COMMITTEE FOR FINANCE AND PERSONNEL
GOVERNMENT RESOURCES
AND ACCOUNTS BILL
(NIA Bill 6/00)
REPORT ON THE COMMITTEE STAGE
Table of Contents
Report
Deliberations of the Committee
Appendices
APPENDIX 1. Minutes of Proceedings of the Committee Relating to the Report
APPENDIX 2. Minutes of Evidence of the Committee
APPENDIX 3. Annexes to the Minutes of Evidence
APPENDIX 4. Schedule of Amendments
COMMITTEE FOR FINANCE AND PERSONNEL: MEMBERSHIP AND POWERS
Powers
The Committee for Finance and Personnel is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Standing Order No. 45 of The Northern Ireland Assembly. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Finance and Personnel and has a role in the initiation of legislation.
The Committee has the power to:
- consider and advise on departmental budgets and annual plans in the context of the overall budget allocation;
- approve relevant secondary legislation and take the Committee Stage of relevant primary legislation;
- call for persons and papers;
- initiate enquires and make reports;
- consider and advise on matters brought to the Committee by the Minister of Finance and Personnel.
Membership
The Committee was established on 29 November 1999 with eleven members, including a Chairperson and Deputy Chairperson and a quorum of five members.
The membership of the Committee is as follows:
- Mr Francie Molloy (Chairman)
- Mr James Leslie (Deputy Chairman)
- Mr Alex Attwood
- Mr Billy Bell
- Mr Seamus Close
- Mr Nigel Dodds (appointed in replacement of Mr Oliver Gibson on 2 October 2000)
- Mr Derek Hussey
- Mr Alex Maskey
- Ms Patricia Lewsley (appointed in replacement of Mr Donovan McClelland on 15 January 2001)
- Mr Peter Robinson MP (appointed in replacement of Mr Gardiner Kane on 2 October 2000)
- Mr Peter Weir
(COMMITTEE FOR FINANCE AND PERSONNEL)
REPORT ON THE GOVERNMENT RESOURCES AND ACCOUNTS BILL
(NIA Bill 6/00)
TOP
GENERAL
1. Introduction
1.1.
The Committee for Finance and Personnel met on the dates given in paragraph 3.1 to consider the Government Resources and Accounts Bill (NIA Bill 6/00) that was referred to the Committee on 25 October 2000 for consideration under Standing Order 31(1) of The Northern Ireland Assembly.
1.2.
The Committee had before it the Government Resources and Accounts Bill (NIA Bill 6/00) and the Explanatory and Financial Memorandum to the Bill (NIA Bill 6/00-EFM), as introduced. Ms Eileen Regan and Mr Malachy Finnegan, Research and Library Services, NI Assembly provided advice on the Bill to the Committee.
1.3.
The Minister in charge of the Bill, Mr Mark Durkan MLA, Minister of Finance and Personnel, made the following statement under Standing Order 28 of the Northern Ireland Assembly.
"In my view the Government Resources and Accounts Bill would be within the legislative competence of the Northern Ireland Assembly."
2. Extension of Committee Stage
2.1.
The Committee Stage of the Government Resources and Accounts Bill began on 8 November 2000 and the Committee agreed that the Committee Stage should be extended to 2 March 2001 due to the Bill's technical complexity. The Committee made the following motion seeking an extension to the Committee Stage of the Bill.
"That in accordance with Standing Order 31 (4) the period referred to in Standing Order 31 (2) be extended to Friday, 2 March 2001 in relation to the Committee Stage of the Government Resources and Accounts Bill (NIA 6/00)."
2.2.
Following discussions with the Minister of Finance and Personnel the Committee agreed that it would seek to complete its Committee Stage scrutiny by 26 January 2001. In order to ensure that the Committee Stage must be completed by 26 January 2001 the Minister of Finance and Personnel made the following amendment:
"In line 2, after "Friday" delete "2 March" and insert "26 January".
2.3.
The motion, as amended, was passed by the Assembly on 20 November 2000.
3. Meetings Held
3.1.
The Committee considered the Government Resources and Accounts Bill on the following dates.
|
Date: |
Subject/Witnesses: |
|---|---|
|
24 October 2000 |
Consideration of appointment of a specialist adviser |
|
7 November 2000 |
Briefing by Department - Department of Finance and Personnel Officials |
|
16 November |
Committee consideration |
|
21 November |
Committee consideration |
|
5 December |
Committee consideration |
|
7 December |
Evidence Session (Powers of Comptroller and Auditor General) - |
|
Deputy Chairman Audit Committee, Comptroller and Auditor General |
|
|
12 December |
Evidence Session (Powers of Comptroller and Auditor General) - |
|
Formal scrutiny (Long Title and Clauses 1-6, 9-11, 13-17) - DFP Officials |
|
|
19 December |
Formal scrutiny (Clauses 7, 8, 12, 18-24, Schedules 1, 2) - DFP Officials |
|
9 January 2001 |
Evidence Session (Powers of Comptroller and Auditor General) - Minister of Finance and Personnel |
|
16 January |
Formal Scrutiny (Clause 18) |
|
Consideration of draft Report to NI Assembly. |
4. Evidence
4.1.
The following bodies and individual made written submissions in response to an invitation from the Committee or wrote independently to the Committee in connection with the Government Resources and Accounts Bill:
- Mr Mark Durkan MLA, Minister of Finance and Personnel
- Mr John Dallat MLA, Chairman, Audit Committee, NI Assembly;
- Association of Chartered Certified Accountants;
- The Institute of Certified Public Accountants in Ireland;
- Northern Ireland Audit Office;
- Mr Des McConaghy, Grant aided by Joseph Rowntree Charitable Trust.
4.2.
Other bodies invited to make submissions were:
- The Association of Chartered Accountants in Ireland;
- The Accounting Standards Board;
- Northern Ireland Public Service Association;
- The Institute of Chartered Accountants in Ireland.
4.3.
Mr W Hutchinson MLA Deputy Chairman Audit Committee, Mr J Dowdall Comptroller and Auditor General for Northern Ireland, Mr Mark Durkan MLA Minister of Finance and Personnel and Departmental officials were called before the Committee and questioned.
DELIBERATIONS OF THE COMMITTEE
5. Introduction
5.1.
The Committee gave detailed consideration to each part of the Government Resources and Accounts Bill over a number of meetings and concluded its deliberations with a clause-by-clause scrutiny on 12 and 19 December 2000 and 9 and 16 January 2001 when the parts of the Bill were formally agreed. The decisions made and the parts of the Bill, where substantial clarification was required and amendments were considered, is given below. The record of the Committee's deliberations can be found in Appendix 1 - Minutes of Proceedings and Appendix 2 - Minutes of Evidence.
5.2.
Mr Des McConaghy, a retired public servant undertaking research into the audit of public bodies that was funded by the Joseph Rowntree Charitable Trust brought concerns to the Committee about the Assembly's access to information on, and approval of, public expenditure via the Comptroller and Auditor General (C&AG). Among other matters, he suggested a need to extend the C&AG's powers to allow access to any new forms of public service providers or users of public funds.
5.3.
The main issues identified by Mr McConaghy were considered by the Committee in the context of an amendment to Clause 18 that was proposed by the Public Accounts Committee (PAC) and discussed with the Minister of Finance and Personnel. The amendment proposed by the PAC would provide a new power for the C&AG to undertake inspections of the accounts of bodies in receipt of public funds.
5.4.
The Committee wrote to the Minister of Finance and Personnel on 8 December on several crucial issues arising from its consideration of the Bill. These were
- The proposal from the PAC to amend Clause 18 of the Bill to extend the powers of the C&AG. Discussions with the Deputy Chairperson of the Audit Committee and the C&AG revealed a general consensus on the thrust of the amendment. The proposed amendment is set out at paragraph 24.1.
- a proposal to limit any substantial amendments to the proposed amendment to Clause 18, subject to assurances being given by the Minister on the following matters:
- that C&AG's audit remit would be extended in the forthcoming Audit Reorganisation Bill, e.g. to include all bodies established as limited companies by the Government;
- that C&AG would be given a statutory responsibility for auditing departmental performance measures in the Audit Reorganisation Bill.
- oversight of guidance on accounting matters provided by the Department of Finance and Personnel to Departments was considered in conjunction with the PAC and the Audit Committee. All three Committees considered that the extension of the Financial Reporting Advisory Board's remit would represent the most appropriate way forward. The Committee advised the Minister that a suitable additional clause should be drafted to achieve this in the Government Resources and Accounts Bill.
5.5.
The Minister wrote to the Committee on 5 January 2001 setting out his consideration of the issues raised by the Committee in the Chairman's letters of 7 and 19 December 2000. He appeared before the Committee on 12 December 2000 and 9 January 2001 when he was questioned on the issues.
5.6.
On 12 December the Minister confirmed that he was in agreement with the broad thrust of the approach being taken by this Committee and by the PAC and Audit Committee on public accountability and extending the power of the C&AG to investigate any body that spends significant public monies. He was also questioned on his intention to bring forward an amendment to the Bill to extend the remit of the Financial Reporting Advisory Board.
5.7.
When the Minister appeared before the Committee on 9 January 2001 he agreed to consider further the wording of the proposed amendment to Clause 18 to extend the powers of the C&AG and indicated that he would seek advice from the Office of Legislative Counsel and the C&AG. He also agreed that an amendment to the Bill to extend the remit of the Financial Reporting Advisory Board would be made.
5.8.
The Minister proposed to introduce an amendment to Clause 18 to require the Department of Finance and Personnel to have regard to the views of the PAC. He confirmed that it was his intention to extend the C&AG's audit remit in the Audit Reorganisation Bill. When questioned on the audit of performance information he explained that it was premature to make this a part of the financial audit role of the C&AG but that the matter was being examined in the context of the development of public service agreements.
5.9.
The Minister wrote further to the Committee on 15 January 2001 (Appendix 3) setting out his formal response to the issues raised. He indicated that it was not possible to provide the form of words to achieve the desired outcome. However, the letter did set out the Minister's proposed approach to the introduction of an extended power of inspection for the C&AG.
6. Long Title
6.1.
The Committee agreed that the Committee reports to the Assembly that it is content with the Long Title.
7. Clause 1 - The Consolidated Fund Account
7.1.
No major concerns were raised and the Committee agreed that the Committee would respond to the Assembly that it was content with Clause 1.
8. Clause 2 - The Consolidated Fund
8.1.
No major concerns were raised and the Committee agreed that the Committee would report to the Assembly that it was content with Clause 2.
9. Clause 3 - Payment out of Consolidated Fund: standing services
9.1.
No major concerns were raised and the Committee agreed that the Committee would report to the Assembly that it was content with Clause 3.
10. Clause 4 - Payment out of Consolidated Fund: sums authorised by Act of the Assembly
10.1.
No major concerns were raised and the Committee agreed that the Committee would report to the Assembly that it was content with Clause 4.
11. Clause 5 - Application of sums issued
11.1.
No major concerns were raised and the Committee agreed that the Committee would report to the Assembly that it was content with Clause 5.
12. Clause 6 - Appropriation in aid
12.1.
No major concerns were raised and the Committee agreed that the Committee would report to the Assembly that it was content with Clause 6.
13. Clause 7 - Resources accounts: preparation
13.1.
The Committee deliberated on two proposed amendments to Clause 7.
13.2.
The Committee considered the need make an amendment to introduce oversight arrangements to be undertaken by the Financial Reporting Advisory Board (FRAB). The Department advised the Committee that it was in agreement that such an amendment should be made but that it should avoid referring to a specific oversight body and that the proposed amendment would be best placed in the 'Miscellaneous' section of the Bill.
13.3.
The Committee considered the motion:
"That the Committee reports to the Assembly that the Minister of Finance and Personnel should introduce an amendment to the Bill to require the Department to consult an advisory body of people with appropriate experience of financial reporting principles and standards before issuing guidance on the preparation of resources accounts and Whole of Government accounts.".
13.4.
The question being put, the motion was carried without division.
13.5.
The Committee deliberated on a drafting error in subsection (6) and was advised by the Clerk that this would require correction by means of an amendment.
13.6.
The Committee agreed that Clause 7 should be amended as follows:
page five, line three, leave out "Department" and insert "department".
13.7.
The Committee agreed that the Committee should report to the Assembly that it was content with Clause 7 as amended.
14. Clause 8 - Resource accounts: scrutiny
14.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 8.
15. Clause 9 - Other departmental accounts
15.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 9.
16. Clause 10 - Comptroller and Auditor General: access to information
16.1.
The Committee considered the need for the Comptroller and Auditor General to have unfettered access to any documentation relating to departmental accounts and agreed that Clause 10 should be amended to ensure that the Comptroller and Auditor General would have access at all times to documents relating to a department's accounts.
16.2.
The Committee agreed that the Committee should report to the Assembly that Clause 10 should be amended as follows:
page 6, line 36, leave out ' at all reasonable times'
16.3.
The question being put, the motion was carried without division.
17.
Clause 11 - Resource accounts: non-departmental bodies and other persons
17.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 11.
18.
Clause 12 - Preparation
18.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 12.
19.
Clause 13 - Obtaining information
19.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 13.
20.
Clause 14 - Scrutiny
20.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 14.
21.
Clause 15 - Supplies by departments
21.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 15.
22.
Clause 16 - Alteration of timetables for accounts
22.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 16.
23.
Clause 17 - Directions of the Department
23.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 17.
24.
Clause 18 - Examinations by Comptroller and Auditor General
24.1.
The Committee was concerned about the absence of power for the C&AG to investigate bodies receiving substantial public monies. The Chairman of the PAC wrote to the Committee on 28 November 2000 to propose the following amendment to Clause 18 of the Bill to extend the powers of the C&AG:
"( ) The accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if that body exercises functions of a public nature or is entirely or substantively funded from public money."'
24.2.
The Committee questioned Mr Billy Hutchinson, Deputy Chairperson of the Audit Committee and Mr John Dowdall, Comptroller and Auditor General on 7 December. This revealed a general consensus with the objectives of the amendment.
24.3.
The Committee agreed to expand the proposed amendment to give the C&AG discretion on determining whether or not the body exercises functions of a public nature or has received significant public funds. The revised amendment is set out below with the Committee's additions underlined:
"( ) The accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if it appears to him that the body exercises functions of a public nature, has received significant public funds or is entirely or substantively funded from public money."'
24.4.
The revised amendment was discussed with the Minister of Finance and Personnel and officials on 12 and 19 December 2000 and 9 January 2001. The Minister's position on the matter was outlined in his letter to the Chairman of 5 January. He explained that he was supportive of the objectives for the amendment, subject to a change in the wording. He considered that the current wording would present difficulties and preferred to use the phrase " public sector" rather than the Committee's proposed wording ".as in receipt of significant public funds or is entirely or substantively funded from public money.".
24.5.
The Minister also suggested a further amendment to Clause 18 to oblige the Department of Finance and Personnel to have regard to the views of the PAC. The Committee agreed that this proposal was sound and should be recommended to the Assembly.
24.6.
The Minister wrote to the Committee on 15 January 2001 setting out in detail his proposals for introducing a new power of inspection for the C&AG. Member's noted the Minister's commitment to draw up an alternative amendment to Clause 18 that would seek to achieve the Committee's objectives of providing powers of inspection to cover the use of all public funding. However, as the Department had been unable to present the Committee with their proposal for a revised text of the amendment during the period of the Committee Stage of the Bill the Committee concluded that the amendment proposed by the PAC and amended by the Committee should be tabled. In considering the matter further, the Committee agreed the final form of the proposed amendment as set out below:
"( ) The accounts and all documents relating to the accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if it appears to him that the body exercises functions of a public nature, has received significant public funds or is entirely or substantively funded from public money."'
24.7.
The Committee agreed that it may withdraw its proposed amendment should the Minister table an amendment, in line with his letter dated 15 January 2001, that is equally satisfactory to the Committee.
24.8.
The Committee agreed that the Committee should report to the Assembly that Clause 18 should be ammended as follows:
Clause 18, page 10 line 19 -
"( ) The accounts and all documents relating to the accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if it appears to him that the body exercises functions of a public nature, has received significant public funds or is entirely or substantively funded from public money."'
24.9.
The question being put, the motion was carried without division.
25.
Clause 19 - Reports of Comptroller and Auditor General
25.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 19.
26.
Clause 20 - Public bank accounts
26.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 20.
27.
Clause 21 - Interpretation
27.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 21.
28.
Clause 22 - Amendments and repeals
28.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 22.
29.
Clause 23 - Commencement
29.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 23.
30.
Clause 24 - Short title
30.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Clause 24.
31.
Schedule 1 - Minor and Consequential Amendments
31.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Schedule 1.
32.
Schedule 2 - Repeals
32.1.
No major concerns were raised and the Committee agreed that the Committee should report to the Assembly that it was content with Schedule 2.
TOPAppendix 1
Minutes of Proceedings of the Committee
Relating to the Report
Minutes of Proceedings of the Committee that relate to the Report on the Government Resources and Accounts Bill are given below:
|
Date: |
Subject/Witnesses: |
|---|---|
|
24 October 2000 |
Consideration of appointment of a specialist adviser |
|
7 November 2000 |
Briefing by Department - Department of Finance and Personnel Officials |
|
16 November |
Committee consideration |
|
21 November |
Committee consideration |
|
5 December |
Committee consideration |
|
7 December |
Evidence Session (Powers of Comptroller and Auditor General) - |
|
12 December |
Evidence Session (Powers of Comptroller and Auditor General) - |
|
Formal scrutiny (Long Title and Clauses 1-6, 9-11, 13-17) - DFP Officials |
|
|
19 December |
Formal scrutiny (Clauses 7, 8, 12, 18-24, Schedules 1, 2) - DFP Officials |
|
9 January 2001 |
Evidence Session (Powers of Comptroller and Auditor General) - |
|
16 January |
Formal Scrutiny (Clause 18) |
|
Consideration of draft Report to NI Assembly. |
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
TWENTY EIGHTH MEETING
THURSDAY, 24 OCTOBER 2000
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS
Present:
Mr Francie Molloy (Chairman)
Mr James Leslie (Deputy Chairman)
Mr Billy Bell
Mr Seamus Close
Mr Derek Hussey
Mr Donovan McClelland
Apologies:
No apologies were made.
In attendence:
Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.02 p.m. The meeting was held in public session.
Any other business:
Specialist Adviser
The Committee deliberated on the appointment of a specialist adviser to assist the Committee Stage of the Government Resources and Accounts Bill (NIA Bill 6/00).
Resolved: That the need for a specialist adviser would be re-considered at a later date.
FRANCIE MOLLOY
Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
TWENTY NINTH MEETING
THURSDAY, 7 NOVEMBER 2000
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS
Present: Mr Francie Molloy (Chairman)
Mr Seamus Close
Mr Nigel Dodds
Mr Derek Hussey
Mr Alex Maskey
Mr Peter Robinson
Mr Peter Weir
Apologies: Apologies were received from Mr James Leslie and Mr Billy Bell.
In attendence: Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.10 p.m. The meeting was held in public session.
Consider any Bills:
Government Resources and Accounts Bill (NIA Bill 6/00)
Officials from the Department of Finance and Personnel briefed the Committee on the principles of resource accounting and budgeting and the purpose of the Government Resources and Accounts Bill.
Resolved: That the Department would provide the Committee with an example of the 'dry-run' that it has undertaken for resource budgeting and an example of the resource accounting when it becomes available.
Resolved: That a presentation on the role of the Comptroller and Auditor General under the Government Resources and Accounts Bill be arranged.
FRANCIE MOLLOY
Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
THIRTIETH MEETING
THURSDAY, 16 NOVEMBER 2000
COMMITTEE ROOM 135, PARLIAMENT BUILDINGS
Present: Mr Francie Molloy (Chairman)
Mr James Leslie (Deputy Chairman)
Mr Seamus Close
Mr Derek Hussey
Mr Alex Maskey
Mr Peter Robinson
Peter Weir
Apologies: Apologies were received from Mr Billy Bell.
In attendence: Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.20 p.m. The meeting was held in public session.
Matters arising:
Extension of Committee Stage of Bills
The Committee deliberated on the Committee's legislative programme and the extensions required for the Government Resources and Accounts Bill, Defective Premises (Landlords' Liability) Bill and the Family Law Bill.
Consider any Bills:
Government Resources and Accounts Bill (NIA Bill 6/00)
The Committee deliberated on Clauses 1 to 5 of the Government Resources and Accounts Bill. The Committee was advised by Eileen Regan and Malachy Finnegan, Research Services.
Resolved: That questions raised by members be put to the Department of Finance and Personnel.
FRANCIE MOLLOY
Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
THIRTY FIRST MEETING
TUESDAY, 21 NOVEMBER 2000
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS
Present: Mr Francie Molloy (Chairman)
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Derek Hussey
Mr Alex Maskey
Mr Peter Weir
Apologies: Apologies were received from Mr James Leslie.
In attendence: Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.25 p.m. The meeting was held in public session.
Consider any Bills:
Government Resources and Accounts Bill (NIA Bill 6/00)
The Committee deliberated on Clauses 6 to 9 of the Government Resources and Accounts Bill. The Committee was advised by Ms Eileen Regan and Mr Malachy Finnegan, Research Services.
Resolved: That questions raised by members be put to the Department of Finance and Personnel.
FRANCIE MOLLOY
Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
THIRTY THIRD MEETING
TUESDAY, 5 DECEMBER 2000
Committee Room 144, Parliament Buildings
Present: Mr James Leslie. (Deputy Chairman)
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Donovan McClelland
Mr Peter Robinson
Mr Peter Weir
Apologies: Mr Francie Molloy (Chairman)
Mr Derek Hussey
In attendence: Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Sharon Bowman (Administrative Support)
The Deputy Chairman took the Chair due to the absence of the Chairman and declared the meeting open at 2.40 p.m. The meeting was held in public session.
Consider any Bills:
Government Resources and Accounts Bill (NIA Bill 6/00)
The Committee deliberated on Clauses 10 to 18 of the Government Resources and Accounts Bill. The Committee was advised by Ms Eileen Regan and Mr Malachy Finnegan, Research Services.
Mr Nigel Dodds attended from 3.45 p.m.
Mr Seamus Close returned to the meeting at 3.58 p.m.
Resolved: That questions raised by members be put to the Department of Finance and Personnel.
JAMES LESLIE
Deputy Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
THIRTY THIRD MEETING
THURSDAY, 7 DECEMBER 2000
SENATE CHAMBER, PARLIAMENT BUILDINGS
Present: Mr Francie Molloy (Chairman)
Mr James Leslie. (Deputy Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Peter Robinson
Mr Peter Weir
Apologies: none received.
In attendence: Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.05 p.m. The meeting was held in public session.
Government Resources and Accounts Bill (NIA Bill 6/00) Evidence Session
The Chairman welcomed Mr Billy Hutchinson, Deputy Chairman, Audit Committee and Mr John Dowdall, Comptroller and Auditor General who appeared before the Committee to give evidence on the Bill. The witnesses were questioned on matters arising from the letters to the Chairman dated 10 November 2000 from the Chairman, Audit Committee and 28 November from the Chairman, Public Accounts Committee. These proposed amendments to the Bill to extend the powers of investigation of the Comptroller and Auditor General and introduce an independent check on the Department of Finance and Personnel's guidance on accounting matters by extending the remit of the Financial Reporting Advisory Board.
Mr Peter Robinson attended from 2.20 p.m.
Mr Nigel Dodds attended from 2.29 p.m.
Mr Hutchinson spoke about his Committee's views on the need to ensure that the Comptroller and Auditor General's statutory powers of access to investigate were not restricted. The Comptroller and Auditor General explained that he was content with the audit procedures provided for in the Bill. However, the Bill did not take the opportunity to update his powers to inspect in line with latest government practice. With regard to performance measures he considered that there should be a statutory requirement that departments' performance indicators should be audited by the Comptroller and Auditor General but was content to await the introduction of suitable powers in the proposed Audit Reorganisation Bill.
The Comptroller and Auditor General was questioned on the extent of his powers under the Bill to investigate bodies such as football clubs that can receive substantial sums of public monies for improvements but are not deemed to be public bodies. He explained that he did not think that he could investigate such bodies under the proposed amendment to Clause 18, as drafted by the Audit Committee but that he would need to seek advice on the matter.
The questioning of witnesses ended at 3.20 p.m.
The Committee deliberated on clauses 19 to 24 and Schedules 1 and 2 of the Government Resources and Accounts. Ms Eileen Regan, Research and Library Services, NI Assembly advised the Committee.
Resolved: That questions raised by members be put to the Department of Finance and Personnel.
FRANCIE MOLLOY
Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
THIRTY FOURTH MEETING
TUESDAY, 12 DECEMBER 2000
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS
Present: Mr Francie Molloy (Chairman)
Mr James Leslie. (Deputy Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Alex Maskey
Mr Peter Robinson
Mr Peter Weir
Apologies: none received.
In attendence: Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.35 p.m. The meeting was held in public session.
Matters arising:
Government Resources and Accounts Bill (NIA Bill 6/00)
The Minister of Finance and Personnel appeared before the Committee and was questioned on the letter dated 7 December from the Chairman to the Minister on the Government Resources and Accounts Bill. The Minister confirmed that he was in agreement with the broad thrust of the approach being taken by this Committee and by the Public Accounts Committee and Audit Committee on public accountability and extending the power of the Comptroller and Auditor General to investigate any body that spends significant public monies. He was also questioned on his intention to bring forward an amendment to the Bill to extend the remit of the Financial Reporting Advisory Board.
Resolved: The Minister agreed to consider the proposed amendment to Clause 18 to extend the powers of the Comptroller and Auditor General and would seek advice from Legislative Counsel and the Comptroller and Auditor General. He also agreed that an amendment to the Bill to extend the remit of the Financial Reporting Advisory Board would be made.
Consider any Bills:
Government Resources and Accounts Bill (NIA Bill 6/00)
The Committee deliberated on the Long Title and Clauses 1 to 17 of the Government Resources and Accounts Bill (NIA Bill 6/99).
The Committee deliberated on the Long Title.
Resolved: The Committee agreed that it was content with the Long Title.
Motion: That the Committee reports to the Assembly that it is content with the Long Title.
The question being put, the motion was carried without division.
The Committee deliberated on Clauses 1 to 6.
Resolved: The Committee agreed that it was content with Clauses 1 to 6.
Motions: That the Committee reports to the Assembly that it is content with Clauses 1 to 6.
The questions being put, the motions were carried without division.
The Committee deliberated on Clause 7.
Resolved: The Committee noted that an amendment was required to introduce the oversight arrangements to be undertaken by the Financial Reporting Advisory Board and asked the Department to clarify the principles and intent of any such amendment.
Subsection (6) line 3 "Department" to be amended to "department". The Clerk to determine whether or not this change required a motion to be made.
The Committee deliberated on Clause 8.
Resolved: The Committee asked the Department to give further consideration to the Committee's proposed amendment to Clause 18 to extend the powers of the Comptroller and Auditor General to inspect accounts and to report back to the Committee whether this would have any impact on Clause 8.
The Committee deliberated on Clause 9.
Resolved: The Committee agreed that it is content with Clause 9.
Motion: That the Committee reports to the Assembly that it is content with Clause 9.
The question being put, the motion was carried without division.
The Committee deliberated on Clause 10.
Resolved: The Committee agreed that Clause 10 should be amended to ensure that the Comptroller and Auditor General would have access at all times to documents relating to a department's accounts.
Motion: That the Committee reports to the Assembly that Clause 10 should be amended as follows:
page 6, line 36, leave out ' at all reasonable times'
The question being put, the motion was carried without division.
Motion: That the Committee reports to the Assembly that it is content with Clause 10 as amended.
The Committee deliberated on Clauses 11 to 17.
Resolved: The Committee agreed that it was content with the following motions.
Motions: That the Committee reports to the Assembly that it is content with Clauses 11 to 17.
The questions being put, the motions were carried without division.
Resolved: That Clauses 7, 8 and 18 to 24 and Schedules 1 and 2 be considered on Tuesday, 19 December.
FRANCIE MOLLOY
Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
THIRTY FIFTH MEETING
TUESDAY, 19 DECEMBER 2000
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS
Present: Mr Francie Molloy (Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Derek Hussey
Mr Alex Maskey
Mr Peter Weir
Apologies: Mr James Leslie. (Deputy Chairman).
In attendence: Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.45 p.m. The meeting was held in public session.
Consider any Bills:
Government Resources and Accounts Bill (NIA Bill 6/00)
The Committee deliberated on Clauses 7, 8, 12 and 18 to 24 and Schedules 1 and 2 of the Government Resources and Accounts Bill (NIA Bill 6/99). Officials from the Department of Finance and Personnel appeared before the Committee and were questioned on the Bill.
The Committee deliberated on two proposed amendments to Clause 7.
The Committee considered the need make an amendment to introduce oversight arrangements to be undertaken by the Financial Reporting Advisory Board. The Department advised the Committee that was in agreement that such an amendment should be made but that it should avoid referring to a specific oversight body and that the proposed amendment would be best placed in the 'Miscellaneous' section of the Bill.
Motion: That the Committee reports to the Assembly that the Minister of Finance and Personnel should introduce an amendment to the Bill to require the Department to consult an advisory body of people with appropriate experience of financial reporting principles and standards before issuing guidance on the preparation of resources accounts and Whole of Government accounts.
The question being put, the motion was carried without division.
The Committee deliberated on a drafting error in subsection (6) and was advised by the Clerk that this would need to be corrected by means of an amendment.
Resolved: The Committee agreed that Clause 7 should be amended as follows:
page five, line three, leave out "Department" and insert "department"
Motion: That the Committee reports to the Assembly that it is content with Clause 7 as amended.
The question being put, the motion was carried without division.
The Committee deliberated on Clause 8.
Motion: That the Committee reports to the Assembly that it is content with Clause 8.
The question being put, the motion was carried without division.
The Committee deliberated on Clause 12. The Clerk advised the Committee that the proposal to amend page seven, line 23 "thinks fit" to read "may reasonably determine" was not considered at the meeting on 12 December.
Resolved: The Committee agreed that Clause 12 should be amended as follows:
page seven, line 23, leave out "thinks fit" and insert "may reasonably determine".
Motion: That the Committee reports to the Assembly that it is content with Clause 12 as amended.
The question being put, the motion was carried without division.
The Committee deliberated on the proposed amendment to Clause 18 i.e. that - "The accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if it appears to him that the body exercises functions of a public nature, has received significant public funds or is entirely or substantively funded from public money."
The Department advised the Committee that it was still awaiting comment from Legislative Counsel and the Comptroller and Auditor General on the possible impact of the revised wording.
Resolved: The Committee agreed that the Minister of Finance and Personnel be invited to speak to the Committee on the proposed amendment and that Clause 18 be considered again at the meeting on 9 January 2001.
The Committee deliberated on Clauses 19 to 24.
Motions: That the Committee reports to the Assembly that it is content with Clauses 19 to 24.
The questions being put, the motions were carried without division.
The Committee deliberated on Schedules 1 and 2.
Resolved: The Committee agreed that it was content with the following motions.
Motions: That the Committee reports to the Assembly that it is content with Schedules 1 and 2.
The questions being put, the motions were carried without division.
FRANCIE MOLLOY
Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[extract relating to the report]
THIRTY SIXTH MEETING
TUESDAY, 9 JANUARY 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS
Present: Mr Francie Molloy (Chairman)
Mr James Leslie (Deputy Chairman)
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Derek Hussey
Mr Alex Maskey
Mr Peter Weir
Apologies: None
In attendence: Mr Martin Wilson (Committee Clerk)
Mr Peter Hughes (Assistant Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.35 p.m. The meeting was held in public session.
Consider any Bills:
Government Resources and Accounts Bill (NIA Bill 6/00)
Mr Mark Durkan MLA, Minister of Finance and Personnel appeared before the Committee and was questioned on the Committee's proposal to extend the powers of the Comptroller and Auditor General (C&AG) to investigate bodies receiving substantial public monies by an amendment to Clause 18 of the Government Resources and Accounts Bill. The Minister was in broad agreement with the principle of the amendment but asked the Committee to exercise caution in how bodies were defined. He considered that the wording should be changed so that the C&AG's powers related only to bodies that could be defined by the term "public sector".
The Minister was also questioned on his proposal to introduce an amendment to Clause 18 to oblige the Department of Finance and Personnel to have regard to the views of the Public Accounts Committee. The Minister confirmed that it was his intention to extend the C&AG's audit remit in the Audit Reorganisation Bill but could not give a firm commitment at this stage. When questioned on the audit of performance information he explained that it was premature to make this a part of the financial audit role of the C&AG but that the matter was being examined in the context of the development of public service agreements.
Resolved: That the Committee would consider Clause 18 again at the next meeting when the draft report on the Bill would be considered.
FRANCIE MOLLOY
Chairman
COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS
[unapproved]
[extract relating to the report]
THIRTY SEVENTH MEETING
TUESDAY, 16 JANUARY 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS
Present: Mr Francie Molloy (Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Derek Hussey
Ms Patricia Lewsley
Mr Alex Maskey
Mr Peter Robinson MP
Mr Peter Weir
Apologies: Mr James Leslie (Deputy Chairman)
In attendence: Mr Martin Wilson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)
The Chairman declared the meeting open at 2.35 p.m. The meeting was held in public session.
Consider any Bills:
Government Resources and Accounts Bill (NIA Bill 6/00)
The Committee deliberated on the proposed amendment to Clause 18 of the Government Resources and Accounts Bill and a letter dated 15 January 2001 from the Minister of Finance and Personnel on the Minister's proposals for extending the powers of the Comptroller and Auditor General. The Committee welcomed the Minister's letter but considered that, in the absence of the text of the proposed amendment from the Minister, the amendment proposed by the PAC and amended by the Committee should be recommended to the Assembly. The amendment should be further amended to refer to "all documents relating to the accounts".
Resolved: The Committee agreed that Clause 18 should be amended as follows:
Clause 18, page 10, line 19 at end insert -
"( ) The accounts and all documents relating to the accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if it appears to him that the body exercises functions of a public nature, has received significant public funds or is entirely or substantively funded from public money." '
Motion: That the Committee reports to the Assembly that it is content with Clause 18, as amended.
The question being put the motion was carried without division.
The Committee deliberated on the draft report on the Government Resources and Accounts Bill. A number of amendments were made to the report.
Resolved: The Committee agreed the report, as amended and ordered it to be printed.
FRANCIE MOLLOY, Chairman
TOPAppendix 2
Minutes of Evidence of the Committee
Minutes of Evidence of the Committee that relate to the Report on the Ground Rents Bill are given below:
|
Date: |
Subject/Witnesses: |
|---|---|
|
7 December |
Evidence Session (Powers of Comptroller and Auditor General) - |
|
12 December |
Evidence Session (Powers of Comptroller and Auditor General) - |
|
Formal scrutiny (Long Title and Clauses 1-6, 9-11, 13-17) - DFP Officials |
|
|
19 December |
Formal scrutiny (Clauses 7, 8, 12, 18-24, Schedules Officials 1, 2) - DFP Officials |
|
9 January 2001 |
Evidence Session (Powers of Comptroller and Auditor General) - |
|
16 January |
Formal Scrutiny (Clause 18) |
|
Consideration of draft Report to NI Assembly. |
MINUTES OF EVIDENCE
Tuesday 5 December 2000
Members present:
Mr Leslie (Deputy Chairperson)
Mr B Bell
Mr Close
Mr Dodds
Mr McClelland
Mr P Robinson
Mr Weir
Advisers to Committee:
Ms E Regan ) Research and Library Services,
Mr M Finnegan ) NI Assembly
1.
The Deputy Chairperson (Mr Leslie): In our deliberations we concluded at clause 9 so we are now starting at clause 10. We will continue our normal practice, with our advisers taking us through their comments. They have provided a very weighty document.
2.
Ms Regan: The paper helps streamline the process and systematically goes through each of the clauses and outlines what each clause means. In relation to each clause the paper flags up minor amendments followed by major amendments that potentially could be made to the Bill. Then the paper looks to comparable provisions in the Westminster Bill - the Government Resources and Accounts Act 2000 - as well as the Public Finance and Accountability (Scotland) Act 2000.
3.
I would draw the Committee's attention to the fact that the major amendments do not outline the precise language that such an amendment would involve. The paper simply flags up the concepts that were expressed in the documents sent by various parties to the Committee Chairperson.
4.
I understand that it is best that we move as quickly as we can through the clauses. I will talk the Committee through the paper. I would also draw your attention to the fact that there are three annexes. Annex A is the Exchequer and Audit Act (Northern Ireland) 1921 (the 1921 Act), which some members expressed a desire to see. Annex B is the Committee of Public Accounts Fourth Report, which speaks about issues concerning the Comptroller and Auditor General's access as well as performance measurements. Finally at Annex C, is the Public Finance and Accountability (Scotland) Act 2000. The Government Resources and Accounts Act 2000 which was enacted by Westminster is not included as the Bill currently before you mirrors that.
Clause 10 (Comptroller and Auditor General: access to information)
5.
Ms Regan: We will start with clause 10 of the current Bill, which defines the scope of the Comptroller and Auditor General's powers to access information for the purposes of examining the accounts of Northern Ireland Departments. In specific terms clause 10(1)(a) is basically the provision which outlines access which must be at "all reasonable times".
6.
Mr P Robinson: What is the definition of "reasonable times"? It would be at whose convenience?
7.
Ms Regan: Clause 10(1)(a) is framed in a way that gives the Comptroller and Auditor General a right of access at all reasonable times to any documents.
8.
Mr P Robinson: That is what I am saying - what are "reasonable times"?
