Mr. John McCarthy:

I thank the Chairman for the invitation to appear before the committee. The committee is considering the timeliness of submission of annual accounts for audit. I know this is an issue that is of keen interest to the committee and to the Chairman. At the outset let me place on record that compliance with our obligations in this regard is also a key priority for my Department and for me as Accounting Officer for the reasons of good governance, as pointed out by the Chairman.

The issue which I wish to address specifically relates to the Local Government Fund, LGF. The LGF, as the fund is known, was established in 1999 under legislative provisions introduced through the Local Government Act 1998. In terms of the preparation of the annual accounts of the fund, the relevant provision of the Act is section 3(5), which provides as follows:

As soon as may be after the end of each financial year, the Minister shall submit the accounts of the Fund to the Comptroller and Auditor General for audit and the Minister shall cause a copy of an abstract of the accounts as so audited together with a copy of the report of the Comptroller and Auditor General thereon to be laid before each House of the Oireachtas.

There is therefore no statutory deadline for the preparation and presentation of the draft annual accounts of the LGF to the Comptroller and Auditor General, a position which also applies in relation to a number of other funds, as recognised in last year's special report on financial reporting by the Comptroller and Auditor General. However, there is a very clear statutory requirement to produce the accounts as soon as may be after the end of the year. That is a duty that we take very seriously along with all of our other statutory requirements in relation to the preparation of accounts.

In that context, it is important to note that there is a statutory financial reporting requirement to submit the Appropriation Account for the Department's Vote by 31 March each year. The production of the Appropriation Account and the engagement with the Comptroller and Auditor General on the Vote audit have to take priority for the Accounting Officer in the early part of the year. This has been a longstanding practice and to my knowledge has never been identified as an issue of concern by the Office of the Comptroller and Auditor General. In addition to the Appropriation Account having to take priority, given the statutory deadline that attaches to it, it should also be noted that the LGF is a very detailed and complex account to prepare as the Department has to receive and reconcile annual returns from 26 local authority motor tax offices as part of the process and the turnover involved for 2017 for the fund is in excess of €1.8 billion.

Notwithstanding all of that, the Department is committed to an expeditious and timely submission of the annual accounts. This is demonstrated by the fact that a preliminary draft excluding the related notes of the 2017 LGF account was submitted to the Office of the Comptroller and Auditor General on 18 April 2018, barely two weeks after the Appropriation Accounts have been completed. While this did not include all of the notes associated with the account, I understand it did allow significant progress on the audit to be made by the Comptroller's audit team. As the Chairman mentioned, the final draft of the 2017 account with the associated notes has also now been completed and was submitted to the Comptroller and Auditor General on 17 May.

Taking account of the range of financial reporting requirements to be met, I am satisfied that we have discharged our responsibility to submit the accounts of the LGF as soon as may be after the end of the year in question with the period of time involved decreasing significantly in the past ten years.

Notwithstanding the absence of a specific statutory deadline, we continue to strive to shorten the period for the preparation of the annual accounts of the fund. In that context with the fund undergoing significant restructuring this year, with motor tax now being remitted directly to the Exchequer rather than to the fund and a number of payments that were previously made from the LGF now being made from voted moneys, we will be looking to again shorten the time period for the preparation of the 2018 accounts for the fund. Specifically, we will be aiming to have the draft 2018 accounts completed by the end of March 2019, subject, of course, to prioritising the work on the 2018 Appropriation Account and also just to mention it, it needs to take account of any potential implications that may arise from the fact that the Department will be likely to be moving to a new financial management shared service centre in 2019

I thank the committee for the opportunity to address an issue which I know is of keen interest to the Chairman and members and one which is also taken very seriously by me and by the Department.