Professional Documents
Culture Documents
At a meeting of the Houses of the Oireachtas Commission on 21 January 2014, a letter from
the Dil Committee on Procedure and Privileges (CPP) in relation to the issue of the audit of
members' expenses was considered and discussed.
CPP asked that the Commission consider that, when the Mazars' contract comes to an end, the
auditing of members' expenses be taken on in-house by staff of the Houses of the Oireachtas
Service. Though not stated in the letter, it is understood that the reason for the suggested
move from an external auditor was on the basis of cost. The cost of auditing 10% of members
(12 Members) in respect of the 2012 year was
( incl VAT plus travel expenses. The
move to vouched expenses for all members necessarily increases the cost of the 2014 audit
for the 2013 year as 22 Members were audited. An auditing fee of c
( incl VAT) can
be expected. At the meeting concerns were also expressed about the independence of an audit
of the PRA if it was to be conducted in-house
The Houses of the Oireachtas Service was requested to explore the recommendation made by
the CPP and to investigate the issues being raised at the meeting.
It was decided that the views of the Audit Committee, the Comptroller and Auditor General (in
view of the C&AG's role in relation to the Commission's account) and the Standards in Public
Office Commission should be requested. The views obtained in February 2014 are attached at
Appendix 1.
3.
The cost of auditing 10% of members (12 Members) in respect of the 2012 year was
(incl VAT plus travel expenses). The move to vouched expenses for all members necessarily
increases the cost of the 2014 audit for the 2013 year as 22 Members were audited. An
auditing fee of c.
(incl VAT) can be expected. The position in relation to staffing
levels in the Internal Audit Unit, qualifications required , the probable cost and audit
independence aspects were all examined by the then Principal Officer in Members and
International Services Division in February 2014 and are attached at Appendix 2.
4.
There are four main options available to the Commission at this point, each of which would
have to satisfy the C&AG in terms of audit risk and also address the other issues raised by the
Audit Committee and SIPO:
1. To continue with the current system: i.e. to have the annual audit of the PRA conducted by
an external auditor appointed through a tender process in the same way as the current
incumbent. Based on available figures, the future annual cost would be in the region of
50,000 (based on the current 10% of Members audit ratio). This approach would continue
to fulfil the principles of robustness, objectivity and transparency, as set out by the Audit
Committee, and also satisfy the C&AG in terms of audit risk.
2. To have the audit carried out internally by an expanded in-house Internal Audit Unit
with suitably qualified personnel and meeting the audit risk requirements outlined by
the C&AG: the in-house approach could only fulfil the principles of robustness, objectivity and
transparency if the appropriately trained staffing levels are put in place, and without which
the audit risk identified by the C&AG could not be satisfied. If the in-house option was chosen
and notwithstanding the cost implications, it would also be important to be aware that the
receipts, vouchers, invoices etc., that may be retained in the proposed Unit may be liable for
release under Freedom of Information (FOI) requests. Under the current external auditor
arrangement, these documents are not taken in charge by the Oireachtas Service and therefore
FOI does not apply.
3. The Commission could request the Office of the C&AG to add the annual audit of the PRA
to its Audit Plan for the Oireachtas Service: the audit of the Houses of the Oireachtas
Service by the C&AG is paid for by the Service and the cost of a wider audit would increase
accordingly. This option would ensure that the audit risk identified by the C&AG was satisfied
and that the principles of robustness, objectivity and transparency were also satisfied.
However, it should be noted that the costs of doing this could be considerable as the C&AG
charges a daily audit rate in the same way as the independent auditor.
4. The final option would be for Members to produce their own audit certificate from a
recognised qualified auditor: Members would be able to claim for this expense within the
current PRA ceiling. This option would satisfy the audit risk and ensure that the principles of
robustness, objectivity and transparency were fulfilled. The agreement of the Minister for
Public Expenditure and Reform may be required to make this change, as well as a subsequent
amendment to the relevant SI. However, the value-added to the ongoing refinement of the
Audit Guidelines which results from one independent auditor dealing with all those selected
each year for audit would be lost under this arrangement.
It is considered that in addition to the independence and qualifications of the current auditor and
the valuable input to the annual review of the audit guidelines, the contract represents good
value in overall cost terms at less than 50,000 per annum.
The 2014 Audit by Mazars is the last contractually obligated audit. However, there is an option
for one additional year to the current contract, at the discretion of the Oireachtas Service.
In all the circumstances, it is recommended that
(i)
(ii)
The additional year on the current contract with Mazars be approved by the
Commission i.e. Mazars to undertake audit of 2014 PRA in 2015 ; and
The Commission again review the position following the completion of the audit of
the 2014 PRA at the end of 2015.
