Committee Reports > List of Committees > Dáil > 1990 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1987

PART II

PARTICULAR ACCOUNTS

GENERAL

1. Deferral of Matured Liabilities

The practice by Government Departments of deferring payment of matured liabilities to the following year was criticised by the Comptroller and Auditor General in his Report on the 1987 Appropriation Accounts. This practice had arisen because of the imposition by Government, in certain instances, of what were effectively cash limits on Departmental expenditure.

The Comptroller and Auditor General considered it necessary to draw the attention of Dáil Eireann to the fact that deferral of matured liabilities was not in accordance with the prescribed financial procedures. The relevant legislation, Section 24 of the Exchequer and Audit Department’s Act, 1866 stipulates that transactions which have actually come in course of payment within the year must be included in the Appropriation Account for that year. The Department of Finance guidelines on this point specify that all matured liabilities must be paid before the end of the year and such payments should not be postponed even at the risk of an excess vote. The Comptroller and Auditor General in evidence reminded the Committee that these provisions are based on the underlying precept that the Estimate voted by Dáil Eireann is stated to be the amount required for the service in any given year, and that if more than the sum provided in the Estimate is required, the normal practice is to seek sanction of Dáil Eireann for the extra expenditure by way of a Supplementary Estimate.

Two specific cases which illustrate the problem were cited by the Comptroller and Auditor General. The first case relates to savings which arose in the Estimates provision for compensation awards by the Criminal Injuries Compensation Tribunal because of a government decision in July 1987 that £500,000 of the amount provided should not be spent. Although, on the face of it, there was a saving of £587,198 on the Subhead, in reality there were 400 awards to a value of £2.5 million awaiting payment at the end of 1987.

The second case arose in relation to the Farm Improvements Programme, Farm Modernisation Scheme and Western Package. Certain claims were not paid because of a Government decision that payments under the schemes should be limited to the amount provided in the annual Estimate. These claims though approved were carried forward to 1988 and amounted to £8.9m.

In written evidence the Accounting Officer for the Department of Finance stated that the general principles and procedures governing the charging of matured liabilities to an Appropriation Account remained valid. However, apart from contractual type payments where the date of maturity is clear, Government Departments also make other types of payments. The normal practice in such cases is that the Estimate submitted to the Dáil includes provisions to meet expected demand under the relevant schemes. The Accounting Officer submitted that ministers must have an element of discretion in the timing of payments in certain cases, such as open-ended grant schemes, in order to control public expenditure.

The Committee could not accept that this view is valid, under the rules of Government accounting as presently prescribed. The Committee agrees with the Comptroller and Auditor General that if there were two different attitudes being adopted to the meeting of payments then this should be clearly indicated when Estimates are being moved in the Dáil. The Committee fully accepts and it notes that the Comptroller and Auditor General has clearly stated that he also accepts, that financial management is a matter for Government. However, if it is seen as desirable that certain Estimates provisions should be treated as cash limits rather than purporting to represent the cost of providing the service in the year, then the Estimate presented to the Dáil should state that fact, so that the Dáil will be clear as to what exactly is being voted. Furthermore, it would be desirable in those circumstances that the Appropriation Account should indicate, by means of a note, the extent to which expenditure had been deferred at the end of the year because of the imposition of a cash limit.

The Committee requested the Accounting Officer and the Comptroller and Auditor General to consult on how best such matter could be reflected in the Estimates and the Appropriation Accounts. The Committee understands that this question is being addressed in the context of an overall review of the format of the Appropriation Accounts being undertaken by the Department of Finance and the C & AG. The Committee wishes to be consulted in this process.

The Committee in previous reports has stated that explanations of variances between estimate provision and expenditure in the Appropriation Accounts should be factual and meaningful. In the case of the criminal injuries compensation payments the explanation given was misleading. The Committee once again reiterates the importance of accounts being as informative as possible and deplores the use of facile explanations for variations. The Committee trusts that this aspect will be examined as part of the overall review being undertaken.

AGRICULTURE AND FOOD

2. Misappropriation at Veterinary Research Laboratory

A Departmental review in 1987 identified certain deficiencies in internal control procedures at the Department’s Veterinary Research Laboratories. These related to the operation of bank accounts, collection of fees, local purchasing and the usage and cost of vehicles. A misappropriation amounting to £6,039 over a period of three years was also discovered.

The Accounting Officer in evidence informed the Committee that the individual involved had resigned voluntarily without any pension rights being granted. The Accounting Officer agreed that the incident demonstrated the need for a constant review of control procedures. The Committee trusts that the revised improved procedures implemented by the Department will avoid the recurrence of such irregularities and stresses the need for regular review to ensure that the approved procedures are being operated as intended.

3. A.C.O.T. Claims from European Social Fund

The Comptroller and Auditor General adverted to confusion in the amounts claimed in respect of training courses in 1985 and 1986, resulting in the failure to obtain an additional £485,000 from the ESF in 1985. The Accounting Officer in evidence stated that 1985 was the first year in which ACOT claimed for all of its training programmes. The Commission of the European Communities generally regard three year courses as apprenticeships and therefore ineligible. It had been a joint decision by the Departments of Agriculture and Food and Labour firstly, to achieve acceptance in principle for the eligible agriculture training courses for ESF funding, and secondly, to avoid jeopardising the claim, to omit the third year of the three year course. In 1986 as a result of discussions with the Commission the third year was included as part of the claim. However, in that year and every subsequent year the Commission disallowed one-third of the claim for various reasons, inter alia that it was an apprenticeship type course etc. The Accounting Officer stated that the Commission had absolute discretion and lays down arbitrary criteria which are designed to limit claims to accord with the amounts of money available in any given year.

A note subsequently supplied to the Committee stated that the decision on the 1985 claim was reached collectively by the three parties concerned (i.e. the Department of Agriculture and Food, Department of Labour and A.C.O.T.), after consideration of all the implications involved.

As a result of its examinations in previous years, the Committee recognises the particular problems that Departments face in preparing claims for EC aid. That said, the Committee has a certain disquiet that all costs recoverable from EC funds are not being claimed and that there may be some loss to the State. It is difficult to state definitively whether or not there was such a loss in this case but as a general point the Committee urges that Departments be fully aware of what is available from EC sources and the criteria necessary to maximise the State’s return.

4. Bovine T.B. and Brucellosis Eradication

The Committee notes that the total gross cost of the Bovine Tuberculosis and Brucellosis Eradication Programmes to 31 December 1987 was £395m. Receipts by the Department arising from the operation of the schemes up to 31 December 1987 amounted to £131.7m

The Accounting Officer informed the Committee that apart from one pocket of residual infection in County Cork, brucellosis disease had disappeared. However he stated that the Department would continue to monitor the problem for some years. A full round of T.B. testing was undertaken in 1988 and a marginal reduction in the incidence of the disease had been noted. However, the Committee does not concur with the Accounting Officer’s assurances that the results of the eradication schemes to date are commensurate with the amount of money spent.

When queried in relation to the lower prevalence of bovine TB in Northern Ireland and Britain, the Accounting Officer instanced less movement of cattle, different sizes of farms and higher levels of management of farms in Northern Ireland as a possible explanation. Regional differences within the Republic were stated to be due to varying patterns of farming. The Accounting Officer assured the Committee that there is total liaison between our veterinary services and the Northern veterinary services with regular exchanges of views.

The Committee’s attention was drawn to the establishment of ERAD (Eradication of Animal Disease Board) in April 1988 as an executive office of the Department of Agriculture and Food to implement a new four year programme with the objective of halving Tuberculosis levels. The Board comprises nominees of farmer organisations and cooperatives and veterinary organisations. It is concerned with all aspects of eradication, including the setting of priorities and objectives and recommending any changes in legislation considered desirable. The Committee notes that Exchequer funding and bovine disease levies are to be maintained at 1988 levels, with proportionate decreases should there be a reduction in the running costs of the programme in future years. The Committee will monitor the effectiveness of this four year programme in future reports.

5 Inadequate Supervision and Control of Beef Export Refunds

Export refunds (i.e. subsidies on exports of meat and agricultural produce to countries outside the EC), are paid by FEOGA. The Department of Agriculture and Food as intervention Agency administers these subsidies on behalf of the EC and the Customs Officers also play an important role in the classification and certification of exports. Should any losses arise in the operation of these subsidies, or indeed any other EC aided scheme, the national exchequer may have to bear such loss. Accordingly it is vital that adequate control systems are in place and operated. This is also vital in the context of the international standing and reputation of the quality of our agricultural produce.

The Comptroller and Auditor General reported that in 1987 some £355m was paid to Irish exporters in export refunds including £177m in respect of beef and veal exports. He drew attention to a number of deficiencies in the control systems operated by the Intervention Agency and Customs Officers to ensure the correctness of claims for beef export refunds. The specific deficiencies were:-

-Beef was being frozen before the Customs Officers had the opportunity to examine it for classification purposes

-Customs Officers’ were dependent on the departmental veterinary staff’s health certificates for the purpose of satisfying themselves as to the weight and description of consignments declared for export even though the vets wouldn’t stand over the accuracy of the information.

-There was no documentary evidence of technical assistance when given by vets in classifying beef for export refund purposes.

-There were delays in agreeing the definition of particular cuts of beef for classification purposes.

-There was a failure to implement the recommendation of an interdepartmental group for the elimination of other control deficiencies which existed

The Committee is concerned that such control deficiencies should have existed in regard to an activity in which the value in terms of EC financing is very high.

In such circumstances the risk factor must be apparent because the temptation to maximise financial gains at the expense of strict adherence to EC and national regulations cannot be insignificant. It is therefore essential that a high degree of vigilance be exercised at all stages of the operations involved in the production, classification and declaration of meat for export. The Committee is all the more perturbed that this does not appear to have been the case because some of the deficiencies which the Comptroller and Auditor General has drawn to its attention were known both by the Department and the Customs Authorities to have existed for some time.

The Accounting Officers of the Department of Agriculture and Food and the Revenue Commissioners informed the Committee that the control deficiencies referred to had since been addressed by them and that all of them had now been rectified.

The Committee reluctantly accepts these assurances and trusts that the improvements in control will be real and that it will be evident to the meat industry that it is the Department’s policy to monitor and supervise their operations in a way which allows for no deviation from strict codes of practice which are fully in accordance with EC requirements and which will reflect favourably on the reputation and standing of the meat industry.

The Committee noted that the European Court of Auditors had also carried out some audit work on export refunds and that the Court had outlined somewhat similar control deficiencies in the Irish operation of the scheme in its annual report.

6 Irregularities in Regard to Cattle and Beef Exports.

The Comptroller and Auditor General reported that the Customs Authorities had conducted an investigation into suspected irregularities involving two firms in connection with exports of live cattle through Waterford Port. The Authorities suspected that weights of consignments were being overstated, which if true would have resulted in the overpayment of some £3.5m in export refunds for the period August 1983 to February 1985. The Department withheld £3.5m in other export refunds due to these companies to cover the potential overpayments. These companies sued the Department for the £3.5m withheld and while they won their case in the High Court, the Court put a stay on this pending the hearing of a counterclaim by the Department. The Department then lodged counterclaim proceedings.

As the case was before the Court when the Committee was considering this matter it did not discuss it in detail. However the Committee’s main concern was that prima facie, the procedures for the prevention and detection of the suspected irregularity appeared to be deficient over a long period, especially as the technique allegedly adopted by the exporter was facilitated by what was seen in retrospect as a glaringly obvious deficiency in quay side surveillance of weighing and loading operations.

The Committee is pleased to note that since this matter came to light the Customs Authorities have made significant changes in their control procedures in this area which should prevent this type of situation recurring.

The Committee hopes that these controls are being fully operated and being kept under constant review. The Committee has since learned that an out-of-court settlement had been reached during 1990 under which the companies concerned agreed to the withholding of £1.3m in export refunds in full and final settlement of the case. The Committee was also informed that the DPP had ruled that criminal proceedings which were being considered should not go ahead. In that regard the Committee would like confirmation that this amount will be accepted by the EC as a valid payment of export refund to be met by FEOGA as it would be concerned if the Irish taxpayer ended up footing the bill.

7 Beef Aids for Private Storage Irregularity

An investigation by the Department of Agriculture and Food and the Customs Authorities into irregularities in connection with the claiming of aids for private storage (APS) and export refunds was also drawn to the Committee’s attention by the Comptroller and Auditor General.

The irregularities occurred at two meat plants located at Waterford and Dublin and owned by the same company. APS procedures are supervised by local Officers of the Department of Agriculture and Food but Customs Officers are also involved because the same beef can be simultaneously declared for export refund purposes and put under customs control when being put into store. The irregularity in this case was initially discovered when a Customs Officer verifying a consignment of beef declared for export noticed that, while the correct weight was recorded on each individual carton, the total quantities were overstated for the purpose of claiming private storage aid and export refunds.

In the course of the investigation of this case it also came to light that in one of the two plants trimmings had been included in the boxes. Arising out of these irregularities the Department and the Customs Authorities carried out investigations at the company’s other meat plants but no evidence of any other irregularities came to light. The Department held the company liable for a total of almost £1.1m in connection with the irregularities and this amount was paid by the company.

