COMMITTEE OF PUBLIC ACCOUNTS díospóireacht -
Thursday, 7 Jul 2016

Work Programme

Mr. Seamus McCarthy (An tArd Reachtaire Cuntas agus Ciste) called and examined.

Chairman

By virtue of section 17(2)(l) of the Defamation Act 2009, all witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.

As this is the first meeting of the new Committee of Public Accounts, there are many new members and also some new Deputies. Therefore, I invite Mr. McCarthy to give a short overview of his role and ongoing work that may be of interest to the committee. It will be followed by questions and answers.

Deputy Mary Lou McDonald

I am sorry, but, before he does that, let me make a couple of observations about how the committee might work. In the previous Dáil, particularly during its last year or so, I was concerned that obstacles were being put in the committee's way. In some instances, it may have been legitimate, but in others I considered it to be overly conservative and cautious and a little obstructionist in investigating certain matters.

I congratulate the Chairman and the Vice Chairman on assuming their positions. The work the committee does is important, in that we follow the money and are the voice of the citizen and taxpayer. I hope we will be facilitated in doing that job within the boundaries of Standing Orders, good practice and procedure. I hope we will not have a repeat performance of what happened in the last 12 months or so of the previous Dáil when it became very difficult to pursue certain matters. Many of the themes the committee will address are carry-overs from the previous Dáil when we did good work. The Chairman and the Vice Chairman have stewardship of the committee and I hope members will be supported and facilitated in asking questions on behalf of the public in a non-party political way so as to ensure we can get our work done.

Chairman

The Deputy's points are noted. We will revert to a general discussion on the work of the committee, but I now ask Mr. McCarthy to give a general overview and explain to members his role, particularly vis-à-vis the committee.

Mr. Seamus McCarthy

I will outline the matters about which the Chairman asked. I will not get too technical or legalistic in dealing with them, but I should probably mention some of the legal constraints. As most members probably know, I am appointed under Article 33 of Bunreacht na hÉireann, but my office and I operate mainly under the provisions of the Comptroller and Auditor General (Amendment) Act 1993 which is the core legislation.

The comptroller and auditor general functions are determined and defined in the Constitution. The comptroller function relates to the release of funds from the Central Fund of the Exchequer. It is a straightforward process. The Department of Finance or the National Treasury Management Agency, NTMA, applies to my office for what is called a credit. Assuming that we are satisfied there is a legal basis for either body to receive the funding, we agree to the release of the money from the Exchequer. It does not take a large part of the resources of the office. There are perhaps three or four staff in total engaged in it and it is not full time. It probably works out at somewhere between a half-time and a whole-time equivalent staff member in a year.

The auditor general function is my office's primary function. It involves the audit of accounts and financial statements of public bodies. Members are probably familiar with that work. It also involves the carrying out of value for money, VFM, examinations under section 9 of the 1993 Act or inspections which are carried out under section 8. I can discuss these examinations and inspections further.

I am also required by law to report to Dáil Éireann in particular ways and on particular matters. I issue a report on each audit we carry out - the individual audit certificate attached to a set of financial statements. Separately, there is a provision whereby I publish the appropriation accounts, the accounts of Departments in respect of the Votes for which they are responsible. I am required to publish each year with them a report which is usually issued in September. Since the two elements are locked together, everything must come at the same time because that is how the law requires it.

I can also issue special reports which may either relate to general matters that arise from the audits we conduct - for instance, if there is a common theme, I may report on a general matter - or VFM examinations or inspections.

I am specifically prohibited by the 1993 Act from commenting in my reports on policy matters. Members will not find a reference to, or at least a comment on, policy. We may point to the result of the implementation of policy, but members will not find a judgment on the merits of a policy.

Apart from the 1993 legislation, there is other legislation that makes me the auditor of certain entities and creates slightly different relationships in terms of accountability, for example, the Health Service Executive legislation, the NAMA legislation, the Central Bank legislation and the universities legislation. While I am the auditor of the Central Bank, a limitation is placed in the legislation on the Central Bank's accountability that excludes the bank from accountability to the Committee of Public Accounts for its financial statements. If I was to carry out a VFM examination of how the Central Bank spends its money, it would be within the parameters of the committee, but the bank is otherwise the subject of an unusual exclusion from the committee's remit. There is a similar provision in the case of Horse Racing Ireland and Bord na gCon which stems from the legislation under which they were established.

In total, we audit approximately 290 sets of accounts or financial statements each year. These funds and entities have a combined turnover of approximately €200 billion. Obviously, funds flow between them, but because they were set up as separate funds and entities, we must audit the two sides of transactions.

The number of funds and accounts that we audit is down from a peak of about 370 or 375. That is due to the amalgamation and abolition of agencies and some consolidation of the accounting arrangements that are put in place, where perhaps what was a departmental fund is now absorbed and it becomes a note of another set of financial statements. At the moment, as I said, we have about 290 funds and entities.

There are two specific exclusions from my remit that the committee might wish to note. The first is commercial semi-State bodies and their subsidiaries. They do not come within my remit. I do not carry out the financial audit of companies like CIE, Coillte, Bord Gáis or RTE. I do not have a remit to go in and carry out a value-for-money examination or an inspection in those and because of that, by extension, the Committee of Public Accounts is limited in its scope in calling them.

The other area where I do not have a remit is local authorities. Local authorities are audited by the Local Government Audit Service not by me. Again, that has an implication for the business of the Committee of Public Accounts.

On financial statements, I think it is something maybe to note and again I do not need to get too detailed about this. Votes, most departmental funds and education and training board accounts are prepared on what is called a cash basis. That is the accounts recognise cash received or cash issued in the period in which it issues or is received. All the other accounts and entities prepare their accounts on what is called an accruals basis. Essentially, transactions are recognised in the period to which they relate rather than the period in which they occur. Effectively, apart from Votes, Department funds and the ETBs, one should expect to see the same kind of set of financial statements in a public body that one would expect in a private body. Maybe one difference would be the level of disclosure. There are guidelines issued by the Department of Public Expenditure and Reform on matters that should be disclosed in financial statements. We encourage Departments and - maybe a little bit more than encourage - we push them to ensure they do comply with disclosure requirements. Sometimes there can be a question as to whether it would be useful for there to be a disclosure of a particular matter. We are quite strong in encouraging Departments to be as transparent as possible and to put as much information into the public domain as is relevant for the purpose of transparency about public business.

Organisationally, I am supported in the exercise of my functions by my office, the Office of the Comptroller and Auditor General. Technically, I am not part of the office and it is a separate entity. I exist as an individual carrying out my functions but, as I said, I am supported by the office. It is staffed by civil servants. The office is headed by Andy Harkness who is the Secretary and Accounting Officer for the office. He manages the Vote for the office. He also acts as a director of audit and is involved in carrying out and overseeing audits, along with two other directors of audit.

Each of the directorates within my office has a mix of financial and reporting responsibilities. They would have a grouping of financial statements, maybe within the areas of education, health, etc. We try to take a relatively vertical view so that we can understand better the business within individual sectors and that it is the same people who manage and carry out the audits in the health sector, the education sector, etc.

My office employs a total of about 140 whole-time equivalent staff. In terms of the breakdown, some 75% of the staff or about 105 people are engaged mainly in financial audit work. Approximately 15% or 22 people would be engaged in reporting work and approximately 14 individuals or 10% are engaged in the provision of support services such as IT, the finance unit, HR and so on. Within the staffing, 94 or 95 staff are qualified accountants and 40 would be pursuing accountancy studies at the moment. All of the staff are based in Dublin but the staff do undertake extensive travel as part of the financial auditing of clients based outside Dublin. A considerable number of our clients are located not just in Dublin but in all counties at this stage, I think.

Over the past number of years I have seconded, or my office has seconded, an individual staff member to the Committee of Public Accounts to act as a liaison officer. Mr. Billy Carrie is my colleague and he is with me today. I propose that he will be the liaison officer for the next year or so at least.

The core function of the liaison officer is to provide the Members with timely briefings on the key points in my reports or in the financial statements that are presented for the committee. I am conscious how busy Members are and how little time there is in a week to prepare for a meeting. I think that in the past maybe we have been producing, quite heavily, text-based presentations of information. I am not sure that that is the best way to deliver information to Members. I would like us to find, together, a way of getting the key information to Members in advance of meetings so that they are best placed to be able to carry out their function. I hope that we will be able to find a way that is useful. Mr. Carrie will be working with the clerk in trying to do that work. We will try different things and see what works best. Maybe different things work best for different Members and we are open to finding ways of making that work.

I thank the Chairman. I am quite happy to take any questions on the matters that I have outlined.

Chairman

This is a learning experience and as meetings progress we will see how things work. Does anybody have a question? If so, I shall take them in order.

Deputy Bobby Aylward

I have a question on the semi-State and local county councils, which is where most of us came from. Why do they not come under the remit of the Comptroller and Auditor General? Why are they separate? Should they come under the remit of the office? They spend public money.

Mr. Seamus McCarthy

It is a policy matter. It is a matter of long standing that it is the Local Government Audit Service and it operates within the Department of the Environment, Community and Local Government; it is a parallel. Its audit is quite similar to the audit that we carry out and its remit, in general, very much mirrors our own. Because of the reporting relationship between local authorities and the elected members locally, it is felt appropriate that the audit process would be targeted at a local level as well.

There is a development. In the past three years we have had the appointment of an oversight committee, which is operational. It oversees and looks for general trends in what is happening at local government level. I think its second annual report is due out around now. It is something that is discussed between the committee here and the Secretary General of the Department of the Environment, Community and Local Government, when he appears. As I said, it is enshrined in legislation. Also, I think local government is enshrined in the Constitution as a separate level of government. The audit arrangements mirror that and try to ensure that there is a line of accountability at local level that does not, if one likes, cut across what is happening at the committee. It is a matter for the Legislature, I suppose to-----

Deputy Bobby Aylward

Can we not summon them to appear before us for some reason?

Mr. Seamus McCarthy

No, that would not have happened in the past.

Chairman

Normally, the legislation setting up a particular semi-State body specifies the auditor and if it is not the Comptroller and Auditor General then we cannot go near them.

Mr. Seamus McCarthy

We try to work in co-operation with the Local Government Audit Service, where there is an area of responsibility that overlaps. For example, we are working on a review of the arrangements for motor tax collection, some of which is collected centrally and paid into the local government fund and some of which is collected locally through motor tax offices. We are co-operating with the Local Government Audit Service to present a report on it and I expect to complete it in the autumn. We are trying to ensure audit arrangements follow the money to the greatest extent possible and that there are no grey areas or areas where something is failing at the edges of responsibility.

Deputy Róisín Shortall

I thank Mr. McCarthy for his presentation. Apart from the annual accounts of the public bodies he oversees, I am curious about the value for money reports and the special reports. By what process does the Comptroller and Auditor General select topics or subjects for the reports and what scope is there for the Committee of Public Accounts to request that he make a particular selection?

Mr. Seamus McCarthy

The way my role is set up in law is that I am independent in the choice of matters on which I report. As I said earlier, 75% of the resources of my office are dedicated to financial audit work. The amount of resource we have available for what is discretionary, the reporting side, is limited. Given that we have to do the financial audits, this gets the first cut of resources. It is always a struggle to have sufficient resources to investigate the matters I consider should be investigated.

