Committee Reports::Special Report - Bovine Tuberculosis Eradication::07 June, 1994::Report




1. Misappropriation of Stores

The Minister for Finance fully concurs with the views expressed by the Committee regarding the misappropriation of military stocks. Irregularities of this sort could only be detected when the records of one unit were cross-checked against those of other units. At the time of these thefts such a check had not been included in the procedures of inspection teams of the Quartermaster - General’s Branch. Since 1988 such cross-checks have been carried out by inspection teams. The importance of the depth and scope of inspections has been stressed at conferences of General Officers Commanding Commands and of Command Quartermasters. In addition, the Department of Defence has confirmed that the security aspect of Defence Force stocks is always kept under special review.


2. Bovine Tuberculosis and Brucellosis Eradication

The Minister has been advised that, during 1992, the Public Accounts Committee held a comprehensive special inquiry into the Bovine TB Eradication Scheme and that all ERAD matters were examined in depth by the Committee. The independent cost benefit analysis undertaken by Professor Sheehy on the effectiveness of the four year ERAD programme was covered in this inquiry. The Sheehy Report concluded that the Scheme was cost effective, particularly in terms of access to export markets. The Minister understands that the Report of the special inquiry has not yet been published.

With regard to the current position on Bovine TB, the Minister has been informed that over 97% of 172,000 herds and over 99% of 7 million animals in the national herd are free from the disease. It is the normal pattern in the elimination of any infectious disease that the elimination of the residual level poses particular difficulties. Notwithstanding the residual level, Ireland, in common with the UK, complies fully with EC Health trading requirements.

The Minister has also been advised that Brucellosis levels in this country are very low, reducing to just 150 herd breakdowns in 1991. However, there was an increased number of outbreaks in 1992, a number of which occurred in counties which had been clear. These outbreaks have been linked to the activities of certain unscrupulous dealers trading in infected animals, who found a ready market because of the anxiety of some herdowners to quickly build up animal numbers in the context of seeking to maximise their CAP quota.

The 1993 programme contains a number of specific strategies designed to arrest and then reverse the number of outbreaks. As in 1992, the round of brucellosis testing will comprise bulk milk ring testing of dairy herds and blood testing of non dairy herds. All blood testing will be done in conjunction with TB testing.

Also, a major awareness strategy has been mounted, designed to encourage herdowners to purchase from reliable sources only. The marts have arranged a number of 60-day brucellosis tested sales. The grant schedule has been revamped in favour of the prudent herdowner who is careful as to sourcing of animals for the herd and in regard to general husbandry practices. Specific dealer herds will be subject to routine brucellosis testing at 60 day intervals and will be monitored rigorously on a continuous basis.

3. Purchase of Computer Hardware and Software

The Minister for Finance fully shares the concern of the Comptroller and Auditor General and the Committee that all Departments follow proper procedures in the purchase of information technology goods and services and, in particular, that such purchases should, to the greatest extent possible, be preceded by a competitive tendering process. The Minister is convinced that this is a prerequisite for ensuring that the best possible value for the taxpayers’ money is achieved. The Minister also wishes to state that specific Department of Finance sanction is always required for the purchase of information technology goods or services where, for technical reasons, it may not be possible to get competitive tenders. The Minister is also of the view that significant investments in information technology should only be undertaken in accordance with a formal information technology plan which has been previously approved by the Department of Finance Such plans now routinely set out the technical architecture most appropriate for each Department. The Minister welcomes the Committee’s reference to “open systems architecture” and fully supports the view that this approach offers the best means of minimising costs. These principles have now been laid down in the Administrative Budget Agreements which set out the terms under which Finance sanction has been delegated to most Departments to incur administrative expenditure including the purchase of computer systems and services.

The Department of Agriculture, Food and Forestry information technology plan was completed in 1991 and the first priority is the development of the Animal Movement Permit/Headage computerised project. It was initially intended to place a contract for a system with a commercial developer. However, after a procurement competition, the Department of Agriculture, Food and Forestry have concluded that none of the tendering firms had produced a workable solution. They proposed, therefore, to carry out the project as an in-house development. The Department of Finance has agreed to this proposal, subject to the Department of Agriculture, Food and Forestry (DAFF) demonstrating their capacity to carry out the project by bringing in the first (design) phase on time and to budget. This phase is now due for completion. Subject to validation that it has been successfully delivered, DAFF expect that the entire project will be in place in 3 to 5 years. This is intended to monitor and control strictly all bovine movement from one location to another and will include as an objective the cost effective incorporation of the existing and proposed systems.


4. Central Records System

The Minister concurs with the view of the Comptroller and Auditor General as stated in paragraph 57 of his report, that information in the Central Records System should be as complete and accurate as possible. The situation regarding the main deficiencies highlighted by the Comptroller and Auditor General is outlined in the following paragraphs.

5. Inadequacies in the data transmitted from Revenue

The Minister has been advised that this problem arises mainly from the failure of employers to supply full details of insured employees on the P35 return, in particular their correct RSI numbers. It has resulted in a file of contributions (referred to as the ’Emergency File’) which cannot be readily allocated because the identity of the contributors either cannot be established or is difficult to establish. Of the ’Emergency’ records received up to 1987/88, RSI numbers have been traced in approximately 135,000 cases. In the four years since then (ie 1988/89 to 1991/92 inclusive) almost 700,000 ’Emergency’ records have been received from Revenue. RSI numbers have been traced by the Department of Social Welfare in approximately 140,000 of these cases. This is achieved in various ways.

For the past number of years, it is the practice to write to employers for further details or, where addresses are available to write to the persons themselves. About 25% of cases are now resolved in this way i.e. about 25,000 to 30,000 per annum. Also a proportion of cases are resolved when the people involved claim benefit and furnish information which enables the contribution details to be traced on the Emergency File.

In 1992, special software was developed for the purpose of matching the Emergency File against the Central Records database. The Department of Social Welfare has indicated that initial runs using this software are encouraging. For example, an additional 11,000 cases were resolved from the 1989/90 data when run against about one third of the Central Records database. Approximately 43,000 cases had already been traced using the usual methods. The intention is that in future years the software will be run first before a mailshot issues. In this way postal charges will be kept to a minimum. It is also the intention that the software will be run on earlier years’ data as and when time and resources permit.

A new measure introduced in 1992 whereby RSI numbers are issued to young people before they are likely to start work i.e. at age 16, is expected to help considerably towards the elimination of the problem. From 1993, where a person’s RSI number is not available, the employer is required to supply certain other personal details not previously sought i.e. the person’s date of birth and mother’s maiden name. The Department of Social Welfare has indicated that the availability of such information should greatly enhance its ability to trace cases.

The Minister understands that in addition to the steps being taken in the Department of Social Welfare, new and more stringent checking of P35 forms has been introduced in the Office of the Revenue Commissioners. Only about 5% of P35s are being subjected to the new checking process at this stage but it is planned to increase the percentage in due course. Were it not for the measures outlined above, the number of records currently on the ’Emergency File’ would be substantially greater.

The question of reconciling the P35 details with the amounts of money paid over by employers is primarily a matter for the Revenue Commissioners. This is done by the Revenue Commissioners to the extent that it is cost effective. Any irregularities noted by the Department of Social Welfare arising from employer surveys, claim processing or other monitoring is reported to the Revenue Commissioners. The Minister is advised that procedures introduced for controlling the transfer of data by magnetic tape from Revenue are operating satisfactorily and there have been no incidents in the meantime similar to that referred to in the report.

6. Inadequacies in Recorded Information

With regard to the problem of duplicate RSI numbers, the Minister is informed that the Department of Social Welfare has been conducting a major exercise to remove as many duplicate records as possible from its files. Special software for matching names and other personal details and for merging identified matching records has been developed. The actual exercise itself, which commenced in April 1990, involved significant clerical effort as well as heavy computer processing. In addition to the cases automatically matched, approximately 115,000 near-match cases had to be examined clerically. A total of 35,000 questionnaires were issued in cases where there was insufficient information to decide whether or not the records were belonging to the same person. The Minister is informed that this exercise has now reached the point at which it is becoming unproductive and is coming to an end. Approximately 120,000 duplicate records have been eliminated altogether at this stage.

The more stringent checking which is now possible under the new computerised registration system is helping to prevent the creation of new duplicate records when people re-enter employment. In addition, the Revenue Commissioners have changed the PAYE system so that a woman’s RSI number no longer changes on marriage. This latter practice was a major source of duplicates.

On the question of disability claims, while the Department of Social Welfare accept that instances of these claims not being recorded on Central Records exist, the Minister is informed that there is virtually no risk of payment on concurrent disability claims. However the Department of Social Welfare has been endeavouring to make improvements in its systems by putting procedures in place for the recording of all claims, including assistance claims, on Central Records. In this regard a new computerised Common Claims Registration system has been implemented, while the Central Records system has been redesigned to improve flexibility and development capacity. The Department of Social Welfare expect that the new systems will greatly improve claim management generally and should facilitate the introduction of other improvements which will enhance the consistency of the data between the various scheme systems and Central Records.