9.
Ms Regan: I am acknowledging your question. However, it was viewed that the best way to go through the Bill is to review the clauses and then flag up the minor amendments that potentially should be made, and then move on to the major amendments. You are suggesting that this would be a minor amendment.
10.
Mr P Robinson: It is not necessarily an amendment at all if you can satisfy me about the meaning.
11.
The Deputy Chairperson: It may not be reasonable for us to ask Ms Regan that question. It is the Department really that has to provide the answer. We are identifying issues that we will put to the Department.
12.
Mr B Bell: That is a reasonable issue.
13.
The Deputy Chairperson: It is a reasonable issue to put to it. That is the way we should deal with that matter, and it is noted in our list of queries for the Department.
14.
Ms Regan: Reasonableness would be viewed under the law as an objective standard, so it would be understood. Therefore the Department officers could speak to that more specifically.
15.
Just to be clear, is it better to go through each of the subsections of the clauses and whilst we are going through them to flag up potential minor amendments, or is it best to run through the entire clause and then go back? That is a stylistic question.
16.
The Deputy Chairperson: I would prefer to go through the clause to the end so that we have got the thrust of the general intention of the clause and then take it bit by bit to see how it carries out its intention. Are members happy to approach the matter in that way?
17.
Mr P Robinson: You will have a problem when you come to some of the longer clauses.
18.
The Deputy Chairperson: I know what you mean. It is a question of identifying the general idea of the clause and then going back. Depending on the nature of the clause, we could go through it and then come back to it piece by piece. We will try that and see how we get on. If it proves intractable then we will slow down.
19.
Ms Regan: Clause 10 is about the access of information by the Comptroller and Auditor General for the purposes of examining accounts of Northern Ireland Departments. I will now move to the specific provisions, flagging up issues of minor concern and potential minor amendments.
20.
Clause 10 1(a) refers to the Comptroller and Auditor General's access to the Northern Ireland Department accounts. An issue of concern, as Mr Robinson has pointed out, is the definition of "reasonable times". Generally, I would say that reasonableness is an objective standard, so that is something to ask the departmental officials about.
21.
The second important thing is about the term "accounts". In clause 10(1) you need to clarify whether "accounts" refers to resource accounts, as defined under clause 7, as well as other accounts, as defined under clause 9 of the current Bill, and whether there are any other accounts to be considered. Clause 10(1) could be amended so that the term "accounts" is clearly defined.
22.
The Committee Clerk: Chairman, do you want to ask the Department precisely what accounts are referred to in clause 10(1)?
23.
The Deputy Chairperson: My feeling is that clause 10 applies to clause 7, and clause 11 applies to clause 9. I believe that is what the drafting means.
24.
Mr B Bell: We would need to get that clarified by the Department.
25.
The Deputy Chairperson: We will do that.
26.
Ms Regan: The Explanatory and Financial Memorandum does not provide enough clarity.
27.
Mr B Bell: That is right.
28.
The Deputy Chairperson: Subsection(2) has the effect of narrowing the impact of this access.
29.
Ms Regan: Yes, but if you go back to clause 10(1)(b) the Comptroller and Auditor General's access there is to "any assistance, information or explanation". I would suggest that, potentially, it should be "any relevant assistance, information or explanation".
30.
The Deputy Chairperson: I would be resistant to that, as "any relevant" is less than "any". I would stick with "any".
31.
Ms Regan: Just as we have to acknowledge the concerns about the Department of Finance and Personnel's wide discretion, equally we have to be concerned about the potential for the Comptroller and Auditor General. There has to be consistency in process and not potential for misuse of discretion. This is a matter for the Committee.
32.
Mr Weir: I would tend to go with the Deputy Chairperson. I would prefer the wider discretion of "any assistance". It is well enough drafted as is.
33.
The Deputy Chairperson: My sentiment on this is to give the Comptroller and Auditor General as wide a discretion as possible. By that token, one is trying to narrow the range of what the Department can do without overview.
34.
Mr Weir: If you refer to "any relevant assistance" it comes back to the point of who defines "relevant". Is it then a question of the person who controls it in the Department saying, "I am not going to give this information because I do not consider it relevant."? That could become an issue there, whereas at least what you have at the moment is fairly clear-cut.
35.
Mr P Robinson: The possibility that the Comptroller and Auditor General would act unreasonably and irrelevantly is addressed by the use of the words "reasonable" and "relevant".
36.
The Deputy Chairperson: It is probably part of his rules of office that he behaves reasonably. Are we content on paragraph(b)? We will move on to subsection(2).
37.
Ms Regan: Subsection(2) restricts the prescribed power of the Comptroller and Auditor General. It allows the Comptroller and Auditor General to access only those documents held or controlled by the Department, or managed by a third party. There is no minor amendment in relation to this subsection.
38.
Mr P Robinson: If the Comptroller and Auditor General wanted to cast his net wider, what would we have to do, and who would we be encompassing that we are not already encompassing under this subsection, as it presently stands?
39.
Ms Regan: If major amendments are to be moved, the issue of the Comptroller and Auditor General's general access is raised in relation to the inclusion of parties beyond those also mentioned in clause 11.
40.
The Deputy Chairperson: We have to look at clauses 10 and 11 and determine if there is any other expenditure of Government money not covered. If there is, the Comptroller and Auditor General needs to be in a position to examine that expenditure. We need to be conscious that this is an issue, and the Comptroller and Auditor General - who is coming in on Thursday 7 December - is the person best placed to answer that question.
41.
Mr B Bell: It is a big issue as there are other agencies over which the Comptroller and Auditor General does not have power.
42.
Mr P Robinson: That is what I am trying to get at. Who is escaping the net that clauses 10 and 11 are casting?
43.
Mr B Bell: The Comptroller and Auditor General was not allowed to look at the Positively Belfast scheme of two or three years ago - that is the sort of agency that should be looked at.
44.
The Committee Clerk: Clause 11 makes it clear that the Comptroller and Auditor General has access to only those estimates approved by the Assembly for which resource accounts are to be produced. At this point, I do not think anybody -
45.
Mr P Robinson: Sorry to stop you in your tracks, but, as I understand it, the Assembly could approve the estimate for a Department and that Department can then start casting out its money. Can the Comptroller and Auditor General follow the money?
46.
The Committee Clerk: The question of how far you can go on the basis that the Assembly has approved an estimate is important. We would need to ask the experts - and the Comptroller and Auditor General is the expert - but I instinctively feel it would go to the point of including agencies, which are possibly other non-departmental Government bodies. It probably would not include limited companies which are nonetheless publicly funded. That is precisely the area on which we need clarity. The answer to that question will define exactly those areas at which he does not have the right to look.
47.
Mr Weir: It does not include limited companies. For example, is the cross-border tourism body going to be a limited company by virtue of having been set up jointly by the Assembly and the Irish Government? One would have logically thought that if you have the right to look at agencies, you should also have the right to look at other bodies.
48.
Mr B Bell: Those are the types of things we want to include.
49.
The Deputy Chairperson: This is a stage-by-stage process. The Comptroller and Auditor General has to establish, first, his current position, and secondly, where he would be if this were to be enacted. We then have to consider whether that is satisfactory, or whether his ability to look at other bodies should be added. Can we make sure that our notes reflect these issues? We do not want to miss any of those.
50.
Mr B Bell: The Sharman Committee at Westminster is looking at this from the UK point of view.
51.
Mr P Robinson: A mirror image of the Government Resources and Accounts Act 2000 occurred when the Committee was dealing with the Northern Ireland Act. The Tories tried to amend the Act in such a way that they could follow the money after it arrived in Northern Ireland. They were cut off at that point, so I suppose there are some similarities with their wanting to pursue where the resources were going.
52.
Mr B Bell: We want to make sure that we get our procedures right in the Assembly, irrespective of what happens at Westminster. If the Sharman Report suggests that something should not happen at Westminster, I do not see why we should go along with it. We need to make things happen here.
53.
Mr P Robinson: There may be more questions we need to take up with the Comptroller and Auditor General on Thursday, such as the resource implications issues - for instance, the local government auditor, by and large, spends his time looking at sexy issues, such as small amounts of money, which there has been some public controversy about, instead of looking at large chunks of money which may not be prudently spent. If the Comptroller and Auditor General is busy looking at small groups around the place, he will not be concentrating on the ball.
54.
Mr B Bell: There is a happy medium.
55.
Mr P Robinson: In this instance I suppose it is his right to do it.
56.
The Deputy Chairperson: On the third page of the research document, you can see that the Audit Committee has raised, almost exactly, the issues that you have been driving at. We have a letter from John Dallat, Chairperson of that Committee. We intended to see him last week. The Deputy Chairperson is coming this week with the Comptroller and Auditor General.
57.
We have these points well flagged up, and the Public Accounts Committee and ourselves are essentially driving in the same direction. It is a matter of ensuring that all of the questions are answered. However, that is outside the scope of what we can do today. What we are doing is identifying what we will ask on Thursday.
58.
Mr B Bell: We will have to revisit it.
59.
The Committee Clerk: The Audit Committee has indicated that, in its view, "the Comptroller and Auditor General should be appointed as auditor of all executive, non-departmental bodies", and also that "the Comptroller and Auditor General should be appointed the auditor of e.g. limited companies established by central government bodies". That is full audit. In other words, he should be the full auditor, the number one auditor.
60.
The Public Accounts Committee on the other hand proposed a change to clause 18, which is slightly different in that it does not seek to make the Comptroller and Auditor General the auditor of these organisations but will provide him with unrestricted inspection rights. That probably needs to be put in. We have flagged that up to the Comptroller and Auditor General. Whether he will be satisfied with that as a solution, at least in the short term, will be one of the questions the Committee will put to him.
61.
The Chairperson: OK. I know that effectively this argument was circulated in a debate at Westminster. Are there any matters relating to that that you want to highlight?
62.
Ms Regan: In relation to Westminster, on page 3 of Annex B I have included extracts from the Fourth Report which refer to access and external validation of the Comptroller and Auditor General. As clause 10 mirrors section 8 of the Government Resources and Accounts Act 2000, it would be worth the Committee's while to go through those pages. Specifically, I would like to draw your attention to paragraph 38. It starts by explaining the deficiencies; and paragraphs 43 to 45 identify the deficiencies in the Government Resources and Accounts Act. The same arguments will apply to this Bill.
63.
Mr B Bell: Yes.
64.
The Deputy Chairperson: We see the problems, and we must find a solution to them, which is not what we are doing today. Today we have identified the problems; on Thursday we will try to identify the solutions.
65.
Mr B Bell: That is all we can do.
66.
The Deputy Chairperson: We are at the tail-end of clause 10; are there any other matters?
67.
Ms Regan: The Committee should bear in mind that any changes it makes to clause 10 might trigger amendments to clauses 7, 8 and 9. That might involve a major reworking of the Bill. Clause 10 cannot be amended in isolation.
68.
The Deputy Chairperson: Our job is to identify the issues; we can argue with the Department later about the extent to which the Bill should be amended. However, we will come to that in our own good time.
Clause 11 (Resource accounts: non-departmental Bodies and other persons)
69.
The Deputy Chairperson: We can move on to clause 11, with which we have largely been dealing. It deals with the preparation of resource accounts by other non-departmental bodies or persons whose estimates are approved by the Assembly. The Committee asked if the clause's scope was wide enough. Did the Scottish Parliament set a test for limited companies of 50% funded?
70.
Ms Regan: Yes.
71.
The Deputy Chairperson: Are there any other questions on clause 11?
72.
The Committee Clerk: Glancing at clause 11 one might fail to spot that it restricts not merely the access of the Comptroller and Auditor General, but it also stipulates that bodies not covered by this clause do not have to produce resource accounts. Access is not the only question. A body which does not have its estimate approved by the Assembly does not need to produce resource accounts. It is because of this that the Comptroller and Auditor General does not obtain access.
73.
Ms Regan: If clauses 10 and 11 are amended, clauses 7, 8 and 9 will have to be amended as well.
74.
The Deputy Chairperson: We can cross that bridge when we come to it.
Clause 12 (Preparation)
75.
Ms Regan: In general terms, clause 12 of the current Bill permits the Department of Finance and Personnel to prepare consolidated accounts that would be Whole of Government Accounts for the Northern Ireland public sector. It also permits the Department to determine the content and form of such accounts.
76.
Clause 12(1) specifically empowers the Department to determine which bodies are to be included in Whole of Government Accounts. Clause 12 subsection(1) paragraph(a) and paragraph(b) prescribe some boundaries in which such discretionary powers are to be exercised. The bodies are to exercise functions of a public nature or are to be entirely or substantially funded from public money.
77.
The Explanatory and Financial Memorandum explains that the discretion is to enable the Department to expand the coverage of the accounts as required. It further states that the consolidated accounts will initially be prepared for the central Government sector and will, over time, be extended to include all public sector bodies.
78.
It should be noted that clause 13 will be read in view of what is said in relation to clause 12. Clause 12(2) extends the Department's power in relation to clause 12(1) and allows us to include information referring wholly or partly to activities which are not activities of bodies falling within clause 12(1) but appear to the Department to be activities of a public nature. It gives the Department wider discretion to catch those that fall outside of clause 12(1).
79.
The Explanatory and Financial Memorandum states that the discretionary power will allow the Department to extend the scope of Whole of Government Accounts so that they encompass accounts such as the social fund that is administered by Northern Ireland Departments but which are not included in their own accounts.
80.
Clause 12(3) gives the Department full authority to determine the content and form of Whole of Government Accounts. Such authority is broad in that it empowers the Department to do as it thinks fit.
81.
Clause 12(4) and clause 12(5) are guiding principles for the Department in determining the form and content of Whole of Government Accounts. Clause 12(4) specifically requires that the form and content ensures that Whole of Government Accounts present a true and fair view and that they conform to generally accepted accounting practice subject to such adaptations as are necessary in the context. The Explanatory and Financial Memorandum explains that modifications should be made only as necessary for the needs of the public sector.
82.
Clause 12(5)(a) elaborates on clause 12(4), and it requires the Department to have regard to guidance issued by the Accounting Standards Board Limited or any other such body responsible for setting the accounting standards for accounts prepared under the Companies Act 1985. Clause 12(5)(b) further requires the accounts to include three main statements: a statement of financial performance; a statement of financial position; and a cash flow statement. The Explanatory and Financial Memorandum states that the description of the statements is precisely that adopted by the Accounting Standards Board Limited in its statement of principles for financial reporting. The approach is intended to prevent the legislation becoming outdated quickly.
83.
There are a few minor amendments that would tighten up the Department's discretion under clause 12. Clause 12(2) seeks to require the Department - rather than leave it to its discretion - to include activities that are not activities of bodies falling within clause 12(1) but appear to the Department to be activities of a public nature. It is imposing a requirement on it to do this, so that all activities are included.
84.
Mr P Robinson: The difficulty with that is that you are putting a requirement on the Department to do something which is subjective, and it, at the end of the day, is to make the determination on whether it appears that the activities are of a public nature.
85.
The Deputy Chairperson: The instinct of the Department is to demand accounts in all directions. Its instinct would essentially be the same as ours. However, the question is how we have a device to ensure that if something has fallen through the net, you can get it back into the net, given that the Department may, for some perverse reason, exercise its discretion not to do so.
86.
Mr P Robinson: I do not see the value of making the "may" a "shall", and then giving the Department a get-out clause in paragraph (b).
87.
Ms Regan: Clause 12(2)(b) could be amended to read: "the Department reasonably determines to be activities of a public nature." This imposes the requirement of reasonableness on the Department. It still affords it some discretion, but it is a much narrower discretion.
88.
The Deputy Chairperson: I am inclined to think that you need the Department to have fairly wide discretion in this respect. If the Committee felt that it was not using it widely enough, it would be up to the Committee to say so, and for the Department to justify why it was not using it. I am looking at the practical application of the clause, which is probably OK.
89.
Are we generally content with the clause as worded?
90.
Mr Weir: Do you mean clause 12(2), or clause 12 in general?
91.
The Deputy Chairperson: Clause 12(2) is what we are discussing at the moment.
92.
Mr P Robinson: The premise in clause 12(1) is that the Department shall prepare accounts. Is it the Department that does the preparation?
93.
Ms Regan: It prepares Whole of Government Accounts after it gets the information from the designated organisations under clause 13. Then 13(2) and 13(3) explain what type of information the Department will be looking for. It can then prepare Whole of Government Accounts.
94.
Mr P Robinson: It is the word "prepare" that I am questioning. I see the Department is producing accounts, but the preparation is coming from the groups, is it not?
95.
Ms Regan: No, it is the Department.
96.
The Committee Clerk: I think the Whole of Government Accounts is an attempt to present the Assembly with a comprehensive picture of where every single penny of the £9 billion or thereabouts goes to. Information about expenditure will presumably be fed into it by all of the bodies which will ultimately be designated under clause 13. The Department will use that information to prepare Whole of Government Accounts. The expression "prepare" relates to the final document which is the culmination of all the information which is put into the account. The word "account" is used to describe the end result, as opposed to the individual components of it. We could ask for clarification of that.
97.
Mr McClelland: Are you leaving "prepare" in?
98.
The Deputy Chairperson: I have not heard any violent objections to it. Do you object to its use?
99.
Mr McClelland: No, but as has already been said, it is slightly misleading. Is the Department preparing the end result rather than doing the actual work. However, it is not of tremendous significance.
100.
Mr P Robinson: Is the Department preparing or producing the accounts? It could prepare them, but is anybody going to see them? Why is the Department preparing them?
101.
The Deputy Chairperson: So that it knows what is going on.
102.
Mr P Robinson: What does that do for us with regard to public accountability?
103.
The Committee Clerk: That comes up in clause 14, which is the scrutiny clause. It states that that will be scrutinised by the Comptroller and Auditor General. He does that on behalf of the Assembly.
104.
Mr P Robinson: Does the Committee have a right to see such accounts prepared, under the Assembly functions of asking for papers?
105.
The Committee Clerk: I presume that the Public Accounts Committee could. It is intended that the Comptroller and Auditor General will produce a report as a result of his scrutiny under clause 14. I suppose that the Public Accounts Committee could seek whatever documents it requires.
106.
Mr B Bell: That is the opinion of the Committee, but I do not think it is the opinion of the Speaker, for instance.
107.
The Committee Clerk: The Committee of Finance and Personnel can demand all documents so long as they relate to devolved matters.
108.
Mr B Bell: In some ways the Public Accounts Committee is an extension of the Northern Ireland Audit Office. They work hand in hand, and the Public Accounts Committee scrutinises reports from the Comptroller and Auditor General. The Public Accounts Committee believes that its remit is wider than that. The public and the Assembly can come to the Public Accounts Committee with issues, and the Committee will deal with them.
109.
The Deputy Chairperson: Clause 12 is about who is going to produce accounts and what form they will be in. Clause 14 is concerned with looking at those accounts produced. The rights of scrutiny are not intended to be under this section.
110.
Mr B Bell: I realise that. I was responding to Peter Robinson's question.
111.
The Deputy Chairperson: Clause 12 (1) and 12(2) relate to what the Department is going to do. Are we content with the methodology in 12(1) and 12(2), subject to the questions we are going to ask the Department?
112.
Clause 12(3) is an extension of that. The Committee must ask the Department what it means by "such information as the Department thinks fit". That is a loose term.
113.
The Committee Clerk: The paper indicates that a possible tighter definition might be "as the Department reasonably determines". This introduces both the concept of reasonableness and the idea that there will be a process behind it - "thinks fit" does not give much of either.
114.
Mr B Bell: "Thinks fit" is an odd expression, is it not?
115.
The Deputy Chairperson: Certainly the thrust of this is that you could have a situation where the Department has the power to know absolutely everything and has quite draconian powers to establish that. It is not clear if anybody else has the same power to access the same information. I think we have to deal with the impact of clause 12 by looking at clause 14.
116.
The Committee Clerk: With regard to clause 12(3), Mr Deputy Chairman, do we want to ask the Department about the possibility of using that revised form of words?
117.
The Deputy Chairperson: Yes. First of all, we want to know what it means they mean by "thinks fit" and propose that it should be amended. Any comments on clause 12(4)?
118.
Ms Regan: In relation to clause 12(5) there is a query.
119.
The Deputy Chairperson: Right, are we happy with 12(4)?
120.
Mr Weir: I do not know whether any changes should be made, but I am wondering if "shall aim to ensure" is a little bit loose in the wording. I do not know if change is needed or whether it is just a little bit too aspirational.
121.
The Committee Clerk: I suppose it is so hard to measure the following tests.
122.
Mr McClelland: I suggest we leave out "aim to".
123.
Mr Weir: I just wonder in relation to clause 12(4) and (5) whether there is just a wee bit of looseness there and whether that is to allow themselves more flexibility. It should be easy enough to ensure that you are conforming with generally accepted accounting standards. That is perhaps where paragraph(a) and paragraph(b) differ a little. If you are aiming to present "a true and fair view" then I can understand that that is more reasonable than saying "aim to ensure" that you are conforming with generally accepted accounting practice.
124.
The Deputy Chairperson: You can prepare accounts to generally accepted accounting practices, and they certainly do not constitute a true and fair view.
125.
Mr Weir: Maybe the two things need to be separated out. There is a slight query in my mind regarding the wording.
126.
The Committee Clerk: We could ask what the impact of deleting the words "aim to" would be.
127.
The Deputy Chairperson: Certainly you should aim to ensure that you conform to the general standards. That takes us to clause 12 (5).
128.
Ms Regan: The Accounting Standards Board Limited raised the issue of whether clause 12(5)(b) refers to Companies (Northern Ireland) Order 1986, clause 264(1) rather than clause 256 of the Companies Act 1985 in their written correspondence to the Committee. The Department should be able to clarify that.
129.
The Deputy Chairperson: I was not here when we dealt with clause 7, but I had a query about where The financial Reporting Advisory Board (FRAB) came in. It relates to having the same third party check here as under clause 7(3)b.
130.
Ms Regan: It is one of the places where FRAB potentially arises.
131.
The Deputy Chairperson: If it were going to be the arbiter on clause 7, I would have thought, by like account, it should be the arbiter here rather than the Accounting Standards Board. The Accounting Standards Board is a fairly toothless body.
132.
Subsection 4(b) generally accepts accounting standards in whatever precedent that is set under clauses 7(3) through to 12(4). Are there any further issues arising?
133.
Ms Regan: No. However, there remains concern regarding clause 10.
134.
The Deputy Chairperson: We can not unravel those until we have consulted with the Comptroller and Auditor General. Clearly those clauses will have to be discussed in further detail.
135.
Mr B Bell: We are not able to deal with that today.
Clause 13 (Obtaining information)
136.
Ms Regan: In general, clause 13 provides the Department of Finance and Personnel with the power of designating public bodies to be included in all Government accounts as well as the power to obtain relevant information from them.
137.
The Committee Clerk: Designation will be carried out by use of an order - a statutory rule - which will be presented to the Assembly. Ultimately, this will require approval from the Assembly of the statutory rule which sets out the designation of organisations and bodies for which clause 12 will apply.
138.
The Deputy Chairperson: Can we now roll through the suggested minor amendments?
139.
Ms Regan: In clause 13(1), it may be necessary to change the word "may" to the word "shall," which will tighten up the discretion that has been afforded there. In doing so it will read: "the Department shall by order subject to negative resolution designate that body for the purposes of this section". We require the Department to designate any body that would meet the requirements of clause 12 (1), exercise functions of a public nature, or to be entirely or substantially funded from public money.
140.
The Deputy Chairperson: I am not convinced that this is necessary. If the Department intends to do something, then it will.
141.
Ms Regan: It is more a matter for the Committee.
142.
The Deputy Chairperson: I consider this to be satisfactory. Any contrary view?
143.
Ms Regan: With clause 13 subsection 2(a), I suggest that this be amended by inserting "reasonable" in the appropriate place so that it reads "as the Department may reasonably request". Again, this is to tighten the discretion in the manner in which it is exercised.
144.
Mr P Robinson: That is to weaken it, is it not?
145.
The Deputy Chairperson: That weakens it.
146.
Ms Regan: It is a matter for yourselves as to whether you view it that way.
147.
The Deputy Chairperson: We are on the side of the Department when they look at somebody's books, because we want them to be examined as rigorously as possible, and Clause 14 is to enable us or the Comptroller and Auditor General to look at whatever they have examined with equal rigour.
148.
Ms Regan: Should I move on?
149.
The Deputy Chairperson: Yes. That covers the whole of clause 13(2).
150.
Ms Regan: In relation to clause 13(3), "as the Department may reasonably request" would again be inserted.
151.
The Deputy Chairperson: Again, I think the thrust of our argument is that the Department should be unreasonable.
152.
Ms Regan: Is that a matter for the Committee?
153.
The Deputy Chairperson: That takes us to the end of clause 13. Do the members have any other issues on clause 13?
154.
Unlike clause 14, it is a fairly mechanical clause.
155.
Clause 13 agreed to.
Clause 14 (Whole of Government Accounts - scrutiny)
156.
Ms Regan: Clause 14 empowers the Comptroller and Auditor General to audit the whole of Government accounts and lay them before the Assembly. It should be noted that clause 14 only applies to those bodies or persons who have been designated by the Department under clause 13, subsection (1).
157.
The Deputy Chairperson: Where did you get that from? That clause 12 is designated by clause 13.
158.
The Committee Clerk: Clauses 12, 13 and 14 are closely intertwined. Clause 12 states that these bodies will prepare accounts to be incorporated into the whole of Government accounts.
159.
Mr P Robinson: In relation to clause 14(1), does the word "accounts" necessarily mean all accounts?
160.
The Committee Clerk: I think it is a reference to "accounts" in the first two lines of clause 12.
161.
Mr P Robinson: I know that it is, but is it all of the accounts from clause 12? It does not say "all accounts".
162.
The Committee Clerk: I think it is just the account that they have prepared.
163.
Mr P Robinson: However, that is plural, "accounts". That is why I am wondering if it is all accounts, or just some of the accounts?
164.
Mr Weir: Would an amendment such as "all the accounts prepared under clause 12" cover it and make sure it was explicitly clear that it meant all accounts?
165.
Mr P Robinson: In terms of questions for the Department - [Interruption].
166.
The Deputy Chairperson: It is a question for the Department.
167.
Mr P Robinson: Let us see what they say. If they give us an undertaking that it is all accounts, so be it.
168.
The Deputy Chairperson: They have to tell us why it might be less than all. The problem is that when we look at clause 14 (2), the Comptroller and Auditor General satisfies himself on the basis of what is sent to him. The question is whether he has been sent it. Has he been sent everything that he might reasonably want to see?
169.
Mr P Robinson: Under clause 14(4), it says that the Department has to
< size=1>"lay accounts and reports received under subsection 3(b)", which is all of the ones under clause 14(1) "before the Assembly". Therefore, you would have all of those.
170.
The Committee Clerk: Yes, that is true. It is not dependent on whether the Comptroller and Auditor General produces a report. Obviously, if he does not produce a report, they still have to be laid.
171.
Mr P Robinson: He has to produce a report. In clause 14(2), it says
< size=1>"shall examine accounts sent to him under this section, with a view to satisfying himself".
172.
The Committee Clerk: That is right - that is under 14(3).
173.
Mr P Robinson: Why, according to clause 14(2) has he to do an examination, whereas in 14(3) it says "where" the Comptroller and Auditor General conducts an examination he has to produce a report, which that would be in every case.
174.
The Committee Clerk: I suppose that all 14(3) is saying is that the examination must result in a report.
175.
Mr Close: That must go to the Department.
176.
The Deputy Chairperson: Therefore, at the end of the exercise, all of those accounts - if we achieve all - will be laid before the Assembly having been certified by him.
177.
Does that take us happily to 14(4)? I think it does. There seem to be some issues on 14(5), which Ms Regan has flagged up.
178.
Ms Regan: I am fine in relation to clause 14(5), but I wish to comment on 14(2), concerning the term "certify".
179.
Mr P Robinson: Can somebody explain to me what the substance is of Des McConaghy's concerns in relation to clause 10?
180.
Ms Regan: I thought it was agreed that they would be looked at later when we were discussing clause 10.
181.
The Committee Clerk: Can we look at it now briefly?
182.
Mr P Robinson: First, who is Des McConaghy?
183.
Ms Regan: I understand that he is a retired civil servant from across the water.
184.
Mr P Robinson: Someone who is taking the revenge of the civil servant.
185.
The Committee Clerk: Someone who takes an interest in everything to do with the resource accounting.
186.
The Deputy Chairperson: The central thrust of his position is that the Comptroller and Auditor General should be heavily empowered. We are probably in sympathy with that, subject to our meeting with the Comptroller and Auditor General.
187.
The Committee Clerk: The other big issue that he brings in is performance monitoring.
188.
The Deputy Chairperson: We will probably be in a better position to assess Mr McConaghy's views once we have seen the Comptroller and Auditor General.
189.
The Committee Clerk: Clause 14(2).
190.
Ms Regan: Clause 14(2) - it is just a minor amendment. After the word "section", insert the phrase "and reasonably determine whether they present the true and fair view". However, the Committee may not view that to be necessary.
191.
Mr Close: Accounts that are certified generally present a true and fair view. If you are certifying accounts, that is how you would certify them.
192.
Ms Regan: That can be so, but it is a subjective determination. It is about trying to introduce some objectivity into it.
193.
The Deputy Chairperson: I would not be inclined to change it. Does anybody else feel strongly on that?
194.
The Committee Clerk: Is the Committee basically content with clause 14?
195.
The Deputy Chairperson: Except that clause 14 will come bouncing back to us once we have seen the Comptroller and Auditor General.
196.
Are there any other issues that we can identify? The rest of it is fairly mechanical. If we are agreed on clause 14, we will move to clause 15.
197.
Clause 14 agreed to.
Clause 15 (Supplies by Departments)
198.
Ms Regan: Clause 15 concerns the Department of Finance and Personnel exercising discretion to prescribe the methods of accounting for supplies of goods or services that are taxable under VAT. It prescribes how such receipts and payments in relation to that should be handled for the purposes of sections 7 and 9. It then provides an exemption.
199.
The Deputy Chairperson: That seems to be a fairly mechanical clause.
200.
Mr P Robinson: Is that a VAT exemption?
201.
Ms Regan: Clause 15(2)(b) relates to
< size=1>"the exemption of receipts in respect of value added tax to such extent and on such conditions as may be specified, from any requirement for payment into the Consolidated Fund."
202.
Mr P Robinson: Can you give me an example of mixed supplies of goods or services? What are we talking about here?
203.
Ms Regan: I would not be able to give you an example.
204.
The Deputy Chairperson: The Department needs to explain to us how this works in practice, because it has an impact on the accounts. It says that is how they will treat VAT for the purpose of the accounts under Sections 7 and 9.
205.
Mr Close: It is effectively where a Department supplies a good that is eligible for VAT under the VAT regulations. It could be that the Department would provide a service that would be eligible for VAT.
206.
Mr P Robinson: I am trying to think of an example.
207.
Mr Close: If you provide a service, it is eligible for VAT.
208.
Mr P Robinson: It must be a service to the private sector or to the public in some way, outside of Government. I am trying to think where they are going with these franchised operations.
209.
Mr Close: Yes.
210.
Mr McClelland: I am trying to second guess. If the Department of the Environment were to provide the cleansing service to a private function, would that be eligible for VAT?
211.
The Deputy Chairperson: I am trying to remember whether you pay VAT on a House Building Certificate.
212.
Mr Close: We have been involved in one recently in the Public Accounts Committee. If the Water Service provided the service to clean up the pollution in a river -
213.
Mr P Robinson: You mean stop polluting our river?
214.
Mr Close: No, if they provide the service to clean up the river after a pollution exercise, they would charge the Department for a service, and there would be VAT at 17·5%.
215.
The Deputy Chairperson: Rather than idly speculate, we should put that to the Department and request an explanation of its application.
216.
Mr P Robinson: Suppose that was the example, are we saying that the Department does not have to pay VAT on it?
217.
Mr Close: I would assume that they do.
218.
The Deputy Chairperson: If it is about how the account for the receipt -
219.
Mr Close: If the bill received was £100, there would be 17·5% VAT. That 17·5% would have to be accounted for as an input tax as opposed to an output one, for VAT purposes.
220.
The Deputy Chairperson: If a service eligible for VAT is sold, the books must account for 82·5% of the gross. It is then a question of where and when the VAT man is paid. It relates to that sort of exercise. Short of asking the Department, however, I do not know how we can get to the bottom of it. We will treat this clause as being queried subject to having heard an explanation. Clause 16.
Clause 16 (alteration of timetables for accounts)
221.
Ms Regan: Clause 16 gives the Department discretion to issue an order subject to negative resolution. That changes timetables, specifically dates in clauses 7, 8, and 9, for all purposes or for specified purposes. The explanatory financial memorandum refers to the possibility that in the future clause 16 will enable the Department to shorten the stated dates in order to encourage quicker completion of accounts. Such power can be exercised only after consultation with the Comptroller and Auditor General.
222.
The Deputy Chairperson: Essentially, the Department is empowering itself to set dates subject only to consultation with the Comptroller and Auditor General.
223.
Ms Regan: However, it does so by an Order subject to negative resolution.
224.
The Committee Clerk: There are several areas in which dates are quite specifically stated on the face of the Bill. They are probably pretty much set in stone. The Department is allowing itself some flexibility so that, should finances be managed by computerisation, or whatever, at some point in the future, it will have the ability to change those dates. Otherwise a brand new Act would have to be prepared. It is saying that, if the timetabling changes in the future, a new Bill does not need to be drafted, as the dates on the face of this Bill can be changed by a Statutory Rule.
225.
The Deputy Chairperson: We should, however, have this on our list of issues, and ask the Comptroller and Auditor General whether he thinks it is all right for the Department to monkey about with the dates.
226.
The Committee Clerk: Certainly.
227.
The Deputy Chairperson: I know that it is subject to consultation, but suppose his view was that it was wrong and the Department went ahead and did it.
228.
Mr Dodds: It is also subject to Assembly approval.
229.
The Committee Clerk: It would be - negative resolution. The likelihood is that he would have flagged it up in his consultations if he were concerned about it.
230.
The Deputy Chairperson: For all of that, for the sake of our scrutiny we should just leave this as it is. Is that clause 16 then?
231.
Clause 16 agreed.
Clause 17 (Directions of the Department)
232.
The Deputy Chairperson: Clause 17. Nice short clause.
233.
Ms Regan: Nice short clause? It empowers the Department to revoke or amend by further direction any direction that it made under the Act. Such directions are in relation to clause 7 and clause 9. The memorandum explains that such power is needed so that the Department can issue directions as and when accounting requirements necessitate such change.
234.
The Deputy Chairperson: It is saying that the Department does not bind itself. How much of the 1921 Act is actually left after all the repeals?
235.
Ms Regan: Very little, but that does not give you a precise answer.
236.
The Deputy Chairperson: I just wanted a general feel for it.
237.
Mr P Robinson: There must be still some power of direction under the 1921 Act.
238.
Mr Finnegan: The only excepted sections are section 19 on the examination of accounts of receipts of revenue; section 28 on tenure of office, salary and officers of the Comptroller and Auditor General, section 29 on the definition of Department, and section 31 - the short title.
239.
The Deputy Chairperson: Right. I was just wondering whether the Department was empowering itself in relation to the 1921 Act in a way in which it had not been previously empowered. That was really what I wanted to identify, and it does not seem very likely.
240.
Are we content to let the Department overrule itself in future? That seems sensible enough.
241.
Clause 17 agreed to.
Clause 18 (Examinations by Comptroller and Auditor General).
242.
The Deputy Chairperson: If we can deal with clause18 today, that will have been a good afternoon's work.
243.
Mr P Robinson: Agreed.
244.
The Deputy Chairperson: Is clause 18 capable of being described in general terms?
245.
Ms Regan: Very general terms.
246.
The Deputy Chairperson: Give us a general description, and then we will attend to the subsections.
247.
Ms Regan: Clauses 8, 9, 10 and 14 - 10 and 14 having been discussed today -qualify the Comptroller and Auditor General's scope for examining accounts. It qualifies anywhere that the Comptroller and Auditor General is given a power under clauses 8, 9, 10 and 14.
248.
The Deputy Chairperson: The Public Accounts Committee had already written to us about amending clause 18. As we have its Chairman here, perhaps he might tell us if he feels one amendment can have a significant impact.
249.
Mr B Bell: Yes.
250.
Ms Regan: The amendment about which we are speaking is on page 13 of the paper.
251.
The Deputy Chairperson: Perhaps we might cut straight to that and consider its impact.
252.
Ms Regan: It is under the heading "Assembly's Public Accounts Committee", paragraph 2.
253.
The Committee Clerk: Perhaps I might say one or two words to help focus the discussion. In clause 18(6) it states:
< size=1>"The Department may by order provide for the accounts of a body to be audited by the Comptroller and Auditor General."
It goes on to reflect certain earlier conditions, stating that the body must in essence be carrying out public functions or ones substantially funded from public money. It is quite clear that the Comptroller and Auditor General is being provided with access to virtually any organisation within those overall parameters, but - very significantly, I feel - subject to direction by order of the Department. That means there would have to be an Order in Council for that to happen.
254.
In other words, it is very restricted. The Comptroller and Auditor General's power to carry out such audits is heavily circumscribed, since the Department must initiate it by Order. To overcome that, the Public Accounts Committee suggests an additional section to the clause to give the Comptroller and Auditor General power of inspection - not examination, which means audit. That inspection power would be unfettered and independent of the Department's taking any step, by Order or any other means. It simply gives the Comptroller and Auditor General the ability to inspect. We must concentrate our minds on - particularly next week with the Comptroller and Auditor General - what an inspection means. What is he able to do, and what access does he have to documents? What powers does he have to call people in front of him and produce papers? That is probably where we might wish to -
255.
