Oireachtas Joint and Select Committees
Tuesday, 25 September 2018
Public Accounts Committee
2016 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Vote 1 - President's Establishment
We have a quorum and are now in public session. We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, who is a permanent witness to the committee. He is joined by Ms Maureen Mulligan, deputy director of audit. Apologies have been received from Deputy Pat Deering. We will take the business of the committee as normal on Thursday next. Today we will be dealing with the 2016 Annual Report of the Comptroller and Auditor General and Appropriation Accounts, Vote 1 - President's Establishment. We will also have an update on the 2017 position.
I welcome Mr. Martin Fraser, Secretary General of the Department of An Taoiseach who is the Accounting Officer for the Vote relating to the President's Establishment. I thank him making himself available, especially as I understand he had an accident. His arm is in a sling and he is somewhat incapacitated. We wish him a speedy recovery.
I draw the committee's attention to some distinctions relating to Vote 1. First, while Mr. Fraser is the Accounting Officer for Vote 1, he does not have operational responsibility for the Office of the President. Second, our examination will be carried out in a way that respects the constitutional independence of the Office of the President, as per Article 13.8.1 of the Constitution which states, "The President shall not be answerable to either House of the Oireachtas or to any court for the exercise and performance of the powers and functions of his office or for any act done or purporting to be done by him in the exercise and performance of these powers and functions." I know members appreciate this point.
As Chairman, I want to put the purpose and timing of this particular meeting in context. An Taoiseach discusses the Estimates and related information for Vote 1 before a select committee of the Dáil every year. The related appropriation account is voted on in the Dáil at the end of each year. The actual appropriation accounts for 2017, which include Vote 1, the President's Establishment will be published by the Comptroller and Auditor General on Friday next, 28 September. The Minister for Finance and for Public Expenditure and Reform will publish the 2019 abridged Estimates for Vote 1, the President's Establishment, as part of his Budget Statement on 9 October. Our role as the Committee of Public Accounts is to complete the cycle by examining the allocation of moneys to the President's Establishment and how they were spent and to look at the governance and oversight measures adopted by the Accounting Officer relating to that expenditure.
Regarding the timing of this meeting, certain questions regarding the President's Establishment were raised over the summer months. The first opportunity this committee had to discuss these was on Thursday last. As already stated, this committee has a clear role in respect of the examination of all voted expenditure. However, I was concerned that we would do so in a way that is respectful of the upcoming election process. As a result, I proposed - and the committee agreed - that this examination should take place at the earliest opportunity and in advance of the closing date for nominations, which is tomorrow. Unfortunately, it was not feasible to hold this meeting any earlier and I wanted to put that on the record.
Before we begin, I want to summarise guidance for members because of the unique nature of this particular Vote. Objective questions relating to oversight and control of moneys allocated to or for the benefit of the President's Establishment are obviously in order. Detailed questions relating to expenditure that would, of their nature, potentially concern decisions or actions of the President are not in order. For other matters, I will carefully weigh up the question asked before deciding whether a particular matter is in order. We expect to get answers to all of our questions today. However, any matters that are not clarified will be dealt with at a later date. I ask for full co-operation from all members in this regard.
I remind members, witnesses and those in the Public Gallery that all mobile phones should be switched off. I wish to advise that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence.
They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. While we expect the witnesses to answer questions put by the committee clearly and with candour, witnesses can and should expect to be treated fairly and with respect and consideration at all times in accordance with the witness protocol. I invite Mr. McCarthy to make the Comptroller and Auditor General's opening statement.
Mr. Seamus McCarthy:
Thank you, Chairman. The 2016 Appropriation Account for Vote 1, President's Establishment, shows gross expenditure of €3.6 million. Expenditure in relation to the centenarian's bounty scheme accounted for €1.15 million, with the balance relating to other expenses of the President's Establishment. The amount provided in the Estimate for 2016 was €3.9 million. After receipts for the year of €84,000 were taken into account, a surplus of €287,000 was surrendered. There were no matters arising from the audit of the Vote for the President's Establishment that I considered warranted reporting.
Mr. Martin Fraser:
The reason I did not supply one is that I can only use one hand for typing at the moment. I apologise for that. I do not have much to add to what the Comptroller and Auditor General has said. The spend of €3.6 million in 2016 is set out in the account in a lot of detail. There is only one non-office expenditure, the centenarian's bounty, which is the amount paid to people on reaching 100 years, in the country each year. My position is a little bit different in respect of Vote 1 in that I do not have any executive authority over the Office of the President, for obvious reasons.
Broadly speaking, in 2017 the spend is again approximately €3.7 million and that was again within budget, but the account has not been published yet. As I stated in my letter, I rely in the main on the Comptroller and Auditor General for assurance on the accounts, and he has found no problems. That is all I have to say in the way of an opening statement.
I thank Mr. Fraser. He will be free to answer questions in so far as the Constitution permits. As it is a special meeting members have indicated the sequence in which they wish to speak. It has been agreed that each member will have a ten-minute slot and if people want to come back a second time they can do so. Members have indicated in the following sequence: Deputies Bobby Aylward, Alan Farrell, Catherine Connolly, Shane Cassells, David Cullinane and Catherine Murphy. Deputy Alan Kelly is next and we will see what happens after that. Deputy Aylward has ten minutes and because of the nature of the meeting I ask members to strictly adhere to the ten minute time slot.
I welcome Mr. Fraser as the Accounting Officer for Vote 1, the President's Establishment. When there is a report from the Comptroller and Auditor General our remit is to scrutinise the Vote and to make sure there is value for money for the taxpayers of this country who pay to keep the system in place. The Comptroller and Auditor General said €3.6 million was the overall amount spent in 2016. In one of last Sunday's newspapers I read there had been a cost of €50 million. I do not know where that amount came from. That would be €7 million a year. Where did such a figure come from or how did anyone come up with the amount?
Mr. Seamus McCarthy:
I did not see the article on Sunday. I imagine the calculation is based on aggregating the figures from the operating costs statement of the account. That statement tries to get the full costs associated with a service and so it brings in expenses that are borne on other Votes for which other Accounting Officers are responsible and includes them in the operating costs statement. If we go to page 7 of the Appropriation Account we will see a figure in 2016 of €8.2 million, and at the bottom of the page there is a breakdown. The net allied services figure is €4.6 million and the breakdown of it is given there.
