COMMITTEE OF PUBLIC ACCOUNTS debate - Thursday, 10 Nov 2011

Business of Committee

Mr. John Buckley (An tArd Reachtaire Cuntas agus Ciste) called and examined.

Chairman

We will deal with the minutes of the meetings of 26 October and 3 November. Two sets of minutes are to be agreed, the second relating to the special meeting held on Thursday last. Are the minutes agreed? Agreed.

With regard to matters arising from the minutes, I would like to deal with the defeat of the constitutional amendment to give extra inquiry powers to Oireachtas committees. The decision means that the proposals we had agreed with regard to the legislation are no longer relevant. I propose that the committee write to the Minister asking that he look at using the current powers available to this committee to have an inquiry into the banking scandal, starting with the bank guarantee. I want to establish what can be done using our existing powers, given that the Abbeylara judgment does not entirely rule out the committee making a judgment that wrongdoing was committed. I propose that we send a letter to the Minister for Public Expenditure and Reform, Deputy Howlin, to that effect. Do members wish to comment on this?

Deputy Shane Ross

It is a very good idea. There is precedent for it in this committee in the DIRT inquiry. We can go ahead without the Abbeylara amendment having been passed.

Chairman

I will ask the Comptroller and Auditor General to comment on this and to give some background so that we know what we are dealing with.

Mr. John Buckley

The DIRT inquiry involved special legislation. A 1998 Act gave compellability powers to the Comptroller and Auditor General during the preliminary round of the inquiry. It involved phases, such as sending an auditor into the banks. Let me put it this way. It was taking inquiry out of the public accountability domain and moving it into the private domain. In the current case, the same issues probably do not arise. Most of the matters in contention would probably be within the remit of public authorities, such as the Financial Regulator and the Department of Finance.

I should mention that there was a domestic standing group comprising the three elements. It met, usually monthly, in the lead-up to the crisis. The minutes of those meetings are already discovered to the committee. Those minutes are a foundation for a good deal of the kick-off information which might be necessary if the committee was minded to do any such inquiry.

Deputy Kieran O’Donnell

Can the Comptroller and Auditor General explain the purpose of the legislation? Why was legislation necessary to hold the DIRT inquiry?

Mr. John Buckley

The primary reason was that the remit of Comptroller and Auditor General and of the Committee of Public Accounts extends to public accountability. That means the accountability of public bodies for having proper accounts, regularity, probity, value for money and all the matters that come within the broad remit of public accountability. When one goes out into examining private institutions and issues within them, one is no longer in that domain. One needs a formula to do that. The formula that was agreed was that the Comptroller and Auditor General would not necessarily go into the banks but would hire an auditor, and that auditor went into the banks.

Deputy Kieran O’Donnell

They were private auditors.

Mr. John Buckley

They were private auditors. There was a combination of the Comptroller and Auditor General having compellability powers to interview the people in the banks and having the power to discover documents. There were three strands. The major source of evidence during the DIRT inquiry was the discovery of documents by the Comptroller and Auditor General, which gave a vast amount of information about how the internal audit functions in banks had been operating with regard to non-resident accounts.

Deputy Kieran O’Donnell

Did the 1998 legislation have a sunset clause? Is it still on the Statue Book?

Mr. John Buckley

It related only to the DIRT inquiry. The legislation kicks off with a statement that there was a matter of public importance, rather like the statement in the recent proposed amendment. It had to recite something like that and say what the matter was. It related entirely to the DIRT issue.

Deputy Kieran O’Donnell

Does Mr. Buckley feel he can do it without a need for any-----

Mr. John Buckley

No, I am saying we probably need to explore it. One would probably need to take legal advice. Generally speaking, the issues that may surface if we did a preliminary look at it would be-----

Deputy Kieran O’Donnell

Would be in the public domain.

Mr. John Buckley

----about how public authorities had acted on the information, or lack of information, they had.

