Financial Auditing and Reporting 2006-2007

02 July 2008

Financial Auditing and Reporting 2006-2007

John Dowdall, the Comptroller and Auditor General for Northern Ireland and Head of the Northern Ireland Audit Office, today reported the results of financial audit work in the past twelve months. The report comments on a range of topics and issues arising.

Statement of Rate Levy and Collection

The Statement of Rate Levy and Collection includes £847 million of receipts. There is currently no requirement for a published, audited account of the Statement to be laid before the Assembly. The Department of Finance and Personnel has given a commitment to examine the accountability and corporate governance arrangements as a matter of urgency. Mr Dowdall says that if he were required to give an audit opinion this would be qualified and a disclaimer issued. A disclaimer is unusual and normally only appropriate where financial control problems are so significant and pervasive that the auditor is unable to express an opinion on the financial statements. The report draws attention to a number of control problems:

  • Some basic functionality of a new IT system has not been adequate to meet operational needs.
  • Basic financial controls such as bank reconciliations were not successfully carried out during 2006-07 or 2007-08.
  • The report also reveals that £5 million of allowances were paid to landlords and agents for timely payment of rate bills. In 2006-07, every private landlord and agent received the full discount regardless of when they paid their bill, due to the failings of the IT systems.

The report also reveals that the number of properties in arrears at 31 March 2007 was 112,930, an increase of 108 per cent on the previous year. Arrears have increased from £35 million at 31 March 2005, to £48 million at 31 March 2006, to £88 million at 31 March 2007. The most recent indication of arrears at 31 March 2008 is £130 million. The report says that “after ‘go live’ in October 2006 the new system did not have the necessary functionality to issue final notices or process debt proceedings. As a result and with Departmental agreement, priority was given to developing the IT systems ability to issue domestic rates bills based on capital values. As a result no computer generated recovery action took place during the 2006-07 financial year”.

Disposal of Surplus Land

Mr Dowdall examined the systems and processes departments currently have in place to identify and manage public sector surplus assets. His work should be read alongside the Capital Realisation Taskforcem report which was presented to the Northern Ireland Executive in January 2008. Mr Dowdall’s review identified a number of issues including:-

  • at present there is no overall central asset management strategy for public bodies in Northern Ireland;
  • in a number of instances land was being acquired for projects which ultimately did not proceed within the expected timescale;
  • there was a general lack of incentives for bodies to identify surplus land; and
  • in some instances a considerable amount of time is taken to dispose of land that has been categorised as surplus.

Management of Non-Public School Funds

Schools are primarily funded by public money. However they also receive money from voluntary donations and organised events such as concerts. It is the Audit Office’s view that schools should apply the principles of good financial management and control regardless of the source of income. Mr Dowdall found that over the past five years there have been eight cases of fraud and mis-appropriation involving non-public school funds with an estimated total value of £54,000 and corresponding restitution of £12,000. The cases span all five Education and Library Boards but the largest and most publicly reported occurred in the Western Education and Library Board where a principal of a primary school pleaded guilty to a charge of ‘furnishing information for an accounting purpose …. dishonestly and with intent to cause loss to another ….’ Mr Dowdall stated improvements can be made to the control of non-public monies in schools. He made recommendations on policies and procedures, training and internal audit.

Accountability of North South Bodies

Mr Dowdall’s report contains a section, prepared jointly with the Irish Comptroller and Auditor General outlining the accountability requirements of the Implementation Bodies established under the ‘Good Friday Agreement’ in April 1998 and Tourism Ireland whose establishment was agreed by the North/South Ministerial Council in 1999.

The Bodies referred to in the report are Waterways Ireland, Food Safety Promotion Board, Trade and Business Development Body (known as InterTrade Ireland), Special EU Programmes Body, North/South Language Body, Foyle Carlingford and Irish Lights Commission and Tourism Ireland. The report summarises the issues that arose on audit since the establishment of the North/South Bodies.

Notes for editors

  1. The Comptroller and Auditor General is Head of the Northern Ireland Audit Office (the Audit Office). He and the NIAO are totally independent of Government. He certifies the accounts of Government Departments and a range of other public sector bodies. He has statutory authority to report to the Assembly on the economy, efficiency and effectiveness with which departments and public bodies use their resources. His reports are published as Assembly papers.
  2. The Comptroller and Auditor General's report, "Financial Auditing and Reporting: 2006-2007" is published as NIA 193/07-08 of Session 2007-08. It is available from the Stationery Office throughout the United Kingdom. It is also available on the Audit Office website at www.niauditoffice.gov.uk. There report is embargoed until 00.01 hrs on 2 July 2008.
  3. Background briefing can be obtained from the Audit Office by contacting Rodney Allen (028 9025 1122).