Special Report: Administration of National Health and Local Authority Levy Fund                     Press Release Monday 29 April 2013

The Comptroller and Auditor General has carried out an inspection of the National Health and Local Authority Levy Fund. His report on the inspection has been presented to Dáil Éireann.    
The Fund bank account was established in December 1998. A senior SIPTU official was identified on bank documentation as trustee of the account, and acted as Fund administrator until mid 2010. No formal system of accounting for Fund transactions was put in place. 
SIPTU took over control of the account in July 2010. It commissioned the preparation of financial statements for the Fund for each year from 2002 to 2011, inclusive.
The inspection team examined the financial statements for the Fund and the underlying bank records. The team matched that information with accounting records in the public bodies that provided funding, and carried out other work to validate payments.     
The Fund administrator met with inspection team members on four occasions. He provided verbal explanations of some transactions based on diary entries and on his recollections, but did not provide complete explanations of certain transactions. He declined to provide the inspection team with a copy of a report on the Fund transactions, which he had commissioned a firm of accountants to prepare.
Main findings
  • A range of State bodies provided a total of over €4 million to the Fund between 2002 and 2009. All the identified funding provided by public bodies for the Fund was lodged to the Fund bank account.
  •  The balance in the Fund was consistently well in excess of the immediate requirements for Fund-based activities. In five of the seven years between 2002 and 2008, substantial grant payments were made by public bodies in December. In effect, the Fund may have acted as a mechanism for public bodies to avoid unused money allocated for partnership purposes being surrendered back to the Exchequer at year-end.
  • Almost €1 million in unused funds was returned to State bodies between late 2010 and December 2012. It is estimated that the net cost to taxpayers of the Fund’s operations since 2002 was of the order of €3.15 million.
  • The public bodies provided the funding for social partnership purposes, but did not specify clearly how money allocations were to be used. They did not exercise effective oversight of how the Fund was applied, and did not put in place arrangements for accountability for the Fund’s operations.
  • About €2.2 million was paid out of the Fund account on training programmes and grants. This appears to be consistent with the broad partnership objectives stated by funders. But because the funding bodies did not set business-focused objectives, it is difficult to conclude on whether the application of the funding resulted in delivery of expected outcomes, or the achievement of intended outcomes.
  • Other substantial areas of spending from the Fund, such as marketing and promotions (€348,000), travel and accommodation (€598,000) and hospitality (€99,000). It is not possible to identify the extent of the contribution they may have made to the development of partnership.
  • Payments to charities (totalling €49,000) may have resulted in worthwhile social benefits, but they were clearly outside the scope of funding objectives.
  • Further significant expenditure without a clear business purpose was charged to the Fund, including payments related to foreign travel. Refunds of around €125,000 were made by individuals (mostly in 2010). The inspection team was not able to match this to specific payments or to conclude if all refunds due have been paid.
  • In some instances, employees of public bodies engaged in foreign travel that was arranged and paid for from the Fund. Such arrangements are inappropriate, because they bypass internal controls over the charging of and accountability for foreign travel expenditure incurred by public employees.
  • There were other inappropriate financial procedures in relation to Fund expenditure, and administrative errors could have been prevented had appropriate financial controls been put in place. For example, the Fund administrator submitted the same invoices, worth a total of €98,000, on two occasions in support of different claims for reimbursement.
Recommendations
The report presents a set of recommendations that aim to improve the control over, and accountability for, State grants. The Department of Public Expenditure and Reform has indicated that it accepts the recommendations and proposes to progress them through a joint working group between the Department and the Office of the Comptroller and Auditor General.
Note for Editors
Follow this link to read the report:           Special Report 80: Administration of National Health and Local Authority Levy Fund
Enquiries contact: John Crean ' (01) 603 1075 email John_Crean@audgen.irlgov.ie
The Comptroller and Auditor General is an independent constitutional officer with responsibility for the audit of public funds. He reports to Dáil Éireann.