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Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017

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Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017 Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017 REPORT BY THE COMPTROLLER AND AUDITOR GENERAL 13 March 2018 Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017 Published 13 March 2018 This report has been prepared under Article 8 of the Audit (Northern Ireland) Order 1987 for presentation to the Northern Ireland Assembly in accordance with Article 11 of the Order. K J Donnelly Northern Ireland Audit Office Comptroller and Auditor General 13 March 2018 The Comptroller and Auditor General is the head of the Northern Ireland Audit Office. He, and the Northern Ireland Audit Office are totally independent of Government. He certifies the accounts of all Government Departments and a wide range of other public sector bodies; and he has statutory authority to report to the Assembly on the economy, efficiency and effectiveness with which departments and other bodies have used their resources. For further information about the Northern Ireland Audit Office please contact: Northern Ireland Audit Office 106 University Street BELFAST BT7 1EU Tel: 028 9025 1100 email: [email protected] website: www.niauditoffice.gov.uk © Northern Ireland Audit Office 2018 Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017 Contents Page Abbreviations Executive Summary 1 Section One: Central Funding 5 Section Two: Qualified Opinions 13 Qualified Opinions – Resource Accounts 14 Qualified Opinions – Other Accounts 19 Outstanding Accounts 26 Conclusion 26 Section Three: Other Matters 27 A: Impact of the Dissolution of the Assembly on the Estimates Process 28 B: Armagh Observatory and Planetarium – Governance Issues 30 C: Northern Ireland Courts and Tribunals Service Trust Statement – Fine Collection 38 D: Sport NI – Audit Completion and Governance Issues 44 E: Independent Counselling Service for Schools – Contract Management and Oversight 46 F: LPS - Fraud 50 G: Northern Ireland Housing Executive – Regularity Issues 66 H: Direct Award Contracts in Departments 91 Appendices Appendix 1: NI Supply Figures by Department in 2016-17 96 Appendix 2: NICTS Trust Statement – Financial Penalties Definitions 97 Appendix 3: NICTS Trust Statement – PAC Recommendations 99 Appendix 4: LPS Fraud – Timeline of Events 104 Appendix 5: LPS Fraud – Recommendations highlighted by the LPS investigation report 105 Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017 Abbreviations AAD Audit and Assurance Department (in NI Housing Executive) ABRR Application Based Rate Rebate AO Accounting Officer AOP Armagh Observatory and Planetarium AOCC Assembly Ombudsman and Commissioner for Complaints ARAC Audit and Risk Assurance Committee C&AG Comptroller and Auditor General CPD Central Procurement Directorate CXBC Chief Executive’s Business Committee (in NI Housing Executive) DAC Direct Award Contract DAERA Department of Agriculture, Environment and Rural Affairs DCAL* Department of Culture, Arts and Leisure DE Department of Education DEL* Department for Employment and Learning DETI* Department of Enterprise, Trade and Investment DfC Department for Communities DfE Department for the Economy DfI Department for Infrastructure DFP* Department of Finance and Personnel DOE* Department of the Environment DoF Department of Finance DoH Department of Health DoJ Department of Justice DSD* Department for Social Development DVA Driver and Vehicle Agency DWP Department for Work and Pensions EA Education Authority EU European Union FCES Fine Collection and Enforcement Service FPN Fixed Penalty Notice FSA Food Standards Agency in Northern Ireland GB Great Britain GFIS Group Fraud Investigation Service HR Human Resources HSC Health and Social Care Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017 ICSS Independent Counselling Service for Schools LPS Land and Property Services LSANI Legal Services Agency Northern Ireland MLA Member of the Legislative Assembly MSFM Management Statement and Financial Memorandum NAV Net Annual Value NDPB Non-Departmental Public Body NDVR Non-Domestic Vacant Rating NI Northern Ireland NIAC Northern Ireland Assembly Commission NIAO Northern Ireland Audit Office NIAUR Northern Ireland Authority for Utility Regulation NICF Northern Ireland Consolidated Fund NICS Northern Ireland Civil Service NICTS Northern Ireland Courts and Tribunals Service NIHE Northern Ireland Housing Executive NILA Northern Ireland Library Authority NILSC Northern Ireland Legal Services Commission NIW Northern Ireland Water OFMDFM* Office of the First Minister and Deputy First Minister PAC Public Accounts Committee