In the main, we identify topics in two ways. First, when carrying out the financial audit when we are inside organisations, we may find issues about which we are concerned. If we see that a major capital project that has been running for a number of years is not making the progress it should, we would flag it as something we should consider for reporting. We have a list of 140 to 160 issues that would potentially be something to examine, but it is impractical for us to get to all of them. We have to make choices, and we make them on a rolling basis.

There is provision for the Committee of Public Accounts to communicate with me, as Comptroller and Auditor General, and draw a matter to my attention which I should consider. The tradition in the past was that if the committee was minded that there was something important, it would be very difficult for me to say I was not going to do it, assuming it was in my area of responsibility. Over the years, when matters have generated a certain amount of public interest or there has been ongoing public concern, I would have taken it into consideration in my choices about what was prioritised. An example is when we examined the funding around SIPTU and training courses a number of years ago. We carried out the examination because we felt we could assist with bringing information into the public domain.

I am happy to engage with the committee and understand what its concerns are. Given that I am here every week, I listen to what members are asking and what the focus is. I get an understanding from them, which reflects what is happening with citizens generally as to what is important and what is of concern. We try to do work that speaks to those concerns, answers them and brings information which may be helpful to the committee and members of the public.

Deputy Alan Kelly

Mr. McCarthy said his office experiences resource difficulties from time to time. Will this affect any of the work in which we are involved? What difficulties are there? Do they impinge on the Comptroller and Auditor General doing his job in any way? From talking to those who were members of the Committee of Public Accounts before and colleagues, I am conscious that the volume of information and data management here will be incredible. I very much welcome and was taken by the fact that Mr. McCarthy is examining other ways in which to provide us with the information. Could he elaborate on how he will do it? We need to have the capacity to examine everything. I presume Mr. McCarthy is talking about providing information in some format and then we can make a decision about whether we will dig deeper. It would be helpful, and we can make our own decisions. Could Mr. McCarthy elaborate on it?

Mr. Seamus McCarthy

Like all other Government Departments and offices, we have a staffing limit which we cannot exceed. Therefore, one is always trying to approach it from underneath. We try to staff up as much as possible so we can use the maximum level of resources available to us. While the limit is 165 members, we are operating at approximately 140. Turnover in the office has increased during recent years. For the past couple of years, the staff turnover has been approximately 13% to 14%, which is quite high. It is difficult to maintain a workforce and have the right people in the right places at the right time. It means we must invest a large amount of resource in training. Mr. Billy Carrie has been heading up our training and professional development unit during recent years, and we constantly invest in it. There is quite a demand for the skill set that many of our staff members have and they find opportunities outside. This is what gives rise to the turnover.

We use two techniques to address some of the gaps. We take in professional, qualified accountancy staff from agencies to slot in and fill places on the audit teams. A challenge this may give us is that, very often, people coming from a private sector background may not have an appreciation of public sector issues and concerns. Our audit goes considerably beyond a standard private sector audit. We have much more emphasis on regularity matters, which is that transactions are done in accordance with the law, and, due to the interest of the Committee of Public Accounts, much more emphasis on governance and propriety matters. We regularly report on those. While drawing resources from outside is a short-term solution, a better solution is more permanent staff.

We contract out some of the work. One of the features of the public sector is that almost all agencies operate on a calendar year accounting basis. This means everybody finishes their accounting year in December and all the accounts are due for delivery to us in February, March and April, when we get a huge peak in demand for our work. As well as contracting out and in, we try to manage this peak as best we can. We are not always able to get to every entity in April or May. Some have to be deferred until June or July, whereas we get the bigger, higher value accounts dealt with early on. The bigger accounts include the Central Bank, National Treasury Management Agency, NTMA, and the Revenue. We have managed to bring the finance accounts forward.

There are certain implications with respect to the way we are resourced and that has an effect on the delivery of financial statements to the committee. It can expect to see smaller entities' accounts coming in later in the year rather than them all coming in together by the end of June.

On the issue of data management, I have learned the difficulty involved in getting briefing notes on briefing notes and telephone books are presented to me. I have three folders of material with me today. I sympathise with the challenge the committee has in preparing for these meetings. The way in which everybody accesses information is changing. We absorb information better now in a more visual way. We are looking at ways of summarising information and at graphical ways to present text which will the give members information at their fingertips without forcing them to read pages of text to figure out what is going on. That is just a suggestion. That works for me but it may not work for the members, or it may for some but not for others. It could be that a face-to-face briefing between the members and Billie Carrie, where they would have a conversation with him before the meeting, might be the best way to help them to quickly understand the key issues in a set of financial statements or in a report. We will just have to see what works. I am quite happy to get feedback from the committee if it does not work for them or if they think something different would work. We will try to find ways of assisting them.

Deputy David Cullinane

As a new member, I found the Comptroller and Auditor General's presentation very helpful. I commend the Chairman and the Vice Chairman on their roles and wish them well in them over the next number of years. We can have both options when it comes to getting information to the committee. We can get the information in the way the committee got in the past but we could get a hybrid version of it where we could get more visual, shorter presentations and it would be up to us to dip deeper if we wanted to, although we would have to get full information. That would be a good way to start and we could see how it works out.

On the question of the lines of demarcation and the issue of local government, I do not want to deal with the substantive issue as I will deal with that under item 4 of the work programme, which is the use of public private partnerships, PPPs, and how much State money is spent on PPPs. The National Development Finance Agency is responsible for all PPPs over €20 million and all PPPs generally, except in the areas of transport and local government. A central unit of the Department of Public Expenditure and Reform chairs the steering committee and has responsibility for all PPPs. Local government has developed a range of PPPs in all sorts of areas, ranging from waste to wastewater. If it so wished, would it be possible for the committee to deal with PPPs, including local government, given that a central unit of the Department of Public Expenditure and Reform has overall responsibility for PPPs? I will deal with the substantive issue later under item 4.

Mr. Seamus McCarthy

Over the years, we have looked at a number of PPPs in detail and we have reported to the committee on them. For a number of years, we were collating information about liabilities under PPPs from central government offices and Departments for the audits for which we are responsible. The Deputy mentioned the National Development Finance Agency and my understanding it that it assists Departments and local authorities on their projects but it is not responsible for them as such. It is a technical unit. The Department of Public Expenditure and Reform has a PPP unit but it would probably not accept that it is directly responsible or accountable for individual projects. It is responsible for the framework within which local authorities, State bodies and Departments engage in PPPs and so on. Regarding the liabilities under PPPs, there is a case for perhaps more central collation and presentation of information about the projects. A project in which there was specific interest at this committee was the Poolbeg incinerator project but the understanding was that it was outside the remit of the Committee of Public Accounts. There is really no way around it. I do not audit Dublin City Council, therefore, I cannot examine it. I do not know how I can be more helpful to the committee on that.

Chairman

On that exact point, if a liability from local authorities falls back on the State balance sheet, as its debts are part of the national debt, and the Comptroller and Auditor General audits the National Treasury Management Agency which manages the national debt - the Comptroller and Auditor General sees where I am going with this question - is such a debt auditable at this committee? There might be a link there.

Mr. Seamus McCarthy

I am not sure that the liability falls on the national debt. It may be within the general government debt.

Chairman

The Comptroller and Auditor General had better explain the difference between the national debt and the general government debt.

Mr. Seamus McCarthy

General government debt is a quantum that is calculated under statistical rules rather than accounting rules. I do not audit the general government debt; I audit the national debt, which is the borrowing undertaken by National Treasury Management Agency. With respect to that borrowing, there is a set of financial statements which comes to the committee called the account of the national debt. It is also incorporated into the finance accounts. That is the limit of the remit of the Committee of Public Accounts in regard to that. If the liabilities are accounted outside that, my understanding is that it would not fall to the committee.

Chairman

The Comptroller and Auditor General might send us a note, in plain English, on the difference between the general government debt and the national debt.

Deputy David Cullinane

It would be helpful if a note could also be sent to us on the work that was previously done by the Comptroller and Auditor General and this committee on PPPs.

I have a separate question on off balance sheet expenditure and models such as special purpose vehicles that are being increasingly used. What is the Comptroller and Auditor General's role and what potentially could be our role in examining State money that is spent through those models as well?

Mr. Seamus McCarthy

The accounts of the central fund of the Exchequer are called the finance accounts. They are produced by the Department of Finance. My personal view, and this is something I have recommended, is that the finance accounts could be expanded and improved but it is a matter for Committee of Public Accounts to engage with the Department of Finance on that. The format of accounts generally in the public sector is a matter for the line Minister and the Minister for Public Expenditure and Reform. I cannot decide that the structure and the level of disclosures in a set of financial statements should be different. I have to work within the framework that is set by the relevant Ministers. It is within the competency and the remit of the committee to look at the financial statements and to form a view, if the members are so minded, that those financial statements do not cover all of the information they think is appropriate to be in the public domain. Were they to look at the finance accounts the next time they appear before the committee, if they were to step back from them and consider them in terms of the level of information they give, they could ask if that was the kind of information that needs to be in the public domain and what they, as members of the committee, would wish to recommend be changed. They would then get a response from the relevant Minister.

Just to give an example, the finance accounts are a cash account and do not have a balance sheet so the liabilities and the assets of the State are not presented in the account of the Central Fund of the Exchequer. The committee may decide it would like to see that and there would be a job of work involved in compiling it. Back in 2012 or 2013, the IMF came in and had a look at the form of accounting and the structures for accounting and made recommendations about the necessity for a whole-of-government account and, if one likes, a more comprehensive view than the finance accounts give. A project has commenced on that and I reported on it when it was starting out. I envisage a further report giving a progress report on that project, which will come to the committee, probably not this year but perhaps next year. It is a line of questioning and Deputies do not have to wait for a report. Given that the project is under way, they could engage with the Secretary General of the Department of Finance on that when he appears.

Deputy Alan Farrell

I congratulate the Chairman and Vice Chairman on their appointments and thank the Comptroller and Auditor General for appearing before the committee. A number of the questions I intended to ask have already been asked and answered. On lines of communication, I presume the Comptroller and Auditor General will be in a position to provide us with the direct lines and methods of communication that have been available in the past. That would be appreciated.

Is it possible for the Comptroller and Auditor General to provide members with an exhaustive list of the bodies which fall under the remit of his office?

Chairman

A list was circulated last night.

Deputy Alan Farrell

My apologies; I did not see it.

The presentation of information has been covered by a number of colleagues. On the Comptroller and Auditor General's point on the turnover of personnel, he is in the unique position of being fully aware that such turnover is currently fairly standard in the public sector because of the rising economy. He correctly noted the expertise in his office and I have seen similar trends in many similar specialised departments recently. The bottom line is the remuneration available in the public sector versus that in the private sector and the level of expertise in the Office of the Comptroller and Auditor General. That is regrettable.

While I do not wish to put words in his mouth, I am sure the Comptroller and Auditor General will freely admit that the use of agency staff is a sticking plaster in terms of what he is trying to achieve in his office. While it may be useful for particular items, it is not necessarily the ideal scenario for the head of an office, such as Mr. McCarthy, in the long term. I do not know whether this issue will be the subject of a debate next year as we wade through the work programme.

I thank the Comptroller and Auditor General for his presentation. I ask him to forgive me as I did not have a chance to read it because it was sent after 7 o'clock last night.