The Comptroller and Auditor General told the Committee that a Customs Officer discovered the irregularity by way of a simple check which was not provided for in the prescribed control procedures. While the procedures provided for the random check of the weight recorded on individual boxes, and these were all in order, they did not provide for the reconciliation of the total weight of all the boxes with the total quantity declared in the documentation. Arising out of this irregularity the control procedures were revised and further measures such as a joint programme of sample checks of beef in storage under the 1988 APS scheme was initiated in April 1989 by the Department and the Customs Authorities.

The Committee is concerned that what appeared to be a fairly straightforward irregularity would not have been detected by the prescribed control procedures. It wishes to emphasise that the fact that detection took place - in this case attributable to the initiative of a Customs Officer (for which he is to be commended) - in no way relieves the controlling authorities of their responsibility to devise and implement methods which will at least prevent the more obvious types of fraud.

When considering this case the Committee took the opportunity to visit a meat factory to see at first hand how procedures operate. The visit confirmed what the Accounting Officer had already indicated that during a period of intensive production the activity at a factory is such that all staff are under extreme pressure. It is, however, this very fact which concerns the Committee as the implementation of controls may be pushed into the background in the factory’s anxiety to maximise efficiency on the production line, the danger being that there might be an inadvertent reluctance on the part of Customs and Agriculture staff to impede production by insisting on the appropriate level of control. The Committee therefore wants to be assured that these officials are diligent at all times and particularly during peak periods.

While the Committee appreciates that the boning out hall operations can be very intense it is important that Department personnel be very diligent in ensuring that only meat of the requisite quality is boned and boxed.

The Committee would also emphasise the need for Departmental and Customs Staff based in factories to be constantly reminded of the potential high risk areas and advised on appropriate countermeasures. There is always the possibility that familiarity may induce complacency in the operation of controls and in this regard the Committee expects, as a matter of course that staff are rotated regularly between factories.

The Committee also noted that since January 1991 special control Enquiry teams inquire into overall CAP control procedures on an unannounced basis and make an immediate report to the Department headquarters. It trusts that any follow up action necessary as a result of these visits is taken speedily.

Finally the Committee would like to be kept informed as to whether the Director of Public Prosecutions has finalised his review of the particular case involved in this irregularity.

8 Beef Sampling Operations

When giving evidence in the course of his examination on the 1986 Accounts the Accounting Officer told the Committee that in the period April - September 1989, the Department of Agriculture and Food and the Customs Authorities carried out a joint programme of sample checks on boxes of beef produced under the 1988 APS scheme and declared for export refund purposes. The Committee when considering the 1987 APS irregularity took a particular interest in this sampling programme. There had been media speculation that penalties in the region of £25m were to be imposed on beef producers because of failure to observe EC requirements and the Committee was alarmed at the implications of such an amount being involved. The finalisation of this matter took a very long time as the results of the sampling and the action to be taken had to be agreed with the EC by the Department. The Accounting Officers of Agriculture and Revenue assured the Committee that the amount involved was considerably less than £25m and that most of the infringements were of a technical nature i.e. meat was not properly wrapped and some trimmings, which are ineligible for APS or export refunds, were included in boxes.

The Committee was anxious to know the final outcome and it was informed on 20 May 1991 that of the nine companies at which samples were taken, infringements were noted in five of them. Following finalisation of discussions with the EC financial penalties of £3.6m were imposed on the five companies. The Committee was also informed that a dossier on the matter was being prepared for issue to the Director of Public Prosecutions for consideration as to whether further proceedings were warranted.

While the Committee notes that the final outcome, viz the imposition of penalties of £3.6m, clearly indicates that the magnitude of the problem was far less than was originally speculated it considers that it should not make any further comment until the DPP has made a decision and until the amounts have been paid. It would like to be kept informed of progress.

The Committee is conscious of the fact that since it discussed these matters a judicial inquiry has been established to inquire into the various matters connected with the operation of the Beef Industry and that the foregoing paragraphs relate to aspects which may be relevant to the matters under inquiry.

MARINE

9 Expenditure in Relation to the Wreck of M.V. “Kowloon Bridge”

The Committee notes that the total expenditure incurred by 7 Government Departments on clean-up operations following an oil spillage from the wreck of the MV Kowloon Bridge amounted to £1,754,958. In October 1987 the Department of the Marine claimed from the ship’s insurers, the London Steamship Company, who were unwilling to meet this claim in full. The matter was referred to the Chief State Solicitor and subsequently proceedings were commenced in the High Court. The Accounting Officer informed the Committee that the Minister was proceeding for the recovery of all costs incurred by the State or its agencies. The Committee are to be informed of the outcome of this case in due course.

The Accounting Officer stated that the lesson to be drawn from this incident was the necessity for improved legislative arrangements and more effective co-ordination between the agencies involved. The establishment of the Department of the Marine should lead to a greater co-ordination of the efforts of agencies such as the naval service, the coast radar services etc.,

The Committee were assured that contingency plans for future oil spillages had been revised in the light of experience in this case.

INDUSTRY AND COMMERCE

10 Export Guarantees and Market Entry and Development Schemes

The Market Entry and Development Scheme introduced in 1985 was interpreted as coming within the scope of the Insurance Act, 1953. Under this scheme, the Vote, through C.T.T., effectively prefinances a company’s expenses in developing new export markets and the repayment of the money is dependent on the success or otherwise of the venture. The Market Entry and Development Scheme is supposed to be self-financing although expenditure of £1.53 million as against income of £0.378 million over the period 1985/87, does not give this impression. However, the Committee accepts that a longer lead in period than this is probably required before the scheme can be realistically assessed.

The Accounting Officer expressed his satisfaction that the development of new export markets will more than pay for itself by way of return over a period of time. At the date of his examination fourteen companies had been financed under the scheme. The scheme depends on a company operating successfully in an export market and the Committee is concerned that, despite the tight screening procedures by the Department, two firms defaulted on loans granted. The Accounting Officer stated that the companies which are assisted are companies whose plans or proposals are regarded as being commercially viable but would not be capable of implementation in the absence of assistance. The two firms in question were approved on the grounds that they satisfied the criteria and their business plans appeared sound.

Protection for the Department is by way of levy on the firms on the incremental sales which flow from the implementation of the scheme and development of export markets. The objective is that the loan would be cleared over a five-year period. However, as it is a levy on incremental sales the payback is dependent upon the actual sales achieved. The levy is paid to Coras Tráchtála twice yearly.

The Committee welcomes the fact that participating firms had generated additional exports of £25m up to end September 1988. However the Committee considers that the Department must be more stringent in adhering to strict criteria of eligibility. The schemes’s cost and value to the State will be examined by the Committee when a reasonable times span for realistic assessment has elapsed.

OFFICE OF THE ATTORNEY GENERAL

11 Fees to Counsel

Legal fees of £74,149 were incurred by the State in appealing the High Court decision in Crotty V AG, which tested the Constitutionality of the Single European Act. The Comptroller and Auditor General noted that the Department of Finance was hesitant initially in authorising payment of these fees to Counsel on the grounds that they were excessive. However these fees were paid in full in January 1988.

At its meeting of 19 January 1989 to examine the Accounting Officer for the Office of the Attorney General, the Committee asked the representative of the Department of Finance for a note on the background to his Department’s reservations about the fees paid to State Counsel in the Supreme Court hearing. In reply the Department informed the Committee that Counsel for the State are engaged either by the Attorney General or the Director of Public Prosecutions. The Chief State Solicitor instructs Counsel on behalf of both offices as requested. The level of fees paid is at the discretion of the Attorney General and the Director of Public Prosecutions within the delegated limits set by the Department of Finance. The overwhelming bulk of fees paid by both offices are generally well below the delegated limit and only a tiny proportion of cases - which would be, for example, major constitutional actions taken against the State - exceed the limit. The fees in such cases must be referred to the Department of Finance for sanction. The Director of Public Prosecutions did not in 1987 (and very rarely does) require sanction to exceed the delegated limits for legal fees.

According to the Department its reservations are mainly in relation to the high-cost cases. The reservations relate both to the absolute level of fees and the rate of increase in recent years, against a background of financial stringency and cutbacks in other areas.

In regard to the SEA case the Department had contended that the Supreme Court action covered much of the same ground as the High Court action and a substantially lower fee was warranted.

The fees which were approved by the Attorney General for State Counsel, and eventually paid to them, were substantially less than those which the High Court, following consideration of the Taxing Master’s report and a full hearing of submissions advanced by both sides, found to be the proper and appropriate fees for plaintiff’s Counsel in the case. On the brief fees, the State Senior Counsel were paid a total of £15,960 each as compared with the plaintiff’s Senior Counsel’s total of £34,287 each. According to the Accounting Officer the discrepancy revealed by these figures, between what is paid by the State to its Counsel and what must objectively be regarded as the proper remuneration, is regularly repeated in other cases.

The Committee has reservations regarding excessive costs being claimed in cases simply because the Exchequer is paying and it is concerned with the high level of payments to counsel and whether they are consistent with good financial control by the State.

The Committee has addressed this matter on a number of occasions and has never found its misgivings to have been fully allayed. It therefore urges that a fresh look be taken at other options for providing the state with a more cost effective method of prosecuting or defending cases in the Courts.

GARDA SIOCHANA

12 Failure to register cleaners for PAYE/PRSI

The Comptroller and Auditor General highlighted the failure of the Department of Justice to implement the PAYE and PRSI regulations in respect of certain civilian employees who were recruited for cleaning duties outside the Dublin area and also in respect of certain Gardaí who received payment for similar work. His concern is that a Government Department should not be seen to be in breach of the legal obligations of an employee under the PAYE/PRSI code. The Committee shares this concern.

The Accounting Officer explained that local station cleaning is very casual work and quite lowly paid. In the period under review 130’ cleaners and 113 Gardaí had received payments which would require them to be registered for PAYE/PRSI purposes. The problem arose, according to the Accounting Officer, because of a lack of familiarity with procedures at local level arising from staff changes over the year.

The Committee noted that advice had been sought from the Revenue Commissioners and arrears had been collected and appropriate procedures had been put in place. However, the Committee feels that it must draw attention to this case because despite the relatively small amounts involved, it is imperative that Government Departments should be to the forefront in complying with and being seen to comply with all their legal obligations as employers.

13 Inadequate Stocktaking Procedures

The Comptroller and Auditor General noted a continuing failure to implement adequate recording, stocktaking and reconciliation procedures in a number of areas of the centralised stores located at the Garda Depot. The Committee in its Report of the 1983 Appropriation Accounts stated that it was vital that procedures in regard to stores, records and stocktaking should be rigorously applied and it sought an assurance that directives laid down in this regard would be strictly adhered to in future. Although the Accounting Officer assured the Committee that tight accounting controls existed, the failure to implement a full stocktake in the Barrack Master Stores or in the Transport Stores for over 15 years devalues any controls which might have been in operation and is unacceptable to the Committee.

In the Barrack Masters Stores, the stock records were being maintained by the officer with responsibility also for physical custody of the stock. In the Transport Stores, the receipt of items in had not been recorded since February 1987 and issues had not been recorded since 1983. The Accounting Officer assured the Committee that a full stocktaking had taken place in the Barrack Masters stores in October, 1988 and stocktaking in the Transport Stores had just been completed.

As a follow-up to its examination of this matter a delegation from the Committee visited the centralised stores at Garda Depot, Phoenix Park and the new stores accommodation at Santry.

Although annual stocktaking is now being carried out and the new accommodation at Santry is being utilised, the delay in dealing with this problem once attention had initially been drawn by the Comptroller and Auditor General to the inadequacies of the system is regarded by the Committee as indefensible.

The Committee wishes to emphasise that, as in any commercial enterprise, an adequate system of control must involve at a minimum, the recording of the receipt and issue of stores items and the reconciliation of records with physical stock. Such a reconciliation is essential if a meaningful, effective stock control system is to be operated. The Committee will be vigilant in its examination of procedures in other Departments and will highlight, as appropriate, any inadequacies that come to light.

COURTS

14 Warrants for Unpaid Fines

The Comptroller and Auditor General expressed concern that certain prescribed procedures, which form an essential part of the system of control for the issue and execution of warrants, for the collection of fines and for the bringing to account the fees collected, were not being operated between the Dublin Metropolitan District Court and Garda District Offices and in a number of instances, between the Gárda District Offices and Gárda Stations. The failure to operate these procedures would lead to difficulty in identifying which outstanding fines were being followed up and which were not, and this in turn could result in delays in collection. Misappropriation of fines could also be facilitated by the control deficiencies brought to light. The Accounting Officer assured the Comptroller and Auditor General that proper procedures had re-commenced and were now being observed in the court areas and the Garda districts.

The Committee takes a serious view of lapses in internal controls and feels in this case that Departmental management should have been aware of them before they were revealed on audit. The Committee would like to remind Accounting Officers of their primary responsibility in the matter of adequate internal control.

In paragraph 37 of the Comptroller and Auditor General’s Report certain statistics are given which show the extent of the problem of arrears in both the issue and execution of warrants. At end 1987 the total number of warrants outstanding was 123,700 with a potential value of in excess of £8m. Although this represents an improvement in the number of outstanding warrants when compared to 1984 the Committee is concerned at the size and value of outstanding fines which represents more than the total amount collected in any one year. The Accounting Officer informed the Committee that the main types of offences involved related to the Road Traffic Acts and T.V. Licences.