It indicates the other Votes and the Central Fund as being the sources.
Yes, so it would be more in line with that. Is Mr. Fraser happy with the procedure and the governance of the moneys that are spent? He is the Accounting Officer and he must stand over this each year. Is he happy with the way it is spent and distributed? Is he happy with all the procedures that are in place?
Mr. Martin Fraser:
The way it is distributed and spent is a matter for the President and the President's office. If the Deputy is asking whether I am happy with the financial management, controls and oversight, I am. My main assurance comes from the clean audit reports from the Comptroller and Auditor General.
That leads on to the next question. If Mr. Fraser believed there was an overspend or money was being spent unnecessarily, if there was extravagance or whatever else one might call it, who has control or the authority to check that and call it in? Can that happen and is it scrutinised to keep it under control in order that there is value for money in what is spent?
I asked that question because we can all go on holidays, go on business trips, travel first class or whatever way we like, and we can stay in different types of hotels and so on. Who decides who goes where? Who in the President's office decides who goes where, what hotels are used and what travel arrangements there are?
Mr. Martin Fraser:
Asking me who in the President's office decides is asking me to discuss the office and the functions of the President. I can help somewhat. The Department of Foreign Affairs and Trade makes most of the travel arrangements but I cannot get into who in the President's office makes decisions.
What I am trying to do is see if there is value for money. I am following the money, which is our job. I am asking a straight question and I do not want to overstep any mark or make any accusation. All I am asking is whether we are getting value for money on all aspects of the spend on Vote 1, the President's Establishment. That is what I am trying to get at. Scrutinising it is what we are doing here today. I am not trying to make any political gains or anything like that.
Mr. Martin Fraser:
Foreign travel arrangements are generally made by the Department of Foreign Affairs and Trade. If there was a state visit, and I am not talking about the incumbent but rather any President here, the Department of Foreign Affairs and Trade would make the travel arrangements in the host country. While it has its own procedures, broadly speaking it is interested in logistics, security, location, whether a venue is suitable and so on. Regarding the Deputy's general point, it is the responsibility of the people in Áras an Uachtaráin, and to a lesser extent in the Department of Foreign Affairs and Trade. I get assurance from the Comptroller and Auditor General. If he saw anywhere where procedure was not being followed, he would highlight it.
There is good news there in that there was a 10% return in 2016. The money that was voted on was not even used. Is coming in under cost the norm, or are we giving too much money to the Vote in the beginning?
Mr. Seamus McCarthy:
Yes, the underspend. One thing about an appropriation account is that there must be no overspending. That is the priority. One is always aiming to come in under the budget provided. The 10% underspend is about what is usual on the President's Establishment Vote and it is not out of line with spending for similar small offices or Departments.
Mr. Martin Fraser:
It has not happened. Let me put it as follows. If I received an internal audit report or management letter or audit report from the Comptroller and Auditor General which gave rise to concern, I would have to take it up with staff in the Office of the President because that is my responsibility. However, I would not seek to intervene in the operations of Áras an Uachtaráin. As I am sure people understand, the relationships between the Government and the President and the Oireachtas and the President are very delicate. As such, it would be with the greatest reluctance that I would intervene in Áras an Uachtaráin. However, if a financial issue of the kind which would interest the committee arose, I would have to ask questions of the people in Áras an Uachtaráin and hope to have it fixed. However, it has not happened.
The public, media and newspapers in general want to scrutinise everything. That is why we have to be careful here today in what we say and what we ask about. In any event, Mr. Fraser is happy within his remit that the spend is well within reason.
Why then did Mr. Fraser write us a letter last week, which we received last Thursday, about the constitutionality of the committee doing its job, as I see it here, of scrutinising Vote 1? Why did Mr. Fraser have a concern and write that letter, at which some members took offence in the view that the Secretary General was interfering with the running of our committee here? I ask him to comment on that personally.
Mr. Martin Fraser:
I was not interfering with the committee. I was making a number of points which it is my job to make. As such, I made them. I think they are important. The first point was that the Presidency is above politics. The second was that my role as Accounting Officer is different in relation to Áras an Uachtaráin than it is in relation to the Department of the Taoiseach. The third point was that there is a very profound constitutional issue which everyone accepts here. The fourth point was that I was worried about political impartiality in the context of an election campaign, as I am in any other situation. Finally, I made the point that the President is, of course, open to scrutiny and will be in the election campaign. I felt they were important points to make.
Mr. Martin Fraser:
It is not a matter of civility. To be fair, I have to deal with all aspects of the Constitution all the time in my work. I probably deal with the Constitution more than anybody else. As such, I am very careful about the Constitution. That does not mean the committee is not; it is just that I am.
Good morning to Mr. McCarthy. I welcome Mr. Fraser. I will comment briefly on the decision to hold this meeting. I was not present at the previous meeting of the Committee of Public Accounts when the decision was made to have this hearing. Had I been present, I would have said that it stinks for us to make a decision to look at presidential expenditure the day before the closing date for nominations for the Presidency and the election. That said, the decision has been made democratically and I respect that.
From a procedural perspective, I note the references to the audit committee's chair being absent in 2016 and for a period of 22 weeks from the date on which the accounts were to be filed to the actual date of the filing of the accounts. Will Mr. McCarthy comment on those two issues?
Mr. Seamus McCarthy:
On the filing of the accounts, I received the appropriation accounts from the Accounting Officer by the due date, which was the end of March 2017. There was an adjustment made in the statement on internal financial control which necessitated the Accounting Officer re-signing. I did get what the Accounting Officer was required to do.
Is Mr. Fraser satisfied with everything he said to Deputy Aylward and in his brief opening remarks in terms of the financial controls, processes and procedures in place?
There is that question, however, regardless of the clear audit opinion. I understand the internal audit committee did not meet because it did not have a chairperson. I will not call it alarming but it raises a question or two about the process. The nature of the absence is not my business. From a financial control perspective, however, it begs the question what procedures were put in place to compensate for the lack of an internal audit committee. Will Mr. Fraser comment on that?
