COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 5 Oct 2023

Business of Committee

An Cathaoirleach

The business before the committee this afternoon is as follows: minutes, accounts and financial statements, correspondence, work programme and any other business. The first item is the minutes of the meeting 28 September 2023, which have been circulated to members. Do any members wish to raise any matters? No. Are the minutes agreed? Agreed. As usual, they will be published on the committee's website.

Let us move on to accounts and financial statements. The first item of business this afternoon is the 53 sets of accounts and financial statements that have been laid before the Houses of the Oireachtas between 25 September and 29 September. I call Mr. Seamus McCarthy, the Comptroller and Auditor General, to address these before I open up the floor.

Mr. Seamus McCarthy

No. 1 is the accounts of the Digital Hub Development Agency for 2022, which received a clear audit opinion. However, I drew attention through note No. 7 to the financial statements, which discloses that the agency incurred an expenditure of €227,500 in respect of 2022 as a result of a vacant site levy charge by the local authority. This is the fourth or maybe even the fifth year in which a levy has been paid. Already, they have paid more than €1 million in vacant site levy charges.

No. 2 is the Office of the Planning Regulator for 2022. That received a clear audit opinion. However, that may be a little bit late in being presented. It was signed on 10 May, so it has been nearly five months in getting that presented. The committee may want to follow up with that.

No. 3 is the Garda Síochána Ombudsman Commission for 2022, which received a clear audit opinion. No. 4 is Teilifís na Gaeilge for 2022, which received a clear audit opinion. No. 5 is the Approved Housing Bodies Regulatory Authority for 2022, which also received a clear audit opinion. No. 6 is the Residential Tenancies Board, RTB, for 2022. It received a clear audit opinion but there are a number of connected issues to which I draw attention. There are significant disclosures in the financial statements, the first of which is a cost overrun and delay in the delivery of a new IT-based management system. There were also functionality difficulties with that for tenancy registrations and disputes. The second aspect is non-compliance with legislation on late annual registration penalties. Because of the difficulties with the system, automatic penalties were being applied to late registrations and the board took the view that they should return these. However, there is actually no provision in the legislation for their return. Therefore, at the year-end, they identified €402,000 that they were in the process of reimbursing to landlords because of the difficulties with the system. Finally, I draw attention, as I did in the previous year, to the non-compliant procurement of business processing services, which they had again rolled over. It is a significant-----

An Cathaoirleach

What was the value of that?

Mr. Seamus McCarthy

The contract was in the millions of euro. They have been using the same supplier for a number of years. It has been for nearly a decade. They keep extending the contract and it appears to me that it is a non-compliant procurement. However, these are all related problems with the organisation.

Regarding the appropriation accounts, as members may be aware, there were 45 in total for Departments. They were all presented last week. They all received clear audit opinion. The accounts properly present the transactions and financial position. For a number of the accounts, I draw attention to certain matters that are disclosed. There are links to chapters in the report and the accounts of the public services for 2022. I do not propose to go through them in detail because there are too many of them, and because I think they are already in the public domain.

Moving on to accounts, No. 52 is the Health Products Regulatory Authority for 2022. That received a qualified audit opinion. The accounts give a true and fair view, except for the fact that they account for the costs of retirement benefit entitlements of staff, only as they become payable. That is a standard qualification for many of the health bodies.

Finally, No. 53 is on the Sustainable Energy Authority of Ireland for 2022, which received a clear audit opinion.

The Chairman may recall that I have a report that deals with two significant schemes operated by the Sustainable Energy Authority of Ireland that the committee may be interested in examining.

An Cathaoirleach

With regard to the Residential Tenancies Board and non-compliance with legislation and late annual registration penalties, in order that we understand properly what happened, is it a case that penalties were applied because it was the fault of the landlord for not registering or was there a breakdown in their systems? Which was it?

Mr. Seamus McCarthy

The board has accepted that difficulties with the system resulted in landlords being unable to get their registrations in.

An Cathaoirleach

Okay.

Mr. Seamus McCarthy

Because of the way the system is set up and because of the way the legislation is framed, the penalties were automatically applied even though it was not necessarily the fault of the landlord and, therefore, the board felt it was fair to return amounts that had been charged on that basis. It was providing for just over €400,000 to be reimbursed.

An Cathaoirleach

With the non-compliant procurement of businesses processes and services, Mr. McCarthy mentioned that it is going into millions. Does he have a figure?

