Northern Ireland Appropriation and Other Accounts

Mr John Dowdall, Comptroller and Auditor General and Head of the Northern Ireland Audit Office, today reported the results of Financial Audit work undertaken over the last twelve months. Mr Dowdall has qualified his opinion on six accounts including three of the 1999-2000 Appropriation Accounts produced by Government departments.

Vote 10, Environmental and Other Services

Mr Dowdall qualified his audit opinion because of errors in payments made by Making Belfast Work. His audit revealed a number of breakdowns in financial controls, including

• absence of Letters of Offer to support payments made;
• payments made in advance of expenditure being incurred by the recipient; and
• payments made without invoices or other supporting documentation required under the terms of the Letter of Offer.

Vote 16, Miscellaneous Health and Personal Social Services

The audit revealed a lack of financial control by the Department of Health, Social Services and Public Safety and the Department for Social Development in the payment of grants to voluntary bodies, other expenditure on research, training and grants to community groups funded under the European Regional Development Fund and the EU Special Support Programme for Peace and Reconciliation. Mr Dowdall qualified his opinion because of estimated overpayments of £1 million and also due to a lack of evidence to support payments totalling £17 million.

Vote 18, Social Security

Mr Dowdall qualified his audit opinion because of errors in payments made by the Social Security Agency. He estimated overpayments of some £65 million in respect of Disability Living Allowance, Income Support, Job Seeker's Allowance, Family Credit and Attendance Allowance. The overpayments were due to:

• clerical error; and
• conditions of entitlement not having been satisfied largely through insufficient evidence being sought to support the award of benefit.

The Comptroller and Auditor General also qualified his opinion due to:

• insufficient detail to allow full testing of Disability Living Allowance payments to Motability Finance Limited of £43 million; and
• the Agency's policy on document retention which prevented him from validating a number of Child Benefit payments from within the total expenditure of £288 million.

The other accounts qualified were:

Rivers Agency Accounts 1999-2000

A disclaimer was issued by Mr Dowdall because infrastructure assets with an estimated replacement cost of £150 million were not included in the Financial Statements.

Northern Ireland Child Support Agency: Client Funds Account 1999-2000

Mr Dowdall qualified his audit opinion due to:

• overpayments of maintenance by non-resident parents estimated at £1.3 million; and
• inaccurate assessments which led to errors in the amounts owed by non-resident parents.

Northern Ireland Social Fund Account 1997-1998

Mr Dowdall qualified his audit opinion due to errors made by the Social Security Agency in:

• awarding budgeting and crisis loans;
• making payments towards the cost of funerals;
• paying community care grants and winter fuel payments; and
• recording loan repayments received.

He estimated net overpayments of some £1.2 million. The errors were due to conditions of entitlement to payment not having been satisfied and clerical mistakes in calculating payments and recording loan repayments.

Other matters addressed in the Comptroller and Auditor General's Report include:

Northern Ireland Tourist Board

The report reveals that, over a number of years, the Northern Ireland Tourist (NITB) Board had not complied with proper purchasing procedures in awarding contracts to the value of £3.9 million. The weaknesses identified were:

• breakdown of NITB's own financial procedures, particularly the requirement to formally tender print contracts over £15,000;
• failure to observe the requirements of both Government Accounting and European Union Procurement Regulations on print contracts; and
• failure to ensure adequate competition, not least in the circumstances where one of the companies awarded print contracts had an association with the NITB Chairman.

Training and Employment Agency

Mr Dowdall notes that the Agency failed to follow proper purchasing in awarding contracts worth £900,000 to the GCAS Group of companies for design and advertising services. His report identifies a number of lessons. It states that "the tendering process for all purchases should be transparent and clearly documented" and that "the reasons behind a decision to accept a tender other than the cheapest should be documented and retained on file for accountability purposes".

Water Service Ex-Gratia Payment

Mr Dowdall has highlighted an ex-gratia payment of £450,000 which was paid to the successful bidder as compensation for bidding/tendering costs in respect of the Bangor element of the Bangor and Kinnegar Waste Water Treatment Works Private Finance Initiative contract. This part of the contract could not proceed due to the inability to secure land acquisition, planning permission and environmental impact assessments during the early stages of the contract. Mr Dowdall states that "this is one of the largest ex-gratia payments that I have encountered in the accounts of any Department. I recognise that the Department wanted to provide tenderers with a genuine opportunity to apply innovation to both the strategic provision and location of the sewage treatment service (treatment at one site and incorporation of some intervening works was an option). However, I am concerned that there was a need to make a payment, in circumstances where this project was allowed to go to tender before basic but major issues such as land acquisition, planning permission and environmental impact assessment were fully addressed. It is important that departments considering Private Finance Initiative projects draw lessons from this case and do not leave themselves open to substantial claims from tenderers".

Fraud

Mr Dowdall's report also deals with major fraud cases in the Department of Agriculture and Rural Development, LEDU and the Department of Finance and Personnel. This report reveals that, in a three year period, there have been two separate suspected fraud cases involving employees of LEDU's accounts department.