Deputy Eoghan Murphy

Chairman, do you propose to write to the Minister on behalf of the committee to see how we may conduct such an inquiry, in light of the fact that the referendum was defeated but also going back to the Abbeylara decision to see what scope that gives us? That means it is our intention to hold an inquiry.

Chairman

The proposal to the Minister is that the Committee of Public Accounts is the only committee that is best placed to conduct such an inquiry into the bank guarantee or has a broader remit regarding banking and what happened. While informing the Minister of that, as the Comptroller and Auditor General has stated, certain information is already available to us about the minutes of those meetings leading up to the guarantee. We may now have to take legal advice or advice from the Minister. We are entering into a consultation as to how we might proceed in this regard. That would be the sensible thing to do because legislation may be required in this instance, as in the case of the DIRT inquiry. There was special legislation relevant to that inquiry.

We need to establish the facts. The first step is to inform the Minister and get the minutes which are already available to us, circulate them to the members and then explore the options for the committee.

Deputy Eoghan Murphy

Is it the committee's intention to hold an inquiry into the banking crisis?

Chairman

That is what we would like, yes. That would be the intention. If the members are agreed on that we will formally write to the Minister and report back as we have information. I have asked the clerk to make available to the committee the minutes and other pieces of information which might already be available, as outlined by the Comptroller and Auditor General. Is that agreed? Agreed.

The next item is correspondence received since our meeting on Wednesday, 26 October 2011. We have correspondence dated 25 October 2011 from Mr. Paul Russell of IDA Clients, Belgium. It refers to alleged corruption in the IDA and Enterprise Ireland. This correspondence is to be noted. We have had ongoing correspondence on this issue, including an external review undertaken by the Department which found no wrongdoing. We will pass on this latest correspondence to the Department and the Comptroller and Auditor General. The Department can examine whether new evidence has come to light and we will get a note on the matter from the Department.

We have correspondence dated 25 October 2011 from Mr. Ray Mitchell of the parliamentary and regulatory affairs division of the Health Service Executive providing information requested by the committee at its meeting of 29 September 2011. This correspondence is to be noted and published. Correspondence dated 28 October 2011, from Mr. Ronan Lenihan, principal clerk, Joint Committee on Finance and Public Expenditure re correspondence previously forwarded by the Committee of Public Accounts from Mr. Tommy Moran, Concerned Irish Citizens, regarding Quinn Insurance. This correspondence to be noted. Correspondence dated 24 October 2011, from Ms Ruth McNally, town clerk, Tullamore Town Council, re amalgamation of Laois and Offaly vocational education committees. This correspondence to be noted and to be forwarded to the Department of Education and Skills for a note on the amalgamation and appropriate follow-up.

Deputy John Deasy

I ask for an update from the Comptroller and Auditor General about the issues I raised regarding the amalgamation of vocational education committees generally and the issues arising from such amalgamation. How does the Comptroller and Auditor General propose to deal with the matter I raised and when does he expect to be in a position to report to the committee?

Mr. John Buckley

At the moment we are scoping out our work for next year. One of the issues being examined is the issue raised by Deputy Deasy. We will finalise a preliminary or an outline study report. Because there is provision in the terms of reference of the committee for consultation between the Office of the Comptroller and Auditor General and the committee on matters such as the work programme of the Comptroller and Auditor General, I will table that outline study report for preliminary discussions to get an input from the committee in setting the issues, scope and methodology that might be used in any proposed programme.

Deputy John Deasy

When will the Comptroller and Auditor General bring a preliminary report to the committee? Will this be in a couple of weeks?

Mr. John Buckley

I hope in two to three weeks, but I think it will be nearer to three weeks.

Deputy John Deasy

Thank you.