Mr B Bell: Indeed, for he has no powers at present in relation to other bodies.
256.
Mr Weir: I have a good deal of sympathy with the suggestion of some sort of catch-all category to allow the Comptroller and Auditor General access to these things, and I have only one or two points to make. The question will arise of whether inspection is sufficient or whether we need to go further. If there are to be inspections or some form of examination - assuming we accept the amendment, or a variation thereon - consequential amendments might also arise from it.
257.
Depending on the exact nature of the inspection, there will presumably be a requirement for some form of reporting, for instance. Whether or not that proves necessary, consequential amendments may arise. I am certainly in favour of the general thrust they are putting forward - essentially to allow a catch-all category so they are not as restricted.
258.
Mr Close: The way the Comptroller and Auditor General operates is that he carries out an inspection, afterwards producing a report which comes before the Public Accounts Committee. The Committee opens up the whole arena as to what is right or wrong. The responsibility of the Public Accounts Committee is to bring in front of it the accounting officer for the particular Department or Departments upon which the report was drawn. After that the Public Accounts Committee makes its report and recommendations to which the Department of Finance and Personnel has to reply to ensure the various things are done.
259.
The inspections open up that avenue and make it all accountable at a political level through the Committee and thus the Assembly.
260.
Mr P Robinson: Generally speaking, the Departments and those bodies that are immediately answerable to them, probably prepare their accounts to a fairly high standard. The further down the line that the money goes the more questionable the accounting practices - particularly if the money is issued by way of grants. For example, yesterday in the Assembly Michael McGimpsey answered a question about football grounds. In his response he indicated that the Department would give money but that the football club had to put up 15% itself. I know that there are football clubs that do not have the 15%, but they have friendly builders. Therefore, you will get inflated bills being presented to the Department and it will end up paying 100%. In those circumstances the public purse has clearly been cheated. Has the Comptroller and Auditor General got the power to go in and follow the money, at least to that extent, to see if what was intended by the Department is actually what has happened?
261.
Mr Close: Under those inspection rights he would go in and examine that.
262.
Mr P Robinson: I am not sure under this that he has the right. I do not think he gets that far.
263.
The Deputy Chairperson: We have got to be satisfied that he has got sufficient right. On the face of the Bill, I do not think he has.
264.
Mr P Robinson: Even under the building amendment I do not think he would have the power, because I am not sure that the reference in the Public Accounts Committee's proposed amendment to a body that exercises functions of a public nature would catch it.
265.
The Committee Clerk: That is the definition we got in section 12.
266.
Mr Weir: Could it be covered and entirely or substantially funded from public money?
267.
Mr P Robinson: The body would not be, but the project would.
268.
If you are willing to catch that kind of situation, you would certainly need to amend it.
269.
The Deputy Chairperson: Mr McClelland, are you aware of our next meeting? Two o'clock on Thursday.
270.
Mr McClelland: Technically, I told my Whip I resigned two months ago, but there has been a delay.
271.
The Deputy Chairperson: We seem to have lost that letter.
272.
Ms Regan: There is one final point about the proposed amendment. If there is no statutory authority saying that certain groups have to prepare resource accounts, then this provision is only to catch certain types of accounts. If you are trying to get those groups that you are talking about - those that are now outside it - to prepare resource accounts as well, it has to be reflected somewhere within the Bill; it has to impose that kind of a duty.
273.
While that amendment is important, it is limited to the information that is being prepared by the body. If they do not have to prepare resource accounts, although there can be an inspection power, there is no information available for the Comptroller and Auditor General to inspect.
274.
Mr Weir: Is there any pressure on them to produce accounts of some nature, because the reference in the amendment, for instance, is to the accounts of an authority board?
275.
Ms Regan: It does acknowledge that, but there is the other issue of the resource accounts, which is a different form of accounting. However, you should be cognisant of that while viewing the amendment.
276.
The Committee Clerk: Basically, it is a resource accounting Bill. The power that is being sought here may not give you access to resource accounts with these bodies, because clause 11 states that they are not required to produce resource accounts.
277.
Mr Weir: Are you required to produce any sort of accounts?
278.
The Committee Clerk: They would have to produce cash-based accounts.
279.
Mr Weir: Either this amendment, or some variation on it, may need consequential amendments throughout. Perhaps Mr Bell has raised a wider issue?
280.
Mr B Bell: The Comptroller and Auditor General has no power to go into anything at this stage, but we would like him to have the power to be able to inspect what is going on. The reason we are not using the word "audit" is because most of these bodies have their own audits.
281.
We are not seeking audit powers for the Auditor General, rather we are seeking inspection powers so that he can go in and inspect the results of the audit, which he cannot do at the minute. In the case of "Positively Belfast", he had no power to go in there at all. We feel that the Committee has gone into this in quite some depth, and that this amendment would give him the power to go in and inspect. In his audit reports, the Comptroller and Auditor General does not only deal with fraud and such, he also deals with best value methods.
282.
A lot of money is wasted, but not necessarily through fraud. However, we need him to have the power to go in and inspect, in order that he can form a judgement on the matter as Comptroller and Auditor General.
283.
The Deputy Chairperson: The inability of the Department of Finance and Personnel to keep accounts of all Government money is not a particular worry, but they should be empowered to be able to look at those accounts. As Mr Bell says, the Auditor General should be able to inspect what is going on.
284.
Mr B Bell: That is exactly what we want, and we feel that this amendment will deal with that.
285.
The Deputy Chairperson: We hope to achieve a simple amendment with a wide-ranging impact.
286.
Mr Close: Accountability is the key here. We need to ensure that money from the public purse is spent on the purpose for which it was granted.
287.
The Transport Holding example may help to crystallise this. The accounts of this organisation are certified and the proper accountancy standards are followed. However, we would only know through an inspection, and the political input through the Comptroller and Auditor through to the Public Accounts Committee and the examiner, whether the money was being put to proper use.
288.
Mr B Bell: It is encouraging that there are members who believe this is strong enough.
289.
Mr Weir: We will need to test it before we consider it strong enough. I have no doubt that something of this nature is required, but we will need to check if it goes far enough.
290.
Whenever we get the evidence back from the Comptroller, he may give some indication of what we may need to change.
291.
The Deputy Chairperson: We will need the use of a "howlometer" to judge the reaction from the Department.
292.
Mr B Bell: He is aware of this amendment.
293.
He helped us to draft it.
294.
The Deputy Chairperson: We have nearly completed our business. Are there any outstanding matters concerning clause 18, other than this substantive matter?
295.
Ms Regan: There were a number of minor amendments under which the Department would be required to be reasonable in relation to clause 18, subsections 7(a) and 7(b). In light of the Committee's position on other similar amendments, it is possible that they still do not believe those amendments to be necessary.
296.
The Deputy Chairperson: We have to ask the Department about certain matters and therefore others on which we need to consult with the Comptroller and Auditor General about - do not tell one what the other has said.
297.
Mr B Bell: How can that be done when we are in public session?
298.
The Deputy Chairperson: They will no doubt send their spy along. That is probably all we can do on clause 18 today. I thank our researchers.
299.
The Committee Clerk: Chairman, on the point raised by the Minister in his letter of 20 November, I will read out the relevant paragraph: "We will also need to discuss further the precise approach to an additional clause for the Bill on the way in which DFP guidance on accounting matters to Departments would be overseen by some independent check. Since this was last discussed, I understand that the Scottish Executive is considering the extension of the remit of the Financial Reporting Advisory Board (FRAB) to cover their guidance. This would still allow for guidance and analysis on these issues to be tailored to our own circumstances rather than necessarily following the approach agreed, under FRAB's direction, by the Treasury in London. We do not necessarily have to follow this approach although it is indeed the simplest way of proceeding. In any case, I think that it will be possible to find a satisfactory approach to this issue and, I would be grateful for the Committee's views."
300.
The Public Accounts Committee has commented on this matter in a letter to us, in which it stated: "A further issue on FRAB, raised by the Minister in correspondence, was the need to include an additional clause on how DFP guidance on accounting matters to Departments would be overseen by some independent check. We consider that since we are part of the UK public expenditure framework and normally closely follow all Treasury guidance on financial reporting matters (which are based on accounting standards) there can be little scope for divergence. We would also be keen to avoid the establishment of another quango unless this was really necessary. In view of this we agree with the Minister that extending of the remit of FRAB, as agreed in Scotland, is the simplest way of proceeding."
301.
FRAB is the representative group of all the professional accounting institutions. It is entirely independent from Government.
302.
The Committee must therefore decide if it agrees with the proposal from the Public Accounts Committee. It must decide whether to propose that the Public Accounts Committee tell the Minister to introduce the proposed amendment along those lines.
303.
The Deputy Chairperson: Do we need to look at this decision yet? We will look at it in its entirety when we have -
304.
The Committee Clerk: Yes, but the sooner we indicate to the Minister that an amendment is needed, the more likely it is that it will be drawn up in time to be included in the Bill.
305.
The Deputy Chairperson: Is there a view on that? If we write to the Member and say that we want this amendment to be included, the snag is that we are committing ourselves before we have completed our exercise.
306.
Mr B Bell: We ought to wait until we speak to the Comptroller and Auditor General. He will be here in two days.
307.
The Deputy Chairperson: Yes, my feeling is to hold off.
308.
The Committee Clerk: I will flag that up as a matter for discussion with the Comptroller and Auditor General.
309.
Mr B Bell: We would want that amendment, but if somebody proposes something stronger -
310.
The Deputy Chairperson: We have a couple of items to deal with -
311.
The Committee Clerk: Chairman, that concludes our consideration of the Bill.
MINUTES OF EVIDENCE
Thursday 7 December 2000
Members present:
Mr Molloy (Chairperson)
Mr Leslie (Deputy Chairperson)
Mr Attwood
Mr B Bell
Mr Close
Mr Dodds
Mr P Robinson
Mr Weir
Witnesses:
Mr B Hutchinson MLA ) Assembly Audit Committee
Mr J Dowdall ) Comptroller and Auditor General
Ms E Regan ) Assembly Adviser
Clause 19 (Reports of Comptroller and Auditor General)
312.
The Chairperson: Let us see if we can cover some of the clauses we have not dealt with yet. We are dealing mainly with technical situations, so I ask Ms Regan to take us through the first stage of clause 19.
313.
Ms Regan: Clause 19 concerns reports of the Comptroller and Auditor General. Subsections (1) and (2) provide an additional safeguard for the Assembly. Together they provide an independent power for the Comptroller and Auditor General to lay before the Assembly his/her report on accounts, which are made pursuant to the various provisions of the Bill if the Department of Finance and Personnel fails to do so within the timeframe specified in the Bill.
314.
Subsection (3) repeals section 18 of the Exchequer and Audit Act (Northern Ireland) 1921, implying that the presentation of reports will go no longer to the House of Commons but to the Assembly. The only possible minor amendment can be to subsection (2), which, at the moment, states "as soon as possible". The Subsection could be amended to state at the very end "as soon as is reasonably possible in the circumstances".
315.
Mr Close: Is that "as soon as possible" not covered by the months that are referred to earlier - July, October and November?
316.
Ms Regan: On the face of the Bill, it does not mean that. The words "as soon as possible" stand on their own. If the Department of Finance and Personnel fails to lay reports before the Assembly within the stated timeframes, the Comptroller and Auditor General can lay reports. The words
< size=1>"as soon as is reasonably possible in the circumstances"
would tighten the clause up a little bit.
317.
Mr P Robinson: The term "as soon as possible" does not seem to be very technical or legal. Why can it not be "immediately"?
318.
Ms Regan: I can only speculate and this is potentially something that the Department should be asked. But in speculating, there might be events that will have to be waited for or papers to be put in order. This provision might not be used often but will ensure that reports are taken care of as soon as is possible in the circumstances, when the situation arises. "As soon as is reasonably possible" qualifies the timeframe so that the Comptroller and Auditor General can do it not whenever but when it is reasonably possible.
319.
Mr P Robinson: But it is a report and, at the stage it becomes a report, we must assume that it is finalised, and if it is finalised, why can it not be immediately laid on the Table?
320.
Ms Regan: There may be unforeseen circumstances that you are I are not contemplating. That is why it is best to go before the Department of Finance and Personnel and ask them that.
321.
Mr P Robinson: Could we put that down to take that up with the Department?
322.
Mr Attwood: That word might be "immediately" unless there are exceptional or unforeseen circumstances.
323.
The Chairperson: Does anybody want to make any other points on clause 19?
Clause 20 (Public bank accounts)
324.
Ms Regan: Clause 20 concerns public bank accounts. Subsection (1) empowers the Department of Finance and Personnel to determine, where necessary, the banks and accounts that are to be used by the Northern Ireland Departments.
325.
Subsection (2) appears to prescribe the Department of Finance and Personnel discretionary powers to consolidate accounts in such manner as the Department thinks most convenient for the public service.
326.
Subsection (3) repeals sections 7 and 8 of the Exchequer and Audit Act (Northern Ireland) 1921, effectively implying that the Treasury's determination to deem public accounts and consolidation of public accounts at banks, will cease to have effect. Instead, the Department will have such authority. Committee members can have a look, at Annex A, at the 1921 Act.
327.
The Chairperson: Do members have any questions?
328.
Mr P Robinson: We had earlier, when we talked about the issue of banks. There were questions of a general nature that we wanted to raise with the Department of Finance and Personnel, such as: what objective criteria are established to choose which bank the Department will be placing an account with? It is something that would lie behind the legislation rather than be on the face of it.
329.
Ms Regan: There are two minor amendments to subsection (1). It is intended to tidy it up to read
< size=1>"may reasonably determine in the circumstances".
At present it says
< size=1>"may from time to time determine".
That affords wide discretion.
330.
Subsection (2) may be amended to read
< size=1>"as the Department reasonably believes is most relevant for the public service."
The intention is to tidy that subsection so that wide discretion is not afforded.
331.
Mr P Robinson: May I question "convenient" for the public service? What is convenient for the public service may not be in the best interest of the public.
332.
Ms Regan: That is why the suggested amendment would read "is most relevant" rather than "most convenient". The Department should be asked what is meant by "convenient".
333.
Mr P Robinson: "Most appropriate" may be preferable.
334.
The Chairperson: That will be brought to the attention of the Department of Finance and Personnel next week.
335.
Mr Hutchinson, Deputy Chairperson of the Assembly's Audit Committee, will now make a statement, and some questions will follow.
336.
Mr B Hutchinson: It is hoped that I will assist in your deliberations on the Government Resources and Accounts Bill. The Committee stage is to be completed by the end of January to enable the new resource accounting arrangements to be in place for the new financial year. Mr Durkan attended a joint meeting of the Audit Committee and the Public Accounts Committee on 7 November at which he answered questions on the implications of the Bill, especially for the access of the Comptroller and Auditor General.
337.
The Public Accounts Committee has the main interest of ensuring that the Comptroller and Auditor General has sufficient access to follow public money wherever it goes. I cannot speak for that Committee and its views on the Government Resources and Accounts Bill legislation but Mr Bell, Chairman of the Public Accounts Committee, will keep you informed. However, the views of the Audit Committee are similar to those of the Public Accounts Committee as expressed in Mr Bell's letter of 28 November to the Finance and Personnel Committee.
338.
The Audit Committee's role is to scrutinise the Comptroller and Auditor General and the expenses of the Northern Ireland Audit Office and to ensure that it is providing value for money to the Assembly. However, to ensure that value for money is provided by the Northern Ireland Audit Office and that the Comptroller and Auditor General is able to fulfil his role fully and properly on behalf of the Assembly, it is important that the Audit Office's access to public money is not restricted.
339.
The Audit Committee will watch developments to see how the Government Resources and Accounts Bill impacts on the workload of the Comptroller and Auditor General's office and whether additional resources will be required to enable the Comptroller and Auditor General to adequately carry out his work. Following the joint meeting, John Dallat wrote to Mr Molloy on 9 November to formally register the Committee's concerns in respect of the Bill as currently drafted. Those concerns mirror issues raised by the Committee on Public Accounts at Westminster when it examined similar legislation last July.
340.
The Audit Committee feels that there is a need for the Comptroller and Auditor General's statutory access to be increased.
341.
Increased access needs to be enshrined in legislation and not be at the discretion of the Department of Finance and Personnel, as is currently the case. The Northern Ireland Audit Office (NIAO) needs to be able to follow public money in areas that could be described as being on the margins of Government. Such areas would include new forms of service provider, for example, public and private partnerships, non-departmental public bodies and limited companies established by central government including the student loans company that deals with Northern Ireland students.
342.
In addition, the Audit Committee believes that in future the NIAO should also carry out the work to validate departmental performance as reported against the new public service agreements to be included in the finalised Programme for Government. The Audit Committee welcomed Minister Durkan's commitment in his correspondence of 20 November to provide new powers for the Comptroller and Auditor General's role, to be encompassed in the proposed Audit Reorganisation legislation at some stage in the future following the outcome of the Sharman Review. However, the Public Accounts Committee has noted that it has not been given an assurance that the Audit Reorganisation Bill will give the Comptroller and Auditor General full access to all public money, nor has it indicated when the Bill will be introduced.
343.
The opportunity now exists to strengthen the Comptroller and Auditor General's statutory access by introducing any necessary amendments to the draft Government Resources and Accounts Bill at this stage. The Audit Committee does not see how such amendments would require substantial redrafting, or would adversely affect the timetable of having legislation in place. Again, I concur with the opinion of the Public Accounts Committee that there should be the following addition to the clause 18(7) (a):
< size=1>"The accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if that body exercises functions of public nature or is entirely or substantially funded from public money."
344.
This would give the Comptroller and Auditor General prompt access, on the Assembly's behalf, to all bodies mainly funded from public funds. He could then report on them and bring any matters of concern to the Public Accounts Committee as appropriate.
345.
Finally, I wish to thank the Committee for the opportunity to give the Audit Committee's views on this important legislation. The Audit Committee eagerly anticipates the publication of the outcome of Lord Sharman's Review to discover what implications it may have to the Comptroller and Auditor General in carrying out his work on behalf of the Northern Ireland Assembly.
346.
Mr Dowdall: I have nothing to add to what the Deputy Chairman of the Audit Committee has said. I outlined my views in discussion with the Audit Committee and the Public Accounts Committee, and they are represented in the two letters that the Committees sent to you.
347.
Mr Leslie: I am concerned about two areas of the Bill. The Department seems to completely reserve to itself all the powers to set accounting policy. The snag with that is that if you want to paint a different picture you can change the policy. The other area relates to the matters that Mr Hutchinson raised which are the auditing of moneys and access to all accounts. We have been going down the avenue of seeing what third party view we can have on accounting policies that the Department seeks to use.
348.
Mr Dowdall: I do not have any concerns on that point. It seems that it has always been proper for the Treasury to prescribe formal accounts. That is the United Kingdom tradition. It is also the way it is done in Scotland subject to the views of the Financial Reporting and Advisory Board that has been set up because resource accounting has been brought in and it aspires to apply full commercial accounting standards to the public sector. It made sense to have an advisory board that helped to sort out the difficult technical issues that that was presenting, but the Treasury reserves the right to prescribe the form of those accounts at the end of the day.
349.
As Comptroller and Auditor General, I have no difficulty with the public sector tradition. It seems to be proper. I am unsure, as I have not checked, but I expect that it is common practice in any developed democracy.
350.
Mr B Hutchinson: The Audit Committee agrees with the letter which the Public Accounts Committee sent to Mr Molloy on 28 November. It says Assembly Members in particular do not want to set up another quango, as it is unnecessary.
351.
The Financial Reporting Advisory Board has already been set up in the UK. The Scottish Parliament have decided that they will not establish one and they will use a United Kingdom body. That is what we should do. If we consider that finance and so forth comes from Westminster already scrutinised, it would be better to follow the Scottish pattern rather than setting up another quango in Northern Ireland.
352.
Mr Dowdall: I would like to comment on your point about auditing.
353.
The Chairperson: You may be subject to more probing by others, but go ahead.
354.
Mr Dowdall: I am glad to have the opportunity to make it clear that I am happy with the auditing provisions in this Bill. I know they are complex, but we have looked at them carefully. They are a straightforward read across or update of the powers of the Exchequer and Audit Act (Northern Ireland) 1921, so they do not diminish my powers to scrutinise financial accounts in Government and certify them on behalf of the Assembly. The technical job of reading across the powers of the Exchequer and Audit Act had to be done, and they had to be updated because we are now examining resource accounts. This read across has been adequately done in this Bill.
355.
Our difficulties with the Bill, reflected in what the Public Accounts Committee and the Audit Committee said, are not with what it says about my audit powers, but with the fact that it has not taken the opportunity to move beyond 1921 and update those powers in line with modern government.
356.
Mr Close: As a result of predetermined time parameters, we in Northern Ireland are expected to accept second best. As a new Assembly, we should take the opportunity we have to create the Rolls Royce of accountability and to follow other schemes, for example those in New Zealand, and to a degree in Scotland.
357.
Can you satisfy us that the proposed amendment accepted by Mr Hutchinson as being a reasonable way forward, is sufficient to assure us that full accountability is achievable? Can we, on behalf of those we represent, be confident that everything possible is being done to ensure accountability to ourselves and the public? Can these assurances be given both through the proposed audit reorganisation legislation and written assurances from the Minister?
358.
Mr Dowdall: I agree that the problem with this Bill is that in order to meet the requirements of resource accounting, it has to be dealt with in a tight time constraint. I agree with the Department of Finance and Personnel that it is extremely important we do not fall further behind the timetable for resource accounting. We must ensure that this key part of the legislation is in place on time. Nothing I say about extending or addressing my powers is intended to jeopardise that primary issue. That is why you as legislators can reasonably feel that the timetable does not give you the scope to do the complete updating job on audit.
359.
The Scottish Committee was able to do the job, because they had a long run at it. They had to do this as they had no auditing legislation. The difference in Northern Ireland is that we have had satisfactory audit since 1921. If you accept that there are real time constraints, it is not unreasonable for a Committee like yours - which is going to have to take a long-term interest in this - to say we will work on this step now. We want clear undertakings and we will have the opportunity to work on the other steps later.
360.
Mr Hutchinson has spelt out this step, and it has been put in the correspondence to you. It is a significant extension of my ability to research and report on financial issues and, therefore, the Assembly's ability to follow them through.
361.
Perhaps it would help if I were to explain exactly what I think the Clause is attempting to do. It is establishing for me an inspection right in every part of the public sector that is spending significant sums of the money that you vote them. That is different from an audit right. The strongest power would be to make me the auditor for every conceivable public sector body or every body that gets significant sums from the Assembly. I am not asking for that - I would not be even asking for that in the long run.
362.
Inspection rights are a lesser role than the auditor. The auditor has to go in every year, do a detailed piece of professional audit work and certify the accounts. I have to put my signature on it, saying to the Assembly that they are a true and a fair view, so significant work underlies that statement. Every year I find out quite a bit about the financial operations of any organisation that I audit, which is pretty proactive.
363.
If I think there is a problem somewhere, or if an Assembly Member comes to me and says "There is a problem - I hear this is going on in the Transport Holding Company. Comptroller and Auditor General, what do you know about it? can you look at it?", at the moment I have to say "I am sorry, but that is outside my remit and I do not know how I could advise you to take it forward." If I have an inspection right, that means that at my own initiative or at the request of any Assembly Member or Committee I can exercise that right at any time. It is a powerful right.
364.
Once I am in there, I can look at whatever I want to. People have to give me the full co-operation that they give me when I am exercising my statutory powers on an audit. I have the full powers that go with that - to either publish a report or to report in a memorandum to the Assembly. If that proposed amendment was added to the Bill it would mean there would be virtually no part of the public sector or any body receiving significant funds of public money that I could not look at, and, therefore, could not report to you.
365.
Mr Weir: By implication of what you have said, I presume that you share the view of Mr Hutchinson in relation to the proposed audit reorganisation legislation. In effect, you would not have to wait for the provisions that may come in there, but the opportunity to extend your role can actually be worked in fairly clearly into this Bill, by way of the amendment.
366.
Mr Dowdall: Yes. The attractive thing about this proposed amendment is that it does not seem to me to require outside consultation - it has been framed very much with that in mind. It does not require bodies, who have other auditors at the moment, to upset those arrangement because I am not asking to audit them. I am simply asking to have almost a reserve power, on behalf of the Assembly. If they receive Assembly money, I want to be able to look at how they spend it.
367.
Mr Weir: If I could take a step back from what you have been saying. Essentially you are indicating that your principal concern with the legislation, as currently drafted and proposed to us, without the amendment and any other changes, is that it seems to be a missed opportunity to extend your remit. With the expertise of your team, have you examined the fine detail of the Bill to see if you are happy with all the technical aspects of it? Would there be any minor amendments you would want to be able to tighten things up?
368.
Mr Dowdall: I can give you an absolute assurance on that. My team have fine-toothed-combed it, and are happy with every element in it.
369.
Mr B Hutchinson: The Audit Committee feel that this is about missed opportunities. If we look at what happened at Westminster, these are the opportunities that they missed. The difficulty is that some people are suggesting that we should wait until after the Sharman Review. Our view is that we should not. We should take this now and do it. As Mr Close said, we are a new Assembly, and we should make things come to fruition. If we do this now it would be more important, and when we get the Sharman Review, that will give us an insight as to what we should do in future legislation. That is the way we need to move forward.
370.
The Chairperson: What additional powers would you wish to see in the forthcoming Audit Reorganisation Bill? Are there a number of proposals?
371.
Mr Dowdall: Yes. It seems to be an opportunity to take a root and branch look at modernising the Comptroller and Auditor General's powers. To some extent, I want to keep broadly in step with best practice in the rest of the UK and the Republic of Ireland.
372.
What John Dallat has sent you, Mr Chairman, in his letter of 9 November, is the key shopping list that I, as the Comptroller and Auditor General, am suggesting needs to be addressed in that Bill.
373.
Mr P Robinson: I would like to follow the money to see where your scrutiny ends. Under existing legislation, you can scrutinise the Departments. How far can you go in scrutinising where the Departments give money? You mentioned the Transport Holding Company - you seem to have come up against a statutory block there? Can you not go beyond the Department at the present time? The next question deals with this legislation, but what about now?
374.
Mr Dowdall: Not in that area. I am glad you asked that. The nature of my current powers is a patchwork that has built up over the years to become really powerful. The Central Government Departments are the big spenders, and that is what the 1921 Act was getting a grip on. Legislatures were perfectly competent then, and they got a very good grip on it. But Government has changed enormously since then, as you know, and many powers have been devolved.
375.
The next stage of devolution is agencies, which are departmental bodies, so I have full cover in agencies at the moment. Then, the next stage of devolution is non-departmental bodies, and the patchwork begins at that point. Some non-departmental bodies are not covered, because they were not envisaged on their current scale at the time of the original Act. I have statutory access to some of these non-departmental public bodies if statutory access was put into it, when the Department was framing the legislation. An important example would be the Education and Library Boards, where I have statutory access. I am as powerful an auditor, in my access rights with the Education and Library Boards, as I would be in a Central Government Department.
376.
As you move gradually into the outer reaches of the public sector, it gets more and more fragmented. I can give you some examples. If you move to organisations like LEDU, universities, voluntary grammar schools and grant-maintained schools, they are all done by what is called "Agreement Inspection". I have the right to go into LEDU and inspect them, just in the same inspection sense that the amendment we are proposing exists, but it is by the agreement of the Department, and is not in statute anywhere.
377.
One of the great advantages of the amendment that we are proposing, is that all of those agreement inspections will then be put on a statutory basis. Even more importantly, I do not have to keep this frenetic watch on all of the new public sector bodies that are popping up all over the place to make sure that the legislation is not slipping through without giving me inspection rights, or without proper agreement being established. To show you what this means, regarding the Equality Commission that was set up the year before last, I found myself having to argue with the Department of Enterprise, Trade and Investment, that I should have statutory inspection rights there. Of course, I won the argument at the end of the day, but I should not have had to waste my time arguing for that. It was clear that such an enormously politically sensitive body was going to have to be fully accountable to any Assembly in Northern Ireland or to Parliament, if that was the way it was working.
378.
I should not have had to waste my time and resources on that debate. This amendment would be a useful step towards underpinning that.
379.
Mr P Robinson: Before we come to that amendment, I was wondering - more out of curiosity than anything else, I would have to confess - have you, during an idle moment, attempted to quantify the extent of the resources that are beyond your reach, and which you cannot inspect?
380.
Mr Dowdall: They are not enormous, because we have tried to police this over the years. I can give you some examples. I cannot quantify figures for the Northern Ireland Transport Holding Company off the top of my head, but it involves very large sums indeed. You may have noticed that I did a report for Parliament on the Northern Ireland Transport Holding Company a while ago, but I could not get access to the holding company. I had to do it through the Department's dealings with the company. Housing associations are another area of great concern in Great Britain. They take very large sums of public money, and I would like access to them too. They are a clear example of the way in which the pattern of Government spending has switched from primarily providing large, direct sums to build social housing themselves, to channelling substantial funds into housing associations. About £50 million is paid to housing associations each year, and I have not been able to follow that money. Therefore we are talking about reasonably big sums in some areas, but I do not want you to have the impression that this is more than - I was going to say 10%, but it is probably not as much as 5% of spend in Northern Ireland. Basically, I do have good powers, and this is a question of ensuring that they are extended fully, in line with best practice - right out to the margins of the public sector.
381.
Mr P Robinson: I assume that when you do not have any powers of inspection or audit that, the Northern Ireland Transport Holding Company and the housing associations, for instance, would produce accounts. Is it "hands off" as far as you are concerned? Is it "I am not responsible, so I am not going to even look at this"?
382.
Mr Dowdall: If I have not audited them myself I cannot take responsibility for reporting those matters to the Assembly in the same way that I do with every other element of public expenditure. If I spotted an anomaly in a published account - and I am speculating here because I have never done it - I could draw it to the attention of the Assembly. However, I would not be able to give the Assembly the service of saying "I have probed, audited and accessed the books myself." The degree of the scrutiny would be fairly limited.
383.
Mr P Robinson: Does the Audit Committee's amendment bring everybody under the scope of the Comptroller and Auditor General?
384.
Mr B Hutchinson: May I answer that, Mr Dowdall? The Audit Committee has been very careful with the amendment, and the key word in it is "inspection". The Audit Committee view this as being reactive rather than proactive. If we were to be proactive with every penny that the Assembly gave out, large amounts of resources and finance would be required to cover and pay for the Comptroller and Auditor General's work.
385.
I want to give you an example that will assist your understanding of our position. At some stage, I believe that every Member here will have encountered the problem of public money not being spent in the best possible way in their own constituency. Those of us from Belfast would have been very critical at one stage of what happened in Positively Belfast, but that money could not have been tracked by the Comptroller and Auditor General. If this amendment was inserted, a procedure could be established to allow the Comptroller and Auditor General to look into a matter which was of particular concern to any of us. As he would only have inspection rights, it would be reactive rather than proactive. The Audit Committee is of the opinion that this is the best way to proceed without spending large amounts of public money tracking public money. The approach is more one of opening things up and examining them if they are of concern, rather than having control in the sense that audits are proactively done all the time. That is why the word "inspection" was used instead of "audit".
386.
Mr P Robinson: May I ask a final question, which perhaps reflects some of my scepticism about auditors? You may be able to set me right.
387.
Is there not a great danger that if you have the power of inspection you will react to every trendy complaint that there is, over probably small amounts of money, and take your eye off the important ball where the large sums of public money are being spent?
388.
Mr Dowdall: I have had a lot of grounds for scepticism about auditors. That is not usually one of the main ones. I think you are quite right that prioritisation is enormously important in a job like mine, where I am looking at what is virtually an £8 billion block. It has been a problem for us in the past. I now have the advantage that I am assisted in that prioritisation process by two Assembly Committees, an active Public Accounts Committee, an active Audit Committee, and any number of Members of the Legislative Assembly who are only too anxious to tell me which are the important areas to look at. Therefore my ability to make those judgements is enormously better informed than it used to be.
389.
Mr B Hutchinson: I think that that is what Mr Robinson is worried about.
390.
Mr P Robinson: I am not sure that having all of those groups helping you will add to the amount of time you have available to do all of the other tasks.
391.
Mr Dowdall: The question of the best use of my time and the resources I need to do the job are very much a part of the dialogue between myself and the Audit Committee. I have been looking at this particular amendment and, to my mind, it does not require a significant amount of extra resources. I have a lot of flexibility in my programme, in terms of the topics that I bring in to look at. I am pretty sure that this flexibility could accommodate the extra bodies that will be caught up in this amendment. Bear in mind that it is less than 5% of the audit burden that the office bears.
392.
The Chairperson: Does the International Fund for Ireland, for instance, come under your remit at any point?
393.
Mr Dowdall: No, it does not. I always look at the International Fund for Ireland funding when I see it in packages alongside Government money, because it is an important element in the total non-private funding which is going into any project. However, I have no audit access to International Fund for Ireland matters, nor am I seeking it.
394.
Mr Attwood: Yesterday I met the oversight commissioner who is responsible for policing change. He was talking about setting performance measures against which to judge policing change. I understand that your ability to audit performance measures is not presently included in the Bill. How do you view having that power, and what mechanism might you propose to have that power in the future?
395.
Mr Dowdall: I am glad that you asked that question. I detect, in some of the concerns that I have seen on paper from the Committee, that you think that the Scots have these powers, whereas I do not. The Scots have largely the same powers as I do, in relation to performance measures. No auditor in the United Kingdom yet has the duty to audit the Government's performance measures, and we are suggesting that this would be a sensible thing to have. As performance measures become a larger part of the way Departments present their achievements, with your money, to the public, it seems sensible for a Department to get the assurance of independent validation.
396.
I would ultimately like to see - and I am in line with the Comptroller and Auditor General in England and Wales, and in Scotland in this - a statutory requirement that Departments should have to have performance indicators independently validated as they put them into the public domain. That is quite a reasonable requirement for the future.
397.
I readily acknowledge that Departmental performance indicators are at a very early stage of development.
398.
I am not bursting to get my hands on the kind of performance indicators as they currently stand, but they are developing quickly. More and more significance is being attached to them and they are getting to the stage where, clearly, they need a form of independent validation, and that should be required by statute.
399.
When I say I have powers at the moment: if I was dissatisfied with a Department's performance indicators or spotted one that I thought was wrong, I have plenty of powers to look at that and say it is wrong but I have not got the statutory requirement to examine each one every year and ensure that it is indeed everything the Minister says it is.
400.
Mr Attwood: There is actually a useful precedent here, in that the section 75 duty of the Northern Ireland Act - that public authorities are required to submit their performance measures or equality scheme to the Equality Commission, who have to approve it - means they are then drawing up further measures for the enforcement of that equality duty.
401.
Mr Dowdall: That is why it is such a rapidly developing field.
402.
The Chairperson: Are you happy that the performance measures would actually become part of the next Bill, and not this one?
403.
Mr Dowdall: I actually think it is more appropriate for the next Bill.
404.
Mr Close: Audit up to now has been - dare I use the word? - reactionary. It depends on what happens when you audit it. Through the performance measurements, what you should be seeking is to get in there and ensure that the outputs are right before the event rather than after the event. Is there not the danger - if we are obliged to wait - that perhaps bad habits might develop that will be difficult to change?
405.
Mr Dowdall: I do think that is a danger, but I must say I do not put a lot of weight on it. I do sense from my contacts with Government Departments, non-departmental public bodies (NDPBs) and other bodies that they are striving enormously to improve the quality of performance indicators, but none of them are yet at the stage where they will say "We think this is it, and we are satisfied with it." While they are at that development stage, I do not feel a burning need to be statutorily required to validate them. But they are getting very close to that stage and I do think it is important as Departments begin to put really substantial weight on their performance measures that statutory powers are in place where they know, at that stage, that their calculations are going to be examined and certified. That in itself will be an enormous inducement to quality no matter what practices they have been employing up until then.
406.
Mr Close: We are going to have many such indicators and targets and bench marks presented to us - presumably in January - to fill the gaps of the Programme for Government, and some of us will be concerned that this is looking forward for a period of years. Could things inadvertently slip through that we would never be able to catch up with?
407.
Mr Dowdall: I really do not think there is a problem there, the ones you will get in January will be forward looking. The real issue for you, as scrutinisers, would be to judge how the Department reports its performance against those targets that they set themselves in January. It does seem to me that we would be reasonably well placed to do that if this other piece of legislation goes through in the expected time-scale which, assuming it is not hurried, would have it in place I assume sometime around the end of next year or early the following year.
408.
Mr Close: A final point just to get it on the record: Mr Weir mentioned your inspection rights as requested under the amendment, clause 18. If those inspection rights are granted, am I correct in assuming that it would give you the opportunity to prepare a report which would go through the Public Accounts Committee which would then have the right to call the accounting officer or the Chief Executive of whatever the body may be, and that they would be answerable to that body and that the normal process for following that through would be in place.
409.
Mr Dowdall: That amendment would fully embrace into the whole structure of the Assembly accountability any issue that I chose to investigate.
410.
Mr Weir: Obviously this amendment to section 18 would more or less cover your concerns with the current situation. If the amendment went through as proposed, would there be a need for consequential minor amendments to any other clause? One example was Clause 10(1), which gives the Comptroller and Auditor General specific right of access at all reasonable times to any documents relating to the department's accounts. Would that need to be widened in any way?
