Joint Committee on Housing, Local Government and Heritage debate -
Tuesday, 17 May 2022

Local Government Audit Service Report: Discussion

Vice Chairman

We are now in public session. I thank our witnesses for their attendance. From the Local Government Audit Service we are joined by Ms Niamh Larkin, director of audit, and Mr. Richard Murphy, principal local government auditor.

Witnesses are protected by absolute privilege in respect of their contributions to today's meeting. This means they have an absolute defence against any defamatory action for anything they say at the meeting. Witnesses are, however, expected not to abuse the privilege they enjoy. It is my duty as Vice Chairman to ensure this privilege is not abused. Therefore, if their statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks and it is imperative that they comply with such direction.

Witnesses are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I invite Ms Larkin to make her opening statement.

Ms Niamh Larkin

I would like to thank the joint committee for the invitation to attend this meeting today, to discuss the report on the overview of the work of the Local Government Audit Service for the year ended 31 December 2020. I am joined by my colleague, Mr Richard Murphy.

The Local Government Audit Service, LGAS, performs the independent, external audit of local government, as established by the Minister for Housing, Local Government and Heritage. The LGAS audits the annual financial statements of local authorities, including regional authorities, motor taxation offices and other bodies. The Minister for Housing, Local Government and Heritage appoints auditors, known as local government auditors, to carry out or assist in the carrying out of audits of local authorities and other bodies.

All local government auditor staff are qualified accountants and are recruited following open public competitions. Each local government auditor is assigned an audit district under warrant of authority from the director of audit. Local government auditors are independent of the Department when discharging their professional functions. This independence is protected in legislation in accordance with section 116(2) of the Local Government Act, 2001.

The Local Government Act, 2001 sets out the primary duties of the local government auditor as follows:

In the course of the audit of accounts of the local authority or other body, the local government auditor shall carry out such audit tests as he or she considers appropriate in order to be satisfied as to:

(a) whether the annual financial statement is prepared in accordance with section 108 or with the accounting requirements otherwise applicable to the body concerned,

(b) whether the annual financial statement presents fairly the financial position of the authority or other body and of its income and expenditure for the period in question,

(c) whether the transactions of the audited body conform to the statutory or other authorisation under which they purport to have been carried out.

There are a number of outputs from the audit. Following the audit, each local government auditor issues an audit opinion, an audit report and a management letter to the chief executive of the local authority.

It is the local government auditor’s main statutory duty, following completion of the financial audit, to give his or her independent audit opinion on the annual financial statements of the audited body, as to whether it presents fairly the financial position of the audited body and of its income and expenditure for the period under audit.

In addition to the audit opinion, it is custom and practice to issue statutory audit reports covering any matter or matters which the auditor considers should be reported. The chief executive of a local authority is required to respond to this report and his or her comments shall be included, if of material significance, as part of the final report. This procedure has enhanced public scrutiny of local government as management responses to address the issues raised at audit now form part of the published audit reports. In accordance with international standards in auditing, an auditor may issue a management letter drawing attention to any weaknesses in financial procedures or internal controls or both identified during audit and make appropriate recommendations.

This report provides an annual overview of the work of the Local Government Audit Service in delivering on its statutory remit of providing the external audit of local government, in accordance with sections 114 to 126, inclusive, of the Local Government Act 2001, as amended by the Local Government Reform Act 2014. The report is divided into three sections. Section 1 provides detail on the background of the Local Government Audit Service, the legislation under which we operate and the various obligations we have. It also looks forward to our future priorities. Details regarding the various relationships the Local Government Audit Service has with other bodies, including local authorities, their audit committees, the National Oversight and Audit Commission, NOAC, and the Office of the Comptroller and Auditor General are set out. The relationships and interdependencies with our various stakeholders are also noted. The role played by the value for money unit in the LGAS, the reports issued during the year and ongoing are highlighted.

Section 2 provides a high-level independent summary of the financial performance of the local authorities and their financial position at the year-end. The primary sources of information for this section are the local authority audited financial statements and their annual audit reports. As with previous years, the annual report explores the sources of funding for local government and looks at the various supports received, including the rates waiver scheme, restart grant schemes and loss of income from goods and services and increased Covid-19 related expenditure. Details of the main sources of both revenue and capital income and expenditure together with historic data are set out in the report in order that comparisons can be made. The value of assets of local authorities and the liabilities that they face in both the short and long term are detailed along with comparisons.

