Special Report 108 - Public Sector Financial Reporting for 2017

Published on 23 January 2020

Timely preparation and publication of audited financial statements is fundamental to the accountability and effective oversight of public bodies.

This report reviews the timeliness of public sector financial reporting and focuses mainly on financial statements for periods ending in 2017. It identifies those bodies where delays in reporting have occurred and outlines the causes of those delays. The report also summarises the types of issue that were brought to attention in the Comptroller and Auditor General’s audit reports on financial statements for 2017. Similar reports on financial statements for periods ending in 2016, 2015 and 2014 have previously been published.

Production of 2017 financial statements and audit completion

The Comptroller and Auditor General was responsible for the audit of the 2017 financial statements of 285 public bodies and funds with an aggregate turnover of €230 billion.

In general, public sector bodies are required to present their financial statements for audit within two to three months of the end of their accounting period. All government departments and offices produced their 2017 and 2018 appropriation accounts by the statutory deadline of three months after the year end. Around two-thirds (64%) of other bodies produced draft 2017 financial statements for audit within three months of the end of their accounting period. The corresponding figure for the 2018 year of account was 72%. 

By the end of September 2018, audits had been completed in respect of 61% of financial statements for the 2017 year of account. These accounted for 97% of the value of 2017 turnover audited.

Accounts in arrears

At the end of 2018, there were eight sets of financial statements for 2017 or earlier periods that had not been certified. There has been a progressive improvement since the end of 2015 when there were 25 sets of financial statements in arrears.

Five of the accounts in arrears at the end of 2018 were in the higher education sector. While significant progress has been made to improve timeliness of financial reporting in that sector, a number of institutions still need to improve their performance in that regard. 

Opinion on the financial statements

Depending on the requirements of the particular accounting framework adopted, the Comptroller and Auditor General’s audit report will state his opinion on whether (or not) the financial statements 

  • give a true and fair view of the assets, liabilities and financial position of the entity at the financial year end, and of its income and expenditure for the year, or   
  • properly present the entity’s transactions and balances.

An unqualified audit opinion is given if the financial statements give a true and fair view or properly present the transactions/balances (as appropriate). If this is not the case, a qualified audit opinion may be given.

Most of the 2017 financial statements certified received an unqualified audit opinion — just thirteen were qualified. In all of those cases, the basis for the qualified opinion related to pension accounting issues.

Regardless of whether the audit opinion is qualified or unqualified, the Comptroller and Auditor General’s audit report may draw attention to an accounting matter which is considered to be important for users to be aware of in reading and understanding the financial statements.  The 2017 audit reports highlighted 25 matters in this way, including

  • eight cases outlining explanations provided in the financial statements about accumulated deficits or liabilities, and why the bodies concerned consider they remain ‘going concerns’
  • fifteen cases where bodies generating significant non-State income from their activities account for how they expect to fund future pension liabilities
  • one case where accrued pension liabilities had not been recognised pending completion of negotiations about which public body will meet the liabilities
  • one case where there was a material change in the body’s accounting policy for heritage assets. 
Exception reporting

Other specific matters are referred to in audit reports where it is considered appropriate to bring them to the attention of the Oireachtas. Such matters generally relate to the use of public funds, or to governance and control issues. There were 91 such matters identified in the audit reports certified to date for 2017. Cases where public bodies did not comply with the relevant procurement process for purchases of €500,000 or more of goods and services accounted for almost half of the matters reported. In general, the remainder related to control weaknesses that had occurred during 2017 and concerns over the adequacy of internal audit resources and output.