COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 8 May 2014

Business of Committee

Chairman

Are the minutes of the meeting of 1 May 2014 agreed? Agreed.

Next are matters arising from the minutes. The committee has been circulated with a draft of the application of the committee for compellability in the context of our ongoing examination of the spend of public funds of Rehab. The application will now be submitted to the Committee on Procedure and Privileges. Is that agreed? Agreed.

No. 3 is correspondence received since our meeting on Thursday, 1 May 2014. No. 3A is correspondence from Accounting Officers and Ministers. No. 3A.1 is correspondence received from Patrick Neary, David Doyle, Mr. Hurley and Mr.Cardiff regarding bank stabilisation measures. These are to be noted and published. The invitation offered to these four senior officials arose from the interim Committee of Public Accounts report on bank stabilisation published last year. The outstanding issues will now fall to be dealt with by the upcoming banking inquiry. No. 3A.2 is correspondence dated 30 April 2014 from the Secretary General of the Department of Communications, Energy and Natural Resources.

Deputy John Deasy

Why did we wait so long to publish the correspondence from Mr. Neary, Mr. Doyle, etc.?

Chairman

It was nothing else only an error in the office. We produced a bank stabilisation report. Then we wrote to the individuals concerned and they wrote back. They did not appear on the correspondence list until now, inadvertently. No. 3A.2 is correspondence regarding the sale of Bord Gáis Energy. This is to be noted and published. No. 3A.3 is correspondence dated 2 May 2014 from the Secretary General of the Department of Public Expenditure and Reform regarding the sale of Bord Gáis. This is to be noted and published.

No. 3B is individual correspondence. No. 3B.1 is correspondence dated 25 April 2014 from Mr. John McCarthy, Secretary General of the Department of the Environment, Community and Local Government, replying to correspondence from Deirdre Murphy. This is to be noted and a copy sent to Deirdre Murphy. No. 3B.2 is correspondence dated 1 May 2014 from Mr. Graham Love, chief executive, Health Research Board, in reply to the note in the Comptroller and Auditor General audit re rent and associated costs. This is to be noted. No. 3B.3 is correspondence dated 1 May 2014 from Deputy Michael McGrath. It relates to correspondence from Gary Delaney re Irish national postcodes. This is to be noted and a copy is to be forwarded to the Department of Communications, Energy and Natural Resources for a note on the matter.

Next is correspondence relevant to today's meeting. We have received correspondence dated 2 May 2014 from the Department of Finance with briefing material for today's meeting. This is to be noted and published. No. 3C.2 is correspondence received on 8 May 2014 from the Department of Finance regarding opening statement for today.

No. 4 is reports. There is a list reports from Nos. 4.1 to 4.4. No. 4.4 relates to the accounts of the Central Bank of Ireland and the credit institutions resolution fund. Details have been laid before the Houses and I understand there is a copy in the Library. This might relate to what you were referring to some time ago, Deputy Ross. The matter can be raised again. The accounts are to be noted. The position is that the committee cannot examine the accounts of the Central Bank since it is a body included in the Second Schedule to the Comptroller and Auditor General (Amendment) Act 1993. In accordance with Standing Order 163 the committee cannot examine that account.

Next is the work programme.

Deputy Eoghan Murphy

I wish to ask about the accounts for County Cork Vocational Education Committee from 2011. I understand they have not been signed off yet.

Mr. Seamus McCarthy

No, they have not. I have a draft report which is with County Cork VEC in respect of various matters that have been the subject of correspondence with my office and the Committee of Public Accounts. When that is completed I will present a report with the certificate. This is unusual; it is called a supplementary report and it is attached to the certificate in respect of VECs.

Deputy Eoghan Murphy

Does this relate to issues we discussed in the committee previously?

Mr. Seamus McCarthy

It does, yes.

Deputy Eoghan Murphy

When does the Comptroller and Auditor General expect to have that back from the VEC?

Mr. Seamus McCarthy

I expect comments back from the VEC in the coming weeks and at this stage I expect to sign off on the report in June.

Deputy Kieran O'Donnell

Does the Comptroller and Auditor General audit the Central Bank?

Mr. Seamus McCarthy

Yes.

Deputy Kieran O'Donnell

However, we as a committee cannot examine it.

Mr. Seamus McCarthy

That is right.

Deputy Kieran O'Donnell

Am I at liberty to ask about notes Nos. 15 and 16? In Mr. McCarthy's audit opinion, would he have drawn attention to these by emphasising the matter?

Mr. Seamus McCarthy

Yes.