Section 3 summarises the audit opinions and the findings from the audit reports issued. The purpose of an audit report is to highlight issues noted during the annual statutory audit. However, it is equally important to recognise the continued progress made by some local authorities in these areas, especially during challenging times. Therefore if improvements are noted in audit reports, these are referred to in this section also. Auditors have continued to note improvement in the collection yields in the area of housing rents and housing loans. The steps taken by some local authorities in improving their budgetary controls and reducing revenue deficits over the last number of years has also been commented on in some reports. Other areas where improvements were noted by auditors as part of their annual audit reports included capital balances, fixed asset management, procurement, and governance. However, issues or findings that appeared in the 2020 audit reports which were consistent with prior years included asset management, unfunded balances, interest-only or rolled-up interest loans, development contributions, procurement and understaffed internal audit functions. The reporting of these issues individually to local authorities and cumulatively in this report is important, as it allows us to highlight the recurrent sectoral issues.

The findings included in the overview report are not an exhaustive list of all findings but a summary of the main areas. The audit reports for each local authority deal with the findings in detail. I hope the overview report gives an insight into the work carried out annually by the Local Government Audit Service and I look forward to discussing it with the committee in detail.

Vice Chairman

I thank Ms Larkin. With the agreement of those members present, Senator Boyhan will take the first slot. I advise members that as a result, their speaking time will be seven minutes later than originally agreed. If members are not present when their slot is called we will do our best to include them at a subsequent slot.

Senator Victor Boyhan

I thank the Vice Chairman and members present for facilitating me. I have to go up to the Seanad Chamber after this but I will be back. I welcome Ms Larkin and Mr. Murphy and thank them for their ongoing positive engagement with me. They are always available and if I have a particular query I have always found them to be very receptive and helpful in furnishing me with any details to assist me in my own parliamentary work.

The overview of the work of the Local Government Audit Service is very extensive. Ms Larkin in her final paragraph referred to the more granular detail that is in the individual reports themselves. I want to flag a few concerns. I refer to the time lag from 2020 to 2022. I know that is not Ms Larkin's problem but it is the constraints of the system. Does she have any recommendation or suggestion as to how we could knock a few months off that?

I took the time to contact many of the 31 local authorities to see how they have dealt with this report. I am a former councillor myself so I know how it works. The local government audit report is furnished to the chief executive. It then finds its way to the audit committee, which is quite a select group itself. As we discussed earlier, the chairs of those committees are not elected members, who are precluded under the legislation from chairing an audit committee. I have a difficulty with that as do some elected members but that is the system we have to operate in. Then we have a situation where the audit committee might not meet for another two or three months. It is a crazy situation. Therefore the chief executive will say he or she has not discussed it with the audit committee and cannot bring it to the attention of the elected members. I do not understand the logic of that. I want some reassurance if the witnesses can provide it. Is there some impediment as to why all members of the council could not receive the report at the same time? The audit committee cannot adjust, tweak or modify any element of the report or tamper with it, not that they would. There is no reason the audit committee and elected members could not have it at the same time. Can Ms Larkin confirm that?

The 2020 report sets out the LGAS priorities for 2022. I am not going to read them out here but they are very impressive. I like that. While we are dealing retrospectively with so much, the LGAS has gone to the trouble to set out in page 10 its priorities for 2022. I acknowledge the importance of that contribution.

On the recurring themes, I took a random sample of 12 councils. I am not going to name them because it would be unfair to single them out. They know who they are. I printed each one off and marked them up. I refer to one local authority in respect of the fixed asset register. The witnesses will be very familiar with this; it is the land and property register. Again, the auditor singles out that it has been reported by a previous auditor and that it is recurring. It is stated that the LGAS has asked the council to address these issues continuously since January 2017, when we had the corporate state report, I think it was report No. 30, an excellent report which I suggest now needs to be revisited. The chief executive in this case says the matter is noted and it is a work in progress. That is after years and years during which the same local authority is being cautioned about its failure to comply. Are there sanctions?