Chairman

Nos. 3.5 and 3.9 are linked. No. 3.5 is correspondence dated 1 November 2011, from Mr. Michael Howard, Secretary General, Department of Defence, providing further information requested by the committee at its meeting of 13 October 2011. This correspondence to be noted and published. The Irish Red Cross will present evidence to the committee. No. 3.9 is correspondence dated 17, 19 and 24 October 2011, respectively, from Mr. Noel Wardick, former head of international department, Irish Red Cross re the appearance of the Secretary General of the Department of Defence at the committee meeting of 13 October 2011 and forwarding a letter sent to the chairman of the Office of the Commissioners of Charitable Donations and Bequests for Ireland. These letters to be noted and published. The matter to be referred to the Department of Defence and the Irish Red Cross for appropriate follow-up. We will also forward correspondence to the Broadcasting Authority of Ireland. We have not finished with the Irish Red Cross issue and will return to it.

Deputy Eoghan Murphy

Is it known yet when the Irish Red Cross will address the committee?

Chairman

A date has not yet been set.

Deputy Eoghan Murphy

Has it been confirmed that it will attend?

Chairman

The society has confirmed that it will attend but the date has not been set as yet. It will be included in our work programme.

No. 3.6 is correspondence received on 3 November 2011 from the Department of Transport, Tourism and Sport, providing updated information on matters scheduled for examination at the meeting of 10 November 2011, as previously requested by the committee. This correspondence to be noted and published. Correspondence dated 3 November 2011, from Mr. Aidan Punch, assistant director general, Central Statistics Office re opening statement originally submitted for the meeting of 3 November 2011. This correspondence to be noted and published. No. 3.8 is correspondence dated 4 November 2011, from Mr. Ian d'Alton, chief executive officer, Housing Finance Agency re providing a briefing note on the Housing Finance Agency's debt. This correspondence to be noted and published. No. 3.10 is correspondence received in November 2011 from an anonymous source re copy of an article in The Irish Times from June 2011, entitled, “Why David Kirk Has Made His Last Investment In Northern Ireland” and requesting an examination of joint investigation vehicles used by Enterprise Ireland. This correspondence to be noted. A note will be obtained from the Department on the use of joint investment vehicles. It is very likely that we will examine the accounts of Enterprise Ireland in 2012. No. 3.11 is correspondence dated 1 November 2011 from Mr. John Kinsella, New Ross, County Wexford, re forwarding correspondence with the Department of Transport, Tourism and Sport and with Fáilte Ireland. This correspondence to be noted and the correspondence to be forwarded to the Department of Transport, Tourism and Sport and to Fáilte Ireland, for a note on the issues raised. No. 3.12 is correspondence dated 1 October 2011, from Mr. Don Curry, MECD Springs Limited and former ISME chairman from 1996 to 1998, re retrospective audit trails. This correspondence to be noted and forwarded to the Department of Jobs, Enterprise and Innovation, for a note on the issues raised. The committee has received voluminous correspondence on this issue and the previous committee, on the advice of the Comptroller and Auditor General, agreed it had no function in this matter. No. 3.13 is correspondence received dated 8 November 2011, from Mr. Frank Delaney, Manlift Hire Limited, re the Health and Safety Authority. This correspondence to be noted. The committee is awaiting a reply from the Department of Jobs, Enterprise and Innovation, on issues raised by Mr. Delaney. Once this reply is received, we can review the matter and perhaps examine the Health and Safety Authority. On that matter, if we are awaiting a reply from the Department of Jobs, Enterprise and Innovation, when did the committee write to the Department?

Clerk to the Committee

For the information of the committee, we wrote to the Department in June. The Department has sent a preliminary reply which was only received last night so it was not put on the list for today.

Chairman

It is not satisfactory that in writing to a Department last June the reply has only arrived now. While a preliminary reply is available now, we must remind all Departments of the need to respond with greater speed.

No. 3.14 is correspondence received 8 November 2011, from an anonymous source re alleged breach of the Croke Park agreement. This correspondence to be forwarded to the Department of Education and Skills for a note on the matters raised. Correspondence dated 24 October 2011, from Councillor Padraig Conneely, Galway, re Eyre Square enhancement project. This correspondence to be noted. The Comptroller and Auditor General does not audit the accounts of city councils. Correspondence to be forwarded to the Department of the Environment, Community and Local Government for a note on the issues raised and appropriate follow-up. It is likely that this matter is outside our remit and we cannot follow up on expenditure by local authorities. This is a point I have raised on a number of occasions. A total of €5 billion per annum is given directly from the Exchequer to local authorities and it is high time for reform in that area to bring such matters within the remit of the Comptroller and Auditor General. This is a matter we must continue to pursue directly with the Minister when he comes before us on some occasion.

