. Graham.—I think it has been the practice of the Comptroller and Auditor General over the years to draw attention to overruns, but the inference at least from some of the reports of the Comptroller and Auditor General would be that value for money had not been given. I would say that that was going slightly beyond the limits of his legislative authority.

Deputy G. Mitchell.—In other words, he goes out on a limb to draw the attention of the committee, he does not have the legislative power to do it?

Mr. Graham.—I do not like to say——

521. Deputy G. Mitchell.—Can I say that I say that he does? You will be aware that the committee looked at the functions of the Auditor General in Canada which is probably the leading value-for-money audit system in the world. Do you think it would be beneficial if Parliament were to have a value for money audit system here?

Mr. Graham.—Any developments which would aid the control of Parliament over public expenditure must be of benefit.

522. Deputy G. Mitchell.—Can I ask what the direct Government spending was for 1984, including grossing up the appropriations-in-aid which we tend to net off?

Mr. Graham.—If you gross up appropriations-in-aid the total would come to £6.5 billion in June 1984.

Deputy G. Mitchell.—That is current spending you are referring to?

Mr. Graham.—That is current spending. Central Fund spending would be approximately £3.5 billion.

Deputy G. Mitchell.—So we are talking about £10 billion, in 1984 values.

Mr. Graham.—Something of that order.

523. Deputy G. Mitchell.—Leaving aside the fact that you do not have value for money powers or comprehensive audit powers, even on the attest function is it possible for you to attest beyond spot checks in every Government Department? Is it not only spot checks we get?

Mr. Graham.—I would have to accept that in some Departments it would be only a limited spot check.

524. Deputy G. Mitchell.—What about the use of outside firms? Is the Comptroller and Auditor General like the UK Comptroller and Auditor General in that he is empowered to hire the services of outside firms to assist him in audits where he might consider there are problems?

Mr. Graham.—To the best of my knowledge he would have the authority but at the moment we would not have the financial resources.

525. Deputy G. Mitchell.—Could I suggest that this is an area which the committee needs to look at, perhaps in a special meeting? I would like to ask Mr. Smith, of the Department of Finance a question before I finish. Are you aware that this committee made a special report to the Dáil on the desirability of giving the Comptroller and Auditor General the powers to do this job and that this committee expressed dissatisfaction with the powers. Have your Department responded to that minute, which it is your duty to do?

Mr. J. Smith (Department of Finance).—We have a section in the Department specifically looking into these general questions of legislation and powers of the Comptroller the Auditor General, etc. There is nobody here this morning from that particular section but I can let you have a note on the up-to-date situation.

526. Deputy G. Mitchell.—Is it not a fact that your Department have a responsibility to respond to the minutes of this committee?

Deputy Mr. J. Smith.—That is correct.

527. Deputy G. Mitchell.—And we have not had a minute on our special report on the Office of the Comptroller and Auditor General.

Mr. J. Smith.—I believe you may have it before the Secretary of the Department of Finance comes here for examination. I understand something on those lines is at present being prepared.

528. Deputy G. Mitchell.—I hope you will communicate to the Secretary of the Department that certainly we should have it and have it soon because what is really happening is that the audit function in this country, which is set up independently in the Constitution, is being frustrated. There is no real power to audit. We need modern legislation. We need to up-date the powers of the Comptroller and Auditor General. Legislation of 1866 is worthless in 1986. I would ask you to communicate to the Secretary that we would like that minute.

Mr. J. Smith.—I will do that.

529. Deputy Crotty.—I wonder could the Accounting Officer give us a breakdown of the 92 staff which he has between accountants and administration? How many people are involved in the administration of the office?

Mr. Graham.—In administration at the moment, we would have a corps of approximately ten staff. In pure administration we would have a staff of five at the moment. On the management of audit, at the audit manager level, what we call principal officer, deputy director upwards, we would have five in our head office operation. We also have a small audit division which deals with computer audits who also have an input into our administration. On pure administration we have a staff of five and a further five directing the audits. A percentage of the computer audit team’s time is also devoted to administration.

530. Deputy Crotty.—Year after year the Comptroller refers to the lack of staff in his office to carry out an adequate audit. You mentioned that you have 92 staff. What level of staff do you feel you would require to carry out the audit that the Comptroller would wish to carry out?