The Minister understands that the failure to update Unemployment Benefit and Unemployment Assistance credits, as referred to by the Committee, was due to clerical error. The automatic calculation and updating of credits is catered for by the UA/UB Payments system. At the end of 1989, credits were automatically calculated and notified to Central Records only at the 15 offices in the Dublin area in which the UA/UB Payments system was in operation. At present, this facility is in operation in 20 branch and 51 local offices and will be extended to all remaining local offices and branch exchange offices by mid 1994. Consequently, there should be a significant reduction in the volume of credits cases to be entered clerically for the year 1992/93 and subsequent years. This should greatly improve accuracy.

The Minister is informed that in April 1991 the Department of Social Welfare took over responsibility for the allocation of RSI numbers from Revenue and introduced a new computerised registration system to handle the issuing of the numbers. As mentioned above, the Department also started issuing RSI numbers to young people at age 16 and as a first step in this process, issued numbers to all persons in the 16 to 20 year age group who did not already have numbers.

7. Recording of Credits in the Central Records System resulting in Duplicate Payments of Social Welfare

The Minister is advised that a total of 3,968 cases of overlapping credits, which were identified in the 1987/88 data, have been examined. The main cause of the overlaps was clerical errors in the manual recording system. Duplicate claiming was identified in less than 1% of 3,968 cases and any overpayments involved in these cases are being recovered. Earlier surveys on samples of the data for 1987/88, carried out by the Department of Social Welfare and by the Comptroller and Auditor General had suggested that the level of duplicate claiming was much higher at 8%, although subsequent examination of the same samples a year later showed that this had been reduced to 1.5%. As already mentioned, the figure had reduced to less than 1% when the full examination of the 3,968 cases was conducted. The Department of Social Welfare indicate that these figures show clearly that normal control procedures detect virtually all cases of double claiming in due course. Examination of overlapping credits for 1988/89 produced only 3 cases of duplicate claiming (just over 0.1%). No cases have been discovered in the 1989/90 data. The exercise is continuing but the Department of Social Welfare expect that the volume of cases should peter out in a few years.

With regard to computerisation of local offices, the Minister is advised that at the end of 1989, 35 of the Department of Social Welfare’s then 51 local offices were computerised. Two computer systems were in operation; the UA/UB Payments System in 15 local offices in the Dublin area and the Primary Local Office Workstation (PLOW) System, which was in operation in 20 rural offices.

At present, 51 of the now 52 local offices are computerised. The one outstanding - Wexford - will be computerised by end October, 1993. The PLOW system has been phased out and replaced by the UA/UB payments system. The Department’s computer systems are also being extended to Branch Employment Offices (BEO). BEOs are run by private individuals on an agency basis for the Department of Social Welfare. To date, 20 of the 77 BEOs nationwide have been linked to the system. The current computerised claimload represents 69% of the national live register.

The automatic calculation and updating of credits is catered for by the UA/UB payments system. At end 1989, credits were automatically calculated and notified to Central Records only at the 15 Dublin based offices which operated this system. At present the automatic updating facility is in operation in all of the 71 computerised branch and local offices. The remaining offices will be computerised by mid 1994 by which stage the automatic updating facilities will also be available to them.

Consequently, there should be a significant reduction in the volume of credits cases to be entered clerically for the year 1992/93 and subsequent years. This combined with the fact that all new assistance claims are now registered on the central records system, should virtually eliminate the possibility of overlapping credits and duplicate claiming.

The Minister is informed that formerly only employed persons were on the Central Records database. Some years ago it was decided to include all social welfare clients. Commencing in 1987, current unemployment assistance cases from both computerised and manual local offices were taken on. Registration of new non-contributory pension cases commenced around that time also - registration of pre-1987 claimants was considered not to be a priority because they constituted a low risk from the point of view of fraud and, in addition, the numbers were reducing all the time. It was decided to leave this category until all other categories were included. Children down to age 12 were included during 1991 and 1992. It is planned to have all children included by the end of 1993. Child Benefit claimants, who do not already have RSI numbers are at present being assigned numbers. Also a major exercise is about to commence to assign RSI numbers to adult dependants who do not have numbers. Many in these two latter categories would be women who never worked outside the home. The inclusion of persons on certain allowances e.g. Unmarried Mothers Allowance is also being actively pursued at present. About two thirds of UMA cases have been assigned RSI numbers at this stage. The self-employed were brought into social insurance in 1988 and these are now also registered on the system.

8. Overpayments in the Social Welfare System

The Minister is informed that the efforts of the Department of Social Welfare to maintain an effective system to detect, record and recover overpayments are considerable and ongoing and the deficiencies revealed in the C&AG’s report have been addressed. There is an improved detection rate arising from restructuring, training, section reviews, and increased control activity. There has been a renewed focus placed on all these activities and a special section has been set up in the Department to co-ordinate all control work.

The process of recording overpayments has been streamlined. The duplication in records within Accounts Branch has been virtually eliminated by the revision of clerical procedures and an enhancement of the computer system which will reject an attempted duplicate entry. The level of inaccuracies in recording overpayments has been considerably reduced by the improvement of checking procedures. The inclusion of overpayments information/ details on the central information system, Infosys, has greatly improved the ready availability of information to scheme sections and assisted in decisions regarding recovery. The development of the Central Claims Register and the Integrated Short Term Scheme System will also benefit the recovery process.

The Social Welfare Act 1993, contains provisions which will rationalise the various disparate existing provisions in relation to recovery of overpayments and will provide a consistent framework within which recovery of overpayments may be effected. The Regulations, to be made under the legislation, will also provide for an element of flexibility to be exercised in the overpayment system.


9. Employment of persons as Census Enumerators, Presiding Officers and Poll Clerks

Current Central Statistics Office recruitment procedures for temporary field staff discriminate positively in favour of unemployed persons. In recruiting such staff for the 1986 Census of Population, preference was given to suitable persons who were on the Live Register or who were otherwise in economic need. Following an action taken by an unsuccessful applicant against the CSO, the Labour Court ruled that this policy discriminated indirectly against married women. Prior to the recruitment of field staff for the 1991 Censuses of Population and Agriculture, the CSO sought the views of the Department of Labour and the Employment Equality Agency (EEA) on its recruitment policy. It was agreed that all advertisements for the posts in question would indicate that preference would be given to persons not in paid employment. The EEA accepted that this would be gender and marital status neutral, since married women without jobs would be assessed on the same basis as other persons without jobs. All temporary field posts for the two censuses held in 1991 were also advertised in Social Welfare offices throughout the country.

The recruitment procedures adopted for the 1991 censuses were also used in the establishment of a panel of field supervisors for the annual Labour Force Surveys to be undertaken in the period 1991-95. Appointments as interviewers for the surveys are made annually on the basis of merit, subject to location, following competitive interview, from amongst candidates nominated by local FAS offices.

While the responsibility for the employment of staff in connection with an election or a referendum is a matter for the local returning officer, the Minister has been advised that it has been the practice at recent elections and referenda for the Department of the Environment to request the local returning officer to offer employment to suitable unemployed persons, whenever possible.


10. Misappropriation of moneys in Prisoners’ Deposit Accounts

The Minister is advised that the investigation of irregularities is complete and that the estimated total of missing funds remains as indicated in the Committee’s report. The Gardai submitted a file in respect of their investigations to the Director of Public Prosecutions who decided not to prosecute. The Department of Justice has begun internal disciplinary proceedings against one officer. These proceedings are stalled because of an application by the officer for judicial review of the case. The system for prisoners’ deposit accounts has, however been redesigned and computerised so as to minimise opportunity for misappropriation and to enable such accounts to be balanced daily.


11. Appropriation-in-Aid

The Minister agrees with the Committee that substantial progress has been made in eliminating arrears of outstanding cable television licence fees; total arrears outstanding from all cable licensees had been reduced from £873,400 as at 31 December 1988 to £295,000 as at 30 June 1993. Arrears amounting to £242,800, of the end June 1993 figure of £295,000, are in respect of those companies who had arrears at the end of 1988. The Minister understands that most of the £242,800 arrears are due from one company. An agreement is now in place with that company to pay off the arrears over a three year period up to the end of 1994.

The Minister understands that adequate procedures, including inspections, to control the collection of the licence fees are now in place. The Minister has been advised that the underlying problems are now resolved and that the arrears problem will be eliminated in the foreseeable future. The Minister also understands that while there is no legal basis at present for the application of interest to arrears, the matter will be considered on the next occasion that the relevant legislation is being revised.


12. Motor Vehicle Duties

The Minister supports the Committee’s view on the need for effective control where receipt of public money is involved. With regard to Motor Taxation Offices, the Minister is advised that the comprehensive instructions issued by the Department of Environment to licensing authorities in relation to the enhancement of controls included:-

(a)re-evaluation of clerical procedures at cash points;

(b)revision of control and accounting procedures in relation to postal receipts;

(c)revised procedures for the transmission of motor taxation documents to the Vehicle Registration Unit in Shannon;

(d)checking of transactions by a local authority officer outside the Motor Taxation Office (County Checker or Internal Auditor).