Deputy Kieran O'Donnell

He might elaborate on why he believed it was necessary to make reference to the issue in notes Nos. 15 and 16 on the statement of accounts, which outlines the impact of the liquidation of Irish Bank Resolution Corporation, IBRC, on the bank's balance sheet.

Mr. Seamus McCarthy

It was such a significant issue and raised a number of accounting implications.

Deputy Kieran O'Donnell

Were they all-----

Mr. Seamus McCarthy

They are all satisfactorily resolved, but it was a significant matter.

Chairman

The work programme is now on the screen. We will sit next week but not the following week due to the European and local elections, so we will deal with the Comptroller and Auditor General's report on contract management in education public-private partnership, PPP, projects; Vote 26 - Department of Education and Skills; and the National Training Fund account 2012. In the context of the work programme, I will ask the clerk to review the outstanding matters, be they about Waterford Institute of Technology or-----

Clerk to the Committee

We have a draft.

Chairman

-----the various other items of work that we must conclude, and to set out the timeframe for any report that we might publish or complete.

We received correspondence from Mr. Michael Brosnan regarding a number of issues with the Department of Agriculture, Food and the Marine. I will ask the clerk to draft a note on it so that we might have the specific questions that are required to be answered for that individual. Likewise, Mr. John Shine made a submission to the committee. I am sure it is going through the process. We need a note on it to inform members of the extent of his query and which questions are outstanding for the Department. We will do that for next week's meeting.

Do members wish to raise other matters?

Deputy John Deasy

I wish to discuss the clerk's note on the committee's remit. In his own words, will he go through it? I am slightly confused about the conclusion. Are we to determine what our remit will be based on our application to the Committee on Procedure and Privileges?

Clerk to the Committee

I was drawing attention to something. The note is broken into three areas. First, what is the narrow interpretation of Standing Order 163 on appropriation accounts, the accounts of bodies audited by the Comptroller and Auditor General and value for money reports? Second, we examined our remit to reach down into bodies that we have invited to attend meetings on public expenditure grounds, for example, the Central Remedial Clinic, CRC, which has attended, and other sections 38 and 39 bodies. We have done that in the content of an examination of the funds provided to them by the HSE. We have now sought to compel certain evidence. This will go through a process and will form one of the CPP's considerations.

The note continued. Obviously, some bodies fall outside the remit of the Committee of Public Accounts, those being, Schedule 2 bodies. We have discussed one, namely, the Central Bank of Ireland. The Dáil has stated that, as these are Schedule 2 bodies, they are outside the committee's remit.

I wanted to tease out a number of issues. The Chairman in particular has raised with me issues like school transport. We will consider that matter next week with the Department of Education and Skills. The Accounting Officer is accountable for the €152 million provided to Bus Éireann, which subcontracts. It is possible to invite Bus Éireann officials to the committee as part of that examination. It makes no sense to stop at the Department if one wants a thorough examination of the matter.

Deputy Collins raised the issue of Leader companies. If one is examining an Accounting Officer and there is an issue with a funded body, one may want to invite the company to appear before the committee. It is in this context that we are trying to determine the committee's remit.

Chairman

The CPP's examination of the application for compellability will bring all of that into play. Last week, Deputy Fleming raised the issue of the number of organisations in receipt of substantial public funds that, by way of legislation, were not mentioned in this committee's review of how those funds were spent. The application before the CPP will start to clarify all of that matter in a definite way. If, arising from the CPP's decision, there are shortcomings in Standing Order 163 or in terms of the list of agencies, Departments and external bodies that appear before us, we can make an application to have the Standing Order amended to include the various bodies that we believe should be included. For example, Deputy Murphy has raised the issue of Poolbeg. Now that a decision has been made, a question arises about how the €108 million was spent. We asked for the reports arising from the commentary on the matter to be laid before us. The application for compellability will set out the CPP's position.

Deputy John Deasy

We are not just applying for compellability in respect of individuals and public bodies related to Rehab. In essence, we are also applying for an extension of our remit. It is part and parcel of the application.

Chairman

No. Our application is specific to our current investigation and what we want to do to conclude it.

Deputy John Deasy

Yes, but the Chairman expects these issues-----

Chairman

The decision arising from that will probably impact on our remit as it stands and define it better for us. Once we have that definition, as it were, we can decide to amend it to include such and such and make an application to the Dáil in order to cover those agencies that will be able to answer more directly than an Accounting Officer in respect of, for example, school transport.

Deputy John Deasy

Would that include local authorities?

Chairman

No, since they are different. It would require separate legislation, as they are set up on the basis that they cannot be made accountable to our committee. This is an issue, given the amount of public money they receive directly from the Government, and they may be addressed in that context. They should be accountable to us. The rest should be accountable to audits. Does the Comptroller and Auditor General wish to comment?