Appendix 1
Consultations undertaken in February 2014
It was decided that the views of the Audit Committee, the Comptroller and Auditor General (in
view of the C&AG's role in relation to the Commission's account) and the Standards in Public
Office Commission should be requested. The views obtained in February 2014 are as follows:
Audit Committee
As part of its annual work programme, the Audit Committee recently reviewed the latest
external audit of members' allowances and is satisfied that it meets all the requirements.
From an audit perspective, the current system works well and the Audit Committee did not
feel compelled to recommend any change to the existing system. It is a matter for the
Oireachtas Commission to decide on the appropriateness of particular arrangements for the
audit of members' expenses. In the event of any changes being considered, the Audit
Committee would be of the view that such changes would need to ensure that the current
levels of robustness, objectivity and transparency are maintained.
Appendix 2
Resources required for an Internal Audit
Current staffing level
Currently, the Internal Audit Unit in the Service has a staff complement of 1 part-time AP (halftime) and 1 Junior Clerk. Both officers are general civil servants not trained professional
auditors. In addition, audits conducted by the Services Internal Audit Unit are, generally, work
process audits (to identify process failures and gaps) rather than forensic audits which are
carried out currently by the Mazars independent auditor. In view of these issues, it should be
considered if the level of qualification available would satisfy the audit risk test outlined by the
C&AG above.
Qualifications required
The qualifications required, when the Service seconded an auditor from an external accountancy
firm in 2008, were stringent in that the seconded person had to
(a) possess a third-level qualification;
(c) have at least two years post-qualification audit experience in the public sector; and
(d) be able to demonstrate relevant skills and expertise by way of experience in
leading (or participating in, at a level equivalent to that required for the
performance of the services outlined in Appendix 1) an audit team in the private or
public sector;
preparing high quality audit reports to strict deadlines;
designing a formal training programme for the Assistant Principal assignee and
demonstrating how skills transfer will work in the context of point 3 of the
description of assignment.
That seconded auditor was with the Service from 2008 until March 2012, when he returned to
the accountancy firm.
RFT Clause
Clause 3.2.B of the RFT prior to the appointment of Mazars states:
All Tenderers must possess a professional accountancy qualification and audit certification or
equivalents. Tenderers must be a member of a professional accounting body
Tenderers who did not possess those qualifications were deemed to have failed.
Probable Cost
If the audit was to be conducted in-house, minimum qualifications and ancillary resources,
including the ability to undertake off-site visits, would be required. The function would cost more
(not least in salary costs) than the current audit does. For example, a person at AP level with
relevant qualifications would be the lowest level one could expect. The cost of an AP at present is
87,698 (which includes PRSI and overheads) a lot more than the current cost of the audit
which, even if the cost of it was doubled, would cost less than 50,000 pa. In addition, the
ancillary staff of at least 1 Junior Clerk would cost approximately 55,000 pa.
Independence of Audit
It is extremely important that any audit carried out in- house would be fully independent and
seen to be so. Accordingly, the Service would have to appoint a person at suitable level to
conduct any such audit at a minimum cost as outlined above. Following the meeting of the
Houses Commission on 21 January, 2014, the then Principal Officer in Members and
International Services Division met with Mr Bernard Barron, Senior Partner in Mazars to discuss
the issues that had been raised by Members at CPP and the Commission meeting. Mr Barrons
comments in response to specific queries were as follows:
All calls from members in relation to Audits are dealt with by him personally and
that no log of calls is kept although a note of every conversation is kept. Calls are
from members being audited for the most part.
In response to a query asking if information packs were given to members selected
prior to audit, a letter goes to each selected member, explaining the requirements
(papers, records etc.). An explanatory memo in relation to the audit process is
provided for all those selected and a summary of the documentation required is
given the need for vouched documentation is reiterated.
He explained that the audit is a process that must be completed in a robust manner
but he appreciated that it was difficult for some members and stated as follows
o That statutory requirements and stipulations are adhered to in full in
relation to categories, requirements, etc.
o That any audit process requires certain steps and, if it is to be conducted
properly, must be rigorous. He is of the view that their audit is no more or
less robust than any other auditing process. The Auditor has a lot of
knowledge of other public service bodies and their requirements. The
company also carries out audits for the C&AG and is aware of issues within
public sector bodies.
o That there is generally a low knowledge base of requirements within the
members they only feel the need the get the knowledge when selected for
audit (this is borne out by experience of OSS and Members Services).
o That there must be a line drawn in the process so it is completed correctly
which is why the Auditors must pursue calls when they are not responded
to. When calls are made to members during the audit they are followed up
weekly.
o Guidance etc. come from OSS not the auditors the auditor needs to keep it
at arms length.
o Finally, the auditor appreciated the anxiety and upset that members feel
when being audited but that it is a process that must be gone through.
However, he is keen to improve the process but within normal audit
requirements.