Mr. Martin Fraser:
To answer the Deputy's question, I would take great assurance from clean audit reports from the Comptroller and Auditor General. I get management letters from the Comptroller and Auditor General at quite a level of detail. I am obviously an Accounting Officer for the Taoiseach's Department, another small enough organisation. Nonetheless, I am very familiar with the procedures. I was a finance officer and set up the audit committee in the Taoiseach's Department, as well as in Áras an Uachtaráin. I am very familiar with all of these themes. In fact I wrote a thesis on value for money if the Deputy really wants to get bored.
I was happy that I was getting clean audit reports and reasonable management letters from the Comptroller and Auditor General's team in the Áras. That gave me the assurance. Indeed, the committee has the same assurance from the Comptroller and Auditor General. There were particular circumstances, which were not ideal but, I am afraid, were rather sensitive. I just felt it is not appropriate to go into them.
Notwithstanding those sensitivities which I entirely accept, is there not a process in which an internal audit function in any Department or quasi-authority should have a procedure to initiate the holding of meetings or for a temporary chairperson to be appointed?
Mr. Martin Fraser:
I agree with that. I think probably the issue here was that this was the first time there had ever been an audit committee in Áras an Uachtaráin. If we had an audit committee on an ongoing basis, it might have been in the swing of things. We did appoint a respected person to be chair but, unfortunately, he was indisposed. I made a judgment that it was not appropriate to pursue it.
Yes. I am querying whether there may be an oversight function with the body of Áras an Uachtaráin that co-ordinates security services. Is that provided for? If I cannot question staff, I am wondering if it is a function of the Áras to co-ordinate such matters?
I welcome Mr. Fraser. I am looking at the President's Establishment. I do not want any comment on Áras an Uachtaráin or any President. I am looking at the President's Establishment's Appropriation Accounts. Mr. Fraser is responsible for these accounts and the responsibility to ensure there is proper financial control is on his shoulders. He is free to answer all my questions on those matters.
Mr. Fraser signed the accounts on 29 March 2012, so he was the Accounting Officer for the previous year. At what stage did he take the decision to set up an audit committee? Would he accept that an audit committee is an essential ingredient?
Mr. Seamus McCarthy:
I have just looked back at the 2012 Appropriation Account, when Mr. Fraser was Accounting Officer. My recollection of those years was that it was accepted that the audit committee of the Department of the Taoiseach would have had an oversight role with regard to the internal audit function. The internal audit function for Áras an Uachtaráin is the internal audit function of the Department of the Taoiseach.
I am coming to that. I thank Mr. McCarthy. As has already been acknowledged, I acknowledge that opinion of the Comptroller and Auditor General is that the Appropriation Account properly presents the receipts and expenditure of 2016, with adequate accounting records and so on. I accept that. I am looking at the controls and processes in place. That is all we are looking at in this committee. Let us look at the audit committee which Mr. Fraser set up in spring 2014 for the first time ever. Talk to me a little bit about an internal audit.
Mr. Martin Fraser:
The model we used was used in an at least one other body, as the Comptroller and Auditor General may know, the National Economic and Social Council, which is also under the Department of the Taoiseach. The internal audit unit for the Department of the Taoiseach has the skills. It is a small unit but these are very small organisations-----
Leave the Comptroller and Auditor General out of it. It is the end of the year when he looks at it. I am talking about the Department's internal audit. I am not sure why Mr. Fraser is putting his eyes up to heaven.
If we could just look at the procedures. There was no audit committee and no internal audit function. Let me repeat that. There was no internal audit function during all of this period. Is that okay?
All right. I have to mention something positive. When I look back on the appropriation accounts for all of the years, there was very little information prior to Mr. Fraser's time, so it gradually improved in terms of what is written down. On 23 March 2016, he talks about periodic reviews and states that the internal audit function and its programme are subject to periodic reviews. The previous year he said exactly the same thing. Did he carry out periodic reviews?
Mr. Martin Fraser:
I did keep an eye on financial controls in Áras an Uachtaráin but, throughout the period, as I said earlier, it was suboptimal because the chair was indisposed and, therefore, it was not as good as it might have been. I did not ignore the matter, however, and I certainly had access, as I said, to management letters and audits from the Comptroller and Auditor General.
I am just going by what Mr. Fraser has said. I have looked at the data for the President's Establishment going back a number of years. It talks about periodic reviews and internal audit work. Was internal audit work carried out? If so, what was the theme of that internal audit work? If not, it was not-----
In regard to the date of the accounts, which has been explained, I want to go back a bit to find out why there was a delay. They were signed off in September of this year as opposed to earlier. Again, what was the reason for that?
This does not makes sense to me. I am looking at the accounts for 2016 and I am looking at Mr. Fraser's comments on the accounts, which are in 2017, and the chairperson was to be appointed in 2017.
I wish to go back to why we are here. I am finishing. I have less than a minute left. We have had various organisations before us, including the Garda in Templemore, and we put them under serious pressure in respect of internal audits and audit committees. We did so with the vocational education committees, VECs. That is part of our job. Mr. Fraser is here today, and this has not happened with the President's Establishment. Is that not correct?
I welcome Mr. Fraser. I want to touch on expanding on the net programme costs of the Presidency and the true reflection of the course born. The Comptroller and Auditor General's short opening statement refers to the appropriation accounts and gross expenditure of €3.6 million but, as has been pointed out by Mr. McCarthy himself, when one goes to page 7 of the appropriation accounts, the net programme cost is €8.1 million. We therefore have this direct expenditure of €3.5 million and then these net allied services at a cost of over €4.5 million. This reminds me a little of when we were trying to get to the bottom of the accounts for local government. Obviously, the net allied costs are quite significant, even more so when one discounts what is paid in terms of the centenary and the bounty. Then the President's Establishment is only €2.4 million, yet the net allied costs are €4.6 million. In order that I understand this, how does the Office of the President make those demands, whether it be the office of the Minister for Justice and Equality, the office of the Minister of State with responsibility for the OPW or the office of the Minister of State with responsibility for defence? There are half a dozen different departments there. As has been pointed out, the office of the Minister of State with responsibility for the OPW went from €2 million in the 2015 accounts to nearly €2.5 million in 2016.
In the overall context of these accounts, that was a significant amount. The OPW's figure is now as much as that relating to the President's Establishment, which comes in at €2.4 million. Expenditure under Vote 36 - Defence went from €408,000 to €431,000. How does this work? Are demands made by the Office of the President for X, Y and Z needs to be met and various Departments then make the requisite appropriations to meet them?
