C&AG finds State spent €152m on expert banking advice

The State spent €152 million on consultants to advise them on the banking sector following the collapse of the sector in 2008, a report by the Comptroller and Auditor General(C&AG) has found.

It said the Central Bank, the National Treasury Management Agency, the Department of Finance and the National Pension Reserve Fund had all requested assistance from expert financial advisers.

The report by the C&AG is examining the use of taxpayers money and has identified significant issues with the use of exchequer funds across a number of departments and agencies.

From 2008 until the end of 2014, these services had cost the State almost €152 million.

Four legal and financial firms accounted for 60 per cent of this expenditure; Arthur Cox received €33.1 million, Blackrock Financial Management received €23.5 million, Ernst and Young €20.9 million and KPMG €13.2 million.

Irish Water

Separately, the report also said that the number of people who have not registered with Irish Water is 422,455.

It said figures from August 31st, show 1,099,545 have registered to pay the levy.

Of those who have their own supply, 284,327 have registered and an estimated 101,857 have not.

The CA&G said the level of Government subvention to the company in the future is difficult to predict.

It said: “The calculation of the actual amount of the subvention in each year will be complex as it will depend on the actual volume of water used by Irish Water’s domestic customers, the number of customer households and the number of children in respect of whom a water allowance is due.

“The payment of the subvention will be examined as part of the audit of the Local Government Fund from 2015.”

School Meals

The C&AG report also identified a number of payment irregularities in organisation participating in School Meals Scheme Payments.

An internal audit by the Department of Social Protection discovered over-payments of €1.4 million from 2011- 2013.

This was due to schools inflating pupil numbers, inadequate records and failure to disclose other income.

A number of the cases have been reported to An Garda Síochána.

The initial internal audit by the Department of Social Protection discovered irregularities of around €802,000 in two schools.

In 2011, the unit audited 11 schools and in one case, irregularities involving an amount of more than €102,000 were detected and referred to An Garda Síochána.

On foot of the irregularities identified, the department began an inspection programme in 2012. It discovered wide-spread over-payments of the scheme.

The C&AG report said: “There has never been an evaluation of the school meals scheme by the department to determine the extent to which it is reaching disadvantaged children, or whether it is having a beneficial impact on those children, thereby enabling them to take full advantage of the education being provided.

“Furthermore, the department has no guidelines in place as to how disadvantaged children should be identified in non-DEIS situations.”

Tax Debtors

Records from the Revenue Commissioners at the end of March confirm a trend of tax debtors leaving the country.

During 2014, Revenue made 55 debt-related mutual assistance requests to other EU member states.

Just over €300,000 in payments was received in 2014, following these requests.

The C&AG said the number of debtors leaving the State posed a significant challenge to tax collection for revenue bodies.

Revenue said the gross tax debt due to the State at the end of March 2015 was just over €2 billion, having fallen by 9 per cent in the two years to that date.

It says 35 per cent of tax debt is classified as non-collectible because it is under appeal.

At mid-June 2015, Revenue had yet to request hearing dates from the Appeal Commissioners for about 50 per cent of the tax under appeal.

Half of this debt is more than three years old, including 28 per cent over five years old.

The report found: “There is a significant risk that this debt may be incorrectly classified by Revenue.”

Illness Benefit

In relation to the Department of Social Protection the report found that people on illness benefit were being overpaid by approximately €1.5 million a week.

It conducted a sample of the department’s payments and 12.9 per cent of welfare expenditure was found not to satisfy the medical eligibility criterion and had their payments stopped.

The report said: “While in some cases this may indicate a genuine change in medical circumstances over time, in other instances it could be reflective of a lack of timely medical review, which is a key control in schemes based on medical eligibility.”

A similar review of payments to those on an invalidity pension estimates overpayments of €348,000 a week were made last year.

Health Insurance

The report detailed the difficulties in securing debt from private insurers. At the end of 2014, €290 million was owed to the Health Service Executive.

This breaks down to €172 million in relation to statutory hospitals and €118 million for voluntary hospitals.

The report makes clear: “At the end of 2014, the total amount due from insurance providers was equivalent to 51 per cent of the income recognised in the year (30 per cent for statutory hospitals and 21 per cent for voluntary hospitals).

“The comparable measure at the end of 2013 was 44 per cent.”

The report says it now takes an average of 186 days to collect a private insurance claim.

This means the exchequer is funding the gap in revenue due to the late payment.

Private insurers are also querying more claims, with this activity showing a 69 per cent increase.