Mr. Graham.—The figure which we mentioned earlier, of 101 staff, was what we considered in 1981 to be the adequate staffing level. I accept that there may have been certain net reductions in our responsibilities since that time and the figure would be something in the region of 96 or 97 to meet the present responsibilities of the Comptroller and Auditor General.

Deputy G Mitchell.—For the attest function only?

Mr. Graham.—Yes.

531. Deputy Crotty.—You mentioned that some of your responsibilities have decreased. Could you elaborate on that?

Mr. Graham.—Well, for example, you have had the establishment of the postal and telecommunications services as separate companies. That used to be the Department of Posts and Telegraphs. That was an audit carried out by the Comptroller and Auditor General. We have ceased to audit four subsidiary companies of Údarás na Gaeltachta. In the past four or five years the Pigs and Bacon Commission has been wound down and is finally being dissolved currently. These are reductions which we will have to admit to.

532. Deputy Crotty.—So what you are saying is that you would require four extra staff to carry out a proper audit, an increase from 92 to 96.

Mr. Graham.—That is the figure I have in correspondence.

533. Deputy Crotty.—That is a very small number of staff for a very vital and sensitive area. Would the Department of the Public Service representative like to comment on this situation where four staff are required to carry out an adequate audit and they are not made available to the Comptroller’s office.

Mr. J. O’Farrell (Department of Public Service).—As you know, due to lack of finance generally it has been essential to reduce the size of the Civil Service and that has been done. The reductions in the Office of the Comptroller and Auditor General have at least been contained. For instance, last year they were able to hold their numbers at the same level of 92 staff, which was not possible for the rest of the Civil Service. The reduction from 96 to 92 is much lower than what has had to be imposed on the rest of the Civil Service. Members of the committee will be aware of how very difficult it is to contain a precedent to any case no matter how exceptional.

534. Deputy G. Mitchell.—Could I ask a supplementary to that? Are you aware that the Comptroller and Auditor General is a constitutional officer rather like a High Court judge? Would you consider a High Court Judge to be a civil servant? For instance, could we contain the number of judges because of an embargo in the public service?

Mr. O’Farrell.—The situation is that the staff of the Comptroller and Auditor General still have to be paid out of the public sector pay bill, subhead (1).

535. Deputy G. Mitchell.—They would be paid out of all the savings we make on wasted public spending if they could get after it.

Mr. O’Farrell.—That has never been demonstrated. Perhaps it is because the function of the office does not make it possible but there has never been a direct correlation between savings that would accrue to the Exchequer and additional staff for the Comptroller and Auditor General. We are talking here about a policy that may be a blunt instrument but it has achieved very significant reductions — £30 million plus — in the public sector pay bill. It would be very difficult to contain any exception. Making exceptions, as you will appreciate, Deputy, would tend to undermine the overall policy and it is and has been a very effective and very valuable public policy.

536. Deputy Crotty.—Could I suggest to you that the purpose of the blunt instrument, as you call it, was to save funds on salaries? The purpose of the Comptroller and Auditor General’s Office is to see that funds are properly spent with the likelihood of saving funds. In any properly run business, proper auditing is required. I do not think that the State would accept from any company in the private sector accounts which were not properly audited. Are you saying that this is not necessary in the public sector, that it is not necessary to audit or to carry out a proper test audit — and it is only a test audit — in the public sector and that you are not prepared to have the personnel available? We are only talking about four personnel in this case being made available to the office.

Mr. O’Farrell:—Of course it is not necessarily accepted by the Department of the Public Service that the Comptroller and Auditor General cannot carry out a proper test audit with 92 staff. As you say, the margin of difference between us is very slight. Proposals were put to the Comptroller and Auditor General for a survey by the management services unit of the Department of the Public Service to try to iron out the areas of difference, to see if there were alternative approaches not involving additional staff that might have the same effect.

537. Deputy Crotty.—Could I ask the representative of the Department of Finance is he satisfied that a proper audit and an adequate audit is being carried out with the staff that is available to the Comptroller and Auditor General’s office?

Mr. J. Smith.—We have no evidence that a satisfactory audit is not being carried out. Policy on public service numbers is entirely in the hands of the Minister for the Public Service and we leave it to the Department of the Public Service to decide the proper staffing of any office.

