Committee Reports > List of Committees > Dáil > 1990 > Committee of Public Accounts > Final Report - Appropriation Accounts 1988

APPENDIX 28

Computer Review of PRSI Contributions

Paragraph 58 of the Report of the Comptroller and Auditor General on the Appropriation Accounts for 1988 makes reference to a computer facility available to the Revenue Commissioners to make an accurate estimate of total PRSI contributions due for each employee. In fact no such facility has been available since 1987. Because this facility had proved to be of negligible value, it was not incorporated in the replacement computer system to administer PAYE/PRSI which was implemented in 1987. The review had not been used for a number of years prior to that because of the poor return on the investment of staff needed to process the computer output.

When PRSI was introduced, a computer programme was developed to assist in the review of the correctness of the amount of PRSI declared on the annual return (Form P35) by an employer in respect of each employee. Discrepancies between the amount of PRSI shown and the liability calculated on the basis of the declared earnings and contribution class were identified. These were expected to highlight cases where PRSI was not being operated correctly. This expectation was not fulfilled as the vast bulk of the apparent discrepancies identified by computer were found to be attributable to a number of legitimate reasons. These include the following:

—The contribution class changed in the course of the year. The computer record contained the latest class.

—Severance or redundancy payments were included.

—The employee held a medical card.

—The employee was a casual worker.

The ability of the computer system to automatically identify discrepancies in PRSI payments with accuracy decreased further as the operation of PRSI became more complex. The new scheme announced in the 1990 Budget speech to exempt earnings of £60 or below in a week from employee social insurance contributions in that week would have created further difficulties in attempting reconciliation by using the computer.

When the last review was done, in respect of the year 1982-83, less than 5 per cent of the apparent underpayment identified by computer proved correct after clerical examination. The task was a time consuming one and the cost of the exercise far exceeded the additional PRSI recovered. The effort was not regarded as worthwhile having regard to the other demands placed on the Collector-General’s Office. No further reviews were done and the computer facility was not modified to reflect changes in PRSI in subsequent years. As explained above, it is now obsolete.

The proper operation of PRSI is checked by Taxes staff as part of their local examination of employer records for PAYE purposes.