We go to another authority. It is a recurring issue for ten or 15 or them and I have not even looked at the whole 31 councils. A recurring theme is the failure of local authorities to have a detailed inventory of valuable real estate that belongs to the taxpayer. It does not give me confidence in chief executives managing the real estate of the citizens in these 31 local authority areas. I am not going to rehash the RTÉ programme or bad publicity but it does not give the public confidence in a system when the local authorities are not addressing issues the Local Government Audit Service has raised.

The final area I want to single out is that of local authority companies. I received a letter from a councillor who lists in an Excel sheet all the non-commercial agencies under the aegis of the local authorities. We have all these subsidiary companies which are hands-off for the local authority members and are subject to no scrutiny or accountability by the elected members of the councils.

Many of these companies involve theatre, culture and sport. They could be development companies or property companies. They are investing millions of euro of taxpayers' money and taking risks and not all of them have been very successful. Somehow, none of this is in the public domain. These are public funds and these are people are non-elected officials in local councils buying property and dealing in real estate and yet there is no accountability to elected members. There may be an elected member or two on the board but their duty of care is to the company, not the council, so I have real concerns.

They are two recurring themes. This might be beyond my remit but I ask that we produce a special report on these subsidiary companies, audit them and find out what is going on in the 31 local authorities because I do not think it is satisfactory that elected members have no way of scrutinising the public affairs and funds relating to them.

As Ms Larkin knows the two points I am making about the real estate property register, she might address them. In simple terms, I am asking whether it is possible to have a renewed focus on these two key issues that the auditors continually raise across many local authorities.

Ms Niamh Larkin

I thank the Senator for all his comments. As for the timeliness of audit reports, we complete all our audits by 31 October every year. We only receive the accounts for most of the local authorities on 1 April and finish all our audits by 31 October. We would be in favour of our audit reports being issued as soon as they are issued to the local authority for the information to be more timely. There are two legislative items relating to this area. There is legislation about sending out the audit report and there is legislation about the audit committees. Those are not coterminous and there is no timeline set out within them. A lot of local authorities publish accounts and send them to councillors as soon as we send them the audit reports. However, some local authorities wait for them to go to the audit committee first for that committee to do its report. Our preference would be for them to be issued as soon as we have issued them.

Vice Chairman

I thank Ms Larkin and she may return to the other points later.

In a similar vein, I have a question that I also put to NOAC. I am a member of the Committee of Public Accounts and the discussion about the degree of oversight of public spending at local government level has taken place at the Committee of Public Accounts and this committee. I say this as someone who was a member of a local authority for over ten years. The discussion at the Committee of Public Accounts concerned the fact that the function of the Comptroller and Auditor General but, perhaps more importantly, the resources that are available to the members of the committee to scrutinise the audit constitute a really important function. While the structures are there at local government level, the resources might not necessarily be there for members of local authorities and independent members of the audit committee to scrutinise the audit produced by the LGAS in the same way as is done at the Committee of Public Accounts. There was a concern among whether we should be asking whether there should be additional resources for members of audit committees to allow them to scrutinise these. Senator Boyhan raised the issue of independent companies operated by local authorities but there is also an argument around shared services, for example, Dublin Fire Brigade or the Dublin Region Homeless Executive. The same examples can be found in waste management and other areas. It is very difficult for a member of a local authority audit committee to scrutinise the delivery of spending by a shared service when they do not necessarily have the local knowledge that applies to a local authority they might not necessarily be part of or affiliated to. Has the LGAS looked at this? Does it believe that this committee should make recommendations to improve the resources available to local authority members and independent members of audit committees to give them greater scrutiny?

Programmes like the recent edition of "Prime Time" show the local government sector in a very negative light when many of us here know the significant amount of positive work done by local authorities and local councillors on behalf of their communities. When you do not get proper scrutiny or when audits are not properly scrutinised, sometimes you do not get to the bottom of why decisions were made, which can have a negative impact.

I have been aware of a decision at audit level in Dublin City Council where a circular regarding travel expenses for local authority members was misinterpreted by a staff member. As a result, every member of that local authority between 2018 and the date on which it was discovered owes an amount because of an error by a staff member. In the spirit of full disclosure, I am one of those people. The penalty does not to me because I do not intend to run again for the local authority in this cycle, so I can pay it off at my own discretion or through my retirement arrangements. However, those who want to run again as local authority members now have to repay that full amount in advance of running again for election. In some cases, a local authority member will have to repay 10% of his or her salary in advance of running again in a local election because of an error that was made by a staff member. It is an example of how we do not often get to the bottom of why decisions are made and if a penalty does apply, it often unfairly falls on the local authority member rather than on the local authority itself.