The Department considers that the full implementation of the revised procedures should significantly reduce the possibility of further fraud in Motor Taxation Offices. The Department is continuing, through regular inspections, to encourage licensing authorities to fully implement the instructions.

In response to the Committee’s request to be informed of progress in computerising Motor Tax Offices, the Minister has been advised that local pilot computerisation projects have been implemented in a small number of Offices. The computer project will be implemented over 5 to 6 years at a total cost of about £5 million at 1992 prices and £400,000 has been provided to fund the project in 1993. The project has formally commenced under the control of a Project Board chaired by an Assistant Secretary of the Department of the Environment and is managed on a day-to-day basis by a Project Manager.


13. Public Service Early Retirement Scheme

The Minister is assured by the Department of Education that its internal security and control systems for the handling of payable orders prepared for issue are satisfactory and that such arrangements are kept under review. The Minister shares the Committee’s view on the importance of keeping such systems under review.

The position in relation to recovery of the stolen moneys is as follows:-

a)One payable order (value £10,425.59) was used to open an account with a building society. A withdrawal of £1,000 was made from this account. The balance of £9,425.59, together with accrued interest amounting to £1,613.20, was refunded to the Department of Education in November, 1991. The Department of Finance sanctioned the write-off of the £1,000 withdrawal on the basis that acceptance of the building society offer (to refund the undrawn balance plus interest) was recommended by the Chief State Solicitor.

b)The second payable order (value £29,869.65) was used to open two accounts with another building society. Withdrawals amounting to £29,600 were subsequently made on those accounts. Legal proceedings have been instituted against the building society for recovery of the full amount of the payable order. A notice of trial has now been served and the case will take its place on the next non-jury list and is expected to be heard in 1993.

14. Employment of Substitute Teachers

The Minister has been advised that in an attempt to ensure that schools make every effort possible to employ a qualified substitute, the Department of Education introduced in September 1990 a new system of certification of payment for unqualified substitute teachers. The Chairperson of the Board of Management is required, when claiming payment in respect of an unqualified substitute, to certify on a standard Department form that it was not possible to obtain the services of a qualified substitute and indicate what efforts were made to obtain such services. The INTO Substitute Replacement Agency is identified on the form as one possible source for obtaining the services of a qualified substitute teacher. This service tends, however, to be confined in its scope to the larger centres of population.

In addition, a supply panel of thirty qualified temporary teachers is being established on a pilot basis in September 1993 to provide for the short-term substitution requirements in three designated areas. The aim of this pilot project is to determine whether this approach represents a better method of addressing the difficulties being experienced by Boards of Management in obtaining qualified substitutes for short-term absences.

The level of employment of unqualified substitute teachers for the years 1990 and 1991 is as follows:-





Total substitute days




Trained substitute days




Untrained substitute days




Percentage untrained days




15. Design Costs - Education Building Programme

The Minister has been advised that the Department of Education is satisfied, from its experience of the schools capital building programme, that the standard procedures and briefing documents governing design, choice of materials and supervision of construction are satisfactory. These procedures are constantly being updated to ensure that the materials used in school building projects comply with all relevant Irish, British and European standards and codes of practice and are installed in accordance with the manufacturers’ instructions.

Savings in design costs are being made principally in the design of short/medium term “minimum - cost” solutions where savings of 15% to 35% over the cost of long-term accommodation are being achieved. The variation in the percentage savings is due to the nature of the accommodation (classrooms versus highly serviced special subject rooms) being provided in the second-level sector.

Professional design fees for all major second-level projects are now negotiated in accordance with procedures set out in Department of Finance Circular 11/87 -“Engagement of Consultants and Settlement of Fees”, which have been agreed following discussions with the relevant professional bodies.

16. VEC Deficits

The Minister and the Department of Education share the concern of the Committee of Public Accounts that Vocational Education Committees remain within their authorised financial allocations. The Minister has been advised that a monthly budget reporting system enables the Department of Education to closely monitor VEC expenditure/income relative to the sanctioned financial allocations and take up promptly with the VECs any deviation from allocations. Since 1987, the Department’s own controls ensure that it does not exceed the limit of the funding provided in its Estimates for grants to VECs.

At end-1992 the deficit (unaudited) was £986,272. While this represents a disimprovement in the position, the deficit is accounted for in the main by a small number of VECs. Over 80% of the combined 1991 and 1992 deficits is accounted for by five VECs - Co. Westmeath, Co. Offaly, Co. Galway, Co. Sligo and Co. Kilkenny. The size of the deficit has also to be viewed in the context of the overall budget. The end-1992 deficit represents 0.5% of the 1992 provision. This does not, however, in any way condone the over-expenditure incurred by certain VECs.

All Vocational Education Committees have been apprised of the Committee’s concern in relation to their incurring large deficits and how such practices undermine the essential financial control of Government expenditure. The Department of Education is keeping closely in touch, by way of correspondence and meetings, with the VECs which have large deficits with a view to securing the elimination of the deficits as soon as possible. The Minister for Finance is assured that close supervision of the situation by the Department of Education will preclude any significant control difficulties in the future.

17. Unapproved Borrowing by County Cork VEC

The Minister is informed that sanction for the loan of £50,000 was given retrospectively on 14 February, 1992, on foot of an undertaking from the Chief Executive Officer of the VEC to obtain Departmental approval before entering into any future borrowing arrangements. The £50,000 was given by the VEC to the Clonakilty Community Hall Association as an advance of 10 years rental for 1985-1995. The Department of Education sanctioned this arrangement exceptionally, on condition that the VEC obtained the Department’s approval before entering into any new rental arrangements and on the understanding that future rent demands would take account of annual running costs apportioned between all users of the Hall.

VECs are required under Section 49 of the 1930 Vocational Education Act to obtain the sanction of the Minister for Education for borrowing by way of bank overdraft or otherwise. Arising from the concern expressed by the Committee, the Department has taken steps to remind VECs of their statutory obligations in this regard. Apart from this loan the Department has not given sanction in recent years for any other VEC loans.

18. Purchase of Site by County Cork VEC

The Minister is informed by the Department of Education that a letter issues to VECs each year conveying the approved expenditure for the year and setting down guidelines and conditions in relation to such expenditure. As stated at paragraph 16 above, the monthly budget reporting system enables that Department to closely monitor VEC expenditure/income relative to the sanctioned financial allocations and take up promptly with the VECs any deviation from allocations.

It is incumbent on the VECs to operate their financial schemes in line with the authorised allocations sanctioned by the Department. The Department cannot prevent a VEC from incurring unauthorised expenditure if that Committee so decides. The power to disallow payments and to recover money by way of charge or surcharge rests with the Local Government Auditor. Under the recent Comptroller and Audit (Amendment) Act, 1993, the VECs will fall to be audited by the Comptroller and Auditor General.

The views of the Committee were brought to the attention of all VECs in a circular letter which conveyed the concern of the Minister for Education that the Committee had found it necessary to comment in such strong terms in relation to VEC expenditure and stressed again the necessity for VECs to operate within approved budgets. The views of the Committee were also brought to the attention of the Inspector of Audits, Department of the Environment. He has indicated that as sanction was given for the retention of 10 acres - and for the remaining 8 acres to be sold - it would have been nugatory to have invoked either the power of surcharge or charge, which have always been regarded as actions of the last resort. At the date of audit (1984) the focus had shifted from the original purchase to the question of utilising to the best economic advantage the retained 10 acres and of loss elimination or limitation in relation to the disposal of the remaining 8 acres.

The retained 10 acre site is still owned by Co. Cork VEC. An offer to purchase the site in December 1990 was subsequently withdrawn. The Department in consultation with the VEC is now considering how best to proceed in relation to the site.


19. Non Exchequer Funded Capital Suspense Account

The Minister concurs with the Committee’s view that Departments should comply with the constitutional and legal requirements of the State with regard to the treatment of Capital Receipts. In this regard, arrangements have been agreed between the Department of Finance and the Department of Health to ensure that the treatment of all capital receipts will be in accordance with statutory requirements and approved practice. The Minister also understands that the Department of Health has taken steps to negotiate a legally binding lien on the assets of voluntary hospitals being financed from public funds. On a more general level, the question of the protection of taxpayers’ interest where the State finances assets for use by third parties is under review by the Department of Finance and the Committee will be informed of the outcome of this review in due course. The Minister would also refer to the recent Comptroller and Auditor General (Amendment) Act, 1993, under which the accounts, books and other records of bodies which receive State financing in excess of 50 per cent of their gross funding may be inspected by the Comptroller and Auditor General.

20. Health Board Borrowings and ‘Letters of Comfort’

As the Accounting Officer stated in his evidence, the Minister has been advised that the practice of entering into arrangements for payments mechanisms even without a written guarantee has ceased in view of the concerns expressed by the Comptroller and Auditor General. The Minister is satisfied that this matter has been resolved satisfactorily. Following from the Committee’s comments, the Department of Finance Guidelines on ’Letters of Comfort’ are under review. Pending the outcome of the review, the Minister will draw the attention of all Accounting Officers to the existing guidelines.

