Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 41: To ask the Minister for the Environment, Heritage and Local Government the reason local authorities are establishing new audit committees; and if he will make a statement on the matter. [28428/07]

John Gormley (Dublin South East, Green Party)
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Expenditure by local authorities is projected to reach €9.5 billion in 2007 and it is vital that the oversight of financial management and control systems in these bodies reflects best practice. Section 5 of the Local Government (Business Improvement Districts) Act 2006, which replaced the provisions in the Local Government Act 2001, provides a framework for the establishment by local authorities of audit committees with an appropriate structure and remit.

Earlier this year, all city and county councils were asked to set up audit committees and were provided with guidance on their role, functions and membership. I am pleased that progress in their establishment has been good. Some 15 city and county councils have set up audit committees while arrangements for their establishment elsewhere are being finalised.

The new audit committees will continue the ongoing modernisation of the finance function of local authorities. Improvements already in place include the change to full accrual accounting, the professionalisation of the finance function and a greater emphasis on risk management. A new costing system for local authorities will be implemented next year to ensure that services provided by the authorities are costed on a consistent basis.

The functions of an audit committee under the new provisions are to review financial and budgetary reporting practices and procedures within a local authority, foster the development of best practice in the internal audit function, review auditors' reports and special reports and assess follow-up action by management, assess and promote efficiency and value for money, review risk management systems and make such recommendations to the authority as the committee considers appropriate in respect of these matters. An audit committee will have an independent role in advising the local authority, but it will not have executive functions.

The new provisions allow for the inclusion of outside expert membership. They should generally have five members, including at least three external members and up to two serving or retired councillors. The chair of the committee will be selected by its members. In line with best practice, this will be one of the external members.

James Bannon (Longford-Westmeath, Fine Gael)
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Local government is an essential element in any democratic state. It is the machinery by which important services are provided. Everyday when we get up and go outside our doors, we see the services put in place by local authorities, such as public lighting, road infrastructure, water services, sewerage systems etc.

Brendan Howlin (Wexford, Labour)
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Does the Deputy have a question?

James Bannon (Longford-Westmeath, Fine Gael)
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Each local authority has a local government auditor, director of financial services, a budget committee, finance committees etc. and each committee needs a secretariat. Are the new committees necessary? As additional staff are required to man the secretariats, will the embargo on local government staffing be lifted to accommodate their staffing requirements?

The public wants a better delivery of services. As more committees have been established within the local government system, I question whether the Better Local Government programme is working. There may be too many directors of services in small local authorities. For example, an authority with a population of 35,000 may have as many directors as an authority serving a population of 250,000.

How often will the audit committees meet and will there be secretariats to support them? Are the committees necessary?

John Gormley (Dublin South East, Green Party)
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If we are to hold local government to account financially, they are necessary. The Deputy referred to the significant role played by and the considerable expenditure involved in local government. From the budgetary process on which I have embarked, I know how important it is to have a proper local government fund.

We require efficiency at local government level. When I was a councillor, I saw expenditure on items I considered to be extravagances. Each Deputy who has served on a local authority will have seen such expenditure and wondered why the authority took that particular route. We can save money through the audit committees if they do their job properly. The idea must be considered and expanded upon.

I hope the House considers the new Green Paper on local government reform. People are examining in detail the possibility of expanding the audit committees' role. I hope this aspect will be addressed when we reach our conclusions in the Green Paper, which will be published shortly after Christmas.

James Bannon (Longford-Westmeath, Fine Gael)
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All council members on the finance or budget committees are accountable to their electorates. They have done a good job to a large extent and one would not accuse elected members of wasting funding. They have a hands on approach to how their counties or cities should be developed. How often does the Minister expect the new audit committees to meet?

John Gormley (Dublin South East, Green Party)
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It will depend on what they are examining. The crucial difference is that the committees will include external members. Sometimes, if councillors were involved in decisions with expenditure implications, they could not adjudicate on their performance properly. I hope the committees will meet as often as necessary. When people are only in receipt of expenses and work is not properly remunerated, one cannot expect the same extent of work.

I did not answer the Deputy's question on the embargo. It is a separate matter, but it must be addressed if we are to have functioning local government. I want greater staff numbers. I was surprised that the same number of people is employed in local authorities as in the early 1970s. Given the population increase since then, this must be addressed.