538. Deputy Crotty.—Is it not the responsibility of your Department to see that funds are properly accounted for, at least that they are properly spent? The Comptroller and Auditor General and the Accounting Officer stated quite clearly this morning that he has not got enough staff and an adequate audit has not been carried out. Do you accept that? Do you dispute or reject that?

Mr. Smith.—I neither accept nor reject it. The position is that under the law the Minister for the Public Service is the person responsible for staff and has full authority in that area. The Department of Finance cannot authorise extra staff for any particular office.

539. Deputy Crotty.—Have you made representations to the Department of the Public Service that you are not satisfied that the public finances are adequately audited?

Mr. Smith.—I do not think we did but the Department of the Public Service representative has said that they offered to send management services people into the office of the Comptroller and Auditor General to try to sort out the problem of staff deficiencies. Apparently that offer was not accepted.

540. Deputy Crotty.—Could the Comptroller and Auditor General tell us the last time the management services people were in? Have you the record there?

Mr. Graham.—Arriving at an authorised establishment in 1981 followed protracted correspondence and negotiations with the Department of the Public Service and a review was carried out by the Department of the Public Service. We would have felt at that time that 101 was the right figure which we felt would give us an adequate level of audit. The Department of the Public Service mentions that they have offered to carry out a management survey. That is true. We had an informal approach by the Department in 1985 making certain suggestions to us. We feel that the review that was carried out pre-1981 was sufficient. We arrived at an agreed level of staff at that stage and to my mind that is the right figure.

541. Deputy G. Mitchell.—I want to establish something, Mr. Graham. You are talking about the number of staff which is necessary to continue with an attest function only. That means that if the State buys an elephant for £1 million and they spend £1.5 million you cannot say whether it was a white elephant or a pink elephant but only that it cost £500,000 more than it should cost. It is purely a test function you are speaking about. You are not talking about the value for money audit or comprehensive auditing. That is quite separate to this?

Mr. Graham.—That is quite separate.

Mr. McDonnell.—Could I just add one thing to clarify a small point which occurred to me when Deputy Crotty was speaking and the Accounting Officer mentioned the question of the Post Office? It is true, of course, that the functions of the Post Office have been hived off to two State bodies. You will recall that the committee in its special report referred to this question. The reduction in staff as it stands takes account of the Post Office situation because we had the odd situation that at one stage the Department of the Public Service offered some extra staff to carry out the audit function in relation to the Post Office and suggested that we had chosen not to fill these posts. In fact, by the time we had got the sanction, the Post Office had been taken away. So, events had overtaken the sanction. I just wanted to make the point that the reduction in staff as it stands at present, takes account of the reduction in workload. The Accounting Officer may have given Deputy Crotty the impression that the reduction arising from the transfer of the Post Office work would enable us to divert the existing staff on to other work. What I am saying is that the present reduced staff takes account of the transfer.

542. Deputy Crotty.—What is the situation regarding the mechanisation of the office. Have you all the mechanics, computers and all the other instruments which you would require for the proper running of the office?

Mr. Graham.—At the moment we have installed a microcomputer system ourselves which aids in a number of areas in the administration of the office and in the preparation of audit programmes. We would hope that it is being used in the development of our own audit programmes and would be used in producing programme packages for testing other computer systems. From that point of view, I think the answer to your question would be yes. At the moment we have got the computer equipment that we currently need.

543. Deputy Crotty.—Has the mechanisation of the office a high priority?

Mr. Graham.—Yes, it has.

Deputy Crotty.—Whatever equipment you requested has been made available to you.

Mr. Graham.—Yes.

544. Deputy M. Ahern.—There are two points that have to be taken note of in this Report and paragraph 1. It is something that we have gone over for a number of years now. Leaving aside the value for money auditing, just going purely on the function that the Comptroller and Auditor General has at the moment, he has stated that the reduction in the staff numbers has adversely affected the level of auditing examination and has delayed the audit. Those two points are vitally important. There is a level of audit examination. Anyone who has experience of auditing would know that if one has to reduce the level of auditing there is the chance one is likely to miss out on areas that need to be covered and one might only be able to do it every few years. In the meantime things could go wrong. Taking into account the moneys that have been spent by the Government, the taxpayers’ money, it is necessary that an adequate level should be undertaken at all times. Secondly, the delay in the auditing. Any business would deem it necessary that audit should be available at the earliest possible opportunity. It is evident that due to lack of staff this is not happening here. We have looked for explanations year after year since I have come here and we have not got any satisfaction from the Department of the Public Service or the Department of Finance. We have expressed before that adequate staff should be given to the Comptroller and Auditor General to carry out the function he is statutorily required to do, even though we believe that the function should be overhauled and given value for money and that comprehensive auditing should be what he should be at at this stage in the development of accounting. Until we can get some political will to change it, we will be getting these stock answers from the Department of the Public Service and the Department of Finance.