21. Delays in commissioning new Health Facilities after completion

The Minister understands that all the facilities mentioned by the Comptroller and Auditor General in paragraph 66 of his Report have been fully commissioned. The Loughlinstown project will not proceed as the need which the project was designed to meet will be provided for through the expansion of community based facilities as envisaged in the Programme for Economic and Social Progress. However, if elements of the plan for the Loughlinstown project prove suitable for application in some areas, they will be used.


22. Export Credit Insurance Scheme

The Minister has been informed that legal proceedings in relation to a decision taken in October, 1989 to void certain policies of export credit insurance in respect of beef exports to Iraq are continuing and has noted the Committee’s agreement to defer consideration of the matter pending the outcome of these court proceedings. The Committee will be informed when the proceedings have been disposed of.

23. Property Sales by IDA and SFADCO

The Minister has been advised that suggestions that the IDA was inept in selling the sites and that no attempt was made to realise current market values present an unfair and misleading representation of the situation.

As the Committee has already been advised, all of the properties were:

(i)Sold by auction, tender or private treaty as recommended by the auctioneer and subject to a reserved price based on local market conditions as then existed. In cases where the reserve price was not reached at auction or at tender stage, the properties were not sold until such time as the reserve price was reached or exceeded,

(ii)Publicly advertised in accordance with the marketing programme recommended by the Auctioneer,

(iii)Sold at a price which was recommended for acceptance by the auctioneers.

The Minister has been advised that the Committee’s suggestion that the IDA paid well above the going rate for lands at the purchase stage is not warranted. The Minister is not aware of any evidence to support this suggestion and understands that the IDA paid the going rate for the land it purchased having regard to the criteria under which it was acquired. These criteria related to such matters as zoning, availability of water and sewerage, road access and proximity to a town. Because of these criteria, the purchase price was always going to be considerably in excess of the prevailing local price for agricultural land. The bulk of the IDA land purchases was in fulfilment of government policy that the industrial development agencies should be in a position to provide suitable land for incoming industry on a national basis at a time when the price of agriculture land was at an all-time high.

The Committee’s report also raises questions regarding the appropriateness of purchasing some of the land which was subsequently disposed of as part of the disposal programme. The Minister has been advised that in this context the Committee do not appear to have taken into account the background to the acquisition of IDA’s landbank which was contained in the IDA’s Regional and Industrial Plans 1973/1982 and referred to in the information submitted by the Department of Industry and Commerce to the Committee.

With regard to the Committee’s reference to the size of the IDA’s land bank in the 1980s, the position is that the Authority’s land bank and available advance factory space have been reduced substantially over the years and are currently well within the ceilings set in the Industrial Policy White Paper 1984.

The Minister has been informed that the views expressed by the Committee have been brought to the attention of all State agencies. As regards the Committee’s request that they be advised of the steps being taken by the Department of Enterprise and Employment to ensure that the IDA land holdings match the real needs of industry, that Department is having a study of the land and buildings area carried out by a new Evaluation Unit which has recently been established in the Department. The result of this review will be notified to the Committee in due course.


GIVEN under the Official Seal of the Minister for Finance this 21st day of September 1993


S.P. Cromien




Department of Finance



1. Construction of new facilities at the Central Mental Hospital

The Minister has been advised that the problems which emerged following attempts to implement the Government decision of January, 1986 were complex and far-reaching. Following legal clearance and the rescinding of the previous Government decision, approval was given by the Government on 26 February 1991 and work began immediately on adapting the unit. The new unit was opened on the 21 October 1992. The Minister agrees that a recurrence of such delays in the commissioning of new facilities should be avoided in the future.

2. Local Government Auditor’s Reports on the Audit of Health Boards

The Minister understands that the audit reports and abstracts of accounts for 1989 for 7 Health Boards have been presented to the PAC and the audit reports and abstracts of accounts for 1990 for 8 Health Boards and for 6 Health Boards in respect of 1991 have been received in the Department and have been approved by the Government. Furthermore, the Comptroller and Auditor General (Amendment) Act, 1993 provides that in, future, the C&AG shall audit the accounts of the Health Boards. The C&AG will also be empowered to carry out discretionary examinations of the economy, efficiency and management effectiveness of these bodies. These provisions, which take effect in respect of the financial year 1994 and subsequent years, together with the proposed amendments to the terms of reference of the Committee (paragraph 4.11 of the White Paper on the Role of the C&AG refers), will give the Committee a specific role in examining and reporting on the accounts of the Health Boards.

3. Mental Handicap facilities at Cheeverstown Hospital

The Minister shares the Committee’s concern that facilities which have been provided by taxpayers’ money should be used to their full potential. The Minister understands that with regard to the provision of facilities at Cheeverstown House, an agreement was reached in October 1990 between the Board of Cheeverstown House and the Eastern Health Board which provided a workable framework. The facilities at Cheeverstown House currently provide 80 residential places and 134 day care places. The commissioning of a further 20 places in 1993 will bring the number of residential places filled to 100. The commissioning of further places in Cheeverstown House will continue in 1993 and future years in line with funds made available for that purpose.


4. Staffing Levels in VECs

The Minister for Finance is informed that the new monitoring arrangements introduced by the Department of Education and close liaison with VECs which have previously exceeded their staffing quota have led to a significant improvement in compliance with approved allocations. A number of residual difficulties remain, however, in a small number of VECs and these are being actively addressed by the Department of Education. The Minister has been advised that in the event of the VECs and/or their officers incurring unauthorised expenditure, there are a range of sanctions available, in statute and regulations, to the Local Government Audit Service and/or the Minister for Education. It is a matter for the Local Government Audit Service and/or the Minister for Education to invoke these sanctions as they deem appropriate. In addition, under the recent Comptroller and Auditor (Amendment) Act, 1993, VECs will be subject to audit by the C&AG in respect of the financial year 1994 and subsequent years. Measures are also being taken to address the over-staffing in certain VECs while ensuring that individual teachers affected by these measures are dealt with as reasonably as possible.

5. Irregularities in Sligo RTC

The Minister understands that in view of the concern expressed by the Committee during its examination of the 1989 Appropriation Accounts, the Department of Education again wrote about control of College resources and facilities to the relevant Vocational Education Committees who were then responsible for Regional Technical Colleges (RTCs) and the Dublin Institute of Technology (DIT). Since January 1993, under new legislation, RTCs and the DIT are directly responsible for all aspects of College management including the control of resources and facilities. A new accounting and related management system for the newly constituted institutions is being drawn up and it is intended that this will include effective procedures for the control of resources and facilities.

In the case in question, the Chief State Solicitor was consulted by the Department of Education on the question of recovering the cost of use of the facilities. On the basis of his advice it was decided not to pursue the issue further because of the potential costs of legal action and the uncertainty of success. The Chief State Solicitor was also consulted about whether any further action would be appropriate on the part of the Department of Education or of the VECs involved in relation to the lecturer who conducted the course. After consulting the Garda file and the Office of the Attorney General, he advised that no further legal proceedings were appropriate.

6. Recovery of State Grants from Carysfort College

The Minister for Finance is informed by the Department of Education that the matter of the surplus in the accounts of Carysfort College involves issues of an extremely complex accounting and legal nature. The Department of Education has continued its in-depth examination of the accounts of the College, in the light of continuing legal advice obtained by that Department and information gained from discussions with legal and accounting representatives of the College. In line with the most recent legal advice received, the Department of Education is currently engaged with the College authorities in seeking a settlement of the dispute. As requested, the Committee will be informed of progress in this matter.


7. Bovine Tuberculosis Eradication

The Minister is advised that statistical analysis of the results of random surveys undertaken during testing programmes in the period 1990 - 1992 indicates that, within the sample taken, a lesser number of TB reactors were detected by a proportion of private veterinary practitioners by comparison with Department veterinarians. The main purpose of the random sample survey is to provide an accurate projection of disease patterns. Commencing with the 1991 testing programme, there has been increased emphasis on quality of testing. All practitioners must now be on contract to the Minister for Agriculture, Food and Forestry. The contract specifies how the test should be carried out, and provides for more stringent supervision of testing. A poor standard of testing may result in withdrawal of the contract. ERAD’s quality control strategy as applied to the 1989/91 Testing Programme indicated a potentially greater number of T.B. reactors than that recorded for the national testing programme. On that basis, it has been suggested that a number of reactor cattle are not being detected with the present testing methodology. The quality control results also showed a regional or county variation. The main factor giving rise to the variation appears to relate to the nature and regional distribution of the disease. On the issue of the effectiveness of the Tuberculin Test as used in the Bovine TB Eradication Programme, the Minister is advised that the Tuberculin test is the recognised test under EC legislation and is accepted worldwide. It is fully approved on a scientific basis by the EC Commission and has been successfully employed in the eradication of bovine TB in many member states. Research is continuing on the development of a blood test for bovine TB, which would complement the existing tuberculosis test in identifying carriers of the disease. As regards the question of employing lay technicians for TB testing, the Minister is advised that no EC Member State employs non-veterinarians for testing, mainly because under EC legislation, veterinary certification that animals are from TB free herds is an essential trading requirement. The Committee report states that “in 1988 a total of 1,253 cattle were shown on postmortem examination to have been infected with Bovine T.B., despite having come from herds which have been declared to be clear of the disease. The Minister is advised that, in fact, this is a small number of cases (0.1%) when compared with the total of 1.2 million clear animals slaughtered and postmortemed. The degree of infection is likely to be slight in a number of these cases, indicating the possibility that infection may have manifested itself subsequent to the tuberculin test. The tuberculin test is the recognised test for detecting bovine TB and currently is the best test available, but it has certain technical limitations. The development of a reliable blood test to augment (but not replace) the tuberculin test would enhance the detection of infected animals.