The Accounting Officer pointed to the difficulties of finding the people concerned in order to execute the warrant and the human problems in cases of inability to pay. A certain amount of arrears is therefore regarded as irrecoverable. The percentage of warrants returned for cancellation is approximately 9% to 10%. In Dublin alone it is 15%. Mitigation of penalty may be obtained by way of petition to the Minister.

The Accounting Officer stated that committal to prison is only used as a last resort in very exceptional cases and that the number in prison for non-payment of fines would be 1% to 2% of the total prison population (ie. between 10 to 20 people) at any point in time.

The Accounting Officer informed the Committee that 45% of fees are paid immediately and that the Department had requested the Committee on Court Practices and Procedures to examine the means by which collection of fines can be improved and the burden of fines payable by certain people eased by a system of attachment to wages or payment by instalment.

The Committee is of the opinion that the appeals system is resorted to because of the absence of an appropriate method of payment by instalment geared to the circumstances of individuals and urges the Department to investigate the possibility of instituting such a mechanism, however cumbersome, as a humane response, and as a way of reducing existing arrears.

The Committee intends to keep this matter under review.

ENVIRONMENT

15 Award of Advertising Contracts

Expenditure of some £400,000 was incurred in 1987 on advertising, the cost of which was considered unjustifiably high by the Department of Finance and for which contracts were awarded without observing some fundamental principles under the Department of Finance guidelines which must be adhered to for public contracts, such as obtaining competitive tenders and the furnishing of tax clearance certificates by prospective contractors. Although the Accounting Officer, in outlining the extenuating circumstances of the case, regretted that certain stipulated procedures had been overlooked, he informed the Committee that the general principals applying to public contracts had been adhered to. He confirmed that he had since taken steps to avoid a recurrence and he assured the Committee that the advertising campaigns undertaken were effective. The Committee concluded that the case put forward by the Accounting Officer did not justify the failure to observe well established rules which have equity as their basis.

16 Proposed National Toxic Waste Centre

The Comptroller and Auditor General drew attention to the costs totalling £410,734 to end 1987 associated with the proposed development of a national centre for handling toxic waste which the Government decided not to proceed with in January 1988. The Accounting Officer informed the Committee that fourteen acres were purchased at a cost of £12,000 per acre by the National Building Agency acting as an agent for the Department. It had been intended to utilise this site for processing the waste prior to exporting it. However, the Accounting Officer stated that the original assumptions upon which the proposals for this arrangement were based could now be queried and a system of capital grants was introduced to encourage the private sector to produce a service industry to meet the need for handling toxic waste.

The Accounting Officer assured the Committee that the original decision to purchase the site was correct, based on the information at the time, when it was clear that the private sector had no interest in providing such a service.

The Committee regrets the evident lack of proper planning in relation to this proposal and wishes to be informed of the final loss to the Exchequer, once this site has been sold. It must be critical of the 1981 purchase price of £12,000 per acre for land which was being used for agricultural purposes. A note forwarded by the Accounting Officer in relation to the purchase of the land is at Appendix 1.

TAOISEACH

17 Substitution of National Lottery Funds for Voted Moneys

This case concerned the use of savings achieved through the substitution of National Lottery funds for voted provisions which enabled the Department of the Taoiseach to save money on the Vote and then use it to purchase a new computer costing £191,000. An excess on one subhead under this Vote had occurred due to the purchase of this computer and was met through transferring savings which had arisen in relation to the grant-in-aid Fund for Cultural Organisations because of National Lottery fund allocations.

This technical procedure, known as Virement, permits the use of savings on one subhead of a Vote to offset excess in another subhead of the same Vote. The procedure requires the specific authority of the Minister for Finance. Otherwise the sanction of Dáil Éireann should be sought for the excess by way of Supplementary Estimate.

However, the manner in which the Department of Finance exercised the discretionary power of virement may be questioned by the Comptroller and Auditor General and this Committee which may report to Dáil Éireann any particular case where the committee considers the sanction of the House should have been sought by way of Supplementary Estimate.

The Comptroller and Auditor general clarified his interest in this matter to the Committee. Firstly, the use of Lottery funds for the cultural purposes for which they were allocated was not in question. Secondly, the decision to purchase a computer was not at issue. Thirdly the Accounting Officer from the Department of the Taoiseach had obtained the authority of the Minister for Finance in regard to the purchase. His concern was with the question of the authority of the Department of Finance as against the authority of Dáil Éireann.

The Department of Finance informed the Committee that the essential condition for Virement had been met ie that the saving was a real one and that the expenditure was not being postponed to a future year. It was on this basis that the Department had sanctioned the Virement.

The Accounting Officer for the Department of the Taoiseach assured the Committee that the amount of monies allocated to cultural organisations under this Vote is fixed and that additional amounts, even if available, would not be granted. No organisation was at a loss due to the substitution of Lottery funds for voted monies in this case.

The Committee draws attention to the Department of Finance publication ‘An Outline of Public Financial Procedures’ which sets out the conditions under which virement may be granted. It states that the Department of Finance may decide to refuse virement if in its view the additional expenditure would fall into any of a number of categories, one of which is that it would be novel or contentious. It goes on to state:

‘Where there is any uncertainty in relation to any of these points, best accounting practice would require that a Supplementary Estimate be taken.’

The Committee believes that best accounting practice was not followed in this case as the use of Lottery moneys in 1987 for services originally provided for by way of voted moneys certainly constituted a novel situation and should properly have been dealt with by way of Supplementary Estimate. The Committee expects the Department of Finance to follow its own prescribed guidelines in dealing with any future requests for virement and to be conscious of Dáil Éireann’s interest in the process.

DEFENCE

18 Stocktaking

During examination of the Accounting Officer it emerged that due to staff shortages, stocktaking procedures in relation to army stores were deficient. The Accounting Officer informed the Committee that he had written to the Comptroller and Auditor General and to the Minister for Finance to inform them that due to shortages of staff the Department’s internal audit unit had been unable to carry out the required number of stores audits.

The Department of Finance stated in evidence that government policy is that numbers in the civil service should be reduced and that it is a matter for senior management within each Department to decide the priorities of that Department and to allocate available staff accordingly. The Department of Finance would expect that the stores audit function would be regarded as a high priority.

The Committee is concerned that the scaling down of the number of internal audits creates subsequent problems for the Comptroller and Auditor General because his function is exercised on the basis of test examination of transactions which takes account of the level of internal control and audit in Departments. Furthermore where the quality of internal audit suffers it has a detrimental impact on the Accounting Officer’s ability to discharge his responsibility for the money entrusted to his stewardship.

The Committee wishes to re-emphasis the importance of proper internal control and audit in Departments. It is particularly important it is not diluted at a time when it is most needed.

PUBLIC WORKS AND BUILDINGS

19 Cost Overrun in Building of Garda District H.Q. in Westport

In August 1985 a contract in the sum of £586,337, with a completion period of eighteen months, was awarded for the construction of a new Gárda district headquarters in Westport. The total estimated cost of the works was £634,000. Even though the execution of a performance bond had been provided for at the tendering stage and had been recommended by the architect when the contract was being awarded, the Commissioners decided not to look for a bond when placing the original contract.

Subsequently a dispute arose with the contractor concerning the financial basis of remeasurement of work. The Commissioners at the same time terminated the contract on the grounds that the contractor had failed to proceed with reasonable diligence. The dispute went to arbitration. The arbitrator found that certain of the procedures followed by the OPW in dealing with the contractor were flawed. The cost of the unfinished project at that stage was £235,770 including £105,000 approximately, incurred as a result of the arbitrator’s findings. A contract for the completion of the project was placed with another contractor in the sum of £648,986, subject to a performance bond. The architect’s original recommendation for the award of the contract was also contingent on clarification of certain technical points. In evidence the Comptroller and Auditor General stated that the dispute might not have arisen at all if there had been sufficient clarification of the financial basis of remeasurement of work at the early stages. He pointed to the fact that the Accounting Officer has recognised that this case will have implications generally for building contracts. In the light of the arbitrator’s findings the Commissioners had proceeded to examine the instructions which might be necessary for staff generally in relation to contractual procedures so as to avoid a recurrence.

In evidence the Accounting Officer stated that the original contractor’s price was very keen and that the architect expressed a certain amount of concern but that they had gone through the normal procedures of asking the contractor to confirm that his prices were adequate to cover him when dealing with this work. Assurances and guarantees in this regard were forthcoming and having regard to independent reports on this contractor the Commissioners entered into the contract with him without requiring a performance band.

The Committee agrees with the Comptroller and Auditor General that the architect’s recommendations should have been taken on board and with hindsight, it is clear that OPW would not have ended up with such a costly mess if the advice had been taken. As a general point, the Committee strongly feels that when Departments are placing public contracts they should err on the side of providence rather than take chances with taxpayer’s money.

A note on performance bonds was forwarded to the Committee on 29 March 1988 and is included at Appendix 2.

20 Claim for Repairs to Dun Laoghaire Pier

In 1984 the Commissioners carried out repair works to Dun Laoghaire Pier at a total cost of £89,917. The damage had been caused by a foreign registered ship colliding with a section of the car ferry terminal in 1981. The amount was claimed from the owners of the ship. However, there has been little progress in this matter.

The Accounting Officer informed the Committee that from April 1981 to November 1984 officials of OPW endeavoured to get a firm of solicitors or a company to accept a service of proceedings. From November 1984 to approximately January 1987 the matter was in the hands of the Chief State Solicitor. In March 1987 a High Court plenary summons was issued against the owners of the vessel at the date of the incident which had the effect of suspending the Statute of Limitations in so far as the Commissioners’ claim was concerned. A court order to serve a writ outside the jurisdiction was obtained in May 1988. The Chief State Solicitor then sought Counsel’s advice as to whether the Commissioners should proceed or await the service of a counterclaim from the owners of the vessel, against the State.

The Committee is concerned with the length of time taken in handling this case, and how the delay might affect recovery prospects. It is also fearful of the possibility of substantial legal costs being incurred and wishes to be kept informed of progress in this case.

For the information of the Committee the Accounting Officer forwarded a note on

(1)Powers to detain vessels in State Harbours

(2)Implications of the settlement between the owners and the charterers.

This note is at Appendix 3.

SOCIAL WELFARE

21 Welfare fraud

A comprehensive examination of the system for paying unemployment assistance and benefit was carried out by consultants at the request of the Department to establish areas of risk and to advise on the most cost effective measures to minimise such risks.

The final Report which issued in December 1987 highlighted problems of internal control that exposed the system to the possibility of both internal and external fraud. The Department accepted the main thrust of the consultants’ recommendations and initiated a comprehensive package of proposals for improvement. As some of these proposals involved fundamental structural changes they were submitted to the Department of Finance for consideration.

The Accounting Officer informed the Committee in evidence that with the assistance of the consultants a survey was carried out in the Dublin area, based on a sample of one thousand welfare recipients. The results demonstrated that external fraud was at a level of between one and two per cent.

The Committee trusts that the necessary cost-effective controls will be put in place as soon as possible to minimise the risk of internal and external fraud in this area.

22 Jobsearch Programme

The Comptroller and Auditor General drew attention to the Jobsearch Programme and the way in which the programme had the effect of causing a significant number of UA/UB claimants to sign off or have their claims closed. This suggested that there may have been a level of abuse in this area which had hitherto gone undetected.

The Accounting Officer in evidence on 4 October 1989 summarised the effects of the Jobsearch Programme which was initiated as a pilot project in Tallaght, Limerick and Letterkenny in September 1986. The programme extended nationwide in 1987, concentrated on persons aged between 20 and 55 who were long-term unemployed i.e. signing on the register for over six months, and its primary aim was to help people in their search for work. However, as a result, a number of people left the live register for undisclosed reasons. In 1987, approximately 142,000 people were interviewed, 36,000 of whom were placed in jobs or schemes of various kinds, 10,300 went on Jobsearch courses and up to 15,000 left the live register. The Department estimate that as a result of the activities of the Jobsearch Programme £8.2m was saved in 1987 and £18.3m was saved in 1988.

The Committee is pleased to note the savings achieved although it reinforces its view that the Department’s procedures, prior to the Jobsearch Programme, for preventing UA/UB fraud were deficient.

23 Disability Benefit Fraud

The Comptroller and Auditor General referred to two major incidents of disability benefit fraud. The first concerned the mining industry where out of a total combined workforce of 245 in three firms 176 workers had made fraudulent claims in the period 1983 to 1987. The second incident related to workers in a number of other firms and in a Local Authority.

The Accounting Officer clarified that in the mining industry case the fraudulent claiming of benefit occurred mainly in 1984-85 and this was detected early in 1986 by the Department. The total amount involved was £162,000 and by 20 April 1989 £84,400 had been recovered; 57 cases were considered not suitable for prosecution and 119 cases were passed to the Chief State Solicitor for prosecution, of which 115 had been the subject of hearings; the number of cases disposed of by April 1989 was 77. According to the evidence given by the Accounting Officer the balance of monies fraudulently claimed is being recovered gradually. Fines were imposed on certain workers and the Probation Act was applied to others. There were eight doctors involved in issuing the medical certificates to which this abuse relates.