Deputy Derek Nolan

On a point of clarification, if there has been significant funding given to that project from the Department of the Environment, Community and Local Government, is the committee in a position to examine the project?

Chairman

My point is that the Comptroller and Auditor General does not audit councils. I ask the Comptroller and Auditor General to clarify the situation.

Mr. John Buckley

Even though my office has the power to trace money with regard to other organisations, we do not have this power in the case of local authorities because of the way the legislation is framed. The 1993 Act places the local authorities on a schedule which excludes them from any audit by the Comptroller and Auditor General.

Deputy Derek Nolan

We will not be permitted to audit this scheme.

Chairman

I suggest we ask for a copy of the auditor's report from the internal audit conducted. There is no reason we cannot raise the matter in the context of discussing it with the Department of the Environment, Community and Local Government.

Deputy Kieran O’Donnell

If the funding is provided by the Department which itself falls under the remit of the Comptroller and Auditor General, would it be possible for the Comptroller and Auditor General to follow the audit trail to see where the money has gone?

Mr. John Buckley

It is complicated. A constitutional amendment entrenched local government as an element of government. The legislation provides for a separate local government audit system. The concept here is that since it is an arm of government, accountability for spending within a local authority area should be at local level, since it is an arm of government. The auditor in that case is to report to that local government element and not to central government. The general difficulty is that much public funds are administered locally. I refer to a chapter in my report this year which outlines that something of the order of what the Chairman said is of the nature of public national funding which is administered at local level. Nonetheless, because of the way the legislation is framed, there is no power for either this committee or the Comptroller and Auditor General to follow it.

Chairman

To be clear, the suggestion to amend the legislation and have a role for the Comptroller and Auditor General has been discussed by this and previous committees. All of the reports that were sent to the various Ministers for Finance on this issue proposed that we should be able to follow the money. There is €5 billion of taxpayers' money at issue here. We will continue to make that case to the Minister in the hope that at some stage he will agree to it. The Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, when in opposition, wrote a report to the Minister, on behalf of the committee, which partly focuses on this issue. Perhaps we can use that report as the basis to pursue the issue with the Minister.

Deputy Simon Harris

I have raised this issue with the Minister for the Environment, Community and Local Government by way of parliamentary question. It seems that regardless of who the Minister is or who is in government, whenever the issue is raised with the Department of the Environment, Community and Local Government, it puts a roadblock in the way. Deputy Anne Ferris and I recently queried an application for €3 million from Wicklow County Council to the Department. Again, we were unable to trace it. It seems one can trace the money to the door of the council but not thereafter. Every time an issue like this arises, we should convey the information to the Minister.

Chairman

I will include that in our correspondence with the Minister. We might also include it in our correspondence with the Minister for Public Expenditure and Reform, Deputy Brendan Howlin. It is a problem that simply will not go away and taxpayers are demanding accountability in this area.

No. 3.16 is correspondence dated 8 November 2011 from Mr. John Corrigan, chief executive officer of the National Treasury Management Agency, providing information requested by the committee at its meeting of 6 October 2011, to be noted and published. No. 3.17 is correspondence received on 9 November 2011 from Mr. Tom O'Mahony, Secretary General at the Department of Transport, Tourism and Sport, which comprises an opening statement, to be noted and published. No. 3.18 is correspondence received on 9 November 2011 from Mr. John Moriarty of Dublin Waterworld Limited in respect of further correspondence regarding Campus Stadium Ireland Development Limited, to be noted. Members may wish to raise matters relating to this correspondence at today's session.