Deputy Josepha Madigan

I thank Mr. McCarthy and Mr. Carrie for being here today. As a new Deputy and member of the committee, I appreciate their appearance. Deputy Farrell touched on the question I wanted to ask. Having read some of the turgid legal texts from the past 20 years, I would find a summary of information very helpful, perhaps some form of aide-mémoire or precis, as Deputy Farrell noted. This does not mean we cannot read everything but we would have the key points available to us. That would be very important because members to whom I have spoken, some of whom are present, alluded to the fact that it takes a long time to read all the documentation. I do not know who would provide a summary - perhaps the staff of the committee - or if the resources are available to do so but it would be very helpful. This is a laborious process which takes a long time and I am in favour of simplifying matters rather than over-complicating them. I thank Mr. McCarthy for his presentation which I found very helpful and beneficial.

Mr. Seamus McCarthy

If I may respond to Deputy Farrell on lines of communication, the principal line of contact should be through Mr. Carrie. As audits are carried out by different units within the organisation, it is impractical for me to give members a list of who is responsible for the different audits. If members then telephoned the organisation, the list will have changed within a month and people will have changed responsibility. In general, if Deputies have a query or wish to know something, they should contact Mr. Carrie.

I want to be careful here. If any of the members feel they would like a more detailed presentation, we are willing and would be happy to have them come individually or perhaps in a group of two or three to our offices. We could spend a morning working through the list of the accounts, showing members the accounts and audit certificates and talking about what we are trying to do. That is an offer. However, I know some members are very experienced and will certainly not need that kind of orientation. We are more than happy to do this and we can send over a number of people. We can organise that here and we will try to accommodate whatever works for members. If they feel a summary will work, we will be happy to provide one. Mr. Carrie will work ahead. Once the programme is settled, it allows him to plan, get a piece together and set out the issues for members. As I stated, we will try it and find out what works for individual Deputies and if something works better for somebody, we will try to accommodate that as well.

Deputy Shane Cassells

I thank the Chairman and congratulate him and the Vice Chairman on their appointments. I thank Mr. McCarthy for his presentation.

I propose to address the issue of demarcation lines raised by Deputies Aylward and Cullinane from a different angle. I seek clarity on this issue because the local government sector is responsible for the expenditure of hundreds of millions of euro. I acknowledge what Mr. McCarthy said regarding the current auditing process and audit committees in the various counties. However, these are very much focused on revenue streams.

I will address the capital expenditure side and the correlation between funding provided directly by Departments for capital schemes. Some of the most substantive work done is the funding of capital schemes that come under a separate budget distinct from the revenue stream. Housing schemes are about to become the subject of a strong focus because they will soon be delivered very rapidly, including in terms of land acquisition.

I note the number of Departments and agencies, including the Housing Agency, which the Comptroller and Auditor General audits. In recent years, bad debts of tens of millions of euro generated by land acquisition have nearly bankrupted some councils. These debts have been offloaded into the land aggregation scheme, LAG, to get them off the books of local authorities. The debts arose when public funds were used in bad deals involving the acquisition of landbanks that could never have been developed. These deals crucified councils because interest payments on them removed money from revenue streams that were to be allocated for public expenditure. This issue comes under the remit of the Housing Agency, one of the bodies that are audited by the Comptroller and Auditor General. While I acknowledge Mr. McCarthy's point on approaching the issue from the local government side, there is significant scope for approaching it from the other side because all of the schemes are ultimately funded by a superior body, whether through the funding of loans by the Housing Agency or through the schemes that will be implemented on the ground by the Department of the Environment, Community and Local Government. I seek an explanation in this regard because large sums have been expended in an incorrect manner. These must be examined because they have an impact on public funds and are not subject to an appropriate level of scrutiny under the current regime.

Mr. Seamus McCarthy

I agree that there are two ways of viewing this. For the past six or seven years, one of the reports that we have included in the report that is published in September is an update on the flows of funds from central government to local authorities. It is designed exactly to put a finger on how much money emanates from the Exchequer towards local authorities. What we cannot do is go into the local authorities to find out how it is spent. That is where the limit is put on us but we do exactly what the Deputy mentioned in that we identify the flows of funds. Presenting that information is a complex process. I feel that it is a form of report that the committee should be expecting from the Department of the Environment, Community and Local Government rather than from me. It is absorbing resources on my part when it is the kind of information on which it would be perfectly reasonable to expect the Department to give an overview report each year. The point of the report we present each year is that it creates a context for this exact debate with the Secretary General of the Department of the Environment, Community and Local Government.

We have also examined spending on water services, housing and grant schemes and we have considered the land aggregation scheme, LAG, and we have reported on same. I can have Mr. Carrie forward those reports to the Deputy or the whole committee so as to show members the kind of work that we have done and to which we revert periodically. However, we cannot do a report on the LAG every year. It is not within our current level of resources. There is scope for the committee to have an engagement with the Housing Agency and the Department of the Environment, Community and Local Government about the kinds of programme that they are funding.

Deputy Shane Cassells

I will make a quick remark. Obviously, this matter goes beyond that. Consider the National Transport Authority, NTA, and the capital schemes across the country. Most of those schemes are funded centrally as opposed to from the internal revenue side. That was the point that I was trying to make.

Mr. Seamus McCarthy

It has always been that way. There has been that distinction.

Chairman

We can easily handle this matter. We dealt with the land aggregation report previously. If there is none available in advance of the Secretary General appearing before us, we will have a detailed report and update sent to us and we will let the Secretary General know that it will be a specific issue for discussion. Someone is smiling at me, so I will say no more.

Deputy Catherine Connolly

Go raibh maith agat as ucht an chur i láthair. Bhí sé thar a bheith spéisiúil domsa, mar bhall nua den choiste, agus bhí sé cabhrach. Ní raibh a fhios agam go raibh an méid sin oibre i gceist. Beimid anseo seachas sa Dáil, is dócha, leis an méid oibre atá romhainn. Comhghairdeas leis an gCathaoirleach agus leis an Leas-Chathaoirleach freisin.

I am a new Member, so I thank the Comptroller and Auditor General for his presentation. One of my first questions was on resources but it has been asked and I will not repeat it. However, I will address Mr. McCarthy's answer. His office is functioning with 140 staff whereas its complement is 165. Has Mr. McCarthy formed a view and gone to the Government concerning the number of staff he needs to do his job properly in light of the large number of bodies that his office examines? Is it 290?

Mr. Seamus McCarthy

Yes.

Deputy Catherine Connolly

I lived through the land aggregation scheme in Galway. Half way through, it was suspended. I never believed it to be a good idea. I would appreciate the report that is being carried out and any update. Some land was transferred into the body in Dublin at great cost, although I do not know what that cost was. Certain loans have been taken while others have not. I am lost as to where the value for money was in that scheme.

Who is monitoring the value for money of using agency staff and contracting out work as a result of a lack of staff? Is it cost effective?

Mr. Seamus McCarthy

On resources, the office's staffing level before the downturn and the 2008 crisis was approximately 175. Every organisation had to take a cut in the circumstances. Our staffing level was reduced to 165. Although it fell to 150, it has been increased to 165. The committee will recall that in addition, we were given NAMA, which is probably our largest audit, absorbing something in the region of seven to nine whole-time equivalent staff members in a year. It is a significant change.

My predecessor and I took the view that, even though we believed that what we did delivered value for money, we could not in the circumstances be the first ones up asking for additional resources. There were other significant service delivery demands, for example, teaching, hospitals and so on. We did not believe that it would be appropriate for us to put ourselves forward as a special case in years past.

It is a disappointment to me that we are not producing more reporting work. There is a great deal of potential for us to do it. It is expensive and resource-intensive work. Since it is a discretionary piece, our capacity to deliver the kinds of report that are helpful to the committee gets hit whenever we have a gap in resources.

In terms of the value to be had from using agency staff, we are always conscious of the cost, including relative cost, of engaging them. We keep it under constant review. During the downturn, people were let go from other organisations and became unemployed, which meant that there was a pool of talent from which we could draw at reasonable prices. With the upturn in the economy of recent years, however, it is becoming more expensive. Even within agency resources, the turnover has become more difficult to manage. With the heat in the economy, we are probably getting to the stage at which it is less attractive for us to use agency staff. On the other hand, it can be useful at a point in time. We may need to consider other models for finding staff to plug those gaps, which is a constant challenge. We interview people to determine whether they are suitable and we agree for them to start but because they are agency staff, they might get permanent job offers and be gone. That can leave one with a planning problem if, for example, one is about to commence an audit. Operationally, it is not ideal but it is better than having ever-increasing delays in the completion of audits and the delivery and presentation of financial statements.

Regarding the land aggregation scheme, we have dealt with the issues that the Deputy raised about the two phases - the land aggregation and the stopping - in the report that I mentioned when answering Deputy Cassells. We will let Deputy Connolly have the report. It may answer some of the points that she raised. As the Chairman suggested, the Secretary General may be in a position to update the report's information when he appears before the committee, giving the Deputy a fresher perspective.

Chairman

Who audits the Comptroller and Auditor General's office?

Mr. Seamus McCarthy

The secretary and director of audit is the Accounting Officer.

He produces the accounts. It is a Vote account. I am technically the auditor of the Vote account but it is done for us. I outsource and, therefore, Mazars are the auditors of my office. They carry out the audit, they certify the financial statements and a set of accrual accounts and then when I present the appropriation account, I put my own certificate on it because I am satisfied that they are carrying out on my behalf a thorough audit of my office.

Chairman

The organisations audited by Mr. McCarthy are large and many conduct a number of internal audit reports during the year. What is his relationship with them in this regard? Does he examine these reports? Does he consider them to be part of his work in coming to an overall conclusion?

Mr. Seamus McCarthy

While we have many big organisations with huge budgets, not all of them are big. Some are small and they might have a turnover of €20,000, €1 million, €1.5 million or €10 million. They vary considerably. For instance, the HSE has a substantial internal audit function but all public bodies are expected to have some internal audit function. The smaller ones tend to contract it out and, therefore, they will use Mazars or Deloitte to carry out an internal audit programme that is set for them and reviewed by the audit committee within the organisation. Their focus should be on the operation of the internal controls. Our primary focus is on the true and fair view in the financial statements and the propriety and governance issues at a higher level but we expect internal audit to go in and look in detail at what happens within schemes, the payments systems and so on.

Where there is a well-established and professional internal audit function operating, we take into account the work they are doing when we plan our work. We can place reliance, therefore, on the internal audit's work if we are satisfied that it is independent and professional and producing the right quality of work. We tend to try to avoid a situation where if they have programmed a piece of work, we cut across it and do the same thing. It is not an efficient use of resources. We examine the work they have done, the areas they have covered and the findings and we look for the systemic implications of what they find. That is the kind of thing we draw to the attention of the audit committee when we report and to management in a management letter and so on. We also look to see that where internal audit has carried out an exercise, the organisation responds to the recommendations and implements them or changes the control regime in order that risks are closed off. Our auditors meet regularly with internal audit personnel to try to understand their programme and their priorities and to a certain extent to assess and be satisfied that the internal audit function is meaningful to the operation of the organisation.

Chairman

I thank Mr. McCarthy for his presentation and for his replies to our questions. If any member or group of members wish to have a further discussion with his office, they should contact the secretariat and that can be arranged.

The committee continues from Dáil to Dáil and, therefore, there is a carryover of work from the previous Dáil. It does not have to be re-established. I wish to deal with correspondence, reports and statements since the last meeting, which was prior to the election, and our work programmes. Issues relating to the HSE and Console will come under the work programme. If members have queries on correspondence that has been circulated to them, we can defer it and come back to it at a subsequent meeting. The secretariat produces a schedule, which is in the file. For simplicity, we deal with three categories of correspondence. Category A is correspondence and briefing relating to the subject meeting of a particular day. We will deal with the OPW next week. Correspondence under this category will deal with the report of the Comptroller and Auditor General in respect of the OPW, briefing material from the OPW and the Comptroller and Auditor General's office or e-mails from the committee about the topic of the day. We do not have such correspondence today because no external body is appearing before us.