That is what I am saying. The devil is in the detail. I am only asking my question in the context of Deputy Connolly's questions. We are discussing an amount in the OPW's Vote that is similar to expenditure relating to the President's Establishment. I am trying to get a true reflection of the cost. Officials from the OPW will appear before us in a couple of weeks.
I will revert to the OPW, but let us park it for a second. The Comptroller and Auditor General raised the issue.
Let us turn to the Office of the Minister for Justice and Equality in terms of An Garda Síochána. How was that expenditure figure arrived at? I presume all of it relates to wages.
Okay. If there was a security review at the Áras, given how someone was able to drive through the gates last week and go to the President's office to say "Hello", and the Commissioner's analysis called for additional security, would that request be forwarded by the Office of the President to the Minister for Justice and Equality for appraisal and how would it be signed off on? Do the cumulative departmental expenses have to be approved by the Cabinet?
I appreciate that. Cumulative expenses of €4.6 million are not falling directly under the Office of the President but are being spent on that office. It is a bit like local government, with money being spent on other areas. Is it the case that the Garda Commissioner would, for example, consider last week's situation of someone going straight through the gates and saying "Hello" to the President and decide that the security arrangements at Áras an Uachtaráin need to be reviewed and allowances need to be made for increasing the security detail? Is it incumbent on Departments to bear such cost increases or must the Office of the President make an official request of them to do so? I am trying to understand the process.
Mr. Martin Fraser:
I do not know. I do not have any executive or operational role in how the Áras does its business. In respect of security, I am sure that it talks to the Garda all the time. If there was a need for more security, the Garda would have to fund that. It was €174,000, which is not a large amount of money in terms of-----
No, but it was €344,000 the previous year. I am trying to understand how the figure could have changed from one year to the next and whether a demand was made by the Office of the President for a certain amount of expenditure to cater for a particular event, for example.
I am trying to extrapolate something. There is €4.6 million being spent on the President's Establishment by other Departments and it is not coming from its Vote. In order to examine it, we would have to spend days in having the individual Accounting Officers come and asking them what they are doing in terms of spending on the President's Establishment. By the way, if they are accountable, that is what we will end up doing. People can answer these questions because the money is coming from different Departments. It does not come under the auspices of the President's Establishment at all. For example, the Department of Defence went from spending a sum of €408,000 to €431,000. What was the purpose of the additional expenditure? Was the increase initiated by the Department of Defence or the Office of the President? I think I have put that question in a compact fashion.
Okay, we do not know. That goes to the root of the issue in this interaction. Moneys are being spent on the President's Establishment that do not come within the remit of the supposed Accounting Officer but cumulatively the cost is very big. As Deputy Bobby Aylward said, they give a proper and true reflection of the cost of the Office of the President. Perhaps I might ask the Comptroller and Auditor General about this in the light of his role in dealing with all of these Accounting Officers. Is it the case that they are coming up with it themselves? Are they saying they anticipate additional expenditure in these areas? If there is to be some big event in a particular year and a Department has to allocate expenditure for it, I am sure the Office of the President has to alert the Department concerned to the need for additional expenditure, expenditure which does not come within the remit of the office but which it thinks the Department needs to put aside to cater for the event. Does Mr. McCarthy understand the question?
Mr. Seamus McCarthy:
I would not have that detail, but I expect that, if there was some requirement, it would be signalled. However, it is my understanding it would be An Garda Síochána that would make decisions as to what was appropriate and necessary in respect of such things as the provision of drivers and security arrangements for the President.
Let us take, for example, the Department of Foreign Affairs and Trade. In 2016 there were seven State visits approved by the Office of the President, although I think the number came in at nine in the end. How does that work? Is it the Office of the President that sets down the expenditure figure and how it will work or is it the Department of Foreign Affairs and Trade? I am trying to find out which Department is actually running the show.
Mr. Martin Fraser:
The Government typically knows in advance the number of State or official visits the President might make, but it can change during the year. Like every other office and Vote, there is an estimate of the cost for the year which is published in the Estimates. As the Chairman pointed out, it is reviewed by the relevant committee of the House. The Estimate is voted through and it is then for the Office of the President to expend the money granted to it. It is very clear from the appropriation account - some things are self-evident - that it does it in conjunction with the OPW for the reasons I have outlined; An Garda Síochána in respect of security; the Department of Foreign Affairs and Trade, mainly in respect of foreign travel; and the Department of Defence because there are five Defence Forces personnel stationed in Áras an Uachtaráin.
I get that. I am trying to get a feel for whether it is the individual Departments that make adjudications on the Office of the President or whether it is the office that makes requests of the individual Departments in terms of how the figure for expenditure anticipated for a coming year is arrived at. Who is making the judgment call on how much it should cost and how much it will cost?
I welcome Mr. Fraser and Mr. McCarthy. I wish to put on the record that it is disappointing in some respects that we are meeting and discussing this matter now. I reluctantly voted to have today's hearing but I will stick to process and oversight mechanisms, which is what I want to get a sense of. I have got some flavour of it already. Mr. McCarthy audits the accounts. What are the roles or titles of those with whom he interacts in the Áras in the course of auditing those accounts?
In terms of an accountability chart regarding how the money is spent, is it fair to say that how the money is allocated and the controls on that are under our remit but why the money is spent is a matter for the President and outside the scope of the committee?
Questions have been raised about the true costs because there are several costs associated with running the Áras which are outside of the €3.9 million gross and the €3.8 million net that are in the President's Establishment account for 2016. On page 6 it is detailed that they relate to: salaries, wages and allowances; travel and subsistence; training and development; and incidental expenses.
No, sorry, that is the wrong page. It is detailed on the following page. Those costs relate to the office of the Minister for Finance; superannuation and retired allowances; the Office of Public Works, which I presume relates to the upkeep of the Áras itself; the Garda Síochána; foreign affairs; and defence. The latter three are obviously expenses incurred in the context of security. It was earlier asked whether the figures that we are given are a proper and true reflection of the overall spend. Is it fair to say that those additional costs are addressed in the report of the Comptroller and Auditor General? Mr. McCarthy reports the additional costs.