411.
Mr Dowdall: Under the 1987 Audit Order, without relying on this Act, that amendment as it is worded at the moment gives me inspection rights, and would trigger my full other powers of access with reasonable co-operation and all the rest of it.
412.
Mr Weir: Are you then confident that if the amendment was put through there would be no need for any consequential amendments?
413.
Mr Dowdall: Yes, not in this legislation.
414.
Mr Dodds: To clarify the position in the amendment to clause 18, where public money is allocated to a body or organisation for a particular project but is not entirely or substantially funded from public money, is it open to you to see that that money is spent as it was allocated? Or does that rest with the Department that allocates that money?
415.
Mr Dowdall: Primarily it is always the Department's job. It is always my job as a public sector auditor to check what we call regularity, that the money has been spent precisely as the Assembly said it should have been spent. That is the big difference between a public sector auditor and a private sector auditor - regularity in that sense is a very large part of our audit work, whereas normally in private sector audit that is not a consideration.
416.
Mr Dodds: So if it were drawn to your attention you could look into it and report on it?
417.
Mr Dowdall: I would wish to look into and report on it. We attach a lot of importance to regularity.
418.
Mr P Robinson: At the last committee meeting I used an example. I would like to check if you can investigate this. If, for instance, the Minister of Culture, Arts and Leisure were to make a grant available to Northern Ireland football clubs for improvements to their grounds, that grant would be subject to their providing 15% of the funding themselves. Some honest clubs say "We are sorry, but we cannot even raise the 15%, and therefore cannot take advantage of the grant." Other, craftier clubs say "We have a friendly building contractor on our board. He will give us an inflated estimate for the work, so the Department will end up paying for the 100% in real terms."
419.
Mr B Hutchinson: Is this a real example?
420.
Mr P Robinson: Can you go in and look to see if this was properly done?
421.
Mr Dowdall: I am embarrassed to say, Mr Robinson, that, I having told you that this new clause would give me power to follow virtually every penny the Government put up, you have picked the one example that I had not thought of. It would not apply because the football club would not be a body of a public nature, nor would it be caught in the second part, as it would not be receiving a substantial part of its funding.
422.
Mr P Robinson: But a substantial part of the funding for the project would be coming from government sources.
423.
Mr Dowdall: Yes, I think I would have to take legal advice on that one but it certainly is not obvious that it extends that far out. The kind of amendments that we envisage in the longer term are much tighter in relation to the absolute authority to follow all public money as far as it goes, and they seek ultimately to give the auditor the right to follow the money into substantial private sector contractors who are dealing with public sector issues.
424.
The example you quote would be covered by the Sharman Committee and what they have envisaged under those headings. I would have to confess that I do not think this proposed amendment would cover that.
425.
Mr Dodds: That was the example that Mr Robinson gave. It was a specific example of what I was getting at in my earlier question. Do you think there is room to look at the wording of the amendment to cover that situation?
426.
Mr Dowdall: Yes. I think that to cover it you would have to put in a form of words instead of saying "A substantial proportion of their funding" or "Any funding". I am getting into an area here where I would need legal advice. You would have to try and project- define it, in which case it might get quite complicated.
427.
Mr P Robinson: A significant proportion.
428.
Mr Dowdall: When the Committee, the PAC and the Audit Committee asked me to briefly discuss this with them they were looking for a simple form of words which could readily be put in.
429.
Mr Dodds: Obviously we can not find the proper words just off the top of our head, we have to look at it and consider it. However, in principle, is this something you would welcome or would it be something you would not seek?
430.
Mr Dowdall: In principle I would seek to be the statutory auditor of anything in which the Assembly has a financial interest, otherwise how can I do the job that I am supposed to do in relation to this.
431.
Mr B Hutchinson: I think it would be true to say that the Audit Committee, and I am assuming PAC were the same, felt there would be a number of things that would be picked-up by the Sharman Review, and that this would be one of them because of the number of things that have happened regarding English football. Obviously it would be directly read across to here. If we take things like the Taylor Report, money has been given by the Government through different trusts. That would be something we would expect the Sharman Review to pick-up. We were trying to have something in place which allows us to track money now. In the next Bill, hopefully, the Sharman Review would give us more information about what we should be doing to improve it.
432.
Mr B Bell: Basically, we did not really want to wait for the Sharman Review. We wanted to get this thing through in the meantime. This debate went on at the last meeting and I know that Members are concerned that this amendment was not strong enough. I tried to assure you that it was strong enough for the purpose we wanted it for and that is what the Auditor General is telling us now. It is something we need to get through really quickly. If we changed the wording of it now it might delay the whole thing, we do not want that.
433.
Mr Dowdall: In looking at the strength of this amendment, I was going back to what Mr Durkan had been saying when he came to the two Committees, that there should be no no-go areas for the Assembly's auditor. It did seem to me subject to the kind of loop hole which Mr Robinson had just found. That virtually established the point there would be no no-go areas for me. I might not be the auditor in everything but I could go in and inspect any significant sums of public money that were spent for public purposes.
434.
The Chairperson: Are Members satisfied with all the questions asked?
435.
Mr B Hutchinson: Just before we finish may I just say that from the Audit Committee's point of view, we would want people to understand that this amendment is about actually trying to take advantage of the opportunities that were missed at Westminster. I think that is the important thing. We would judge this in terms of whether this helps the C&AG to inspect public money. It is about best practice as well.
436.
The Chairperson: Thank you very much, Mr Hutchinson and Mr Dowdall, for taking all the questions. Sorry for what happened at the last meeting, where we actually missed everyone. Let us hope that we rectified it today.
437.
May we first of all deal with questions to the Department and the remaining clause, would allow us to deal with the Department? We are aiming to be finished by 4.00 pm.
Clause 21 (Interpretation)
438.
Ms Regan: Clause 21 (1) defines "the use of resources" as
< size=1>"their expenditure, consumption or reduction in value."
439.
Subsection (2) defines various terms. The only suggestion is that "examination" might be included. This applies particularly if the Committee adopts the amendment of the Public Accounts Committee, so the term "inspection" would be defined for clarification.
440.
The Chairperson: There are minor amendments in that case?
441.
Ms Regan: They relate to a definition of 'examination.'
442.
The Chairperson: I would like to move on to the term "certify".
443.
Ms Regan: I was coming to that. 'Examination" and "inspection" are presumably more important amendments - although they are not listed here - but I am coming to the term "certify". The other suggestion was to define the term "certify" as used in clauses 8 and 9 to ensure that it is not interpreted to indicate approval.
444.
Mr Leslie: I do not take "certify" to indicate approval. Things are certified if they stand as indicated.
445.
The Committee Clerk: That would be my understanding.
446.
Ms Regan: The issue may not be patently obvious to those without an accountancy background, so it is used for clarification. The Committee may find it is not important or necessary.
447.
Mr Leslie: If the issue of the exact meaning of "certified" were raised, you would go to the Accounting Standards Authority, which would know what it meant. When accounts are certified, they produce a bland statement and it can more than qualify. Actually, I meant to ask the Comptroller and Auditor General to define "qualification".
448.
The Committee Clerk: He more or less defined what he does when he certifies. He talked about producing a report that would comment on the fairness and appropriateness of the accounts. That is not the point, however.
449.
Mr P Robinson: If the Audit Committee's amendment were accepted, would we need to have an interpretation of the word "body"?
450.
Ms Regan: That is at the discretion of the Committee.
451.
The Chairperson: That would be done by further amendment.
452.
The Committee Clerk: We would also need an interpretation of the word "inspect".
453.
Mr Leslie: The amendment partially defined this body. It discusses inspection by the Comptroller and Auditor General then goes on to say
< size=1>"if that body exercises the functions of public nature or is entirely or substantially funded from public money."
It was therefore getting at the money rather than the function.
454.
Mr P Robinson: It subdivides "body" into those with that degree of public funding. For example, would a football club be considered a body? Or are we talking about public bodies? That is what I understand a body to be. Will "body" be defined to include, for example, community groups - one area they may want to take - plus other private sector organisations that receive money.
455.
Mr Leslie: Yes. However, I should argue the opposite. The advantage of having an undefined term is that it is as wide as the Comptroller and Auditor General wishes, and only then subject to challenge by the body, whereas if one defines "body" and leaves something out -
456.
Mr P Robinson: The difficulty is that there is an Interpretation Act, and if the term is defined elsewhere in a more limited fashion, we might well wish to expand beyond "authority" or "body" to include some other categories with a wider scope. I suspect that "body" has been interpreted. I am not aware if Mr Weir has come across any cases.
457.
Mr Weir: Quite apart from that, we must check the Interpretation Act 1978 to see if the term is defined.
458.
Mr Leslie: One sometimes sees "body corporate", which is clearly more narrowly defined than "body".
459.
Mr Weir: We do not wish to restrict ourselves unduly. If a definition is already given for "body", that would be the court's interpretation.
460.
Mr P Robinson: Yes. We should therefore have to be satisfied that it was wide enough.
461.
The Chairperson: The other term is "inspect". Do you feel it needs to be defined?
462.
Mr Leslie: I feel it is to the amendment's advantage not to define "inspect".
463.
The Chairperson: The Comptroller and Auditor General seems to be saying that if he secured the right to inspect, the other Act, which already defines "inspection", would take over.
464.
Mr Leslie: So he believes he has a defined meaning for "inspect".
465.
The Chairperson: Are we happy enough on that point?
466.
Members indicated assent.
467.
Mr Leslie: Perhaps we should see how "inspection" is defined in the Audit (Northern Ireland) Order 1987, since we might refer to it.
Clause 22 (Amendments and Repeals)
468.
Ms Regan: Clause 22(1) essentially gives effect to schedule 1, which amends existing legislation. Subsection (2) gives effect to schedule 2, once again amending existing legislation.
469.
The Chairperson: Are there any queries? No amendments are proposed.
Clause 23 (Commencemnt)
470.
Ms Regan: Clause 23(1) explains that the Act will become effective on a date ordered by the Department. The explanatory and financial memorandum states that the Department intends the date to be sometime at the beginning of the financial year 2001-02. Departmental officials informed the Committee in November that the intended date is 1 April 2001.
471.
Subsection (2) qualifies subsection (1) by enabling the Department to make provisions to ensure a smooth transition from the current cash accounting system to the resource accounting and budgeting system. Subsection (3) increases the scope of the Department's power under clause 13. It allows the Department to issue an order, subject to negative resolution, requiring bodies which it does not formally require under clause 13(1) - that is, those bodies which the Department would designate - to provide it with information needed for Government accounts pursuant to subsections (2), (3), (4) and (5) of clause 13. It effectively increases the Department's power so it can have more bodies included in Government accounts. The clause 13 subsections that I have just mentioned address form and content.
472.
The Chairperson: So in the absence of any changes to the Act by negative resolution, the Department can add a body. Is there any need for that list of bodies at this stage?
473.
Ms Regan: No. One would only know who fell outside when the Department issued an order.
474.
The Chairperson: Are there any questions?
475.
The explanatory and financial memorandum states that the discretion afforded under subsection (3) will enable the Department to acquire another Department to pilot the necessary consolidation procedures for public co-operations. Furthermore, the Department is to prepare the extension of all Government accounts from central government to the whole of the public sector. This will enable the Department to take a phased approach, which includes the preparation and publishing of audited accounts on behalf of central government as the first stage.
476.
This enables the Department to acquire public co-operations, or other relevant bodies, to prepare dry run information. This may be done prior to the formal extension of the coverage of both audited and published accounts for the whole of the public sector. Other Departments are permitted to consolidate this so as to test the systems and procedures required.
Short Title
477.
The Chairperson: Is there any debate regarding the short title?
478.
Ms Regan: This simply explains how the Act will commonly be referred to.
Schedule 1 (Minor and consequential amendments) and Schedule 2 (Repeals)
479.
The Chairperson: We will now deal with the two schedules.
480.
Ms Regan: To go through the individual schedules is asking a legal question, whereby it goes beyond the remit of the research.
481.
The Committee Clerk: These are purely technical devices to make minor consequential amendments and to repeal other pieces of legislation that are made redundant. The Office of Legislative Counsel have done a wonderful job and will take on board any other necessary amendments.
482.
Ms Regan: In the explanatory and financial memorandum, on page 16, at paragraph 14, the Committee received a letter from NIPSA, dated the 7 November, and they drew attention to that particular paragraph. I will read the paragraph for you, it says
< size=1>That the provisions on RAB in the Bill will not affect public service manpower. To the extent that the move to RAB has resulted in changes in manpower then these have already taken place as departments have set up the necessary accounting systems and strengthened finance functions.
483.
NIPSA would maintain that Resource Accounting and Budgeting is likely to be more labour intensive to operate than the current cash accounting system. It is expected that more will have to be invested in training for those required to operate the RAB.
484.
The Committee Clerk: Set out in the amendment are the assurances needed for this Committee to conclude whether it will go for the amendment as proposed by the Public Accounts Committee. There are certain undertakings that are necessary by both the Minister and Mr Dowdall, in referring back to John Dallat's letter. This indicated that he wishes to see in any follow up legislation in future - thereby extending the Comptroller and Auditor General's powers to the various other bodies - and that he be given the power to undertake performance measurement.
485.
Mr Durkan is to attend the Committee and give a briefing on his budget statement that day. Furthermore, with his agreement, we have asked to extend that session, as the Committee will ask for those reassurances, and for them to be given in writing.
486.
Will he give an assurance that the audit remit of the Comptroller and Auditor General (C&AG) will be extended by the forthcoming audit reorganisation? Exactly what will be the two issues will obviously need to be pinned down.
487.
Mr Bell: Is an assurance from the Minister enough? The Public Accounts Committee would like to have this amendment included. I have perhaps misunderstood.
488.
The Committee Clerk: I think you have. Before the Committee makes its final conclusion it will limit itself to your amendment.
489.
Mr Bell: That is OK.
490.
The Committee Clerk: Before limiting ourselves to that amendment, the Committee would probably wish to receive the Minister's assurances in writing that he will address the matters which were referred to by John Dallat on behalf of the Audit Committee. In other words, that the forthcoming Audit Reorganisation Bill will address the remit of the C&AG, as outlined by John Dallat, and that it will also address the issue identified by Mr Dowdall and Alex about performance measurement. Those, I think, are the two absolute minimum issues, but the Committee may feel that there are others.
491.
Mr Bell: One way or the other we want to get the amendment into the Bill, because it is important.
492.
Mr Leslie: Even if we believe those undertakings, this will not be the only amendment.
493.
Mr Bell: That is OK.
494.
The Chairperson: We have a list of steps to be taken. Do you want to deal with the amendment to the Bill? Members have the amendment in front of them. We have been advised that it covers all the different issues, and that it is the first stage of the inspection. Are Members content?
495.
Mr Weir: I am happy at one level with the thrust of the amendment. Could there be some tweaking in reference to "substantially" - slightly different wording? I would worry that it does not cover absolutely everything. If "substantially" was changed to "significantly", or there was some other slight change, it would cover exactly the point we are looking at, but a bit more comprehensively.
496.
The Chairperson: May I remind Members that it is the same form of words as appears earlier in the Bill in relation to clause 12, which deals with whole of Government accounts. There may well be a linkage which requires to be continued.
497.
Mr Weir: Without looking at clause 12, in one sense the complication is the fact that specific statutory powers of audit on all the Government departmental stuff may mean that because this is more of a reactive or an inspection power you actually need something stronger and wider than you would with purely the departmental stuff.
498.
Mr P Robinson: May we have a grammatical insert - the indefinite article in from of "public nature"? I assume that this is a typographical error.
499.
Mr Dodds: The Comptroller seemed to be indicating that he would welcome something which took account of the point that Peter and I were raising. Peter Robinson pointed out a very specific example. Peter Weir then mentioned about changing "substantially" to "significant" or whatever, but I still think that that would leave a gap. In the example of the football club, that is an organisation which could be said not to be entirely or significantly funded by public money, yet is still in receipt of money for particular projects. Every single penny which comes from the public purse, as it were, should be open to inspection.
500.
Mr P Robinson: That may be a substantial amount of its funding for that year, but it might not be a body that is substantially funded from the public purse.
501.
Mr Leslie: Is that similar to the situation in Scotland?
502.
The Committee Clerk: It may have been in the 'Whole of government accounts', but the principle is the same.
503.
Mr P Robinson: I suggest that "has received significant public funds or is entirely or substantially funded from public money" be included after "public nature".
504.
Mr Bell: The Public Accounts Committee has had a meeting with the Minister on the Bill and the Finance and Personnel Committee has had a question and answer session with him. The Bill has been examined in reasonable depth. The Committee has discussed the Bill with the Comptroller and Auditor General and that amendment is a result of that. It is a bit loose because we do not want it to delay anything. We do not want it to delay the powers. The amendment may delay the Bill if we start to make major amendments to it.
505.
Mr Weir: I disagree with Billy. The amendment covers the loophole that we have uncovered. It would not delay the Bill because it only amounts to the addition of about half a dozen words, but it does mean that we would be covering a situation where public funds may be abused.
506.
Mr P Robinson: I did not get the impression that the Comptroller and Auditor General had any emotional capital tied up in the specific words in the amendment. He was more interested in outcomes. I cannot see how that additional reference would delay the Bill. It will go through at the same time as it would otherwise have gone through. It is not such a significant amendment as to throw it into any other procedures.
507.
The Chairperson: May we have the wording again?
508.
Mr P Robinson: After "public nature," insert "has received significant public funds or is entirely or substantially funded from public money".
509.
The Chairperson: It covers another avenue. If it is dealt with now, we might discover that other wordings should be included.
510.
Mr P Robinson: It will go to the legislative draftsmen anyway.
511.
The Committee Clerk: If the Committee made that proposed amendment there is nothing to prevent the Minister from putting in an alternative amendment which may further refine it and be more practicable. If we put that amendment, it may trigger a reaction from the Minister, but it is the Assembly that will finally decide.
512.
The Chairperson: We are not putting the amendment today, so we have a wee bit of time. The Committee is meeting the Department and the Minister again, and if we had that amendment to the amendment it would cover it.
513.
Mr Dodds: That is the point. We are not setting the precise Bill in concrete today. We are making the point that was raised. Mr Bell said that he has dealt with the Bill in detail but it is clear that the Comptroller and Auditor and General - as he admitted himself - had not thought about that area. He is now quite receptive to the idea that he should have that power of inspection in such cases. Not to pursue that would be remiss of the Committee.
514.
Mr Bell: I have no objection to it being pursued but I got the impression that we were going to pass the new wording in an amendment now.
515.
The Chairperson: No, we are not.
516.
Mr Dodds: We do not want to delay the amendment either.
517.
The Chairperson: We are not taking a vote on the matter we are simply taking your minds on the proposed change. Before it becomes an amendment on paper we will be coming back to the issue. In between times the two Committees can discuss and see if they have any major problems with the amendment. If the Clerk has the matter in writing then we can have a look at it again.
518.
The Committee Clerk: In order to get maximum benefit from any discussion with the Minister, if he agrees to meet with us, it might be appropriate, if the Committee agrees, to write to him to ask those questions. Then when he appears before the Committee he knows what he will be asked. We also need the Minister's reassurance with reference to the Comptroller and Auditor General's remit being extended in the forthcoming audit reorganisation Bill. Also that auditing Departmental performance measures will be a requirement on the Comptroller and Auditor General. The forthcoming Bill will introduce that. We could put the proposed amendment to the Minister simply for comment.
519.
Mr Leslie: We want to recruit him to the amendment as soon as possible.
520.
The Chairperson: We would also want to involve the other two Committees - the Audit Committee and the Public Accounts Committee.
521.
Mr Leslie: Then we can tease the matter out.
522.
Mr Dodds: The Minister might raise some valid points.
523.
The Committee Clerk: It might be possible to formalise the Committee's view on the use of FRAB in scrutinising and approving the Department of Finance and Personnel's advice to other Departments about how resource accounts are formatted. Mr Dowdall and the Audit Committee were happy with that, and we already know that the Public Accounts Committee is also content. We might include the Committee's view that this is the proper way to go in our letter to the Minister. We could suggest accepting the Minister's offer to bring forward an amendment to introduce that. We could do that right now.
524.
The Chairperson: Are we agreed on that course of action?
525.
Members indicated assent.
526.
The Committee Clerk: Since we have finished our internal examination of the Bill might I suggest that we formally invite the Department of Finance and Personnel officials to our Tuesday meeting following our meeting with the Minister, to begin the formal process of working through the clauses. Our time is limited and we need to use each moment to meet our deadline of 26 January 2001. With the Committee's agreement we could go forward.
527.
Mr Weir: By that stage we would have been fully informed of all the minor issues.
528.
The Committee Clerk: The Department has already responded to most of the queries raised on the early part of the Bill, so working through the clauses on Tuesday, at the very minimum we might reach clause 9. That would be a weight off all our minds.
529.
The Chairperson: Therefore part of the papers today are the responses to the matter.
530.
The Committee Clerk: The Department will take us through the Bill.
531.
The Chairperson: On Tuesday we will go through the Bill with the Department clause by clause and make progress.
MINUTES OF EVIDENCE
Tuesday 12 December 2000
Members present:
Mr Molloy (Chairperson)
Mr Leslie (Deputy Chairperson)
Mr B Bell
Mr Close
Mr Dodds
Mr Maskey
Mr P Robinson
Mr Weir
Witnesses:
Mr M Durkan, The Minister of Finance and Personnel
Dr A McCormick )
Mr M McNaughton ) Department of Finance
Mr B Delaney ) and Personnel
532.
The Chairperson: Minister, are you happy with the amendment that has been put forward?
533.
The Minister of Finance and Personnel (Mr Durkan): As I have said before to this Committee and, indeed, to the joint meeting of the Audit Committee and the Public Accounts Committee, I fully support the objective of the proposal and regard it as generally acceptable. We need to give further consideration to the technical wording, and legislative counsel will have to advise us on that. I do not want anybody to be in any doubt about the commitment to accountability processes, whether delivered through public or private sector audit mechanisms. That is something that we want to take forward and work on with this Committee and, in particular, with the Public Accounts Committee.
534.
I think that some of the matters that are concerning members more rightfully belong in the context of the audit reorganisation Bill, rather than the Government Resources and Accounts Bill. In deciding how we make the progress that we need to make, and how we make the improvements that we need to make, in these areas, we need to be mindful of the fact that there are other perspectives on this as well as our own. Different interests manage different aspects of public money.
535.
We want to make suitable progress now, in the context of the Bill that we have in front of us, and then make further progress in the context of the audit reorganisation Bill. That will allow us to take in the sort of consultation process that we need in relation to other interests and concerns that may be affected or just plain interested in the issues of broader access and inspection.
536.
The Chairperson: So you are happy enough with the amendment, subject to the legislative people looking at the wording of it.
537.
The second issue relates to the commitments to follow on with the audit reorganisation Bill. Are you happy enough to give the Comptroller and Auditor General the audit facility, and will that come up in the next Bill that comes forward?
538.
Mr Durkan: We are all agreed that there needs to be proper auditing of public money in the various uses to which it is put and the various mechanisms through which it flows. We want to ensure that that is there. The audit reorganisation Bill will further improve that, so that people are satisfied in that regard. We will want to consult as to the best means of doing that, and make sure that we solve the problem we are trying to solve without creating any other unnecessary or additional problems.
539.
We have all experienced enough in the course of devolution to know that different proposals generate different issues and problems that may not be seen at the outset, but come in from particular points of view. We want to take these things forward in the context of the audit reorganisation Bill. That should afford us the consultation cycle that we need.
540.
The Chairperson: Do you agree that the Comptroller and Auditor General should be given statutory responsibility for auditing departmental performance measures in the audit reorganisation Bill?
541.
Mr Durkan: That raises wider issues that go beyond my brief as Minister of Finance and Personnel. I would only be able to advise you of a definitive position on that on the basis of further Executive consideration. Obviously, it relates to the work and interests of other colleagues and other Departments, including, but not limited to, the Office of the First Minister and the Deputy First Minister.
542.
To return to the point that I made earlier, we are trying to take forward the Government Resources and Accounts Bill to cover the issues that are appropriate there; issues that are actually about accounts, rather than about auditing and accountability. The audit reorganisation Bill will concentrate on those important issues.
543.
As to the application of that to performance measures, we want to consult with this Committee and with the other Committees that have a stake in this. I will also have to reflect the views of the Executive Committee, and at this stage the Executive Committee has not taken a view on the issue.
544.
The Chairperson: The main reason that we are pushing it is that an amendment to the Bill would provide a mechanism, as long as we can see that the follow-on mechanism would also be in place. Billy Bell, Chairman of the Public Accounts Committee, might want to come in with particular questions on that.
545.
Mr B Bell: I am reasonably satisfied with the letter that the Minister sent me, particularly in relation to the Public Accounts Committee amendment. At our last meeting, members felt that that was not strong enough, and consequently this new wording has been produced. My concern was that this rewording would have the capacity to delay the whole thing. We do not want any delay. I do not think that you dealt with that in your answer.
546.
The Chairperson: The words "has received significant public funds" were in addition to what the Public Accounts Committee sought.
547.
Mr B Bell: I would be happy enough with the new wording, but my concern is that it might cause problems.
548.
Mr P Robinson: Why?
549.
Mr B Bell: That is what I am asking the Minister.
550.
Mr Durkan: We are not raising any points to try to cause delay. It is the same as when the Committee seeks to take more time on a matter that it is considering - it is not for the sake of causing delay. It is simply part of due diligence, and we want to make sure that we get the wording right. In particular, where wording might be of a fairly general nature, we want to make sure that it is competent and definitive.
551.
If you use a phrase such as "significant public funds," a number of bodies will be very quick to ask, "Does that mean us?" Significant amounts of public money flow through various sectors, including the community and voluntary sector, and people already complain about the current reporting and audit trails.
552.
That is why we need due consultation so that we all know what it is that we are talking about. I think that we are all agreed that we want to see this, but we might not be all agreed on how we would explain or define it to a public body, community group or voluntary group. We all need to be clear on that.
553.
The Chairperson: Mr Peter Robinson suggested the additional words.
554.
Mr P Robinson: I used a couple of examples simply because they were topical at the time. Michael McGimpsey had raised an issue about football clubs receiving millions of pounds for improvements to their grounds. Crusaders Football Club very honestly came forward and said, "We were to provide 15%, but we have not got it and, therefore, we are not going to draw down any funds." Other clubs could well be in the position where they do not have the 15%, but they draw down the money anyway, with an inflated bill for the work which includes their 15%. Effectively, the Government ends up paying it all.
555.
Have we, or the Comptroller and Auditor General, the power to go in and look at that? The Department may well be able to have a peep at what is going on, but the Comptroller and Auditor General would not, even under the amended wording that came from the Public Accounts Committee.
556.
Mr Durkan: I will not be tempted to refer to level playing fields or anything like that. [Laughter]. That is a useful example, giving both sides of the argument. We want to make sure that public money is being used for its proper purposes. If particular criteria are attached to the allocation of public money, we want to ensure that those criteria are being honoured and upheld in all allocations.
557.
We want to achieve that, but we also have to take into account the fact that public money is often used as part of a mix of funding. We might get into a situation where there would be potential implications for the bodies or interests concerned, and also for the Comptroller and Auditor General. We might end up with the Comptroller and Auditor General actually auditing football clubs, simply because bodies or organisations may or may not put together, and present, their funding arrangements in a particular way. People might need to go further into things. What do you think?
558.
Mr P Robinson: It is a power of inspection, rather than a requirement to audit. They are very different things.
559.
Mr Durkan: That is as far as the power of inspection is concerned, but there is an argument for taking it to the level of audit. I am not saying that there should be no-go areas for the Comptroller and Auditor General, not least in terms of inspection and, in particular, where audit work has already been undertaken. I take Mr P Robinson's point on the power of inspection. That is not the only case that has been made. We all need to be clear that we are talking about the same thing when we agree and bring forward the amendments.
560.
Mr Close: Bearing in mind the time constraints on the Bill - I think the closing date is the end of January - when can we get your assurances on the two latter points in the letter? We could take on a lot of amendments, but effectively we are saying that we appear to be relatively satisfied with the amendment proposed by the Public Accounts Committee, subject to the wording being corrected by legislative counsel. Providing we get assurances from you, we can work to the deadline, but if we are held back in getting the assurances, it will have a ripple effect as to when we can sign off the Bill. When can we get the assurances?
561.
Mr Durkan: It is not in my interests to delay the Committee or the Assembly from signing off the Bill. However, we want to engage with legislative counsel on this matter, and we also need to consult on other matters such as the Comptroller and Auditor General. We need to be satisfied on those points. We need to have enough for the purposes of the current Bill, and to ensure that there will be no inconsistencies with the proposed audit reorganisation legislation. I will endeavour, through other consultations, to respond to the Committee as soon as possible.
562.
Mr B Bell: Next week?
563.
The Chairperson: As soon as possible, so that we can get the amendments into it.
564.
The other matter relates to the Financial Reporting Advisory Board (FRAB). You stated in your letter to Mr Bell that you were reasonably happy, but you would investigate it further.
565.
Mr Durkan: There are other points that we need to check through. I do not foresee any major difficulties, but I do not want to say that there are no difficulties and that it is all straightforward. It is a matter of due diligence so that we get it right, but I am in broad sympathy with the approach, so there is no problem.
566.
The Chairperson: Are you bringing forward an amendment on FRAB, and would that be part of the Bill?
567.
Mr Durkan: Yes, I said that we would be bringing it forward at the Second Stage.
568.
The Chairperson: If members are happy, we will move to the next stage. The penny product was the other matter that was raised. How will that apply, and what effects will it have? Is that out of line? Is there nothing further to add on the penny product and the revised Estimates?
569.
Mr Durkan: Apparently there is no friend for me to phone on this one. Are you referring to the error from some time ago that came to light last week?
570.
The Chairperson: That is right. How will that affect the councils in particular? Will it mean that they will be short of money?
571.
Mr Durkan: We are working on that with the local government branch of the Department of the Environment. They want to wait until they have all the information before we meet. Last week the Rates Collection Agency wrote to the chief executives of the councils to make them aware of the issue and, secondly, to give them the relevant information for this year.
[The Minister left the meeting.]
572.
Mr Leslie: The letter of 8 December that discusses the penny product calculations is exquisite in its vagueness. It finally concludes by saying that the difference is less than 1%. I do not know the nature or impact of the error. Is the difference more in earlier years and less in the more recent years? It would be helpful to have more precise information than that in this letter.
573.
Dr McCormick: I will refer that to those who are responsible for it. We can pass that on and ensure that the Committee's questions are answered.
574.
Mr B Bell: I would like to refer to Mr P Robinson's question about Executive infrastructure funding. This morning I asked why private money was not involved in that. When the Minister is answering the letter, could he address that issue? It is a shame that we cannot have these projects - we can start them, but we cannot finish them. I had hoped to say that to the Minister before he went; perhaps you could convey it to him.
575.
Dr McCormick: I understand that the use of the infrastructure capital renewal fund is likely to include encouragement of private finance initiatives and public/private partnership arrangements as part of what would be relevant to consideration for that fund. That issue is on the minds of the Excutive.
576.
Mr B Bell: This Assembly will not succeed unless it gets results. If we continue as we are, we will not get results.
577.
The Chairperson: We will move on to the Government Resources and Accounts Bill. We can consider the details of the responses.
578.
Mr P Robinson: The Minister did not have much time to listen to the point about making sure the Department knows our case as regards the amendment. He appeared confused about audit and inspection. The amendment refers specifically to the right of inspection. The Comptroller and Auditor General has the right to inspect, which he may not wish to avail of in all circumstances. There is no requirement to audit. I do not think that anybody in the Committee has any attachment to the wording. We wish to have that effect. It might be possible to do it by keeping the original wording and adding "or in any financial year is entirely or substantially funded from public money." If a significant amount of money were put into that kind of project, it would be substantially funded from public money in that year. However, it might not be funded from public money overall.
579.
Dr McCormick: As the Minister said, there is no difficulty or issue of principle. It is simply a matter of trying to find the best way to implement and make effective the kind of arrangements that this Committee and the Public Accounts Committee are seeking. We will work with the Comptroller and Auditor General to find the best way to formulate this. That is the purpose. We take the point entirely about the distinction between inspection and audit.
580.
Mr Delaney: We have not as yet passed it to the parliamentary draftsman, and until he looks at the particular wording, it is not appropriate at this stage for the Minister -
581.
Mr P Robinson: Had he looked at the original wording?
582.
Mr Delaney: No, he has not had a look at the wording at all. There is a difference between audit and inspection, but we do not know if the parliamentary draftsman will see it in those terms. He might suggest better wording to achieve the same objective and purpose.
583.
Mr B Bell: I emphasise the point that Peter Robinson made. We want to have inspection, not necessarily audit.
584.
The Chairperson: These issues are dealt with in the prospective audit reorganisation Bill.
585.
Mr Delaney: We did not want to prejudge the language of the parliamentary draftsmen.
586.
Mr B Bell: Send them in here sometime to see us.
587.
Mr Dodds: When the parliamentary draftsmen look at it from a technical legal point of view, they may not like a particular form of words. It is the intent behind them that is important. They might perhaps come up with something more appropriate in terms of technical legal language. We are keen to see the loopholes closed.
588.
The Chairperson: The only reason that we are rushing the situation is that if this were not possible, then the Committee would have to formulate other amendments. It is to speed up the process.
589.
The Committee Clerk: The next stage is the detailed clause-by-clause consideration of the Bill. Members have in front of them a document that will help us to do that. It is entitled 'Schedule of Clauses (1 - 17).' We are - perhaps somewhat optimistically - hoping to get through that today, but we may not.
590.
The first page is a simple introduction. At the top of the second page, we have a rehearsal of the issues that we have already discussed. The first bullet point is the proposed amendment to clause 18 from the Public Accounts Committee. The second bullet point deals with the two issues put to the Minister, asking him to give consideration to possible undertakings or assurances to the Committee. As a result of the discussion today, the Minister will look at what assurances he can give. The third bullet point is the oversight of guidance provided by the Department. Again, the indication is that the Minister will provide an amendment which would bring in oversight by the Financial Reporting Advisory Board.
591.
Point two is a short explanation of the fact that Mr Des McConaghy has brought various concerns to the Committee, and the Committee has taken them on board. They largely relate to the issues that we have been talking about, namely the role of the Comptroller and Auditor General, the extension of his powers and performance measurement. That is certainly one of the issues which the Committee has asked the Minister to consider for introduction in a future Bill.
592.
If we turn over the page, we can commence consideration of the Bill itself.
Long Title
593.
The long title specifies that the Bill will make provision about Government resources and accounts and for connected purposes. The Committee did not have any concerns about the long title and did not put any points to the Department.
594.
Long title agreed to.
Clause 1 (The Consolidated Fund Account)
595.
The Committee Clerk: The purpose of clause 1 is to modernise the provisions in section 1 of the Exchequer and Audit Act (Northern Ireland) 1921 and to repeal that part of the older legislation.
596.
Members raised two concerns about this clause. First, they referred to subsection 1 and asked who was the responsible person within "the Department" - defined in the Bill as the Department of Finance and Personnel - mentioned at line 5 on page 1. The Department replied that power rests with the Minister. In practice, some decisions are delegated to the permanent secretary and other officials, within policies and approaches approved by the Minister.
597.
Secondly, members questioned the use of the term "the Bank" at page 1, line 5 of the Bill. Members asked what bank would be used. The Department's response was that any bank could be considered but, in practice, a bank is selected on the basis of a commercial tender exercise.
598.
Mr Close: In practice, the powers delegated in clause 1 are essentially going to the permanent secretary. Are there any situations in which it would be the Minister?
599.
Dr McCormick: In determining what bank to use, a commercial tendering process would take place. If an issue were raised, the Minister would be made aware of it. The process would depend on whether there were any problematic issues arising. If not, then it would be straightforward.
600.
Mr Delaney: In legislative terms, tendering is a decision for the Minister, although he would not be intimately involved in the process of tendering.
601.
Clause 1 agreed to.
Clause 2 (The Consolidated Fund)
602.
The Committee Clerk: The purpose of clause 2 is to modernise the provisions of section 2 of the Exchequer and Audit Act (Northern Ireland) 1921 and repeal that part of the older legislation.
603.
The Committee had two concerns. Members referred to subsection 3, which can be found at page 2, lines 5-6, and asked why the exercise of judgement is being given to the Department of Finance and Personnel rather than to the spending Departments. The Department's response is that it is responsible for the efficient and effective management of the consolidated fund. In fulfilling this role, it is important to keep cash advances to a minimum in order to reduce the cost of borrowing to the public sector. In practice, the Department monitors the requests from Departments, together with their existing cash balances, to ensure that there is no build-up of surplus cash.
604.
The second point related to the definition of "current payments" at page 2, line 6 of the Bill. The Department indicated that the definition depends on the individual Department. Each Department requires sufficient cash resources to satisfy demands for payment as they fall due. The nature of the business of each Department will determine the frequency and volume of cash required to satisfy current demands. Some departments make requests for cash on a daily basis while others request cash weekly.
605.
Mr Maskey: Would there ever be a situation where the Department of Finance and Personnel would dispute the nature of current cash demands or needs?
606.
Dr McCormick: I find that hard to imagine.
607.
Clause 2 agreed to.
Clause 3 (Payment out of Consolidated Fund: standing services)
608.
The Committee Clerk: The purpose of clause 3 is to modernise the provisions of section 4 of the Exchequer and Audit Act (Northern Ireland) 1921 and to repeal that part of the older legislation. The clause deals with payments out of the consolidated fund under any statutory function. Member raised four concerns.