8. Aid to Farmers in Disadvantaged Areas

The Minister shares the concerns of the Committee and of the Comptroller and Auditor General about the accounting procedures followed by the Department of Agriculture, Food and Forestry in this case. The Minister also stresses that sanction was given on the basis that payments would be made in association with “stop lists”. In the event, the extent and scope of the “stop lists” proved inadequate to prevent overpayments arising.

The cattle headage schemes for certain less favoured areas provide for the payment to farmers of grants based on livestock numbers. The Minister understands that industrial action by clerical staff towards the end of 1989 meant that only some 22,000 payments due under the schemes had been processed in the normal way, which involves the verification of applications and herd inspections. This left some 48,000 payments which were not ready for processing in the normal way. In view of the undue hardship which the farmers involved would have suffered by a delay in receiving payment, the Department of Agriculture and Food proposed in November 1989 that these applications could be dealt with by way of advance payments based on payments made in the previous year. The Department of Agriculture and Food sought the sanction of the Minister for Finance to proceed on this basis subject to the operation of “stop-lists” which would ensure that advances would not be paid to persons who were not applicants under the 1989 Scheme or who owed money to the Department of Agriculture and Food. The Minister gave oral sanction to proceed on the basis that “stop-lists” would operate.

The Minister is advised that details of the advances paid and overpaid are as follows:

Advances in respect of the 1989 Schemes were issued to farmers who still had a BTE herd number as at December 1989 and amounted to 70% of grants paid under the 1988 Schemes. The following Table summarises the situation in regard to these advance payments:



No. of







Total Advances paid



Total overpayments verified



Unrecovered overpayments



outstanding as at-



July 1991


not supplied

May 1993



The Minister is advised that the reason for the failure of the “stop-lists” to prevent large-scale overpayment was that the industrial dispute involving clerical staff worsened between November and December 1989 (when the payments were actually made). The “stop-lists” were the only mechanism considered by the Department of Agriculture and Food at the time as a means of ensuring that overpayments did not occur. The Minister is concerned that the Department proceeded with the advance payments in the circumstances, but accepts that hardship could have occurred if the payments were not made.

The Minister is concerned that action to recover the full overpayment be pursued as rapidly and vigorously as possible. The Minister is advised, however, that efforts to recover the remaining outstanding amount of £271,126 are continuing and that the Department of Agriculture, Food and Forestry intend writing again to persons who received payments which remain outstanding requesting repayment. It may subsequently be decided to take legal action to secure repayment. The Minister will not be prepared to sanction the writing-off of any of these outstanding amounts until all avenues of recovery have been fully explored.


9. Revenue Collection

The Revenue Commissioners have always tried to be both accurate and fair in the information they provide to the Comptroller and Auditor General for inclusion in his Annual Report. The information is provided in a format which is determined by the Comptroller and Auditor General and any change in the manner of its presentation is primarily a matter for his Office. The Commissioners are most willing to respond to any request from the C&AG to provide any additional information available to them and any comments or analysis he might require which would serve to enhance the clarity and quality of the published information.

There was a substantial increase in self assessment auditing during 1991 and 1992 - 3,341 audits were initiated in 1991 and 2,663 in 1992 (about 1% of the taxpayer base). The 1992 figure includes almost 700 company audits.

The number of officers involved in the outdoor audit and examination programmes was increased from about 200 before self assessment to nearly 400 in 1992. Proposals agreed with staff interests at the end of 1992 allow for a further increase in the number of outdoor officers in 1993 and over 500 officers have now been assigned to audit, special enquiry, arrears and compliance programmes.

The self assessment programme for 1992 is in addition to very substantial VAT, PAYE and Construction Industry Tax audit programmes. On this basis the various forms of audit would have impacted in the region of 10% of the total taxpayer base. The Revenue Commissioners regard the examination of any aspect of a return (for IT, CT, CGT, VAT or PAYE) as an audit. This is the situation in other countries using the self assessment system - audits are simply directed at whatever issue or issues pose a risk.

In consequence of all the changes which have been mentioned, tax evasion is being challenged more effectively now than in the past and the feedback to Revenue is that audit is having a significant deterring impact on evasion. This also seems clear from discussions with practitioner representatives, representations from professional bodies and press coverage of the publication of lists of tax defaulters.

10. Revenue Supply Branch

While all remaining difficulties have not yet been eliminated, progress in implementing computerised stock control procedures continues to be closely monitored. Formal contracts and control procedures for security and cleaning projects have been introduced and are being maintained.

11. Theft of Motor Vehicles from the State Warehouse

The State Warehouse was moved to new, more secure premises in 1991 and, as part of its overall security, it is protected by a burglar alarm connected to the local Garda Station. As far as possible all the more valuable seized vehicles are stored in an adjoining compound which is also part of the State Warehouse.

The Revenue Commissioners are continuing to monitor the position regarding seized vehicles held in the State Warehouse and are making every effort to ensure that vehicles are disposed of without undue delay. At the end of December 1992 a total of 69 vehicles were stored in the State Warehouse.


12. Errors in Pension Payments

Pension Underpayments:

The Minister is informed that the errors detected referred mostly to clients who were over 80 years before the computerisation of Old Age Pensions. All clients who were identified as being over 80 years and not in receipt of the over 80 allowance were immediately awarded the allowance. Arrears, where applicable, were paid.

In order to avoid non-payment of over-80 allowance due to clerical error - i.e. payment of pension for the first time to over-80-year-old clients at the under-80 rate - the pensions system is scanned on a regular basis to highlight any such incidences. Up until September, 1992, these scans were carried out by Computer Development staff on behalf of the Pension Services Office. However, since a special computer audit software package was installed at the PSO it is possible to scan the system locally. This scan is generally carried out at weekly intervals and the PSO seek to run a different scan each week. Any clerical errors detected are corrected immediately.

54 Adult Dependants were identified in the C&AG’s Audit as being over 66 years and not in receipt of the over-66 rate of Adult Dependant Allowance. When full details of the clients were identified, payment was issued immediately and appropriate arrears paid.

The underpayments to adult dependants relate to the computerisation of the Old Age Pension records. Incorrect date of birth information was used and this created difficulties in identifying these types of underpayments. A new Common Claims Registration system has come into effect in conjunction with the new Central Records System which incorporates a facility to enter the date of birth of the adult dependant. In addition, the Pension Services Office has scheduled development work to take on personal details of adult dependants on the pensions computer data-base for the first time. These two developments will enable the Pension Services Office to scan the system on a regular basis to identify claims where the adult dependant is over 66 but the claim is being paid at the under 66-rate.

Pension Overpayments:

The Minister is informed that an important part of the Department of Social Welfare’s control of potential under- and over-payments is the development of its Central Records system. This system is to become the focal point for all claim registration and reference for client details. This re-design is well advanced. Later stages of development of Central Records will allow cross-reference between household members and regular checks should ensure that any duplicate payment of pensions and/or adult dependant allowances would be identified at an early stage.

The Department of Social Welfare has made substantial progress in recent years in setting up controls. An important element is a comprehensive and centralised evaluation of all control programmes. This allows the existing balance of controls to be reviewed continuously with a view to stepping up activity wherever there is the greatest return on effort.

The expanded Central Records system will greatly assist targeting of discrepancy cases and will permit a new and more effective balance to be achieved. The use of computer audit software by the Department’s Pension Services Office is already improving the targeting of control effort in relation to pension schemes specifically.

13. Overpayments and Fraud under the Social Insurance and Social Assurance Schemes

The Minister is advised that Social Welfare legislation provides that certain offences are to be dealt with by means of prosecution. However, the requirement to prosecute offenders is not expressed in absolute terms; proceedings may be brought ‘at the suit of the Minister for Social Welfare’.

Criminal prosecution in cases of abuse by claimants is not designed to recover moneys wrongfully obtained. The legislation provided specific and separate provisions for the recovery of moneys due to be repaid, viz civil proceedings and deductions from future payment of entitlements.

The Minister is informed that the Social Welfare Acts create criminal offences, and a conviction may have severe consequences for the individual concerned. It may affect their prospects for employment in the future or their ability to migrate to other countries. In addition, substantial effort and expense are involved in bringing cases before the Courts. Consequently, it is the Department of Social Welfare’s policy to exercise discretion in determining which cases of fraud warrant prosecution.

