Mr. Seamus McCarthy:

I will outline the matters about which the Chairman asked. I will not get too technical or legalistic in dealing with them, but I should probably mention some of the legal constraints. As most members probably know, I am appointed under Article 33 of Bunreacht na hÉireann, but my office and I operate mainly under the provisions of the Comptroller and Auditor General (Amendment) Act 1993 which is the core legislation.

The comptroller and auditor general functions are determined and defined in the Constitution. The comptroller function relates to the release of funds from the Central Fund of the Exchequer. It is a straightforward process. The Department of Finance or the National Treasury Management Agency, NTMA, applies to my office for what is called a credit. Assuming that we are satisfied there is a legal basis for either body to receive the funding, we agree to the release of the money from the Exchequer. It does not take a large part of the resources of the office. There are perhaps three or four staff in total engaged in it and it is not full time. It probably works out at somewhere between a half-time and a whole-time equivalent staff member in a year.

The auditor general function is my office's primary function. It involves the audit of accounts and financial statements of public bodies. Members are probably familiar with that work. It also involves the carrying out of value for money, VFM, examinations under section 9 of the 1993 Act or inspections which are carried out under section 8. I can discuss these examinators and inspections further.

I am also required by law to report to Dáil Éireann in particular ways and on particular matters. I issue a report on each audit we carry out - the individual audit certificate attached to a set of financial statements. Separately, there is a provision whereby I publish the appropriation accounts, the accounts of Departments in respect of the Votes for which they are responsible. I am required to publish each year with them a report which is usually issued in September. Since the two elements are locked together, everything must come at the same time because that is how the law requires it.

I can also issue special reports which may either relate to general matters that arise from the audits we conduct - for instance, if there is a common theme, I may report on a general matter - or VFM examinations or inspections.

I am specifically prohibited by the 1993 Act from commenting in my reports on policy matters. Members will not find a reference to, or at least a comment on, policy. We may point to the result of the implementation of policy, but members will not find a judgment on the merits of a policy.

Apart from the 1993 legislation, there is other legislation that makes me the auditor of certain entities and creates slightly different relationships in terms of accountability, for example, the Health Service Executive legislation, the NAMA legislation, the Central Bank legislation and the universities legislation. While I am the auditor of the Central Bank, a limitation is placed in the legislation on the Central Bank's accountability that excludes the bank from accountability to the Committee of Public Accounts for its financial statements. If I was to carry out a VFM examination of how the Central Bank spends its money, it would be within the parameters of the committee, but the bank is otherwise the subject of an unusual exclusion from the committee's remit. There is a similar provision in the case of Horse Racing Ireland and Bord na gCon which stems from the legislation underr which they were established.

In total, we audit approximately 290 sets of accounts or financial statements each year. These funds and entities have a combined turnover of approximately €200 billion. Obviously, funds flow between them, but because they were set up as separate funds and entities, we must audit the two sides of transactions.

The number of funds and accounts that we audit is down from a peak of about 370 or 375. That is due to the amalgamation and abolition of agencies and some consolidation of the accounting arrangements that are put in place, where perhaps what was a departmental fund is now absorbed in and it becomes a note of another set of financial statements. At the moment, as I said, we have about 290 funds and entities.

There are two specific exclusions from my remit that the committee might wish to note. The first is commercial semi-State bodies and their subsidiaries. They do not come within my remit. I do not carry out the financial audit of companies like CIE, Coillte, Bord Gáis or RTE. I do not have a remit to go in and carry out a value-for-money examination or an inspection in those and because of that, by extension, the Committee of Public Accounts is limited in its scope in calling them.

The other area where I do not have a remit is local authorities. Local authorities are audited by the Local Government Audit Service not by me. Again, that has an implication for the business of the Committee of Public Accounts.

On financial statements, I think it is something maybe to note and again I do not need to get too detailed about this. Votes, most departmental funds and education and training board accounts are prepared on what is called a cash basis. That is the accounts recognise cash received or cash issued in the period in which it issues or is received. All the other accounts and entities prepare their accounts on what is called an accruals basis. Essentially, transactions are recognised in the period to which they relate rather than the period in which they occur. Effectively, apart from Votes, Department funds and the ETBs, one should expect to see the same kind of set of financial statements in a public body that one would expect in a private body. Maybe one difference would be the level of disclosure. There are guidelines issued by the Department of Public Expenditure and Reform on matters that should be disclosed in financial statements. We encourage Departments and - maybe a little bit more than encourage - we push them to ensure they do comply with disclosure requirements. Sometimes there can be a question as to whether it would be useful for there to be a disclosure of a particular matter. We are quite strong in encouraging Departments to be as transparent as possible and to put as much information into the public domain as is relevant for the purpose of transparency about public business.

Organisationally, I am supported in the exercise of my functions by my office, the Office of the Comptroller and Auditor General. Technically, I am not part of the office and it is a separate entity. I exist as an individual carrying out my functions but, as I said, I am supported by the office. It is staffed by civil servants. The office is headed by Andy Harkness who is the Secretary and Accounting Officer for the office. He manages the Vote for the office. He also acts as a director of audit and is involved in carrying out and overseeing audits, along with two other directors of audit.

Each of the directorates within my office has a mix of financial and reporting responsibilities. They would have a grouping of financial statements, maybe within the areas of education, health, etc. We try to take a relatively vertical view so that we can understand better the business within individual sectors and that it is the same people who manage and carry out the audits in the health sector, the education sector, etc.

My office employes a total of about 140 whole-time equivalent staff. In terms of the breakdown, some 75% of the staff or about 105 people are engaged mainly in financial audit work. Approximately 15% or 22 people would be engaged in reporting work and approximately 14 individuals or 10% are engaged in the provision of support services such as IT, the finance unit, HR and so on. Within the staffing, 94 or 95 staff are qualified accountants and 40 would be pursuing accountancy studies at the moment. All of the staff are based in Dublin but the staff do undertake extensive travel as part of the financial auditing of clients based outside Dublin. A considerable number of our clients are located not just in Dublin but in all counties at this stage, I think.

Over the past number of years I have seconded, or my office has seconded, an individual staff member to the Committee of Public Accounts to act as a liaison officer. Mr. Billy Carrie is my colleague and he is with me today. I propose that he will be the liaison officer for the next year or so at least.

The core function of the liaison officer is to provide the Members with timely briefings on the key points in my reports or in the financial statements that are presented for the committee. I am conscious how busy Members are and how little time there is in a week to prepare for a meeting. I think that in the past maybe we have been producing, quite heavily, text-based presentations of information. I am not sure that that is the best way to deliver information to Members. I would like us to find, together, a way of getting the key information to Members in advance of meetings so that they are best placed to be able to carry out their function. I hope that we will be able to find a way that is useful. Mr. Carrie will be working with the clerk in trying to do that work. We will try different things and see what works best. Maybe different things work best for different Members and we are open to finding ways of making that work.

I thank the Chairman. I am quite happy to take any questions on the matters that I have outlined.