No. 3.19 is correspondence dated 9 November 2011 from Mr. Kenneth Nolan of the Government accounting unit at the Department of Public Expenditure and Reform comprising the minute of the Minister in response to the committee's report on the 2007 appropriation accounts and annual report of the Comptroller and Auditor General and the special reports of the Comptroller and Auditor General, to be noted and published. Members may not have had a chance to read through this minute, in which case we will defer consideration of it until next week. The dates are interesting in that they go back as far as 2007. If we are to make the work of the committee more relevant, Ministers will have to respond in a timely fashion.

The fourth item on the agenda is reports, statements and accounts received since the meeting on 26 October 2011. I do not propose to list every one of these. They are listed in the document from No. 4.1 to No. 4.15, inclusive, all to be noted. We will defer notation of the Údarás na Gaeltachta financial statements until the new year. Have members any comments on these sets of accounts?

Deputy Derek Nolan

I note that the Office of the Disability Appeals Officer submitted four accounts at once, for the years 2007 to 2010, inclusive. In respect of the older accounts, that is a significant delay.

Mr. John Buckley

In the initial years after the establishment of that office, it was understood that its expenditure would be included in the Department's Vote, which it was. However, a statutory provision requires that it also account separately for its activities. At the end of last year the office produced all three sets of accounts for the preceding years, as well as the 2010 account, at the same time. Therefore, this was not a case of a failure to account. Rather, it previously was accounted for within the Vote of the Department and, separately, the relevant legislation required that, even where the Department was effectively acting as its banker, the office must still have a separate account.

Chairman

The work programme to December is on screen and has been agreed by the committee, although we may have to amend it to cater for developing issues. The secretariat will circulate a draft spring programme which we will discuss at next week's meeting.

We will now deal with any other business. Have members any matters they wish to raise before we call the witnesses into the room?

Deputy Sean Fleming

Are we in private session?

Chairman

No, we are in public session

Deputy Sean Fleming

That is fine. To return to the discovery of the €3.6 billion, which we discussed last week, I have a question in regard to the Comptroller and Auditor General's reports. Mr. Buckley was not here for that meeting. His annual report includes a certificate at the beginning which sets out the matters dealt with in the course of the audit. Most readers would naturally assume that the figures included in the report had been audited. However, it transpires that some of the charts included in the report contain unaudited figures, including the consolidated figures in regard to general Government debt.

Mr. Buckley included a note in the report indicating that the source of the information is the Department of Finance. Perhaps he is of the view that this covers his office in terms of informing the public that these may not be audited figures. However, nobody could glean from this note that there are unaudited figures in the report. Anybody reading the report would assume the Department was the original source of the information contained therein, but they would also assume that information had been audited. It is essentially a presentation issue and is very confusing. Everybody who reads the accounts, other than Mr. Buckley, would assume the figures in the report, from which charts are extrapolated and serious commentary made thereon, are audited figures. It is a reasonable assumption to make.

The Minister had a side swipe at the Comptroller and Auditor General's office on the basis that the incorrect figure for general Government debt was included in the report, and it was pointed out that the figures contained therein were not audited. Will Mr. Buckley comment on that? Can he indicate how he may assist users of his report in future to know, when they are reading charts, the difference between what is audited and what is not? I am not criticising the figures, but anybody who has read any of the Comptroller and Auditor General's reports did so in the comfort and belief that the figures were audited. Does Mr. Buckley understand the point I am making?

Mr. John Buckley

I understand the Deputy's point fully. The report we produce is a very lengthy document. While it touches on the figures in the various State accounts we audit, in addition, it gives a context to those figures. In the case of the national debt, it is necessary to give such a wider context. I audit the national debt and it is managed by the National Treasury Management Agency. I give an audit certificate in that regard, so, in that sense, the figures are audited. However, on top of that, there are further tranches of public debt. My belief - and it applies in everything I do - is that I must give that wider context when I am reporting.