PND Penalty Notice for Disorder PPS Public Prosecution Service for Northern Ireland PSNI Police Service of Northern Ireland RfR Request for Resources RHI Renewable Heat Incentive SAU Standards Assurance Unit SIB Strategic Investment Board SLA Service Level Agreement SMS Short Message Service Sport NI Sports Council for Northern Ireland SSE Spring Supplementary Estimate TEO The Executive Office TIU Technical Inspection Unit VES Voluntary Exit Scheme Note: Northern Ireland Civil Service (NICS) departments were reorganised with effect from May 2016. Those marked with an asterisk are the pre-May 2016 departments. Executive Summary 2 Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017 Executive Summary Each year I prepare a report which summarises Section Three brings together a number of reports, the results of my financial audit work across central the majority of which I have attached to accounts. government bodies. This report primarily deals I would draw out a number of common themes with the results of my audit of 2016-17 accounts, emerging from these reports: but also reports the outcome of audits for previous accounting periods which I have certified since • the role played by whistleblowers in identifying my last report. It does not encompass my work malpractice and the importance of timely on bodies within the health and social care sector, investigation, reporting and resolution of the which will be addressed in a separate report. issues identified; Section One summarises the receipts and • the need for public officials to maintain high expenditure of the Northern Ireland Consolidated standards of conduct in public life, which Fund, a central fund which accounts for such things includes complying with proper procedures as receipt of the Northern Ireland block grant and and being open and transparent about rates income and the distribution of these monies potential conflicts of interest; to Northern Ireland departments and other public bodies. This section also provides an update on • the importance of proper record keeping to be Voluntary Exit Schemes which I reported on in able to show openness and transparency and October 20161. to provide evidence of what was considered during decision making; Section Two summarises audit qualifications I have made on the accounts of central government • the importance of strong governance bodies during 2017. My audit qualifications arrangements and leadership within should be viewed in the context that the vast organisations; and majority of public bodies continue to provide accounts on time and have unqualified audit • the need for adequate, effective checks to opinions. There was a rise in the number of ensure that fraudulent activity is prevented or qualifications during the year, driven by an detected. increase in excess votes, where I draw attention to departments who have exceeded budgetary limits I am particularly concerned at the number of approved by the Assembly. However, in reality, findings reflecting conduct that falls short of the most of the departments that incurred excess high standards expected from those in public life. votes on their 2016-17 accounts had followed The Principles of Public Life were set out by Lord the correct budgetary procedure by applying for Nolan in 1995 and are often referred to as the approval for further expenditure through Spring Nolan Principles. They still reflect expectations for Supplementary Estimates (SSEs ). The dissolution public office holders, whether they are elected, of the Assembly in January 2017, however, meant appointed or employed, they require: that this process could not be concluded as would normally be the case. Only one department • Selflessness; would have incurred an excess vote if Assembly approval had been obtained for the SSEs and • Integrity; further information on this is provided in Section Three. 1 Northern Ireland Public Sector Voluntary Exit Schemes, Northern Ireland Audit Office, 11 October 2016 Financial Auditing and Reporting: General Report by the Comptroller and Auditor General for Northern Ireland – 2017 3 • Objectivity; 2018, due to the need for further secondary legislation. • Accountability; • My report on Sport NI outlines issues about • Openness; governance and the completion of accounts for 2014-15 and subsequent years due to • Honesty; and poor quality accounts and supporting papers being presented for audit. I would emphasise • Leadership. the need for the production of timely, good quality Annual Reports and Accounts for proper All those in public life have a responsibility to accountability and I would strongly urge the comply with these principles in undertaking their body
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