Category B is correspondence from the Accounting Officers or Ministers as a follow-up to a meeting. Regularly, information has to be supplied to us subsequently and we get correspondence which is filed under this category. It is essentially correspondence from departmental sources. Correspondence under both these categories is almost always published on the website.

Category C is correspondence from individuals about different issues and any other correspondence. We decide whether to note it, forward it or investigate it, as the case may be.

No. 5b is a letter of clarification dated 16 February from Mr. Graham Doyle, Secretary General of the Department of Transport, Tourism and Sport responding to the previous committee's request for information in respect of the compulsory purchase of lands and goodwill payments related to the €5,000 and €3,000 got in compensation by farmers who had permitted early access to their land as part of the roads programme. Is it agreed to note that? Agreed.

No. 6b is a letter dated 12 February from Mr. Jim Breslin, Secretary General of the Department of Health, keeping the committee informed of developments in respect to the Irish Blood Transfusion Service pension fund. We can note it and members are free to come back to it again.

No. 8b is a letter dated 23 February from Mr. Mark Griffin, Secretary General of the Department of Communications, Energy and Natural Resources, providing follow-up information to the committee on two matters relating to Inland Fisheries Ireland, IFI, and Eircode. The accounts are audited by the Comptroller and Auditor General but I was not aware that IFI is a rateable organisation similar to a local authority. This was news to me when I read that. If officials can establish the owner of some grounds where people fish, they can raise a commercial rate. I never knew this and, worryingly, the letter states a rates bill is sent out once a year and if it is not paid, the organisation provides in full for it. It is extraordinary that an organisation would write off unpaid commercial rates. Will the Comptroller and Auditor General forward the most recent audit report for IFI to the secretariat? I would like to come back to this issue because I was shocked to uncover that yesterday and I do not want to let it go. There might be nothing untoward in this but it was news to me and I would like detailed information on this.

No. 12B is a letter from Mr. Ray Mitchell of the HSE, responding to the committee and providing notes re legal advice regarding the ending of a residential care arrangement for an adult and also on training in open disclosure for certain members of staff that related to a particular lady called Grace. The matter was dealt with extensively. People asked what training the staff received in terms of the open disclosure of issues and we can note the reply. If somebody has a personal interest in this matter then he or she should feel free to raise it again.

Nos. 17B, 18B, 19B, 20B and 21B are minutes from the Minister and the Department of Public Expenditure and Reform. They are responses to previous reports that we did. The reports were on the Bytel project, the wards of court, the fishery harbour centres and a review of costs associated with undelivered capital projects and the Dublin Docklands Development Authority. We need to take a bit of time to consider the minutes and I would not just note them today.

Deputy David Cullinane

Two issues have jumped out at me in terms of the minutes on the review of costs associated with undelivered capital projects. My first issue is the national paediatric or children's hospital. It says that, in terms of the Mater site, there is a post-project review being carried out by the Department in consultation with or with input from the HSE, and with external support from the Department of Public Expenditure and Reform. Also, the timescale for the completion of this work is June 2016 and that is the first report.

The second issue relates to the Thornton Hall site. Again, the reply says that there is a working group in place, which will report back and is due to complete its work in April 2016. Do these reports automatically come to us? Do we have to ask for them to come to us? Can we say that once the reports are finished they should come to us for consideration?

Chairman

On foot of the Deputy's comments, I will write directly to the Secretary General requesting that reports are furnished to us as soon as they are ready because they may not necessarily come to us unless we follow it up.

In terms of all of the reports, there is quite a bit in them and I have not had a detailed chance to review them. I propose that we hold them over until next week's meeting for consideration and then decide what to do. In order for people to understand what the Committee of Public Accounts does I shall outline what happens. The Comptroller and Auditor General does a report on a particular issue and then we discuss it. At the end of our discussions we may choose to do a report on our findings as a result and that goes to the Department of Public Expenditure and Reform. We may have recommendations in our report and then there is a detailed response back from the Department of Public Expenditure and Reform. Sometimes the Department agrees with our report. We have received its reply from the last batch of reports the previous committee sent to it before the election. I propose that we hold the reports over until next week in order that we have a chance to look at them in detail. Is that agreed? Agreed. We will formally ask that the next report is sent to us.

I note a later item in the correspondence about the wards of court. We will return to this matter as well. We have the wards of court report and some people are not satisfied with the way it has gone. There is quite a bit of work so we will come back to this individual item of correspondence as part of the review of the wards of court report. The correspondence has been noted.

Category C refers to private or other individual correspondence received. No. 1C, which can be viewed on the screen, is a letter from Neil Pakey, CEO, Shannon Commercial Enterprises. The letter is dated 29 January and responds to matters raised by the committee. He has confirmed that Shannon Commercial Properties is not a public body and, therefore, did not fall under the committee's remit in the first place. He is saying that we should not have written to him.

Mr. Seamus McCarthy

Can I make a point on the matter?

Chairman

Yes, an observation.

Mr. Seamus McCarthy

Shannon Commercial Properties is not a public body that I audit and it is not within the scope of the committee. Shannon Development, as was, was audited by me and up to 2013 it was subject to the review of the committee. It was a matter that was discussed when their final accounts were before the committee, just to be clear.

Chairman

A reply has been received and we will note the reply.

The next items of correspondence are Nos. 2C, 10C and 16C. They are letters from Ms Anne Marie Caulfield, Private Residential Tenancies Board, enclosing copies of the correspondence between the PRTB and a private individual which was sent to us. It is an issue that we followed up before. The board has completed the circle and told us what we sent to the particular person. We note the correspondence.

No. 3C is a letter dated 11 February from Mr. Seán Ó Foghlú, Secretary General, Department of Education and Skills. He responded to the committee's request for information on financial irregularities at An Mhodhscoil Limerick for a particular school project. We note the correspondence.

The next item is a letter dated 16 February from Mr. Graham Doyle, Secretary General, Department of Transport, Tourism and Sport. He responded to the committee's request for information on alleged unauthorised dumping on the R158 regional road upgrade. It has been determined that this is being dealt with as a local authority matter and does not fall within the remit of the committee. I ask that this item be held over because the EPA may have a role although I think the EPA is saying that it is the local authority. I do not want to pass over this correspondence too quickly so we will hold it over until next week.

No. 7C is a letter dated 12 February from Mr. Aidan O'Driscoll, Secretary General, Department of Agriculture, Food and the Marine, on a grievance an individual has with the Department arising from the finding of a prohibitive drug called Carbadox on his farm. I understand that legal proceedings are ongoing and it is an individual case. We will just note it and not pursue it any further.

No. 9C is a letter dated 29 February from Mr. Frank McLoughlin, chairperson of the audit committee, Meath County Council, in terms of a matter raised, in correspondence, by an individual to the committee regarding the awarding of a contract in 2004. Again, local authorities do not come under our remit. Has anybody had a chance to look at the correspondence? Are Members happy to note it and move on? Agreed.

Correspondence No. 11C is from Mr. Tony O'Brien, Director General of the HSE, in terms of a lease of a property in Kells, County Meath. The matter had been brought to a conclusion by the previous committee and Mr. O'Brien's letter is a final response to the matter. Can we note the correspondence? Agreed.

No. 13C is a letter dated 9 May from Mr. Aidan O'Driscoll, Secretary General, Department of Agriculture, Food and the Marine responding to the committee's recommendations in terms of the seizure of animals from the farm of an individual. As there are ongoing legal proceedings by the individual against the Minister and the Garda Commissioner on this matter I suggest that we note the correspondence.

Deputy Mary Lou McDonald

Can I ask a question on the issue?

Chairman

Yes.

Deputy Mary Lou McDonald

We dealt with Mr. Fannin in the course of the last Dáil. Is it possible for the clerk of the committee to make contact with Mr. Fannin to clarify for him the position in respect of the PAC? Can we clarify for him where we are now in terms of what we can and cannot do, and what we might and might not do, in respect of his case?

Chairman

Is the Deputy asking us to forward this correspondence to Mr. Fannin?

Deputy Mary Lou McDonald

I do not think doing so would do any harm.

Chairman

He may or may not agree with the contents.

Deputy Mary Lou McDonald

I presume the correspondence will be published and, therefore, a matter of public record.

Chairman

Yes.

Deputy Mary Lou McDonald

More to the point, he had an engagement with the committee. He is personally frustrated and angry, in fact, in terms of his personal treatment. For the purposes of the committee, it would be useful to speak to him and explain to him the current situation.

Chairman

We will say we note there are ongoing proceedings against the Minister and the Garda Commissioner and, as a result, we can only note the correspondence.

Deputy Mary Lou McDonald

I understand it is a matter of legal proceedings. I simply ask that the committee engages with the man.

Chairman

Yes, we will give him an explanation.

Deputy Mary Lou McDonald

We should do him the courtesy of explaining the situation.

Chairman

Yes, it is a courtesy issue.

Deputy Mary Lou McDonald

Yes.

Chairman

I thank the Deputy. No. 14C relates to the adequacy of the Department of Public Expenditure and Reform's response to the recommendation of the committee's report on the wards of court. As this relates to the minutes already discussed, I propose that we discuss the correspondence with the wards of court report separately next week.

No. 15C is a letter from Mr. Alan Farrell calling on the committee to commence a review of the charity Console. This matter relates to the upcoming work programme. I propose that we discuss it when we discuss the work programme in a couple of minutes.

No. 22C and 23C are two items of correspondence from an individual, the origin of which relates to an alleged wrongdoing by Horse Racing Ireland. This handwritten letter has been referred to. The individual has been in regular contact with the previous Committee of Public Accounts, several Departments, Deputies and Garda over a number of years. As the correspondence is lengthy, I propose that we return to it in the near future for a comprehensive response. That concludes correspondence.

The next item is reports and statements of accounts received since the last meeting. I shall outline what this means in simple English. As the Comptroller and Auditor General has said, he audits 289 organisations each year and many of the reports are laid in the Oireachtas Library, on the completion of audit.

We formally note all of the accounts that have been laid in the Oireachtas Library. The dates they were laid are listed. They commence on 28 January 2016 up to the current date. There is an observation beside those organisations as to whether there is a clear audit opinion or if there is an issue regarding the audit - sometimes there is regarding public service pensions. It gives an indication of the size of the organisation and the accounting period involved. We list the turnover so that people will know whether it is a €100,000 organisation or a €10 million organisation. Do we have to note these individually?

Clerk to the Committee

Yes.

Chairman

We will do it page-by-page on the screen and members may make comments. I will not call them out. On screen 1, we start with the Citizens Information Board, clear audit opinion. Some of them are new agencies and some of them have merged with other organisations in the meantime. Are we happy to note that page 1, up to 4.13? I invite the Comptroller and Auditor General to make comments if he wishes.

Mr. Seamus McCarthy

The second item is Inland Fisheries Ireland. Once the committee has that note from us regarding the matter the Chairman raised about rating and collection of rates-----

Chairman

Yes.

Mr. Seamus McCarthy

We will relate that to the 2014 accounts, which are the ones presented there.

Chairman

I ask the Comptroller and Auditor General to clarify. We raised that a moment ago.

Mr. Seamus McCarthy

This is the 2014 accounts for Inland Fisheries Ireland. They were certified by me on 23 October 2015 and they came in on 29 January. The issue the Chairman is raising about the cancellation or-----

Chairman

Commercial rates.