Mr. Martin Fraser:
I might be procedurally wrong on this matter and I defer to the Comptroller and Auditor General in that respect. That is the account I presented. If I am looking at the correct year, it details the full net programme cost of €8.163 million. The direct Vote for which I am responsible is Vote 1, which totals approximately €3.6 million. Other Accounting Officers are responsible for the other Votes.
There are seven others. That is interesting. I understand the constitutional position, but with regard to scrutiny or accountability of the spend, there is a block, or certainly a practice, that Mr. Fraser does not respond to freedom of information, FOI, requests from people outside the Oireachtas. In the letter that Mr. Fraser sent to this committee he quite rightly pointed out that the President is not accountable to either House of the Oireachtas, which is fine. What is the logic or the reason there is no response to FOI requests or a refusal to engage in that regard? Is that something Mr. Fraser would respond to or is it something the Áras would respond to?
Mr. Martin Fraser:
There is probably a policy dimension in that. I believe that government has felt the President should be separate to the normal run, and that is the policy. There is also a fundamental constitutional issue, which is the article I mentioned in my letter, in that the President cannot be answerable to the Oireachtas or to the courts. The freedom of information legislation ultimately leads to the courts. That is the constitutional-----
To be fair to Mr. Fraser, he might not be able to answer this, but was advice received from the Attorney General at the time the Act was brought in and when the policy decision was made that the Office of the President should not be subject to FOI? Obviously there was some wisdom there and Mr. Fraser has given us some insight into why it was the case.
Let me put it a different way. The policy decision that was made to omit the President's Establishment from FOI was a matter of policy and, as Mr. Fraser has said, it was also because of constitutional issues.
Okay. I would be interested to get our own opinion on that because whatever about the President being accountable back to both Houses of the Oireachtas, I am not quite sure how there would be a constitutional block to FOI requests being answered and why the President's Establishment could not be subject to FOI. I just do not-----
The President's Establishment is exempt from the legislation, based on the legislation passed by the Oireachtas. It is not even a matter for the President to deal with. The Oireachtas has decided that on the basis of-----
That is fine, but as the Chairman I am saying that the freedom of information legislation that was passed by the Oireachtas does not cover the Vote for the President's Establishment. If Deputy Cullinane has an issue, then the matter should be raised in the Oireachtas, not with the Accounting Officer.
I will cut to chase and put it this way. We decided to exempt Áras an Uachtaráin.
It is and you should allow me to say why. It was your request that we have this hearing. I did not seek it. You did. One of the reasons you sought it, which you stated at the last meeting, was that journalists submitted freedom of information, FOI, requests and were not given the information.
Okay but I still think it is valid for us to have an understanding of why it is omitted under the FOI legislation and maybe to get legal advice on it. I do not have a difficulty if it was policy decision or even if it was unconstitutional. That is fine. I just want a legal opinion on why it is the case. I am not agreeing or disagreeing. I am just looking for the logic behind it.
I fully appreciate the reason the audit committee was not established. I am not even going to go there. I would like to just ask Mr. McCarthy the genesis of putting an audit committee in place. Up to 2013 there was none there. Obviously at some point, a decision was made that we would put one in place. Where did that decision come from and how did it evolve?
Mr. Seamus McCarthy:
For Departments in general, the expectation is that an audit committee is in place. There has been a difficulty over the years, particularly in small offices, with getting people to act on audit committees. In fact, in most cases there is not a payment for anyone who is a member of an audit committee.
May I make one request? It might be useful for us for future sittings as well. I do not know who could do this, but could we get an accountability chart in terms of who is responsible for what? We have Mr. Fraser, who is the Accounting Officer for one element of the spend. We are told we have maybe seven other accountable officers. May we have a breakdown of what they are accountable for? Then we have the Comptroller and Auditor General, who audits the accounts. We have an audit committee in place and then we have management in the Áras. It is difficult to get our heads around who is responsible for what.
I welcome Mr. Fraser. I want to put on record that I think all public moneys should be subject to scrutiny. I do think, however, that the timing of this is very unfortunate, to put a benign interpretation on it. Once the writ was moved, I think we should have delayed this until after the presidential election. So be it. The committee has decided to have this hearing today.
There is quite a substantial difference between the Committee of Public Accounts and the freedom of information provisions in terms of the information that is forthcoming. There may be an expectation that we are going to see a big box of receipts or something here today which, of course, is never the case. There may be an expectation that we are going to be trawling through travel, accommodation and all that kind of stuff. That expectation was never going to be realised. That would never be the case with any organisation that we look at here. We have a difficulty in portraying what the role of the Committee of Public Accounts is when we fall into that kind of situation.
I would like to explore slightly further the line of questioning Deputy Cullinane opened up regarding the Freedom of Information Act. My memory of what happened with that Act is that most of the real focus related to whether freedom of information requests should be paid for as opposed to an emphasis on the various aspects that were excluded from the process, although some attention was paid to those. Was Mr. Fraser asked for his opinion on whether the Office of the President should be excluded from the freedom of information process? I presume all Departments would have been asked for an input. Does Mr. Fraser recall being specifically asked about that and, if so, what was his response?
Mr. Martin Fraser:
However, in order to be helpful to the Deputy, as stated earlier, with the freedom of information process, one asks for information and either gets it or gets some of it. If one does not get it, one can appeal to the Information Commissioner and, ultimately, to the courts. In that context, putting the Office of the President under the freedom of information legislation would include it in a process that could lead to the courts. That would be, in my opinion, the difficulty. I think it is a policy matter and that it should not arise in respect of the accounts. I do not want to be unhelpful to the Deputy but I think that is a serious point.
I will take that up at a different forum because I believe there is a legitimate reason these public moneys should be scrutinised. I do not think that it is in respect of the general headings that possible concerns arise.
The Comptroller and Auditor General had most of the responsibility for this in the absence of the audit committee. I recognise that the audit committee was put in place on his insistence that it would happen, albeit that it did not function as it should. In terms of his engagement with the Áras, his office would have had full sight all of all of the documentation. Would he have examined matters such as value for money or was the purpose just to reinforce that the audit was clear? Has there been any issue highlighted over the years - whether during this or a previous Presidency - which has caused the Comptroller and Auditor General a difficulty?
It is obvious, from looking at page 7 of the accounts, that 2016 was a significant year. It would not have mattered would was President at the time but the incumbent played a central role. Is the Comptroller and Auditor General aware whether the difference for 2016 relating to the Office of Public Works involved physical changes to the Áras or would that all have been accounted for by virtue of the various additional activities in that year?
