Overview of the work of the Local Government Audit Service ... · SECTION 1: ROLE OF THE LOCAL GOVERNMENT AUDIT SERVICE Audit Opinion It is the local government auditors main statutory

Local Government Audit Service

Overview of the work of the Local

Government Audit Service

Year ended 31 December 2015

March 2017

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© Department of Housing, Planning, Community and Local Government 2017

The website of the Department of Housing, Planning, Community and Local Government is the primary means of

publishing reports of the Local Government Audit Service, http://www.housing.gov.ie/local-government-audit-

service/local-government-audit-service

Contents

Executive Summary .......................................................................................................................... 1

SECTION 1: - Role of the Local Government Audit Service ............................................................... 3

SECTION 2: - Financial Performance of Local Authorities ............................................................... 14

SECTION 3: - Auditor Opinions and Reports ................................................................................... 32

Appendix 1 - General Cumulative Revenue Balances 2015 ............................................................ 42

Appendix 2 - General Cumulative Revenue Balances 2015 ............................................................ 43

Appendix 3 - Revenue Expenditure 2015 ....................................................................................... 44

Appendix 4 - Revenue Expenditure 2015 ....................................................................................... 45

Appendix 5 - Revenue Income 2015 ............................................................................................... 46

Appendix 6 - Capital Expenditure 2015 .......................................................................................... 47

Appendix 7 - Capital Income 2015 .................................................................................................. 48

Appendix 8 - Fixed Assets 2015 ...................................................................................................... 49

Appendix 9 - Non-Mortgage Loans ................................................................................................ 50

Appendix 10 - Mortgage Loans 2015 .............................................................................................. 51

Appendix 11 - Rates Collection ....................................................................................................... 52

Appendix 12 - Housing Rents Collections ....................................................................................... 54

Appendix 13 - Housing Loans Collection ........................................................................................ 56

Appendix 14 - AFS Publication Dates .............................................................................................. 58

Appendix 15 - The Local Government Audit Service ...................................................................... 59

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OVERVIEW OF THE WORK OF THE LOCAL GOVERNMENT AUDIT SERVICE - EXECUTIVE SUMMARY

Executive Summary

This report provides an overview of the work of the Local Government Audit Service (LGAS) in

delivering on its statutory remit of providing the external audit of local government, in

accordance with sections 114 to 126 of the Local Government Act, 2001, as amended by the

Local Government Reform Act, 2014.

The report also summarises the financial performance of the 31 local authorities audited for

the year ended 31 December 2015, together with a summary of the main audit issues arising

as noted in our audit reports.

This report only covers the results arising from the audit of the 31 local authorities. The LGAS

is responsible for the audit of all local government bodies in Ireland as follows:

Exhibit 1 – Bodies audited by the LGAS Audited Bodies Number Local Authorities 31 Regional Assemblies 3 Motor tax offices 26 Other 4

Section One of this report provides background information on the LGAS, the audit function

which we perform, the various bodies we collaborate with, our priorities for 2017, and the

role of the Value for Money (VFM) unit. The LGAS performs the independent, external audit

of local government, as established by the Minister for Housing, Planning, Community and

Local Government. All Local Government Auditors are qualified accountants. The LGAS is

committed to delivering an efficient and effective external audit service for local government.

Section Two of this report looks in detail at the financial performance of the local authorities.

It sets out facts about the local authorities and where they receive their income from and

where they spend their money. It details the value of assets under their control and the

liabilities that they face in both the short and long term.

Revenue income and expenditure has declined in the year to 31 December 2015 by €57m and

€89m respectively. The main source of income continues to be rates, accounting for over 37%

of total income. Housing & Building, Roads, Transportation, Safety and Environmental

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OVERVIEW OF THE WORK OF THE LOCAL GOVERNMENT AUDIT SERVICE - EXECUTIVE SUMMARY

Services continue to be the largest areas of expenditure, accounting for over 60% of total

expenditure.

Capital Income has increased in the year to 31 December 2015 by €157m, with 58% of total

funding being derived from government grants, demonstrating the continuing dependence on

central government for the funding of infrastructure projects. Capital expenditure has also

increased in 2015 by €259m, with the largest increase represented in the purchase of other

assets.

Section Three of this report sets out a summary of the opinions we issued on the Annual

Financial Statements and the findings from our audits of the local authorities. Local

Government Auditors have noted the progress made by some local authorities in certain

areas and the lack of improvement in other areas. Areas where improvements were noted in

some local authorities included income collection performance, loan balances, updating of

risk registers, unfunded balances, development contributions and procurement. However,

issues in the areas of asset management, the disparity between local authorities in terms of

income collection performance, unfunded balances, interest only or rolled up interest loans,

development contributions, procurement and poorly staffed internal audit functions continue

to feature in audit reports. To address these areas the local authorities will have to commit to

a dedicated project plan each year and allocate adequate resources to ensure the success of

the plan.