The Committee considers it alarming that 72% of the workforce in three collieries in the same region could be certified as unfit for work, claim for disability benefit and continue working. The fact that the fraudulent claiming could go on for such a long period without being detected is a poor reflection on the Department’s controls. It also calls into question the objectivity of the eight doctors whilst accepting the point made by the Accounting Officer that proof of malpractice or collusion would be necessary before contemplating action against them. In this context the Accounting Officer stated that as soon as the court cases were finalised, the doctors concerned would be requested for explanations relating to the certificates issued by them. However, he stated that there was no evidence of any collusion between doctors and patients. He informed the Committee that the Department has power to refer doctors to the Medical Council and that up to 12 doctors are fined annually for lax certification.

The Accounting Officer stated that the cases of abuse referred to would account for less than one per-cent of total disability benefit paid. Approximately 80,000 people are paid every week and about 200,000 individuals make claims in the course of a year. Approximately £200m is paid annually in disability benefit.

The Committee accepts the assurances given by the Accounting Officer that there was no internal departmental involvement in the fraud.

The Committee notes that the Department has extensive control measures in place to curb possible abuse. The Committee also notes that, in compliance with the Committee’s previous request to the Accounting Officer, all certifying doctors were circularised in November 1989 by the Department’s Medical adviser on the need for vigilance in the matter of certifying persons as being unfit for work.

The Committee awaits a Report on the outcome of the court cases in both the frauds involving the miners and those involving the other employers mentioned in the Comptroller and Auditor General’s Report.

24 Control Procedures and Computerised Systems

The Committee recognises that the Social Welfare system is a large and complex one in which a balance has to be maintained between providing a fast and efficient income maintenance service to claimants, and ensuring that proper internal accounting and control procedures are in place. In relation to the computerised system of payment at labour exchanges in Dublin, certain weaknesses appear to have existed in the procedures for ensuring correct data input and subsequent detection and correction of invalid data. The possibility of such weaknesses being exploited is of concern to the Committee as it has reported on internal irregularities in recent years.

The Committee will keep abreast of the Comptroller and Auditor General’s continuing review of the effectiveness of these controls.

25 Reconciliation of Unemployment Payments made through Post Offices

Unemployment Benefit and Unemployment Assistance are paid at post offices to persons who reside over six miles from the nearest local office of the Department of Social Welfare. Each week, the Department of Social Welfare, through its Employment Exchanges/Local Offices issues 5,500 paysheets to over 1000 individual post offices. The paysheets contain details of amounts to be paid out to particular clients

on production of signed vouchers at designated post offices. Amounts paid out in respect of each client are entered on the paysheets by the post office staff and returned to An Post headquarters in College House, Dublin, where they are sorted and subsequently transmitted to the Accounts Branch of the Department of Social Welfare.

To compile the necessary expenditure figures on postal payments, it is necessary for the Accounts Branch to process postal paysheets listing approximately 80,000 individual payments each week. The system in operation is largely a manual one in the Local offices, Accounts Branch of the Department and Post Offices.

The Comptroller and Auditor General adverted to the procedures for authenticating payments made and to the reconciliation of the total valid pay sheets with the amounts paid to An Post in their role as agent of the Department. The Accounting Officer acknowledged that there were deficiencies in procedures and assured the Comptroller and Auditor General that remedial action had been taken. In a note from the Accounting Officer to the Committee dated 7 March 1990 it is stated that a post office control book was introduced into the Accounts Branch with effect from 1 January 1988. The Control book records receipt of paysheets from post offices for each week. The useful function served by the control book is that it highlights cases where no return is received from a particular post office. It does not however indicate if individual paysheets are missing from a post office and therefore incorrect or irregular payments on the missing paysheets could go undetected.

The Committee notes that the existing manual system poses certain difficulties. According to the Department a reconciliation procedure between paysheets issued by Exchanges/Local Offices and paysheets returned by An Post would, were it to be attempted solely on a manual basis, have major implications for work procedures and staffing levels in the Department, giving rise to considerable increases in the volume of paper processing both in local offices and the Accounts Branch; this would in turn have implications for the meeting of deadlines for the completion of the statutory accounts.

However, the Committee is of the opinion that improvements could be devised and implemented as part of the intended computerisation in this area. In this regard the Department envisages that the full computerisation of the accounting systems currently being implemented on a phased basis, will provide for automated reconciliation of postal payments.

The Committee expects that the normal checks and balances which form part and parcel of arrangements between organisations in the private sector will be applied to the relationship between the Department and An Post in the administration and payment of social assistance and benefits through Post Offices.

26 Accounting Procedures relating to Supplementary Welfare Payments

Payments of supplementary welfare allowances made by the Health Boards to applicants awaiting the award of benefit or assistance from the Department of Social Welfare are regarded as interim advances to be recovered from Social Welfare payments to which such persons may subsequently become entitled.

Statistics quoted by the Comptroller and Auditor General suggested that there may have been a breakdown in the system of notifying the Department of interim advances made to applicants with the result that the necessary deductions were not made in all cases, from the applicant’s subsequent social welfare entitlement

In addition the Comptroller and Auditor General informed the Committee that on occasions where the Department had been duly notified, advances were not subsequently withheld. Furthermore he noted that the local government auditors had report on a number of occasions certain deficiencies in the Health Board’s systems of recording supplementary welfare payments which are due for recovery.

The Accounting Officer accepted the shortcomings of the system and undertook to look into the basic problems which beset the operation of this aspect of the scheme. The Committee acknowledges the difficulties of trying to reconcile a humane and flexible system of helping those most in need with the requirement for control but feels that this does not absolve the Department and the Health Boards of their responsibility to ensure that applicants receive what they are entitled to - no more or no less. The situation described by the Comptroller and Auditor General leads to inequity and cannot be accepted by the Committee.

27 Overpayments of Social Assistance and Social Insurance

By 31 December 1987 £13.9 million overpaid under Social Insurance schemes and £9.5 million overpaid under Social Assistance Schemes had not been recovered.

Of this total of £23.4 million due to be recovered, £6.8 million related to overpayments in the 1987 accounting year and £16.6 million related to overpayments made in previous years. This large balance of accumulated overpayments has built up in the Department’s accounting records because the Department of Social Welfare’s accounting policies do not allow write-off of overpayments which cannot be recovered. The Committee was told by the Accounting Officer that this policy is currently being reviewed and that proposals will shortly be made to the Department of Finance which envisage automatic write-off of overpayments after a number of years.

The Committee supports this proposed change in accounting policy. In regard to the overpayments of £6.8 million in 1987, the Department attributed £5.4 million to cases of fraud by Social Welfare recipients. The Committee wishes to highlight the extent of Social Welfare fraud and supports the Department’s efforts to minimise the level of fraud, while recognising that the vast majority of recipients receive only their due payments.

REVENUE COMMISSIONERS

28 Collection of Outstanding Taxes

The Committee notes that the initial impact of the newly appointed sheriffs was an improvement in the enforcement of the collection of taxes. However at the end of December 1987 the number of certificates with the sheriffs was 106,000. In addition 103,000 unissued certificates had accumulated in the Collector General’s Office. The total number of certificates outstanding would however have been reduced by virtue of the response to the tax amnesty in 1988. The Accounting Officer in evidence informed the Committee that by end 1988 the number of certificates on hands with the sheriffs was 95,201.

The Accounting Officer informed the Comptroller and Auditor General that agreement was reached in September 1988 on revised procedures for the recording and paying over of amounts collected by sheriffs. The Comptroller and Auditor General stated in evidence that he is considering the question of inspection by his staff of the records of the sheriffs to see whether the adoption of these procedures ensures that public moneys are fully and promptly brought to account.

In evidence the Accounting Officer explained that all sheriffs must inform the Collector General each month of the balance of remittances on hands and every six months they must forward a report giving the opening balance, the amount collected and paid over in the previous six months and the closing balance, these amounts to be verified by bank certificate and the sheriff’s own auditors. Tax and interest paid in full is remitted to the Revenue Commissioners with the following monthly payovers with the sheriff retaining the certificate to pursue any outstanding fees or costs. The Accounting Officer further stated that sheriffs have been requested to refrain from making instalment arrangements with taxpayers but in the case of any such arrangement which has to be made where the final instalment is not paid within six months the sheriff pays over whatever he has collected at the end of six months of the instalment arrangement and retains the certificate to pursue the balance of the tax, interest and poundage. The Accounting Officer stated that the overall limit on the balance held by each sheriff is the total of the previous four months’ payments.

The Committee notes that the rates of poundage for sheriffs are 5% on the first £100 and 2.5% thereafter. These charges are levied on the defaulter.

The Committee wishes to see that all outstanding taxes received by sheriffs should be remitted as speedily as possible to the Collector General. In this connection it notes that except where instalment arrangements are made (which occurs in a minority of cases), monies are paid over, within the month following receipt, by the sheriff.

The Committee will be looking for an appreciable improvement in collection on foot of certificates once the Revenue Sheriffs get into top gear and will keep progress under review.

29 Procedures for Receipt, Recording and Lodgement of Remittances by Collector General

In view of previously detected fraud in the Office of the Collector General, the Committee shares a concern expressed by the Comptroller and Auditor General in relation to improving the control of remittances at point of receipt and reduction of delays in lodgement of cheques. Simple procedures properly supervised could help considerably to reduce the danger of irregularities occurring. The Comptroller and Auditor General in evidence stated that a system had been introduced for marking all cheques, money orders etc. for the Revenue Commissioners’ account as soon as envelopes are opened. The Accounting Officer informed the Comptroller and Auditor General that new arrangements had been put in place to lodge any cheques for which accounting instructions had not been received, to a special bank holding account, for the immediate benefit of the Exchequer, pending the receipt of missing information.

The Accounting Officer in evidence assured the Committee that adequate control procedures are now in place and that there are no delays in lodgement of cheques.

The Committee notes the Accounting Officer’s assurances and is glad to see the introduction of new arrangements which were well overdue. The holding of cheques for long periods pending the receipt of accounting instructions was a practice which would not be tolerated in the business world and similarly has no part to play in the efficient running of an organisation in the public sector.

30 Fraudulent and Attempted Fraudulent Encashment of Cheques

The fraudulent or attempted fraudulent encashment of cheques sent by taxpayers to the Revenue Commissioners and of repayment of cheques issued by the Revenue Commissioners was referred to by the Committee in previous Reports. This was again discussed when the Accounting Officer came before the Committee in September 1989.

The position as already reported on by the Committee was updated as follows:-

The Committee wishes to be kept informed of developments in this case.

31 Fraud in Relation to Motor Vehicle Import Charges

Paragraph 24 of the Comptroller and Auditor General’s report relates to investigations initiated in 1984 by the Revenue Commissioners into the circumstances in which 41 seized imported second-hand cars were released from customs control after the payment of duty and VAT which appeared to be based on artificially low valuations of the vehicles. The Accounting Officer confirmed in evidence that the amount of revenue lost was approximately £30,000. In a note to the Committee (Appendix 4) it is stated that twenty six importers may have been involved.

The Accounting Officer told the Committee that the basis of assessment of excise duty on motor vehicles was changed in 1985 from a subjective assessment of the value of each vehicle by the customs officer to a scale of deductions from the recommended retail selling price at a percentage based on the age of the vehicle, no allowance being made for the condition of the vehicle. Therefore a similar situation to that pertaining in 1984 could not recur.

The Accounting Officer also explained that control procedures were based on routine follow-up action by mobile units of the customs service with the co-operation of the local motor tax offices which ensured that irregular importations were reduced to a minimum.

Because this matter concerns an alleged fraud by a Customs Official, who has obtained a continuing injunction from the High Court against further investigations by the Revenue Commissioners, pending trial, the Committee will restrict its comments to noting the matter at this stage. However, the Accounting Officer is to forward details of the outcome in due course.

32 Irregularities Under the PAYE System

The Committee in its Report on the 1985 and 1986 Appropriation Accounts referred to the irregular amendment of the tax allowances of certain taxpayers on the PAYE file. Irregularities of a similar nature were noted by the Comptroller and Auditor General in the course of the 1987 audit. The Accounting Officer informed the Comptroller and Auditor General that detection had followed an investigation by the Garda Fraud Squad into the disappearance of loan cheques issued through the post by a finance company. A tax official, serving in a Dublin district, successfully defrauded the finance company by applying for loans in the names of taxpayers. The frauds were perpetrated by the submission of fictitious applications for advances from the finance company supported by genuine estimates from motor traders for cars. The applications were in the names of persons with bona fide addresses which the tax official obtained by accessing PAYE computer files and were supported by fictitious end of year tax data (P.60s). The loan applications were submitted by post followed up by phone calls to the company as to acceptance and asking when letters of acceptance and cheques would issue. The tax official was in collusion with three postmen who intercepted the loan cheques in the post in return for which they were given a portion of the fraudulent advances and had tax free allowances to which they were not entitled input to their PAYE computer records. The tax official was suspended by the Revenue Commissioners and then resigned. He was convicted on cheque fraud charges. In a note to the Committee (Appendix 5) the Revenue Commissioners have stated that information supplied by An Post indicates that two postmen were suspended, charged with the theft of postal packages, given suspended sentences of six months each and subsequently dismissed. An Post further advised that no disciplinary or criminal action was taken against the third postman.