Mr. Seamus McCarthy:
I do not have the detail. That is something the Deputy would have to get from the Accounting Officer for the Office of Public Works. One thing the Deputy should bear in mind is that the expenditure is on a cash basis so if, for example, there were significant building works or adjustments made within a year, the full cost of that would be charged here. We would not be looking at the depreciation figure or whatever. There can be lumpy patterns in the spending because it is cash. I know that a substantial part of that is the maintenance and upkeep of the buildings and the grounds of the Áras.
I raise a small issue. There was a change from 2015 to 2016 in respect of expenditure by the National Shared Services Office. Obviously, this is related to salaries. Given that many, although not all, Departments and State organisations are covered by the National Shared Services Office, payroll is obviously the big ticket item. Staff numbers in the President's office did not change so why would that figure have changed?
Mr. Seamus McCarthy:
Yes, but this is how much it is estimated to have cost to process the expenses. I do not have the detail of that. The Deputy would have to ask the National Shared Services Office the basis for the figure but a couple of hundred euro in the difference from year to year would tip it from rounding to €3,000 as opposed to rounding to €4,000.
I welcome Mr. Fraser and hope he gets over his accident. My question is to the Comptroller and Auditor General. Can we take it that most audit committees can now defer to him rather than it being necessary for them to exist?
Is it possible then to categorically state from the Comptroller and Auditor General's own work that there would be no governance failings or issues in the absence of internal audit during the period?
Okay. We have a need for internal audit because the level of assessment the Comptroller and Auditor General will apply with his own resources, expertise and staff is such that it requires the support of an internal audit function in terms of the in-depth work programme it would undertake.
My next question is to Mr. Fraser. We would not want to send out a message to other Departments or State agencies that we could defer. Theoretically, since 2016, we have had an internal audit function but in reality we have one now. It will not have existed and it will probably only focus on 2017 accounts and onwards. That was because an individual, and I do not want to get into personal issues, was indisposed. If Mr. Fraser is indisposed, who does his job?
We have identified two failings. The audit committee did not have a vice chair, so it could not meet and the Comptroller and Auditor General said to us earlier that it was a matter for the committee itself to meet. Why would the committee not have met of its own accord, or was just a chairman appointed and no members?
Notwithstanding this person's fine reputation, and not wishing to impugn it and the esteem in which he is held, it was decided that the ship would not proceed until he was ready. That would seem to me to be poor practice in terms of a way to run our country. Does Mr. Fraser agree?
It is a bit more than a matter of opinion. It is a matter of public funds, oversight and having the job done. I would hate to think that if I, Mr. Fraser, the Comptroller and Auditor General or the Chairman were absent, the work of the Oireachtas would come to a halt no matter how high or low the esteem in which I or others may be held. Does Mr. Fraser agree?
Never mind the circumstances. This is nothing to do with the reason the person was indisposed. The fact is the person was indisposed. Whether that was due to being on holidays, ill or wherever else, that does not matter.
It does not matter. I am not interested in whether the person was on holidays. Deputy Connolly made the point very clearly earlier. The fact is, when the chairman was missing the committee did not do anything for nearly three years. Against the backdrop of the letter Mr. Fraser sent to the committee last week, that is a problem. Like Deputy Murphy I take the view that, leaving aside the Constitution, all public money should be subject to scrutiny.
In terms of the expertise of the people on the audit committee, are they accountants?
It is a committee, as Mr. Fraser mentioned. There is also the NACE and so on.
In 2015 the spend on training and development was €122,000, but it went up to €302,000 in 2016. For there a particular reason for the increase?
I do not think it has a title, which is why I am trying to get some answers. I asked the Comptroller and Auditor General if he was aware of an amount of money, approximately €325,000 per year, which is not a salary, which is not open to the Comptroller and Auditor General to audit.
I am interested in that. There is a payment that is made to the President. I do not want to get into the President at all, but a figure of €317,000 per year is provided for under an Act. However, we do not know what it is to be used for. It is an allowance, but we do not know what its purpose is. Theoretically, it could be spent on anything. Presumably, it might not even be spent at all. Is it an amount that is surrenderable at the end of the year?
Can I request, on behalf of the Committee of Public Accounts, that those procedures be given to us, first, to confirm whether they are in place? Perhaps it is something the audit committee set up in 2016 can look at once it gets around to it in 2018 or 2019. What procedures govern the expenditure or use of the sum of €317,000? Perhaps we could have an indication, staying within the bounds of the constitutional position, of what it has been used for in the last seven or, for that matter, ten or 20 years. It seems bizarre that €317,000 of public money is given to whomever on an annual basis, with no oversight or responsibility by anybody, while Mr. Fraser, as Accounting Officer, states to me that he presumes there are procedures in place that govern it in Áras an Uachtaráin and the Comptroller and Auditor General confirms that he does not audit it. That is an issue.
To clarify, in my own research I became aware of this amount of money. What statutory instrument it is, I do not care about. The bottom line is that we have established that €317,000 per year is paid to somebody and nobody has any interest in and oversight of what it is spent on. That is significant.
Does that indicate that the €317,000 can be paid per annum, accumulate and then, if there are amounts left over, as seems to have been the case in 2011, the balance is refunded to the Exchequer? Whoever was responsible at the time, we do not know on what the money was spent per year and still do not. We want to get the procedures, albeit we know that the Secretary General of the Department of the Taoiseach does not know and that the Comptroller and Auditor General is not responsible and does not know. According to the Comptroller and Auditor General, the Secretary General of the Department of Finance also does not know or have a role in auditing that amount of money. That is significant and if it is all we find out today, it is good work.
There is one speaker left in the first round, while one or two have indicated for the second round. At this stage, most members have had an opportunity. I want to go through the document with Mr. Fraser and ask some questions directly about it.
Is there a risk register established in Áras and Uachtaráin, as in most Government bodies, as part of the audit committee? In Mr. Fraser's statement on administrative controls and management reporting he refers to a risk management system.
Is there a risk register established in Áras an Uachtaráin like in most Government bodies? In his statement, he stated a risk management system operates.
To be clear, the reason the date on Mr. Fraser's statement was 14 September rather than 31 March, which would have been the date it should have been submitted, is that it relates to the text regarding the audit committee. Is that correct?