Mr. Seamus McCarthy

I do not have a figure offhand-----

An Cathaoirleach

There is a figure here-----

Mr. Seamus McCarthy

-----but I think the latest extension was probably over €2 million. That was the value of the extension of the contract.

An Cathaoirleach

I suggest to the committee that we write to the RTB and bring to its attention that we are concerned about this non-compliant procurement. Perhaps the Comptroller and Auditor General can provide that figure-----

Mr. Seamus McCarthy

I can certainly find the figure for the Chairman.

An Cathaoirleach

-----and we can ask it what steps are being taken to address this. Is that agreed? Agreed.

Can we agree to note the listing of accounts and financial statements? Agreed. As usual, the listing of accounts and financial statements will be published as part of our minutes.

There are a couple of items of correspondence. As previously agreed, items that were not flagged for discussion for this meeting will continue to be dealt with in accordance with the proposed actions that we have circulated, and decisions taken by the committee with regard to correspondence are recorded in the minutes of the committee’s meetings and published on the webpage.

The first category of correspondence under which members have flagged items for discussion is B - correspondence from Accounting Officers or Ministers or both. No. 2162C is from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Deputy Catherine Martin, dated 3 October, providing an update with regard to the terms of reference for the Mazars report. I propose that we note and publish this item. It was something on which we were very much in agreement with her. She stated in her letter of 3 October that:

The [RTÉ] Expert Advisory Committee that I appointed to undertake a Review of Governance ... have requested the following expansion ... of [the terms of] reference of the Mazars examination to assist them in their ... work:

- to review whether appropriate processes and procedures were followed in relation to the approval and operation of the barter account ... established in 2012;

- to review the role of the 'Executive Board' and Board of RTÉ as regards the governance of the barter account in the period 2017 - 2022; and,

- to review whether, and if not why not, the internal audit function in RTÉ, the Audit and Risk Committee of the Board of RTÉ, and RTÉ’s external auditor examined or queried the barter account in the period 2017 - 2022.

She went on to state that:

Mazars have informed my Department that this expansion to the terms of reference will not impact on the timelines for the delivery of Mazars 2 in November 2023. A further report (‘Mazars 3’) encompassing the matters set out in the expanded terms of reference is also ... [being] completed ...

That is so members are aware of that response from the Minister. If it is agreed, we will note and publish the item of correspondence. I think members will be happy enough with it. Does Deputy Colm Burke wish to comment on it?

Deputy Colm Burke

No.

An Cathaoirleach

That completes the items of correspondence. We will move on to section 4. Members have been circulated with a draft work programme discussion document, which is displayed on their screens. Next week, we will once more meet with representatives from RTÉ and the Secretary General of the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media to resume examination of matters relating to the appropriation of public moneys to RTÉ and the expenditure, by RTÉ, of such moneys; and the commercial arrangements entered into by RTÉ and its presenters, including those underwritten by RTÉ, which have impacted on and relate to the expenditure of public moneys.

On 19 October, we will engage with Children’s Health Ireland regarding its 2021 financial statements and the National Paediatric Hospital Development Board with regard to its latest financial statements. We have requested that the Department of Health ensure that the National Paediatric Hospital Development Board's 2021 accounts are laid ahead of this meeting.

On 26 October, we will engage with the Department of Housing, Local Government and Heritage regarding the Department’s 2022 appropriation account. The delivery of social housing by local authorities and the funding and governance of Uisce Éireann have been flagged as specific items and representatives of Uisce Éireann and the Commission for Regulation of Utilities, CRU, have also been requested to attend with the Department. I propose that we add the following chapters from the Comptroller and Auditor General’s Report on the Accounts of the Public Services 2022 to the agenda for this meeting: chapter 3 - central government funding of local authorities; and chapter 4 - accountability for central funding of local authorities. Is that agreed? Agreed.

We have six free meeting slots then in November and December. On the basis of the Comptroller and Auditor General’s 2022 Report on the Accounts of the Public Services, which we got last Friday, the 2022 appropriation accounts and areas of interest to members, the secretariat has prepared a list of potential bodies for these meetings, which are now visible on screen. I will go through the list and then if members wish to comment they may do so. I propose that we agree the meetings of 9 November, 16 November and 23 November today in order that the secretariat can begin making preparations.

