Dáil debates
Thursday, 8 February 2024
Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
Office of the Comptroller and Auditor General
10:40 am
Rose Conway-Walsh (Mayo, Sinn Fein)
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86. To ask the Minister for Public Expenditure and Reform if he has engaged with the Office of the Comptroller and Auditor General on the potential of extending its remit to cover commercial public bodies in a dual audit capacity to ensure greater oversight and accountability; and if he will make a statement on the matter. [5766/24]
Rose Conway-Walsh (Mayo, Sinn Fein)
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Has the Minister engaged with the Office of the Comptroller and Auditor General on the potential of the State auditor to cover semi-State bodies that receive public money but engage in commercial activity? I refer to a dual audit capacity. The public would be surprised that the Government does not require this already. Will the Minister consider changing the State auditor's remit to ensure greater oversight of and accountability for public money?
Paschal Donohoe (Dublin Central, Fine Gael)
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Many State bodies classified by the Central Statistics Office, CSO, as commercial are already solely audited by the Office of the Comptroller and Auditor General. While section 1438 of the Companies Act 2014 provides that companies not trading for the gain of their members may be audited by the Office of the Comptroller and Auditor General, only regulated private sector audit firms can act as statutory auditors for companies, including public companies, that have been set up for commercial gain under the Companies Act.
Commercial State companies established for commercial gain are generally held at arm’s length by central government for a number of reasons. These companies are usually expected to make profits that generate dividend payments that are utilised to fund public services. It is, therefore, an important principle that commercial State companies should be treated the same as their private sector competitors in order that they are not put at a competitive disadvantage. Every commercial State body is expected to meet the highest standards of corporate governance and to follow the requirements set out in the code of practice for the governance of State bodies.
As the Deputy knows, it is the responsibility of each Minister and his or her Department to manage each of the Minister's shareholdings in each State enterprise. Ministers are supported in managing the shareholdings of many these enterprises by the New Economy and Recovery Authority, NewERA, through its provision of expert advice. There are a small number of State enterprises where there is a dual audit arrangement between the private sector statutory auditor and the Office of the Comptroller and Auditor General.
The further extension of such arrangements would need to be considered on a case-by-case basis by each Minister with policy responsibility for a particular enterprise. That would need to take into account the specific circumstances and commercial responsibilities and environment of the commercial body. If such a review happened, I would then engage with the Comptroller and Auditor General with regard to making the necessary legal and administrative provisions.
10:50 am
Rose Conway-Walsh (Mayo, Sinn Fein)
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I really think it is time the Government looked at this collectively rather than waiting for individual Ministers. The Minister gave the usual reason of commercial operations and private auditors, but there seems to be an inconsistent approach to when public oversight is used. Just across the road, more than 50% of Trinity College's revenue is not from the State, yet every year the books are analysed with full transparency by the State auditor. Why is it the same standard and expectations are not extended to all organisations? Companies that are almost 100% owned by the State, such as ESB and Bord na Móna, cannot be audited by the State. Iarnród Éireann does not compete in a private market and yet avoids State audit. If an organisation, commercial or not, is in receipt of large sums of public money, the Comptroller and Auditor General should be able to inspect it for audit. This issue has been raised for more than 30 years now and still has not been resolved. It is a ridiculous situation. Will the Minister review the issue in light of recent scandals and will he bring real public oversight to public money and State investment?
Paschal Donohoe (Dublin Central, Fine Gael)
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I do not have any such plans. For such a change to be made, there would need to be clear evidence to underpin a very broad change in how we audit a very broad and significant part of the State. As I said in my answer to the Deputy, there are many organisations that are operating in the commercial environment. It is therefore appropriate, as they are operating in the commercial environment, that they are audited in a way that is equivalent to how their peers are audited. What is it in the operation of ESB, for example, that makes the Deputy think it should be subject to audit by the Comptroller and Auditor General? Does she have any evidence of wrongdoing or malfeasance, or is it just a general suspicion she has of excellent organisations that do great work on behalf of our State?
Rose Conway-Walsh (Mayo, Sinn Fein)
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I referenced those organisations to highlight the inconsistency of approach. The outrageous scandal in RTÉ brought this to the public's attention. How do we know there are not any other RTÉs? A small commercial operation is used to hide from public accountability. The current system, whereby oversight is conducted by the board of RTÉ by commissioning the audit of accounts, is clearly unsatisfactory. Too many private auditors are not revealing layers of dysfunction and lack of proper governance. They are hired directly by the organisation they are supposed to audit. It is an endemic problem in the private sector. Have we learned nothing from Anglo Irish Bank, Carillion and others, who received a clean bill of health from auditors? It is the public, at the end of the day, that ends up paying the price for this. This Government has the power to legislate so that the State auditor can act either annually or as the office deems necessary. This could be done easily by amending the Broadcasting Act of 2009.
Paschal Donohoe (Dublin Central, Fine Gael)
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When the Deputy referenced layers to dysfunction, what organisations was she referring to?
Rose Conway-Walsh (Mayo, Sinn Fein)
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Anglo Irish Bank and Carillion.
Paschal Donohoe (Dublin Central, Fine Gael)
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We are all well aware of the scandals and the huge difficulty Anglo Irish Bank created. Anglo Irish Bank was a commercial organisation for nearly all of its existence. This is indicative of the general tone of suspicion Sinn Féin has in respect of very important State bodies that do excellent work on our behalf. On the one hand, the Deputy talks about the need for the State to be expanded and the need for the State to do more. On the other hand, she is then coming forward and saying, on the basis of some claims and suspicions she is not outlining in her argument to me, that we should radically overhaul how very valuable State organisations are audited. She referred to a simple change being made in legislation. The consequences of that for organisations like Bord na Móna, ESB and Dublin Bus would be anything but simple. If there are issues of wrongdoing and issues where corporate governance is not meeting the requirements it has, the Government will act. We have an abundance of reports into what happened in RTÉ. I think the Deputy should lay out why it is that she has a general suspicion of our commercial semi-State sector.