In conclusion, I would like to acknowledge the assistance and courtesy given to the LGAS by

local authority Chief Executives, Heads of Finance, management and staff over the past year,

this has been greatly appreciated. Audits were completed for all local authorities, for the year

ended 31 December 2015, by the end of 2016.

_________________________

Niamh Larkin Director of Audit Local Government Audit Service March 2017

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SECTION 1: ROLE OF THE LOCAL GOVERNMENT AUDIT SERVICE

SECTION 1: - Role of the Local Government Audit Service

The Local Government Audit Service (LGAS) performs the independent, external audit of local

government, as established by the Minister for Housing, Planning, Community and Local

Government. All Local Government Auditors are qualified accountants and recruited

following open public competitions.

The Local Government Act, 2001 sets out the primary duties of the local government auditor

as follows:

“In the course of the audit of accounts of the local authority or other body, the local

government auditor shall carry out such audit tests as he or she considers appropriate in

order to be satisfied as to:

(a) whether the annual financial statement is prepared in accordance with section 108 or

with the accounting requirements otherwise applicable to the body concerned,

(b) whether the annual financial statement presents fairly the financial position of the

authority or other body and of its income and expenditure for the period in question,

(c) whether the transactions of the audited body conform to the statutory or other

authorisation under which they purport to have been carried out.”

In discharging their responsibilities, local government auditors must take account of matters

arising from previous audit reports and management letters. Auditors should also:

Plan the audit and allocate resources to achieve a balance of work between the

various aspects of the audit, having due regard to availability of resources, and carry

out cyclical reviews of financial systems

Take a broad and analytical view of the audit work based on an assessment of the risk

of material error in the annual financial statement

Ensure that one of the aims of the audit is to assist members and management of the

audited body

Perform the audit in a professional manner and conclude it without undue delay

Develop, with the Director of Audit, measures to ensure a standard audit approach.

Following the audit each local government auditor issues an audit opinion, an audit report

and a management letter to the Chief Executive of the local authority.

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Audit Opinion

It is the local government auditor’s main statutory duty, following completion of the financial

audit, to give his/her independent audit opinion on the annual financial statements of the

audited body, which have been prepared in accordance with the Code of Practice and

Accounting Regulations for local authorities, as to whether it presents fairly, the financial

position of the audited body and of its income and expenditure for the period under audit.

Audit Reports

In addition to the audit opinion, it is custom and practice to issue statutory audit reports

covering any matter or matters which the auditor considers should be reported. The Chief

Executive of a local authority is required to respond to this report and his/her comments shall

be included, if of material significance, as part of the final report. This procedure has

enhanced public scrutiny of local government as management responses, to address the

issues raised at audit, now form part of the published audit reports.

The local government auditors’ statutory reports issued to the elected members of the local

authorities on the audits of the annual financial statements for 2015 are published on the

Department’s website at

http://www.environ.ie/local-government-audit-service/local-government-audit-service

Management Letters

In accordance with International Standards on Auditing, an auditor may issue a management

letter drawing attention to any weaknesses in financial procedures and / or internal controls

identified during audit, and make appropriate recommendations. A management letter may

incorporate audit memoranda already issued to functional officers and line managers during

the audit. Management letters were issued to all local authorities for the year ended 31

December 2015 and referred to accounting and financial control issues identified in the

course of the audits.

Role of the Elected Members

The role of the elected members in the governance of local authorities is vital. The approval

and regular monitoring of revenue and capital expenditure, and the consideration of the

annual financial statement are important functions for the council members. A copy of the

auditor’s report is furnished to each member of the local authority in accordance with article

20 of the Local Government (Financial and Audit Procedures) Regulations 2014. Furthermore

the audit committee is required to report to the relevant authority on its consideration of the

audited financial statement, auditor’s report or auditor’s special report at the next practicable

meeting of the relevant authority following the audit committee’s consideration. Members’

or retired members’ participation on the local authorities’ audit committee is now an integral

part of the oversight of corporate governance in the local authorities.

http://www.environ.ie/local-government-audit-service/local-government-audit-service

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Role of the Local Authority in the preparation of the AFS and in the year

end audit process.