Ms Niamh Larkin

In terms of scrutiny of audit, an accountability framework is already in place regarding local government. We are one part of that. Our audit report goes to the chief executive. The chief executive and directors of service look at it and respond to us with an issue. The local government auditor then follows that up at the subsequent audit. That audit report also goes to the audit committee. I know audit committees are now tracking our issues in part of their recommendations. They are calling in some of the directors of service and asking for explanations as to improvements made so there is accountability there as well. Obviously, the audit committee then prepares a report that goes to the council so there are a number of layers of accountability regarding any issues-----

Vice Chairman

But are the resources there to support the structures?

Ms Niamh Larkin

We are adequately resourced in terms of audits. We use any additional resources for our value for money work. All of our audits are adequately resourced during the year. Internal audit is obviously a very important part of that governance structure in local authorities. The committee will have noticed that some audit reports do make reference to being understaffed or insufficiently staffed. That is a very important part. If the auditor had any concerns, that would be noted in the individual audit report. Again, that is for actioning from the point of view of the audit committee and the local authority.

Regarding the scrutiny referenced by the Vice Chairman - the "Prime Time" programme - it is important to note that the majority of those issues had already been raised in audit reports and management letters. The issue of expenses was picked up as part of our audit. Again, it shows the audit process is functioning correctly and is doing what it was intended to do. The subsequent payback is a matter for the council and the councillors.

Vice Chairman

Unfortunately, there is a unique factor in local government in that you are not allowed owe the local authority any money, be it a library fine or a bill of any nature. As a result of this mistake, there may be local authority members who will not be able to run again and I think this is a very serious issue in a democracy.

Ms Niamh Larkin

For us, the issue is that our audit process picks up those issues and we are able to report them to the local authority to ensure that they cease and do not happen again.

Vice Chairman

I appreciate Ms Larkin's replies.

Deputy Thomas Gould

The work done by the LGAS is very important. Accountability in local authorities is very important. Depending on the local authority, it could be dealing with hundreds of millions of euro.

I have a few questions arising from the report. One relates to a purchase of city trees by Cork City Council at a cost of €404,000 to improve the air quality in the city centre. No advice was sought from the council's own procurement officer and no documentary evidence was provided as to the value for money assessment for the purchase of these city trees. I was looking at them when I was in Cork city centre yesterday and thought I should raise a question about them. An awful lot of money was spent on them. It would be one thing if a value for money assessment was carried out that states they will improve the air quality and thereby justify the expense, but is it justified?

Vice Chairman

I will interrupt for a moment. Deputy Gould has a seven-minute slot but the next speaking slot available is also for Sinn Féin. I will allow the Deputy the full Sinn Féin allocation.

Deputy Thomas Gould

I will just take the seven minutes in case Deputy Ó Broin comes in.

Vice Chairman

That is fine.

Ms Niamh Larkin

I thank the Deputy. The matter to which he has referred was already recorded by the local government auditor in the audit report for 2020. The project was looked at and concerns were noted, as the Deputy said, in the report. Our role is to make sure that proper procurement practices are in place in any area in the local authority at which the local government auditor has looked. That was why this project ended up in the report It is being reported back to the chief executive for a reply. The matter will then be dealt with. It is about constantly improving the governance structure in terms of the procurement processes that are in place.

Deputy Thomas Gould

I was a councillor for 12 years. Should representatives of the Local Government Audit Service, LGAS, come in and sit down with the elected representatives to go through the reports for each local authority? Senator Boyhan made the point earlier about the time that passes before we get the report and the local authority audit committee gets a look at it and the time to go through it. There is an awful lot of work involved, which has to be recognised, for the people in the local authorities to carry out this work and go through the reports. Our guests are the people with the information and expertise. Could we consider bringing in the approach I have suggested? Every local authority would have issues with different parts of the report. Have our guests ever considered such an approach? Has it ever been asked of them?

