I propose to take Questions Nos. 53, 143, 144 and 156 together.
The Department’s Internal Audit unit carries out independent audits across business activities. Its purpose is to examine the internal controls in place to guard against the risks associated with the activities and to provide assurance to management. Following an audit, Internal Audit reports are generated for management and outline issues and make recommendations if applicable for improving any deficiencies or shortfalls. The reports are internal documents circulated to senior management and the relevant business areas to assist in obtaining assurance and in addressing issues arising.
A new Compliance and Anti-Fraud Strategy 2014 – 2018 was introduced earlier this year, building on the approach and progress made under the Fraud Initiative (2011–2013), and redundancy debt is pursued under this overall Departmental policy.
To support and enhance its debt recovery approach, the Department is also in the process of replacing its current debt management system in order to deliver a more modernised and automated approach to the recording, accounting and recovery of all debts outstanding. The new system will be operational in the last quarter of 2014. Redundancy and Insolvency Sections will be using this system as part of their debt recovery strategy.
Where a company is continuing to trade, the Department actively engages with such employers in order to maximise the recovery of debt. Full recovery of the debt is sought and where appropriate, the Department agrees a debt recovery plan with employers which can include payment by instalment.
Where a company has gone into liquidation, the Minister for Social Protection becomes a preferential creditor against the assets of the employer.
Redundancy payments, are made to firms which are in financial difficulty, therefore, a very significant amount of this debt will not be recoverable.
Since 2011 the Department has introduced a much more rigorous and detailed examination of claims submitted. This includes cross checking wage figures against the P45/P35 returns and double checking for breaks in service, periods in receipt of social welfare payments etc. This detailed examination of claims ensures that the correct level of redundancy payment is made in each case.
Where employers default in making redundancy lump sums, the full statutory entitlement may be made to employees from the Social Insurance Fund (SIF). In addition where employers become insolvent, certain other outstanding statutory entitlements (arrears of wages, holiday pay etc.) may also be paid from SIF. Amounts paid under these circumstances are recoverable from employers. However the level of recoveries cannot be accurately estimated and the amount recoverable is recognised as a contingent
asset of the SIF.
In accordance with recognised accounting practice (International Accounting Standard 37 refers) a contingent asset is not recognised in the balance sheet of the SIF but is disclosed by way of note to its annual statutory account. The annual statutory account of the SIF which is subject to audit by the Comptroller and Auditor General records full details by way of note of Redundancy and Insolvency amounts paid, recovered, written off and outstanding; recoveries are brought to account on a cash receipt basis. The book value of the amount recoverable in respect of Redundancy and Insolvency at 31 December 2013 is €460,498,000.
Expenditure on the redundancy and insolvency payments schemes from 2011 to the end of August 2014 and debt recovery details for the period 2011 to June 2014 are set out in the following tables.
Expenditure on Statutory Redundancy Payments
|
Year
|
|
|
|
|
|
Rebates to Employers
(€ million)
|
Lump sums to employees
(€ million)
|
Total
(€ million)
|
|
2014
Jan to Aug
(Provisional)
|
4.93
|
40.93
|
45.86
|
|
2013
|
49.5
|
76.6
|
126.1
|
|
2012
|
167.4
|
134.3
|
301.7
|
|
2011
|
185.3
|
126.7
|
311.96
|
|
Year
|
Expenditure on Statutory Insolvency Payments Scheme
(€ million)
|
|
2014
Jan to Aug
(Provisional)
|
24.48
|
|
2013
|
22.047
|
|
2012
|
21.664
|
|
2011
|
18.510
|
Redundancy and Insolvency Payments Schemes
Payments and Recoveries 2011 to June 2014
|
Debt
|
2011
€m
|
2012
€m
|
2013
€m
|
2014 to end June
€m
|
|
Redundancy Payments Scheme
|
|
|
|
|
|
Payments (debt incurred)
|
68.6
|
95.6
|
61.2
|
29.4
|
|
Recoveries
|
3.7
|
4.09
|
5.2
|
6.5
|
|
Insolvency Payments Scheme
|
|
|
|
|
|
Payments (debt incurred)
|
18.5
|
21.7
|
22.05
|
11.8
|
|
Recoveries
|
0.8
|
1.8
|
1.8
|
1.9
|