The investigation by the Revenue Commissioners brought to light two further cases of allowances having been wrongly increased. However, there was no clear evidence as to who was responsible. The Accounting Officer informed the Comptroller and Auditor General that the amount of tax underpaid in the five cases was £6,700. In two other cases underpayments totalling more than £3,800 were recovered by restricting tax free allowances. In two cases the taxpayers were unemployed and the underpayment had not been recovered. In the fifth case no action was necessary as other allowances due to the taxpayer more than offset the overpayment.

The Accounting Officer stated in evidence that he could not guarantee that records would never again be falsified but that he hoped that the system of checks would be sufficient to enable the extent of any such irregularity to be detected and those responsible identified.

The Committee once again wishes to express its concern with the failure of procedures for preventing and detecting irregular transactions.

The Committee is of the opinion that there is need for better supervisory control of data input relating to tax-free allowances. This could go a long way in preventing a recurrence of this type of internal fraud.

In relation to confidentiality in general, the Accounting Officer assured the Committee that individual officers have access only to the limited number of cases with which they are dealing, and not broad access to all records.

The question of computer system security in all Government Departments is one to which the Committee will address itself at a future date.

FORESTRY

33 Controls in Relation to Pulpwood Sales from State Forests

The Comptroller and Auditor General adverted to the fact that certain control procedures were not being adhered to when pulpwood was being removed from State forests. Essentially the removal of pulpwood by two companies was not being properly monitored and there were grounds to suggest that timber had been removed without authorisation. This would have obvious implications for the correctness of invoices issued by the Department. The Accounting Officer assured the Committee that this situation had since been remedied and that a new system of improved controls introduced in 1988, was being operated by Coillte Teo which now had responsibility for State Forests.

The Forestry act, 1988 provided for the establishment of a new State company Coillte Teo for the purpose of forestry development and assigned to it functions previously exercised by the Minister for Energy. Under this act the company is obliged to submit its accounts annually to an auditor, whose report is presented to the Minister and laid before each House of the Oireachtas. The Comptroller and Auditor General has no responsibility in relation to the audit of Coillte Teo.

The Committee would like to re-iterate its belief expressed in an earlier report that the Comptroller and Auditor General should be given access inspection rights with reporting responsibilities to Dáil Eireann, in the case of commercial State-sponsored bodies, and that such reports should be subject to examination and report by the PAC.⁽¹⁾

EDUCATION

34 Computerised Payroll Fraud

The Committee’s attention was drawn to an internal fraud entailing the setting up of two fictitious records on the PostPrimary Teachers payroll. The amount involved was £13,000 of which £1,600 was recovered with the remainder being written off. The officer concerned was convicted by the Court.

The Accounting Officer informed the Comptroller and Auditor General that the irregularities occurred and continued over a long period because the control procedures envisaged in the payroll system when it was being set up as a computerised system were not fully carried out. This enabled the person involved to bypass the supervisor’s check and to intercept computer produced documents. The continuation of the fraud was facilitated by the fact that the practice of checking payrolls on a monthly basis against the returns from the schools, showing the number of teachers employed, had fallen into disuse.

The Accounting Officer gave assurances that new security measures have been implemented and that a similar type of fraud could not now occur.

The Committee is disturbed to note that this fraud was facilitated by the failure to operate basic controls techniques which should be a ‘sine qua non’ in any payroll system. The Committee recognises that the use of computers has increased the potential for sophisticated fraud but that was clearly not the case here. The Committee therefore urges Departments to ensure that, at a minimum, basic controls consistent with accepted best practice are operated at all times and would remind Accounting Officers of their responsibilities in this regard.

As stated earlier in this Report the Committee intends to examine the adequacy of computer system security within Government Departments.

35 Community School Irregularity

A Principal of a Community School irregularly drew 17 cheques to a value of £10,384 which purported to represent payment for goods and services supplied over the period June 1983 to September 1985. He was charged and convicted of fraud in January 1988. More that 50 per cent of the amount involved was recovered by withholding pension contributions and the Department of Finance sanctioned the write off of the remainder. The Accounting Officer explained to the Comptroller and Auditor General that the extent of the Department’s review of the monthly accounts of each school and the local audits by Department staff at the schools was limited during that period because of staff shortages. In fact no local inspections had been carried out during the period of the irregularity.

The Committee is particularly perturbed that this problem came to light following information received by the Department from a firm of solicitors and not through the Department’s own control procedures, especially as the Comptroller and Auditor General had in 1977 adverted to the fact that approved procedures for the signing of cheques drawn on school accounts were not being adhered to at two community schools. The Committee welcomes the assurances given by the Accounting Officer in evidence that quite extensive new procedures have been introduced.

36 Errors in ESF Claims

The Comptroller and Auditor General drew attention to the incorrect claim for aid from the European Social Fund for a 1985 programme of Vocational Preparation and Training. The Accounting Officer informed the Comptroller and Auditor General that on the basis of its understanding of the relevant Community Regulations, the Department requested schools to calculate the depreciation costs on the buildings over 25 years, but they subsequently found, in consultation with the Commission, that they could be depreciated over six years. The Department itself proceeded to correct claims received from schools because of time constraints involved. The Accounting Officer stated that the Department relied on information regarding depreciation furnished by the schools rather than on Departmental records. On audit it was discovered that for claims provided by secondary, community and comprehensive schools, the depreciation charges which had been included in the final claim were overstated by £403,000 in respect of secondary schools and understated by £33,000 in respect of community and comprehensive schools. There was a further underclaim of aid of £153,000 by 4 V.E.C.s which omitted depreciation costs entirely from their E.S.F. Claims. In addition there was a failure by 24 schools to make any claim. The Department attributed this to inadequate secretarial or administrative staffing in the schools and estimated that the amount foregone was £295,000. Taking all these under-claims and over-claims into account, the result was that there was a net underclaim of £78,000. The Department sought the sanction of the Department of Finance to write off this net loss.

The Committee agrees with the Comptroller and Auditor General’s view that, although the amounts are small in the context of the European Social Fund as a whole, they are substantial amounts both in their own right and when viewed against the particular schools’ costs of running the courses in question. The Committee is further concerned that errors relating to claims for ESF aid are continually coming to light. It concurs with the Comptroller and Auditor General’s statements in evidence that in relation to European aid in general, overclaims and errors cannot be ignored by him and that a contrary view would not reflect a high standard of integrity or credibility in regard to our system of public sector auditing. Furthermore, the Comptroller and Auditor General pointed to the fact that the audit of E.C. funds is the responsibility of the European Court of Auditors and its audit is carried out, as provided in the Treaties, in liaison with the national audit authority.

The Committee is of the view that proper accounting procedures and adequate cost control and financial management systems should be introduced at all levels within the Department and within V.E.C.s’ and Comprehensive and Secondary schools to ensure that the haphazard approach which appears to have existed up to now is eliminated. It regrets that the serious concern which the Committee expressed in regard to similar occurrences in the past has apparently not led to improvement. The Committee regards tardiness and errors in claims for ESF aid as unacceptable and is of the view that this could adversely affect the integrity and acceptability of submissions for other forms of Community aid.

A report from the Department of Education on steps taken to ensure that the procedures for the computation and submission of ESF claims are adequate and do not call into question the integrity of national controls is at Appendix 6. The Committee will keep this matter under continuing review.

HEALTH

37 Computerisation

In its 1986 report the Committee stated that it would continue to monitor progress on the programme for computerisation in the health service.

In evidence the Accounting Officer stated that, contrary to the Committee’s opinion expressed in that report, (that the expenditure of £11m to end 1986 represented an expensive learning process for the Department), a large number of facilities including financial and patient/administrative systems were put into operation in a number of centres throughout the country. These facilities, he assured the Committee, were working effectively and supplying information to facilitate management. He further assured the Committee that the Department was progressing along the lines outlined in the report prepared for the Committee in November 1988.

The Committee notes this change in the Department’s strategy which coincided with the Committee’s examination of the matter and will return to this subject at a future date to review the efficiency and effectiveness of the full implementation of the programme.

Despite the Accounting Officer’s initial assurances, The Committee would therefore find it hard to accept, in the light of evidence given and documents submitted, that the Department adopted a value for money approach to its computerisation programme in the health service or that its management of the programme was above reproach.

38 Local Government Audit of Health Boards

The bulk of moneys required by Health Boards are provided by the Health Vote. These issues from the Vote are subject to audit by the Comptroller and Auditor General in the normal way but once the moneys have been properly disbursed to the Health Boards, the Comptroller and Auditor General’s direct involvement in the audit process ends. The accounts of Health Boards are audited by Local Government Auditors who are officials of the Department of the Environment. Their audit reports are sent to the Department of Health but are not presented to the Houses of the Oireachtas with the audited accounts. However, the Comptroller and Auditor General has adopted the practice over the years of examining the Local Government Auditors’ Reports and bringing to light in his Annual Report any matters which he feels merit attention and in this way a measure of accountability is achieved through the Public Accounts Committee’s examination of the Accounting Officer for the Health Vote.

The Committee has in its special report identified the weaknesses in the current arrangements for holding Health Boards publicly accountable for their use of vote moneys and recommended that Health Boards should be reviewed and that consideration should be given to bringing this function within the ambit of the Comptroller and Auditor General for reporting to Dáil Eireann and for examination in greater detail through the Public Accounts Committee. Pending a Government decision on this, the Committee has requested that the detailed audit report of the Local Government Auditor relating to each Health Board’s annual account be submitted to it in order to form a basis for examination by the Committee. It has also recommended that the Comptroller and Auditor General be facilitated in every possible way in helping to promote greater public accountability in this area.

The Committee hopes that the making of formal arrangements for ensuring public accountability for Health Boards expenditure will not be too long delayed.

COMPTROLLER AND AUDITOR GENERAL

39 Staffing

In previous reports the Committee drew attention to the unsatisfactory level of staffing in the Office of the Comptroller and Auditor General and the resultant impact on audit coverage of public expenditure and revenue. This situation was compounded in 1987 by staff losses at managerial level which had the effect of curtailing audit planning and co-ordination, and delaying the completion of audit reports and the certification of accounts.

The Committee accepts that by drawing attention in his Annual Report to the effect of staffing shortages on the level and quality of audit, the Comptroller and Auditor General is fulfilling the duty imposed on him by Section 1(4) of the Exchequer and Audit Departments Act 1921 to report to Dáil Eireann ‘any important change in the extent or character of any examination made by him’.

The subject of staffing in the Office of the Comptroller and Auditor General has been examined by the Committee on numerous occasions and the Committee strongly feels that the matter can be resolved only in the context of the recommendations set down in its Special Report (1988). The Committee urges early enactment by legislation along the lines proposed in that report.

40 National Lottery Grants

The Committee was glad to note that expenditure by Departments from National Lottery moneys is subject to the same accounting and control requirements as Vote expenditure and is subject to the same type of audit which the Comptroller and Auditor General supplies to departmental transactions as a whole.

Gay Mitchell T.D.

Chairman

25 July 1991

PART III

MINUTE OF THE MINISTER FOR FINANCE

RESPONSE TO THE MINUTE OF THE MINISTER FOR FINANCE ON THE REPORT OF THE COMMITTEE OF PUBLIC ACCOUNTS ON THE APPROPRIATION ACCOUNTS, 1985 AND 1986

Paragraph 43: Monies due from the Sale of Timber in State Forests

The Committee would like to be advised of the final outcome in the court case relating to a debt of £215,553 due to the State.

Paragraph 47: Public Works and Buildings

The Committee would like to be advised of the extent of the reorganisation of the office of Public Works and the consequent improvements in efficiency and effectiveness which are expected to ensue.

Paragraph 50: Cell Doors for Portlaoise Prison

The Committee do not wish to see a repetition of this type of purchasing practice. The Committee point out that this has resulted in £395,000 being spent on high security doors which have never been used.

MINUTE OF THE MINISTER FOR FINANCE ON THE REPORT DATED 9 MARCH 1989 OF THE COMMITTEE OF PUBLIC ACCOUNTS ON THE APPROPRIATION ACCOUNTS FOR 1985 AND 1986

CUID I - NÓTAÍ GINEARALTA

Mír 1 - Meabhrán ón Aire Airgeadais dar dáta 27 Iúil 1988, ar Tuarascáil ón gCoiste ar na Cuntais Leithreasa do 1980 agus 1981.

Tógann an tAire nóta den mhéid atá ráite ag an gCoiste sa mhír seo agus tá sé tar éis aird na Ranna a tharraingt air.

PART II - APPROPRIATION ACCOUNTS 1985 & 1986

Paragraphs 8, 18, 20, 32, and 62 do not appear to call for comment.

LOCAL GOVERNMENT AUDIT SERVICE

Paragraph 2 : Arrears of audit in bodies audited by the Local Government Audit Service.