545. Deputy G. Mitchell.—Could I make a proposal? I do not think the only answer is for the Comptroller and Auditor General to take on more staff. He could be given finance to take on outside accountancy firms. I would like to propose that quite separate to his job as Accounting Officer for the Department of Finance we should invite the Secretary of the Department of Finance to a special meeting of this committee to consider the audit function of the Comptroller and Auditor General so that we can bring this to some sort of a head and then perhaps pursue it politically after that.

Deputy M. Ahern.—I second that.

546. Chairman.—The present staffing in your office is 89. In 1984 you dealt with figures in the region of £10 billion. Could I ask the Comptroller and Auditor General what other auditing firms think of the staffing within your office?

Mr. McDonnell.—I have not got any formal views. I am asked from time to time by people from the auditing sector what is the staff of my office. All I can say is that they are aghast at the numbers. They find it incredible. I think I heard the Department of the Public Service representative say that the Department of the Public Service considered that there was sufficient audit being done by the staff that I have. There is a fundamental principle involved. It is an auditor’s judgment as to what he considers to be a sufficient level of auditing. It is the anithesis of the whole concept of audit to say “we think you are doing enough”. With regard to outside firms, Deputy Mitchell will recall that the committee made this recommendation in their report of January 1985.

Mr. J. O’Farrell.—Could I just correct something? I did not make any comment as to the adequacy or otherwise of the audit being performed. I said that where we have a difference of opinion is on the number of authorised establishment that the Comptroller and Auditor General might require to perform a satisfactory audit. That was all.

547. Deputy Crotty.—That is the same thing. There is no point in saying that you think he has enough to audit if the Comptroller and Auditor General says he has not. If he has not got enough people he cannot carry out a proper audit.

Mr. J. O’Farrell.—No, what we have offered is a review of procedures to see if there are methods which we could jointly suggest whereby a satisfactory level of audit could be achieved with the staff of 92.

548. Deputy Crotty.—Is your Department qualified to carry that out?

Mr. J. O’Farrell.—Certainly we are qualified to assess staffing levels in any Department. Obviously we cannot accept at face value without any further investigation, either from the Comptroller and Auditor General or from any Accounting Officer, his office’s assessment from their perception alone of the number of staff they need.

549. Deputy Crotty.—So in the meantime you are not accepting the comments or the words of the Comptroller and Auditor General and you are not prepared to move until you carry out some sort of an exercise yourself?

Mr. J. O’Farrell.—We have offered to go in and we are available at short notice. The staffing level of 101 was set in a survey conducted in 1978, which was the apex of the job creation era. We would not accept service-wide that the levels of staffing set around 1978 and thereabouts are sufficiently low. There have been substantial reductions service-wide. We could not just accept a figure of 101, take off five for the post office and leave it at that. We would want to carry out a more detailed survey. I think that is reasonable.

Chairman: Mr. Graham.

Mr. Graham.—I would just like to make one point. I know that there are often difficulties in correspondence between Departments. There is one point that I would like to clearly state. I accept that the review the Department of the Public Service carried out was in 1978. It was not in the context of job creation. I would like to emphasie that. It may have taken place at the same time. We had made a request to the Department of the Public Service absolutely independently of any job creation. If that Department put the increases in staff that we were given at the time in as part of a job creation programme that has nothing to do with us.

550. Deputy Naughten.—What we are talking here is the competence of your office to determine the number of staff that the Comptroller and Auditor General’s Office should have. How can your office have the expertise to say exactly and precisely what number of staff the Comptroller and Auditor General’s office should have?

Mr. J. O’Farrell.—We have the function of setting staffing levels service-wide for the huge variety of functions entailed there. Somebody has to do it with regard to the overall need to contain the public sector pay bill.