Ms Niamh Larkin

At the moment, it is set out in the regulations that we present our report to the audit committee, which prepares a report for the council. That is the mechanism under the regulations at the moment as to how our issues are reported back to the council. Each council member receives a copy of our report and can raise any questions to the local authority about it. However, the mechanism at the moment requires a local government auditor to meet with the audit committee and present his or her report before the audit committee prepares a report for the council.

Deputy Thomas Gould

Local councillors then must feed back into their local authority's audit committee. There is no facility for them to engage with the LGAS if they feel something is of concern or if they have questions.

Ms Niamh Larkin

Some councillors ask to meet the local government auditor to discuss issues directly. There is such an informal process in place.

Deputy Thomas Gould

It is good to hear that route is available. I will move on to the derelict sites levy, which I raised earlier with representatives of the National Oversight and Audit Commission. The report outlines that derelict properties are subject to a levy at 7% of their market value. In 2019, that figure was 3%. In 2020, Cork City Council only collected €163,000 of the €3.2 million that was deemed due by the local authority. It also states there were 95 properties on the derelict sites register. I have a couple of issues in this regard. The LGAS is carrying out an audit and I do not believe it has the full information. The report states there are 95 properties on the derelict sites list when we know that figure is much higher. This is not an issue specific to Cork City Council. It is an issue for all 31 local authorities. Thirteen local authorities are not recording any derelict sites at all. This is a failure. It is a financial matter. Millions of euros are not being collected annually. Our guests are the people with oversight of local authorities and how they are conducting their business. This is wrong and needs to be addressed. Is there anything the LGAS can do to ensure that all local authorities have an accurate derelict sites register? They should have accurate figures if they are supplying the LGAS with information. Local authorities should be able to collect all those levies. That money belongs to the citizens and local authorities. It should be spent on services such as parks, roads and public lighting. In Cork city alone, more than €3 million is outstanding.

Ms Niamh Larkin

I thank the Deputy. Levies not being collected is an issue that has been listed in a number of audit reports for 2020. It made its way into our overview report for the first time in 2020 because we recognised it was a recurring issue across a number of local authorities. As the Deputy said, it is an issue from a number of different perspectives. The register might not be updated correctly. It might be unavailable. The levies might not be applied and they might not be collected. We recognise it is an issue as a matter of lost revenue for the local authorities. I understand the function of collecting the vacant sites levy will move to Revenue in 2023. That should address some of the issues.

Deputy Thomas Gould

We are talking about oversight here. We are also talking about money that local authorities should be collecting. Of the derelict site levies that should have been collected, €12.5 million is outstanding. Are there sanctions available? Is there anything the LGAS can do to force local authorities to do what they should be doing? We know that 13 local authorities have not recorded any derelict sites and that the other local authorities are not collecting enough in levies. What can we do to force them to do what they should be doing? This is legislation they should be enforcing. Is there anything the LGAS can do to sanction local authorities or to force them to give an accurate report on dereliction and levies?

Ms Niamh Larkin

As the Deputy said, it is set out in legislation. The percentages to be applied and what the local authority is supposed to do is set out in legislation. It is also set out in circulars from the Department. Our role is to ensure that the legislation and the circulars are being adhered to in the local authority. That is what has led to those matters being reported on in individual audit reports and in our overview report. Our mechanism is to report and to seek feedback from the chief executive. The accountability framework dictates that our report then goes to the audit committee, the members, the management and the chief executive in the local authority. We follow up on issues every year. Any issues that are raised one year will be followed up on the following year to see what action has been taken.

Deputy Thomas Gould

The derelict sites levy came into being in 1990. It is 32 years old. Some local authorities have not added a single site to the derelict sites register. Is LGAS tracking local authorities that are putting in an attempt to address this? Local authorities and chief executives are refusing to do what they have been mandated to do and no one is able to bring them to account. This is a scandal. We are in the middle of the worst housing crisis in the history of the State. We have local authorities. I know from my fellow Sinn Féin representatives in Cork City Council that the council had to look at the services it could provide for 2022 because of the financial position with regard to its budget for this year. It had to cut some services although not as many as it expected. How can any local authority be allowed to cut services and at the same time leave €3 million, and perhaps double that amount, uncollected?

