TWO OFFICIAL reports on the €3.6 billion discrepancy in the Government’s debt figures have concluded there was duplication of effort between agencies, failures in communications and reporting, as well as lack of resources for key statistical work.
An internal Government report prepared for the Department of Finance and an external review carried out by consultants Deloitte and Touche have both concluded the responsibility for compiling the statistics should rest with one agency, the Central Statistics Office, rather than it being shared with the Department of Finance.
The double accounting first occurred in 2007 for three years of accounts dating back to 2004, the internal review found.
A Department of Finance spokesman said last night they would make no comment on the reports in advance of their publication tomorrow when the recently-appointed secretary general of the department John Moran would appear before the Public Accounts Committee for the first time.
The error initially arose in statistics prepared in late 2007 and led to a situation where €3.6 billion of Housing Finance Agency funds were “double counted”, resulting in the total of the general Government debt being overstated.
The discrepancy arose because there was a change of status for the housing agency’s borrowings. While the National Treasury Management Agency referred to the change in covering letters, the internal report said a key issue was whether or not the references were “sufficiently detailed” to be picked up the statistics unit of the Department of Finance.
The internal report concluded that emails and communications sent by the NTMA in 2010 and 2011 should have prompted the Department of Finance statistics unit to reconsider its figures, allowing it to identify the discrepancy.
It was also critical of the delays that occurred in communicating the error to senior management in the Department of Finance and also to the Minister for Finance, when the error was discovered. The discovery was made on October 19th but the Minister was not informed until November 1st.
“The statistician informed the review team that his primary intention was to confirm without any doubt that there was a discrepancy,” states the report.
“Furthermore, the statistician told the review team that, at the time, he did not appreciate or anticipate the attention that such an error would attract either from the media or from the Committee of Public Accounts, particularly given that the error was a ‘positive’ one and did not have a detrimental impact on the GGDebt [general government debt] figures.”
Both reports have found the work involved was very complex but that responsibility lay with a very small number of individuals, and resources was an issue. The Deloitte report states: “The current systems carry a significant risk of errors or omissions occurring and this has increased considerably in recent years.”
Deloitte found the calculation of the general government debt was complex and that regular clarification was required on the items that should be included in the reporting of the debt figures.
The accountants said that given the significance of the general government debt calculations and the reporting of those figures, a greater awareness among all government departments, agencies and local authorities was required and this should form part of future budgetary reform processes.
The secretary general of the department when the accounting error occurred, Kevin Cardiff, was rejected for the post of European Court of Auditors by a budgetary committee of the European Parliament by one vote in November last year. The European Parliament later overturned the recommendation by the budget committee to nominate Mr Cardiff to the post which carries a salary of €276,000 per year.