609.
First, members referred to the phrase "the Comptroller and Auditor General shall" in subsection 2. They asked why the Comptroller and Auditor General did not have discretion to grant a credit on the consolidated fund account, and whether that represented a change in practice. The Department replied that clause 3 deals with payments for services out of the consolidated fund which have been specifically cited by statute. These payments are therefore made independently of the annual authorisation of supply. Assuming that the Comptroller and Auditor General receives a correct requisition, he has no option but to grant the credit to the consolidated fund in order to comply with statute. This clause modernises section 4 of the 1921 Act and is intended to replicate existing practice.
610.
Secondly, the Committee asked whether the Comptroller and Auditor General has greater flexibility under the current legislation and, if so, what does it allow him to do? The Department of Finance and Personnel indicated that there is no greater flexibility, as stated above. The clause is intended to replicate the current legislation in up-to-date terms.
611.
Thirdly, members asked what the phrase "where a credit has been granted" in subsection 3 means in practice. The Department replied that, in practice, the Comptroller and Auditor General will authorise cash to be credited to the consolidated fund. The Department of Finance and Personnel will then issue the cash to the relevant department, body or person as specified by statue.
612.
Finally, the Committee referred to subsection 7 and asked whether any powers under section 4 of the 1921 Act would cease to have effect. The Department said that the powers under section 4 of the 1921 Act are replicated in modern form by clause 3.
613.
Mr Close: Give an example, so that I am clear on the understanding of it. Statute decides what goes into the consolidated fund. That is an annual thing - is that correct? Then a requisition is made and the Comptroller and Auditor General gives a credit to a particular Department. Is that what it is about?
614.
Dr McCormick: Yes.
615.
Clause 3 agreed to.
Clause 4 (Payment out of Consolidated Fund: sums authorised by Act of the Assembly)
616.
The Committee Clerk: The purpose of clause 4 is to modernise the provisions of section 6 of the Exchequer and Audit Act (Northern Ireland) 1921 and to repeal that part of the older legislation. The clause deals with payments out of the consolidated fund that are authorised by an Act of the Assembly. Members raised three concerns.
617.
First, members referred to subsection 1, and asked to whom the phrase "This section applies in respect of sums which the Assembly has authorised by Act" applies in practice, and how it differs from payments made under clause 3(1). The Department replied that, in practice, this clause deals with payments out of the consolidated fund on the basis of the annual Appropriation Acts passed by the Assembly. These Acts determine the level of supply for Departments for a particular financial year. In contrast, payments decided by statute are automatic and paid directly from the consolidated fund. There is no requirement for annual approval by the Assembly.
618.
The second point related to subsection 3. The Committee asked about the extent of the current powers of the Comptroller and Auditor General and whether his hand could be strengthened. The Department replied that the current powers of the Comptroller and Auditor General to authorise a credit to the consolidated fund on the basis of an Act of the Assembly are retained and reflected in the clause. Provided the Department of Finance and Personnel makes a correct requisition in accordance with an Act approved by the Assembly, the Comptroller and Auditor General must grant a credit to the consolidated fund in line with the wishes of the Assembly.
619.
The third and final point referred to subsection 8. The Committee asked about the powers provided under section 6 of the 1921 Act. The Department replied that the powers under section 6 of the 1921 Act are replicated in modern form by clause 4.
620.
Mr Leslie: I have a practical question. We are getting familiar with what is paid under the Appropriation Acts. What, as a matter of practice, is paid under statute?
621.
Mr Delaney: A simple example is payments to MLAs. They are under an Act, and they are also covered in the Appropriation Act, so they could be covered under both requirements. The salaries of civil servants, the salaries of -
622.
Dr McCormick: There are specific examples that are not covered by the Appropriation Acts, and one very simple one is the salary of the Comptroller and Auditor General. Would it help if we could provide some more examples?
623.
Mr Delaney: There would be obligations under law, for instance, to pay compensation. I would need to check if that is caught within that wording, but it would not be within an Appropriation Act. It would be an obligation under law, as distinct from an obligation under an Appropriation Act. If a court order were made, that would not be under an Appropriation Act, it would be an obligation under law. I think that we need to call in the legal people.
624.
Dr McCormick: It might be better if we came back with a note with some examples of the standing charges covered by clause 3 as opposed to clause 4. Is that the best way?
625.
Mr Leslie: The clear implication is that the Appropriation Acts cover most of the money, but it would be instructive to know what else there is, and where it is accounted for.
626.
Dr McCormick: It still forms part of the accounts covered in the resource budgeting process. The money will have to be found, but it will be outside the vote and, therefore, recorded separately in the consolidated fund accounts. There is a separate account of the consolidated fund itself, as well as the appropriation accounts, so there is full coverage in accountability terms.
627.
The Assembly has provided a power in which it is saying that there are some things which it wants to see funded routinely and permanently, without the need for them to be brought forward annually by the Executive. Those items are very much an exception.
628.
Mr Close: When a Department presents a requisition, does it apply initially to Department of Finance and Personnel? Is the onus then on the Department of Finance and Personnel making a correct requisition? Does it check that the requisition is correct, and then authorise it with the Comptroller and Auditor General?
629.
Mr Delaney: Yes. It is a fairly straightforward process.
630.
Mr Close: Does the responsibility for the correct requisition lie with the Department of Finance and Personnel or does it lie with individual Departments? What are the powers of the Comptroller and Auditor General in the process? Does he just accept the Department of Finance and Personnel's word?
631.
Mr Delaney: As with everything that the Comptroller and Auditor General does within his constitutional position, we cannot prescribe what he does. Within his function, he can audit anything and comment as to how that process is working. He will satisfy himself that the process is working satisfactorily. He audits the Department of Finance and Personnel, just like any other Department.
632.
Mr Close: I accept that. However, I was concerned with the specific question of a requisition. If it has been approved by the Department of Finance and Personnel, does the Comptroller and Auditor General honour it automatically?
633.
Mr Delaney: He is obliged to do that, yes.
634.
Mr Close: There is, therefore, a responsibility on the Department of Finance and Personnel, is there not, to assure itself that the requisition from the spending Department is correct?
635.
Dr McCormick: Yes. That is in terms of cash management and governed by the framework of the estimates, and approved in both terms. That was approved under the Appropriation Acts, so that is what the Department of Finance and Personnel works under. It checks and ensures before passing it on to the Comptroller and Auditor General.
636.
Mr Delaney: In clauses 1 to 4, the Comptroller and Auditor General is approving the bank transactions, or at least having to comply with them. He is not in the position of auditing them. That is putting it simply. It is quite archaic.
637.
Mr Close: Even at that level, there is still a responsibility on Department of Finance and Personnel to get it right.
638.
The Chairperson: Are Members happy with the clause, or do they want to wait for a response from the Department?
639.
Mr Leslie: I do not have any problem with the way it is set out.
640.
Clause 4 agreed to.
Clause 5 - (Application of sums issued)
641.
Mr Dodds: We have the papers in front of us, and there are 11 different objections to clause 7, for example. Rather than having them read out by the Clerk, I suggest that Committee members read them themselves and then raise any points. That might be a quicker, more efficient way.
642.
The Committee Clerk: It is for Members to decide. The only benefit of doing it this way is that it is in Hansard's record. The letters from the Department of Finance and Personnel will be part of our own record.
643.
Mr Weir: Would it not be sufficient from the point of view of the record for Hansard to say that, relative to whatever clause it is, listed below are the concerns raised and the responses to them? If it is purely a matter of getting the issues on record, the Members can look at the clauses and, if necessary, raise specific points.
644.
The Committee Clerk: It would certainly speed things along.
645.
The Chairperson: OK. We will move to clause 5 and try it and see.
646.
Mr Maskey: If we have any objections we should say what they are.
647.
The Committee Clerk: I was just going to say that there was one concern raised on clause 5.
648.
The Chairperson: Are members happy with the response?
649.
Clause 5 agreed to.
Clause 6: Appropriation in aid
650.
The Committee Clerk: Clause 6 deals with appropriation in aid. There were two issues, one at page 3, lines 30-31, and the second at page 4, lines 10-11.
651.
The Chairperson: You all have the response from the Department of Finance and Personnel. Is everyone happy with that response, or are there any questions?
652.
Mr Leslie: An example of that is forestry service receipts. At the moment, the mechanism by which those are retained by the Department is the Exchequer and Audit Act (Northern Ireland) 1921. We are simply replacing that.
653.
Mr McNaughton: Actually it is the Exchequer and Financial Provisions Act (Northern Ireland) 1950.
654.
Clause 6 agreed to.
Clause 7: Resources Accounts: preparation
655.
The Committee Clerk: As Mr Dodds pointed out, there are 12 issues. The first is at page 4, line 27. The second issue raised is at page 4, lines 33-34. The third issue was raised at page 4, lines 37-39. The next issue was number four, raised at page 4, lines 40-42. The next issue was raised at page 5, line 3. Issue number 7 was raised at page 5, lines 2-3. Issues 8 and 9 were raised in respect of subsection 6. Issue 10 was raised in respect of subsection 7(a). The final issue, number 11, was raised in respect of subsection (8).
656.
Mr Weir: Why is there no number 6? Is that just a typo?
657.
The Committee Clerk: Yes, that is true. There were obviously ten issues, then.
658.
Mr P Robinson: Psychologically, there must be something there.
659.
The Chairperson: Are we happy with the responses from the Department of Finance and Personnel? I know that there has been some discussion on the appointment of the accounting officer in different Departments. Is it the Department of Finance and Personnel that appoints the accounting officers?
660.
Dr McCormick: It is the responsibility of Department of Finance and Personnel to appoint the accounting officers who are responsible for votes. There are also accounting officers for smaller agencies that are part of departmental responsibilities, and it is the principal accounting officer of the Department concerned who appoints that kind of accounting officer. The role of the Department of Finance and Personnel is confined to appointing permanent secretaries as overall accounting officers over votes.
661.
Mr P Robinson: The accounting officer is the permanent secretary - you do not appoint permanent secretaries.
662.
Dr McCormick: After someone has been selected as permanent secretary, they then receive a letter from the Department of Finance and Personnel that confirms their status as accounting officer.
663.
Mr P Robinson: But it always follows, like thunder and lightning.
664.
Mr Weir: Presumably you could not just take a notion to appoint somebody else.
665.
Mr Dodds: I am concerned about point 4 - the question of dates being prescribed in the Bill. The response from the Department of Finance and Personnel was that concern had been raised about the ability of Departments to meet those dates. It is currently discussing this issue with Departments, and it may be more appropriate to amend the dates than the Bill itself. Have you addressed that any further?
666.
Dr McCormick: We also need to have further discussion with the Comptroller and Auditor General, because this affects the schedule of work of the audit office, as well as having implications for how departments work and produce accounts. The schedule of work of the audit office also needs further exploration. We will deal with this as quickly as possible so it can be brought to a sensible conclusion.
667.
Mr Dodds: This could be an area where an amendment may be forthcoming.
668.
Mr Maskey: Point 1 refers to clause 7(3)(c). It mentions disclosing explanations supplementary to, rather than being part of, the formal accounts direction. Is that something extra?
669.
Mr Delaney: We could issue a direction to say that accounting officers have to put some extra information into their accounts. That is what clause 7(3) says, and that could be as a result of a specific activity that a body is involved in.
670.
Mr Leslie: I thought that the Financial Reporting Advisory Board (FRAB) had a role in scrutinising the accounting practise that was being used.
671.
The Committee Clerk: The Minister proposed the introduction of a new clause to deal with inspection by FRAB.
672.
Dr McCormick: This deals with guidance being issued by the Department of Finance and Personnel. It is possible, and our intention would be, to introduce a separate clause that would provide for oversight of that guidance. The two issues can be interrelated, but the formulation here is creating the power to give the guidance that can then be overarched by a requirement that the guidance is subject to independent scrutiny by FRAB.
673.
Mr Delaney: Subsection(2) is the one that says we can issue directions. Subsection(3) is putting those additional conditions on those directions and saying that the accounts at the end of the day, on whatever directions we issue, must be showing a true and fair view and conform to generally accepted accounting practice (GAAP) principles.
674.
The additional point about explanation of the difference in an item in the accounts has the overall purpose of ensuring that the information is robust. It is a due diligence test on any directions that the Department of Finance and Personnel might issue in terms of directions.
675.
Mr Leslie: I have several concerns. "Generally accepted accounting practice" is quite a flexible term. The accountancy profession is in the practice of flexing the accounting practice to suit the circumstances. It is a question of who is vetting what a generally accepted accounting practice is.
676.
The other point is that the basis on which the accounts are prepared may change. How is the Assembly going to scrutinise what has happened? How it is going to compare the new basis to the old basis? How it is going to satisfy itself that what is being done is not a "smoke and mirrors" exercise?
677.
Our concern is driven by what we know has happened in Westminster, which is quite the opposite of what I have just said. They have managed to retain a situation where Parliament has virtually no ability to find out what is going on in the accounts. This was in the teeth of objection during its passage through Parliament, but it was whipped through. Although we have less scope for abuse because we are dealing with an absolute amount of money that is prescribed by someone else, the Assembly needs to be sure that it can understand and see clearly what is going on in the preparation of the accounts.
678.
Obviously the Department will assure us that everything will be entirely transparent, but I am not sure whether that is necessarily good enough if we are to do our job properly.
679.
Mr Delaney: That clause does put an obligation on the Department to ensure that it takes account of generally accepted accounting practice, and, yes, it is like moving sand. The sand is moving to improve accountability in the accounting profession, locally, nationally and internationally, and that is what GAAP is supposed to achieve. The Financial Reporting Advisory Board amendment is an additional safeguard to ensure that any accounts directions we issue, are following generally accepted accounting practices, however those are defined.
680.
Mr Leslie: Could somebody remind me what FRAB stands for.
681.
Mr Delaney: Financial Reporting Advisory Board.
682.
Mr Leslie: Who is on the board, and how is it constituted?
683.
Mr Delaney: There are two nominations from the Treasury. The head of the accounting profession nominates one, and there are half a dozen other people who are nominated onto that particular board which comprises mainly professionals from Departments. It is a professional, technical accounting thing, as distinct from an accountability mechanism, and that is why we talk about this Bill dealing with accounting rather than accountability. It is made up of basically professional-style accountants. The National Audit Office is on it with the Assistant Comptroller and Auditor General, Caroline Mawood. The Audit Commission is on FRAB. It is also advised by people like, Ernst & Young, Deloitte and Touche, and PWC. They seem to go on in rotation.
684.
The Chairperson: Are we generally happy with the situation in clause 7?
685.
Mr Leslie: Subject to seeing this amendment.
686.
Mr Dodds: The dates?
687.
Mr Leslie: No, the Financial Reporting Advisory Board.
688.
Mr Weir: In relation to the point about dates that was raised, there is still consultation going on as to what may come out of it. It is also subject to the one change made in clause 7.
689.
The Committee Clerk: There is one technical point, and that is at point 5. The Committee asked whether the word "Department" should read "department" with a lower case "d".
690.
Mr P Robinson: That is a very important point, otherwise the only people who could become permanent secretaries would be people who worked in the Department of Finance and Personnel.
691.
The Committee Clerk: I was assuming that the Department had no malicious intent. On advice from the Clerk of Bills, that type of correction is deemed to be a technical one and would be taken on board by the Department as a typing correction. It does not require an amendment proposed by the Committee.
692.
I suggest that final consideration of the clause be deferred until the two further issues are clarified to the Committee.
693.
Mr P Robinson: Are we sure that we are right in that? It is not technical in the sense that if it stays with a capital "D" it means the Department of Finance and Personnel, and if it stays with a small "d" any other department. If it means the Department of Finance and Personnel, then it is appointing people from its own number. That is not technical; that is a major change in the Bill.
694.
The Chairperson: Just for the record, can we state what it actually is?
695.
Dr McCormick: There was no intent to use a capital "D" in this context.
696.
The Chairperson: It is the small "d" that we are talking about?
697.
Dr McCormick: As indicated by Mr Robinson, the small "d" is the correct meaning.
698.
The Chairperson: Are members content that this clause is referred back whilst we wait for the explanations?
699.
Members indicated assent.
Clause 8. (Resource accounts: scrutiny)
700.
The Committee Clerk: Clause 8 deals with the scrutiny of resource accounts.
701.
The Chairperson: We will discuss each point individually.
702.
The Committee Clerk: There are six concerns. The first relates to subsection(1). This can be found on page five, lines 19 and 20.
703.
The Chairperson: On the first point, are there any particular questions? Are members satisfies with the response?
704.
Mr Maskey: Can we discuss the three bullet points found in subsection(1). Would any of those preclude the other, or is one or other of those bullet points required? For example, take the situation of a public events company. In the context of "any relevant statutory provision" or "any agreement made between the relevant department and the body" could the words "any agreement made between the relevant department and the body" exclude any relevant statutory provision?
705.
Mr Delaney: Taking bullet point one, you could have a statutory provision that the Assembly wishes to pass that would exclude the Comptroller and Auditor General access.
706.
Mr Maskey: From a public body getting public money?
707.
Mr Delaney: In theory, this is what has been covered in that bullet point. This includes matters such as any relevant statutory provision.
708.
Mr Maskey: Would that not run against the thrust of the earlier clauses?
709.
Mr Delaney: It is theoretical that you could pass that and say that the Comptroller and Auditor General does not have access rights. Therefore we are explaining the clause rather than applying the clause. That is why that is there and refers to that single bullet point.
710.
Mr Maskey: If there were any such body established and if there were any public funding going into that, you must have the protection that that body is fully accessible for scrutiny. Does this leave a loophole?
711.
Dr McCormick: This section mostly provides the basic powers with regard to the audit of departmental resource accounts. The wider issue of dealing with companies will need to be addressed, as it is not easily dealt with in this particular context. It would need the kind of separate amendment that we have been talking about, in terms of providing the right balance of inspection, access and other such rights for the Comptroller and Auditor General. That will be dealt with in terms of the issues of principle. It is difficult to weave it into the words of this bit.. That is why this specifically focuses on resource accounts.
712.
Mr Delaney: With an organisation like the Fire Authority or The Northern Ireland Transport Holding Company, which the Comptroller and Auditor General does not have access to, it is possible that when the clause proposed by Public Accounts Committee has been looked at, the Department of Finance and Personnel may wish to give due consideration to the appropriateness of that clause within this Bill or within the audit reorganistion Bill. Each of those organisations have their own auditors and their own audit committees and processes of measuring value for money. It may be important to consider whether it is carried out by Comptroller and Auditor General public audit or by private-style audit. Furthermore, with regard to local government audit, would you wish the Comptroller and Auditor General to be duplicating the work of the local government auditor so that he has access rights? A body could effectively be audited several times over. Therefore the clause needs to be looked at in detail. The discussion with the Comptroller and Auditor General is important as to the extent and scope of that particular clause. We have undertaken to come back to you on those issues after we have had that consultation and discussion.
713.
The Chairperson: Mr Maskey, do you want to come back again?
714.
Mr Maskey: No, if it is coming back for further consideration, clause 8 will be deferred on that basis - although it is probably ok.
715.
The Committee Clerk: The second point was raised in relation to subsection (1)(d). It can be found at page 5, lines 27 and 28.
716.
The Chairperson: Is everyone happy with that? Let us move on to point 3.
717.
The Committee Clerk: Point 3, which related to subsection (2), can be found at page 5, lines 29 and 30.
718.
The Chairperson: Is everyone happy with the response? Let us move on to point 4.
719.
The Committee Clerk: The fourth concern, which also concerned subsection (2), can be found at page 5, line 30.
720.
The Chairperson: This relates to the material use of resources.
721.
Mr Leslie: I do not know if the clause makes sense. I am looking at line 30.
722.
The Chairperson: Is there any further explanation?
723.
Dr McCormick: This deals with what should be a very unusual situation.
724.
Mr Leslie: I am not worried about that. It feels as though there is a word missing in the phrase "to suggest that a material use of resources required". Should it not be "was required" or "be required"?
725.
Mr Dodds: What is meant is that it required the authority of the Department, but did not receive it?
726.
Mr P Robinson: The "material use of resources required but did not receive the authority of the Department".
727.
Dr McCormick: The kind of case we are dealing with is where, either under statute or through Government accounting, a certain item of expenditure should have come for Department of Finance and Personnel approval - something which is material and a use of resources. The clause tries to address cases where that approval was not obtained.
728.
The Chairperson: Let us move on.
729.
The Committee Clerk: The next concern, number 5, related to subsection (2)(b), and it can be found at page 5, lines 33 and 34.
730.
The Chairperson: Is everyone content?
731.
The Committee Clerk: The final point, which related to subsection (5), can be found at page 6, lines 4 and 5. For the assistance of members, I should perhaps say that the term "vouchers" does not appear in this Bill, but it appears in the initial Exchequer and Audit Act (Northern Ireland) 1921.
732.
The Chairperson: Are we happy? It is a modern way of expressing it.
733.
Mr Delaney: It is an audit term. One "vouches" expenditure.
734.
Mr P Robinson: Is it normal for your repeals to be taken at that stage of the Bill, rather than in the schedule with the rest of the Bills?
735.
Mr McNaughton: Yes. That is standard, and they are also repeated in detail at the back.
736.
The Chairperson: We will have to return to that one. Are Members agreed that that clause can be referred back to enable the first point of concern raised to be examined?
737.
Members indicated assent.
Clause 9 (Other departmental accounts)
738.
The Committee Clerk: Mr Chairman, clause 9 relates to other departmental accounts. There were seven concerns, and the first relates to subsection(1) - the relevant point is on page six, line seven.
739.
The second point relates to subsection(1). It can be found on page six, line eight.
740.
The Chairperson: This was the issue about bodies
741.
The Committee Clerk: Point three relates to subsection(2). It can be found on page six, line 10.
742.
Point four relates to subsection(4). It can be found on page six, line 21.
743.
Mr Chairman, point five relates to subsection(4) again.
744.
The Chairperson: Therefore it is the same issue.
745.
The Committee Clerk: Point six relates to subsection(5). It is on page six, lines 27 to 30.
746.
The final point of concern relates to subsection(6). It can be found, Mr Chairman, on page six, lines 31 and 32. Again, that is about modernisation.
747.
Are there any questions?
748.
The Chairperson: Are members happy with the responses?
749.
Clause 9 agreed to.
Clause 10 (Comptroller and Auditor General: access to information)
750.
The Committee Clerk: Clause 10 relates to the Comptroller and Auditor General's access to information. You will be delighted to hear, Mr Chairman, that there are two concerns. The first relates to subsection(1). It can be found on page six, line 35.
751.
The Chairperson: This was the issue about certifying. OK. Are Members happy with the response? Is everyone agreed?
752.
Members indicated assent.
753.
The Committee Clerk: The second point relates to subsection(1), paragraph (a). It can be found on page six, line 36.
754.
Mr P Robinson: I think we should go to the wall on this one. Why do we have the words "at all reasonable times" in if that is unlikely to happen? Why not allow access at any time? If you believe that he is going to act responsibly and reasonably, why do you require this caveat, which you can use at a later stage if it does not suit you?
755.
Mr Delaney: The counter argument is that, if you expect him to act reasonably, why not put the word in. It is one of these decisions about whether you insert it or not. It is acting reasonably.
756.
The Chairperson: Are there any other points members want to discuss?
757.
Mr Dodds: It is not just a question of acting reasonably in terms of time. It cannot be the case that just because it is 5 o'clock, and the security man is off, that access should be denied.
758.
Mr Delaney: If there were a difficulty with a particular body, it would actually preclude the ability to state a time that was not reasonable. Access time has to be reasonable - for instance, not after 9 o'clock in the evening.
759.
Dr McCormick: It provides scope for what we have done by agreement.
760.
Mr Dodds: Do you knock off early?
761.
Dr McCormick: Not often.
762.
Mr P Robinson: I suspect that the Comptroller and Auditor General does not really want to be sniffing around after 9 o'clock in the evening either.
763.
Mr Delaney: No, but it is saying that he is entitled be given access at reasonable times by a Department.
764.
Mr P Robinson: We are not talking about "Mr Awkward". We are talking about somebody who will want to do his business in a reasonable fashion at any time. He might sometimes need, for some important matter, to get in outside working hours. Maybe there is some time limit applying to him for some reason that we cannot now think of. Why can he not say to the Department that he needs to get in to have a look at this matter, for he has to report the following morning? Will you tell him that he can only get in at reasonable times and that you do not consider this to be reasonable?
765.
Dr McCormick: It would be reasonable in context. If the issue were urgent, then that would be reasonable time. I find it hard to see where the Department would in any sense resist, unless it had a very good reason. If the information is needed in order to facilitate the Comptroller and Auditor General's work, then the Department would need to have a chance to get the required material together. Then if the Comptroller and Auditor General comes in, all the information is there.
766.
There is no question in my mind as to where the power and weight lie. Departments know that they will be held to account by how they respond to this. They will look at this very seriously. They take audit issues and Public Accounts Committee inquiries very seriously and concentrate accounting officers' minds knowing all of these issues are around. They would respond reasonably. There is nothing lost from the Assembly's point of view to have this in.
767.
Mr P Robinson: Just to take you back a step, let us say something has gone wrong in one of the Government Departments. Fraud is believed to have taken place. The C&AG wants to get in there and get hold of those books straight away. In those circumstances, this clause could be used, by the person who is allegedly responsible for the fraud, to hold the C&AG back from going in while work is done to make it more difficult for him to find anything.
768.
Dr McCormick: If it is the C&AG finds any hint of fraud, he will be blowing whistles to the most senior officers in the Department.
769.
Mr Weir: In any form of legislation, you want to have as much clarity and certainty as possible in order to avoid potential disputes. If the phrase "at all reasonable times" is left out of the clause, it is clear that there would be an absolute right of access. Leaving out the phrase would create more clarity than leaving it in.
770.
The Chairperson: What difficulty would the Department have in leaving those words out?
771.
Mr Delaney: If I could just add something to the case study that has been mentioned. If there were a case of fraud, one would expect the departmental accounting officer to call the police.
772.
Mr Weir: What happens if it is the departmental accounting officers who are perpetrating the fraud?
773.
Mr Delaney: It would not be a matter for the Comptroller and Auditor General as to how to get through locks and bolts in order to secure documentation. That would be outside his remit. It would be for him to follow up the matter of whether it was or was not done.
774.
The Chairperson: Is there a need for a right of access at all reasonable times? Where does the clause lose power from the Department's point of view? Why can the Department not assume that the Comptroller and Auditor General is a reasonable person and would only ask for access at reasonable times?
775.
Mr P Robinson: He would be going cap in hand under these circumstances. He would be in control, if you removed that word. Is that what you are resisting?
776.
Dr McCormick: Departments would never see the Comptroller and Auditor General as coming to them cap in hand. If he wants information, then attention is paid and a response is made. The word "reasonable" is included to cover the remote possibility that the officers of the Comptroller and Auditor General might act unreasonably. It is theoretically possible that an overzealous member of staff in the Audit Office might act unreasonably. However, if it were an issue of fraud, then the Department would want to stamp down on that very quickly. That is what all Departments do in practice. The word is to cover overzealous and unreasonable behaviour, which is a theoretical possibility. I do not see any harm in including it.
777.
Mr P Robinson: In this context it is not simply a case of what one person might consider reasonable. It could involve Departments applying different standards of what is reasonable.
778.
Dr McCormick: If there were any doubts as to what is reasonable, the burden of proof would be with the Department resisting access. The right of access would lie mainly with the Comptroller and Auditor General. However, if his office were behaving very unreasonably, and the Department could show that this is so, this clause would be applicable.
779.
Mr P Robinson: That contradicts what you are trying to achieve. You are saying that, in all of these circumstances, you would, on balance, run with the C&AG. Why not include that in the legislation?
780.
The Chairperson: Perhaps the best way for the Committee to move forward is by deciding to make an amendment. We can then debate the matter in the Chamber.
781.
Dr McCormick: We could also talk to the C& AG about it.
782.
The Chairperson: Does the Committee want to make an amendment to drop those four words?
783.
Dr McCormick: The Comptroller and Auditor General is happy with this as it is.
784.
Mr P Robinson: That may well be, but the person in post now may not be the same person in post in a week's time.
785.
Mr Weir: Another factor in this was highlighted by the amendment concerning the Public Accounts Committee (PAC). The Comptroller and Auditor General was generally happy with the Bill and with the amendment. However, when we pressed him about the additional words on the PAC amendment we found that there had been situations he just had not thought of.
786.
To take one example, even if it is just on a very technical point, the C&AG's office said that from a technical perspective it had looked at the legislation and was broadly happy. We were questioning, albeit a small point, whether the word "department" should have a capital "D", which was something that the Comptroller's office had not applied their minds to.
787.
Due to the length of this legislation it is obvious that particular things can occur to the Committee which have been forgotten about, or have not been realised, by the C&AG.
788.
The Chairperson: Does the Committee want to make an amendment?
789.
Mr Dodds: I think we should be proceeding. I do not know whether we need to do it formally now. Do we?
790.
Mr P Robinson: It is the removal of the word "reasonable".
791.
Mr Dodds: That would certainly be our mind at this stage unless there is something else.
792.
The Chairperson: So we are suggesting the removal of the word "reasonable". Are we saying that they should have access at all times?
793.
Mr P Robinson: Yes.
794.
Mr Dodds: I suppose you could have a right of access to any of the documents without any reference to time.
795.
Dr McCormick: Are we saying that departmental staff will have to be on duty 24 hours a day?
796.
Mr Weir: Would it not be better if the four words were removed?
797.
Dr McCormick: What notice would the C&AG have to give for access? Would it be an hour's notice, or a day's notice?
798.
Mr P Robinson: What notice does he have to give under the existing clause? You did not have to have it itemised there, so why do you have to have it itemised here?
799.
Dr McCormick: It is because the clause is stating reasonable times. If the Committee suggests removing that, it would, for instance, have to say if it wanted the C&AG to have access at 1 o'clock in the morning.
800.
Mr Dodds: Is that likely?
801.
Dr McCormick: I know it is not likely but that would be included in the term "reasonable time".
802.
Mr Dodds: I prefer "He shall have a right of access to any of the documents", without any reference to time. It is unusual to get time references in an Act. All these things, if challenged, would be subject to the general test of reasonableness, which takes more than the simple issue of timing into account.
803.
The Chairperson: Access to any documents relating to the Department's account.
804.
The Committee Clerk: Chairman, the wording of the amendment would be on the following lines: "On page 6, line 36, after "access" delete "at all reasonable times"."
805.
The Chairperson: Is everyone happy?
806.
Members indicated assent.
807.
The Committee Clerk: We are now at point two. If those are all the Committee's concerns on this clause, the motion would be: that the Committee report to the Assembly that it is content with clause 10 as amended.
Clause 11 (Resource accounts : non-departmental bodies and other persons)
808.
The Committee Clerk: Clause 11 relates to resource accounts, non-departmental bodies and other persons. No issues were raised with the Department.
809.
The Chairperson: There are no new issues to be raised.
810.
Clause 11 agreed to.
Clause 12 (Preparation)
811.
The Chairperson: Let us move on to clause 12, about which there are a number of issues.
812.
The Committee Clerk: Indeed. The clause deals with preparation, and there are six concerns. The first of these relates to subsection (1), to be found at page seven, line 14.
813.
The Chairperson: Is point one agreed? Any questions?
814.
Mr P Robinson: Is this a cut-and-paste exercise, or is original thought required?
815.
Dr McCormick: This is a developing area where the Treasury is still finding its way. The preparation of the Whole of Government Accounts needs a considerable amount of work, both at Treasury level in Whitehall and here, as it rolls forward. This section of the Bill is to provide the enabling powers. It will require a great deal of work to make more sense so it is not merely an assembly of information but begins to provide a better picture of what is happening, looking at the financial aspects of the whole of government. To provide meaningful and helpful information is a considerable task.
816.
We shall need to look at the implications of the application of accounting policies by different organisations, bringing them together where there are differences, which may exist for very good reasons related to the context and purpose of individual organisations. However, if accounting policies differ, bringing that together to give an overview will be a good deal of work. The intention is to provide something more sensible and helpful. There are also issues about transactions within the public sector where there are grants or loans of various kinds going out of Departments, or in between Departments or other bodies within the scope of the Whole of Government Accounts. We need to think through what emerges as the right picture of government accounts.
817.
Mr P Robinson: Is this more desks in the Department, or is it more work for those there? Do you need more resources?
818.
Dr McCormick: We probably need more resources to do this properly. There are questions to be asked of the Treasury as to the speed and nature of this process. It is an ideal to have Whole of Government Accounts and clarity of accountability in those terms, but the practicalities and details are quite significant.
819.
The Chairperson: Are members satisfied with that response?
820.
The Committee Clerk: The second point relates to subsection(1) and can be found in page seven line 15.
821.
The Chairperson: This brings us back to the bodies.
822.
Mr Delaney: The boundaries of government need to be addressed under the Sharman review. What forms part of Whole of Government Accounts is a key issue for the Assembly. It is also key as regards consultation with the public bodies involved.
823.
The Chairperson: Are members satisfied with the response?
824.
The Committee Clerk: Part three relates to subsection(2)(b), and can be found on page seven, line 21.
825.
The Chairperson: This raises the same issues.
826.
The Committee Clerk: Point four relates to subsection(3), and can be found Chairman at page seven, lines 32 and 33.
827.
The Chairperson: Are members agreed?
828.
The Committee Clerk: Part five relates to clause 12(4) and can be found at page seven, lines 24 and 25.
829.
The Chairperson: Is this a definition of "true and fair"?
830.
Are we agreed?
831.
That is all the items raised.
832.
The Committee Clerk: An issue relating to the Accounting Standards Board was raised, which is identical to one raised earlier.
833.
Clause 12 agreed to.
Clause 13: Obtaining information
834.
The Committee Clerk: Clause 13 relates to obtaining information in relation to Whole of Government Accounts. There were no concerns raised by the Committee with the Department, so it is now a matter of their satisfying themselves that there are no further issues.
835.
Clause 13 agreed to.
Clause 14: Scrutiny
836.
The Committee Clerk: There was one minor concern with clause 14, which deals with scrutiny. It relates to subsection(1) and is on page eight, line 22.
837.
Clause 14 agreed to.
Clause 15: Supplies by departments
838.
The Committee Clerk: There were a couple of concerns about clause 15. The first one relates to subsection(1) and can be found at page nine, lines 3-5.
839.
The Chairperson: Any questions?
840.
Mr P Robinson: What we wanted was an example of what this is talking about.
841.
Clause 15 agreed to.
842.
Clause 16 to 17 agreed to.
MINUTES OF EVIDENCE
Tuesday 19 December 2000
Members present:
Mr Molloy (Chairperson)
Mr Attwood
Mr B Bell
Mr Close
Mr Hussey
Mr Maskey
Mr Weir
Witnesses:
Dr A McCormick )
Mr M McNaughton ) Department of Finance
Mr B Delaney ) and Personnel
843.
The Chairperson: We shall be discussing clauses 7, 8 and clauses 18 to 24.
Clause 7: Resource accounts: preparation
844.
The Committee Clerk: We asked for clarification of several points relating to some of the clauses that we dealt with last week. The first of these related to clause 7, and dealt with the involvement of the Financial Reporting Advisory Board (FRAB) in the oversight of guidance issued by the Department.
845.
The Department has responded and the response is set out in the paper. In summary, it explains the process for the type of oversight that is needed. The Department also comments on the suitability of FRAB. It is interesting to note the Department's expectation that FRAB would prepare an annual report to the Assembly. Finally, the Department suggests that the new clause be relocated in the "miscellaneous" part of the Bill.
846.
The Chairperson: Is it advisable to write FRAB into the Bill? If there is a change of organisation, that would affect the regulations. Is there another way of putting it?
847.
Dr McCormick: The Government Resources and Accounts Act 2000 refers to a suitable advisory group; it does not specify a named organisation. FRAB is the organisation that fulfils the function, but the terms of the Bill are more general. It would make sense to take that approach.
848.
The Chairperson: We should leave it more general. A different organisation may be relevant to a different time.
849.
Dr McCormick: Times may move on, and there may be need to change. FRAB is a relatively recent creation. It is best for the Assembly to have the latitude to change.
850.
The Committee Clerk: On page 5 line 3, there is a reference to the "department". The Committee reached the conclusion that it should read "Department". We promised to see whether that required a formal amendment or was just a simple typing correction. The advice from the Office of the Legislative Counsel is that, in this instance, the change is a substantive change. We would be changing the word from the "Department", meaning the Department of Finance and Personnel, to a "department". Therefore, in light of that advice, it is necessary for us to include an amendment in our report, if Members feel that they are happy to do so.
851.
The Chairperson: Are Members content that the Committee report to the Assembly that clause 7 should be amended as follows: in page 5, line 3, delete "Department" and insert "department"?
852.
Members indicated assent.
853.
The Chairperson: Are Members content that the Committee report to the Assembly that the Minister of Finance and Personnel should introduce an amendment to the Bill to require the Department to consult the Financial Reporting Advisory Board (FRAB) - perhaps we should say "or some such body" -
854.
Dr McCormick: We could say "a body of people with appropriate experience".
855.
The Chairperson: We need not actually mention the name of the body. Are Members content that the Committee report to the Assembly that the Minister of Finance and Personnel should introduce an amendment to the Bill to require the Department to consult a body of people with appropriate experience of financial reporting principles and standards before issuing guidance on the preparation of resources accounts and Whole of Government accounts. The aim is to ensure that any departures from generally acceptable accountancy practice are justified.