Ms Niamh Larkin

There are two levies, namely, the derelict sites levy and the vacant sites levy. The latter came in under the later legislation from 2015. Our overview report refers to the vacant sites levy under the most recent legislation, and that is what is moving across to Revenue. I just want to clarify that we are referring to the vacant sites levy.

It is very important that all sources of revenue that are not being collected by the local authority are followed up. That is why, in all of our audit reports, we look at all sources in terms of rents, housing loans and rates, which are very important. Equally, we think it is important that all sources of revenue are followed up and that is why we refer the matter back to the chief executive for a response and follow-up. We want to highlight the issue, and we want it to be addressed and actioned within the local authorities.

Deputy Thomas Gould

Are the responses from the chief executives of the local authorities available to the public?

Ms Niamh Larkin

Yes. All of our audit reports are published on the Department website and also on the local authority websites. so not only are our audit findings visible but the chief executive's response is also visible.

Deputy Thomas Gould

There is another issue in regard to housing maintenance. A number of issues arise in regard to Cork City Council's report highlighting serious issues with housing maintenance. Twelve recommendations were made but none was implemented, and there were no financial controls in place to identify the expenditure on each property. The council’s response was that national asset management would be rolled out in 2022 at the earliest. This is information we got from parliamentary questions but the LGAS also has it in its own report on Cork City Council. Housing maintenance is a major issue. As the auditors and those with oversight in respect of the funding that is being spent on housing maintenance, do our guests from LGAS believe it has been dealt with in an accountable way?

Ms Niamh Larkin

We have a value for money unit in the audit service and, in the past, we would pick selected topics that we would look at as part of that. We have looked in the area of housing in recent years and the most recent report we did was a vacant and voids value for money report. We would collate the information across 31 local authorities and allow that to be benchmarked in terms of averages in certain areas. We have looked at housing maintenance before. All of those value for money reports are published on our website and all of them go to the chairs of all of the audit committees, as well as the local authorities, so those are very widely available. We do follow-ups from those value for money reports in order to see, if we have made recommendations, that they are being followed through afterwards.

Deputy Thomas Gould

What happens if they are not?

Ms Niamh Larkin

The auditors would tend to pick up those matters as well. When we do a value for money report, we have two mechanisms. The auditors would follow up the recommendations in the value for money reports and the value for money unit follows them up individually with the local authorities, so we have a double-prong approach in that area. We then revisit areas after a number of years to see what sort of progress has been made and what is best practice in that area now.

Deputy Thomas Gould

The LGAS would not map them every year.

Ms Niamh Larkin

No, not every year. Once we issue the recommendations, we leave it for about 18 months, typically, and then follow it up, but in the meantime, typically, the local government auditor will have followed it up as part of its audit and then report on it in its report.

Vice Chairman

To return to the comparison of resources that I raised earlier, Senator Boyhan makes a valid point that it is a very small number of members of the local authority who would be members of the audit committee and so, first, would be aware of the LGAS reports and, second, would be aware of the response to that report, and then would have an ability to raise it in what is often a very busy council agenda. Those members have no extra staff, for example, to help them carry out that work in addition to their current role, and they have no additional resources available to them. My question is this. While the LGAS carries out its audit with full diligence and so on, I do not believe there are the correct resources at each local authority level or the ability for them to bring forward concerns to a full council meeting. It does a disservice to all of the work done by the LGAS that it sometimes falls on a few ears, if not a few deaf ears. I do not feel that the structure available to Members of this House in respect of non-local government spending through the Comptroller and Auditor General is available in local government. I hope the witnesses might have a view on that because I am sure they are very proud of the work the LGAS carries out.

I would say that themes develop in local authorities where local authority members do not have the power to change national legislation but, as a result of the lack of movement in national legislation, there are then audit issues. I will give an example, the collection of fines for waste management, such as litter fines and so on. Often, the very difficult process of collecting those fines has a chilling effect and the local authority does not bother to issue them because it is too difficult to collect them. The local authority member cannot change national legislation, so the local authority member gives up or runs into a brick wall, and there is no natural connection point between that problem and making changes at national level. Obviously, local authority members will raise it through their Senators but that is a democratic expression, if the witnesses know what I mean, not an audit. That issue of local authority fines is one example. There might also be legal services for the eviction of tenants and, again, many local authorities have given up trying to evict problem tenants because of the legal services costs surrounding that. There might be the issue of the rents due by council tenants. In Dublin City Council, the last rent figure was something like €20 million and that is because of structural issues that local authority members do not have the power to change. Therefore, even if they call it to account, get the time and resources, bring it to a committee, get it raised and bring it to the full council meeting, they do not have the power to resolve the issue.

