Vol. 183 No. 13
I move:
That a sum not exceeding £26,400 be granted to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1961, for the Salaries and Expenses of the Office of the Comptroller and Auditor General (No. 1 of 1923).
I should like to refer the Minister briefly to the substance of his replies to some questions I put during the year in regard to the functions of the Comptroller and Auditor General. Particularly I have in mind his activity as auditor of semi-State bodies and companies. This is a hardy annual. Article 33 of the Constitution provides that the Comptroller and Auditor General shall audit all accounts of moneys administered by or under the control of the Oireachtas. There are upwards of a dozen, perhaps more than a dozen, semi-State bodies, some of them companies registered under the Companies Acts, the annual accounts of which the Comptroller and Auditor General audits.
The funds of State-controlled bodies by definition are not administered by or under the control of the Oireachtas. I suggest it is an undue extension of the activities of the Comptroller and Auditor General which constitutes an unwarranted intrusion on the autonomy of such bodies as Irish Shipping, Aer Lingus, Irish Steel Holdings and others.
The bodies to which I have referred appoint the Comptroller and Auditor General under the Companies Acts. There is no compulsion on them to do so. In a recent reply, the Minister made the case that a certain principle was at stake in this matter. I do not think so but if there is such a principle, it is not consistently being applied. The E.S.B. and C.I.E. are among our leading semi-State companies but their accounts are audited by professional firms.
Has the Comptroller and Auditor General statutory authority to do the auditing?
No, the Minister appoints him. Only very few—only one or two. Otherwise, he is just appointed.
May I proceed, Sir? Very properly, we follow the British precedent in many matters affecting our financial administration. I think the Act under which the Comptroller and Auditor General's Department is set up is, in fact, the old Exchequer and Audit Departments Acts, 1866. It is a British Act.
I have endeavoured to find out what is the practice in Britain in regard to these semi-State bodies. They have many of them there. I have not been able to find out about all of them but I can state for a fact that the accounts of the National Coal Board— one of the largest bodies of its kind in England are audited by a firm of professional accountants. The accounts of our analogous body here, Bord na Móna, are audited by the Comptroller and Auditor General. Again, British European Airways and B.O.A.C. are audited by a leading firm of professional accountants, whereas our Aer Lingus and kindred companies are audited by the Comptroller and Auditor General. I do not think it can be argued that there is any principle at stake in this matter.
There are other strong arguments as to why the Comptroller and Auditor General should not be permitted to intrude into these companies. I suggest that the national interest requires here the development of a flourishing and dynamic accountancy profession. Our development in financial and commercial matters has, perhaps, been somewhat retarded but there are now signs of progress. If many of our largest enterprises in the country are to be audited by a Civil Service department, the independent accountant is deprived of an avenue of employment which should be open to the members of that profession. These semi-State companies are here to stay. We shall probably have more of them in the future. I suggest that if we have, it would be most undesirable to follow the precedents laid down in the case of the companies to which I have referred.
The question of the Government's confidence in the accountancy profession arises in relation to this matter, the Minister's confidence in the professional integrity and professional competence of the members of the Institute of Chartered Accountants to which I have the honour to belong. If the Minister has no confidence in the profession, I would urge him to say so frankly and give us an opportunity of putting our house in order. If, on the other hand, he has confidence—and I believe he has—I would urge him to consider my pleading sympathetically.
I do not believe the Comptroller and Auditor General is properly equipped to carry out the audits of commercial companies. I want to emphasise that I do not wish at all to cast aspersions on his department— quite the contrary. The staff of the Comptroller and Auditor General's department are highly skilled and highly specialised in a certain function —the audit of the Civil Service Supply and Central Fund finances. In the course of questions which I asked during the year, I elicited the information that there are 44 members of the staff who are engaged in audit work, of whom only three are members of the Institute of Chartered Accountants. The audit of commercial companies is in itself a specialised field. In particular, I feel that the Comptroller and Auditor General is not equipped to provide that ancillary advisory service which every good professional auditor provides in the course of his professional duties.
I do not wish to detain the House at this stage. I want to point to the fact that a year ago, when Deputy Dillon raised this point, the Minister was most sympathetic in his reply. He said that he had an open mind on the matter. I quote from the Minister's remarks at column 1513, Volume 176 of the Dáil Reports where he said:
I can assure the Deputy I have an open mind and I would certainly consider sympathetically any application made to me for a change by any of those companies.
I want to ask the Minister at this stage if he still has an open mind on the matter and, if so, will he go a step further and indicate, say, to Aer Lingus, Irish Shipping, Irish Steel Holdings that he would not be adverse to their appointing a professional auditor when the reappointment of their present auditors comes up at their next annual general meeting. If the Minister feels that he would be unable to do that, I suggest that he should carefully consider the question of appointing joint auditors—the Auditor General jointly with a professional firm. The practice of appointing joint auditors to large companies is commonplace in Britain and in America simply because of the scale of the work. It is a compromise which I would commend to the Minister.
I want to support Deputy Byrne in the case he made. I made it at some length last year. I had long and intimate association with the department of the Comptroller and Auditor General in the years when I was Chairman of the Public Accounts Committee. It is unnecessary to affirm my entire confidence in the capacity, skill and care habitually shown by that department and by the various Comptrollers and Auditors General who have occupied that position during the years when I had intimate dealings with them.