Deputy John Deasy

I will ask a final question. Has the clerk been in contact with the CPP regarding a timeline for the application?

Clerk to the Committee

I have not.

Chairman

No. We will clear the application today. Members have agreed to make it, but we wanted to ensure that they had sight of it today. Afterwards, the application will be sent. We understand that the regulations and protocols are in place for the CPP to deal with an application for compellability. It will be a matter of weeks.

Deputy John Deasy

To be clear, there is an expectation that it will be more than a plain application for compellability regarding Rehab, in that the other issues mentioned by the clerk will also be addressed.

Chairman

Yes. It will have that effect.

Deputy Áine Collins

I have a concern about private companies tendering for State contracts. In trying to make this point I gave the example of Leader, which in hindsight is probably a bad example. Am I correct in saying that Rehab tendered for parts of those contracts under the Department of Education and Skills?

Clerk to the Committee

In certain cases there was no competition but there may have been a tender with some Health Service Executive contracts.

Deputy Áine Collins

For example, do the top four accountancy firms that do a good deal of work for the State in different areas and the legal firms tender? Where are the boundaries?

Chairman

We have often questioned the Accounting Officers that come before us regarding their spend on legal advice, accountancy advice and so on.

Deputy Áine Collins

I understand that point.

Chairman

The Comptroller and Auditor General might comment on it.

Mr. Seamus McCarthy

There is a provision in the 1993 Comptroller and Auditor General (Amendment) Act which allows me to carry out an inspection regarding the accounts, books and records of an entity that receives more than 50% of its income in a year. There are strict limits on that, and even the calculation of that 50% excludes payments regarding the provision of services or goods. In a situation where it arose that I wanted to carry out an investigation, the first thing I would have to establish is whether they received grant funding or funds of that nature.

Deputy Áine Collins

As opposed to a tender.

Mr. Seamus McCarthy

As opposed to tendered services. The Deputy may recall that when the Rehab representatives were here they made a point that they were essentially providing services on a payment basis. There is possibly a grey area in that regard as to whether it counts for 50% calculation or it does not count for 50% calculation. I have not looked into it formally or looked for a legal definition of it. There is a distinction between the section 38 and the section 39 organisations. My understanding is that the section 39 concept moves the payment one step further from the HSE than payments to a section 38 organisation.

Deputy Áine Collins

It is just an extension of it.

Deputy Kieran O'Donnell

I seek clarification on a point. I see the differential between a company that tenders for work and is paid directly by the Department and one that gets a large allocation of funding from the Department that has discretion in the way it spends that to deliver the service. I understand the section 38 organisations were historic. They were funded directly from the Department of Health whereas the section 39 organisations were funded by way of the health boards. Under the current legislation, if there is an allocation of funding from a Department to a large organisation such as the Central Remedial Clinic or Rehab, what are the Standing Orders or the structure for the Committee of Public Accounts in terms of those people coming before the committee, apart from having to go down the Committee on Procedure and Privileges route?

Mr. Seamus McCarthy

The legal situation I have outlined is in regard to the legislation that is in place for me to carry out an inspection but there is an analogous question as to what is the-----

Deputy Kieran O'Donnell

By extension.

Mr. Seamus McCarthy

-----accountability of a service provider to come before the Committee of Public Accounts, and I would have thought that is something on which it would certainly need to seek legal advice. My understanding of it is that a service provider is not a person who would be accountable to the Committee of Public Accounts regarding the provision of a service to a body which is accountable to the-----

Deputy Kieran O'Donnell

They get more than 50% of the funding.

Chairman

The application for compellability will clarify that for us-----

Deputy Kieran O'Donnell

Okay.

Chairman

-----and arising from that we can take it from there.

Deputy Áine Collins

I am not sure that application will clarify that. We may need a legal opinion on it, but we will see.

Chairman

We have had a legal opinion-----

Deputy Áine Collins

Yes.

Chairman

-----and we have our application to the Committee on Procedure and Privileges. It will get legal opinion - God bless the legal profession-----

Deputy Áine Collins

Yes, God bless them.

Chairman

-----and we will then make up our own minds. Following public money is first and foremost in my mind.

Deputy Áine Collins

Of course.

Chairman

Can we agree our agenda for Thursday, 15 May 2014, which is 2012 Annual Report and Appropriation Accounts of the Comptroller and Auditor General - Chapter 4: Vote Accounting; Chapter 12: Contract Management in Education PPP Projects; Vote 26: Education and Skills, National Training Fund Accounts 2012? Agreed.

I propose to adjourn the meeting until the Dáil deals with its business.

Sitting suspended at 10.36 a.m. and resumed at noon.