Special Report 100 - Public Sector Financial Reporting for 2016

Published on 11 July 2018

Timely preparation and publication of audited financial statements is fundamental to accountability and effective oversight of public bodies. For the 2016 year of account, the Comptroller and Auditor General was responsible for the audit of the annual financial statements of 287 public bodies and funds with an aggregate turnover of €218 billion.

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

Production of financial statements and audit completion

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 2016 appropriation accounts within the required three months. Half of other bodies produced draft financial statements for audit within three months of the end of their accounting period. This represents a progressive improvement since the 2014 period of account.

By the end of September 2017, almost two thirds of bodies had produced audited financial statements. These accounted for 97% of the value of turnover audited.

Presentation of accounts to the Oireachtas

Audited financial statements are generally required to be presented to the Oireachtas within three months of audit certification. Some 80% of 2016 financial statements certified and due for presentation at April 2018 were presented on time. This compares to less than 60% for 2014 financial statements when measured in November 2016. In their appropriation accounts, Government departments are now required to include a status report on the presentation to the Oireachtas of audited financial statements of bodies and funds for which they are responsible. This should increase the monitoring by Government departments of the production of audited financial statements by bodies which they oversee.

Accounts in arrears

At the end of 2017, there were 13 sets of financial statements that had not yet been certified. This represents a significant improvement since the end of 2015 when there were 25 accounts in arrears. Systemic delays in certain sectors are being addressed in a co-operative way.

Six accounts of education and training boards were in arrears at the end of 2017. While improvements are evident, the significant organisational change that the sector underwent from 2013 continues to be a contributory factor to the delays.

The university sector, which previously had a high incidence of accounts in arrears, has shown significant improvement. The one account for 2015/2016 that was in arrears at the end of 2017 has since been certified.

Matters referred to in audit reports

Most 2016 financial statements received a clear audit opinion — just three of those certified to date were qualified.

‘Emphasis of matter’ paragraphs are brought to attention to help users’ understanding of the information in the financial statements. The audit reports issued to date for 2016 financial statements highlighted 48 matters of that kind. Most of the matters reported arise from public bodies that produce accrual accounts not accounting for pensions in the standard way. The approach to accounting for pensions in these cases is being reviewed.

Other matters are referred to in audit reports on an exception basis where it is considered appropriate to bring the matter to the attention of the Oireachtas. Such matters generally relate to losses or ineffective use of public funds, or governance and control issues. There were 71 such matters identified in the audit reports issued to date for 2016. Cases where public bodies procured goods and services without appropriate competitive processes accounted for over half of the matters reported.