I agree with Deputy Byrne that the Comptroller and Auditor General's department is not properly equipped to deal with commercial accounts. I of course, know that from time to time the Comptroller and Auditor General took the precaution of inviting in consultant commercial accountants for the purpose of having the procedures of the division of his department which is responsible for this work reviewed so as to ensure that they are keeping up with the most modern practice. I have little doubt that, as a result of such consultation, the department of the Comptroller and Auditor General have satisfied themselves that their procedures are as up to date and modern as those employed by any commercial firm but there is a lacuna which the Office of the Comptroller and Auditor General can never fill.
One of the most important functions a firm of commercial auditors can discharge for its client is to look at the picture presented by the balance sheet or the profit and loss account of a commercial enterprise at the end of the year and, without revealing the confidential information which the commercial firm has acquired, to say to its client: "The result in your department"—dealing with drapery, grocery, hardware or whatever it is—"is manifestly, in our experience, inferior to what such a result ought to be."
That gives the client a warning that there is some lack of efficiency or lack of diligence in the particular department which the auditor has reviewed on his behalf. No auditor, however conscientious or dutiful he may be can discharge that essential function for a client if he is auditing only the accounts of one firm of that character in the course of his ordinary duties. Apart from the reasons set out by Deputy Byrne, when dealing with firms like Irish Shipping, which is unique in this country, we should have the advantage of a joint audit, that is to say have our own Irish firm in consultation with a firm of Norwegian or American or other country's auditors who would be familiar with our procedure but which would also have experience in dealing with other shipping firms so that that experience might be made available to the board of Irish Shipping.
The same is true of Acr Lingus or any company here, particularly of a semi-State character which is unique in our economic set-up. For without that basis of broad comparison between the performance of our company with that of companies in a similar line of business elsewhere, you are denied one very essential element which auditors should provide for their clients when they are called in for consultation. That is one point I want to make. I agree, therefore, with almost everything that Deputy Byrne said although I am not competent to speak on certain professional aspects of the question to which Deputy Byrne referred as a member of the profession.
I want to refer to another point. A strange reflection was cast upon the general performance of the Comptroller and Auditor General by the Minister for Agriculture when he was concluding. He assured the House that in the years between 1955 and 1957, with particular reference to 1956/57, the payments in respect of grants under the Farm Building Scheme by the Department of Agriculture were held up because the Exchequer had no money. He said that that day has long passed and how happy we are now. Deputy Davern is beaming there from his back seat thinking of speeches he made in days gone by in Timahoe on this subject. But the facts are quite different. If the Minister is correct, the Comptroller and Auditor General is incompetent and if the Comptroller and Auditor General is correct it would appear that the Minister is saying something which is untrue.
I do not think that matter arises.
I am vindicating the accuracy of the Comptroller and Auditor General. He reports that in each of the years 1954, 1955, 1956 and 1957 more grants were paid and more money given to grantees in any of the those three years than in any of the three years since Fianna Fáil took office in 1957. Both stories cannot be true. Either the Comptroller and Auditor General does not know his business or the Minister for Agriculture is telling the House an untruth.
The Vote before the House is a Vote for the next 12 months and the matter does not arise.
All I am saying is that in not one of the three years was a similar number of grants or a similar amount of money expended as between 1954 and 1957. That kind of fantastic misrepresentation by a Minister of our Government-and that Government sitting before us is our Government, the Government elected by this House——
God help us, but it is true.
That kind of fantastic misrepresentation reflects no credit on this Oireachtas and should be beneath the dignity of the most humble member of our administration. The House will understand I am referring to the Minister for Agriculture.
I confess my inability to refer to either of these points made by the Minister for Agriculture but I am quite sure the Minister for Agriculture was correct in what he said.
Then the Comptroller and Auditor General is incorrect.
The accounts of 12 bodies are audited by the Comptroller and Auditor General under statute. When these bodies were set up the statute laid down that the Comptroller and Auditor General should do the job and these vary from An Bord Fáilte to the Central Bank and the National University, so that one can see the variation. There are two where the Minister concerned, with the consent of the Minister for Finance, appointed the Comptroller and Auditor General; these are Bord Gaeltarra Éireann and Bord na Móna. There are eight more, including Irish Shipping, where the bodies themselves asked to have the Comptroller and Auditor General do the accounts, so there is a very big variation not only in the method in which the Comptroller and Auditor General is appointed but in the experience that the Comptroller and Auditor General must have got from his work with these various bodies. It is hardly realistic to suggest that the Comptroller and Auditor General is not equipped, or has not got the knowledge, to deal with these bodies. I am sure there are few auditors in commercial practice who have such a wide and varied experience as the Comptroller and Auditor General has in dealing with these companies.
Trading companies?
I said various companies.
We are talking about trading companies.
Even trading companies. There is quite an amount of experience of trading companies too and I think very few firms of auditors outside would have the experience that he has in dealing with these very big companies. However, I was asked to keep an open mind and I certainly have an open mind. During the year one company asked to be allowed appoint outside auditors to which I agreed and which shows that as far as I am concerned I have an open mind.