The following bodies are suggested for the upcoming engagements, in no particular order: the Department of Finance; the Office of the Revenue Commissioners; the Department of Social Protection; the Department of Public Expenditure, National Development Plan Delivery and Reform; the Department of Housing, Local Government and Heritage; the Department of the Environment, Climate and Communications; the Sustainable Energy Authority of Ireland; the Department of Further and Higher Education, Research, Innovation and Skills; the Department of Foreign Affairs; the Department of Agriculture, Food and the Marine; and the Office of Public Works. Obviously, the Department of Public Expenditure, National Development Plan Delivery and Reform and the Department of Finance would generally be prioritised, particularly after the budget period. Therefore, I suggest that we try to get them in this side of Christmas. Perhaps we could bring in those two Departments in late November or early December.

In view of the Comptroller and Auditor General’s report and if there are no objections, I suggest we bring in the Sustainable Energy Authority of Ireland for one of the early meetings maybe on 9 November or 16 November. Representatives from the Department of Housing, Local Government and Heritage are appearing before the committee on 26 October, so we will try to give them a gap of one month. We might try to bring them in on 23 November to give a four-week gap.

Mr. Seamus McCarthy

It might be easier to have an engagement with the Department of Public Expenditure, National Development Plan Delivery and Reform early so that there would be time to consider any matters for the circular on the appropriation accounts for 2023.

An Cathaoirleach

All right. What if we bring in the SEAI on 9 November and the Department of Public Expenditure, National Development Plan Delivery and Reform on 16 November? That leaves three more sessions between then and Christmas. We could just have a suggestion of bringing in the Department of Further and Higher Education, Research, Innovation and Science or the Department of Finance. Maybe we could bring the Department of Finance in on 30 November. That would keep it away a bit from the budget period, when the Department will be busy, and give the officials the space to get that sorted. We will leave the rest until next week. Unless there are any objections, I will take that as agreed. Subject to availability, the line up will be the SEAI on 9 November-----

Mr. Seamus McCarthy

Chair, would you take the Department as well in relation to that, because it is broader? The chapter I published last week is dealing with responsibilities of the Department and the Vote.

An Cathaoirleach

The Department on 9 November, okay. Then on 16 November we will have the Department of Public Expenditure, National Development Plan Delivery and Reform. On 23 November we hope to have the Department of Housing, Local Government and Heritage in to discuss the issues outlined earlier. We would then have the Department of Finance in on 30 November, so we would have both finance Departments before us in November and that would set out the shape of things for the engagements following that. If there are no objections I will take that as agreed.

That concludes consideration of our work programme. Do members wish to raise anything else? I do not see anything else coming up.

Mr. Seamus McCarthy

I have some additional information now on the Residential Tenancies Board and that particular procurement.

An Cathaoirleach

Yes.

Mr. Seamus McCarthy

The background to it was a contract put in place in May 2013 for three years for the provision of a service with an option to extend for two further years. That would have brought it up to May 2018. The spend on that in total was €5.7 million during those five years, which is an average of about €95,000 per month. Since May 2018 the contract has been extended on six occasions. The combined expenditure under the extended contracts to the end of 2022 was €11 million, which is an average of about €198,000 per month, so the rate of expenditure was doubling. The projected further contracted cost from January to August 2023 was €4 million or €500,000 per month. As I said, it is kind of connected with the difficulties the board is having. The board takes the view it was appropriate and that it is compliant, but having examined it I take a different view on that.

An Cathaoirleach

We can ask the board to explain that because, as Mr. McCarthy said, there was the option of extending it out for a further two years up to 2018.

Mr. Seamus McCarthy

Yes. That was written into the original contract.

An Cathaoirleach

That is fine and we will accept that, but what of the five years since?

Mr. Seamus McCarthy

There is a provision in EU law that a contract may be extended, so long as the value of the extension is not more than 50% of the value of the original contract. What the board has done is that each time it has extended the contract it has been for a period that is likely to result in a payment that is less than 50%. However, it is my view the extensions are beyond what is contemplated in the legislation and certainly beyond the spirit of it.

An Cathaoirleach

We will raise our concerns and ask for an explanation of what actions the board is taking to regularise this and comply with procurement rules.

Mr. Seamus McCarthy

I think because of the difficulties the board was having with the new IT system when it rolled it out, namely, the functionality problems, it felt it did not want to be changing any more systems than it had to in order to try to keep the service operating.

An Cathaoirleach

Okay. As there are no other matters to discuss, we will adjourn until next week when we will engage with RTÉ. Go raibh míle maith agaibh.

The committee adjourned at 3.05 p.m. until 9.30 a.m. on Thursday, 12 October 2023.