Before I respond to the points made by Mr. Meade I will comment on the development of financial controls within the National Roads Authority. The NRA carries out its financial checks as part of a broader system of control on local authorities which include local government auditors, the EU Commission and Court of Auditors, the proposed Department of the Environment and Local Government audit unit and the internal audit functions of individual local authorities. The authority recognises its responsibility in this area and is continually strengthening its operation.
A new management structure is being put in place in line with the recommendations made by consultants appointed to review procedures and relationships with local authority and regulatory agencies generally. As part of this process, the authority has appointed a new senior member of staff to the position of head of internal support and control with responsibility to develop the annual review procedure for road grant payments to local authorities and, generally, to strengthen the authority's involvement in this area. The procedure will involve reviewing each local authority at appropriate intervals and focusing particular attention on the higher risk projects. The authority is currently recruiting two audit technicians to assist in this work.
The actions taken by the authority since 1997 include the completion of 26 control reviews in local authorities of national road grant claims and recoupment of funds, where deemed necessary. There were seven reviews in 1997, 16 last year and three to date this year with 20 planned for this year pending the appointment of the audit technicians.
As mentioned by Mr. Meade, last year the authority issued a circular letter to all county managers requesting them to review their national road grant claims and to provide confirmation that procedures and conditions had been complied with. Resulting from this, a number of local authorities have highlighted breaches or possible breaches that are the subject of review by the authority.
The authority is determined that its system of monitoring and control will ensure statutory, regulatory and value for money requirements continue to be achieved on behalf of the State and the European Union. In recent days I have received from the Department an agreement which I am required to sign whereby we will buy into the financial control and regulation of the operations of local authorities in so far as they relate to EU co-financed works.
Turning to the specific counties mentioned by Mr. Meade, the Comptroller and Auditor General made reference to the issues relating to Cork County Council in the authority's 1996 financial statement, which is the subject of this meeting. I am aware that the committee requested a report on the matter from the Secretary General of the Department of the Environment and Local Government which I understand it received in February. As the committee has reviewed the issues relating to Cork County Council in some detail, I will not spend too much time on them at this stage at least.
The procedures for submission of national road grant claims are set out in the authority's memorandum for road grants which was issued to all local authorities to ensure adherence to appropriate conditions and practices. The memorandum sets out conditions relating to the eligibility of expenditure for grant recoupment. In summary, grant claims may only be made in respect of expenditure incurred on foot of a valid invoice. Breaches of procedures outlined by Mr. Meade are mainly related to the non-observance of these conditions.
During 1993 and 1994 Cork County Council made excess claims for national road grants for three projects to the value of £2.47 million - the N20 project at Velvetstown and the Youghal relief road and Mulcon Valley projects. The claims were based on constructed invoices and were certified for work that had not been completed. The works relating to the invoices were subsequently completed and the liability matured.
The authority completed three reviews of these breaches in June 1997, March 1998 and August 1998 and concluded that, while they could not be condoned, there had been no loss to public funds. The subsequent reviews also confirmed that accounting procedures and controls had improved considerably and are now in order. The county manager has assured the authority that conditions relating to road grants will be fully observed in future.
The authority completed three reviews in Tipperary (North Riding) County Council - two in October 1998 and one in November. It found that an amount of £157,500 relating to the Thurles streets project had been claimed in November 1997 based on a constructed invoice from a contracted firm which certified that the work had been completed when this was not the case. Subsequently the work was completed to the value of £64,000 and a refund of £93,000 odd was made to the authority.
It was also found that two further similar items were claimed in November 1997 for just short of £89,000 in the case of the Roscrea bypass and just under £100,000 for strengthening work on the N52. Work was subsequently completed in 1998 for the full value of the amounts concerned with the exception of a sum of £7,400 odd relating to the N52 which has been refunded to the authority.
The authority also reviewed the outstanding cheque listing and found that £380,500 relating to land acquisition for national road schemes had not been debited to the bank, mainly relating to 1997 and 1998 for the Nenagh bypass. The council immediately closed sales for £226,500 and refunded the balance of £154,000. The authority immediately requested that the local authority change its procedures for land acquisition to ensure proper procedures are followed in future.
The authority completed a review of Donegal County Council on 27 November 1998. It found that two bridge projects had grant claims in excess of expenditure. In the case of Gweebarra bridge the amount of the overclaim and overpayment at the end of 1996 was £130,316. By the time of the review and as a result of work done after the end of 1996 the excess payment was £77,808. This has been refunded to the authority. The review also revealed an excess claim and overpayment at the end of 1997 of £9,500 relating to the Finn bridge. This has also been refunded to the authority.
Following a request from our regional manager for a report on the N8 pavement improvement programmes for the years 1996 and 1997 Tipperary (South Riding) County Council indicated that a credit of roughly £97,500 had occurred. The authority carried out a review on 18 January 1999 to confirm the credit amount on the pavement programmes for these years and to ensure no other procedural breaches had occurred. The review revealed that a sum of £46,000 had been overclaimed and recouped on one project - the Cashel streets project - at the end of 1997.
An examination of the November 1998 returns revealed an overclaim and overpayment of £115,500, in round terms, involving amounts ranging from an underclaim of £3,950 to an overclaim of £51,716 on a range of projects. In addition, an amount of £113,000 claimed in 1997 for land acquisitions on the Clonmel inner relief road had not been debited to the bank account at the time of the review. The authority sought and received a refund in April this year representing the total of all excess claims and payments identified.
As Mr. Meade said, an issue has arisen in Sligo from an audit carried out by DG XX of the European Commission. We are in the process of putting together and finalising an irregularity report on the matter. With the agreement of the committee, we could mention it again at a subsequent meeting. We are yet not in a position to provide the detail. What is not in doubt is that certain sums of money were claimed which were not appropriate for recoupment in road grants and that other amounts were claimed in invalid claims in respect of specific road projects being co-financed from the Cohesion Fund but which were acceptable as a charge against road grants. This is a slight complication.