The change in date refers to just the change in the text about the internal audit committee. It is not regarding the amount of moneys spent.
We have confirmed today that the total cost of running Áras an Uachtaráin in 2016 was €8.163 million, of which direct expenditure was €3.5 million. The balance was from other Departments, namely, the Minister for Finance, the Office of Public Works, the National Shared Services Office for processing payroll, the Garda Síochána, presumably for its involvement, the Department of Foreign Affairs and Trade for booking foreign travel, and the Department of Defence. Then there are payments through the Central Fund such as emoluments and allowances. This figure would include the salary of the President and pensions of former Presidents.
I am only putting this out there for public information.
On the surplus which was mentioned to be surrendered, it happens that most of it had not been paid into the President's Establishment. On Note 2.5, net Exchequer funding due, the accounts state the surplus to be surrendered was €287,000 but, in fact, €291,000 had not been drawn down.
That is the way it was done. It was not drawn down. I just want to put these figures on the record.
To ensure everyone is clear about it, the centenarians' bounty is over €1 million in the account, which is a big enough item. The sum for those who reach the great age of 100 is €2,540. Is that correct?
It is a medal or a token.
We have been dealing specifically with Mr. Fraser's role as Accounting Officer and have not been dealing with the President.
Mr. Fraser, like all Accounting Officers, would have been issued with a circular on appropriation accounts from the Department of Public Expenditure and Reform which deals with net allied services.
There is a little confusion. I mentioned the Office of Public Works, OPW, An Garda Síochána and all the people in the Department of Foreign Affairs and Trade who incur costs in their Departments, borne by their Departments, but it is for the benefit of Áras an Uachtaráin. That is it in a nutshell. The Comptroller and Auditor General records that in note 1.1 in his accounts. That is in the Government accounting rules. A memorandum the witnesses would have received relating to net allied services states, "Departments are required to include actual figures where possible rather than the previous practice of estimated expenditure." It continues, "However, in addition, both the providers and receivers of allied services are reminded to ensure that for the 2017 account the allied services are still relevant and that the breakdown across Departments is provided using an up to date and reasonable method of calculation/apportionment." What kind of assurances has Mr. Fraser received from, for example, the OPW, such that he is satisfied what it has listed under this €2.4 million in 2016 was fair and reasonable? What assurances has Mr. Fraser received from those Accounting Officers? What is the system?
This circular puts an onus both on the OPW, which is providing the service, to be accurate in the figure, but it also puts an onus on Mr. Fraser to be sure the figure is accurate too. Does Mr. Fraser do any check or does he take it in good faith from the OPW?
I checked that myself and they tally. I looked at the Áras an Uachtaráin website last night. It provides useful information about the items we are discussing. There was a discussion about the shared services provided by the Office of Public Works. It lists on its website the costs for last year of €2.5 million. It is on the website and I am sure that Mr. McCarthy will publish the figures on Friday with his appropriation account. The OPW staff costs are listed as €800,000. The building work going on in Áras an Uachtaráin cost €261,000. Electricity and gas cost €182,000. Property maintenance cost €1.283 million. Áras an Uachtaráin puts that information up itself. It is a big figure and we do not have a breakdown here. I want to be helpful to people who are watching by giving that breakdown which was received. One other item is mentioned on the website. It says the Central Fund of €894,000 includes:
- Costs not covered elsewhere in the Vote for the Presidential Establishment (eg. hospitality for 20,000 visitors, State Dinners, community events, etc.)
- Pensions for former Presidents
- President's salary
Mr. Fraser cannot answer this because he is not the Accounting Officer for the Central Fund. Has Mr. McCarthy any information about how much of the €894,000 related to pensions or hospitality? Has he looked at that as part of the audit of the Central Fund?
I would have thought before I arrived today that maybe the OPW costs included the costs of much of the entertaining, functions and people being invited to very important functions in Áras an Uachtaráin. This note seems to suggest that the hospitality for the 20,000 visitors in 2017 was met from the Central Fund. Which is it? Does Mr. McCarthy know?
It is not a matter to which we will come back in the next couple of weeks. On the allowance which was mentioned earlier and which is referred to under emoluments and allowances as part of the Central Fund payment, the Áras an Uachtaráin website states that there is - from the Central Fund - a payment in respect of hospitality for 20,000 visitors. Perhaps there is a relationship, although I do not know. Does Mr. Fraser know? It might be helpful if someone knew.
Mr. Martin Fraser:
I do not know precisely but I think it is a bit of both. That Central Fund figure of €894,000 in the accounts includes the allowance and various other things, such as pensions and the President's salary. I think some of that is used for entertainment for, as the Áras an Uachtaráin website says, 20,000 visitors a year, State dinners and so on. However, the OPW also employs household staff. This is because there are permanent staff in the Áras who deal with catering and so on. The OPW also probably meets expenses like equipment costs, etc.
Yes. The website gives the impression that there are payments in respect of hospitality for the 20,000 visitors to Áras an Uachtaráin and that these are paid for from the Central Fund. It is linking it to that. Even though it is not audited, it appears to link it.
The Áras puts it on its website. We will take it as accurate if it puts it up on its website.
I call Deputy Kelly, who has not yet had an opportunity to contribute. Members who want to speak in the second round should indicate in the following sequence: Deputy Connolly; Deputy Aylward; and Deputy MacSharry.
I will not take long, which is very unusual for me. I apologise for the fact that I have been in and out of the meeting due to media commitments. I thank the witnesses for attending. From what I hear, most of the issues have been thrashed out in regard to the item of interest. I have two questions. He does not have to elaborate on this because it is more a question of process but, before coming in today, did Mr. Fraser seek legal advice from the Attorney General?
I thank Mr. Fraser for clarifying that, particularly as I believe it to be useful information. Obviously, transparency is critical and there may be some information that has come out today that helps in regard to that. I understand that this is the first time we have ever done this. As regards future transparency, are there issues in respect of which Mr. Fraser feels improvements could be made? We have many priorities on this committee across a range of issues and, obviously, if we want to discuss this Vote, we will make the decision to do so. I am not saying that we will not do so. From a transparency point of view, are there more changes or inclusions that can happen in regard to how this Vote is brought out to the public that would ensure we have more information so that, when it comes to looking at our priorities as a committee, we will be able to leverage that and use it to identify whether this is a priority? It is up to every committee to decide. Are there changes that could be made or better platforms for providing information that would help?
