Written answers

Thursday, 31 January 2008

Department of Social and Family Affairs

Departmental Expenditure

5:00 pm

Photo of Kieran O'DonnellKieran O'Donnell (Limerick East, Fine Gael)
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Question 177: To ask the Minister for Social and Family Affairs the review processes that have taken place or he has requested to be undertaken in respect of the budgeting, financial and reporting systems within his Department and agencies; the costs incurred to date; the expected total costs; the deadlines that have been imposed for such reviews; if he will make the reports' findings public; and if he will make a statement on the matter. [3024/08]

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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I understand from contact with the Deputy that he is interested in the accounting systems in use in my Department.

The Department produces two statutory accounts annually. These two accounts — the Appropriation Account and the Social Insurance Fund account — are subject to annual audit by the Comptroller and Auditor General. Their annual outturn for 2006 was €7.3 billion and €7.7 billion respectively. This is the last year for which full information is available.

These receipts and payments are brought to account using our financial and accounting system known as Oracle Financials, which is used widely across the public and private sectors and supports the normal range of accounting functions such as General Ledger, Accounts Payable, Purchasing, Inventory and Fixed Assets. The system was initially acquired in 1998 at a cost of €480,000.

A separate query and reporting tool known as Business Objects was also implemented in tandem with Oracle Financials to provide management reporting facilities.

While there has been no specific review of Oracle Financials since it was implemented, the system is monitored on an ongoing basis and has been upgraded regularly to keep up with emerging business needs. The most recent upgrade in 2006 was implemented at a cost of €235,000. Planning for the next upgrade will commence this year.

An integral part of the accounting process is the reconciliation of the sixty two million payment transactions carried out by the Department each year through the banks and Post Offices. Systems supporting the existing reconciliation operations have been in place since 1986. Following an in-depth review of these processes with expert consultancy assistance costing €127,000, a decision was taken in 2005 to seek a modern integrated solution to replace existing reconciliation systems. After an extensive competitive tendering and evaluation process the most suitable solution was selected and a contract was awarded in 2007. Phased implementation is now under way with planned completion in 2009. The costs of the new system over 2008 and 2009 are projected to be €3.7 million (excluding VAT).

In parallel with the new reconciliation project, a consultancy contract has been awarded to provide the Department's Accounts Division with essential additional expertise in business re-engineering, risk management and enhanced financial controls. The projected cost of this additional expertise over a two year period is projected to be €900,000 (excluding VAT). It is also clear that these and other modernisation initiatives will not only underpin a more effective accounting systems but will yield savings in excess of these initial costs over their lifetime particularly in terms of the ongoing staff resources required to support these systems.

The Department's Vote also funds five statutory bodies which come under the aegis of my Department. The organisations are Citizens Information Board, Combat Poverty Agency, Family Support Agency, Pensions Board and Pensions Ombudsman. Responsibility for maintaining proper financial systems and books of account primarily rests with each of the respective organisations under the terms of their governing legislation and such arrangements are subject to separate regular scrutiny by the Comptroller and Auditor General.

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