551. Deputy G. Mitchell.—This is where the problem arises. You are aware that the Comptroller and Auditor General is specifically mentioned in the 1937 Constitution. You are aware that he is not an officer of the Executive. He is an officer of Parliament. He is like a High Court judge. He is paid from the Central Fund. How can you, when Parliament and the Constitution set up an office in that way, specifically to be totally independent of the Executive, set down terms which frustrate that office in the execution of its duty? It is not the same as any other office. It is not a Department of State. The Comptroller and Auditor General is not answerable to the Government, he is answerable to Parliament. He is an officer of Parliament and he is quite a distinct and separate officer to any other officer of State. The position with regard to the whole Civil Service embargo does not apply, for instance, in the High Court. If a High Court Judge retires in the morning, we do not wait for two more High Court Judges to retire before we appoint one. The Comptroller and Auditor General is in the very same position. He is in a position where he carries out a constitutionally independent function which is being frustrated.

Mr. O’Farrell.—The support staff in the courts are still subject to the embargo. It is purely because of the fact that support staff have to be paid for. It has no desire to frustrate the Comptrolelr and Auditor General in the functions he discharges but we do have to have regard to the overall cost of the public sector pay bill.

Mr. McDonnell.—What worries me though is that there may be an underlying idea if you like, that perhaps the Department of the Public Service would have some function or capability to determine or to suggest how an audit should be conducted. That I could not concede.

Deputy Crotty.—This is the kernel of the problem.

Mr. McDonnell.—Yes. I can accept that it having been explained to them how an audit should be conducted and the input, so to speak that is required, they might then have some function in perhaps discussing staff numbers and so on but the conduct of an audit is a matter for me and the conduct of the audit is a matter for the auditor.

Mr. O’Farrell.—That is fully accepted, Comptroller.

Chairman.—The proposal, as put, is agreed to.

The witness withdrew.

VOTE 31—POST PRIMARY EDUCATION (RESUMED)

Mr. D. Brennan called and examined.

552. Chairman.—Thank you very much for coming back and also for your correspondence during the week. We are just resuming on paragraph 37 and I am asking Deputy Naughten just to come in on the basis that he moved the Adjournment.

553. Deputy Naughten.—I proposed the Adjournment that last day in view of the fact that the Accounting Officer had not some information that the committee required. I must confess that I am still a little bit confused by the information that has been circulated because I have two documents here in front of me and again I refer to paragraph 37 where we are told that the cost of remedial work carried out was £119,000 paid in respect of the original contract. Then we go on and we have one document here which was circulated which says, £120,941 and another document which says, £91,062. Could the Accounting Officer, first of all, tell us which of those figures is correct.

Mr. Brennan.—Thank you, Mr. Chairman. Could I say first that I regret, you can believe me, that I had to come back and I regret having to take up your time a second time. I am glad to say that the last figure you mentioned is the correct figure. I should explain how these changes have come about. It was only on Tuesday last, I think, on December 2nd that we wrote to you and at that time, we were saying that the overall cost of the postliquidation contracts was £120,000 odd. It was only yesterday that the final accounts became available. They came to us from the consultants and they indicated that the actual cost was £91,000 odd. This is to be claimed to the credit of the consultants and indirectly, since we engaged them, of the Department. What happens is: you know that remedial works have to be carried out, you know what the problem is; the problem is identified by the consultants, in so far as they can, from the state of the building as it stands, with the defects following the completion of the work by the contractor. Then contracts or tenders are sought from contractors to carry out the remedial works on the basis of what it would be estimated would be required, but as the works go on, the consultants are keeping an eye to things, and they may see what is really required is something less than what had to be provisionally provided for in the contract and that explains the reduction which is the cause of some satisfaction.

554. Deputy Naughten.—So, in fact, what you are saying to the committee is that the contract cost of carrying out the works is £119,000 but in fact the actual cost was £91,000. Could you tell me on what figure were the consultants paid?

Mr. Brennan.—The consultants will be paid if they claim on the basis of the actual cost of the works. how it happens that they are free to claim their fees in respect of these remedial works as they were free to claim them in respect of the original contract. It is not clear that all of them will in fact claim for the remedial works. Only one architect has so far claimed out of four architects. There is just one other claim which has been made and settled in respect of the remedial works. They are rather minor figures.

555. Deputy Naughten.—on the last occasion, you were not able to clarify whether it was the same firm of consultants that was involved as was involved in the original contract. Can you confirm and clarify that situation for the committee today?

