Mr. Seamus McCarthy:

Go raibh maith agat, a Chathaoirligh. As members of the committee are aware, the Secretary General of the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation is the Accounting Officer for a number of Votes, reflecting the responsibility of his Department for the development and administration of a number of discrete cross-departmental functions in specialised and technical areas. I issued clear audit opinions in relation to each of the four appropriation accounts for 2023 on this morning’s agenda.

The 2023 appropriation account for Vote 11 - Office of the Minister for Public Expenditure, National Development Plan Delivery and Reform records gross expenditure of just over €50 million under a single expenditure programme. Departmental staff pay accounted for €29.9 million. Grants to support the Department’s aegis bodies accounted for just over €11.7 million. At the end of 2023, the Department had a surplus of €4.6 million for surrender.

Vote 12 - Superannuation and Retired Allowances, is used to pay pensions to retired civil and public servants across a wide range of departments, offices and agencies. The gross spend on Vote 12 in 2023 amounted to €814 million. Appropriations-in-aid, mainly comprising employee pension contributions, amounted to €618 million. Receipts of employee contributions in respect of the post-2012 single public service pension scheme were €112 million, or 28%, higher than estimated. This is the main reason that the net outturn on the Vote for 2023 was a surplus of €111 million for surrender.

While I issued a clear audit opinion on the account for Vote 12, I drew attention to a matter disclosed by the Accounting Officer that related to controls over payment of chargeable excess income tax, CET, liabilities to the Revenue Commissioners. CET liability arises at the point of retirement for those retiring on high-value pensions. There is statutory provision for the tax liability to be paid on behalf of the pensioner by the pensions administrator with the recovery of the related debt over 20 years through reduced payment. Pension administration is carried out on behalf of the Vote by the NSSO. Of 21 cases where a CET liability had been identified between 2015 and 2023, the reductions in pension payments had been duly paid in each case, but the tax due had been paid to Revenue in only six cases. The tax due in respect of the other 15 cases amounting to €2.3 million had not been paid. A correcting payment, including a related interest charge, was made to Revenue in 2024, and this will appear as a charge on the 2024 appropriation account.

The Office of Government Procurement, OGP, carries out specialised functions in relation to the procurement of goods and services by public bodies. This includes the putting in place of framework agreements that public bodies can use to procure required goods and services. The 2023 appropriation account for Vote 39 Office of Government Procurement records gross expenditure of €18.8 million. The surplus remaining unspent at the end of 2023 amounted to €3.4 million.

The Office of the Government Chief Information Officer, OGCIO, provides an ICT shared service to a number of Departments and offices. This includes video and data services, email and productivity applications across the public service, and cybersecurity. The 2023 appropriation account for Vote 43 records gross expenditure of €44.5 million. The net surplus on the Vote at the end of the year was €953,000.

Arising from its responsibility in relation to central control and oversight of public spending, the Department sets the standard accounting policies for all appropriation accounts, and issues binding directions around public financial management and procedures and the corporate governance of public bodies. The Department is leading a project to move central government accounting from the current modified cash basis to a more standard accrual basis. This includes the development of a new framework of central government accounting standards, a number of which came into force in January 2024. These will impact the 2024 appropriation accounts, which I will publish in September.

Chapter 3 - Vote accounting and budget management is a recurrent annual report which aggregates and summarises the results across all appropriation accounts as a permanent record. It also highlights any exceptional matters that potentially concern vote management and vote accounting generally. In that regard, the chapter in respect of vote accounting in 2023 explains the accounting treatment of certain advances of funds to the Office of Public Works for the development of Terminal 7 at Rosslare Europort. The works at Terminal 7 commenced in 2023 and I understand are expected to be completed later this year. The overall approved budget is €236 million. The project is being managed by the OPW on an agency basis on behalf of the main public bodies that operate in the port, which are the Revenue Commissioners, the Department of agriculture, An Garda Síochána and the Health Service Executive. Because of the agency arrangement, the costs of the project are being met pro rataby the user bodies. In 2023, amounts totalling €132.7 million were advanced from Votes 9, 20 and 30 to the OPW to meet the costs of development as they arose. By the end of December 2023, the OPW had disbursed €51 million to the contractors. The remaining €81.7 million was recorded by the OPW as credit balances in favour of the three Votes. The Department’s public financial procedures indicate that only the amounts certified by the OPW as disbursed fell to be treated as charges in the 2023 appropriation accounts. However, exercising his statutory powers, the Minister for public expenditure determined that the total amounts advanced to the OPW in 2023 were appropriate for charging in the 2023 accounts. I am required by law to report on the correctness of the payments recorded in the appropriation accounts. I am satisfied that the statutory determination of the Minister made the charges in 2023 correct. However, to facilitate parliamentary accountability, audited financial statements need to be reliable, consistent and clearly understood by users. Given the departure from the public financial procedures principles and from the standard accounting policies for appropriation accounts in respect of the charges totalling €81.7 million, I considered it necessary and appropriate to draw this matter to the attention of Dáil Éireann.