Mr. Seamus McCarthy:

Thank you, Chairman. The National Shared Services Office was set up in 2014 as an administrative office within the Department of Public Expenditure and Reform. From the beginning of this year, 2018, it has been a stand-alone office with its own Accounting Officer. It is responsible for delivering suitable business services on a shared basis, mainly for other central Government Departments and offices.

The shared services office currently provides two main services: PeoplePoint,which provides a human resources and pensions administration service; and the Payroll Shared Service Centre,which provides a payroll and pension payment service.

A shared services financial management system is in development. At the end of 2016, 39 departments had transferred HR functions to PeoplePoint and 43 had transferred their payroll functions to the Payroll Shared Services Centre, PSCC.

The 2016 appropriation account for the Vote for shared services records gross expenditure totalling €36.4 million. There was an underspend in the year of €7.35 million. That was 17% relative to the gross estimate. This was primarily due to delays in planned transfers of staff from departmental payroll centres to PSSC, and delays in staff recruitment. There has been a change in the presentation of the Vote for 2016. In previous years, each of the main shared services was reported on as a separate expenditure programme. For 2016, only a global programme is presented. Pay costs totalling €21.1 million accounted for 58% of the expenditure.

Turning to the chapter on the management of salary overpayments, acting as the agent for the bodies it serves, the shared services office processed payments of €3.2 billion relating to 102,400 employees in 2016. This involved running 2,438 weekly, 1,482 fortnightly and 192 monthly payment runs. It should be noted that the payments made for the bodies concerned are charged back to the relevant appropriation account or financial statements of the bodies concerned, and are not a charge on the Vote for shared services. During the audits of appropriation accounts for 2015, we noted a general increase in the level of salary overpayments being reported. I decided to examine the matter across the board for 2016, focusing on how the shared services office managed and recovered salary overpayments. The examination found that the office notified its client departments that overpayments totalling €4.6 million were outstanding at the end of 2016.

In any large and complex payroll system, it is likely that some salary overpayments will occur, usually because it is necessary to process the payroll to meet pay day commitments before all information that might require a salary adjustment is available. The examination found that late notification was the cause of the overpayment in the majority of cases reviewed. In a sample examined, this mainly occurred because the PSSC were only notified weeks, and, in some cases, months, after an employee should have been put on a zero rate or a reduced rate of pay, for example, due to extended sick leave. There can be late notification by the relevant employer department to PeoplePoint, and-or by PeoplePoint to PSSC. Like any debt, it is important that salary overpayments are managed effectively, and repayment arrangements put in place promptly. In figure 10.2, the chapter presents an overview of a framework for the effective management of overpayments. The examination found scope for improvement in each aspect of this framework.

We found that, at the end of 2016, there were almost 650 identified overpayment cases where the amount of the overpayment had not yet been recorded. The overpayment had arisen more than six months previously in a quarter of these cases. Delays in identifying the value means the recovery process cannot begin, which may ultimately make it more difficult to recover the overpayment. We also identified two ways in which overpayments arose, but which were not being correctly captured by shared services.

Even in cases where the overpayment amount had been calculated, there was evidence of delays in commencing recovery action. At end 2016, there were more than 380 cases with an overpayment value of €1.1 million outstanding for more than a year, with no recovery plan in place. Based on the examination of a sample of cases, the average time taken to issue the first letter requesting repayment was 13 weeks. We also found there was a lack of clarity between the NSSO and the departments being served around the division of responsibility for management of identified overpayment cases.

Recovery of overpayments is often by means of regular deduction from future pay. There is no system in place to identify cases where deductions have ceased but the full amount of the overpayment has not yet been recovered. The examination identified overpayments to four individuals where this had happened.

Overall, it was found that the systems in place did not provide the necessary information to allow for the effective management of overpayments. It was not possible to readily generate an aged analysis of overpayments or to quantify the level of recovery. Extensive manual intervention was required to calculate the amount outstanding at year end and the examination identified a number of errors in this calculation. In addition, the reported year end figure did not include all overpayments, mainly due to a lack of clarity between the NSSO and client departments as to the respective responsibilities for particular types of cases. The chapter makes a number of recommendations to improve systems and recovery processes, and to clarify responsibilities. I am glad that the Accounting Officer accepted all of the recommendations, and will provide an update on their implementation.