Mr. Brennan.—Yes, they are the same consultants. I am advised that there may have been different architects employed but the firms of consultants were the same. I should say that the last day, I did not have before me the letter or reply that was given to a supplementary query from the Comptroller and Auditor General. That reply went out on the 21 February last and gave a statement of the duties of the consultants, their supervisory duties, the responsibilities that lie on them and so on and I think that it would have been fair to say that, if I had that before me, I would have been able to defend the role of the consultants in this as I am able to defend it today. The Department is satisfied that they did a good job and that they are continuing to do a good job. The issue is not absolutely and finally closed. We do not have absolute final accounts yet in respect of this project — that is the four halls being regarded as one project. We have absolute final accounts in respect of remedial works. There is an issue outstanding in respect of increased cost of labour and materials in respect of the main contract but that would be of rather minor significance.

556. Deputy Naughton.—We are talking about sizeable contracts here, Chairman. We are talking about in excess of £1 million of contracts for four recreation halls and I am not at all satisfied that the consultants and architects employed by the Department carried out their job as they should have done and in my view if they had, defects would not have shown up within two years of construction.

Mr. Brennan.—It is part of the conditions of the contract: there is a defects liability period. I think that is the expression that applies in respect of all these contracts which means that if defects show up within 12 months of the handing over of the premises, the contractor is liable. The problem here, of course, was that the contractor was not there to be liable. He was received first and then went into liquidation and the final clearance by the consultants could not be given. I have been made aware, I think I have to rely on this information, of the precise responsibilities that rest on consultants in an area like this. They are responsible for intermittent, sporadic supervision of the works as they go on. If you want more detailed supervision on a constant, continuing basis you either engage a clerk of works in the case of a smaller, contract or a resident engineer or architect and he would be required to be in attendance every day. Now the consultants here were not subject to that obligation. They were not paid accordingly. The contracts were not of such a dimension that it was felt that the necessity for either the clerk of works or the resident engineer would arise. I will have to admit that if the Department were now entering into a contract for a package deal of this kind they probably would engage a clerk of works. There has been no package deal entered into of this kind since this contract.

557. Deputy Naughten.—Could I just go back a small way? First of all, I understand that upwards of £80,000 in fees were paid to consultants on this particular project. Is that right?

Mr. Brennan.—One per cent of a £1 million is £10,000. It would be upwards of that, yes. Something over £70,000.

Deputy Naughten.—Whether we like it or not they were paid to carry out certain functions and it would appear from your memorandum, which is circulated here, that the detailed design was by the contractor not by the architects.

Mr. Brennan.—That is right, that is the normal provision.

558. Deputy Naughten.—Could you inform the committee what the architects and consultants were doing if they were not preparing the detailed design and contracts and they were not supervising the work, which it would appear that they could not be supervising since a defect showed up in four recreational halls, all built at the one time.

Mr. Brennan.—They have certain responsibilities laid on them under the terms of their engagement. These terms are laid down by the Royal Institute of Architects of Ireland. The consultants complied with these terms. If this contractor had not gone into liquidation the defects that showed up would have been fully covered by the contractor himself. He would have been required under the terms of the contract to complete these remedial works without any extra payment whatever. As it happens, they cost something like £90,000, the amount withheld is £53,000 and the Department may still be able to proceed against the, liquidator admittedly without great hope of success, but that course is still open to us and that is the matter that is being pursued. There was £37,000 then altogether lost over the remedial work which would not of course have been lost if the contractor had not been so unfortunate.

559. Deputy Naughten.—Will the liquidator be pursuing the Department for part of that £53,000?

Mr. Brennan.—No, the liquidator would have no claim on that at all.

560. Deputy Naughten.—Just two more short questions. To get back to the bonding, you said that the contractor was finding it difficult to get bonding. Was it not very clear to the Department that there was something wrong when he could not get bonding?

Mr. Brennan.—Well, indeed an unworthy suspicion might have come to the minds of the Department at the time, that possibly there was something about this man that was not exactly right. There are two factors. First of all, we had only two effective tenderers. We had a third tenderer and he got into trouble before the issue could be resolved. The second tender was that much dearer, something like £129,000 — at least that much extra would have been involved. It was a gamble in a sense that one did not insist upon a bond in that instance and it was the case that for individual contracts of the size of the contracts here involved, bonds would not normally have been required. The Board of Works only insist on bonds when the figure is over £1 million. In this instance again I have to say, and it is by reference to what had happened in this case a bond would now be required in any such case.