Following detection of fraud, an individual’s claim is examined by a Deciding Officer and a disallowance imposed in line with the evidence. The amount of the overpayment is also assessed. The case is then scrutinised with a view to prosecution. In many cases, fraudulent claiming would have been of a short duration so that prosecution for a first offence is unlikely. Precedence would be given to cases involving persistent offenders, and to cases where large amounts of money, or lengthy periods of fraudulent claiming, were involved. Any case which comes to light in an area or a firm where there is a high incidence of concurrent working and claiming, or where there is collusion between employer and employee, would also be given top priority for prosecution.

Social Welfare fraud cases are heard summarily, i.e. by a Judge, without a Jury, in the District Court. The maximum penalty provided for by Social Welfare legislation for such cases is a fine not exceeding £1,000 or a term of imprisonment not exceeding one year, or both such fine and such imprisonment. This is, in fact, the maximum penalty District Courts are empowered to impose.

The legislation also allows the Department of Social Welfare to have cases heard on indictment, i.e. before a Judge and Jury in the Circuit Court. Prosecution on indictment requires a decision to do so by the Director of Public Prosecutions. The maximum penalty on indictment is a fine not exceeding £10,000 or a term of imprisonment not exceeding three years, or both such fine and such imprisonment. Ultimately, the penalty to be imposed in any case is a matter for the Courts to determine.

The Minister is informed that the Department of Social Welfare is fully conscious of the deterrent effect which is served by prosecutions and that they intend to take every suitable opportunity to pursue prosecutions in order to maximise this deterrent effect. In selecting cases for prosecution factors such as geographical spread, and occupational category, are carefully considered. Prosecutions are seen as a key element in the Department’s anti-fraud strategy. The amnesty from prosecution announced in June, 1993 affords persons engaged in Social Welfare fraud a final opportunity to regularise their position with the Department of Social Welfare. The Minister is informed that prosecution of new fraud cases will resume once the amnesty ends. There are currently 115 Social Welfare prosecution cases (schemes and employer) with the Chief State Solicitor’s Office which have not yet been finalised in Court.

On the whole question of fraud, the Department of Social Welfare point out that substantial progress has been made and continues to be made in improving their control capacity. A new central Control Section has been established to coordinate all control activities. The new Central Records and Central Claims Registration systems are virtually complete.

These will give comprehensive and coordinated information on all claimants and will greatly facilitate the detection of fraudulent claiming. Increased manpower resources also have been devoted to anti-fraud work. There are now approximately 500 staff in the department engaged to a greater or lesser extent on control work. Furthermore, the Integrated Short Term Scheme System which is currently being developed will greatly improve the control effort by enabling the Department to scan automatically across the various schemes to ensure that there is no duplicate claiming operating.

The Minister is informed that the Department of Social Welfare continue to regard the detection of fraud as top priority and that they intend to monitor regularly the progress that is being made in this regard. Every effort will be made to enhance further the Department’s control capacity.


14. Export Credit Guarantee Scheme

The Minister has been informed that the Canadian Farm assets have been sold. The Department of Enterprise and Employment has confirmed that in future all documents which are crucial to an application for export credit insurance will be properly verified and proven and that it will not be possible for the situation which arose in this case to occur again.

As a result of information coming into the possession of the then Department of Industry and Commerce arising out of the receivership of the Canadian buyer and as a result also of the failure by the Department to elicit all the information sought from the Irish exporter in regard to clarifying the financial arrangements surrounding the contract, the exporter was informed in November, 1991, on the instructions of the Minister for Industry and Commerce, that its policy of export credit insurance was void ab initio and the standard recourse agreement which the company had entered into was invoked.

Soon after that decision was taken the exporter instigated legal proceedings against the Minister for Industry and Commerce and ICI. Following further investigations legal proceedings were instigated by the Department of Industry and Commerce/ICI against the exporter for recovery of the moneys which had been paid out in claims.

The Minister has been informed that agreement has been reached to settle these matters. This agreement, which is subject to Court approval, will reduce considerably the loss incurred by the State in respect of this project.

The Minister has been informed that the Accounting Officer of the Department of Industry and Commerce briefed the Committee regarding the Consultants’ Report into the operation of the scheme when he appeared before it in connection with the 1990 Appropriation Account.

15. Eolas: Science and Technology Audit Programme

The Minister has been informed that as soon as the Department of Industry and Commerce became aware of anomalies in EOLAS claims for costs incurred in the operation of the Technology Audit Programme in 1989, a comprehensive review of the financial/accounting aspects of the Programme was undertaken and revised operating criteria were put in place to prevent a recurrence.

Regular meetings are held by the Department with EOLAS and reports are submitted by EOLAS for the purpose of monitoring/controlling expenditure under the Programme and ensuring compliance with operating criteria and targets. No further operational problems of any significance have been encountered since 1989.

16. Disclosure of Information in State Agencies

In March 1992 the Government endorsed a set of Guidelines for State Bodies which reflected the recommendations of a report prepared for the Minister. The guidelines, which are equally pertinent to subsidiary and associated entities of State bodies, advise, inter alia, written codes of conduct for directors, including disclosure of interests. There is also a requirement to operate a competitive tendering procedure.

The guidelines include the following concerning remuneration of Chief Executives:

“Chairmen of all State bodies are reminded that they are required to implement Government policy in relation to the remuneration of the chief executives and that the arrangements made cover total remuneration. It would be particularly undesirable if non-compliance with any particular Government decision were effected in ways which cut across public service standards of integrity or conduct or involved unacceptable practices which resulted in a loss of tax revenue to the exchequer.”

The Chairmen were asked to ensure that the guidelines were followed by their boards, and in the organisations, and to arrange to have taken whatever action might be necessary in that regard. A copy of the guidelines was sent to the Chairman of the Committee on Public Accounts and to the Chairman of the Joint Oireachtas Committee on Commercial State-sponsored Bodies at the time of their announcement.

Further guidelines were approved by the Government in June 1992 concerning the payment of fees to the chairmen and directors of State bodies. These guidelines were issued to each Minister in July 1992 and they were asked to bring them to the attention of the chairmen of the various State bodies under the aegis of their Departments. The guidelines specify, inter alia, that the board of each State body will ensure that the fees paid to the chairman and directors will be at the rates authorised by the relevant Minister and that the chairman of the main board will each year submit a report affirming that the guidelines are being complied with.

The Minister for Finance shares the Committee’s concern that the Exchequer should not suffer loss as a result of revenue forgone through the participation of State Agencies in arrangements which can confer a tax advantage on any party. The Minister agrees that it would be unacceptable practice for State bodies to make artificial arrangements through the tax system or otherwise with the objective of circumventing Government policy. The Minister will bring the Committee’s concerns in this regard to the attention of all Accounting Officers. The Minister notes that the Committee has requested the C+AG to provide it with details of any cases in this category which have come to his attention.

The Minister also notes the Committee’s concern regarding State bodies and the control of public moneys, including dealings relating to the sale of State assets. In this regard the Minister will draw the attention of Accounting Officers to the Committee’s comments and to financial management procedures in relation to State bodies under their aegis, as outlined in Public Financial Procedures (Section 4).


17. Custom House Docks Development Authority

The Minister has been advised that because of the length of time it took to resolve disputes between the Authority and the Custom House Docks Development Company over the costs applicable to elements of the development which have been completed to date and the consequential effects on the proportion of the profits from the development payable to the Authority, the Authority was not in a position to make a direct return to the Exchequer in 1991. Consequently the £3 million payment due in 1991 was included in the Department’s 1992 estimates. Following a provisional settlement between the Authority and the development company on the disputed costs, a payment of £1 million was made by the Authority to the Exchequer in February, 1992. The Authority made a further payment of £350,000 in December, 1992.

Negotiations between the Authority and the development company on the future development programme for the project recently concluded and a new agreement has been signed. In tandem with the new development programme, settlement has been reached between both parties on past costs. As a result, the Authority has received a sum of about £1m from the Developer. It is expected that the Authority will be in a position to make the Appropriation-in-Aid payment of £1.65m provided for in the 1993 Estimates.

18. Provision of Toll Facilities on the Dublin Ring Road

The Minister has been advised that, as recommended by the Committee, the Department of the Environment will in future ’defer to the proper statutory authorities in these matters’.

The Minister understands that a report on the tolling of the Dublin ring road was submitted to the Committee by the Department of the Environment in March 1991.


19. National Theatre Society Ltd (Abbey Theatre)

The Minister has been advised that the Abbey Board have taken steps to convene a shareholder’s meeting early in the New Year in order to remove from the Memorandum of Association the ambiguity which the Committee identified as being the kernel of the problem which arose from the Board’s decision to pay a salary to their Chairman. The Minister notes the Committee’s conclusions on the other matters raised.


20. Business Expansion Scheme: Project Audit Report

The Revenue Commissioners have extensive procedures in operation to ensure that companies seeking investment under the Scheme and the investors satisfy the conditions for the relief. These procedures involve close examination of BES Schemes. It is a measure of the effectiveness of these procedures that abuses in the Scheme were brought to light.