Mr. Seamus McCarthy

-----the provisioning regarding the commercial rates can be dealt with in the context of the 2014 financial statements.

Chairman

Without having to call witnesses in, can the Comptroller and Auditor General send us a note on the topic I raised-----

Mr. Seamus McCarthy

Yes

Chairman

-----and we will deal with it separately? I do not propose to call them in but I would like information on it anyway. That is good.

Mr. Seamus McCarthy

I will deal with another item on this page. I will not talk about every one of them. The Competition and Consumer Protection Commission is a two-month account because it is the amalgamation of the Competition Authority and the National Consumer Agency. Their final accounts are also there.

Chairman

That is from when it was set up, from 31 October to the end of December.

Mr. Seamus McCarthy

It is from 31 October and the others ceased on 30 October.

Chairman

Grand.

Mr. Seamus McCarthy

In the future, the committee will only receive accounts for the Competition and Consumer Protection Commission.

Chairman

I thank the Comptroller and Auditor General. We will move on to the next page. Are these available in the Oireachtas Library?

Mr. Seamus McCarthy

All financial statements are in the Oireachtas Library and on the Oireachtas website.

Chairman

If anybody wants to-----

Mr. Seamus McCarthy

If members want to get earlier financial statements, they should be able to search and find those.

Chairman

They will be in the Oireachtas Library.

Page 2 starts with the National Roads Authority, clear audit opinion. The last item on that page is the Economic and Social Research Institute, a clear audit opinion. Then there are issues there regarding deferred pensions. I ask the Comptroller and Auditor General to explain that because it comes up regularly in public bodies. This is a regular issue raised by the Comptroller and Auditor General about State bodies regarding their deferred pension funding.

Mr. Seamus McCarthy

In accrual accounting, there is a requirement that the liabilities that accrue in each year in relation to pensions are recognised in the financial statements. It was in previous years under what was called FRS, financial reporting standard, 17. That was the requirement. What it essentially means is that in relation to the staff who work in an organisation in a particular year, an estimate is made of the value of the future pension they will get in respect of the work they do in a particular year. It is quite technical. It is probably overdone in a way in many of the financial statements where one could have five or six pages of notes in the financial statements in relation to how pensions are accounted for. It is a very important economic cost and it is important that it is recognised.

Many of the members will probably be familiar with the concept of a pensions deficit in relation to organisations and private companies. In the public sector, as well as recognising the liabilities, organisations usually recognise a matching funding asset so that it balances the liabilities. The reason they do that is that in most cases in most public bodies there is a guarantee or at least a statutory basis for the pension scheme, so the expectation is that the State will meet those pension liabilities in the future when they arise. On that basis, public bodies usually recognise a matching asset.

With a number of organisations where they are charging for services, particularly with the universities where there are fees and so on, there is not a firm guarantee in relation to the amount that will be provided. They will still recognise the matching asset but because there is not a guarantee underpinning it and because some of the funding may come from charges in the future, we draw attention to the fact that these are different. A lot of these bodies will have recognised the liability and recognised a matching asset, which we would understand will be met and they would understand will be met in the future from their grant funding. We draw attention to the exceptions.

Chairman

Clear as mud. People get it. Regarding public sector bodies, if it was a private company, it would have to provide for a pension fund in its account. However, because it is a public sector body, some take the view that there will be funding from the State in due course to cover this and so do not provide for the full liability in its accounts because it knows the State, because of the statutory situation, will pick up the pension liability for those publicly-----

Mr. Seamus McCarthy

The problem would be that those liabilities could be considerably more than the assets of the organisation so that effectively it would be presenting a set of financial statements which was technically showing it to be insolvent.

Chairman

Insolvent.

Mr. Seamus McCarthy

If it were a private sector body, it would then have a going concern issue but it does not arise with public bodies.

Chairman

We will move on to the next page. Normally we would only have a handful but there is six-months' stock here. The first one is the Adoption Authority of Ireland and the last one on that page is the Dublin Institute of Advanced Studies. Can we move on? There is nothing-----

Mr. Seamus McCarthy

There is something that is recurrent and that I point out in the audit certificate. It is in relation to an obligation on every public body to review the effectiveness of its controls every year. This is stipulated in the code of practice of the governance of State bodies. The requirement is that that review be carried out usually by the board of the body so that it is satisfied in a timely way that it has looked at the controls and that the controls are operating.

We draw attention to a situation where that review does not occur. One sees that more regularly than may be satisfactory. That is the formula. If members look at the Railway Safety Commission, the review of effectiveness in 2014 of the system of internal financial control was only undertaken in September 2015, nine months after the year-end. The problem is that if at that stage it identifies a control weakness, it is too late to do anything for 2015. It needs to be done early and it needs to be done at the highest level of the organisation.

Deputy Alan Farrell

I presume the Comptroller and Auditor General is suggesting, therefore, that within the audit, that recommendation was made to the Railway Safety Commission. Will next year's report indicate that was done or would it be up to the sectoral committee to call that agency in or does it fall to this committee?

Mr. Seamus McCarthy

It is a matter that the committee could take up with the organisation if it called its representatives in. That is the 2014 accounts for the Railway Safety Commission. When 2015 comes up, we will be looking to see if for 2015 it carried out the review. If it has done it and has done it in a timely way, we will not say anything about it. It will be confirming in what is called its statement of internal financial control that it has complied and we do not draw attention to that. The Deputy can take it that the body is confirming and we are satisfied that it did carry it out in a timely fashion with all the rest of them where there is a clear audit opinion. We draw attention by exception.

Chairman

We will proceed to the next page. We will start with the environment fund, a clear audit opinion. This is something we might discuss with the Secretary General specifically when he comes in. Revenues from levies on plastic shopping bags and landfill of waste are paid into the fund, which supports the scheme for the purposes of prevention and reduction. We will not discuss it now but I am just asking that we be conscious of the fact that the account is a separate one in the Department of the Environment, Community and Local Government. We need to ask specifically about it because it does not come under the normal departmental Vote. It is a separate fund. We always have to remember to ask about that separately.

Deputy Alan Farrell

There is a small format issue.

Chairman

It is a case of getting down to the Land Commission at the end. We have the Land Commission's accounts for 2014 and then its accounts for 2013, 2012 and 2011. Mr. McCarthy might explain why we are only now getting the 2011 accounts for the Land Commission. I did not know they were still to be done. What is the issue with them being four years late?

Mr. Seamus McCarthy

Perhaps the reason the Chairman did not believe they were still there was because he was not seeing the financial statements. The obligation is on the Department. Since this is what is called a departmental fund, the Department manages the fund. It is the obligation of the Accounting Officer to submit the financial statements to the Oireachtas, and then it should come on the agenda here.

An issue we have raised in the past is delays in presentation, and the Department of Public Expenditure and Reform issued a circular in 2015, I believe, reminding Departments of the obligation to get their financial statements in quickly. What one should expect is that once I have signed the certificate and presented it to the body, it should then present it to the Department within a month. Unless it has to go to Government for noting, it should be presented by the Minister and his Department within two months of receipt. The maximum period between the date of certification and the date of receipt is about three to three and a half months. However, if one looks down through this list, one will see that there are bigger gaps.

Chairman

Nearly four years.

Mr. Seamus McCarthy

The Department of Agriculture, Food and the Marine overlooked the submission concerning the Land Commission. On the next page, there is the rent tribunal. That Department cleaned out the ones that were outstanding.

Chairman

Is there any way Mr. McCarthy could produce a list of the bodies certified in respect of which the accounts have not been published?

Mr. Seamus McCarthy

Since there are so many, it is difficult to monitor. I am preparing a report for publication and presentation that is dealing with the issue of the timeliness of the completion and presentation of accounts. Again, we have to take a snapshot at a point in time and so on.

Departments have got the message from the Department of Public Expenditure and Reform and the circular exists. It requires those concerned to inform the clerk of the committee if they are going to be late. That has not happened yet but if we publish a report annually on delays, it gives the committee an opportunity to consider that issue.

Chairman

That is good.

The next page concerns rent tribunals. The same issue arises again, namely that of old accounts. We will move on again.

On the next page, the credit union fund is the top item, along with the NAMA accounts. Is that the end of it?

Mr. Seamus McCarthy

No, it goes on.

Chairman

The first item on the next page is a special account for the purpose of the health repayment scheme, 2006. The last item is the Pre-Hospital Emergency Care Council. That is a different organisation we did not know about. We note those accounts and we will move on again.

The next item is Aontacht Phobal Teorannta, and the last item is the HSE 2015 accounts. It goes without saying the HSE representatives will be in specifically to discuss their 2015 accounts in the autumn.

There is a qualification in the HSE’s account. There is a significant level of non-competitive procurement and a lack of evidence of competitive procurement in regard to 30%, by value, of a sample of payments valued at €29.6 million. Note 9 to the accounts discloses the reversal of a provisional €9 million in regard to compensation payable to suppliers from March 2013, when revised regulations on late payments commenced. The provision was reversed on foot of legal advice received in March of that year. It stated suppliers were not automatically entitled to such compensation. Note 29 discloses a contingent liability in relation to compensation for late payment which may be claimed by suppliers. Will Mr. McCarthy state whether that was a provision for late payment that does not have to be made?

Mr. Seamus McCarthy

Yes, it was a provision because there is late payment in the HSE. When we completed the 2014 accounts, we identified that a change in the law in 2013 required it to pay the compensation without application by the suppliers. We reported on that because the sums were quite large. In 2014, a provision, a charge, was included on the income and expenditure account of €9 million in respect of payments the organisation recognised it would be obliged to pay. Subsequently it revised advice that it is not obliged to pay automatically but that it would be liable to pay it if an application were made by a supplier that received payment late. What it has now in the 2015 accounts is a contingent liability. I think the figure for contingent liability is approximately €16 million, and it has a smaller provision, of perhaps €1.5 million to €2 million, charged in the account in the expectation that that is the amount it will pay.

Chairman

Is Mr. McCarthy happy with that? Why has he a note on it? Does he agree or disagree with it?

Mr. Seamus McCarthy

We agree in regard to the HSE's accounting that the accounting is correct. The difficulty is that other organisations are operating on different advice and doing a different thing.

Chairman

Under the same legislation?

Mr. Seamus McCarthy

Under the same legislation.

Chairman

Excellent.

Mr. Seamus McCarthy

In September, I may report on the problem that some public bodies are paying automatically, based on the advice they have, while some will pay if a supplier applies to them, based on their advice. The Department of Jobs, Enterprise and Innovation has, perhaps, a separate view that the objective of the policy is that small suppliers, particularly, should receive compensation if they receive a late payment.

Deputy David Cullinane

I wish to refer to the first note and a separate issue, namely, the significant level of non-competitive procurement. That was a sample of the overall expenditure. How big was the sample?

Mr. Seamus McCarthy

I do not have the detail on the number of-----

Deputy David Cullinane

I am not asking about the value but the overall size. What was the percentage of overall procurement?

Mr. Seamus McCarthy

I do not know but the procurement figure in the HSE is billions of euro.

Deputy David Cullinane

This is a sample, and it is indicated that, in respect of 30% of the sample, there was a level of non-competitive procurement. Of that sample, the value is €29.6 million. Some 30% of overall procurement in the health service would amount to hundreds of millions of euro.

Mr. Seamus McCarthy

It could be, yes.

