Mr. Seamus McCarthy:

The Health Information and Quality Authority was established in 2007. Its primary function is to monitor and regulate health and social care services, to develop standards and to advise on the collection and sharing of information across health care services. Much of its work is focused on inspections across the disability, older people's and children's sectors. Designated residential centres must register with the authority and pay fees which include a registration fee and an annual fee.

The authority's financial statement records total income in 2016 of €18.9 million. Approximately one third of the authority's income, or €6.8 million, came from fees paid by designated centres. Recurrent grant funding received from the Department of Health, under Vote 38, amounted to €11.5 million or just over 60% of the authority's total funding. Most of the remaining income is in the form of employee pension contributions, which are retained by the authority, and replace an equivalent amount of recurrent grant funding.

The authority's expenditure in 2016 was €18.3 million. As set out in the figure on screen, three quarters of the authority's expenditure relates to staff costs. In 2016, the authority's average headcount was 192, with 73% of those staff employed in regulation functions. Some 11% of the authority's total staff costs relate to agency staff.

I issued a clear audit opinion in respect of the authority's financial statement for 2016, which was certified on 29 May 2017. However, my report drew attention to two specific matters. First, I drew attention to the authority's accounting treatment for pensions. The Act establishing the authority gives the Minister for Health, in consultation with the Minister for Public Expenditure and Reform, the authority to set the accounting framework for the authority. In doing so, the Minister has directed that pensions should be accounted for as they are paid, rather than as liabilities accrued, which generally accepted accounting practice requires. This directed accounting treatment for pensions is common to a number of health bodies, and the authority does not have discretion in the matter. As I promised last week, we are compiling a list of the accounting frameworks for all the bodies we audit, setting out such exceptions to generally accepted accounting practice.

The audit report also draws attention to note 18(a), which discloses costs incurred by the authority in 2016, in relation to exiting a lease related to an office building in Sandyford. The lease, which was not due to expire until 2028, was transferred from the former Irish Health Services Accreditation Board when the authority was established in 2007. The building was surplus to the authority's requirements and had been occupied by another health sector body, until that body moved to new premises in 2015. The authority incurred costs of €146,000, equivalent to six months rent, to break the lease, and €350,000 in relation to building restoration costs. The disposal of the lease also resulted in the write-off of the residual value of capitalised leasehold improvement costs of €491,771. In the circumstances, the authority had little option but to incur the costs. Nevertheless, the additional rent payment and the write-off of the residual value of the improvements represent expenditures for which the State did not receive value.

I thank the Chairman.