The abuses, which arose after the extension of the Scheme in 1987, were quickly rectified by changes in the law introduced in the Finance Acts of 1989, 1990 and 1991. A number of measures have been introduced to ensure that the volume of BES funds available to an individual project would be kept within reasonable bounds. Included among the changes was a limit on the level of funding which would qualify for BES relief and the exclusion of financial services from the Scheme. These changes were designed to counteract the type of scheme mentioned in the report, whereby a leasing company raised over £20 million in BES funding. Provisions were also introduced to outlaw various devices which sheltered the BES investor from the risk inherent in a project. Multi-company structures were also prohibited. Finally, sectors where there was a preponderance of asset-backed projects with intrinsically low risk, such as hotels and shipping, were excluded from the Scheme. Overall the whole thrust of the Scheme was altered to target relief at the smaller high risk projects.

These changes in the Scheme have resulted in a reduction of the tax forgone from £41.5m in 1989/90 to £10.4m in 1992/1993. In the same period the percentage of tax forgone accounted for by manufacturing has increased from 31% to 82%. Aside from the tax planning danger, the Department of Finance is anxious to ensure that the BES scheme is achieving the purpose for which it was set up i.e. the generation of risk capital for companies in sectors of the economy which would otherwise have difficulty in raising venture capital but which offered the best prospect of maximising the value of the tax forgone in terms of output and employment. The operation of the Scheme and indeed the need for the Scheme itself is kept under constant review.

Employment levels are an important element in assessing the effectiveness of the Scheme. While the Revenue Commissioners have been collecting figures with a view to assessing the growth in employment in firms assisted by the BES, it will, however, be some time before any reliable trends become apparent from these figures. However a comprehensive review of the BES scheme conducted in 1990 identified employment growth of approximately 4,250 jobs in some 347 companies which had received £95 million investment at a cost of some £49 million to the Exchequer. The sectoral breakdown of the jobs was as follows:

3,138 additional jobs were identified in 275 manufacturing and international services companies which had received £36.9 million in BES investment at a cost in tax forgone of £20 million approximately and £24.9 million in direct State aid;

1,000 additional jobs were identified in 63 tourism companies which had received £46.8 million in BES investment at a cost in tax forgone of £23.5 million approximately;

78 additional jobs were identified in four shipping companies which had received £7.7 million in BES investment at a cost in tax forgone of £3.9 million approximately;

28 additional jobs were identified in five special trading houses which had received £3.3 million in BES investment at a cost in tax forgone of£1.7 million.

No breakdown is available between full-time and part-time jobs.

Being satisfied that the Scheme is now clearly targeted at employment growth, the Government agreed to limited extensions of the Scheme from 1993/1994 on. The Scheme itself which was due to expire in 1993 was extended to 1996, the lifetime cap on relief for individual taxpayers was removed and the cap on investments in individual companies was raised to £1 million. In addition limited forms of Research and Development were brought under the aegis of the scheme.

It must be reiterated that the effectiveness of the Scheme is subjected to constant review. The conduct of regular reviews is indeed inherent in the structure of the Scheme in that it is put in place for specified periods. A comprehensive inter-departmental review was conducted in 1990 and the Scheme is reviewed in my Department in the context of each annual Budget.


21. Aer Lingus Holidays

The Minister has been informed by the Department of Transport, Energy and Communications that the Garda investigation, initiated on foot of the Craig Gardiner report, has been completed and a report forwarded to the Director of Public Prosecutions. Following this, however, further investigations were deemed necessary and these are proceeding with a view to a decision as to whether there should be criminal proceedings.

The Minister has been advised not to make any further comment on the affairs of Aer Lingus Holidays Limited as to do so would be to run the risk of prejudicing not only civil proceedings, including those which have been initiated against the former auditors of Aer Lingus Holidays, but also any criminal proceedings which might be brought as a result of the Garda investigation.


22. The Minister shares the Committee’s concern at the problems which arose in this Office. He is advised that the Organisation Unit of the Department of Justice carried out an investigation into the staffing and working procedures of the Office of Charitable Donations and Bequests with particular reference to those matters raised by the Committee (i.e. the monitoring of charitable bequests and devises in wills).

The Survey Team in conjunction with the Secretary to the Commissioners and after consultation with the Probate Office sought to devise a procedure which would allow the Commissioners to meet their statutory obligations as cost-effectively as possible. The Minister understands that such a procedure has now been put into place. In addition to these procedural arrangements efforts were made to address the staffing of the Office within the constraints of current policy on civil service numbers. It is hoped to increase the staffing in the Office in the near future.


23. Security in the Central Furniture Stores, Rialto

The Minister is advised that no further thefts have taken place at the Central Furniture Stores since the introduction by the Office of Public Works during 1990 of remedial measures to improve security. The Minister is satisfied that all reasonable precautions to prevent further thefts are now being taken, and the arrangements in operation are being kept under constant review.

24. Purchase of Dragline Excavators for Arterial Drainage

The Minister accepts that at the time the Comptroller and Auditor General made his inspection 1990 a number of machines which had been purchased between 1977 and 1980 had not been used for periods ranging from 3 months to almost 6 years. With the benefit of hindsight it is clear that the number of machines which had been purchased on the basis of the anticipated requirements at that time exceeded the actual requirements. The Minister is advised that the number of machines which were purchased was determined by relation to both the continuing machine replacement requirements and the number of machines required to achieve specific performance targets imposed by (a) the E.C. in relation to the Rivers Corrib, Mask and Robe Catchment Drainage Schemes which were already in progress and the Rivers Boyle and Bonet Catchment Drainage Schemes, commencement of which was overdue when the machines were ordered for which the Community funded part of the cost and (b) pressure from the European Investment Bank to accelerate the completion of schemes for which that institution provided low interest loans.

In fact for various reasons outside the control of the Commissioners of Public Works, work on the Boyle and Bonet schemes which it was anticipated would commence in 1980 did not get under way until mid-1982 and even then at a reduced rate of progress. Machines which were delivered in 1980, having been ordered specifically for these schemes as part of a larger contract placed in 1979, could not therefore be assigned to the sites and were retained in storage.

By the time work on the Boyle and Bonet schemes started in 1982 the overall financial climate had changed completely. Because of budgetary constraints reductions were made in the Public Capital Programme involving construction works and as a result the Commissioners of Public Works were forced to effect major cutbacks in their programme of heavy engineering works. This resulted in a reduction in the total number of dragline machines required on schemes in progress. As a consequence it did not become necessary to deploy the last five of the machines purchased in 1980 until 1984 and 1985. The machines which were being placed in storage at that time were in need of major overhaul.

These changed circumstances could not have been foreseen when the Commissioners decided between 1977 and 1979 to implement a programme of machine purchase and replacement. The Minister notes that all of the machines had been in use for varying periods between 1984 and 1990. He is satisfied that in all the circumstances the Commissioners of Public Works exercised a reasonable degree of prudence and efficiency in deciding to purchase the machines.

The Minister is also satisfied that in the circumstances that existed at the time the taxpayer got the best value for money that was available. In fact had the machines not been available for the work which they have been used to carry out to date, it would have been necessary to hire similar machines if sufficient numbers were available, at an additional cost to the Exchequer of at least £1.25 million. The “saving” will increase as the machines which have been retained continue to be used. With regard to the disposal of the surplus machines, this was delayed for as long as seemed reasonable to allow the market, which was extremely depressed, to improve. The Minister considers it more realistic to compare the sale price of the machines with their written down value rather than their purchase or replacement costs. Eleven machines have been disposed of to date. The total price obtained was £81,000 compared with a written down value of £139,338. The difference was due to the continuing weak demand for these fairly specialised machines.

The Minister is satisfied that the problem in this case arose from policy changes brought about by changed economic circumstances which developed subsequent to the purchase of the machines, rather than from the purchase procedures followed. However purchase procedures are kept under continuous review to ensure that a reasonable standard of prudence and efficiency is exercised and that the taxpayer gets good value for money.


25. Purchase of Lifting Equipment at Killybegs

The Minister for Finance has been advised that it was not originally intended to construct as large a synchrolift as was eventually installed at Killybegs. Rapid expansion and modernisation of the pelagic fleet based at Killybegs necessitated a revision of the lift capacity. Therefore the winches, which had already been purchased by OPW on the Department’s behalf, were not suitable for use in Killybegs. The winches in question will instead be installed as replacements at Castletownbere. The Minister has been assured that every effort will be made to ensure that this type of purchasing practice does not recur.

26. The Liquidation of Irish Shipping

The Minister for Finance has raised the comments of the Committee in relation to the liquidation of Irish Shipping Limited (ISL) with the Department of the Marine. He has been assured by that Department that the lessons deriving from the wind-up of the Company have been applied to further strengthening the arrangements put in place by the Department of the Marine at its inception in 1987 for the purposes of exercising due diligence in the monitoring of the financial affairs of State-sponsored bodies under its aegis.