The Minister is informed by the Department of the Environment that major progress was made during 1988 in eliminating local government audit arrears. At the end of 1988 61% of all audits were up to date compared to 20% at the end of 1987 while another 24% were only one year out of date. This improvement resulted from the temporary assignment of additional staff to the Local Government Audit Service in October, 1988, and the introduction of a number of administrative measures in 1988 as part of a programme to eliminate arrears by March, 1991. These included more flexible working procedures, staff reorganisation and the imposition of time limits for completion of audits. If the current rate of progress is maintained, it is anticipated that arrears will be eliminated by mid-1990.

SOCIAL WELFARE

Paragraph 3: Overpayments of Invalidity Pensions.

The Minister is informed by the Department of Social Welfare that recovery of these overpayments is continuing by way of deduction from ongoing weekly pensions. Of the £34,000 overpaid, £23,500 has been recovered to date. It is expected that the remainder will be recovered except in cases where pensioners have died.

Paragraph 4: Use of computerised facilities for cross-checking purposes.

The Committee’s comments in regard to the need to cross-check claims in suspicious cases, even in advance of a computerised automatic cross-checking facility, have been noted. However, the Department of Social Welfare still considers that the development of an automatic computerised cross-checking system is the only effective approach to verifying information supplied by claimants. There have been some developments in this regard.

A facility has been devised for automatically cross-checking the number of child dependants on the Unemployment Assistance or Unemployment Benefit claim (where the computerised system is in operation) against the number of child dependants on the corresponding Child Benefit file. This facility produces warning reports where the number of child dependants on each system do not match and indicates stop dates for children reaching 18 years in the next twelve months.

The facility was implemented on a pilot basis in the Apollo House and Gardiner Street Employment Exchanges recently and, having proved satisfactory, arrangements are now in hand for the introduction of the system in the remaining exchanges where the computerised UA/UB payments system is in operation.

Paragraph 5 : Irregularities in Employment Exchanges.

The Department of Social Welfare fully accepts the Committee’s view on the need for constant vigilance to detect fraud and the operation of adequate checking procedures in that respect.

The Department has carried out a comprehensive analysis of its Unemployment Benefit and Unemployment Assistance payment systems and controls. Arising from this study a number of procedural and other changes were made and the Department is confident that these, together with enhanced training of key personnel and intensified audit functions, will significantly reduce both the opportunity for, and risk of, defalcations at local offices.

Paragraph 6: Arrears of Social Insurance Contributions.

The Department of Social Welfare appreciates the Committee’s point about the need to clear these pre-1979 cases. Recovery of arrears by legal action is an extremely slow process but some progress is being made and the number of cases outstanding is now 237, comprising 148 Social Insurance and 89 wet time cases. However, the total number of people involved is 164 as there are overlaps in 73 cases.

The Department of Social Welfare states that it is difficult to say how much of the moneys outstanding will eventually be recovered. These cases are kept under regular review and reminders or instructions are issued to the Chief State Solicitor whose responsibility it is to pursue recovery of the debt. In the review of these cases the most important considerations are the capacity of the defendant to pay and the best tactics to effect recovery. Accordingly, in some cases it will be prudent to defer action by the Sheriff or to defer an application for an Instalment Order until a defendant’s circumstances are good enough to meet a Decree or meet the Instalment Order. Committal proceedings are considered only where a defendant is deemed a good mark for the debt. The Courts are most unlikely to give a Decree or make an Order against a defendant with little or no means.

Paragraph 7: Overpayments of Social Insurance and Social Assistance.

The matter of fraud in the social welfare system was again discussed by the Committee in the context of its examination of the 1987 Accounts and the Accounting Officer for the Department of Social Welfare gave a full explanation of the measures - Special Investigation Unit, Joint Investigation Unit, Jobsearch, External Control Unit, Medical Referee System, Consultants’ Report and resulting action on the security of the payments system, etc. - which that Department employs to curtail the level of fraud in the system.

The Department of Social Welfare accepts the Committee’s recommendation on the introduction of a procedure which would allow for the writingoff of the non-recoverable amounts under these schemes and is examining ways of achieving this.

POST-PRIMARY EDUCATION

Paragraph 9: Accounts of County Kilkenny VEC.

The Minister shares the Committee’s concerns about the lack of adequate control procedures referred to in this paragraph, and, in particular, about the delay in coming to terms with these problems.

The Minister has been informed by the Department of Education that the County Kilkenny deficit was eliminated by the end of 1988. No sanction for overdraft has issued since December, 1987. After meetings and discussions with the Chief Executive Officer the Department issued sanction retrospectively for the four teacher appointments in mid-1989. The Department is engaged in ongoing correspondence with the Chief Executive Officer of the VEC about several issues including budget control procedures.

The work of the Consultative Council was put in abeyance in 1987 mainly because of the need to accord priority to legislation for rationalisation of VEC structures on foot of a Government decision. The deliberations of the Council gave impetus, however, to revised budgetary and control procedures which have contributed to an improvement in the general position.

Paragraph 10: Expenditure incurred prior to a decision not to proceed with the building of a proposed second level school.

The Minister has been assured by the Department of Education that its Planning Section tries to ensure that it has available to it up-to-date and comprehensive statistical data prior to taking decisions on the establishment of new “green field” post-primary schools. A review of policy for the provision of new and replacement accommodation for primary and second-level schools completed in March, 1988, by officials of the Departments of Education and Finance re-affirmed that in major urban areas, where there are no defined catchment areas, consideration of an application from any school or area for new, extended or improved accommodation will have regard to the accommodation situation (actual and projected) within reasonable access of the particular school or area.

Immediately following the decision not to proceed with this school building project, the necessary arrangements were undertaken for the disposal of the property and the Department of Education intend to have these completed as expeditiously as possible with a view to recouping the cost.

Paragraph 11: Collection of examination fees.

The Minister has been informed by the Department of Education that it is satisfied that the system currently in operation is the most appropriate in present circumstances. The initial phase of the computerisation of the examination process has been satisfactorily completed and development is continuing. The Department has undertaken to examine the ways in which this computerisation will allow additional checks to be made which will meet the wishes of the Committee.

Paragraph 12: Future of Scoil Ard Mhuire, Oberstown, Co. Dublin.

The Minister has been pressing for the disposal of this property and the Department of Education has been taking steps to do so.

Paragraph 13: Aid from the European Social Fund in respect of courses run by VECs.

The Minister shares the Committee’s concern about the loss of aid while acknowledging the difficulties faced by the Department of Education in this regard. He has been assured by the Department that all reasonable steps are being taken, within the resources available, to avoid recurrence of the problems which resulted in a loss of aid.

Paragraph 14: Mechanism used by the Department of Education to overcome shortfall in receipts from the European Social Fund.

The Minister fully accepts that the procedures adopted in this case were incorrect in that they breached the provisions of the relevant legislation and this was acknowledged at the meeting of the Committee at which these matters were discussed by the Finance representative who expressed his surprise at the mechanism adopted by the Department of Education to deal with the problems. The Accounting Officer for the Education Votes also acknowledged to the Committee that the procedures were incorrect and explained that steps had been taken to ensure in future the procedures followed would comply with the legislation.

The Minister, however, does not accept that a practice of adopting ad hoc administrative solutions, which are in breach of legislation, has been allowed to creep in. As suggested by the Committee, the Department of Finance has reminded all Departments that in carrying out their financial operations strict adherence to the terms of the relevant legislation is a fundamental principle to be observed at all times.

Paragraph 15: Accumulated deficits in Comprehensive and Community Schools.

The Minister has been assured by the Department of Education that following the introduction of revised procedures with effect from 1 January, 1989, effective budgeting, monitoring and control procedures are now in operation.

The Department of Education was able to satisfy itself that all deficits at the end of 1986 represented legitimate expenditure which could be charged to the vote.

INDUSTRY, TRADE, COMMERCE AND TOURISM

Paragraph 16: Special Loan arrangement under the Export Credit Insurance Scheme.

The Minister agrees with the Committee’s view that it will take many years to recover this debt. Since the Accounting Officer of the Department of Industry and Commerce reported to the Committee further payments totalling US$105,000 have been received on foot of the promissory note valued US$1,197,314 issued in March, 1988, and all payments are up to date. The promissory note, however, covers only part of the outstanding debt. The balance of US$2.8 million has not been officially acknowledged by the Central Bank of Nigeria which announced in December, 1988, that no further promissory notes would be issued for this category of debt. Efforts to recover the US$2.8 million will take the form of direct discussions with the buyer.

Paragraph 17: Annual Accounts of transactions under the Export Credit Insurance Scheme.

The Minister shares the concern of the Committee at the late submission of the accounts. The Department of Industry and Commerce has informed the Minister that the accounts for 1982-1986 which were audited by the C&AG have now been laid before the Houses of the Oireachtas and the 1987 accounts have been submitted to the C&AG. The 1988 accounts are being finalised in consultation with the C&AG and will be submitted for formal audit in the near future.

Paragraph 19 : Net losses arising on the operation of the Export Credit Insurance Scheme.

The Minister is concerned at the large deficit which has arisen under the Scheme, but has been informed by the Department of Industry and Commerce that the deficit has decreased from £12.76 million at the end of 1987 to an estimated £8.9 million at the end of 1989. This reduction was mainly due to a rise in premium income earned and a number of recoveries of outstanding debts (e.g. China, Iraq, Nigeria and Argentina).

The new agreement with the Insurance Corporation of Ireland (ICI), which facilitates greater liaison between it and the Department of Industry and Commerce, is now in operation. As regards the introduction of new accounting procedures, ICI will shortly be submitting draft accounts prepared on an accruals basis in accordance with normal accounting conventions as applied to insurance.

ISSUES UNDER THE IRISH SHIPPING LTD. ACTS. 1947-84

Paragraph 21 : Repayment to the Central Fund.

The Minister wishes to assure the Committee that the points made by them in relation to seeking the authority of Dail Eireann as soon as possible are noted. The authority of the Dail to have the amounts which were issued under the Irish Shipping Limited Acts recouped to the Central Fund was sought by means of a provision of £94,084,000 in the Estimates (Marine Vote) for 1989 and this amount has been paid to the Central Fund.

OFFICE OF THE MINISTER FOR FINANCE

Paragraph 22 : Waiving of repayment of principal and interest on special advances issued to the Industrial Credit Corporation (ICC).

The latest estimate of the amount that will have to be written off is £4.3 million and the Minister notes that the Committee would like to be kept informed of the total write-off when this finally becomes known.

COMMUNICATIONS

Paragraph 23 : Proposed construction of airport at Letterkenny.

The Minister has noted the point made by the Committee about the lack of coordination between Departments insofar as this project was concerned. He has been advised by the Department of Tourism and Transport that the problems referred to by the Committee were closely associated with the changes of Government which occurred at the time and the attendant uncertainty which these changes created about the future of the project. While acknowledging the unusual circumstances the Minister considers that in such cases of uncertainty it is incumbent on Departments and Ministers to seek early clarification from the Government.

In relation to the feasibility study mentioned by the Committee, the Minister has been advised that the consultant’s report of the study is being examined at present by the Department of Tourism and Transport.

Paragraph 24 : Visit to Connaught (Horan) International Airport, Knock.

The Minister has been advised by the Department of Tourism and Transport that up to February, 1989, the Minister for Tourism and Transport was, legally, the sole provider of air traffic control (ATC) services in the State. Thus, the need for staff for ATC purposes at Connaught Airport could be met only by assignment of such staff from the Department. In February, 1989, an Order entitled the Air Navigation (Personnel Licensing) Order 1988 (SI No 342 of 1988) came into operation. The provisions of that Order permit, inter alia, the licensing by the Department (subject to the requisite standards being met) of air traffic control staff who have been recruited by agencies in the State other than the Department. The Order is designed to enable regional airports, with requirements for ATC facilities, to directly employ appropriately licensed staff.

Paragraph 25 : Collection of TV Licence Fees.

The Minister agrees with the Committee that the progress made in reducing the level of evasion in recent years is welcome and wishes to inform the Committee that it is now estimated that evasion had fallen to around 15% by March, 1989. The Department of Communications has drawn attention to the increases in fines (to £500 and £1,000) for licence evasion, with effect from 1 January, 1989, under the Broadcasting and Wireless Telegraphy Act, 1988, which are expected to reduce further the level of evasion. As regards the fees paid to An Post in respect of collection, the Department has pointed out that while under the Postal and Telecommunications Services Act, 1983, the amounts are decided by An Post with the consent of the Minister for Communications, in practice these are agreed annually between An Post and RTE and sanctioned by the Minister for Communications.

FISHERIES

Paragraph 26 : Leases for sites in Fishery Harbour Centres.

The Minister has been informed by the Department of the Marine that as regards the three cases where draft leases were awaiting signature, difficulties have been experienced in securing the return of these three leases. The present position is that legal proceedings have commenced in one case, proceedings in another case will be put in train unless the signed lease is returned shortly and in the third case a mapping difficulty is delaying finalisation of the matter.

As regards the two cases where queries had to be sorted out, the resolution of these queries proved more difficult than expected. Negotiations have failed to secure agreement on rents and the present position is that the arbitration procedure will be invoked to finalise these leases.

The Department of the Marine have confirmed that no new cases of advance access to sites are being allowed without conclusion of a lease or, at minimum, some form of written agreement setting out the basic liabilities of the lessee.

DEFENCE

Paragraph 27 : Irregularities in the payments of wages to civilian employees.