Deputy David Cullinane

That is surely serious because we are talking about very lucrative contracts. If they are not competitive, it warrants much more scrutiny and investigation by this committee. It was Mr. McCarthy’s job to analyse a sample but, given that it has shown up a very high level of either non-compliance or failure, including systems failure or whatever it is, we now need a deeper picture of what is happening.

Mr. Seamus McCarthy

On numerous occasions, we have reported on the difficulty within the health service and the incidence of non-competitive procurement of services. Basically, a contract is put in place, perhaps for three years, and then it rolls and rolls, such that we are finding there are some contracts under which there could be six, eight or ten years of purchasing from the same supplier.

This blocks out other potential bidders to do the work. We have reported on this on numerous occasions. We always test to see if there is evidence of improvement. For a number of years, we have had a sample basis with this level of non-competitive procurement.

Deputy David Cullinane

The fact that it has been reported on, that there has not been much of a change and that 30% is very high as it is involves one in three products means that this is not good enough and we must come back to it. I argue that when we discuss the work programme later, this is an issue to which we should return. The committee has dealt with it before, but we must come back to it because the figure is way too high. We are talking about hundreds of millions of euro. Many companies have raised issues about procurement and the fairness of the system. For me, this is an important issue to which Mr. McCarthy has drawn attention and we need to take cognisance of it.

Deputy Alan Farrell

I concur with what Deputy David Cullinane said about the sample. I am aware of other Departments, albeit not on the same scale as the HSE, which have had a light shone on their practices. I also agree with the Deputy on the need for further evaluation. Within an annual budget of approximately €14 billion, it is, frankly, alarming that a base sample of €30 million in procurement shows an anomaly of 30%. I suspect that a figure of several hundred million euro might be involved. If there is a saving to be achieved for the taxpayer, it is something to be looked at. There is a procedural question for the HSE to answer to the committee, given its role and, potentially, the health committee, given some of the work it does on the HSE. It is something we should look at as a priority, given the sums involved.

With regard to the discussion on late payment regulations, as somebody who worked in the profession for many years before I became involved in politics, the variances in Departments and the treatment of suppliers are, frankly, shocking. I say this wearing my former credit manager and credit director hat. I will not dwell on the legal variances, other than to say there should be one interpretation across Departments and it should apply to all Departments. Several Departments write cheques on behalf of the State when it suits them. I will not go into which Departments are involved, but it is the case. Therefore, they avoid late payment fees in paying invoices. A series of sectors need to be examined in this regard. I appreciate that it is probably not the role of the Comptroller and Auditor General to standardise this practice, or perhaps it is. Perhaps the legislation needs to be examined.

Deputy Shane Cassells

Why is this not surprising? I suspect the Comptroller and Auditor General does not use English in a flippant manner and that any word used carries huge meaning. Phrases such as "a significant level" and "a lack of evidence of competitive procurement" carry huge weight. Why is it not surprising that this lack of competitive procurement has been found in the HSE? It is not in the least surprising. The public is exasperated, as are politicians, by this practice. The significance of this is in the impact such practices have on the overall health spend. Year in, year out, Ministers and Departments speak about the lack of funding for front-line services, but then we see this total disregard which goes to the very heart of the debate on health services. For years we have had a scenario where health expenditure has increased but the delivery of services has moved the other way. Is it any wonder, when we see this type of language used, reporting and analysis showing this continual scenario and practices such as this, that we do not have a better health service? I agree with Deputy David Cullinane on the need for further analysis. It is even more shocking that the Comptroller and Auditor General has stated this issue has been reported on on numerous occasions. This shows that practices and attitudes do not change, but none of this is surprising when it comes to the HSE because it has been ongoing for years. It is something that must be tackled. Something is not right if the practices followed at its core are not changing.

Chairman

It goes without saying representatives of the HSE will be before the committee early in the autumn to discuss its 2015 financial statements. Everything that has been said and a lot more will be discussed at that meeting.

Deputy Catherine Connolly

I will not repeat anything that has been said as I agree it should be on the agenda.

Chairman

We will have a full debate on the matter.

Deputy Catherine Connolly

There was non-compliance with procurement rules by the Nursing and Midwifery Board of Ireland. Will Mr. McCarthy elaborate on the position at Aontacht Phobail Teoranta? It is a subsidiary of a HSE company which was established and then disbanded.

Mr. Seamus McCarthy

In speaking about the scale of non-competitive procurement in the HSE I distinguish between the HSE and most other organisations where we draw attention to the issue. There is a systemic problem in the HSE, but in fairness to it, it is taking steps to address it. Because it is such a large organisation, it will take time to have an effect. The HSE will give a more detailed account to the committee.

The issue at the Nursing and Midwifery Board of Ireland involved a substantial amount during 2014. On a turnover of €7 million, there was a figure of almost €1 million for non-competitive procurement of services, which was substantial. As we go through the list, the committee will see that there are other organisations where this is a problem.

Aontacht Phobail Teoranta is a company that was established many years ago by the Eastern Health Board to provide sheltered facilities and workshops for people with disabilities. It was absorbed into the HSE in December 2010 because it provided similar services directly. Accounts will continue to be produced until the disposal of assets and liabilities has been completed, but it is more or less non-operational as a company. There is an "except for" audit opinion because, unusually for a company, it was not depreciating its assets. It is a technical issue but on a very small scale. I do not think there is substantial activity. Having said that, the accounts must still be produced.

They must be completed and the company has to be wound up, and we will continue to be the auditor until such time as it is.

Deputy David Cullinane

I wish to return to the procurement issue. I accept the Chairman's statement that the Department of Health will appear before us in the autumn, but it would also be useful to have a comparison with other Departments. If we are discussing 30% non-competitive procurement in a sample in the health service, how does that compare with other Departments? Is it similar, better or worse?

Mr. Seamus McCarthy

It is exceptional.

Deputy David Cullinane

If it is exceptional, that means that there is a problem.

Mr. Seamus McCarthy

Yes.

Deputy David Cullinane

It reinforces the need for us to deal with the issue in a more profound way.

Deputy Shane Cassells

We should note the language used, in that it is a "systemic problem".

Chairman

Did the Comptroller and Auditor General attempt to extrapolate or has an internal audit report on the matter been conducted? There must have been.

Mr. Seamus McCarthy

Off hand, I cannot say, but we will certainly-----

Chairman

Did the Comptroller and Auditor General attempt a wider extrapolation? In advance of the meeting, he might-----

Mr. Seamus McCarthy

I will revert to the committee on that matter.

Chairman

In advance of the meeting, I propose that the committee write to the Department of Jobs, Enterprise and Innovation, which is the parent Department for this legislation, and ask it to explain its perspective of what the legislation it asked the Oireachtas to pass means, in light of what has been said at this meeting. The Department should take some steps to ensure that the legislation is applied consistently. We need a detailed note from the Department on why various Government bodies are interpreting it differently.

We will move on to the next page. I do not know how much is left. This page covers Institute of Technology, Tralee, and Maynooth University. Somewhere along the line, we will invite a number of third level institutions to attend. They are large institutions.

Deputy David Cullinane

I have a question on the institutes of technology. My understanding is that a number of institutes have significant deficits. We need to consider this matter, as some of those deficits amount to millions of euro. The Higher Education Authority, HEA, is working with them on putting containment plans in place and so on. Some are involved in the process of becoming technological universities. We must examine more deeply those that are running deficits while being part of such a process.

I received responses from a number of institutes of technology to parliamentary questions that I asked. Some 85% of Waterford Institute of Technology's operating budget goes on pay. Institutes are labour intensive by nature, but 85% is very high compared with other institutes. Various institutes have problems, in that they have deficits while also having very little remaining in their operational budgets after pay. This matter merits further scrutiny by the committee. Historical issues at some institutes have been addressed by the committee, but there may still be a hangover from them. There were issues in Waterford Institute of Technology.

As to the audit accounts, I am concerned about the levels of deficit, how sustainable they are and whether it is sustainable for some institutes to be run on the basis of 85% of their operational budgets being spent on pay.

Chairman

Did Dublin Institute of Technology make an advance payment of €700,000 million for library services only for the supplier to go bust and the institute not to get the service or its money back?

Deputy Alan Farrell

It is unusual.

Chairman

The institute made an advanced payment and got nothing for it. That is hopeless. It is food for thought.

Deputy Alan Farrell

Was the Comptroller and Auditor General satisfied that there was no breach of contractual procedure by making a payment in advance of a service being received? Does his office get that deep into the detail?

Mr. Seamus McCarthy

As a general rule, we see the risk of this happening with prepayments. Across the government sector, prepayment is generally not regarded as a good idea. It is too risky unless careful controls are in place. We have reported previously on prepayments in other organisations. It is relatively unusual to see. Normally, the level of prepayment in a set of financial statements is not particularly high. I drew attention to this example because there was a loss as a result.

Deputy David Cullinane

Will the Comptroller and Auditor General comment on the number of institutes that are in deficit? How sustainable is that?

Mr. Seamus McCarthy

Off the top of my head, I cannot tell the Deputy how many are in deficit, but four or five have themselves drawn attention to the fact in their financial statements that, on the basis of a going concern, they would be in difficulty if the situation continued. Some might have reserves built up that absorb losses for a year or two.

Deputy David Cullinane

Would spending 85% of an operational budget on pay be considered high?

Mr. Seamus McCarthy

I would be bluffing if I said I knew. I have not examined that statistic as to how it compares. With most public sector bodies, pay is a very substantial part of expenditure in any year. As to how unusual Waterford would be at 85%, I cannot comment at the moment.

I should say that, along with our prohibition on commenting on policy in reports, we tend to regard the allocation of resources as something that is in the policy sphere, so I do not comment on it. I just draw attention to where there may be a problem, a trading difficulty or a going concern issue. I do not suggest, and do not want to get involved in, a potential solution.

Deputy David Cullinane

Institutes of technology have said that there is a difficulty or a potential difficulty in terms of a going concern. By and large, their revenue comes from the Government, which makes them dependent on the Government to keep functioning as a going concern. I understand that the number is five. Some have greater deficits. Unfortunately, Waterford is one such.

Chairman

This is obviously an issue that the Deputy would like to include in the committee's work programme. When we come to discussing the programme, I will ask members to supply a list of types of organisation that they want included in our-----

Deputy David Cullinane

We were speaking to the audited-----

Chairman

Pardon?

Deputy David Cullinane

We were dealing with the audits, but I accept the Chairman's point.

Chairman

We can delve into the issue in further detail subsequently, if the Deputy wants. I propose-----

Deputy Catherine Connolly

On a general point-----

Chairman

If people want to spend more time on this on another day, we will do that.

Deputy Catherine Connolly

I do not. I just wish to make a point about non-competitive procurement. Here are two more institutions, not just the HSE. Generally, it is a theme to which we must revert. If we went through each institution, we would be here all day. It is an issue.

Mr. Seamus McCarthy

Yes.

Chairman

Regarding non-competitive procurement, we will produce a report based on these accounts and take it from there.

Mr. Seamus McCarthy

In terms of my policy on drawing attention to non-competitive procurement that we identify, we generally do so on a sample basis. Sometimes, the sample may not be exactly representative, which occasionally prevents us from scaling up. For instance, we might pick a particular class of goods or services to examine, but I draw attention wherever we identify more than €500,000. It is a blanket approach. The idea is that, because there has been a problem with this in the public sector in general, there might be a small element that we identify in many organisations, but we do not need to draw attention to them. The emphasis that we have placed on it reflects the concerns of the committee over the years and our drawing attention to it at the committee encourages public sector bodies to ensure that they use competitive processes to procure their goods and services.