Mr. Martin Fraser:
I understand. The first thing to say is that everything that has been discussed today is based on published material, so the material is there. The honest answer is that I think it is a matter for the President, whoever may be the President at the time. That is my genuine opinion on the matter.
I want to make a comment and ask a question. It was certainly very appropriate to hold this meeting and I do not agree with any comments about it stinking or being inappropriate timing. If this Committee of Public Accounts cannot look at the appropriation account for the President's Establishment, we are in serious trouble as a committee. I fully support the Chairman in holding this meeting. It is very important that we look at processes. I have not mentioned a single President. I have looked at processes, and Mr. Fraser has admitted that the processes leave something to be desired. Is that not correct?
We have been through that. I am making a comment that it is bad governance not to have an audit committee functioning and an internal audit control functioning. Every single week we have this and we put questions to various organisations. It would be neither just nor fair not to put the President's Establishment through the same processes-----
Mr. Fraser agrees with that. That is great. Today we have looked at the matter and we have seen that no audit committee sat. I do not want to hammer Mr. Fraser as we have been through the matter, but it concerns me that when I look back at the previous years, I do not see where it was highlighted that there was no audit committee. I would have thought the lack of an audit committee would be a basic thing to highlight. If I go back, to 2013 or 2014, Mr. Fraser continually talks about the office having an internal audit function with appropriately trained personnel which operates in accordance with a charter and so on, but actually it was never operating. Is that correct, or am I wrong?
No, this is going way back now. This is 2013. The appropriation accounts refer to an internal audit function with appropriately trained personnel which operates in accordance with the written charter, but the internal audit was not functioning, was it?
At no stage, going through 2013, 2014 or 2015, was it highlighted that it was not working properly. I am thinking in the context of the Garda, the education and training boards and the other organisations we have had before us. We were very hard on them in respect of processes and procedures. The first time I see anything about an audit committee is in Mr. Fraser's 2016 appropriation account. Does he see where I am coming from? There is not an open and accountable system. One thing is being said on paper but the operation of that is not happening on the ground. Is that not right? If this is happening with the President's Establishment, regardless of who the President is, we are not giving out a proper message here on accountability, are we?
I understand that. I have finally learned that over the past two years from the various organisations. I am going back to 2014, before Mr. Fraser appointed a chair. He appointed a chair of an audit committee in May 2014, I understand. Is that so?
I do not expect Mr. Fraser to comment on it, but the commentary outside the committee that this is political is rubbish. We are examining procedures and processes so that we can reassure people that there is accountability. Is that not what all of this language is about? What we are finding out now, though, is that it is simply language and the operation is missing.
I do not want reassurances. When the committee examines this matter next year, I would like to see an audit committee and chairperson in place, a report of the meetings that were held, what were identified as risks, as the Chairman mentioned, by the internal audit process and what steps were taken. That would reassure me and the people watching. That is what I would like to see if we are here this time next year.
I agree with Deputy Connolly. What we did today was good for democracy. It cleared the air. Maybe we should have done it long ago in view of the timing. The people who are trying to cast aspersions on what we have done and make it political are wrong.
There are question marks over this matter. The Comptroller and Auditor General seems to be the main person responsible even though his role is only as auditor. Mr. Fraser has tried to pass the buck to him a few times. There is also the audit committee in the Áras. The question of who is responsible needs to be established. With other audits, the Comptroller and Auditor General makes a report and we ask questions based on what he lays before us, but there seems to be some crisscrossing today. That is something that we should take from our meeting.
I looked up the reason the Committee of Public Accounts exists, that being, the three Es and two Ps. We investigate whether something has been done economically, efficiently and effectively in line with procedures and privileges. No one seems to have answered Deputy MacSharry's question on the €317,000 that seems to have appeared from out of the blue. I knew nothing about it until he mentioned it, but no one present is responsible for it or even able to throw any light on why it was paid. The Comptroller and Auditor General stated that it was not paid out of the Vote, but under a 1997 Act. That and what the money is for need to be clarified. It is €317,000 of taxpayers' money. The question on why and how it was spent must be answered within a short time. Let us know why it was spent so that the public in general and the presidential candidates - the nomination process closes tomorrow - can know what the €317,000 entailed and on what grounds it was spent. This question needs to be answered sooner rather than later.
On internal audit, I understand there is an accountancy code which suggests that at least one member of all internal audit committees should be an accountant. Mr. Fraser said earlier on that there are no accountants on the audit committee.
On the €317,000, about which I am very concerned, I have no doubt that it is probably spent in a very good way, if it is in fact spent. It is not about what it is spent on or about the amount of money. Indeed, this allowance or whatever it is - about which none of us know anything and which is not taxable - could be €1 million. That is not the point. The point is that we, as the public, are entitled to know that Mr. McCarthy, as Comptroller and Auditor General, is auditing and having a look at this and that it is being done in the right way. Even the perception of it being some kind of a slush fund is damaging. I wonder could Mr. McCarthy give us any information other than suggesting that he presumes that there are procedures to govern that fund in the Áras. We look forward to getting that information as early as possible.
Again, I concur 100% with Deputy Connolly. It was remiss of previous Committees of Public Accounts not to do this, rather than mischievous of this committee to do so. I hope it is done every year in the future. This meeting is timely and has been informative. I can certainly think of 317,000 reasons it was a good exchange today.
I do not think we have seen any evidence yet today that there is anything untoward about that €317,000. The previous speaker's reference to a "slush fund" is regrettable and, perhaps, slightly inflammatory.
We have gleaned some information. This meeting was a useful exercise. Perhaps it should have been done several times by previous Committees of Public Accounts. We have learned one lesson. The Vote is an issue we will not neglect in future years. It is an issue to which we will return. We are not asking Mr. Fraser to send any information to us at this point Any question that was not dealt with today is closed for the moment and until such time as the Committee of Public Accounts, as part of a future work programme, decides to come back to this matter. This topic is now closed. I thank Mr. Fraser for his attendance in difficult circumstances, considering he has a broken arm. I genuinely appreciate it because he would have been entitled to send me a doctor's letter. I would have had to get a second opinion had that arrived. I also thank the Comptroller and Auditor General and his staff.