561. Deputy Naughten.—Paragraph 37 refers to bonding for projects in excess of £200,000, is that right?

Mr. Brennan.—That is right.

Deputy Naughten.—So one project was in excess of £207,000.

Mr. Brennan.—At the beginning?

Deputy Naughten.—Yes.

Mr. Brennan.—I am told that the guideline followed at the time was that a contract in the region of £200,000 would not call for a bond and £207,000 could be argued to be in the region of £200,000. I am not trying to be smart about this, I am trying to understand what did happen at the time.

562. Deputy Naughten.—Could you tell me where you draw the line? At what stage would the Department have insisted on bonding? What is the definition, in other words, of “in the region of £200,000?” Is £299,000 in that region?

Mr. Brennan.—It is not easy to give a direct answer to that, much as I would wish to do it. The fact is that all of the P.E. halls being contracted for at the time were in the region of this figure and bonding was not insisted upon in respect of any one of them. I would say again that now, because of the experience here, bonding is being insisted on in all cases.

563. Deputy Naughten.—I would put it to you, Sir, that the Department were neglectful in not insisting on bonding. You have outlined there that contracts in the region of £200,000 were exempt. Nevertheless, I am sure the idea and the spirit of bonding was the size of contract involved and while you were dealing with four different contracts here, the total cost of them, having regard to the fact that one contractor had them must and should have been taken into consideration by the Department of Education.

Mr. Brennan.—We just have to think of the circumstances that applied at the time. Nowadays if we are seeking tenders for a contract for the erection of a P.E. hall you could expect anything up to 30 tenders. You could expect the best and most reputable builders in the country to be tendering. At that time we found it hard to get tenders at all. The tenders had to be readvertised. We got two tenders and the difference between one and the other was extreme. I am not saying that as a justification for the bonding, but the second man might have produced a bond if he was required to do so. The first man could not. The margin was great. As it turns out, he would not have been able to get the bond anyway. The only alternative would have been to go to the second lowest tender which was for a figure greatly in excess of that agreed and we would have been at a loss of more money than we have been.

564. Deputy Naughten.—One last question. With regard to the detailed design by the contractor, is that normal procedure for the Department?

Mr. Brennan.—I understand it is.

Deputy Naughten.—That the detailed design of any particular building is left to the contractor?

Mr. Brennan.—I understand that at that time that was the practice in regard to all package deals of this kind.

Deputy Naughten.—Even though you had a building unit?

Mr. Brennan.—It was in respect of package deals that this arrangement applied. The package deal only applied to P.E. halls and that was the arrangement that was followed at the time.

565. Deputy Crotty.—Would the design of the halls have anything to do with the faults that showed up later on?

Mr. Brennan.—No, it is considered that the contractor, finding himself maybe in some difficulty, realising he was losing his way financially, may have cut corners. I put this question directly to our principal architect and he assured me the design stands up. The implementation of the design was the problem.

566. Deputy Crotty.—Listening to the Accounting Officer’s remarks this morning, it would appear to me that there was a cloud over this contractor from day one. The actual words of the Accounting Officer were, and I do not think he meant them way, that the Department took a gamble with public funds. I do not think any Accounting Officer should take gambles with public funds. I do not think he meant that word but that is what he stated. I just want to put it to you that seeing that there was a cloud over the contractor which proved, unfortunately, to be right and he went into liquidation, was there not justification for the consultant to keep a very close eye on the construction and supervise this building properly?

Mr. Brennan.—What I am told, and I have to rely upon this, is that the consultant acted in accordance with the responsibilities laid upon him under the terms of this engagement. Within the period of the completion of the contract, within the period allowed to him to give the final certificate of clearance he discovered these defects and drew attention to the need for remedial works and they were carried out. In the ordinary way, with a contractor who lasted the course, the remedial works would have had to be carried out then without any further cost. I suppose I might have been more careful about the words I employed. I used the word “gamble” — I could have said they had an option, they had the choice of going for the higher tender or taking the lower one. While there may have been doubts cast upon the contractor who gave the lowest tender by reason of the fact that he found difficulty in securing the bond and saying that it would have been normal — I do not say these were suspicions — for people to entertain some suspicion, in hindsight, I was not around at the time and the people by my side were not there either. It would have been normal to see that a man who had difficulty in getting a bond might have a question mark against him. That is hindsight. When the contract was given no one expected this contractor not to fulfil the contract in every detail.

