Mr. Seamus McCarthy:

The 2022 appropriation account for Vote 36 - defence records gross expenditure of €836 million. Appropriations-in-aid of the Vote amounted to €33.6 million. The surplus of the amount provided over the net amount applied in the year, which was liable for surrender back to the Exchequer, was €9.9 million.

The appropriation account is presented under a single programme related to defence policy and support, military capabilities and operational outputs. The expenditure subheads relate to the inputs purchased, unlike for other votes where the focus of subheads generally is on the costs associated with identified outputs. Salaries and allowances for Defence Forces personnel, including civilian support staff serving with the military, accounted for 60% of the expenditure. At the end of the year, around 8,800 full-time equivalent personnel were employed and remunerated from Vote 36, including around 8,000 Permanent Defence Force personnel. Expenditure of just under €279 million was incurred on equipment, supplies and other operational costs of the Defence Forces. Administration costs for the Department of just over €31 million were incurred in the year.

Expenditure related to the payment of pensions and gratuities to former members of the Defence Forces or to surviving dependants are accounted for separately from the Defence Vote, in the appropriation account for Vote 35 - Army pensions. The 2022 account recorded gross expenditure of €278 million. Appropriations in aid of the Vote amounted to €5 million. The surplus of the amount provided over the net amount applied in the year, which was liable for surrender back to the Exchequer was €1.7 million. At the end of the year, pensions were in payment to approximately 11,300 retired military personnel, and to 1,835 dependants and others. I issued clear audit opinions in respect of both appropriation accounts.

Chapter 12 of my report on the accounts of the public services for 2022 reviews the adequacy of the controls that the Department has in place to manage, value and correctly account for stocks of all kinds held by the Defence Forces. The chapter focuses in particular on the implementation of recommendations arising from a 2014 formal review of inventory management in the Defence Forces, generally referred to as the Dunning report.

At the end of 2022, most of the Department’s stock, valued at €254 million, related to military equipment items held by the Defence Forces in over 380 individual military store accounts in 23 locations across the country and overseas. The largest store account held €87 million worth of stock, while half of the stock value was accounted for in just four store accounts. More than 60 individual store accounts had a total value of less than €10,000 at the end of 2022.

Certain items of equipment used by the Defence Forces, such as weapons, are also held in stores for security and access control reasons. These are recorded and accounted for as fixed assets. Expendable items are held as stock. This differentiation increases the complexity of the stores' functions.

A stock management policy was adopted by the Defence Forces in 2015 in response to the Dunning report recommendations. The policy was planned to cover the period up to 2020 but continued in place until May 2023. Elements of the 2015 policy, including definition of minimum and maximum stock levels and the use of key performance indicators for stocks and stores, had not been implemented across the Defence Forces at the time of the examination. A new policy adopted in May 2023 sets timelines for the introduction of these measures. The examination also identified issues with the misclassification of stock and the disposal of obsolete stock items. Work on data cleansing and the correct classification of items stored by the Defence Forces has been under way for many years, and was still ongoing as of last September. The Dunning report had recommended that this work should be finalised urgently.

The Accounting Officer will be able to update the committee on the status of its ongoing work on stock management and in the implementation of recommendations arising from the chapter.