856.
Members indicated assent.
857.
Clause 7, as amended, agreed.
Clause 8: Resource accounts: scrutiny
858.
The Committee Clerk: Mr Maskey raised an issue relating to clause 8. We wanted to know whether the amendment proposed by the Public Accounts Committee and, at least at this stage, informally adopted by this Committee would have any effect on the way that clause 8 will operate. The Department's response was that
859.
"The proposed amendment to clause 18 suggested by the Committee should have no direct impact on the provisions of clause 8, which deal specifically with the audit scrutiny of departmental resource accounts."
860.
You may recall that the proposed amendment deals with the inspection powers for the Comptroller and Auditor General.
861.
The Chairperson: Members seem to be content with the Department's responses. Is the Committee happy to report to the Assembly that it is content with clause 8?
862.
Members indicated assent.
863.
Clause 8 agreed to.
Clause 12: Preparation
864.
The Committee Clerk: Clause 12(3) makes reference to
< size=1>"such forms as the Department thinks fit."
At the previous meeting, we discussed whether the phrase "thinks fit" might be replaced with "may determine", or something that indicates that there is a process behind it. I think that the Committee suggested that to the Department, although not in writing.
865.
The Chairperson: Can we agree an alternative set of words?
866.
Mr McNaughton: A couple of alternatives were suggested including "may reasonably determine".
867.
The Chairperson: Are Members content that we should suggest an amendment - page 7, line 23, omit "thinks fit", and insert "will reasonably determine"?
868.
Members indicated assent.
869.
Clause 12, as amended, agreed to.
Clause 18: Examinations by Comptroller and Auditor General
870.
The Committee Clerk: Clause 18 is the clause to which the proposed Public Accounts Committee amendment relates. As the Committee is aware, the proposed amendment is also supported by the Audit Committee. I believe that it has this Committee's support, too.
< size=1>We asked the Department for a comment, and they said: "The Department welcomed the draft amendment proposed by the Public Accounts Committee and supports the extension of the C & AG's inspection rights, where this would be appropriate. The Department is therefore currently considering the implications of the proposed amendment and we will need to put advice to the Minister on this and provide a detailed response in due course."
871.
There is another substantive point. It has been suggested that the amendment may be best inserted after subsection (10). There is one possible course of action. The Minister may seek advice from the Office of Legislative Counsel on the precise wording of the amendment, in order to ensure that it does not interfere in any way with the operation of the Bill. Nonetheless, the Committee must make a recommendation to the Assembly. At some point, the Minister might suggest a modification to that and propose his own amendment. However, the amendment from the Public Accounts Committee, it is reasonable to suggest, also has the support of the Audit Committee.
872.
Mr B Bell: Yes. It did have the support of this Committee, but I was under the impression that we had amended the amendment, because it was not strong enough. Is that correct?
873.
Mr Weir: That is the amended amendment. It includes the reference to < size=1>"significant public funds".
874.
It is not the original Public Accounts Committee amendment, but an amended version.
875.
Mr B Bell: That is OK. I was just seeking clarification.
876.
Dr McCormick: This is the heart of the issue. We have thought about this carefully and have held further discussions with Mr John Dowdall. We have not yet had a chance to get the Minister's opinion on the subject. All we can do this afternoon is try to understand fully the Committee's points, convey our perspective on the issue and explain why the original proposal as it was. We need to think carefully about this, before we give further advice to the Minister on how best to proceed.
877.
There are issues relating to definition and precision of meaning. I am not sure that we can capture fully the implications of either the original amendment or the amended amendment. There are questions about the precise definitions of "functions of a public nature" and of "significant public funds" - those are very wide ranging and it is entirely right that the scope of the audit trail that the Comptroller and Auditor General can follow, be open.
878.
The phrase "significant public funds" in the amendment is a very wide definition. Would it be appropriate to proceed with that power without consulting the bodies that would be affected. The phrase "significant public funds" would embrace a wide range of bodies in the private and voluntary sectors and involve large and small companies. They will all be in receipt of such funds.
879.
The main principle, which still applies in Whitehall, is that the Comptroller and Auditor General pursues the issue of how Departments have managed their funds and what checks and balances they have applied. If the Departments are paying grants to private or voluntary sector organisations, they must have applied controls and conditions of grant. Departments will be accountable for that to the Public Accounts Committee. How far that applies to the truly private sector is another issue. The question is whether it is proper to proceed in that way without any consultation with the private sector, or with the bodies who would be directly and immediately effected.
880.
The amendment would give the Comptroller and Auditor General a very wide range of powers immediately on the enacting of the legislation. There would be no forewarning, be it to football clubs, voluntary sector organisations or to large consultancy firms. Would the C & AG have access to records anywhere? The reference to "significant public funds" creates a wide-ranging issue. The Committee should consider whether to proceed in that way. We all want the Bill to secure the right level of accountability.
881.
Mr Weir: We are considering inspection powers, rather than audit powers. That was acknowledged.
882.
If a body is receiving public money, we should be able to ensure that the money is used correctly Examples were given and, to be fair to the Comptroller & Auditor General, he had not originally thought of some of them: he acknowledged that to us. The principle in the amended amendment is the same as that in the original. All that we are doing is, probably, lowering the threshold. For instance, a private company could be substantially funded with public money; that brings in all the points that you made about consultation with private companies or voluntary bodies. All those things could be covered by reference to substantial funding, but we are talking about "significant public funds".
883.
There is no change in principle; we are just charging the number of bodies that could be caught by this Bill. There is no argument on the point of principle.
884.
Mr Close: I concur with Mr Weir's point: we are talking about inspection not audit. Secondly, I cannot, under any circumstances, visualise a situation in which publicly funded bodies would not be subject to inspection. We do not need to consult them before introducing or extending such powers. If you make a distinction for grant-aided bodies, there could be a point in some consultation. As Mr Weir said, that could be dealt with by lowering the threshold in clause 18 through our amendment.
885.
Dr McCormick: It would create a situation from one in which decisions on granting inspection rights was in the power of the Department - as proposed in the Bill - to a situation where such rights would be general and automatic. That would be a shift of principle.
886.
Mr Weir: Would it be a shift of principle whichever amendment we go for?
887.
Dr McCormick: It could be that proceeding in this fashion may, for some reason, not be in the public interest. In those circumstances, the Department could help the Committee and the Public Accounts Committee to ensure that the final outcome is in the best interests of all concerned and, especially, in the interests of accountability. There are other public interest considerations that we need to draw out.
888.
There are two points: will the right be directly given by the Bill, which would be the effect of either amendment; and what is the breadth and extent of the right? A much wider range of bodies could be covered by the phrase "significant public funds". It could include organisations in which a small percentage of money comes from public funds, but they are, for some reason, significant. It could mean a big contract for a very large company. What does the word "significant" imply? Is that the right way for us to proceed, or is it possible to proceed in another way.
889.
That is not the focus of the Bill. The Bill is to introduce resource accounting and budgeting. The proposed audit reorganisation Bill will cover audit matters. That Bill will provide, as was said in the Minister's letter some time ago, the opportunity for us to look at those matters more fully, make sure that the definitions are considered more fully, allow the Sharman review to take its course, and let us deal with the implications that flow from that. It is a possible alternative course that the Committee might want to consider.
890.
Mr Weir: There are two complications. First, I would not be happy with the matter being put on the long finger. Secondly, Dr McCormick spoke about a large company receiving significant funds. Those funds might be a small part of the company's overall turnover, compared with other companies who receive proportionally higher funding, in percentage terms. In that context, the quantum, rather than percentage, will be the important thing. From the Comptroller and Auditor General's point of view, which of the two types of funding is more important, in terms of making sure that funds are being properly used and spent? Would it be a contract giving £5 million of public money to a very large company, or would it be a small contract involving £20,000 grant, which may be the entire budget of a particular body? In my opinion, if we want to that Government resources are used properly, the £5 million grant to the large company is much more important than the £20,000, which may represent 100% funding for a particular body. The converse must be looked at.
891.
Dr McCormick: The main way to keep that fully under control is through the contract with the private sector body and the conditions of grant, or whatever arrangements have been made to govern that payment. The arrangements must be tight and proper. Procedures and procurement rules must be followed to ensure that the gateway is right. Accountability, in that context, would not involve the Comptroller and Auditor General in examining the large company's books. If one part of a world-wide company received a grant from a Northern Ireland agency, would our Comptroller and Auditor General have the right to inspect their books anywhere in the world?
892.
such as the Comptroller and Auditor General had been able to intervene sooner would something like the De Lorean case have been spotted earlier? De Lorean was not public body and it was not entirely funded by public money or - it may be argued - substantially funded by public money, but certainly received significant funding.
893.
Dr McCormick: As the Comptroller and Auditor General said last week at the Public Accounts Committee, he does not have powers in anticipation. His powers are in relation to inspection and audit after the event.
894.
Mr Weir: The case could be ongoing. He should act to stop more money going down the drain.
895.
Mr Close: My ears pricked up when I heard that name "Sharman" and the suggestion - I hope that I am not doing Dr Andrew McCormick a disservice - that the import of our proposed amendment should be kicked aside for another day, because it might be more extensive than he had hoped. I would oppose that.
896.
The Committee is trying to ensure that the Comptroller and Auditor General has access to public sector bodies, at least by way of inspection rights. I do not think that there is anything about that that we should shy away from, or be concerned about in the slightest. In fact, the opposite should be the case. The Committee's responsibilities have been firmly laid down by the Assembly. As far as I am concerned, any attempt to say "Well, another day will do" should be strongly resisted.
897.
Mr B Bell: I agree with Mr Seamus Close on that matter. I am concerned about the delay, and I pointed that out at the time. What will the delay be? Will there be a delay in any case? Will it arise whether we accept the original Public Accounts Committee amendment or this Committee's new amendment?
898.
Dr McCormick: The powers would exist immediately if either of the amendments were to be accepted. The alternative scenarios would not involve any delay in anything that would matter to this Committee or the Public Accounts Committee. Even if we ran with the Bill as it is, or with some other modifications, if the Public Accounts Committee really wanted something to happen in a particular case, the Department would make an order to provide inspection rights.
899.
The Bill already provides a right of inspection and I am not sure what more we can do with it. We could ensure that, in cases in which the PAC wanted the C&AG to have an inspection right for good reasons, such a request would be implemented directly, as is proposed in the Bill in subsections (6) and (8). There need be no delay in giving the C & AG inspection rights in cases in which this Committee or the PAC wishes him to have those rights. That could be done, and I would be astonished if the Minister did not provide a letter or whatever reassurance is necessary to confirm that the Department is not there is resist such rights of inspection.
900.
Mr Weir: Would either amendment delay the Bill?
901.
Dr McCormick: No, but we need workable definitions of the phrases "functions of a public nature", "significant public funds" and "substantively funded from public money." Those issues should be considered.
902.
Mr Weir: Is it fair to say that it will create additional work, but will not effect the timescale?
903.
Dr McCormick: That would depend on whether there was provision for consultation with the bodies that would be effected. That would delay the process.
904.
Mr Weir: Would that apply whichever amendment were chosen?
905.
Dr McCormick: That is correct.
906.
Mr Close: You mentioned clause18(6).
907.
Dr McCormick: I apologise. Clause 18(6) is connected with audit, rather than inspection. I meant 18(8).
908.
Mr Close: I have difficulty with the fact that it puts the inspection operations of the Comptroller and Auditor General totally at the discretion of the Department. We would be saying - I will exaggerate a little - that the Comptroller and Auditor General can only operate at the discretion of the Department. That is not right. It is not what we are trying to achieve.
909.
Dr McCormick: The Department is also trying to secure inspection rights where they are needed. We have a common interest in that.
910.
Mr Delaney: Under this clause, the Comptroller and Auditor General would need the Department's agreement or access rights. The Department itself is accountable to the Assembly, and is required to come to the Committee and explain its actions. Indeed, the C&AG can go to the PAC. The amended clause would give unfettered discretion. Constitutional issues may be raised if prerogative power is granted to an individual or who is not accountable. In that case, we would have to justify invoking the clause to the PAC or to this Committee. The C & AG should be able to invoke the power of inspection without recourse to anyone. The Minister may not be happy to adopt that rationale, which is why we are discussing it today.
911.
With regard to the point about timing and consultation, we feel that accountability has to be accepted by bodies.
912.
If we put this clause in place without consultation with the bodies they could raise this as an issue. Individuals, partners, and directors within those bodies might say that the clause and the accountability has been put in place without any consultation. That would undermine the objectives of the accountability arrangement being put in place.
913.
Mr Maskey: There are issues raised by the Committee which have been well aired. Judging from the Department's responses, they feel the Minister may have issues to raise also. We have put forward our queries and the Department has responded. We are not in agreement. The Department is identifying some questions that the Minister may have about constitutional legislation and so on.
914.
Mr Close: We may have got to the kernel of the matter; the absolute independence of the Comptroller and Auditor General, and that is a virtue. We should try to avoid making the independence of the Comptroller and Auditor General discretionary. Let us keep a tight rein on that. I am not questioning the motives behind it, but we want to break those shackles and move away.
915.
Dr McCormick: The Assembly and the Committee want to find what is best in the public interest. Accountability is a massive consideration in any context but is not the only one. If what is being proposed were to create a situation in which companies felt that there was a more rigorous, intrusive approach to inspection here compared to other regions, they might not want to do business here. That might happen as a misunderstanding of what is intended and through misapprehension about how the practice might be developed by the Comptroller and Auditor General.
916.
That is just a consideration. I am not putting it forward as a massive consideration. It is worth pausing and thinking about the matter before adopting what is a very wide-ranging power. I want to put forward an alternative which can achieve the same end; full inspection rights. That alternative is to retain the status quo where it is by order made by the Department; not by Departmental discretion or whim but is on the basis of defined and relevant considerations - one of which I would suggest could be the stated views of the PAC. Is there room to say here that in considering what inspection rights to provide, the Department must have regard for the views of the PAC?
917.
Mr Close: If I were asked my preferences, I would look at lowering the threshold that Mr Weir referred to in the amendment that we are considering. If we are talking about public sector bodies, I would advocate lowering the threshold as an additional clause, rather than adding a discretionary right for the Department to clause 18(8).
918.
The Chairperson: Returning to the point that Mr Bell raised. Referring to the original amendment that came from the PAC, is the Department saying that that would be acceptable as it stands?
919.
Dr McCormick: We need to advise the Minister on the relevant considerations and come back to you on that.
920.
The Chairperson: So, there is really no difference between the two amendments. That is the point.
921.
Dr McCormick: The difference is the reference to significant public funds, which widens it very considerably.
922.
The Chairperson: The Committee has to decide whether they want the additional words included or whether they are happy to run with the PAC amendment on its own, which would seem to be more acceptable to the Department.
923.
Mr Weir: I would make two points. It seems that the bulk of the complaints concern the overall unfettered power of the Comptroller and Auditor General and the aspect of consultation. I do not know whether we have to make a decision today. There were indications that the Minister had not, as yet, produced a view, and it may be worthwhile waiting to hear what he has to say. Presumably, he will have a view by the date of the next meeting, before we take a final decision on what version, if any, we should accept.
924.
The Chairperson: The only difficulty is from the point of view of writing the report before 26 January. Maybe we should leave the matter, as it is, and ask the Minister to come back with a report. We can make changes then.
925.
Mr B Bell: If our amendment included the words "public sector bodies only", for instance, at least that would extend the Comptroller and Auditor General's powers. I support the amendment, despite hearing about the delay. Our concern was that the Comptroller and Auditor General did not have powers to deal with all public sector bodies, and we wanted something included to enable him to do that. This amendment extends the powers because of the examples we got from Mr P Robinson.
926.
The delay concerns me. The Public Accounts Committee wants the Comptroller and Auditor General to have power to deal with all public bodies. That is what we were asking for but the Committee rightly decided that was not good enough, having regard to the examples that were given. That is fine, and I would still go for an amendment, but if it going to delay this whole process, I think we would be as well to do something along the lines that Mr Close mentioned concerning a separate clause.
927.
Dr McCormick: I do not see any difficulty in including the words "inspection of any public sector body". That does not seem to require any check by Departmental order being made to a subsection in the form of the element which referred to public sector bodies. It does not seem to have that problem.
928.
Mr B Bell: The Comptroller and Auditor General does not have that power at the moment.
929.
The Chairperson: Do we have a copy of the original proposal?
930.
The Committee Clerk: The wording would have been:
< size=1>"The accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if the body exercises functions of a public nature or is entirely or substantively funded from public money."
931.
I think that was the original Public Accounts Committee proposal.
932.
Dr McCormick: Those phrases - especially the phrase "functions of a public nature" - are certainly more open to interpretation. The phrase "public sector" is more capable of a straightforward and tight definition. If the key issue is moving the process forward, a quick resolution is possible. I hesitate to say that "functions of a public nature" could be finally and satisfactorily defined within the timetable of this Bill.
933.
The Chairperson: Those words actually already appear in clause 18 (7)(a).
934.
Dr McCormick: Yes, I appreciate that. But in that context, because the power does not come into effect until there an order by the Department that provides time for definition. If definition is an issue, there is time for it to be dealt with. If we do it this way, then as soon as this Bill receives Royal Assent the phrase is there, whether it has been thought through or not.
935.
Mr Maskey: I accept the need to push on and get it sorted out. However, I am still very reluctant to give an unfair advantage to some organisations, who may be in receipt of very substantial sums of public money, and who would not be subject to the same scrutiny as public sector bodies. Anyone who is getting public money should also be subject to the same degree of scrutiny.
936.
I agree with what you say about not wanting to be intrusive, as you can put any organisation off by too much scrutiny and inspection. Any community organisation will tell you that they probably spend a quarter, if not a third, of their time meeting all of those demands. That is fair enough. I would like to hear some more of the Minister's arguments. I have not heard them yet.
937.
Mr Attwood: I have some sympathy with what Mr Maskey is saying. If you read one of the possible amendments, you really need the advice of legislative counsel as to what it means. If there were only one word or term that was open to, or needed, interpretation, we might agree to proceed. However, there are a number of terms that require some clarification and some very good advice.
938.
Secondly, we have not heard the Minister's view. His view might be able to significantly narrow the difference between us. I get the sense from what the officials are saying that the wish is to narrow whatever difference there might be. I do not know if that is ultimately feasible, but we should give the Minister and the officials time to speak on that.
939.
I do not agree with Mr Maskey's point about scrutiny. I think that officials in the North have said for too long that fair employment legislation puts unfair demands on employers and that it is a disincentive for them to invest. You can say the same about health and safety regulations. Now we are saying it in respect of auditing public moneys. While I hear the argument, it is offering a reason too quickly for not doing something. However, I also hear what the officials have said. We should not proceed today to the point of proposing an amendment of one sort or another.
940.
The Chairperson: In working with the partnership board, I heard most community groups say that European funding is not worth the hassle, because there are so many monitoring forms to fill in. That is where the issue of more monitoring comes in. I would like to tie this down. It would be good if Dr McCormick could, in relation to clause 18, come back to us with wording, and the views of legislative counsel and the Minister, by 9 January 2001. It means that the Committee staff can write up the rest of the Bill, excluding clause 18.
941.
Mr Close: Time is of the essence. The time strictures are not of our doing. We have been prepared to consider one sensible amendment to allow us to proceed without holding the Bill up for other consultations. I re-emphasise that point. I also draw attention to the assurances that we require with regard to auditing performance measures, including the bodies established as limited companies by the Government. We sought assurances last time that those two issues would be included in future legislation. We would greatly appreciate those assurances, preferably in writing.
942.
Dr McCormick: We do not have the Minister's view on these points. Advice has been provided by the Treasury regarding this subject, and this advice mentions how it whould have the effect of making the Comptroller and Auditor General a companies act auditor. The legal issues in this context are not straightforward, and the Treasury has said that the Government will require details of Lord Sharman's review on that matter. Certainly, there are genuine complexities involved here. The Comptroller and Auditor General within the remit of companies legislation. At present, his inspection rights are clear and automatic. A company established by the Government, is regarded as being in the public sector and inspection would be carried out on a straightforward basis.
943.
The next point is whether or not it is right for the Comptroller and Auditor General to act as the auditor of such companies. That requires further consideration. Legal issues are not straightforward. There are issues here of -
944.
Mr Close: Of accountancy qualifications?
945.
Mr Delaney: Yes. This powerful appointment ought to be made by the accountancy body, which would certify that person as a recognised auditor. Everyone in company law must be recognised in that way. A constitutional challenge immediately comes into play here.
946.
Mr B Bell: The objective of this exercise was to prevent us having to wait for the Sharman report. Unfortunately, it seems that we will now have to wait for the report.
947.
The Chairperson: In what manner does the Scottish legislation covers this matter?
948.
Mr Delaney: Under general company law - not only in Scotland - it is compulsory that the person is an eligible qualified accountant. Therefore, the accountancy body must be a recognised supervisory body. You have to submit to their training, discipline and educational requirements. That principle applies commonly, in parity in UK company law, across Northern Ireland, Scotland, England, Wales and also within the South of Ireland. Company law in the South of Ireland mirrors the exact accountancy qualifications of a common body in the British Isles. The sections and subsections may be differently numbered, but they are of the same effect in each jurisdiction. To audit a limited company, the person must be a member of a recognised supervisory body, as that body determines their individual eligibility by way of their registration, training, discipline and quality assurance process. It is also necessary to submit certain information such as pay reviews. However, this does not happen for the Comptroller and Auditor General function within the UK.
949.
Dr McCormick: Does this place a rider on the independence of the Comptroller and Auditor General in a certain sense? Again, I am not confident of giving assurances on that at this stage. To ensure that some bodies are genuinely established limited companies, there is a fully effective audit and accountability arrangement for them to fulfil. However, I am uncertain as to how that is achieved.
950.
Mr Delaney: There is a nervousness with the Sharman process. It is felt that legislation may be passed that permits the appointment of people to be company law auditors, despite not having succumbed to the process of a regulated supervisory body approach with regards to information such as eligibility criteria, peer reviews. This may attract criticism in terms of the relevant accountability mechanisms. The mechanisms that may be put in place and are currently being further developed. Therefore, there is an accounting profession view on this as well as a Treasury view.
951.
Dr McCormick: I shall turn to the question of the audit performance measures. That came up in the informal discussion with the Public Accounts Committee last week. We support the idea of independent validation of performance and information. It is in the public interest that, as Mr Dowdall said last week, we are not in a situation where the standard of measurement is is set within a Department. Public service agreements would not be expected to be effective if that were the case. Therefore we support and emphasise independent and external validation.
952.
I hesitate to link that to financial audit and to a situation where it is part of a very rigorous accountability process. That may scare the horses in that it would take Departments to a situation where their approach to developing performance measurement would be cautious.
953.
Last week, the Comptroller and Auditor General mentioned a case concerning the Rates Collection Agency. He found evidence that the process could be better. I am unfamiliar with the detail, but the principle is there. Another example is in the area of school performance. That is already a controversial matter and the definition of cause and effect is difficult to establish. For instance, what extra pound made what difference to teaching standards, and in turn made what differences to school performance. That is a complex chain of cause and effect.
954.
To suddenly and straightforwardly make that a matter for financial audit in which an accounting officer can be called before the Public Accounts Committee to account if that element of expenditure had not been fully effective in achieving performance targets, is setting the bar of accountability at a very high level. It is where we all need to want to go. However, is the high jump training sufficiently advanced for people to be taking that leap? I hesitate over that. We need to develop effective external validation, but I wonder if people will feel put off when it is part of financial audit.
955.
Mr Close: I hear what is being said, but in our short experience some Departments set their targets and the bar at extremely low levels and then proceed to give themselves a pat on the back because of the improvements that they make. However, those improvements are clearly superficial. I am not concerned about the worries of Departments; I am worried about accountability. That has to start with performance measures. If Departments want to strike silly performance measures we should know about it and we should be prepared to state quite clearly and categorically that those measures are wrong, and must be made right. It should not be done in an antagonistic way.
956.
Dr McCormick: Those options are already open to the Comptroller and Auditor General with regards to value for money audit. There is nothing to stop the Comptroller and Auditor General examining those issues and commenting on them in a value for money context. The extra step that I am hesitating over is bringing them into the financial audit context which is much more precise and detailed. That context introduces a concept of true and fair view, et cetera. It asks if this is fully rigorous. The value for money context asks if it is fit for a purpose. The financial audit context introduces a wider ranging scope.
957.
In financial audits the bar for the standard of detailed information is very high. Supporting information to go along with it requires the audit trail to draw out all the links between expenditure and outcome. That is something that the public sector has not got used to.
958.
The issue is genuinely complex and difficult in a lot of sectors, and also highly controversial in certain contexts.
959.
The Chairperson: We are going to have to end the debate on this part of Clause 18. If the Minister can reply by 9 January 2001, if you could come back with written amendments for us to look at, that would be the best way forward, particularly if the amendments were available in advance. However, that may not be possible. We could look at the variations, and see if there would be legislative competence on those. Are Members happy with that?
(Members agreed to defer decision on clause 18 until 9 January 2001)
Clause 19. (Reports of the Comptroller and Auditor General)
960.
The Committee Clerk: Members will be glad to know that there are no other substantive items on any of the other clauses. There was a minor issue raised as far as clause 19 was concerned regarding on page 10 line 29, the phrase "as soon as possible". It is a matter for members to decide if they are happy to leave it as it is or whether they would prefer to use some alternative. The alternatives were "without delay" or "as soon as is reasonable."
961.
The Chairperson: That will be the case anyway.
962.
The Committee Clerk: Are Members happy that the Committee should report to the Assembly that it is content with clause 19?
963.
Clause 19 agreed to.
Clause 20. (Public bank accounts)
964.
The Committee Clerk: There were no issues in relation to Clause 20. Are members content that the Committee reports to the Assembly that it is content with Clause 20?
965.
Clause 20 agreed to.
Clause 21. (Interpretation)
966.
The Committee Clerk: A small issue was raised with regard to the definitions of the words "inspection" "examination" "certified". The Department has taken this to the legislative Counsel. They have indicated that the words have normal dictionary meanings, and nothing more than that. Are members happy that the Committee reports to the Assembly that it is content with clause 21.
967.
Clause 21 agreed to.
Clause 22. (Amendments and repeals)
968.
The Committee Clerk: There are issues on clause 22. Are members content that the Committee reports to the Assembly that it is content with clause 22?
969.
Clause 22 agreed to.
Clause 23. (Commencement)
970.
The Committee Clerk: There are no issues on clause 23. Are members happy that the Committee reports to the Assembly that it is content with clause 23?
971.
Clause 23 agreed to.
Clause 24. (Short title)
972.
The Committee Clerk: There was no concern about the short title. Are members content that the Committee reports to the Assembly that it is content with clause 24?
973.
Clause 24 agreed to.
Schedule 1 (Minor and consequential amendments)
974.
The Committee Clerk: Is the Committee happy to report to the Assembly that it is content with schedule 1.
975.
Schedule 1 agreed to.
Schedule 2 (Repeals)
976.
The Committee Clerk: Is the Committee happy to report to the Assembly that it is content with schedule 2?
977.
Schedule 2 agreed to.
978.
The Committee Clerk: If Members agree, the Deputy Clerk and I will draft a report for the Committee. We know what the Committee's considerations are, and hopefully we will be able to finalise clause 18, and finalise the report.
979.
The Chairperson: We will meet again on Tuesday 9 January 2001. Thank you very much.
MINUTES OF EVIDENCE
Tuesday 9 January 2001
Members present:
Mr F Molloy (Chairperson)
Mr J Leslie (Deputy Chairperson)
Mr B Bell
Mr S Close
Mr N Dodds
Mr D Hussey
Mr A Maskey
Mr P Weir
Witnesses:
Mr M Durkan MLA, Minister of Finance and Personnel
Mr M McNaughton ) Department of
Mr A McCormick ) Finance and Personnel
980.
The Chairperson: I wish a happy and successful new year to all Committee members, the Minister and departmental staff.
981.
The Minister of Finance and Personnel (Mr Durkan): I am grateful for the invitation to attend the Committee session, but more importantly I appreciate the work that the Committee has done in its consideration of the Government Resources and Accounts Bill and the significant progress that has been made. However, there are some issues that remain outstanding and I appreciate the opportunity to discuss those.
982.
I wrote to the Chairperson in response to his letter that outlined some of the Committee's considerations and concerns in relation to the Bill. In that letter I indicated that I concur with many of the points made by the Committee.
983.
I have also received helpful reports from officials on the sessions which took place before Christmas. In light of the considerations involved I have no problems with the other amendments proposed by the Committee, other than those that are still the subject of outstanding issue. The three Committees that we have spoken to have agreed on the remit of the Financial Reporting Advisory Board (FRAB). I welcome that, but some points remain outstanding. Clause 18 is an obvious one. I am content that the Bill be amended to give the Comptroller and Auditor General (C&AG) a right of access to all public sector bodies. We need to achieve a satisfactory working definition of that term, and we will have to work with the Office of Legislative Counsel to achieve the right outcome.
984.
I would still hesitate to accept the proposition that I accept immediate access rights to any wider definition of classes of organisation, such as those in receipt of significant public funds or those exercising functions of a public nature. I am not averse to the intent and motive behind such suggestions, but I want to make sure that we get things right. In reality, the inclusion of such wide phrases would radically widen the scope of the provisions to include many private sector firms and many grant-aided bodies, large and small. This would have implications for them and this would make a significant difference. We have not had the level of consultation which might have been expected by many bodies or those whose interests are affected.
985.
I am not averse to the intent or the approach, but we must be cautious in order to ensure that we get the language and procedures right. Wider consultation is needed, given the extent to which this could alter the scope of arrangements. If the Department sponsored such a change, the various bodies would expect it to undertake much wider consultation. They would also expect those sort of proposals to have been included in any initial consultation on this subject, but that did not happen.
986.
From our point of view the intention of the Bill is to facilitate, rather than impede, accountability. I have also suggested that we oblige the Department of Finance and Personnel, in clause 18(10) of the Bill, to have regard to the views of the Public Accounts Committee (PAC) in respect of any order made under clause 18(6) or (8). The result of this would be that if the PAC wished to break through a restriction of access by the C&AG, the Department of Finance and Personnel would make an order to that effect. This would be the case unless a major issue of public interest dictated otherwise, but I cannot anticipate or even give an example of such an issue at this point. The likely effect is that access would be given where it is sought.
987.
The combination of those changes should avoid any delay in widening the C&AG's access to information. If the Committee is content with that approach I will instruct the Office of Legislative Counsel to prepare and refine the necessary clauses.
988.
I intend to look at all of these issues more fully within the Audit Reorganisation Bill, and that will give us further opportunity to consider the Sharman Review findings. I intend to bring forward proposals to complete what we are beginning in the Government Resources and Accounts Bill (GRAB), which is a widening of the powers of the C&AG to ensure stronger accountability. However, it would be premature to commit to precise policy in advance of the outcome of the Sharman Review. I am not saying that we are tied to the recommendations of that review or to the responses that may come from Whitehall or Westminster level to those recommendations. We are making sure that we will be taking decisions when we are in possession of all the information.
989.
Mr Weir: As regards the amendment that the Committee put forward concerning clause 18. You are objecting to the phrase "in receipt of significant public funds" or "exercising functions of a public nature" which you say are not particularly well defined. Do you prefer the phrase "public sector"?
990.
Mr Durkan: Yes. I would add the caveat that we would need to make sure that we get the definition of public sector bodies correct.
991.
Mr Weir: You are saying that you are objecting to the Committee's wording because of lack of definition?
992.
Mr Durkan: Yes.
993.
Mr Weir: Why then is the phrase "exercise functions of a public nature" good enough in clauses 12(1) and 18(7)(a)?
994.
Mr Durkan: We are talking about a different function in clause 18.
995.
Mr Weir: Surely the question of clarity is exactly the same? If there is a judgement to be made about whether a body exercises a function of a public nature, which the Department is to make a judgement on in clauses 12(1) and 18(7), why does that, from the point of view of definition, provide difficulty in our amendment?
996.
Mr Durkan: Although the language used is the same, we are talking about different functions and purposes. Let us look at what we are dealing with in clause 18.
997.
At previous meetings, examples were given of what might be meant and football clubs were cited. We need to be clear and precise about what we mean. We are not giving the C&AG a role in relation to matters that go further than the basic intent that we all share. We all want to ensure that the C&AG is in a stronger, readier position to follow what is happening with public money regardless of the purpose for which it is given. The problem with the current wording of the Committee's amendment is that it sets no limits. It does not confine the C&AG's interests to the public sector and we need to come up with a tighter definition.
998.
A number of companies receive public money and the wording of the Committee's amendment - as it stands - raises the question of whether those companies are to be open for audit by the C&AG. We also have the issue of grant aided bodies. The Committee has heard previously from bodies and groups responsible for handling European funding and the concerns they have regarding existing obligations in terms of reporting, audit trails, et cetera.
999.
We must be careful to bring forward measures in this Bill which we can stand by. There is little point in our presenting legislative measures which appear to give the C&AG a role in circumstances where we will subsequently be trying to reassure bodies that the changes will not affect them in any untoward way.
1000.
Mr Weir: Do you mean assuring them that they will not be investigated?
1001.
Mr Durkan: Not beyond their use of the relevant moneys. While there are issues to be addressed, I do not feel that we are in fundamental disagreement about the desired outcome. The question is really whether this is the best wording and whether this is the best Bill in which to cover the point. We must have proper consultation on whatever provisions we make, because a number of interests are affected. I cannot anticipate all the possible issues or complications, but a number of bodies in receipt of public funding, be they private firms in the course of contract work or other bodies receiving grant aid or European funding, would appreciate involvement in a proper round of consultation on legislative proposals which could have implications for their operational arrangements.
1002.
Mr Dodds: You also mentioned consultation as a reason. You suggest that, if we did not proceed with this amendment, you could bring about a change to subsection 18(10) in order to emphasise that the intention of the Bill is to facilitate rather than impede. What consultation have you undertaken in relation to such a change? Are you suggesting that, if no consultation has taken place on a particular issue, it is not the role of any Assembly Committee considering a Bill to suggest what should be added or removed or that some change should be made? The whole purpose of our examination of this Bill is to suggest changes and improvements. Your engagement with the Committee on this issue is as valid as any other element.
1003.
You mentioned the example of the football club which receives substantial amounts of public money, a point which has been raised before. You asked if we were suggesting that such football clubs be audited. As has been said before, no one has suggested their accounts be audited, only that their accounts be open to inspection. Where a significant amount of public money has been given to an organisation, for instance a football club, it is right and proper that there should be some means whereby the C&AG can investigate how that money has been used.
1004.
Mr Durkan: There was no consultation on the original Bill, because the provisions were of a relatively technical nature and the same as similar legislation brought forward at Westminster. I explained that point to the Committee. What is before us now would take the Bill in a different direction and make a potentially radical change to it. To that extent, it is an area for which I should have thought advance consultation would be appropriate. I am not saying that legislation brought before this or any other Committee cannot be subject to sensible and appropriate amendment or that there can be no novelty at this stage. However, this is markedly different and would contradict the reasons and the justification I gave as to why we were presenting the Bill without the sort of advance consultation which happens with other legislation. In trying to bring these issues into the context of the Audit Reorganisation Bill, we can accommodate a fuller round of consultation should it prove necessary.
1005.
Some of these issues are as relevant to the Audit Reorganisation Bill as they are to this piece of legislation. As we know, this legislation is time sensitive, because we have to get it through before this financial year finishes.
1006.
Our proposal in relation to clause 18(10) differs from what is in the Bill. It is a novelty, but I do not regard it as being radically different from current provisions, because it does not offer a sweeping power that raises issues in advance of any other action. These powers are conferred only after a Department takes action. Therefore, the provision serves to address the concerns that have been voiced by this Committee, the PAC and the Audit Committee. It is an attempt to reassure, because even though there is hesitancy over the Committee's suggested changes to clause 18, we are not trying to unnecessarily limit or fetter the C&AG's access to information.
1007.
Legal advice must be sought before a decision is made on the exact phrasing of the powers of access and the nature of that access. The Office of Legislative Counsel has already said that we have to be clear about what we mean, even when employing such a term as "inspection". Legally, this term can mean different things in different circumstances, such as when referring to powers relating to Customs and Excise. Further groundwork must be carried out on all of these issues. I am not making a statement of opposition in principle to what people are seeking, but I am indicating that we should take care to ensure that we use the most appropriate terms in the most appropriate Bill.
1008.
Mr Leslie: I want to raise a couple of points, which reinforce the comments made by Mr Weir and Mr Dodds. We are seeking an inspection power, not an audit power. I am not sure that to kick some of the difficult issues into the direction of the Audit Reorganisation Bill would be an effective solution. That Bill could be about audit and not about inspection. Without knowing how that Bill is framed, I am not persuaded that we can comfortably sweep any outstanding issues into it.
1009.
Furthermore, the GRAB is a substantial Bill which deals with how to frame accounts in the future and the mechanics of spending public money. During the process of spending public money, one must be sure that mechanisms exist to ensure that that money has been spent appropriately and to best advantage. In circular terms, one then returns to this Committee's efforts to seek a method which will allow it to gain retrospective confirmation that that has been the case, through the use of this inspection power.
1010.
I can see a difficulty with the wording, "body exercises functions of a public nature".
1011.
Clearly, if one privatises a railway, the company operating it is exercising functions of a public nature, but the C&AG would have no business in examining its books. On reflection I can see that that particular phrase probably does not work.
1012.