I appreciate that the LGAS is the auditor but there is a frustration at local and national level that all of the good work done by the LGAS does not get an airing and there does not seem to be a systematic approach to connecting those problems with changes in national legislation. I hope that does not do a disservice to any of the work done by the LGAS.

Ms Niamh Larkin

We are obviously very proud of what we do. We have a very professional audit service and we follow a very professional approach. In terms of accountability, what I can take it back to is the accountability framework of which we are part under the legislation. Obviously, we do not feed into policy or anything of that nature. What we have seen - and I definitely see it myself - is an evolving audit committee. The legislation only came in back in 2014 and we are on our second lot of audit committees at this stage. What we have seen is a much more professional approach to audit committees, with, as I mentioned earlier, audit committees tracking issues, not just internal audit recommendations but also our recommendations, and holding the chief executive and senior management within the local authority to account.

In terms of our audit reports not getting enough airing, obviously, we would like the audit reports to receive sufficient airing because our role is to highlight the issues and for progress to be made in those areas.

The Vice Chairman mentioned the collection of rents. That is something we look at in all of our audit reports because it is a very important source of income and it can be material to the annual financial statements - it just depends on the local authority. We would look at that and in particular at the collection and the ageing of rents to ensure that is being actioned. Many other reports make positive comment on what the local authorities are doing in that area in terms of using the mortgage arrears resolution process and other processes that are in place to make sure matters are resolved.

Senator Victor Boyhan

I have great faith and confidence in the LGAS, which does a very good job. That tees up all of these questions for us. We have all of these reports and they tee up all of these questions. When we go back and look historically at the reports, we see this re-occurring theme, like the fixed asset property register, and then the lame excuses from chief executives, who come out and say, “We are developing new systems.”

There are councils that have been developing systems for six or seven years and then it gets a one-liner to say it is a work in progress. I will not even suggest here what I might have thought about that. I am conscious about the circulars and the legislation and that the LGAS is hemmed in by that. Ms Larkin is not here to tell us about legislation. I appreciate and respect that also. The reoccurring theme from the members here today relates to how we impose sanctions. Chief executives are exceptionally well paid. I am supportive of them. They have a most difficult job but ultimately they are accountable and what I have an issue with is accountability. I will give an example. Again, I will not single out councils because that would not be fair. I acknowledge the work of the external chairs of the audit committees but I know of a number of them where the chair will come before the elected members in the public chamber where they are meeting, and they are very confident about presenting to it. I do not know if the meeting are private or if they are webcast but I think these would be webcast. The chief executive should be compelled. If we need to amend legislation or a regulation, go to the Minister or get him in after we have had this discussion with the witnesses, that is a matter for the committee, but each of the chief executives is the Accounting Officer ultimately and they are well paid to do the job. They are the chief executive of the local authority, and it would be ideal to have a situation where the chair of the committee and the chief executive answer questions.

I want to ask Ms Larkin a question. This report is for 2020, and there are 31 of them. Is she in a position to tell us or does she even know if each of those reports has been considered by each of the 31 local authorities? She may not be in a position to know. I understand that. Is she in a position to tell us that?

Ms Niamh Larkin

I will revert back to a previous comment Senator Boyhan made about the chairs of the audit committee. Again, it is set out in regulations that the chair prepares the report for the council and that is why there is an annual report following the meeting with the local government auditor.

In terms of our process, we only publish on the Department's website once the local government auditor informs us that the report has gone to the councillors. Therefore, I assume that those reports have gone to the council if they are on the Department's website at this point.

Senator Victor Boyhan

Yes, but are all 31 on the website?

Ms Niamh Larkin

We have 28 at the moment on the website.

Senator Victor Boyhan

So there are two or three missing?

Ms Niamh Larkin

We are just waiting for them to be published by the Department. I would say they will be up on the next day.

Senator Victor Boyhan

It raises questions as to why they are not published. The LGAS has completed its work on them.

Ms Niamh Larkin

On 31 October, every audit was completed.

