Public Accounts Committee
Report on Excess Votes
(Northern Ireland) 2008-09
Together with the Minutes of Proceedings of the Committee
Relating to the Report and the Minutes of Evidence
Ordered by The Public Accounts Committee to be printed 11 March 2010
Report: NIA 46/09/10R Public Accounts Committee
Session 2009/2010
Eleventh Report
Membership and Powers
The Public Accounts Committee is a Standing Committee established in accordance with Standing Orders under Section 60(3) of the Northern Ireland Act 1998. It is the statutory function of the Public Accounts Committee to consider accounts, and reports on accounts laid before the Assembly.
The Public Accounts Committee is appointed under Assembly Standing Order No. 56 of the Standing Orders for the Northern Ireland Assembly. It has the power to send for persons, papers and records and to report from time to time. Neither the Chairperson nor Deputy Chairperson of the Committee shall be a member of the same political party as the Minister of Finance and Personnel or of any junior minister appointed to the Department of Finance and Personnel.
The Committee has 11 members including a Chairperson and Deputy Chairperson and a quorum of 5.
The membership of the Committee since 9 May 2007 has been as follows:
Mr Paul Maskey*** (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr Patsy McGlone**& ****** Ms Dawn Purvis
Mr Jonathan Craig Mr David Hilditch*******
Mr John Dallat Mr Jim Shannon*****
Mr Trevor Lunn Mr Mitchel McLaughlin
Rt Hon Jeffrey Donaldson MP MLA********
* Mr Mickey Brady replaced Mr Willie Clarke on 1 October 2007
* Mr Ian McCrea replaced Mr Mickey Brady on 21 January 2008
* Mr Jim Wells replaced Mr Ian McCrea on 26 May 2008
** Mr Thomas Burns replaced Mr Patsy McGlone on 4 March 2008
*** Mr Paul Maskey replaced Mr John O’Dowd on 20 May 2008
**** Mr George Robinson replaced Mr Simon Hamilton on 15 September 2008
***** Mr Jim Shannon replaced Mr David Hilditch on 15 September 2008
****** Mr Patsy McGlone replaced Mr Thomas Burns on 29 June 2009
******* Mr David Hilditch replaced Mr George Robinson on 18 September 2009
******** Rt Hon Jeffrey Donaldson replaced Mr Jim Wells on 18 September 2009
Table of Contents
List of abbreviations used in the Report
Report
Summary 1
Conclusions and Recommendations 2
Appendix 1:
Appendix 2:
List of Abbreviations used in the Report
DFP Department of Finance and Personnel
SSEs Spring Supplementary Estimates
Summary
The Report by the Public Accounts Committee on Excess Votes is part of the framework of Assembly control over government spending. The Committee considers the reports by the Comptroller and Auditor General on the resource accounts of departments that have exceeded the limits of expenditure authorised by the Assembly.
The Committee recommends whether the Northern Ireland Assembly should approve further grant to the Departments concerned in order to regularise the excess expenditure. Where the excesses are the results of failures in control within departments, the Committee may make recommendations for improvements.
Resource–based Supply requires departments to estimate and manage the resources they will need during a financial year on an accruals basis, as well as the cash they will need as commitments mature. The Northern Ireland Assembly authorises both cash spending and the use of resources.
In 2008-09 two Departments incurred cash excesses totalling £16.3 million. The specific cases were:
- The Department for Employment and Learning breached its Net Cash Requirement limit by £15.8 million.
- The Department of the Environment breached its Net Cash Requirement limit by £0.5 million.
There were no resource excesses by departments in 2008-09.
On the basis of our examination of the reasons why these two Departments exceeded their voted provision, we recommend that the Northern Ireland Assembly provides the necessary amounts by means of an Excess Vote.
Conclusions and Recommendations
1. Although there were no resource excesses, cash excesses in two Departments in 2008-09 totalled £16.3 million. In 2007-08 there were no breaches of Assembly limits.
2. The causes for the excesses in 2008-09 were:
- The Department for Employment and Learning breached its Net Cash Requirement limit by £15.8 million due to the incorrect budgetary treatment for student loans and a large payment processed by Account NI[1] in 2008-09 which should have been paid in 2009-10.
- The Department of the Environment breached its Net Cash Requirement limit by £0.5 million due, in particular, to payment of creditors earlier than forecast.
3. We expect that all Northern Ireland departments should have robust procedures in place to estimate and monitor their use of cash and resources. We are pleased to note that the Departments concerned seem to have taken the necessary steps to address the issues that caused these cash excesses.
4. We recommend that the Northern Ireland Assembly provides the necessary amounts by means of an Excess Vote, as set out in Figure 1.
Excess Votes in 2008-09
1. Resource-based Supply requires departments to estimate and manage the resources they will need in a financial year on an accruals basis, as well as the cash they will need as commitments mature. The Northern Ireland Assembly authorises both cash spending and use of resources.
2. In 2008-09, the Assembly granted net resources of £15,730 million and total cash of £12,486 million in Supply Estimates to 20 departments, pension schemes and other vote-funded bodies. The difference in the provision of cash and resources is primarily due to including non-cash charges in resources for items such as depreciation of assets, the notional cost of borrowing money if not funded by Supply and changes in value of assets or liabilities.