However, receiving significant public funds is a substantial matter. One of our major horrors is that money, usually grant aid, is paid out and does not appear to have been spent to best advantage or in the manner intended. The question is how can this activity be uncovered, how can it be policed and how can the Admiral Byng principle be applied to ensure that it does not happen again. I am not happy that you are responding to the general thrust of the Committee's concern, namely the stewardship of money that has gone beyond the obvious central government Departments.
1013.
Mr Durkan: Mr Leslie suggested that the Audit Reorganisation Bill was not particularly appropriate for the accommodation of some of these points. It could be argued that this Bill is as appropriate, if not more appropriate, than GRAB because it is more directly related to audit and inspection, whereas GRAB is more about departmental accounts. It is valid and appropriate to take these points up in the Audit Reorganisation Bill. It is also helpful to know that, in looking at these issues, in the context of GRAB, the Audit Reorganisation Bill is soon to be examined. Given that Sharman has not come through in the timescale we had hoped, there are other points that we can pick up there. The fact that the Audit Reorganisation Bill is coming forward gives us, at least, a legislative vehicle for picking up on these issues and carrying them forward.
1014.
To that extent we must be clear that there is no fundamental difference of opinion between the Committee and myself on this matter. We are looking here at a particular bit of legislation and certain wording has been suggested. We are not saying that there should not be a clause in this area of the Bill. We have merely indicate hesitancy in relation to certain language. Members will be aware that we broadly agree with the PAC's suggested amendment in this area, but we want to get the language right. We understand exactly what lies behind the thrust of the further amendments suggested by this Committee and we are sharing with you our caution, which is based on legal advice from the Office of Legislative Counsel.
1015.
I am sure that the Committee shares with me, as Minister, the concern to make sure that legislation is as right and as tight as possible. I am trying to take on board the views of this and other Committees that have a stake in it, but I also have to consider the legal advice I am being given and I must share that with the Committee. The amendments we have offered in respect of Clause 18(10) are there partly to respond to the concerns and interests of the Committee. They do not go far enough, therefore we will want to pick up on the remaining issues in the Audit Reorganisation Bill. Nobody is saying that this is the end of the issue.
1016.
Mr Bell: The Public Accounts Committee produced this amendment and I generally support Mr Durkan's comments but, from the point of view of the PAC, he does not go far enough at this stage. In your letter to the Committee of Finance and Personnel you state that
< size=1>"the Public Accounts Committee wishes to ensure that, without delay, the C&AG has inspection rights in respect of the accounts of all public sector bodies. I would be content for the Bill to be amended to that effect."
1017.
The PAC would welcome this, but only as an interim measure. I am reassured your comments on that in your previous response. However, this measure does stop short of accepting the immediate inspection rights relating to the other bodies mentioned earlier.
1018.
Given the time constraints, and I did point this out at another Committee session, there is difficulty in carrying out broad consultation. I recognise that it may not be possible for the Department of Finance and Personnel to expect legislative provision for inspection of these wider bodies at this stage. However, we need to look at this again and make sure that these are included in any future legislation.
1019.
You also state in your letter
< size=1>"I hesitate to accept an immediate inspection right in respect of any wider definition of classes of organisation, such as "in reciept of public funds" or "carrying out functions of a public nature" as these are less readily defined in the term, "public sector".
You then add:
< size=1>"I suggest that as well as an amendment in the form proposed by the PAC and the Committee for Finance and Personnel (using "public sector" as the operative phrase), we might place on the Department of Finance and Personnel an obligation to have regard for the views of the PAC in clause 18 (10) in respect of any order made under clause 18 (6) or (8).
1020.
It is wrong, in principle, that this Assembly's inspection powers should be subject to the Department of Finance and Personnel. On behalf of the PAC, I accept this provision because of the time constraints, and the fact that wider consultation is needed. However, the issue cannot rest here - it must be dealt with.
1021.
The Chairperson: I interpreted clause 18 in a different way. I thought that the idea was simply to take on board the concerns of the PAC, and that these would then be implemented. Am I reading that correctly?
1022.
Mr Bell: Yes, but that is not happening.
1023.
Mr Durkan: Are you referring to the amendment we suggested? It is there simply because the Department for Finance and Personnel has certain legally held functions. In this amendment, we are suggesting that in respect of certain functions in this particular area, we should have particular regard for the views of the PAC. Among the concerns the PAC's concerns was the fact that the Assembly's rights of access and scrutiny are more circumscribed than people want them to be, as pointed out by Mr Bell.
1024.
Given the concern that has been registered in this particular area, we are trying to ensure that the Department of Finance and Personnel will exercise its powers and duties with particular regard to the PAC. We will have particular regard for the PAC, which is really the key agent of the Assembly, as far as this issue is concerned.
1025.
We have not offered this solution as an absolute "end of the affair". We recognise, as we have before, that other issues must be picked up, including those concerning ourselves and those emerging from the "Sharman Review". But neither the time constraints nor the intended scope of the Bill allow us to deal with all these matters, because some of these matters must be subject to further consultation within the Assembly and outside.
1026.
As Mr Bell quoted from my letter earlier, we did use a hesitant language - we were not absolute or categorical. In principle, there is no argument between us about what we want to achieve.
1027.
The Assembly has the key responsibility in controlling spending. Alongside resources and the Budget, it will also be controlling the stock of assets et cetera. I want to make sure that the public, the people whose money is involved, feel that that is being done as fully and as properly as can be done, not least using the good offices of the C&AG. We need to make sure that the terms that we bring forward are well thought through and well considered.
1028.
Mr B Bell: I have given the Minister credit for that, as was said previously. The PAC was set up by the Assembly to scrutinise public bodies, and we can only do that through the C&AG. It is wrong in principle to rely on a system that obliges us to seek permission to scrutinise any issue from the Department of Finance and Personnel. I know the Minister is trying to be helpful, but the PAC actually scrutinise Departments as well, and it would be nonsensical for us to be in a position where we have to seek permission to scrutinise a Department from that same Department. You said that this is merely an interim measure - the PAC believes that this must be the case.
1029.
Mr Durkan: We have indicated that we are happy to accept the sort of amendment proposed by the PAC, and we made the point about using the language of the public sector, because we thought that would be easier to find. There are also definitional ambiguities, but in broader terms it is easier to define. We are therefore talking about both that amendment and the other that we have suggested. In suggesting that other amendment we are not trying to fetter the PAC or impose any sort of Department of Finance and Personnel vet or veto on what the PAC might do. We are trying, in response to the concerns that are there, to actually lend a power which is currently held by the Department of Finance and Personnel to the interest that the PAC has expressed. There might be types of expenditure that give cause to the C&AG or to the PAC to want to see further inspection. If such issues arise and are not automatically covered in the Bill, the powers that the Department of Finance and Personnel has will be lent to the case that the PAC wants to make. It will be there to facilitate access, rather than to prevent it.
1030.
Mr B Bell: I know he is trying to be helpful, Chairperson.
1031.
Mr Close: I also think the Minister is trying to be helpful. He has disclosed what he got for Christmas - a huge big departmental defensive shield. I think that is obvious from the fact that certain language has been suggested as perfectly acceptable, as pointed out by colleagues across the floor. It is perfectly acceptable to use such phrases in certain paragraphs in Clause 18 when it is giving power and authority to the Department to exercise, but it is totally wrong to give it to the C&AG. I see that as a defensive mechanism by the Department, and that is further added to by the suggestion - which is intended to be helpful - about your amendments to 18 (10). The Chairperson of the PAC is absolutely right on this matter.
1032.
Essentially, it is fact and it will be seen to be so that the C&AG operates at the discretion of the Department, and that, in my book, is fundamentally wrong in principle. It is fettering the right. Inspection rights are all that we are talking about here. Certainly, from this side of the table, we have accepted the difference between audit and inspection. The extensions that we were looking for were for inspection rights in relation to substantial sums of public money, and to be able to follow that money through. The amendment is suggesting that that would be OK: "We give you an undertaking that we will do that and we will give an Order". Now, that is discretionary, and on principle I would be absolutely opposed to that.
1033.
If I can use another cliché, the road to hell is paved with fantastic intentions. We have here a series of wonderful intentions of what is to happen and what we should be looking forward to. With the greatest respect, I remind the Minister of where we started off in this. There were a number of other potential amendments that we would like to have made, through this Bill, in order to increase and enhance accountability. That is what we were after, but because of time restraints it was pointed out that we could not. Therefore, we restricted what we were going to do to the amendment on clause 18, which is in front of us.
1034.
We also sought two assurances - not waiting to see what Sharman says or what the Audit Reorganisation Bill might bring forward - from you, Minister, that the proper accountability and opportunities to trace and follow through and to have inspection rights would be followed through into, for example, PSA's. We now find that effectively we are getting very little of that. We are getting a watered-down agreement to an amendment and defensive mechanisms introduced through clause 18 (6), (8) and (10) where the discretion will lie with the Department.
1035.
Whilst we may intend to be doing all the right things, we must set an example through this Committee and the Audit Committee that the role of the Northern Ireland Assembly is going to be different to that which has pertained through the Treasury for generations, where they have selfishly vided and protected their own little self-interests and in many respects made it virtually impossible for proper audit trails to be followed. We want to change that and get away from that, and defensive mechanisms do not help in assuring us that we are on the same wavelength.
1036.
Mr Durkan: There are a number of points there. First, I want to pick up on Mr Close's comment about a "big departmental defensive shield". He also used language that implied that the Department or I was saying that something was totally wrong. He said that we were saying that some wording is all right in relation to one clause but that we were saying that it is totally wrong and that trying to widen access for the C&AG is totally wrong. I have not said that anything is totally wrong in relation to what this Committee or individual members of this Committee have suggested.
1037.
I have underlined that I am hesitant to embrace that particular wording when the legal advice to me is that there are problems with it and that the wording does not achieve the purposes or ends that people want. I have indicated a commitment to embrace wording that we believe is competent and workable and the need to further address the issues. I know that that does not fully cover all the rightful concerns of this Committee, or of other relevant Committees of the Assembly.
1038.
In the letter that I sent to you, Mr Chairperson, I indicated my acceptance of much of what the Committee has been saying and doing in relation to the Bill. We have indicated that we are happy to accept the amendment that came forward from the PAC. We have gone further by saying that as well as that amendment - and not as an alternative to that amendment - we have offered this other amendment in relation to the PAC that would add to access.
1039.
One must remember that, even as things stand, it goes further than what applies at Westminster, being stronger than what is available to its Public Accounts Committee or the National Audit Office. In these areas we are not absolutely confining ourselves either to what has gone before at the Treasury and in Whitehall or to what comes next there in the light of the Sharman review. In the amendments we are offering, we show that we are prepared to take different courses in response to convincing points made. However, while accepting the validity of points from this Committee and others, I receive equally valid advice from the Office of the Legislative Counsel about certain matters not being so straightforward. We want to ensure that we have a viable legal outcome and the right provisions expressed through the correct terms and wording in the right Bill.
1040.
The Chairperson: Can you confirm that you are satisfied with the wording of the original PAC amendment?
1041.
Mr Durkan: Yes, with the couching on public sector bodies.
1042.
The Chairperson: That is except the point about the public sector body. I shall ask the Committee Clerk to read it so we can clarify matters.
1043.
The Committee Clerk: The original PAC amendment read
< size=1>"The accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if that body exercises functions of a public nature, has received significant public funds or is entirely or substantially funded from public money."
1044.
The Chairperson: You were using the word "public function" instead of "public nature".
1045.
Mr Durkan: Yes. As in the letter, we have warned we wish first to agree the thrust. We must work on the precise language, for legal advice says that not all the terms we use for one purpose are understood in relation to it alone. We must therefore tighten up on the use of words like "authority" and "function".
1046.
Mr Hussey: I first need a clarification. In your letter you said "I hesitate to accept an immediate inspection right". I presume the problem is the word "immediate" and that you do not hesitate to accept the inspection right itself.
1047.
Mr Durkan: No.
1048.
Mr Hussey: Since that is the case and you accept inspection rights, why have you said "We do not have an example of such a consideration, and the likely effect of this proposal would be that inspection rights would be given where they are sought"? Why can you not give us greater assurance on the proposal's actual effect - that inspection rights will be given where they are sought - rather than merely its likely effect?
1049.
Mr Durkan: Had I been even more categorical in my language, people might have understood it wrongly and thought I was offering that as the sum total of what had to be done in this area. I believe that Billy Bell used the phrase "an interim position". If I had said that it would guarantee certain things, people would have decided it was my conclusive offer in the area and that I believed no more needed to be done or examined. However, more must be looked at and done, not only for reasons covered in the deliberations of this and other Committees, but to take account of other developments and factors.
1050.
Mr Hussey: Perhaps one might say "to ensure that one of the effects of this proposal would be"?
1051.
Mr Durkan: I would then be asked the other effects. It might go in another direction. We might have been firmer in the wording, but, whether in the letter or anywhere else, I certainly do not wish to "hype" what we are saying or make it appear to be the end of our thinking and consideration on the issue.
1052.
My point is that we all need to think further about this. We need to consult on the further provisions that we would make to ensure that no untoward and unintentional consequences of the approaches we take are inevitably built in to the legislation. I make the point in relation to other work that I do and I am sure that the Committee does. We hear from people who are in receipt of public monies, not least through European funds, about problems of existing provisions concerning reportage and audit trails et cetera.
1053.
People have many apprehensions about how things will operate in future. We need to make sure that people do not feel that they are being blindsighted by a significant alteration that we make. We therefore need to consult with people, not only so that they are aware of the possible implications of what we are doing, but so that they can make us aware of any such implications, in order that they can make sure that we do our job legislatively in a sound and competent way and, in turn, that we can properly equip the C&AG to do his job on behalf of the Assembly.
1054.
Mr Dodds: I am concerned, as are other members of the Committee, that the C&AG should have inspection powers which are not just in relation to public bodies or bodies exercising the function of the public sector. He himself admitted to us that he thought it would be appropriate that if those bodies are getting public money - taxpayers' money - he should have the right of inspection.
1055.
You have admitted, Minister, that in principle you have no problem with that. You say that it is appropriate to put this in the next Bill. Since the heading for clause 18 is "Examinations by Comptroller and Auditor General", that is the very point at which we could deal with it. We are getting down to nit-picking as to reasons we should not give the C&AG something which he agrees would be useful and which would give the public great reassurance that when significant amounts of public money are given to organisations then they are open to inspection by the C&AG.
1056.
You say, Minister, that it may not achieve the end that we want. From what you say it certainly would achieve that end, but you are perhaps worried that it might go a bit further. If it is only a question of wording, let us sit down with the appropriate legal draughtsmen and draw up the wording. Would you not agree with the Committee that our purpose is to give the C&AG - as part of this Bill - the necessary powers, whereby if significant amounts of public money are given to whatever organisation or body, to inspect those accounts and see how that money is being spent. Is that not sensible?
1057.
Mr Durkan: Again I make the point that I am not here to argue against the C&AG's having adequate and properly enhanced powers of inspection in relation to public moneys. I have said before that I am not in the business of declaring no-go areas. Nigel Dodds has stated that I said that we should not go down this road. I have not said that. I say that we should not expect to cover the distance in this particular bit of legislation, given that the legislation was focused on particular provisions. That was part of the justification for not having subjected it to advance consultation. We know there are time constraints on it. We do not want to come to rushed conclusions in the context of processing this legislation. If we were to rush, we could find that there are particular corners on that road that we should not take too fast and that there are other users of that road for whom we must have due care.
1058.
That is why we need proper consultation on this. I am not setting my face or the face of the Department or Executive against these things. I am simply saying we need to get it right for the right reasons, which include all the basic concerns that have motivated the amendments and suggestions that have come forward from this and other Committees.
1059.
Mr Maskey: Is the Department suggesting that we go with the minimal requirement as an interim measure and then come back to further legislation after this consultation? Is that what you are suggesting, Minister?
1060.
Mr Durkan: That is what we need to do. These issues have turned out to be a strong trailer for a lot of the issues that we will have to examine in the Audit Reorganisation Bill. This Bill has not said "absolutely none of these issues can be accommodated or picked up on in this Bill". We have tried to respond where possible within the constraints of this Bill. We are sharing with the Committee our concerns about some of the wording. We are not arguing against these approaches on principle - we want to pick them up.
1061.
The Department and the Committee can work together for both the good of our interest in this whole area and our shared legislative duty. We want to make legitimate provisions in the right legislation so we can arrive at the point where we are able to make good the deficiencies in the existing Bill without the risk of some of the difficulties we are discussing. That is what we are doing. By agreeing with the amendments and coming forward ourselves with what we hope will be helpful amendments, we are saying this business has to be picked up further in the context of the other Bill.
1062.
The Chairperson: Do you intend to come forward with an amendment that includes that?
1063.
Mr Durkan: Yes.
1064.
The Chairperson: Do you have a draft of that yet?
1065.
Mr Durkan: No.
1066.
The Chairperson: Are you saying to the Committee that you will have an amendment covering the issues dealt with here? The Committee may then be satisfied with that amendment or they may want to make their own, or an amalgamation of both.
1067.
Mr Durkan: Yes.
1068.
Mr Dodds: Would that amendment be tabled in the Assembly or to the Bill presented here?
1069.
The Chairperson: It would go the Assembly because we have to finalise today.
1070.
Mr Dodds: In that case, if we did not agree with it or wanted to change it, would we have to table a further amendment?
1071.
The Chairperson: Yes.
1072.
Mr Dodds: I would like to refer to a couple of points. The letter we received on 5 January 2001 states
< size=1>"that subject to final consideration of precise wording I am content with the other amendments."
1073.
You also discuss your intention to make the C&AG the auditor of companies established by Departments, although you cannot give assurances. In both those cases are you saying you agree with it and you intend to proceed, but for technical reasons you are not in a position to do so - as it has to be cleared by the appropriate legal channels?
1074.
Mr Durkan: Yes.
1075.
Mr Dodds: Apart from that, have you any other concerns?
1076.
Mr Durkan: No, we are only concerned that we get it right and do not raise any unnecessary difficulties.
1077.
The Chairperson: My interpretation of the issue of the auditor of companies is that if the C&AG inspected and found a problem, he would have the right to call for an auditor or go for an audit. The C&AG would not be the auditor of companies in general. There are different interpretations of that role. We have agreed that the inspection should be in place, but by extension he would have the right to audit a particular company, but not as a general auditor of companies. Whereas, in your letter Minister, you state that the C&AG will be "the auditor of companies established by Departments".
1078.
Mr Durkan: I accept your clarification as to what is intended there. That just reinforces the point in all of this we need to know what the implications of the provisions we make are really going to be. I doubt that the C&AG wants to take on powers of auditing companies. We need to make sure that the provisions made, even in terms of inspection, are square with any other relevant legislation, such as Companies' Acts etc.
1079.
We can say what we do not mean in relation to these. I have been able to say what we do not mean and members in the Committee have been able to say what we do not mean. But while we can all say anecdotally what we do not mean, we need to be clear that we all understand what the legislation will mean. We need to be careful on that point, but I appreciate the clarification.
1080.
The Chairperson: The other issue is the audit of performance information. While you are saying that it would be premature at this stage, the Committee was actually looking for that to be established.
1081.
Mr Durkan: There are reasons for judging it to be premature at this stage. We are only bringing forward PSA's, in the context of the debates we had on the Budget and on the Programme for Government. Some Assembly Members, including some members of this Committee, were critical, saying, "You are bringing forward a Budget and you are referring to PSA's but we have not seen them yet", and so on.
1082.
First, we need to have PSA's brought forward and have them challenged and scrutinised within the Assembly with regard to their direct terms and their quality. What we are bringing forward across the Departments as PSA's, indicating actions, targets and outcomes, may not be what the Assembly would accept as being valid and worthwhile.
1083.
If we came forward with fairly conclusive provisions as regards the auditing of departmental performance measures relating to PSA's, I would be open to the same criticism that I received on the Budget. It was said that I had assumed that people accepted the nature and quality of these PSA's. There is further work for the Assembly and the Departments to do regarding PSA's.
1084.
I accept that independent validation of information on departmental performance and on outcomes and outputs would be valuable. PSA's are meant to be an aid to the Assembly and to the wider public interest. But - and we have been hearing this from Departments, and I am sure other departmental Committees are hearing it from their Departments - there are some inherent difficulties with regard to performance setting and to monitoring.
1085.
You cannot always trace a precise cause and effect relationship. In some areas there is obviously a very significant time lag between investments and actual outcomes, for example, investing in teacher training or in health promotion. Not everything is as readily measurable and quantifiable.
1086.
Given that we are dealing with some very different issues here, we should not try to take the premature shortcut, at this stage, of somebody making this part of the financial audit role of the Audit Office.
1087.
In relation to performance measures, the Assembly needs not only to look at ways of enhancing the Northern Ireland Audit Office's contribution to monitoring performance measures, but also the Assembly and the Committees must be enabled to make a more significant contribution in that area. That needs wider consideration in the Assembly.
1088.
The Northern Ireland Audit Office can comment on performance management through value for money studies, et cetera. It is not as if there is no reach for the Northern Ireland Audit Office with regards to performance. However, I am hesitant to try to cover those sorts of policy-sensitive performance issues in an area of a Bill that deals with financial audit.
1089.
The Chairperson: The Committee intended that performance measures would be dealt with in the Audit Reorganisation Bill. Our letter was simply marking that up.
1090.
Mr Close: We are not getting any assurances, yet I appreciate what the Minister is saying. I have sympathy with a lot of it, and I underline that. However, an argument should be made that the best way to get those matters right is to have the audit from day one. That is the type of thing that we are looking for through the audit reorganisation.
1091.
Mr Durkan: I accept Mr Close's point and I appreciate the sympathy that he has for me on this point. I cannot give a unilateral or categorical commitment on this issue because it would have implications across all Government Departments. We are in the process of trying to bring forward PSA's. I cannot say how much the Finance and Personnel Committee, the Assembly or the other departmental Committees will appreciate the nature and quality of them, but we need to establish that.
1092.
The Assembly needs to be careful that it does not short-circuit the important opportunities that are opening up to it with regard to PSA's. If we, at this stage, took the shortcut of lumping an audit of performance measures into financial audit procedures, we might reduce the development potential that PSA's offer the Assembly. We do not want to discourage Departments from coming forward with robust and progressive PSA's in respect of setting out the actions, targets and outcomes that they want to achieve and the outputs that they will be measuring. By saying, at this early stage, that we will automatically cover that by way of financial audit, we might end up encouraging a much more conservative approach by Departments. They may think that it would be safe to come up with broad targets and go for PSA's that are in lowest common denominator land.
1093.
We have a shared interest in trying to ensure that PSA's are of the desired quality and reliability, and we have a shared interest in audit. However, we must ensure that our concern to see one reflected in a particular way does not undermine our concern to see another developed in another way.
1094.
Mr Close: I would like to believe that the scrutiny committees would rule out one of your fears, namely that of going for the lowest common denominator in the agreement. Otherwise, the scrutiny committees would not be doing their job. We are looking at a layer above that.
1095.
Mr Durkan: Those scrutiny committees are the ones that play a key role in as far as auditing and scrutinising performance is concerned. Furthermore, the key role of Committees also includes performance areas. We require further consideration by the Assembly at large in relation to this. I do not want those provisions that are made in respect of auditing arrangements and performance measures to be interpreted as somehow precluding a direct role for each departmental Committee to look at how effective performance actually was.
1096.
The Chairperson: Committees may also become bogged down on the legislation that they do not have time to scrutinise.
1097.
Mr Close: Are we leaving today's meeting at a point where we are to produce a report? If so, are we producing that report in the expectation that if we follow our own line of an amendment and, as a consequence, rejecting amendments to clause 18(6), (8) and 10? Are we to be presented with an amendment on the Floor of the House by the Minister?
1098.
The Chairperson: First, we must ascertain an assurance from the Minister that he is coming forward with an amendment that covers the issues that we have raised. The Committee will then decide whether it feels that that is sufficient or whether it will require its own amendment. We have an assurance that there is to be an amendment dealing with the issues brought forward by the Minister.
1099.
Mr Durkan: Yes, there will be amendments.
1100.
Mr Maskey: Could there be further amendments after this legislation is processed and completed?
1101.
Mr Durkan: There could be further provisions in the Audit Reorganisation Bill.
1102.
Mr Maskey: In particular, with regards to clause 18?
1103.
Mr Durkan: Yes.
1104.
Mr Weir: When are we to sign off from the report?
1105.
The Committee Clerk: The report has to be with the Business Office on 26th January. The Assistant Clerk and myself have to write a report by 16th January.
1106.
Mr Weir: Do we need to sign this off next week?
1107.
The Chairperson: Yes.
1108.
Mr Weir: In terms of any amendments that are brought forward by the Minister, can he assure us that they will be ready by 16 January? We must consider whether we are to go ahead with our amendments or accept the amendments from the Minister?
1109.
Mr Durkan: I do not know when I will receive the final advice from the Office of the Legislative Council. Therefore, I cannot give an absolute assurance of a particular date. I have shared thoughts in relation to what we are trying to achieve in this Bill, and I am keeping the option open to further build on that in the future Bill. I have indicated why I see problems with some of the wording that has been suggested here, and I will attempt to come up with an amendment that will not have those wording problems, taking into account the advice that is given to me. Certainly, this Committee is free to follow its own counsel after that.
1110.
The Chairperson: It would be helpful for the Committee to have that before the final draft of their response to the report - if possible for next Tuesday's meeting. If that is not possible, then the Committee will have to look at the situation at that particular time. However, it would give us some more time if the amendment were received from the Minister.
TOPAPPENDIX 3
ANNEXES TO THE MINUTES OF EVIDENCE
Written evidence on the Government Resources and Accounts Bill as submitted to the Committee are given below.
Annex 1:
Association of Chartered Certified Accountants;
Annex 2:
The Institute of Certified Public Accountants in Ireland;
Annex 3:
Northern Ireland Audit Office;
Annex 4:
(I) Mr Mark Durkan MLA, Minister of Finance and Personnel, letter dated 20 November 2000
(II) Mr Mark Durkan MLA, Minister of Finance and Personnel, letter dated 5 January 2001
(III) Mr Mark Durkan MLA, Minister of Finance and Personnel, letter dated 15 January 2001
Annex 5:
Mr John Dallat MLA, Chairman, Audit Committee, NI Assembly;
Annex 6:
(I) Mr Des McConaghy, retired public servant, written evidence dated 11 November 2000
(II) Mr Des McConaghy, retired public servant, letter dated 30 November 2000
ANNEX 1
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS (ACCA)
November 2000
This Memorandum refers to the Comments of the Association of Chartered Certified Accountants on the Government Resources and Accounts Bill as introduced in the Northern Ireland Assembly on 16 October 2000 (Bill 6/00)
summary
The Association of Chartered Certified Accountants (ACCA) endorses the purposes of the Government Resources and Accounts Bill of the Northern Ireland Assembly, which are to:
- introduce accruals accounting to government departments and their agencies;
- produce consolidated accounts for the whole of the public sector
- and
- enable government departments and their agencies to adopt modern accounting and business practices.
ACCA does not have any specific concerns about the Bill's provisions nor does it believe that there are any serious omissions from the Bill, as it appears sufficiently flexible to accommodate new developments. We do believe, however, that the Bill should address the issue that the accounting officer should be a qualified accountant. As a follow-up to the Bill, ACCA would like to see subsequent regulations dealing with quality of life performance measures for the public sector.
1. INTRODUCTION
1.1 ACCA is pleased to have been invited by the Committee for Finance and Personnel of the Northern Ireland Assembly to comment on the draft Government Resources and Accounts Bill. ACCA has considered the draft Bill together with the explanatory memorandum and the guide to submitting written evidence. ACCA would be willing to give oral evidence if invited.
1.2 ACCA is the second largest of the UK-based accountancy bodies. We currently have some 250,000 members and students, with examinations conducted in more than one hundred countries around the world. ACCA is one of the six member bodies of the UK & Ireland's Consultative Committee of Accountancy Bodies (CCAB) and is a statutory licensing and regulatory authority in the UK in respect of company auditors, insolvency practitioners and investment advisers.
1.3 The Bill has been considered by ACCA's Public Sector Technical Issues Committee; members are drawn from across the public sector. Committee members are professional Chartered Certified Accountants with considerable experience of public sector practice; members' personal details are listed as Appendix A for information.
2. COMMENTS ON THE BILL
2.1 ACCA agrees with the purpose of the Bill. We believe that the proposed legislation will enable government departments and their agencies to rationalise the diverse range of reporting practices which have evolved throughout the public sector in order to:
- prepare estimates and accounts on an accruals basis and hence account for resources consumed, as opposed to cash spent, in a given period;
- consolidate the accounts of the public sector, narrowing the areas of difference between reporting entities in the public and private sectors;
- bring modern private sector accounting practices and techniques into the planning and control of public expenditure.
2.2 ACCA does not have any specific concerns about the Bill's provisions. Although we do not wish to provide a detailed commentary on the Bill, we do wish to record our support for the following provisions, which we regard as particularly significant:
- the provision in clause 3(6): Payment out of the Consolidated Fund to enable implementation of modern e-business processes, such as IT-based systems for the authentication and transmission of payments;
- the provision in clause 6(5): Appropriation in aid, to allow departments to retain and apply resources received in the year for the service of the year, thereby circumventing potential problems of timing differences between the recognition of resources and the actual receipt of cash
- the provisions in Clause 7: Resource accounts - preparation, which empower the Department to require that resource accounts present a true and fair view, having regard to any relevant guidance issued by the ASB or any other body prescribed for the purposes of the Companies Act 1985
- and
- the requirement in Clause 11: Resource Accounts - non-departmental bodies and other persons, that such persons whose estimates are approved by the Assembly will be required to prepare resource accounts.
2.3 We do not believe that there are any serious omissions from the Bill, although, we should like to see the following issues specifically addressed.
- Clause 7 of Departmental accounts and Clause 12 and 13 of Whole of government accounts appear sufficiently flexible to allow the Department of Finance and Personnel to develop performance statements for the public sector. In due course, ACCA would like to see subsequent regulations introducing 'quality of life' performance statements encompassing sustainable development and the social, economic and environmental issues for the wellbeing of citizens.
- Clause 7(6): Resource accounts - preparation and 13(5): Whole of government accounts - obtaining information, require the DFP to appoint accounting officers to be responsible for the preparation of resource accounts and their transmission to the Comptroller and Auditor General. ACCA believes that the Bill should specify that the accounting officer is to be a qualified accountant.
2.4 ACCA acknowledges the statement of the Minister of Finance and Personnel (made under section 9 of the Northern Ireland Act 1998) that "the Government Resources and Accounts Bill would be within the legislative competence of the Northern Ireland Assembly". We do not see any reason why the Bill should not fulfil the legislative competence requirement of the Northern Ireland Assembly.
APPENDIX A
Public Sector Technical Issues Committee Member
Details of Members and Secretary
Chairman
Dennis Yeates: Deputy Director of Finance, Worcestershire Community NHS Trust, ACCA Council Member and member of ACCA Financial Reporting Committee.
Vice-Chairman
Heather Jackson: Director of Finance, HM Land Registry, member of the Financial Reporting Advisory Board (FRAB) and member of ACCA Business Law Committee.
Chris Angell: Fund Secretary & Financial Controller, LRT Pension Fund.
Paul Bailey: Consultant and member of ACCA Charities Panel (Chairman), and Financial Reporting Committee.
Sharon Burd: Corporate Director (Finance and Resources), Watford Council.
Robert Collins: Assistant Chief Executive, Stoke-on-Trent City Council.
Alex Colyer: Assistant Treasurer, Milton Keynes Council
Details of Members
Vicki Harris: Head of Private Investment Policy Department, Department for International Development and ACCA Council Member.
Ian Jamieson: Chief Accountant, West Wiltshire District Council.
Rowan Jones: Professor, Department of Accounting & Finance, University of Birmingham.
Maurice Pendlebury: Professor of Accounting, Cardiff Business School, the University of Wales.
Mike Schofield: Head of Finance, Brighton & Hove PCG & Ouse Valley PCG (East Susses, Brighton & Hove Health Authority), member of ACCA Financial Reporting Committee and the Social and Environmental Technical Issues Committee.
David Skelton: Head of Finance, Hart District Council.
Dean Westcott: Assistant Director Finance, North Essex Health Authority.
Barrie Woodcock: Partner, RBW Associates.
Secretary
Georgina Ayling: ACCA Senior Technical Officer - Public Sector.
ANNEX 2
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTS IN IRELAND
13 November 2000
Thank you for inviting comment from this Institute on the above Bill. Unfortunately the exposure time allowed to conduct a detailed study of the Bill was rather short and therefore our comments are general in nature at this stage.
However the Institute is in full agreement with the purpose of the Bill which is to move from cash accounting, which is an anachronism at this stage, to accruals accounting. Resource Budgeting is also to be welcomed. This Institute has advised the Chairman of the Committee of Public Accounts in the Republic of Ireland on a move from a system of cash accounting to a system of accruals accounting. The Institute has learned from our colleagues in New Zealand where a successful transition to Resource Accounting and Budgeting was effected.
In planning such a move we cannot over emphasise the importance of staff training at all levels from an early stage. It is important that training programmes are put in place which will provide key staff with accounting expertise well in advance of any changes in accounting methods. We would recommend that staff pursue a generalist accounting qualification providing a broad business qualification as opposed to a narrow qualification based on historical models of public sector finance and accounting.
We would recommend that the Committee for Finance and Personnel liaise with the Public Accounts Committee in Dail Eireann to see if a uniform approach can be developed to public sector accounting both in Northern Ireland and the Republic of Ireland. We would further recommend that your Committee liaise with your counterparts in New Zealand to learn from the experiences of a successful transition in a similar style of democracy.
Finally should you require advice on staff training we would be delighted to assist.
EAMONN SIGGINS
Chief Executive
ANNEX 3
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
NORTHERN IRELAND AUDIT OFFICE
15 November 2000
Thank you for your letter of 27 October 2000.
We welcome the proposals within the Government Resources and Accounts Bill and recognise the value of resource accounting and budgeting in improving the clarity and quality of financial information available for the security of the Assembly. We also recognise the importance of having the legislation implemented on the proposed timescale.
My Office has briefed the Public Accounts Committee and the Audit Committee on the implications of the Bill for public sector audit and I understand that the points arising in their joint meeting with the Minister of Finance on 7 November will be passed to you by the Chairman of these Committees.
J M DOWDALL
Comptroller and Auditor General
Annex 4 (i)
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
MINISTER OF FINANCE AND PERSONNEL,
DEPARTMENT OF FINANCE AND PERSONNEL
20 November 2000
I am very grateful to the Committee for agreeing that the Committee stage for this Bill should be completed by 26 January 2001. I understand fully the range of demands on both policy and legislative issues that are before your Committee at this time. As has been indicated, my officials will seek to work closely with the Committee on the details of the Bill and would be happy to provide whatever explanation and analysis you need to complete your work on the Bill.
As officials explained at your meeting on Thursday, it is essential that the GRAB is enacted before the beginning of the next financial year: the Treasury has already moved the planning system onto a RAB basis from 2001/02 onwards, and it would simply not be manageable to run the planning and monitoring of public spending on one system (RAB) and the estimates and accounts on another (cash).
I do understand fully the Committee's concerns about the accountability aspects and the need for C&AG to be able to fulfil his role fully and properly on behalf of the Assembly and especially the Public Accounts Committee. I agree strongly with the principles being sought by your Committee and the PAC on this issue.
It is my firm intention that the forthcoming Audit Reorganisation Bill should make new provisions to provide new powers in relation to C&AG's role. This could include specification of where it would be appropriate for the NIAO to be the auditor of further bodies and on the access rights of C&AG to public bodies where this is not already the case.
As has been explained, this issue does not lend itself to a straightforward amendment to the Bill that is already before the Committee. Also, it would be worth taking account of the outcome of the Sharman Review which is addressing related issues in Whitehall - we do not need necessarily to follow the approach that might emerge from the Sharman Review, but I think we would be well advised to take it into account - and indeed to learn what we can from experience elsewhere.
We will also need to discuss further the precise approach to an additional clause for the Bill on the way in which DFP guidance on accounting matters to Departments would be overseen by some independent check. Since this was last discussed, I understand that the Scottish Executive is considering the extension of the remit of the Financial Reporting Advisory Board to cover their guidance. This would still allow for guidance and analysis on these issues to be tailored to our own circumstances rather than necessarily following the approach agreed, under FRAB's direction, by the Treasury in London. We do not necessarily have to follow this approach although it is indeed the simplest way of proceeding. In any case, I think that it will be possible to find a satisfactory approach to this issue, and I would be grateful for the Committee's views.
I hope this letter provides a firm reassurance to your Committee that we are intending to provide for full and proper accountability and that this will be achieved through forthcoming legislation. On this basis, it should be possible for the Government Resources and Accounts Bill to proceed on a manageable timetable, and again I am very grateful to your Committee for your forbearance on this and other issues at this time.
I am copying this letter to James Leslie. I am writing in similar terms to Billy Bell as Chairman of the Public Accounts Committee and John Dallat, Chairman of the Audit Committee.
MARK DURKAN
Minister of Finance and Personnel
ANNEX 4 (II)
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
MINISTER OF FINANCE AND PERSONNEL,
DEPARTMENT OF FINANCE AND PERSONNEL
5 January 2001
Thank you for your letter of 19 December. DFP officials have reported to me on the discussions with your Committee on the detail of the Government Resources and Accounts Bill. I am grateful for the very good progress that has been made, and I will be happy to discuss the outstanding issues with the Committee on 9 January.
