Amendment No. 22 would extend the remit of the Comptroller and Auditor General to cover bodies receiving money from organisations which are funded directly from public funds, or where 50 per cent of their equity share capital is publicly owned. This would include bodies receiving grants from the IDA, Bord Fáilte, Bord Tráchtála and other such State agencies and would also cover the commercial State bodies.
The Government believes that bodies funded directly by Departments on an annual basis who are receiving over 50 per cent of their funding should be audited by the Comptroller and Auditor General. Section 8 (1) (b) of the Bill makes provision accordingly for the inspection by the Comptroller and Auditor General of such bodies. However, the Government considers that it would be better for the present if the Comptroller and Auditor General, in the context of the widening of his remit for which this Bill provides, concentrated his efforts on the arrangements within those agencies for monitoring the operations of bodies receiving grants from them rather than inspecting the recipient bodies himself. He will be empowered to do this by section 9 of the Bill. This would be a better and indeed a more cost effective, approach than for the Comptroller and Auditor General to dissipate his efforts in inspecting the recipients of grants from State agencies. If he is dissatisfied with the procedures in agencies for monitoring the expenditure of bodies to which they make payments from public funds, he would certainly be able to report on that. As a general point, I would be concerned at the possibility that the general effectiveness of the Comptroller and Auditor General would be weakened, by his officers directly pursuing public moneys beyond those agencies which are assigned the responsibility of issuing grants. In other words, it is the responsibility of individual agencies to make sure, where they are disbursing money, that they have procedures in place for ensuring it is done effectively. If the control were to move from, say, the Department of Enterprise and Employment back to the Comptroller and Auditor General, we would be likly to see a dilution of control. It is up to the Department of Enterprise and Employment or the IDA to see that they have procedures in place for chasing moneys where they are disbursing them to organisations.
In regard to paragraph (d) in the amendment, this would cover all the State bodies, commercial and non-commercial. All the non-commercial State bodies, whose equity share capital is provided by the State, will of course, be subject to audit by the Comptroller and Auditor General. In addition, the Bill provides for the audit of their subsidiaries by the Comptroller and Auditor General. It is intended that all future non-commercial semi-State bodies will also be subject to these provisions. Since this will place a statutory obligation on the Comptroller and Auditor General to audit all the non-commercial State bodies, the question of inspection will not arise.
In regard to the commercial State bodies, to which amendments Nos. 24, 25 and 26 also refer, there are weighty arguments against taking this step even though it may appear superficially attractive.
Section 8 (3) of the Bill provides that the Comptroller and Auditor General shall not inspect the commercial State bodies or their subsidiaries as outlined in the Second Schedule. The Committee of Public Accounts, in their 1988 Special Report, recommended that the Comptroller and Auditor General should be relieved of the responsibility for those few commercial bodies which at that time were still audited.
The core constitutional function of the Comptroller and Auditor General relates to departmental expenditure, the extension of his role to cover bodies which are dependent on an ongoing basis on voted funds is a logic extension. Furthermore, the involvement of the Comptroller and Auditor General could merely dilute the responsibility and, ultimately, the legal liability of the private sector auditors in carrying out a full, objective and professional audit. Involvement by the Comptroller and Auditor General would also greatly complicate the relationship between these bodies and their auditors and could inhibit the auditors from giving the type of forthright commercial advice and services which auditing firms are generally now in a position to offer. It would also tend to dissipate the Comptroller and Auditor General's resources and distract his attention from matters relating to his core constitutional role. It would tend to lead to constant pressure on the Comptroller and Auditor General to police the commercial State sector and to be involved in contentious matters which are properly the province of the Ministers concerned answering directly to Dáil Éireann, the Garda, the DPP or the courts.
In addition the role of the Comptroller and Auditor General in examining the economy, efficiency and management effectiveness of Departments will, of course, also involve him in examining the arrangements in Departments for monitoring the operation and performance of commercial semi-State bodies under their aegis. This general approach is likely to be more productive than a direct involvement by the Comptroller and Auditor General.
The Department of Finance book "Public Financial Procedures", which is sent to all accounting officers on their appointment, sets down Departments' responsibilities in regard to bodies under their aegis. It states:
"It is essential that a clear framework exists (whether administratively or legislatively or both) within which proper control and accountability mechanisms are working to ensure that public funds are used effectively, that they are accounted for properly and that reporting to the responsible Ministers and to the Oireachtas is timely, accurate and comprehensive.
In his examination of Departments the Comptroller and Auditor General will be able to check whether such a clear framework is in place.
One of the most important considerations is that the Oireachtas Joint Committee on Commercial State-sponsored Bodies is given wide-ranging terms of reference which help to ensure that commercial State bodies are already accountable to Parliament. Involvement by the Comptroller and Auditor General would lead to subsequent involvement by the Committee of Public Accounts in this area, an unnecessary duplication of effort by two Oireachtas committees.
In a case where there is agreement in this House that the Comptroller and Auditor General should report to the House on a matter, a resolution can be passed in this House to that effect.
Amendment No. 25, is largely consequential on amendments Nos. 23 and 24 which have already been referred to. With regard to the final paragraph of this amendment, I would draw the attention of the House to section 7 (2) of the Comptroller and Auditor General Act, 1923, which is being retained, which provides that it shall be the duty of the Comptroller and Auditor General to report to Dáil Éireann on such matters and at such times as shall, from time to time, be prescribed by law or by resolution of Dáil Éireann. This provision has not, to my knowledge, been used in the history of the State and I consider it would be used only in most exceptional circumstances having regard to the Comptroller and Auditor General's independent position as a constitutional officer of the State. Nonetheless, it clearly provides a mechanism for this House to deal with exceptional matters which may be of such general concern that it would seem appropriate for the Comptroller and Auditor General to investigate and report to the House on such a matter. The proposal in this amendment to refer to this power is, therefore, unnecessary as the power sought is already available and a resolution can set down, as appropriate in each case, the terms of reference for the Comptroller and Auditor General when preparing his report.