3. In 2008-09 two Departments incurred cash excesses totalling £16.3 million. Details of the Excess are summarised in Figure 1.
Figure 1: Summary of 2008-09 Excess Votes required
|
Department |
Cash |
Amount to be voted |
|
Department for Employment and Learning |
||
|
Amount originally voted |
765,180,000.00 |
|
|
Amount expended |
780,947,570.98 |
|
|
15,767,570.98 |
||
|
Department of the Environment |
||
|
Amount originally voted |
130,569,000.00 |
|
|
Amount expended |
131,073,478.76 |
|
|
504,478.76 |
||
|
Total |
16,272,049.74 |
Department for Employment and Learning
4. The Committee has considered the Comptroller and Auditor General’s report on the Excess in the accounts of the Department for Employment and Learning for 2008-09. The reasons for the excess were:
- The Department’s estimated Net Cash Requirement was lower than it should have been as interest receivable on student loans was not forecast in accordance with the correct budgetary treatment. The problem was identified after the year end when the Department received clarification from the Department of Finance and Personnel (DFP) on the correct budgetary treatment of interest receivable on student loans. This issue accounted for £10.1million of the excess; and
- the balance of the excess, £5.7 million, arose because of an administrative error by Account NI. Account NI made a payment of £5.7 million to the Student Loan Company which was supposed to have been paid on the 1st April 2009 and therefore accounted for in 2009-10, but was actually processed on 31st March 2009.
5. The Department advised the Comptroller and Auditor General that the following action has been taken to prevent recurrence:
- interest receivable on student loans will be forecast in line with new DFP guidance;
- the Department will review its cash management procedures against external guidance and in comparison to other Northern Ireland Departments, to ensure they are as robust and effective as possible; and
- Account NI has confirmed that procedures have been enhanced to mitigate against the risk of a recurrence of this processing error.
Department of the Environment
6. The Committee has considered the Comptroller and Auditor General’s report on the Excess in the accounts of the Department of the Environment for 2008-09. While the Department maintained its resource outturn within the amount approved by the Assembly by £2.9 million, its cash excess of £0.5 million mainly arose because:
- creditors were paid more quickly than had been forecast. The directive issued by the Finance Minister to pay invoices within 10 days of receipt generated a reduction in creditors which was not foreseen at the time the Spring Supplementary Estimates (SSE) were finalised. This reduction was particularly pronounced in relation to the early payment of grants; and
- legal costs associated with judicial reviews were paid in March 2009 which had not been anticipated at the SSE stage.
7. The Department advised the Comptroller and Auditor General that improvements will be needed in forecasting as a result of this excess. It therefore proposes to engage more robustly with all business areas, but more specifically the Department’s three Executive Agencies (Planning Service, the Northern Ireland Environment Agency and the Driver and Vehicle Agency), following the provision of estimated figures for the Department’s SSE. As these estimates are usually requested by mid-December from all business areas, the Department now intends to seek final clarification of these figures by mid-January prior to the SSEs going to ‘print’.
8. The Department also advised that Central Finance staff will also now monitor the Department’s cash drawn down over the period January to the end of March against the estimated NCR in the SSEs. If it is envisaged that the estimated NCR figure might be exceeded, the Departmental Board will be advised as a matter of urgency so that timely corrective action can be taken.
[1] Account NI is the shared service centre which processes payments on behalf of departments.
Thursday, 11 March 2010
Room 144, Parliament Buildings
Present: Mr Paul Maskey (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr Jonathan Craig
Mr John Dallat
Rt Hon Jeffrey Donaldson MP
Mr Patsy McGlone
Mr Mitchel McLaughlin
Mr Trevor Lunn
Ms Dawn Purvis
Mr Jim Shannon
In Attendance: Ms Aoibhinn Treanor (Assembly Clerk)
Mr Phil Pateman (Assistant Assembly Clerk)
Miss Danielle Best (Clerical Supervisor)
Mr Darren Weir (Clerical Officer)
Apologies: Mr David Hilditch
2:03 pm the meeting opened in public session.
4. Northern Ireland audit Office – Excess Vote 2008-09
The Committee were briefed by the C&AG on the issue of Excess Votes.
Agreed: Members agreed to consider the draft report on Excess Votes in closed session.
2:44 pm Mr Shannon left the meeting.
3:30 pm Mr Dallat left the meeting.
The witnesses answered a number of questions put by members.
6. Consideration of the Draft Committee Report on ’Excess Votes (Northern Ireland) 2008-09’
Members considered the draft Committee Report on Excess Votes page by page.
Pages 1 – 6 read and agreed.
Agreed: Members ordered the report to be printed.
[EXTRACT]
Appendix 2
List of Witnesses
who gave Oral Evidence
to the Committee
List of Witnesses who gave
Oral Evidence to the Committee
1. Mr Kieran Donnelly, Comptroller and Auditor General, Northern Ireland Audit Office;
2. Mr Stephen McCormick, Director of Financial Audit, Northern Ireland Audit Office;
3. Mr Joe Campbell, Audit Manager, Northern Ireland Audit Office; and
4. Ms Fiona Hamill, Treasury Officer of Accounts, Department of Finance and Personnel (DFP).