567. Deputy Crotty.—Would you not feel it was prudent in such circumstances to put some sort of responsibility on the consultant. You mentioned a few times that the consultant fulfilled his obligations as laid down by his organisation. If we all carried our duties in that manner I am afraid our performance would be rather skimpy. If I retain a consultant I would certainly expect that he would be on my team and that he would look after my interests. I have grave doubts about this consultant — is he still in business?

Mr. Brennan.—This firm of consultants are still there. They have a high reputation with the Department. They do their job well, they are trusted by the Department and will continue to be trusted by the Department.

568. Deputy Crotty.—He supplied some final accounts to you this week?

Mr. Brennan.—Final accounts were asked for and became available.

569. Deputy Crotty.—Why could he not supply them before this Committee questioned the item?

Mr. Brennan.—I presume he could but we are not at the stage of absolutely coming to the end of this project; there are still some issues outstanding. He supplied them because he was asked for them because of certain problems that had arisen in regard to the figures that had been in circulation. The Department can be wholly satisfied with the manner in which the clerical end of the job was attended to, that is the rendering of the accounts. I am assured, and I believe it to be true, that the Department have no reason to question the professional performance of the consultants. I do not think it is fair to suggest that they skimped on the business, it is simply the case that within the limits of their engagement they did the job well and if we wanted more careful monitoring of the project we would have had to engage a clerk of works at the very least, which is something we now do recognising that the circumstances of contracts like this call for such a safeguard.

Deputy Crotty.—It would be my opinion, taking into consideration that there was a doubt about the contractor, that any reputable consultant would take the necessary action to supervise. It is quite obvious to the Committee in this case that the consultant did not take what action was necessary in the circumstances. In my personal opinion there is a cloud over that firm of consultants.

570. Deputy M. Ahern.—Most of my comments have already been brought up. There is one thing I would like to know and perhaps get a note on it — what were the consultants supposed to do? Mr. Brennan has told us that he is happy that the consultants did what they were supposed to do. He has also told us that the detailed plans and so on were the concern of the contractor; may be Mr. Brennan would be able to let us know what exactly the consultants were supposed to have done. He said that they did it. What were they supposed to have done?

Mr. Brennan.—The note supplied just the other day at paragraph 3 gives as much information about this as is at my disposal at present. I will quote from it:

“Teams of consultants were appointed to make recommendations and supervise. They complete their work when they give a final certificate which is in itself a declaration that the work has been properly carried out.”

That stage was not reached because the work was not completed and remedial works were found to be necessary.

571. Deputy Crotty.—It states in paragraph 3 that part of the duties was to supervise construction work.

Mr. Brennan.—There are limits to the degree of supervision. I have tried to explain this. Depending upon the nature or the size of the contract you may feel it calls for the engagement of a resident engineer or architect who would be on the site every day. For lesser contracts you might decide that detailed daily supervision was required as well; that would call for a clerk of works; that is what we do at present. These consultants were not obliged to be on the site every day.

Deputy Crotty.—It would appear they were not on it too many days.

572. Deputy M. Ahern.—From my experience I know consultants who are doing bigger jobs than that and they are not on site every day but they visit now and again.

Mr. Brennan.—I am quite sure this was happening too.

Deputy M. Ahern.—I do not think the result is too good.

Mr. Brennan.—There is evidence to the Department, reliable convincing evidence, of two-weekly meetings being held on the site between the contractor and the consultants to monitor what was going ahead.

573. Deputy Crotty.—That begs a comment: if there was, I do not think he was a competent consultant or he would have seen the problems would have revealed themselves later on.

574. Deputy Naughten.—I am convinced that this situation does not arise any more in the Department of Education. I had reason to have a deputation go to the Department in the last 12 months over a school transport problem for one child where a school bus was passing the door and the child would not be collected on the bus. A senior official in Mr. Brennan’s Department assured me that if she were, the Comptroller and Auditor General would be questioning it.

Chairman.—Mr. Brennan has pointed out that he was not the accounting officer at the time. I extend my thanks to Mr. Brennan for coming back again.

The witness withdrew.

The Committee adjourned.