Chairman

The Dublin Institute of Technology has presented its accounts to us. A different case arises involving an advance payment of €700,000. I propose that the committee write directly to the institute of technology asking for detailed background information relating to: how the advance payment arose; the decisions made in respect of the payment; whether it was approved at board level; whether credit checks were carried out; who monitored progress; when this person became aware of issues surrounding the advance payment; and what action was taken in this regard. I would like a full report on the matter. We will start by asking for a written report but I am not excluding the option of inviting representatives from the Dublin Institute of Technology to come before the committee. We will obtain a written report first and take the matter from there.

Members will note that we grouped all the educational establishments together in the schedule. We will return to third-level educational establishments as a topic in the autumn. Members will have this documentation in their files for future reference. The next page starts with Ollscoil na hÉireann Gaillimhe and finishes with University College Dublin. After that, we have a page listing the education and training boards, including Donegal Education and Training Board and Dublin-Dún Laoghaire Education and Training Board. We will examine these as a group later. The subsequent page lists institutions starting with Longford and Westmeath Education and Training Board and finishing with Louth and Meath Education and Training Board. The list on the next page starts with the National Council for Curriculum and Assessment and finishes with the Grangegorman Development Agency.

Mr. Seamus McCarthy

I picked up something when scanning through this and would like to make a correction. The turnover for Grangegorman Development Agency should read as €44 million. That is just to keep the record straight.

Chairman

That is fine. We will move on. The next page refers to the Foyle, Carlingford and Irish Lights Commission and the Loughs Agency.

Mr. Seamus McCarthy

This is in a category of its own called North-South bodies. There are seven bodies that I audit together with the Comptroller and Auditor General in Northern Ireland. We jointly certify those bodies under the Anglo-Irish Agreement. It is an unusual feature.

Chairman

That concludes our deliberations on this matter. The moral of the story relates to non-competitive tendering in third level institutes. We can identify a couple of topics here that will be on our agenda for the autumn. As I stated, we do not normally have such a large number of accounts. However, six months of accounts have built up since the committee last met in January. Normally, we would only deal with a handful of accounts.

We move on to the next item on the agenda, namely, the work programme. The clerk has circulated a draft work programme for the period until the recess in two weeks. The Comptroller and Auditor General has highlighted the public bodies on which he must focus. As this is our first meeting, I took the liberty of ensuring we have some work lined up for the period until the end of July. I hope members will approve this proposal retrospectively. I chose the Office of Public Works because the Comptroller and Auditor General has just completed a special report - a value-for-money exercise on strategic planning for flood risk management - and officials from the Office of Public Works will be available to appear before the committee next week. I do not have the details of the report but we will have a full discussion on the matter next week.

Deputy David Cullinane

Is the Chairman seeking ideas for shaping our work programme beyond the autumn?

Chairman

No, I am proposing that we clear the work programme for the next three weeks. For next week, I ask members to submit to the clerk issues they wish the committee to address from September onwards.

Deputy David Cullinane

That is fine.

Chairman

As there are only three weeks left before the recess, I am taking a pragmatic approach because the slots are nearly filled. I took the liberty of trying to fill our agenda for this period in order that the committee had work scheduled. I did not want to start scheduling our work today because we would not be able to make arrangements to meet officials by next Thursday. We had to issue invitations in advance of today's meeting. Next week, we will have officials from the Office of Public Works before the committee on 14 July and representatives of the Health Service Executive are scheduled to appear on 15 July. We will discuss that in a moment. Representatives of the National Treasury Management Agency, NTMA, will appear on 21 July to discuss the latter's annual financial statement, Management of the National Debt. The National Development Finance Agency, NDFA, which deals with public private partnerships, comes within the remit of the NTMA.

Mr. Seamus McCarthy

Yes.

Chairman

However, the NDFA's accounts do not come within the NTMA's remit. The issue of public private partnerships can be discussed with NTMA officials on 21 July. The NTMA is due to publish its 2015 financial statements next week. The meeting will be timely, therefore, because the agency's accounts will have just been published.

On the meeting of 15 July, I will call Deputy Farrell in a moment on the Console issue on which we have received a letter. It should be noted that Console is not audited by the Comptroller and Auditor General and the organisation does not come directly within the remit of the Committee of Public Accounts. While the matters in the public domain are very important and the Office of the Director of Corporate Enforcement has commenced criminal investigations into the case, we will concentrate on the role of the committee. My concern is the adequacy of the Health Service Executive's controls in respect of taxpayers' moneys the executive was disbursing and the funding of organisations such as Console. The committee wrote to the HSE last week requesting information on several matters connected to this issue. We requested: a copy of the service level agreement between the HSE and Console; a copy of the internal audit carried out by the HSE in respect of Console following the 2013 returns; a note on the shortcomings identified in the HSE systems and controls operated in that period to ensure Console and similarly funded organisations are governed in line with grant aid service level agreements; and a note on the action plan to improve controls to ensure that moneys given to HSE-funded organisations are used for purposes for which they have been given. In addition, I included in the letter a reference to the issue of top-up payments, which was discussed by the committee on previous occasions in respect of several voluntary organisations funded under section 38 and section 39 agreements.

The St. John of God organisation has featured in public discussion recently. This matter comes under the topic of top-up payments, which remains on our agenda as it was discussed at previous meetings. I have asked the HSE to deal with the issue of Console and the top-up payments, which also relates to Console. We will deal with other issues, including HSE competitive tendering, at a separate meeting. We have a specific item to deal with on 15 July.

Deputy Alan Kelly

To clarify, the meeting of 15 July will deal with-----

Chairman

We have a meeting on Thursday, 14 July with the Office of Public Works and a further meeting on Friday, 15 July with representatives of the Health Service Executive.

Deputy Alan Kelly

I understand it is proposed that the meeting with the HSE will deal with the issue of the letter in respect of section 38 and Console and we will dig into the issue of sections 38 and 39 agreements and the service level agreements between the HSE and voluntary organisations. We will also discuss top-ups in respect of St. John of God and, no doubt, other organisations.

Chairman

We will obtain an up-to-date report on top-ups because the issue has been ongoing for the past year. I believe we have enough to deal with in that respect.

A number of HSE documents were received yesterday afternoon. These are considerable in volume and most were in hard copy and folder form, rather than in electronic form. From that point of view, they are cumbersome. Listening to the Comptroller and Auditor General, the service level agreements and similar documents should be available for publication. The HSE has asked the committee not to publish any of the documentation before the meeting next Friday. We have to arrange a mechanism to circulate these documents to members in advance of next Friday's meeting because they will have to familiarise themselves with and study them beforehand. It is important to note, however, that they should not be made publicly available during the coming week. The HSE has specifically made this request and we do not want to start our deliberations by failing to comply with a request.

On the internal audit report, the Comptroller and Auditor General indicated that studying these types of report is part of the normal work of the Health Service Executive audit. As it follows directly from the HSE audit, the audit report falls directly within the remit of the committee. I will take questions on the issue because some members will be concerned about some of the contents of the report. Members will have read newspaper reports on the audit report. None of this information has come from the committee, which only received the documents yesterday. I confirm that they have not been circulated to members and that I have not yet had an opportunity to read them.

Deputy Catherine Connolly

Members did not receive the documents.

Chairman

They were received by the secretariat. I have been aware since yesterday evening that hard copies arrived.

Deputy David Cullinane

Is the Chairman referring to the internal Console report?

Chairman

No, it is the HSE's internal audit report into Console.

Deputy David Cullinane

That is the one that is in the public domain.

Chairman

Yes.

Deputy David Cullinane

The clerk has the report and it will be given to us, but it is currently in hard copy form.

Chairman

It is in hard copy form.

Deputy David Cullinane

When are we due to get that?

Chairman

We do not want to do anything that would prejudice any legal proceedings which may flow from that issue. We have already mentioned that the Garda is carrying out investigations. We are already aware that the matter is before the High Court. We are also already aware that the Director of Corporate Enforcement is pursuing proceedings. We want to ensure that nothing we say or do might compromise the work of those State bodies. People will want them to do their work. We will not do anything to cut across that. From my point of view, first, it would be outside our remit and, second, we would not be treading on good ground if we attempted to bring anybody who was involved in Console directly before the committee. We will start with the HSE and Tony O'Brien. Mr. O'Brien is the custodian of the money he handed out to Console. We will start by asking him, in the first instance, to account for the money he handed out.

Deputy David Cullinane

When will the report-----

Chairman

We will come to that before we conclude. I call Deputy Farrell.

Deputy Alan Farrell

When I wrote that letter to the clerk, it was at the beginning of this process but it has taken off at quite an extraordinary rate since then. I am very keen for the committee to do its job but I am also very keen to avoid duplication. A series of investigations are taking place up to and including those being carried out by An Garda Síochána. While we have a clear and defined role in monitoring the expenditure of public funds - clearly, that covers Console via the HSE - I am slightly reluctant to take it to the next stage or to examine the investigations into the investigations and matters of that nature. That would be a waste of time and the resources available to us. It would also be a duplication of the work.

Chairman

Can I be rude and say that I missed the Deputy's last remark. I was reading a note on this issue. Will the Deputy repeat his last remark?

Deputy Alan Farrell

While the committee has a role in regard to the Console issue and while I am very keen for us to deal with that, I have slight concern about the number of investigations that are taking place simultaneously up to and including those being carried out by the Garda. Therefore, we should approach this issue carefully in terms of what we would be getting ourselves into. I would hate for the committee to go down a road and end up looking at investigating those who are carrying out investigations and matters of that sort. That has occurred in the past and I would prefer if it did not happen in this instance. I was a member of the justice committee which, by and large, avoided issues of that nature. On one particular occasion, however, it was not possible to avoid the issue. In terms of members' time, the role of the committee and our interaction with the likes of the HSE, which, clearly, has a great number of questions to answer, the purpose of my correspondence was to begin the process. However, matters have moved on since then.

On the St. John of God issue, obviously it falls very clearly within our remit. Our discussions with the HSE on it in terms of the controls within the service level agreements for sections 38 and 39 agencies need to be examined by this committee. There is also the matter of whether the legislation or statutory instruments governing those agencies need to be examined. I am aware that the charity regulator would most likely have a role to play in some way with regard to both issues and there is the question of whether, as part of our discussions, there would be an opportunity for us to meet the regulator. Deputy Madigan raised that issue earlier in the week. It is certainly something the committee should look at.

Chairman

I will take other comments on this.

Deputy David Cullinane

I agree that we need to be careful and cautious. This committee should not try to supersede, interfere with or do the work of others, be it An Garda Síochána or anybody else. It has already been articulated that there are limitations on us and on the Comptroller and Auditor General with regard to Console. I fully accept that. My understanding as to what we will be doing next is that we will be following the HSE money and we need to do so in that context. We need to ensure that taxpayers' money was not being used in an inappropriate way because this is not the first time this has happened. In fairness to the previous Committee of Public Accounts, a great deal of time was spent on these sections 38 and 39 organisations involving the expenditure of State money and taxpayers' money and, unfortunately, what has come to light seems to be prevalent across many of these organisations. A number of them have been at the centre of very serious issues. This is a matter of major public concern, and we all accept that. That should be our starting point next week and it is right that we would do it that way. We are not trying to replicate anybody else's work but we have a job to do and we have a responsibility to follow taxpayers' money. We must do so in a very clear and diligent manner and ensure that there has been no waste, to put it mildly, of taxpayers' money by any of these organisations. Potentially much deeper issues will arise in respect of those organisations as the issue of State funding will arise in the discussions. I agree with what has been said but we have a clear responsibility to taxpayers with regard to this issue and others that have arisen.

