Vol. 399 No. 10
6 Mr. G. Mitchell asked the Minister for Tourism and Transport if he has satisfied himself regarding his Department's role in ensuring that State companies under his aegis have adequate accounting and internal and external audit controls, in view of the £10 million unreported losses by an Aer Lingus subsidiary; and if he will give an assurance that this problem is confined to this one matter.
The accounts of each of the State companies under the aegis of my Department are audited by firms of auditors, appointed by the boards of the companies subject to my consent. In the case of the air companies the relevant Acts provide for consultation with the Minister for Finance.
The State companies are required to submit audited reports and accounts annually to me, which are, in turn, laid before each House of the Oireachtas. The accounts are submitted in a standard format agreed between my Department, the Department of Finance and the state companies.
Accounting policy and procedures and the internal audit function are matters for the boards. However, at the behest of my Department, audit committees are in operation in the four commercial State companies under the aegis of my Department. In addition, my Department receive interim unaudited accounts on a regular basis for the purposes of monitoring performance.
Can the Minister tell the House how many accountants are employed in his Department to review the reports they receive from the State companies concerned? Furthermore, is he in a position to give us an assurance that no other State body is camouflaging their accounts in the same way as Aer Lingus?
I can tell the Deputy that all audited accounts are submitted to my Department on a monthly basis by CIE and B & I and on a quarterly basis by Aer Lingus and Aer Rianta. Of course, such accounts are screened initially by the boards of the relevant companies and then by the audit committees. My Department keep in very close touch and carefully examine these monthly and quarterly accounts submitted to them. Indeed, on an almost week-in-week-out basis they maintain contact with the companies in regard to their financial and operational activities.
With regard to the number of accountants, I am quite satisfied that the expertise available to my Department is sufficient. In this area we do engage consultant accountants from time to time to examine particular companies or projects. I will maintain a close eye on that aspect.
I want the record to show that my understanding is — from the Minister's reply — that it is a fact that there are no accountants employed in the Civil Service within his Department.
The Deputy will know that accountants do not know everything——
I know that the Minister himself is an accountant.
There is a senior economist in my Department who is competent to read and understand any financial information furnished. Of course, all of this information is dealt with in various ways by the Department of Finance, so that, between the Department of Finance and the economic planning unit of my Department, along with consultant outside accountants, the necessary expertise is available to us.
Now that we have established that there are no accountants in his Department — indeed I might add that his Department did not do very well in discovering what had happened in the case of Aer Lingus — can the Minister assure the House there is no further difficulty being encountered within the Aer Lingus group of companies, that no other section of Aer Lingus has been up to the same sort of activity as Aer Lingus Holidays? Can he give the House an assurance that that is the case? Has he caused inquiries to be made into their other subsidiaries? Furthermore, would he agree with the recommendation of the Committee of Public Accounts that the Comptroller and Auditor General should play a role in inspection of and reporting on State-sponsored bodies when issues of this type are involved?
I should tell the Deputy that the Chairman of Aer Lingus has informed me that a comprehensive action programme — part of which has already been implemented — is under way to substantially strengthen financial controls within the Aer Lingus group. The Assistant Chief Executive, Finance, who was recruited from outside the group last September, is now in the process of filling seven new senior finance appointments as part of a reorganisation of the group. In addition, steps are now being taken to strengthen substantially the group's corporate legal function and specific recommendations are being developed in that regard. The chairman has also assured me that all appropriate steps are being taken to prevent a recurrence of irregularities anywhere within the Aer Lingus group such as occurred in the case of the holiday company. He has also informed me that — as I requested — arrangements are being made for a phased, orderly withdrawal by Aer Lingus Holidays from the tour operating business at the end of the current season. The chairman has also advised me that, arising from the Craig Gardner report, the board of Aer Lingus have decided that certain legal action should be initiated.