In preparation for that discussion, my comments on the outstanding points of substance are set out below. These cover in particular the issues raised in your letter of 7 December. Subject to final consideration of precise wording, I am content with the other amendments which have been agreed by your Committee, and in particular I welcome the agreement by all three Committees that the remit of the FRAB should be extended to cover DFP accounting guidance to Departments here.
The Committee for Finance and Personnel and the PAC wish to ensure that, without delay, the C&AG has inspection rights in respect of the accounts of all public sector bodies. I would be content for the Bill to be amended to that effect.
I hesitate to accept an immediate inspection right in respect of any wider definition of classes of organisation, such as "in receipt of significant public funds" or carrying out functions of a public nature" as these are less readily defined than the term "public sector" where there can be authoritative advice from the Office of National Statistics.
However, to emphasise that the intention of the Bill is to facilitate rather than impede accountability for public funds, I suggest that as well as an amendment in the form proposed by the PAC and the Committee for Finance and Personnel (using "public sector" as the operative phrase), we might place on DFP an obligation to have regard for the views of the PAC in Clause 18 (10) in respect of any order made under Clause 18 (6) or (8). Clause 18 (8) as in the Bill is unrestricted, and thus could be used for any category of body where the C&AG may identify a need for access to information.
This would mean that in any case where C&AG was facing a restriction on access to information which the PAC wished to break through, DFP would make an order to that effect, unless there were some major issue of public interest, which would be a reasonable consideration alongside the PAC's views. We do not have an example of such a consideration, and the likely effect of this proposal would be that inspection rights would be given where they are sought. I would assure the Committees that should such a case arise, where no material issue of public interest arose, access should always be given without delay.
I feel that the combination of these changes should avoid any delay in widening C&AG's access to information. It would remain my intention to look at the issue more fully, and to consult on the wider issues of inspection rights, as we prepare the Audit Reorganisation Bill. This will also provide an opportunity to consider the implications of the Sharman Review.
The Committee also asked for an assurance that the next Bill will provide for C&AG's audit remit to be extended. I confirm that that is my intention, though I cannot give an assurance at this time that this will include making C&AG the auditor of companies established by Departments. As officials explained, this is complex territory, given the requirements of company law, and my preference would be to look at this more fully before making any commitment. In the meantime, the effect of the amendments described above would be to ensure that C&AG has inspection rights for the accounts of all such bodies.
On the audit of performance information, I feel that it would be premature to make this part of the financial audit role of NIAO. DFP is working very closely with the Office of the First Minister and Deputy First Minister to promote the development of Public Service Agreements which will help secure a step change in the information available on what is being achieved through public spending. As I said in the Budget Debate on 18 December, I am determined to ensure that there is much greater clarity of outputs and performance indicators.
My view is that to make this work subject to financial audit from the outset might cause some concerns and lead to a more cautious response than would otherwise be the case. I support the point that independent validation would be valuable, and necessary to ensure full confidence in the targets being set. However, there are inherent difficulties in the task in relation to sectors such as school performance or economic development. NIAO can already make comment on Departments performance measurement and management through value for money studies: that is a very powerful tool in accountability, but adding the requirement that this should be handled through financial audit might be a bridge too far. I would be happy to discuss with the Committee how best to proceed on this point.
I can confirm that David Ferguson will be appearing before the Committee to brief members on the legislative and business matters that the Department is due to initiate in 2001.
I am copying this letter to James Leslie, and to Billy Bell as Chairman of the Public Accounts Committee, and to John Dallat as Chair of the Audit Committee.
ALISON ROSS
pp MARK DURKAN MLA
Minister of Finance & Personnel
(Approved by the Minister)
ANNEX 4 (III)
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
MINISTER OF FINANCE AND PERSONNEL,
DEPARTMENT OF FINANCE AND PERSONNEL
15 January 2001
At the Committee meeting last Tuesday, I said I would see if it would be possible to let you have an alternative amendment to Clause 18 of GRAB, taking into account the advice from OLC. Since then, DFP officials have been working closely with OLC and C&AG on the content of an alternative amendment. It has not yet been possible to find a form of words that achieves the desired outcome without introducing unintended complications: however, I thought it would be helpful to let you know the approach being pursued. I am very conscious that the Committee is planning to agree the final report on the Bill tomorrow.
The proposed approach is to seek to give C&AG powers as follows:
- for all bodies in the public sector (except District Councils, which are the responsibility of DOE's Local Government Audit function), powers to inspect relevant documents and to initiate value for money studies;
- for any other body which is undertaking function of a public nature or substantially funded from public money, powers to inspect relevant documents;
- for other bodies in receipt of significant public funds, the effect of my proposals would be that DFP would facilitate C&AG by using the new power to make an order giving him inspection rights where this became necessary;
- in addition, my intention is that, following consultation, we should seek to agree definitions which would clarify the extent of C&AG's locus for inclusion in the Audit Reorganisation Bill, which is also the obvious place to address any issues in respect of District Councils.
The advice from OLC is that, in order to give legal meaning and effect to the points above would require a new amendment which would be much longer and more detailed than the original amendment proposed by PAC and amended by your Committee. However, I believe that it will be feasible to proceed in this way and hence make significant progress towards the outcome sought by the PAC and your Committee.
Going any further would have direct implications for other bodies, and I believe it would be helpful to consult, so that any factors that may emerge in the consultation can be taken into account when we frame new powers. This should lead to better legislation than would be the case if we proceed based on our present understanding of the issues.
On the details, OLC and DFP propose that the amendment should provide the C&AG with access not just to accounts (as in the Committees' amendment) but also to related documents. This mirrors the corresponding provisions for departments and statutory examinations in Clause 10 of the Bill. It will also be necessary to give C&AG a power to report to the Assembly on matters arising from his inspections.
I also think it would be appropriate to provide that the C&AG should exercise these powers if it appears to him to be appropriate to do so in view of public concern or interest about any matter. This condition would provide reassurance to all concerned that the power would not be used without good reason.
I believe that it will be possible to produce a draft amendment which addressed the immediate concerns of the Committee and I hope that when it is available we can reach agreement on the way forward. As I have already indicated to the Committee, the amendment represents only a first step in the process of developing improved local accountability arrangements and I am committed to revisiting this area in the forthcoming Audit Reorganisation Bill.
I would of course be grateful for the Committees comments on the proposed draft amendment, as outlined above, and would be happy for DFP officials to give any assistance required on Tuesday afternoon or subsequently.
A copy of this letter also goes to James Leslie.
MARK DURKAN MLA
Minister of Finance and Personnel
ANNEX 5
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
AUDIT COMMITTEE (MR JOHN DALLAT, chairman)
10 November 2000
I am writing to you on behalf of the members of the Audit Committee. Following our joint meeting with the Public Accounts Committee on 7 November 2000, and as you are the lead committee for the Committee Stage of the Government Resources and Accounting Bill, I would like to formally register with you the Committee's concerns relating to the bill as currently drafted.
The Bill broadly mirrors the Government Resources and Accounts Act 2000 enacted on 28 July 2000. This legislation has proved contentious in Britain, where the Committee of Public Accounts set out a number of key concerns in two reports. The Audit Committee would echo these concerns, and in particular:
- The need for provision that the Comptroller and Auditor General should have statutory access to examine the public money spent by new forms of service provider eg under public private partnership arrangements, including private contractors, and by voluntary bodies and community groups.
- That the Comptroller and Auditor General should be appointed as auditor of all executive, non-departmental bodies (NDPBs). This is viewed as necessary to meet the requirements of accountability to the Assembly.
- That the Comptroller and Auditor General should be appointed the auditor of eg limited companies established by central government bodies (in the rest of the United Kingdom, these include the Student Loans Company, who activities extend to Northern Ireland).
- That the Comptroller and Auditor General should have a role in auditing performance measures published by departments in their public service agreements as part of their annual accountability process.
At our joint meeting with the Public Accounts Committee on Tuesday, 7 November, my Committee took evidence from the Minister for Finance on many of these issues. We note and welcome the Minister's intention to take account of the findings of the Review established by the Treasury to recommend suitable audit and accountability arrangements for central government in the twenty-first century. We note however the views of some Committee members that Northern Ireland, while taking due account of the findings of this Review (chaired by Lord Sharman), should not be hamstrung by these arrangements. We therefore recommend that the Minister should take account of the concerns expressed by our Committee, in relation to the issues outlined above, and introduce the necessary amendments to the draft legislation at this stage.
We do not consider that this would require substantial or complex redrafting.
JOHN DALLAT
Chairman, Audit Committee
ANNEX 6
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
PUBLIC ACCOUNTS COMMITTEE (MR BILLY BELL, CHAIRMAN)
28 November 2000
Thank you for your letter of 22 November seeking formal opinion from the Public Accounts Committee on this Bill.
Following discussion with the Committee we have agreed the following submission which broadly mirrors our comments in the joint meeting of the Public Accounts Committee and the Audit Committee with Mark Durkan on 7 November.
"The Committee broadly welcomes the Government Resources and Accounts legislation. We recognise the value of Resource Accounting in leading to improvements in the clarity and quality of financial information available to the Assembly. We believe that it is important that Northern Ireland Departments should have financial controls which conform to best practice in the rest of the United Kingdom.
We note the Minister's reference to the review currently being carried out by Lord Sharman on the GB equivalent legislation. He has undertaken that a watching brief will be kept on developments and that appropriate measures will be brought forward for Northern Ireland. However, the Assembly should not be limited to what happens in GB as we can also learn from experience elsewhere.
We welcome Mr Durkan's recognition and understanding of the Committee's concerns on accountability and the need for the C&AG to be able to fulfil his role fully and properly on behalf of the PAC and the Assembly. However, in his correspondence of 20/11/00, he did not give an absolutely firm undertaking to provide the C&AG full access to all public money in the forthcoming Audit Reorganisation Bill. We would be reassured if he would do this. It would also be helpful if he would confirm that the Audit Reorganisation Bill will follow promptly and that he will ensure ample opportunity for consultation and scrutiny.
Without prejudice to any amendments your Committee may wish to propose in relation to this Bill, we think that it would be important at this stage to amend Clause 18 of GRAB. We are conscious that proposing substantial changes at this juncture would necessitate wide ranging consultation with bodies such as the Accountancy Institutions and other interested groups. In order to avoid such consultation, we propose to simply add the following subsection:
18(-) "The accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if that body exercises functions of public nature or is entirely or substantially funded from public money."
This would be purely an inspection power and would not change the audit arrangements for the bodies concerned in any way. The C&AG already has such inspection powers in many parts of the public sector where he is not, formally, the auditor and rights to examine economy, efficiency and effectiveness under the 1987 Audit (NI) Order. This would, however, be a useful extension to his remit which would ensure that he could have prompt access, on behalf of the Assembly, to all bodies mainly funded from public funds and could report on them as appropriate.
A further issue on GRAB, raised by the Minister in correspondence (20/11/00), was the need to include an additional clause on how DFP guidance on accounting matters to Departments would be overseen by some independent check. We consider that since we are part of the UK public expenditure framework and normally closely follow all Treasury guidance on financial reporting matters (which are based on accounting standards) there can be little scope for divergence. We would also be keen to avoid the establishment of another quango unless this was really necessary. In view of this we agree with the Minister that extending of the remit of FRAB, as agreed in Scotland, is the simplest way of proceeding."
I would like to thank you for the opportunity given to Committee to respond to the legislation and of course we will return to this subject following the publication of Lord Sharman's Report in order to discuss its implications for the Northern Ireland Assembly.
I hope that you will find this helpful
BILLY BELL MLA
Chairman of the Public Accounts Committee
ANNEX 6 (I)
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
MR DES MCONAGHY
11 November 2000
I attach a copy of my written evidence. I "burned the midnight oil" to get this to you in time because the Bill is one of major constitutional importance and should - I think - be seen as such. The final paragraph (35) sums up why I personally think it important.
I was very glad to have been able to pick up on points of principle that Members raised during the Second Stage. At paragraph 8 I refer to Mr Bell's point registering the controversial nature of the Bill and the concern about limiting the C&AG's statutory access. At paragraph 29 I also referred to Mr Molloy's concern to see that this Bill for the supply of resources managed to co-ordinate the confusion of separate financial reviews, programmes and budgets. That points directly at the need to include statutory provision for the performance measures (another matter that worried the Westminster PAC and NAO).
Your notes regarding written evidence suggested a reference to position or personal background - which I forgot; but an attempt is now annexed.
Due to my current work on the accountability of RAB at Westminster and in each of the three devolved areas I have liaised with officials in London, Edinburgh and Belfast. In Northern Ireland this liaison has been encouraged by Mr Ingram (prior to the Assembly) and subsequently by Mr Durkan. Consequently I normally circulate to Victor Hewitt (DFP Central Expenditure Division), John Savage (NIAO) and (for any programme examples) David Woods at DENI. Perhaps you would let me know when I could circulate this paper to these officials?
DES McCONAGHY
WRITTEN EVIDENCE
I am a retired public servant currently with a grant from the Rowntree Charitable Trust to look at the effect of the RAB reform on public accountability at Westminster and in each of the three devolved areas; Scotland, Wales and Northern Ireland. I was an architect/planner, graduating in 1955, and worked on large scale housing and town expansions in England and Scotland. I was in the Craigavon master plan team and then responsible for statutory planning at the Development Commission. In 1969 I ran a national inner city pilot project for Shelter in Liverpool and in 1974 published proposals for the national financing of performance driven renewal. This led to a period as a Whitehall adviser under the Health and Callaghan Administrations and I then directed the postgraduate planning workshop at Liverpool Polytechnic and was Director of the Area Information Service: Connect. I was a Churchill Fellow (USA) and an Honorary Fellow of Liverpool University and a journalist and commentator on public administration and public finance in the United Kingdom and Europe.
"The introduction of Resource Accounting will bring about a fundamental change in the way government departments account for their activities."
National Audit Office Annual Report 1998.
Public auditors are not given to wild statements. The National Audit Office's claim that this legislation marks a "fundamental change" in governmental accountability is no exaggeration. The Bill is of central constitutional importance because it can radically affect the accountability of government and therefore the life chances of every citizen.
The Treasury described it as "the biggest reform of public finance management since the Gladstone era" (1) And its constitutional importance is clear if we trace the Bill's aetiology back to the original 1994 Consultation Paper (2). this established that, for resource accounting to be intelligible, the Government would need a new system of output and performance measures (OPAs) when reporting to parliament and public on its programme and achievements (3).
But the Bill is also a "Pandora's Box". The naivety of the Treasury's initial OPA ideas in 1994 led to a search for a reporting dialogue that could be truly accountable (4). This quest also comes at a time when the Westminster Parliament is notoriously by-passed and ignored, and when even the notion of "representative democracy" is questioned. My evidence invites the Assembly to meet this challenge head on! It concentrates on these new reporting tasks and in particular the need for .
- an amendment to secure the Assembly's and Comptroller & Auditor General's access to relevant information (paras 1 to 11)
- an amendment to place the new performance reporting on a statutory basis requiring Assembly validation (paras 12 to 18)
- securing effective operation and control - and implications for the Assembly's scrutiny of budgetary and other planning measures (paras 19 to 35)
None of this is an argument against resource accounting as such. As with all reforms there are advantages and disadvantages. Cash accounting has the merit of simplicity; which is always an important asset where a general understanding by lay members of the public is essential. On the other hand the advantages of Resource Accounting and Budgeting are now widely accepted and have been ably piloted by global trailblazers such as New Zealand. The New Zealand C&AG's 1999 Report "The Accountability of Executive Government to Parliament" is recommended as a model of lucidity (5).
Of course it brings new opportunities for "creative accounting". Andrew Likierman, the chief Treasury architect of resource accounting, has acknowledged this but has stressed that the danger is alleviated in the public sector by (a) "accountability to Parliament" and; (b) "reliance on a single auditor, the Comptroller and Auditor General" (6); in other words precisely the areas where the NI Bill is at its weakest.
OPTIONS FOR NI AMENDMENTS
(A) ASSEMBLY AND C&AG ACCESS TO INFORMATION
1. Two linked matters are completed unresolved at Westminster. They are (a) parliamentary access to information via the C&AG; and (b) parliamentary approval of the new output and performance reporting. This section deals with (a) where over the past seven years the Treasury has been unable to advance solutions wholly acceptable to public audit or to many in Parliament. That makes the NI Bill extremely contentious measure. Indeed it was the continuing nature of these confusions, and the extent, persistence and the seniority of cross-party parliamentary objections, that caused the Treasury to announce a "Review of Audit and Accountability for Central Government" (by Colin Sharman) right in the middle of the Westminster Bill's Committee Stage!
2. This stands normal procedure on its head (legislation preceding review!). But it serves to underline the extent of unresolved questions at the heart of this Bill, and indeed in the Treasury's approach to performance reporting and the Supply process. Therefore although the above Review was first announced in late April, substantial amendments to the Westminster Bill were still proposed by the Chairman and members of the Westminster Public Accounts Committee in the Commons, and in the Lords.
- to extend the statutory access of the Comptroller and Auditor General, including access to the accounts of the new forms of service providers; and
- to secure statutory provision for external validation of performance reporting.
3. These amendments were defeated. But it is of course open to the Assembly's Finance and Personnel Committee to consider these cross-party amendments proposed during the passage of the Westminster Bill. The Committee could consider, and I respectfully suggest should consider, if the more important amendments could be adapted and proposed for the Northern Ireland legislation.
4. The rationale for these Westminster amendments was as follows. The Committee of Public Accounts (PAC) and the National Audit Office (NAO) held the clear view that the statutory access of the C&AG should be extended and that it was an unacceptable abuse of the rights of Parliament (and therefore in the present case an abuse of the rights of the Assembly) to leave this to the Executive's discretion. In the NI Bill the C&AG's access can be extended, case by case, only following an order from (ie at the discretion of) the Department of Finance & Personnel (DFP).
5. Unrestrained C&AG access is not only vital but increasingly important. One of the main objectives of resource accounting is to purchase "outputs" but there are already vast gaps in this information due to the new forms of service providers in the private and voluntary sectors. This dependence continues with central and local governments now regarded as purchasing agencies procuring goods and services from the private sector; (see note (6)). Therefore it will be quite impossible for the Assembly to form a picture of local outputs (let alone "outcomes" or how to trade one output off against another!) if the C&AG cannot access these accounts.
6. But at the Westminster Bill's Second Reading Treasury Ministers said they wished "to make the public sector a better client in public finance initiatives and public-private partnership deals" and, when defeating the above amendments, they explained that an extension of the C&AG's traditional "right to roam" could discourage the enthusiastic participation of the private sector. The NI Assembly might consider if this absence of transparency is really in the public interest or in the interests of good business practice.
7. Moreover this lack of transparency will obstruct the public scrutiny that is now required under S.75 of the NI Act (1998).
8. At the Second Stage of the NI Bill, Mr Bell, the Chairperson of the Finance and Personnel Committee, referred to the controversy over the C&AG's statutory access. Mr Durkan responded that these access rights were being reviewed by the (above) "Sharman committee". Mr Durkan added, "We will take full cognisance of anything that develops and will bring forward appropriate measures for Northern Ireland in due course". Reassuring? And yet there is no guarantee whatsoever that Colin Sharman's review will tackle, let alone resolve, all the central constitutional issues involved - or indeed that the Treasury will suddenly wish to do so!" One simply cannot be sure.
9. One must surely conclude - here and now - that it is problematic, if not downright bad practice, for the Assembly to proceed with important legislation while such central issues of principle are unresolved - and where they may or they may not be decided, elsewhere, following a future review. Devolution suggests discretion in such matters.
10. So the Assembly has the example of the proposed Westminster amendments. Moreover the Committee for Finance and Personnel also has the example of the equivalent "Public Finance and Accountability (Scotland) Act" which improved the Scottish Auditor General's statutory access to accounts. The Consultation Paper preceding the Scottish legislation gives an excellent summary of the innovations based on the work of their Financial Issues Advisory Group (FIAG) (8). As a result the Scottish Act also went to the very heart of the Westminster Parliament's structural problem by, in addition, establishing for Scotland a statutory system of supply (9).
11. Most modern democracies grant their auditors the right of access. Article 33 of the Irish Constitution gives their C&AG a constitutional right of access. It may not be always exercised but any citizen could challenge obstruction in the Courts. The equivalent Scottish legislation has improved their Auditor General's position over the limitations imposed on the C&AG in England and Wales. Why should Northern Ireland have less rights than Scotland, or indeed anywhere else?
OPTIONS FOR NI AMENDMENTS
(B) SECURING EXTERNAL VALIDATION OF THE REPORTING MEASURES
12. There is also the question about the external validation of performance reporting. The Westminster PAC and NAO held the view that the performance reporting should be on a statutory basis - and should be validated externally by the C&AG. They noted that this would bring central Government performance reporting into line with similar developments already in train in other parts of the public sector - the equivalent bring the auditing of performance indicators already being operated at subservient levels of government, and also indeed in Northern Ireland.
13. Here we find that the Northern Ireland Bill's most important provision is tucked away in Clause 7. This is the statutory basis for the actual preparation of resource accounts and Clause 7(4)(b) provides the statutory requirement for "statements of financial performance, financial provision and cash flow". So this is the political heart of the Bill. And yet there is absolutely no mention of any new financial dialogue involving output and performance reporting - even though the successful operation of the whole reform depends on this.
14. Meanwhile in England what was called "Output and Performance Analyses" (OPAs) in the 1994 proposals have given way to "Public Service Agreements" (PSAs) and "Service Delivery Agreements" (SDAs): all highly political documents. They add to the growing proliferation of performance regimes, at all levels, without a coherent procedure for parliamentary validation, (10).
15. Why, then, is there not a more specific reference to OPAs, PSA or SDAs in the Bill? The explanation is that the Bill follows the Treasury's traditional formula for all matters of any constitutional importance: they are left to the discretion of the Treasury. Thus Clause 7(2); "Resource accounts shall be prepared in accordance with directions issued by the Department (DFP)". It is only in the informal Explanatory and Financial Memorandum that there is a hint of "a statement relating costs to objectives".
16. As early as 1998 the Westminster PAC took a stand on this; "A performance statement on output and performance analysis is important in resource accounts. It will provide Parliament (the Assembly) with valuable information on what departments have achieved with the moneys voted to them. Such information will form the basis for enquiries into departmental accountability, and it will help inform Parliament's consideration of further requests for Parliamentary Supply. We therefore expect that such performance statements should be independently validated by the Comptroller and Auditor General alongside the resource accounts", (11)
17. Mr Durkan appeared to accept the importance of Assembly "control" (external validation of Executive's PSAs and SDAs?) in his statement at the Second Stage of the NI Bill. He said, "Under the new system there will also be a summary of out-turns reflecting Assembly control, and, critically, a statement of resources by departmental aims and objectives under PSAs", (emphases added). But that is not what has happened at Westminster. And that is not what is provided for in the NI Bill.
18. One may conclude that this omission of statutory provision has been partly due to a deep ambivalence, running through the history of this legislation, as to whether the innovations are primarily of a technical nature or of a political nature. But there is no doubt that it is mainly due to the Executive'' continuing refusal to engage Parliament in any coherent or systematic debate on the Supply procedure.
19. The Assembly may have to consider if they now wish to import this important feature of parliamentary impotence to the Province. On the other hand the Assembly may wish now to seek amendment that is more conducive to the historic task of encouraging representative democracy in Northern Ireland.
SECURING EFFECTIVE OPERATION AND CONTROL
20. The Chairman of the Westminster PAC made no bones about the political nature of the legislation at the Westminster Second Reading. "It is seen by some people as a technical measure, but it is a constitutional measure because it is primarily about the relationship between Parliament and Whitehall and the way in which Parliament allows the Government the money they need to run the country. It is as simple as that" (12).
21. What is certainly not simple is the task of relating outputs to the relevant financial date in a way that anyone can understand - and without generating a whole new vastly expensive bureaucracy of central command and control. Moreover one should accept at the outset that a purely technical solution is impossible. For example there are loose references to "outcomes". But infinitely complex casual relationships between outputs and outcomes defy measurement or precise costing. The Scottish Auditor General, Robert Clack, adds, "I very much agree with your core point that there are many aspects of performance measurement which are not amenable to static analysis", (13).
22. Robert Black also agreed, therefore, with my assertion that "political debate is as important as the measurements used", (14). That has to mean arranging for constituency and sectoral feedback in operation and control of the SDAs and PSAs. It must mean always ensuring a clear linkage between the performance targets and the financial data. Then, wherever practicable, the Assembly should be able to follow expenditures to the point of impact. In this way (in a truly "Information Age" way!) constituency feedback becomes an integral part of the measurement process and effective political response.
23. All this is now possible. The whole development of modern public audit - from the earlier concepts of strict financial audit to matters of effectiveness and efficiency - has only been made possible by developments in information technology (ICT). Public audit now able to routinely disaggregate (or "localise") central expenditure figures to compare local impacts (performance) across the country; who is getting what, and for what! So the challenge in the operation and control of PSAs is to bring this sort of information from post hoc audit (that is to say after the event) into the information system assisting political judgement in the budget process (that is, before the event).
24. But Ministers are resisting such developments, claiming it would compromise the objectivity of the PAC and NAO. As the Chief Secretary put it; "Performance evaluation is not the same thing as auditing (the) proper use of public money"... "As you come closer to these performance and target issues, there is a risk - I put it no higher than that - that you get drawn closer to the political arena", (15).
25. The Chief Secretary is obviously correct if suggesting that organisational conquest of government has limits. He is correct if claiming that government remains inexpressibly complex and diffuse. His point is quite unassailable that all major resource decisions are finally subjective and therefore a matter for political arena, (16). Where he is less than frank is admitting that this also applies to the work of the Audit Commission; a grant aided external validation body. It's all politics! And what this whole silly anomaly points to is, once again, the great abundance of post hoc, ad hoc information available to Parliament, after the event, and the absence of systematic information available to Parliament before the event; ie in the budget process.
26. That is why I referred above (and at my note 5) to the New Zealand C&AG's solution to RAB - which is to include prioritised sets of performance measures in the Supply Estimates. That process could the use automated routines to freely draw on the mass of disaggregated information from the NAO and National Statistics (and in NI also from the NISRA) without compromising any professional neutrality. And the priority information is, as always, the Executive's expenditure changes at the margin.
27. Some of the mechanics were anticipated in a voluntary data-project I directed 15 years ago where routines picked out the constituency implications of the then generously detailed Supply Estimates and similar data. User-friendly, inter-active programs were devised so that lay-persons (and the House of Commons in the English example) could "call up" who was getting what in any local area and at any level of aggregation. This ran for three years, and in a final year in Northern Ireland with the then help of senior officials in each NI department. It showed, even then, what could be done, (17). Since then I frequently suggested this could assist objective debate in NI only to be met with an official response - until recently - that it was all happening anyway.
28. But it was not - and it is not! Even now Whitehall's pursuit of "e-government on-line" is largely confined to the more obvious routines and services such as passport applications, licences, hospital appointments, changes of address and the like. These important but relatively banal applications fall short of the in-depth and systemic re-engineering which would follow the Assembly's access to such online public sector information systems driving the budget process. This budget based initiative would penetrate all the departmental information silos(!) and, since NI is a largely public sector economy, would have a generative effect in procurement and in stimulating a knowledge-driven supply base throughout the Province.
29. All this is totally relevant to the hope expressed by Mr Molloy, Chairperson of the Finance and Personnel Committee at the Second Stage of the NI Bill. He wanted to see the Bill providing the co-ordinating device for the "Programme for Government" and the otherwise mass of apparently uncoordinated reviews, reports and plans that reach Assembly Members. This Bill's function is to supply the Executive with resources it needs and therefore is the main chance for this co-ordination. But it can only come about if there is statutory provision for performance measures (PSAs or the like) and if they can function within the Estimates in the above way; (para 26).
30. As matters stand the NI Executive's first Budget is mainly a collection of aggregate figures for the Province set out in the Westminster tradition. As a practical matter the opportunities for useful scrutiny and debate by the Assembly Finance or functional Committees - or by the public at large - are quite limited. The first Scottish Parliament's Budget ("Investing in You") had similar faults; the scene was set for innovation but long held official attitudes and ways of working still impeded progress. The Scottish Parliament has clearly said this will be unacceptable in the current year.
SHARMAN?
31. Finally can Northern Ireland really leave it to the Sharman review to define the limits of governmental accountability? Can we be sure that this Review will settle the constitutional dilemmas thrown up in the passage of the Westminster Government Accounts and Resources Bill - and now transferred to the Assembly in the present Bill?
32. Alternatively the Assembly might consider for itself whether the NIC&AG's statutory access should be extended and statutory provision made for the PSAs and their Assembly validation - as suggested by senior parliamentarians at Westminster. Resource Accounting demands this new financial dialogue. It will be pioneered by PSA type instruments and this cannot succeed outside an effective framework of debate. External validation is both a technical and a constitutional necessity.
33. But the Government continues to by-pass the Westminster Parliament. Indeed it should be worth noting that our widely held notion of parliamentary accountability derives mainly from a relatively short period (between 1832 and 1890). At this time the political parties were relatively weak - and so we saw new statutes creating the C&AG and the Exchequer and Audit Department. Unfortunately our distinguished observers of the constitution, such as Bagehot, took this very exceptional period as typical and so the myth of modern parliamentary accountability became commonplace, (18).
34. With the rise of modern party organisations, however, what became known as "the Liberal fallacy" collapsed and Westminster reverted to its traditional feudal model whereby the Monarch and Ministers say what must happen and Parliament's job is just to "Supply" the finance. The latest Parliamentary attempt to redress this imbalance, including a modest reform of supply, has been firmly rejected, (19). So even if Lord Sharman does "grasp the nettle" the Government will hardly relax its grip on Supply; some even say that the era of "representative democracy" may be coming to an end.
35. These comments are nevertheless firmly rooted in the belief that transparency, solidarity and representativeness with people are all abiding virtues. It is suggested, too, that effective government and sustainability - even perhaps survival - may finally depend on the sort of constituency feedback that only representative democracy can deliver. Westminster now faces a real dilemma in this respect. But the Northern Ireland Assembly has unique statutory arrangements to protect it from the perverse effects of party political patronage. This therefore is a real opportunity, possibly also a unique historic opportunity, to demonstrate the benefits of representative democracy.
notes and references
(1) HM Treasury Press Notice 195/99.
(2) HM Government (1994), Better Accounting for the Texpayer's Money: The Government's Proposals, Cm 2626 (HMSO), London.
(3) See also National Audit Office Annual Report 1998, pages 9 and 10, NAO, London.
(4) For a fairly definitive account see McConaghy, Des. Measuring (Accountable) Success - Analysis of Treasury Working Document, Public Money and Management, Vol 19, No 3, October - December 1999, CIPFA, London. Also in McConaghy, Des. Evidence in Treasury Select Committee (1999), Public Service Agreements, Seventh Report of Session 1998-99, HC 378 (The Stationery Office, London).
(5) Controller and Auditor-General (1999, The Accountability of Executive Government to Parliament, Third Report 1999, Wellington, New Zealand.
(6) Likierman, Andrew. (1998), Accounting for a new age, Public Finance, 13 November (CIPFA), London.
(7) This liberalisation continues globally, and nationally, but without C&AG access there is also fragmentation and loss of accountability. Now private contractors and voluntary bodies handle many £ billions of public money, from housing associations to prisons and hospitals, New Deal training opportunities etc and limited companies established by central government bodies.
(8) Scottish Executive (1999), Consultation Paper on a Financial Framework for the Scottish Parliament. See also HM Scottish Office (1999), Principles of the Scottish Parliament's Financial Procedures: Final Report by the Financial issues Advisory Group, Edinburgh.
(9) The NI DFP's Explanatory and Financial Memorandum briefly states, "The system of supply is largely non-statutory and it is not intended to change this". (Re. Clause 5, page 4).
(10) The latest manifestation being HM Treasury. Spending Review 2000: New Public Spending Plans 2001-2004 (Service Delivery Agreements). Press Notice 125/00, 3 November 2000.
(11) Committee of Public Accounts, HM Treasury: Resource Accounting and Resource-Based Supply, HC 731 1997-98, Stationery Office, London.
(12) Parliamentary Debates, (Hansard), Vol. 340, No 13, 6 December 1999, col.340.
(13) Scottish Auditor General - correspondence with the author (20 April 2000)
(14) Scottish Auditor General - ibid.
(15) Committee of Public Accounts (2000), Ninth Report - Government Resources and Accounts Bill, HC 159 1999-2000; response to question 25.
(16) Hopefully this can be contrasted with the Chief Secretary's predecessor view which seemed to threaten a "Soviet" stype top-down command and control system; "Particularly as far as measuring outcomes as distinct from outputs is concerned, I think it is fair to say that we need to develop a new science", Alan Milburn. Treasury Committee, Public Service Agreements, Minutes of Evidence, 11 May 1999 page 55, HC 378-iii. (Account
(17) This is referred to in McConaghy, Des, Measuring able) Success - Analysis of Treasury Working Document, op cit. The voluntary database project was funded by Rowntree Charitable Trust, the MSC and donations from the BBC, etc. It collapsed when new Whitehall rules required that officials seek the maximum financial return for official data. But even in those early days it showed what could be done.
(18) There are many definitive accounts. One of the most striking is Griffith, Professor J A G., (1982), The Constitution and the Commons, in Parliament and the Executive, RIPA, London.
(19) Liaison Committee (2000), First Report, Shifting the Balance: Select Committees and the Executive, HC 300 1999-2000, and The Government's Response, Cm 4737, May 2000.
"Something new is necessary for every man and every nation. We may wish, if we please, that tomorrow shall be like today, but it will not be like it. New forces will impinge upon us; new wind, new rain, and the light of another sun; and we must alter to meet them." (Walter Bagehot, Physics and Politics, Collected Words, vil.II,p.76).
annex 7 (11)
COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO GOVERNMENT RESOURCES AND
ACCOUNTS BILL (NIA 6/00)
WRITTEN SUBMISSION BY:
MR DES MCCONAGHY
30 November 2000
Thank you for your letter of 22 November. I was glad to hear that Members had welcomed my written evidence and were seeking further information about the proposed amendments from the Westminster and Scottish Parliaments.
Members also asked if the amendments addressed all the points I raised relating to "performance reporting" and scrutiny arrangements. The short answer is no. But this legislation is only the framework for subsequent action and innovations. The Bill's immediate twin tasks are to establish (a) the Assembly's control over the funds the Executive needs to run the Province and (b) the Assembly's ability to audit subsequent spending. The amendments would accomplish this. The Assembly would thereafter have a dominant say in any secondary legislation and in the subsequent evolution of all non-statutory rules for performance and budget scrutiny.
The Scottish legislation is already on the statute book and this could be adapted for the NI Bill. I understand, too, that the NAO is ready to offer advice about the amendments proposed at Westminster. I want to add just one reservation. The Westminster amendment proposing a statutory basis for performance reporting need not include the validation of performance measures by the C&AG. This could imply the C&AG's involvement in the political arena of the supply process. But the C&AG can in any event scrutinise technical aspects (accuracy of data and presentation) if the NI C&AG has powers similar to those of the Scottish Auditor General.
It is nevertheless important that this amendment includes the incorporation of performance measures in the Estimates. There should always be an explicit "read across" from performance targets to the relevant financial data. In New Zealand, which leads the world with new regimes of state sector financial management and parliamentary accountability, it was the NZ Treasury which proposed Parliamentary approval of performance outputs in their Estimates, (Public Finance Act 1989, S.9). It would be excellent if the Department of Finance & Personnel would do the same.
Having ensured the legislative framework the Executive and Assembly will be in a position to explore dynamic new public sector information systems that should become available to Members and indeed the public. My evidence briefly referred to some of this and to the Assembly's need for effective feedback systems and budget scrutiny (paras 21 to 30). The sectoral and constituency impacts of public action should be an integral part of measurement and modern ICT can enable this to happen in ways that were not previously possible. It is also a necessary development or the new central command and control regimes could become a wasteful and even counter-productive exercise without always securing desired outputs.
So all this will be to play for and I would be grateful for the opportunity of expanding on various aspects. It will be important if the resource accounting reforms are to become truly intelligible while, at one and the same time, strengthen the constituency base of the Assembly. But in terms of the present bill there is no doubt whatsoever about requiring the above amendments. Anything less may result in a "toy-town parliament"; one without executive clout; a "local authority" within the jurisdiction of a Westminster Parliament, itself notoriously flawed in the above respects.
Devolution was the opportunity for Scotland to legislate itself out of this hole - and indeed it was often suggested that anything less could encourage secession. The Northern Ireland Assembly's case is even more urgent for similar powers, and for transparency and for a new approach to more effective democratic control - and for prosperity and for peace.
DES McCONAGHY
TOPAPPENDIX 4
SCHEDULE OF AMENDMENTS
TO THE GOVERNMENT RESOURCES AND ACCOUNTS BILL
TO BE MOVED AT CONSIDERATION STAGE
The amendments to the Government Resources and Accounts Bill (NIA Bill 6/00) that were agreed and recommended by the Committee to be moved at Consideration Stage are given below.
Clause 7:
page five, line three, leave out "Department" and insert "department".
Clause 10:
page 6, line 36, leave out ' at all reasonable times'
Clause 18:
page 10, line 19, at end insert
"( ) The accounts and all documents relating to the accounts of an authority or body which are not otherwise required to be examined and certified by the Comptroller and Auditor General should be open to his inspection if it appears to him that the body exercises functions of a public nature, has received significant public funds or is entirely or substantively funded from public money." '
TOP