The procedures to be followed by Departments in appraising public investment proposals and in regard to financial management generally are set out in Public Financial Procedures (Section 4). The Minister shares the Committee’s concern that Departments should have full knowledge of expenditure proposals in State-sponsored bodies which are being underwritten from the Exchequer and he will issue a reminder to Accounting Officers to ensure that the correct procedures are being followed.


27. Garda Radio Network

The Minister for Finance will draw the attention of all Accounting Officers to the following motion which was passed by the Public Accounts Committee in the context of this case:-

“In the case of major capital projects such as this the Committee could not tolerate a pay-as-you go approach which makes attempts at overall cost control meaningless. The Committee must insist that in all future projects and without exception, a structured project management system is put in place so that -

1.The scope of the project is clearly defined and fully meets the needs envisaged.

2.An accurate and realistic time frame and cost budget is set and sanctioned at the planning stage.

3.The most cost effective method of implementation commensurate with quality is chosen.

4.The project or programme is rigidly monitored and controlled throughout the implementation stages so that it is satisfactorily completed within budget and on time.”

The Minister for Finance fully endorses the necessity for proper project management arrangements as set out above and has arranged that Department of Finance Circular 1/1983 dealing with capital projects, which is being revised at present, will take account of the Committee’s views as set out above. In the meantime revised approval and monitoring arrangements have been put in place to oversee the future development of Garda communications and information technology systems. In addition a formal Information Technology Plan is being prepared for the Garda Siochana. This plan will provide the framework within which the case for future investment in communications and information technology can be assessed and managed. The Minister for Finance also wishes to point out that sanctions for major information technology projects now include a requirement that a formal project management methodology (usually PRINCE: Projects in Controlled Environments) be used.

28. Prison Buildings

The Minister agrees that temporary prefabricated structures should be purchased only to meet short-term needs. He notes that the bulk of the prefabricated structures purchased in this instance were not in fact used and that much of the expense arose from related factors such as storage and insurance.

He is advised by the Department of Justice that temporary prefabricated structures are now purchased only to meet immediate need and that such purchases are kept to an absolute minimum so as to avoid the costs referred to above. Regarding long term needs he understands that the Department of Justice have developed a planned approach towards securing improvements in the physical conditions and services in the Prisons.


Report dated 6 February 1992

29. Purchase of Carysfort College.

The Minister for Finance notes the concern of the Committee as to whether the best value for money was obtained for the taxpayer in UCD’s acquisition of Carysfort. The Minister is also conscious of the strong view of the Department of Education that the negotiations were conducted on behalf of UCD by a professional and experienced team who sought and obtained the property for the lowest possible price and that the purchase of what the Department of Education and UCD regard as an excellent educational facility represented good value for money.

In his comments following, the Minister has had regard to the general implications of the points made in the Report, which has identified certain matters of procedure and practice which need to be addressed. It must be noted that the decision regarding the purchase of Carysfort at the price negotiated by UCD was ultimately a policy decision by Government.

The Minister concurs with the view of the Committee that where decisions involving substantial sums of money are being made it is desirable that a Memorandum for Government be prepared in advance which would afford his Department an opportunity to express its views regarding budgetary and value for money aspects of proposed expenditure. While noting the view of the Committee that departure from this practice should not be resorted to unless there are compelling reasons to do so, the Minister points out that it is ultimately a matter for the Government to decide how they will deal with any particular proposal or issue.

On the matter of procedures (referred to in paragraph 6 of the Interim Report) the Minister wishes to inform the Committee that his Department have examined the existing procedures for public contracts, in consultation with the main Departments involved, and have included in a draft document to replace the existing “Outline of Government

Contracts Procedures” a guideline to the effect that, in the case of acquisition or leasing of property, where the contracting authority is a Government Department, a valuation must be obtained from the Valuation Office. Departments would be expected to ensure that the principles of the guidelines would be applied also by bodies under their aegis dependent on State funding. The Department of Finance also intends to have included in the new procedures a guideline whereby Departments or bodies seeking valuations on property should specify all the factors they consider to be relevant to the assessment of value and the Valuation Office (or other valuer) should be requested to be specific regarding the considerations taken into account in arriving at their valuation.

The Minister notes the concern of the Committee at the fact that UCD was not notified of the Valuation Office’s valuation when it was negotiating the purchase of Carysfort. In general he considers that, where a Department has information relevant to the negotiation of a substantial purchase by a body under its aegis, it should normally convey that information to the body, with whatever comments it may wish to add.

The Committee sought an assurance that the statutory role of the Department of Finance under the Ministers and Secretaries Act, 1924, was not pre-empted in this case. The Minister has no reason to believe that this statutory role was in any respect pre-empted. No expenditure was incurred without his approval.

The Committee also asked to be informed of the legal advice received by the Department of Education on how Section 8 of the Higher Education Authority Act, 1971 should be interpreted. The Department of Education have sought the advice of the Attorney General on this, and they will notify the Committee of the outcome.


Given under the Official Seal of the Minister for Finance this 19th day of November 1993


S. P. Cromien




Department of Finance


1.The Committee was pleased to welcome Mr. Richie Ryan, Ireland’s representative at the European Court of Auditors to address the meeting on the activities of the Court of Auditors. He outlined particular issues with which the Court is concerned and suggested areas in which the Committee of Public Accounts could co-operate in the protection of the financial interests of the Community.

The text of Mr. Ryan’s address is published in the minutes of evidence for the meeting of 25 November 1993.


The Committee has made progress in the matters referred to it and has agreed the following interim Report:


1. Value for money

The Committee enquired as to the steps taken in the Civil Service Commission to ensure that maximum value for money is obtained and also what financial control arrangements are in place.

The Accounting Officer explained that an internal audit function had been established and a programme of work had been drawn up for that unit. Furthermore, he foresaw that the information technology which had been acquired over the last couple of years would have a continuing significant impact on efficiency. The expansion of the use of technology in administering examinations and managing recruitment programmes had been initiated and the possibility of introducing new improved practices in all aspects of recruitment and selection were under ongoing study.

The Committee asked the Accounting Officer to furnish it with a report, in six months time, on the new practices and efficiencies which have been introduced.


1. Fitting out costs of premises for the National Authority for Occupational Safety and Health.

The Comptroller and Auditor General drew attention to the lease of office premises by the newly appointed National Authority for Occupational Safety and Health for a period of 10 years at an annual rent of £29,000 and to the expenditure of a total of £541,660 on fitting out office premises.

The Committee asked why surplus accommodation in a building already leased by FÁS, another agency of the Department of Labour, and occupied by the aforementioned Authority on a temporary basis while the new premises was being completed was not considered acceptable.

It also questioned the need for so many single offices in view of the fact that the officers concerned are regularly on duty outside Dublin.

The Accounting Officer explained that the surplus space in the FÁS offices was inadequate to meet the needs of the staff concerned. He pointed out the need to be able to afford confidentiality to callers to the office and also mentioned that the grade and professional standing of many of the officers concerned would call for single rooms.

The Committee recommended that the Department of Labour and the Office of Public Works should not confine themselves to expensive centre city locations when seeking new office accommodation.

2. Employment Subsidy and Job Training Schemes

The Committee asked the Accounting officer why only £1.75m had been expended out of a provision of £5.4m for Employment Subsidy Schemes at a time when over 300,000 people are unemployed.

The Accounting Officer said that the targets for this and for a job training scheme introduced about the same time were very ambitious - 25,000 participants in all. He said that the employment subsidy scheme was very heavily promoted with brochures, advertising and calls to employers but the subsidy of £54 per week per new recruit for the first year of employment with a condition that the employment had to last at least 78 weeks did not prove attractive enough to employers. He also said that there was a wide range of other competing incentive schemes available to employers, including social employment schemes and “team work.”

The Committee felt that the low up-take must be attributable to structural and organisational problems inhibiting employment. Instances were cited where persons with job creation ideas failed to find an officer or a section within the current Department of Enterprise and Employment to assist them or to give advice in relation to the pitfalls that might exist and the incentives available to help them to develop a new product or to expand on an existing one. This was seen as a serious deficiency in the newly formed Department.

In summing up the Committee agreed that it was unacceptable that in view of the current level of unemployment, money voted for Employment Subsidy Schemes and for other job creation schemes was not being spent.

The Committee asked the Accounting Officer to report back to it on progress regarding -

(1) improvements put in place in the administrative arrangements for job creation including the establishment of Forbairt, Forfás and the IDA and -

(2) arrangements for dealing with persons who have ideas for job creation schemes.


1. Overlap of Surveys

The Committee adverted to the provision in the estimates for Manpower surveys and noted that Labour Force Surveys are carried out by the Central Statistics Office while similar or related information is collected by the Department of Social Welfare and the Revenue Commissioners and it proposed that the Comptroller and Auditor General undertake a Project Audit on the cost of collection of statistics by different Departments and Agencies.


1. Caravaggio painting

The Committee in noting the account of the National Gallery agreed that it should take the opportunity of recognising the extraordinary generosity and public spirit of the Jesuits in giving the recently discovered masterpiece by Caravaggio to the State on permanent loan and that it should put this appreciation on record.



19 May 1994.