Ms Niamh Larkin:

The Local Government Audit Service, LGAS, performs the independent, external audit of local government, as established by the Minister for Housing, Planning and Local Government. The LGAS audits the annual financial statements of local authorities, including regional authorities, motor taxation offices and other bodies.

The Minister for Housing, Planning and Local Government appoints auditors, known as local government auditors, to carry out or assist in the carrying out of audits of local authorities and other bodies. All local government auditors are qualified accountants and recruited following open public competitions. Each local government auditor is assigned an audit district under warrant of authority from the director of audit. Local government auditors are independent of the Department when discharging their professional functions. This independence is protected in legislation in accordance with section 116(2) of the Local Government Act 2001. The Act sets out the primary duties of the local government auditor as follows:

In the course of the audit of accounts of the local authority or other body, the local government auditor shall carry out such audit tests as he or she considers appropriate in order to be satisfied as to— (a) whether the annual financial statement is prepared in accordance with section 107 or with the accounting requirements otherwise applicable to the body concerned,

(b) whether the annual financial statement presents fairly the financial position of the authority or other body and of its income and expenditure for the period in question,

(c) whether the transactions of the audited body conform with the statutory or other authorisation under which they purport to have been carried out.

There are a number of outputs from the audit. Following the audit, each local government auditor issues an audit opinion, an audit report and a management letter to the chief executive of the local authority. It is the local government auditor's main statutory duty, following completion of the financial audit, to give his or her independent audit opinion on the annual financial statement of the audited body as to whether it presents fairly the financial position of the audited body and of its income and expenditure for the period under audit.

In addition to the audit opinion, it is custom and practice to issue statutory audit reports covering any matter or matters that the auditor considers should be reported. The chief executive of a local authority is required to respond to this report and his or her comments shall be included, if of material significance, as part of the final report. This procedure has enhanced public scrutiny of local government as management responses to address the issues raised at audit now form part of the published audit reports.

In accordance with international standards on auditing, an auditor may issue a management letter drawing attention to any weaknesses in financial procedures and-or internal controls identified during audit and make appropriate recommendations.

This report provides an overview of the work of the Local Government Audit Service in delivering on its statutory remit of providing the external audit of local government, in accordance with sections 114 to 126 of the Local Government Act 2001, as amended by the Local Government Reform Act 2014. The report is divided into three sections. Section 1 covers the role of the Local Government Audit Service and the legislation that governs it. It details the various relationships the Local Government Audit Service has with other bodies, including local authorities, their audit committees, the National Oversight and Audit Commission, NOAC, and the Office of the Comptroller and Auditor General. It also highlights the role the value for money unit plays in assisting local authorities to learn from best practice.

Section 2 summarises the financial performance of the 31 local authorities audited for the year ended 31 December 2017. It details the main sources of both revenue and capital income and expenditure, together with historic data, so that comparisons can be made. It details the value of assets under the control of local authorities and the liabilities that they face in both the short and long term.

Section 3 outlines some of the findings included in some of the local government auditors' audit reports and opinions. The findings are set out under the following headings for the purpose of the overview report: financial standing; income collection; unfunded capital balances; capital projects; loans payable; development contributions; fixed assets; transfer of assets to Irish Water; procurement and purchasing; local authority companies; and governance, internal audit and audit committee. The findings included in the overview report are not an exhaustive list of all findings but a summary of the main areas. The audit reports for each local authority deal with the findings in detail. Auditors continue to issue unqualified audit opinions on local authorities' audited financial statements, with one report, concerning 2017, containing an emphasis of matter. Our primary sources of information for the overview report are local authority audited financial statements and the annual audit reports.

I hope this overview report gives an insight into the work carried out annually by the Local Government Audit Service. I look forward to discussing it with members in detail. As director of audit, I thank the committee for inviting me and my colleague, Mr. Richard Murphy, to today's meeting.