Deputy Shane Cassells

I agree with the Deputy. There is no point in providing cover in advance for guys to come in here next week and stonewall us. We can read the remit in the letter for setting out the basis on which they will come forward and, as Deputy Cullinane said, following the money trail and examining the internal procedures that exist. We are dealing with the HSE but this goes back to my earlier comments regarding a range of agencies throughout the country. I concur with what Deputy Cullinane said but I do not want us to create a scenario where we are giving guys a blanket in advance before they come in and then they can just run the clock down and stonewall us with respect to what we are trying to pursue.

Deputy Josepha Madigan

Essentially, either an e-mail or a letter could be sent during the week calling on the Charities Regulatory Authority to come before PAC. I am aware that Part 4 of the legislation has not yet commenced but, from a public information perspective, it would be very useful to find out what powers it has under the statute in terms of probing the misuse of public funds or whatever by charities. That is certainly something I would be looking for the committee to do.

Deputy Alan Kelly

I agree with Deputy Madigan. Her proposal would be useful and it would close the circle on this issue. It would be helpful to fit that somewhere into our programme. It would also be timely because part of the legislation has yet to be commenced. Deputy Cassells and others made the point that as we speak here about what is one of the most talked about issues in Ireland, there is concern among the public about the use of taxpayers' money. In addition, this issue has touched people in the sense that they are concerned on a number of levels, not only about how taxpayers' money is being spent but also about how their voluntary contributions are being spent, about the services being provided and about whether these will continue to be provided into the future. There is a huge level of concern among the public about this issue. We need to ensure that, as a committee representing taxpayers, we get to the bottom of this matter. Then there are all the other issues that are ongoing in respect of the Garda and everything else. We need to be very clear and direct regarding how the HSE is managing its service level agreements with these organisations. There may be - I believe there are - other issues separate from how the money is being spent. I am concerned that there may be issues regarding procurement, how services are being provided and the cost of those services as a result of the way contracts have been managed.

On the management of staff and not just in relation to payment, it is about the use of staff across a number of these organisations as well. We need to dig into those sorts of layers comprehensively so that the taxpayer has full knowledge of the bottom line and what we are dealing with here. It is about the level of organisations, the volume of issues within them and levels of funds.

The second issue is one on which I compliment Deputy Farrell for taking the initiative to write in advance. It was certainly something we all wanted. It relates to top-up payments. This is a considerable issue on top of the service level agreement issue with the organisations and the HSE. It is something we need to deal with, but we need to do so separately as there are layers underneath that too. There is a comprehensive amount of work on both of these issues that we need to understand. We also need to respect the other avenues of investigation that are ongoing across the State. We are challenged on behalf of taxpayers with ensuring that we get to the bottom of this quickly.

Deputy Catherine Connolly

I compliment Deputy Farrell on sending the letter but I do not share his anxieties. It has all been said. We have a role to ask questions, but when questions become difficult or we avoid them because we are worried, we are in serious trouble. It is an issue with which we must deal. We must ask questions and hold the Executive to account for allocating taxpayers' money. How is it allocated and what was the supervision? They are the questions for us. Entirely separately is what Console and those on the ground are left with, which is not for today. The tragedy on the ground is for people who were being dealt with on a daily basis. It was the only 24/7 service and it is most unfortunate for them. We have to ask questions and hold the HSE to account.

Chairman

I want to be clear on the issue in relation to the circulation of the document we received. They want to get the views of members of the committee. Obviously, there are sensitive issues in that. The HSE has asked for it not to be made public or published before its representatives come here next week and, where people received documents, some in hard copy form and some in electronic form, for that to be respected. Members will be asked for copies before lunchtime if people know the documents are in the building. I am asking people to respect-----

Deputy Alan Kelly

Some of us have already been asked for it.

Chairman

Exactly. As such, I am asking people to understand and respect that. This is a report by the HSE internal audit section and it is a HSE document produced in relation to the management of taxpayers' funds. As such, it is 100% within our remit. If it was a document produced by a third party like Console, there would be an issue as to whether we were entitled to have it. As it is a HSE document, we are entitled to have it.

Deputy Alan Farrell

Is the document sub judice?

Chairman

No. It may be in due course.

Deputy Alan Farrell

But it is not at the moment.

Chairman

No. The document is not sub judice. I will read the letter we received from the HSE with the document. It is approximately five pages. It states that it encloses 30 copies of the internal audit report. It goes on:

The committee may wish to note that in the normal course the HSE does not publish or release to any third party finalised internal audit reports until six months has expired since the date of completion. The reason for this is because any affected party has a period of three months within which they may bring a judicial review challenging a report or any part of that report and has a period of six months within which to commence defamation proceedings.

The letter further states that if a report is published prior to these periods elapsing, there is a potential risk of liability arising from such publication. The HSE internal audit report was completed on 14 April 2016 and furnished to Console on that date. The period within which a judicial review challenging the report may be brought will expire in the normal course on 14 July. By pure coincidence, our meeting will take place on 15 July. As such, we will be smack-bang outside the three-month period. The six-month period within which a person could bring defamation proceedings in the normal course will elapse on 14 October. Anybody is free to do that about anything anywhere in the country. The HSE says that while it does not anticipate any challenge will be brought concerning the Console internal audit report and sees no basis for such a claim, the committee may wish to obtain its own legal advice as to how it intends to use the report. The HSE is just putting us on notice. It is up to us.

Deputy Alan Farrell

Notwithstanding what has been said, my reading is that it is not a document that is sub judice. There are others in the room who are more qualified to say. The report forms part of a public body's investigation into a charity, the funding of which falls under our remit. As a public body, if it is made available, it should be made available in the public domain. That is my position.

Chairman

We can also acknowledge that the HSE, whose letter I am quoting, says that it does not anticipate that any challenge will be brought. Not only is it not sub judice, the HSE is saying it does not expect it to be. That is the HSE's call, not ours. I am just recording it.

Deputy Alan Farrell

If a public document is given to a public organisation, it should be made public.

Chairman

The HSE has asked us not to publish this until-----

Deputy Alan Farrell

The HSE asks us not to publish PQs all the time.

Chairman

It is until 14 July, which is next week. We can circulate it, but it is not to be published or made available.

Deputy Josepha Madigan

On a practical level, I did not know this meeting was going to be on Friday. Is the Chairman going to consult with us in relation to specific dates because I was not aware that there was going to be a meeting at all next Friday? I have great difficulty. If we could have consultation on future dates, I would appreciate it.

Chairman

The Deputy's point is quite right. I had to move myself to have a meeting before the Dáil recess. I understood the Dáil was sitting next Friday and thought it was a safe date on that basis. It was the only day they were available. We had to get clearing from the business committee to hold this unscheduled meeting. I had to act a bit unilaterally.

Deputy Josepha Madigan

It would be helpful to know in advance.

Chairman

We will have a work programme and there will be set dates. To move outside our normal Thursday meeting is absolutely the exception.

Deputy Josepha Madigan

I am on the Committee on Procedure and Privileges. While I am not at liberty to discuss anything on it, a matter in the public arena is previous litigation relating to this committee. Has any guidance emanated from this committee that can be given to members in relation to the questioning of anyone who is going to come forward? Is there any guidance emanating as a result of the pending litigation? Has that been considered?

Chairman

No and what the Deputy raises is a good point in advance of the commencement of the meeting. We might seek advice from the Office of the Parliamentary Legal Adviser on questions and where we can stray or not. To be clear, we are not bringing Console in. We are only bringing in the HSE.

Deputy Josepha Madigan

It is just in general terms.

Chairman

We could do with getting that right.

Deputy Josepha Madigan

I think so.

Chairman

We would all agree with that.

Deputy David Cullinane

Deputy Farrell raised an interesting question which was not answered. Or rather it was answered, but we have not answered as a committee. I want to be absolutely clear about what we are agreeing as a committee. He asked, as to the HSE's request for us not to publish the internal audit report, if it was the Chairman's view that we should respect that and not publish it either by way of the committee publishing it or, inadvertently, a member publishing it. That is what I am getting at.

Chairman

I am going to answer.

Deputy David Cullinane

What is the collective decision of the committee?

Chairman

I will give my understanding and I am subject to correction. My understanding is that the correspondence was not published as part of today's correspondence as it arrived too late to be included and disseminated to people. It has arrived and we have it. The committee is not meeting until next week so we cannot publish anything. As Chairman, I cannot publish anything next Monday, Tuesday or Wednesday on behalf of the committee. It is the committee that will publish it. That will be a committee decision next week. The committee could decide next week not to publish. Let us be clear about that. We are circulating it so that people can read it and not publish it. I am requesting people not to breach that individually.

Deputy Alan Kelly

When will it be circulated?

Chairman

Within 24 hours.

Deputy Alan Farrell

Will the Chairman give an approximation of the number of pages?

Chairman

There are more than 100.

Deputy Alan Farrell

I thought the Chairman was talking in terms of there being thousands.

Deputy Alan Kelly

Is it in hard copy form?

Chairman

Most of it is.

Deputy Alan Kelly

Will it be distributed in hard copy and soft copy form?

Chairman

The 30 hard copies were hand delivered to the committee yesterday evening.

Deputy Josepha Madigan

I apologise for cutting across the Chairman. I mentioned earlier that the section 4 provision had not commenced, but I believe it was commenced yesterday by the Minister.

Chairman

On Tuesday the Minister confirmed to me in a reply to a parliamentary question that she had issued a statutory order, but it will not take effect for two months, until 5 September. She signed the order on Tuesday, but it will be two months before it becomes operative.

Deputy David Cullinane

Will we receive the report tomorrow in order that we can read it during the weekend?

Chairman

Yes.

Deputy Alan Farrell

The Chairman said they were ready. May we receive them today?

Chairman

Yes. They will be put in members' pigeon holes today.

On housekeeping matters, I propose that for the first three weeks the committee operate in the normal way. We can review the position in September. What normally happens is that the Comptroller and Auditor General makes his opening comments. Witnesses then comment and we will have already arranged the first and second speakers. The first speaker has 20 minutes in total for questions and answers; the second has 15, while everybody else has ten. That gives everybody an opportunity to make a contribution within a reasonable period. I suggest we retain this timetable to see how it operates for a couple of weeks. We can then review it, but it has worked well in practice.

Normally, as part of our work programme, a list of first and second speakers on a rotating basis is drawn up. There is an onus on the first and second speakers to be well prepared. I invite members to indicate to the clerk which of the three committee meetings at which they wish to be the first or second speaker and to do so by Tuesday, 12 July. The meetings will be with the OPW, the HSE and the National Treasury Management Agency. If there are too many offering to be a first or a second speaker at a particular meeting, the clerk and I will draw lots. However, everybody will have an opportunity to speak.

Deputy Alan Kelly

Will the first speaker nominated have the opportunity to meet the Chairman and the clerk beforehand?

Clerk to the Committee

Of course. The liaison officer will meet the first and second speakers nominated for up to one hour next Tuesday or Wednesday, if need be.

Chairman

It is normal for the liaison officer to meet the speakers nominated.

Deputy Alan Kelly

That is why I asked.

Deputy Bobby Aylward

Will there be a question and answer session?

Chairman

Yes. The first speaker will have 20 minutes in total for questions and answers.

The committee adjourned at 11.55 a.m. until 9 a.m. on Thursday, 14 July 2016.