The Minister has been informed by the Department of Defence that the Court of Inquiry found that while the system of spot checks in use at the time was adequate for the general supervision of the pay account, it was inadequate for the purpose of detecting inaccuracies in the reporting of absences. The Court noted that revised instructions had been issued in regard to the pay administration system and that changes had been effected at unit level but did not recommend any further change. The Court recommended that no officer should be held liable for the overpayments. The Department of Defence is satisfied that the measures introduced since the irregularities came to light should prevent a recurrence.

It was necessary to write off as irrecoverable £5,557 in respect of amounts outstanding from ex-employees not in receipt of pensions and from deceased employees. In addition, following representations on behalf of the employees concerned, certain adjustments to the total amount due were made and this reduced the amount to be recovered by about £17,000. Recovery of amounts due (now about £5,200) from existing staff and those in receipt of pensions is still proceeding.

AGRICULTURE

Paragraph 28 : Supply of ear tags for use in the disease eradication schemes.

The Minister has been informed by the Department of Agriculture and Food that, in view of the poor financial position of the manufacturer of the tags, it was decided that there was nothing to be gained from a legal action and that the company concerned subsequently went into liquidation. The owner of the factory premises, who was given beneficial ownership to a portion of the stock of tags acquired by the Department, initiated High Court proceedings against the Department to recover £15,882. The view of the Senior Counsel engaged on the case was that the prospect of a successful defence was not good. The Department acted on this advice and, with the approval of the Department of Finance, settled the case out of court for £10,000 including costs.

Paragraph 29 : Potential losses under Calved Heifer Scheme.

The Minister is advised by the Department of Agriculture and Food that, as recommended by the Committee, inspecting officers have been made aware of the financial implications of animals being incorrectly described by herd owners under the various headage schemes operated by that Department and have been instructed to ensure that all applications inspected reflect the composition of herds with absolute accuracy by reference to the precise requirements of each scheme. The Department is satisfied that inspecting officers are now exercising due vigilance.

In addition, a computerised system is being developed at present which will, when implemented, facilitate cross-checks between each application under each cattle headage scheme, thus further reducing the potential for overpayments.

Paragraph 30 : Exchange Risk Guarantee Scheme on loans for agricultural purposes.

The Minister notes the view of the Committee that the treatment of interest paid by the Agricultural Credit Corporation (ACC) on the borrowers’ exchange risk contribution amounted to a hidden subsidy and that it should have been described as such. The agreed rate of interest attempted to compensate ACC for the costs of administering the scheme and was in consideration of the lower margin than normal allowed to the Corporation on the borrowed funds. The special rate of interest was not repeated when the scheme was replaced in 1985 by a common scheme covering the banks and ACC.

Paragraph 31 : Arrears of Land Annuities.

The Minister shares the Committee’s concern about the level of these arrears. He has been advised by the Department of Agriculture and Food that while the rate of increase has declined, the overall total at July 1989 was £5.65 million. The following steps have been taken with a view to reducing the arrears as soon as possible:

(i)68,300 annuities, representing 6% of the total outstanding, have been written off because the cost of collection exceeded their annual value. As a result, greater resources can be allocated to pursuing collection on the remaining accounts;

(ii)Arrangements are being made to transfer commission warrants to the Sheriffs who act for the Revenue Commissioners. The new system will be put into operation as soon as the necessary arrangements have been made. Pending the transfer a final issue of warrants is being made to the County Registrars in an effort to reduce the arrears.

The Committee’s comments on the offsetting of arrears against improvement grants have been noted and the cost of such concessions will be clearly identified in future.

Paragraph 33 : Arrears of Veterinary Inspection Fees in the Pigmeat Sector.

The Minister has been advised by the Department of Agriculture and Food that all arrears of fees relating to the period since 1 April 1985 have now been collected except for £236,000 due from two firms in receivership. The question of securing the arrears in these two cases is being pursued with the receivers.

As regards the pre-April 1985 arrears, the Minister has been informed that the necessary regulations to impose the 15p fee will be finalised by 1 May, 1990.

Paragraph 34 : Absence of proper stock records of beef held in intervention.

The Minister has been informed by the Department of Agriculture and Food that the physical volume of sales in 1985 and 1986, coupled with staff shortages, led to arrears in computerising available data. In addition, the arrangements for some sales were very complex, making it difficult to arrive at a position where work was up to date. The records indicate, however, that there have been no significant overpayments over the years. Furthermore, the Department tries to ensure that there are always balances due to the stores from which any earlier overpayment may be deducted.

The current position is that all charges relating to payments made in 1986 have been verified and that the majority of 1987 payments have also been cleared. In addition, all sales transactions up to 30 September, 1988, have been entered on the computer record. While the difficulties in keeping work records up to date still persist, a sustained effort is being made by the Department, through the redeployment of staff, to get the verification of payments up to date as soon as possible.

Paragraph 35 : Refund to the EEC of grants paid under the Farm Modernisation Scheme (FMS).

The Minister shares the dissatisfaction of the Committee that over £1 million has been lost to the Exchequer. However, he accepts that the Department of Agriculture and Food acted in good faith and did not anticipate a disallowance from the EEC. The Minister considers that nothing further can be done about the matter at this stage save to record that in interpreting important EEC Regulations and Directives and the manner in which they are applied Departments should seek written guidance rather than rely on informal contacts with the EEC Commission.

AGRICULTURE AND CENTRAL STATISTICS OFFICE

Paragraph 36 : Reconciliation of total ewe numbers.

The Minister is satisfied that the revised CSO estimates for ewe numbers for 1988 and earlier years are broadly consistent with the numbers for ewe premiums in those years. The Minister is informed that the difference between the CSO figures and Department of Agriculture figures only became significant from 1985/86 onwards but that retrospective revisions back to 1981 were undertaken in order to avoid having discontinuities in the annual statistical estimates for sheep numbers.

OFFICE OF THE MINISTER FOR JUSTICE

Paragraph 37 : Expenditure in excess of amounts authorised to be issued from the Exchequer.

The Committee has acknowledged the exceptional circumstances in this case. Nevertheless, the Minister fully accepts that the provisions of the Central Fund (Permanent Provisions) Act, 1965, must be complied with and he has reminded Departments of this.

OFFICE OF THE MINISTER FOR JUSTICE AND GARDA SIOCHANA

Paragraph 38 : Weaknesses in internal control - payment on foot of pro-forma invoices.

The Minister shares the concern of the Committee at this lack of internal control in processing claims for payment. Problems arose principally because pro-forma invoices were accepted in some circumstances as a basis for payment. However, the Minister understands that the staff concerned have since been instructed to make payment on foot of original invoices only.

COURTS

Paragraph 39 : Failure to effect payment of matured liability.

The Minister agrees with the Committee that matured liabilities must be discharged before the end of the financial year. The Department of Justice also accepts this and has assured the Minister that the staff involved are fully aware of the importance of discharging matured liabilities in the appropriate year.

LAND REGISTRY AND REGISTRY OF DEEDS

Paragraph 40 : Staffing difficulties and delays.

The Minister shares the Committee’s concern about the long delays in the Registries. The Minister for Justice has already announced that he is carrying out an urgent review of the Land Registry and the Registry of Deeds with a view to bringing about substantial improvements in the level of services provided by the Registries.

OFFICE OF THE COMPTROLLER AND AUDITOR GENERAL

Paragraph 41 : Staffing.

As indicated in the Minister’s Minute of 27 July, 1989, efforts to fill posts in the Comptroller and Auditor General’s Office by redeployment of suitable staff from elsewhere in the public service were not successful.

However, certain arrangements on staffing have been agreed with the C&AG. These include the filling of some posts by internal promotion, the introduction of a new method of recruitment and training more relevant to the needs of the C & AG’s Office and the engagement of junior staff from auditing firms on short-term contracts to work on backlogs of unaudited non-voted accounts. It was also agreed that staffing would be kept at a level adequate to satisfactorily carry out the functions of the Office. A competition for recruitment under the new system was held recently and a number of appointments to a new trainee auditor grade have already been made. These measures should go a long way towards resolving the staffing problems of the Office.

The Department of Finance’s review of the role of the C & AG is now at a very advanced stage and proposals are now with Minister for examination and decision.

FORESTRY

Paragraph 42 : Financial Involvement of the State in Chipboard Products Limited (in receivership and in liquidation).

The Minister is advised that since the Committee examined the 1985 Accounts discussions on the recovery of moneys owing to the State have been held with all the parties directly involved in the receivership. However, no real progress has been possible pending the outcome of a Supreme Court appeal arising from a High Court ruling in another case. The High Court ruled that the accrual of interest on moneys due to the secured creditors ceases once the debtor company is put into insolvent liquidation.

Paragraph 43 : Monies due from the sale of timber.

The Committee asked to be kept informed of developments in the first and third cases referred to in their Report. As regards the first case, the Department of Energy has indicated that proceedings have been instituted against the Department and that it is, therefore, unable to comment at present. As regards the third case, the High Court ruled that the sum of £144,747 was not owed by the company.

ENERGY

Paragraph 44 : Avoca Mines Limited.

The Minister for Finance, in consultation with the Minister for Industry and Commerce (as the matter is essentially one of company law), is considering the Committee’s suggestions regarding the possible appointment of an official receiver or, in certain circumstances, the nomination of an officer of an appropriate Department to act as receiver in the case of a receivership initiated by a Minister.

It might be noted that while the receivership of Avoca Mines Limited has not yet been formally terminated, no fees have been paid since the Committee last discussed the matter and the receiver has been informed that no further State funds will be made available to him.

Paragraph 45 : Bord Gais Eireann - Acquisition of Dublin Gas Company.

In 1987 Bord Gais Eireann (BGE) acquired the assets and business of the Dublin Gas Company but not any shares in the company.

As the Committee accepts, the application of profits other than for the benefit of the Exchequer is fully in accordance with the terms of Section 11(2) of the Gas Act, 1976. With regard to the specific case, it might be noted that the details of profits appropriated for that company were given in the relevant reports of BGE, which were laid before both Houses of the Oireachtas.

STATIONERY OFFICE

Paragraph 46 : - Deficiencies in paper stocks.

The Stationery Office is now part of the Government Supplies Agency administered by the Office of Public Works who have informed the Minister that the stocktakes at the end of each December in the years 1981 to 1984 revealed no stock losses of any significance and that immediate action was taken in January 1986 when initial results of the December 1985 stocktake revealed serious discrepancies. The Minister is also advised that there is no evidence of any paper stock having been stolen or misappropriated since stocks were transferred to Stateowned warehouses in July 1986.

The Minister has been assured by the Office of Public Works that new and effective measures have been introduced to oversee the implementation of stock control procedures in that Agency.

PUBLIC WORKS AND BUILDINGS

Paragraph 47 : Costs associated with the purchase and renovation of a building at No 5 Kildare Street (Dublin).

The Minister shares the Committee’s grave concern at the unsatisfactory sequence of events in this case. He has been assured by the Office of Public Works that this was a unique occurrence. A calculated risk was taken by the Commissioners that they would be able to acquire at an early date the fee simple interest in this property. The acquisition, in the event, turned out to be a long drawn out affair. This, allied to a reluctance to spend money on a building, the future of which was uncertain, resulted in a loss of public money. The Commissioners have reviewed their procedures to ensure that any vacant property is regularly inspected. Measures and procedures are now in place in the Office of Public Works to highlight vacant properties and to prevent any recurrences similar to this case.

The Minister is advised that the settlement made with the owners of the property was in accordance with the legal and professional advice tendered to the Office of Public Works by Senior Counsel and by consultants in the property and construction fields. There was no reference by any party during the negotiations to an inflation of the compensation element so as to minimise tax. The Minister is unable to comment on the tax liability of the property owner, in respect of the settlement, as this matter is confidential to the Revenue Commissioners and the property owner.

The Office of Public Works has also stated that the purchase price of the three years’ residue of the lease of the property, agreed between CIE and the Commissioners, was regarded as reasonable, having regard to the fact that the annual rent applying to the unexpired period of the lease was very low.

The purchase price of CIE’s leasehold interest reflected the condition of the property at the time of purchase. In purchasing the leasehold interest the Office of Public Works assumed all legal responsibilities under the lease and the subsequent claim for dilapidation was solely a matter for the Office of Public Works as tenants under the lease.

The Minister is advised that the Office of Public Works is pressing ahead with a reorganisation of their property activities to achieve a more streamlined operation and greater control.

The Minister is advised that the adaptation works to the building have been completed and that the building is ready for use by the National Library.

Paragraph 48 : Leasing of accommodation in Cork.

The Minister has been informed by the Office of Public Works that it has no vacant accommodation in Cork city at present. Staff have been transferred to the one vacant floor of the building at South Mall and the accommodation vacated by the transfer has been surrendered to the lessors.

The Office of Public Works has stated that every review of rent must be determined on the basis of prevailing market conditions. Market conditions in August 1982 justified a revised total annual rent of £126,000 for the leased accommodation at the South Mall. The subsequent depression in the property market in Cork city was not a factor which could have been foreseen. The Commissioners were, and remain, satisfied that the agreed rent was reasonable and acceptable at the time. It is not possible to say with certainty why the lessors did not seek a further rent review, to which they were entitled, in August 1987. It may be assumed that, as suggested by the Committee, market conditions led them to conclude that an increase in rent was not obtainable.