Senator Victor Boyhan

They were completed on 31 October and some of the audit reports are still not published.

Ms Niamh Larkin

Yes, that is correct.

Senator Victor Boyhan

Is Ms Larkin alarmed or concerned by that?

Ms Niamh Larkin

My preference would be for all audit reports to be published immediately once the audit is finished. I reiterate the regulations and the legislation set out two different processes for the audit.

Senator Victor Boyhan

I appreciate that.

Vice Chairman

I do not wish to ask about specific details, but could Ms Larkin clarify the point about the circumstances that arise when a report is not published? That is an important point.

Ms Niamh Larkin

Local authorities have different processes in place because there is no definitive timeline set out in the legislation. Some local authorities publish the report immediately on their own website and issue them to all councillors as soon as we issue them and then we publish them. Others wait for the report to go to the audit committee, which could involve a time delay depending on when the audit committee meets and then wait for the report to be prepared.

Senator Victor Boyhan

We know that some audit committees delay their meetings, and this prolongs and delays the process. Some of these audit reports are pretty powerful and they are pretty damning. I am not suggesting anything but at some point they have to surface and be dealt with.

I do not know if Ms Larkin has any comment on this, but I would like to see some sort of guidelines in relation to a designated public meeting of a local authority to only deal with this particular issue. Councillors tell me they have been given only two minutes to discuss an audit report, so I think that is an issue.

I have every confidence in the integrity of the LGAS system and the hard work of its staff. I have been tracking it for a long time and I have engaged with for a long time. That is excellent. Where the shortcoming lies is in how we bring it from the LGAS producing the report to the floor of the council chamber, to wit, the councillors. I do not ask Ms Larkin to respond to that. It is just a comment.

It is a matter for Ms Larkin, her staff and her resources, but would she consider revisiting local authority companies and also deal with the issue about the property asset register. They are both alarming and of concern to different degrees. They are two issues that have been jumping off the page as a reoccurring area of concern. Ms Larkin might consider a focus on them. I might not even ask her to say that, because I know she has a work plan and programme, but she might take away that they are two areas on which I would like to think we could have more focus. I thank Ms Larkin and her staff.

Ms Niamh Larkin

I thank the Senator. I would like to go back to one point relating to the individual council meeting. Any format in which the issues in our report are given more consideration and where there is more accountability would be very welcome from our point of view as well. Of course we will consider local authority companies and the property register. Obviously, they are looked at in the majority of audit reports every year.

Senator Victor Boyhan

I thank both witnesses.

Deputy Thomas Gould

In terms of the derelict sites levy, I take issue with something that is in the report. It is noted that few property owners pay their annual levy when billed, and the outstanding levies are not collected until the property is disposed of. As far as I know, it is not legally correct for levies to be imposed every year. I refer to derelict sites, not vacant sites. The reports says the derelict sites levy needs to be collected every year and it should not be left until a property is sold. It states that, in fact, local authorities are failing in their legal duty to collect those levies. I do not think that should be in the report. I think that is a mistake. It needs to be clarified because under this scenario, if I get a parking ticket tomorrow, I do not have to pay it until I sell my car. That is what this is saying here: that a person who has a derelict sites levy that is due, does not have to pay it until he or she sells the property. As far as I know, that is in breach of legislation.

Ms Niamh Larkin

I think Deputy Gould is referring again to the Cork audit report. I do not have the report in front of me but I can come back to him with an answer. I think what he is referring to there is the fact that it was raised because the auditor is not happy with the approach that is being taken at the moment. The reason it is in the report is because the auditor has raised that point. I can come back to the Deputy with a written answer by the end of the week in regard to that specific point.

Deputy Thomas Gould

Gabhaim buíochas le Ms Larkin.

Vice Chairman

That concludes the questions. Ms Larkin can probably see the trajectory of our concerns. When she reflects on it, if she feels there were any issues she did not get to raise during the meeting, she can write to the committee in advance of us preparing recommendations. We would not want to prepare recommendations that are not feasible to implement. There is a lot of concern about the level of oversight and scrutiny, not from the perspective of the LGAS, but in terms of what happens after it issues its report. I thank the witnesses for their time today.

The joint committee adjourned at 5:28 p.m. until 3 p.m. on Tuesday, 24 May 2022.