The procedure for getting extra information for the purposes of my annual report is known as an audit query procedure. This has traditionally involved us sending a set of queries to the Department, to which it responds. More recently, we have been moving towards a process where we engage with the Department, produce a draft report and then have it cleared, again by formal audit query. The inside flap of each report includes a statement indicating that the report was prepared on the basis of information, documentation and explanations obtained from Departments and offices referred to in the report. This statement is designed to explain that we use an audit query system to get this extra information, which is more about public management than accounts.

Deputy Sean Fleming

The Comptroller and Auditor General understands that, but nobody reading it would understand it.

Mr. John Buckley

It is the first thing the reader sees when he or she opens the document. It goes on to say:

Drafts of relevant segments of the report were sent to the Departments and offices concerned and their comments requested. Where appropriate, these comments were incorporated into the final version of the report.

The note printed on the first page of the report also states:

The report focuses on the accountability of Departments and Offices in respect of their administration of public funds. References to third parties should be read only in that context.

In other words, we are not dealing with issues of private accountability, nor are we apportioning blame to individuals. We are dealing with the accountability of accountable persons and Accounting Officers in respect of their responsibility for the administration of public funds.

Deputy Sean Fleming

That is the nub of the issue. The report states that the information included emanates from information and documentation received from the Departments. The Comptroller and Auditor General understands the subtlety of that sentence because he composed it. The Accounting Officers who were participating and providing the information and documentation also understood it. No other reader of the report could have understood the subtlety to which I refer. No reasonable person reading a sentence to the effect that the Comptroller and Auditor General received information and documentation from the Department he was auditing could interpret from it that the figures provide were unaudited. At what point would the Comptroller have obtained the figures only during the course of his audit?

The Comptroller and Auditor General and the various Accounting Officers understood what was meant but the other 3.6 million members of the population would certainly not understand the subtlety to which the former refers. On the next occasion we are dealing with matters of this nature, perhaps the Comptroller and Auditor General could indicate whether figures are audited or unaudited. Does the Comptroller and Auditor General understand from where I am coming on this matter?

Mr. John Buckley

I fully understand what the Deputy is saying. It is very interesting that he mentioned a figure of 3.6 million in respect of the size of the population. The figure of 3.6 is becoming very popular-----

Deputy Sean Fleming

A euro for every-----

Deputy Kieran O’Donnell

I think the Comptroller and Auditor General's report will be on the bestseller list for Christmas.

Mr. John Buckley

The figure of 3.6 seems to be quite popular this year.

Deputy Sean Fleming

I have made my point. Perhaps what I have said could be taken into account in respect of future reports.

Mr. John Buckley

We will do what the Deputy asks and we will specify-----

Deputy Kieran O’Donnell

Whether something is unaudited.

Mr. John Buckley

There is actually more to it than that. The figures we quote are not always those which emanate from accounts. I have a long list of such figures.

Deputy Sean Fleming

Perhaps the Comptroller and Auditor could explain that in the next report.

Mr. John Buckley

I will not bore members by listing those figures but I will expand on them and include that caveat at the beginning of the report. As Comptroller and Auditor General, I do not want to include 1,000 caveats in my reports. Those reading the reports now might have too little information but I assure members that if they had too much, they would be bored out of their heads.

Deputy Sean Fleming

I understand that.

Mr. John Buckley

From my point of view, the trick is to try to identify a way to obtain increased assurance with regard to figures included in the accounts. I am not concerned with washing my hands of matters or including caveats. The quest is always to obtain better information. When I am pursuing that matter internally, that is the mindset I employ.

Chairman

Or it is a case of too many cooks spoiling the broth. If there was one auditor with responsibility for dealing with local government and another with responsibility for dealing with the national debt and the figures relating thereto, there might be fewer complications and explanations of the type with which this committee has been obliged to deal.

Deputy Sean Fleming

The Chairman is correct. I am of the view that this committee should be producing almost instant reports on certain matters. It is clear that the various figures were audited by different people. However, during the period when those figures were consolidated, they were not audited by anyone.