The Minister is further advised that the Office of Public Works did not choose to surrender leases with lower rents than that payable on the South Mall building. These leases were due to expire and the Commissioners were in a position to effect surrender. Despite their efforts, they were unable to surrender or otherwise dispose of the lease on the South Mall building.

Paragraph 49 : Erection of new Government Offices in Leeson Lane, Dublin.

The Minister is advised by the Office of Public Works that under the new procedures now in operation in relation to the planning and execution of capital projects a delay on the part of any member of a project team would very quickly become apparent. These procedures were examined by consultants appointed by the Committee who expressed satisfaction with them.

The Office of Public Works have also stated that a sole practitioner operating a consultancy business, as was the case in this instance, is not now awarded a major commission.

Paragraph 50 : Claims against the Insurance Corporation of Ireland on foot of insurance bonds.

The Minister shares the Committee’s concern that claims by an Office of State against the Insurance Corporation of Ireland could not have been mutually resolved. In these instances, however, the Commissioners of Public Works were left with no option other than resort to the Courts in pursuance of their claims.

The Minister is advised that the legal proceedings, which are being handled by the Chief State Solicitor’s Office, are proving very lengthy and that it may be some time before the Committee can be informed of the outcome of the cases.

Paragraph 51 : Dry rot eradication and other improvement works at six houses in Merrion Square, Dublin.

The Minister is advised that, save in exceptional circumstances, public tendering is, and has always been, the practice of the Office of Public Works. In the case under review it is conceded that there was a deviation from normal practice on the occasions of the extensions to this contract. All officers have since been reminded that they must comply strictly with Government contract procedures.

The Minister is also advised that three of the six houses under review were sold in 1988, that two of the remaining houses have been vacated and are being considered for re-allocation or sale and that the remaining house which was leased is now owned and will be considered for sale in 1990 as part of the decentralisation programme.

As from 1 January, 1989, contract maintenance work, previously carried out on behalf of Departments and Offices by the Office of Public Works, became the responsibility of Departments and Offices themselves. Under these arrangements the Commissioners are required to prepare regular maintenance schedules for Government Departments and Offices.

Paragraph 52 : Deferral to 1987 of matured liability.

The Minister fully subscribes to the Committee’s insistence that matured liabilities be discharged before the end of each financial year. The Office of Public Works also accepts this and has assured the Minister that correct procedures are now being followed.

REVENUE COMMISSIONERS

Paragraph 53 : Collection of Outstanding Taxes.

The latest figures provided by the Revenue Commissioners for amounts collected on foot of Section 485 certificates are as follows :

At 31 December, 1989, the number of certificates still in the hands of the Sheriffs was 104,965 and the face value of these was £194 million; the corresponding figures at 31 December, 1988 were 95,201 and £315 million.

Normal enforcement operations were significantly disrupted in 1988 because of the Section 72 (Finance Act, 1988) Incentive Scheme (otherwise referred to as the Tax Amnesty). The Collector-General’s Office and the Sheriffs had to cope with the overwhelming response to the initiative and all available resources were absorbed in efforts to maximise its positive impact. The issue of further certificates to the Sheriffs was suspended in the later stages and immediate aftermath of the scheme while the massive payment accounting backlog was being overcome. It became impossible to operate existing arrangements whereby the Sheriffs were promptly notified of any payments received in the Collector-General’s Office in respect of items which had been referred to them for enforcement and in these circumstances it became necessary to recall for checking all certificates which had been referred to the Sheriffs up to the end of the Amnesty period. This task was completed in the first quarter of 1989.

A substantial amount of arrears remained on the records despite the success of the Amnesty and a joint review has been initiated between the Collector-General and the Inspectors of Taxes throughout the country in order to clarify the status of the arrears. The objectives of the review are to finalise the amounts of the liability where necessary, to determine the most appropriate form of enforcement for collectable arrears and to confirm any circumstances which would suggest that the arrear may be uncollectable (e.g. business defunct, taxpayer’s whereabouts unknown, etc.)

All arrears found to be suitable for enforcement will be referred to the appropriate agency without delay. However, because of the review programme referred to above, the volume of arrears cases referred to Sheriffs in 1989 was not as high as in previous years.

Paragraph 54 : Irregularities involving the fraudulent claiming of VAT repayments.

The Minister is advised by the Revenue Commissioners that, in addition to the computerisation of the repayments referred to in the Report of the Committee, the VAT system is now subject to monitoring by the Revenue Internal Audit Section which keeps the procedures and controls under review.

A new Internal Security Unit, staffed by two senior members of the Taxes Inspectorate, was established in the Chief Inspector of Taxes’ Office in May, 1988. The function of the unit is to investigate and report on irregularities involving staff members. The controls are regularly examined by this unit and there is no evidence of any further irregularities by staff members.

Paragraph 55 : Control procedures for collection of Customs Duties and VAT.

The Minister is advised that control procedures are now fully operational. Reconciliation of import entries with cargo manifests is up to date and steps have been taken locally to ensure that arrears in this area are avoided in the future.

The present position regarding the computerisation project is that, following a detailed planning study, a Business Case was submitted to the Department of Finance in April, 1989, and this proposal was recently approved. The development of the necessary computer systems is underway and proposals for the operation of a network service have been sought from interested parties. The target date for implementation is January, 1991.

Paragraph 56 : Irregularities under Retail Export Scheme.

The Minister understands that the trader in question, at the time of the irregularity, had opted not to charge VAT at the point of sale and was therefore dependent on Customs endorsement on invoices that the goods had been exported to obtain VAT relief on the sales. This situation lay at the root of the irregularity in this case. Following the investigation, the trader ceased operating sales to tourists on a VAT-free basis and commenced charging VAT, taking advantage of the role of VAT-refunding agencies located at the principal export points. All retailers participating in the VAT Retail Export Scheme are now believed to be availing of the option of charging VAT at the point of sale, thus eliminating their dependence on the return of Customs-endorsed documents by their customers. Consequently, the incentive for retailers to seek to have export sales invoices presented irregularly to Customs for endorsement has been substantially removed.

The VAT liability of the company in question for the year 1986 (the only year not yet finalised) is still under discussion with the Inspector of Taxes.

Paragraph 57 : Irregularity under the PAYE System.

The Minister wishes to assure the Committee that the regulations concerning such cases state that the exposure and prosecution of persons wilfully defaulting or attempting to default with public moneys or property is essential in the public interest as a deterrent against the occurrence of further similar irregularities.

When default by an official is discovered, the facts are immediately reported to the Department of Finance by a responsible representative of the Department concerned. The Minister for Finance, on consideration of the facts furnished, will direct at once whether the case is one to be reported to the Chief State Solicitor. Where the Minister decides that this course should be taken, the facts are to be immediately conveyed by the Department concerned to the Chief State Solicitor with a request that he may direct the arrest and prosecution of a defaulter if he considers that there is sufficient evidence to support a criminal charge.

With regard to the specific cases referred to, the Revenue Commissioners have stated that while it is not possible without prohibitively costly checking to ensure absolute security, supervisory staff are constantly reminded of the need for vigilance and of the importance of the regular and systematic random checking of computer input in a public and open manner.

As mentioned above in respect of Paragraph 54, an Internal Security Unit was established in May, 1988, to investigate irregularities involving staff members. In exercising its functions, the Unit is at all times conscious that prosecutions may follow and if, in attempting to uncover the evidence required for a disciplinary hearing, facts emerge which indicate a crime may have been committed, the matter, after discussion with the Department of Finance, is referred for possible criminal proceedings.

Paragraph 58 : Fraudulent and attempted fraudulent encashment of cheques.

The Minister fully shares the Committee’s concern over this case and agrees that the situation will have to be closely monitored in future. He is advised by the Revenue Commissioners that Garda Fraud Squad investigations in the matter are continuing. The Revenue Commissioners provided the following up-date of the information supplied to the Committee:

In category (1), the latest position is that nine extra cases have been added since 31 August, 1988. Three cases were transferred from category (3) when replacement cheques were received from the taxpayers. Four cases were transferred from category (4) when it was confirmed that the missing cheques had never been cashed and replacement cheques were received from the taxpayers. Two extra cases were discovered by the Garda Fraud Squad during the course of their ongoing investigations but in both these cases replacement cheques were received from the taxpayers and the cases, therefore, are included in the “no loss to Revenue” category.

In category (3), the number of cases has increased from 33 to 35. Three cases were transferred to category (1) as replacement cheques had been received. Five new cases were discovered amounting to £5,922. All of these cheques were stolen between May, 1986 and August, 1987 and came to light in the course of normal collection activity. The latest position, therefore, is that in 21 of the above cases legal proceedings are being prepared against the banks for amounts totalling £170,000, one case concerning a Money Order is being pursued with An Post and in the other 13 cases the Collector-General is in correspondence with the taxpayers.

As regards category (4), as indicated above, four cases were transferred to category (1). There are two cases remaining in category (4) and these cases are being followed up with the taxpayers.

The adjourned case referred to in the Committee’s Report finally came to trial in the Circuit Criminal Court on 3 July, 1989. Having heard the evidence for two days the jury failed to agree on a verdict and a retrial will now take place.

With regard to internal safeguards to ensure a lodgement of cheques without undue delay, the Revenue Commissioners say that the current procedures for dealing with payments are:-

-Payments over £20,000 are processed on the date of receipt in all cases. Any evident inadequacies in the cheque or accompanying documentation are immediately resolved.

-As many as possible of the straightforward payments less than £20,000 are processed on the date of receipt with the remainder the next day. Priority is given to larger amounts.

-Payments with potential problems are examined immediately to identify those which can be processed as straightforward cases.

-Payments not capable of correction and straightforward processing are transmitted to the Holding Account Section immediately.

-In the Holding Account Section, payments are examined immediately to identify whether the problem is capable of being resolved within three working days.

-Payments with problems which are not capable of resolution within the time limit are lodged in the Holding Account at once. Accounting instructions are prepared within ten days where possible for items lodged in the Holding Account.

OFFICE OF THE MINISTER FOR FINANCE AND AGRICULTURE

Paragraph 59 : Redeployment of staff on abolition of the Farm Classification Office.

The Minister appreciates and shares the Committee’s concern that public service staff who become surplus to the requirements of their existing employment should be assigned to other suitable work as quickly as circumstances permit. This, indeed, has been the general policy in relation to the extensive programme of redeployment of public servants successfully carried out in recent years. However, in arranging such redeployment regard must be had to the statutory conditions of employment under which such staff were recruited and the requirements of the Civil Service Commissioners Acts. Potential legal and/or industrial relations problems which, if not fully addressed and resolved, could result in disruption of work in the areas to which staff might be redeployed or costly legal processes, thereby negating any benefits to be derived from the redeployment. Bearing these factors in mind, the Minister agrees with the Committee’s recommendation which, as indicated, corresponds with his general policy in this matter.

HEALTH

Paragraph 60 : Advances to An Bord Altranais.

The Minister was informed by the Department of Health that their Legal Adviser was again consulted and that he had confirmed that the payment of this money (£300,000) to the Board was in order. His advice was that as the moneys were provided prior to the implementation of the 1985 Nurses Act (Commencement Order was dated 1 September 1986), the payment was made correctly under Section 4(2) of the Nurses Act, 1961, which was still extant at the time.

However, Section 4(2) of the 1961 Act also stipulates that the payments “shall be made out of moneys provided by the Oireachtas”. This means that payments must be made out of voted moneys. The Department of Finance refused to sanction the payments from the Vote. Following this the payments were made from a suspense account. This latter course did not accord with Section 4(2) of the Act, and, in fact, there was no proper basis for the payments.

The Department of Health have stated that the Board is still in financial difficulties largely because of factors such as a reduction in the number of students entering training, a reduction in the number of practising nurses, an increase in numbers of trained nurses emigrating and the cost of the new Fitness to Practise procedures. These have ruled out any real hope of an immediate repayment of the remaining £200,000. However, the Department of Health has recently reached agreement with the Board to repay the £200,000 in amounts of £40,000 per annum over a five year period beginning in June, 1990.

Paragraph 61 : Computerisation in the Health Sector.

The Minister shares the Committee’s concern that a significant computerisation programme such as that required by the Health sector should be preceded by a clear statement of objectives and a comprehensive plan of action. Planning for computerisation in the health sector took place in the early 1980s in accordance with the findings of the Project and Study Groups which were set up under the aegis of the Review Body on the Organisation of Computerisation in the Government Services.

In line with improvements which have taken place in planning the use of information technology generally, similar improvements have been made in the computerisation programme for the health service. The Minister for Finance is satisfied that significantly improved procedures for both the planning and supervision of expenditure on computer-related projects are now in place. Since 1989 various items of computer related expenditure (including hardware, software and consultancy) have been drawn together within a single Subhead of the Health estimate. This, combined with adherence to the detailed “Guidelines for Planning, Analysis, Selection and Implementation of Information Technology” which were issued by the Department of Health in June, 1989, should go a long way towards addressing the issues raised by the Committee.

(1)Committee of Public Accounts

Special Report on The Future Role of the Comptroller and Auditor General and the Committee of Public Accounts P. L. 5645