Local authorities deliver a wide range of services in local communities, and in doing so, spend

a considerable amount of public funds. Like all public bodies, they are required to prepare an

annual financial statement (accounts) detailing the income they received, the expenditure

they incurred, as well as the assets and liabilities under the control of the local authority.

Under the Code of Practice and Accounting Regulations as enshrined in legislation by the

Local Government Act, 2001, the local authority is required to prepare their accounts by 31

March each year for submission to the Minister and the Director of Audit.

It is recognised that the production of accurate accounts by this deadline is a significant task

for local authorities, especially given the number of issues impacting on the accounts in

recent years such as the merger of town and county councils and the transfer of water and

sewerage functions to Irish Water (IW). However, the meeting of this deadline is an important

milestone not only for the LGAS but for the local authorities themselves. Failing to prepare

accurate accounts by 31 March deadline reflects poorly on the local authority and can

undermine its financial management and corporate governance arrangements.

It should be noted that the preparation of the accounts by 31 March deadline requires

cooperation across all services within a local authority and does not reside solely within the

finance function.

Appendix 14 sets out the months in which the accounts were certified by the Chief Executive

and Head of Finance. Whilst it is encouraging to see progress in this area it should be noted

that out of 31 local authorities, 13 were not received by the 31 March deadline.

The local government auditors will continue to work with local authorities to provide greater

clarity, in advance of the audit, as to what supporting schedules and other information is

required in order to facilitate the timely completion of the audit. Comprehensive and

complete supporting schedules provided in a timely manner are an essential part of any audit

process.

It is recognised that due to staff shortages, the 31 March deadline does present a challenge

for some local authorities; however this deadline also brings a number of benefits such as:

More timely financial reporting to members and the public

Earlier assurance for the local authority over the previous years’ financial position

before embarking on major financial decisions in the current year

A review of the financial systems in place which if closed earlier may lead to

improvements in overall financial controls.

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While it is important for local authorities to meet the 31 March deadline, it is equally

important for the quality of the accounts and supporting working papers presented for audit

to be of a high standard. One measure of this standard is the number of adjustments required

arising from the audit process. The audits of four local authorities highlighted a number of

amendments which were required to the current year’s AFS which is of concern. In other local

authorities, a list of adjustments was carried forward to the 2016 AFS. The existence of

material items may call into question the process surrounding the accounts production and

review process within the local authority.

In order to address this, it is imperative local authorities review their process of accounts

production to ensure that adequate review and quality assurance steps are taken. The LGAS

intends to monitor this going forward to ensure that it is not a by-product of local authorities

meeting the 31 March deadline.

Public Accountability

Members of the public have unique rights as part of the public accountability framework for

local government. They can inspect the annual financial statement, records and other

documents relating to the accounts to be audited for seven days before the formal audit

commences.

An objection to the inclusion of any item in, or the omission of any item from, the accounts of

a local government organisation undergoing audit may be made to the auditor by or on

behalf of any person, and such objection shall be made in writing, setting out the relevant

particulars and grounds on which it is being made, within ten days of the commencement of

audit. The auditor shall consider such written objection in accordance with the Local

Government (Financial and Audit Procedures) Regulations 2014.

Further information on the organisation and role of the LGAS is included in Appendix 15 of

this report.

Priorities for the Local Government Audit Service in 2017

Due to the increasing public scrutiny of the accountability of local government, the LGAS must

meet a number of challenges arising from developments in the local government sector.

These initiatives are driven by the need for improved efficiency and effectiveness in the

sector and are at varying stages of implementation. The LGAS must also ensure that it carries

out its remit in accordance with international professional standards appropriate to public

sector audit.

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The priorities for the LGAS in 2017 include the following:

Increased collaboration with the National Oversight and Audit Commission (NOAC)

Ongoing and open dialogue with local authorities to ensure deadlines are met, and

there is a greater understanding of audit requirements in order to streamline the

audit process

Continued engagement with local authority audit committees

Continuous improvement of the quality assurance process in the LGAS to ensure

international auditing standards are taken account of

Continued liaison and co-operation with the Office of the Comptroller and Auditor

General.

National Oversight and Audit Commission (NOAC)

NOAC is a statutory body established under legislation introduced in 2014 and its functions

are set out in a new provision (section 126(c)) inserted into the 2001 Act. The Commission is

required to:

Scrutinise performance of any local government body against relevant indicators as

selected by NOAC (to include customer service) or as prescribed in Ministerial

regulations

Scrutinise financial performance, including Value for Money, of any local government

body in respect of its financial resources

Support best practice (development and enhancement) in the performance of their

functions by local government bodies

Monitor and evaluate adherence to Service Level Agreements entered into by any

local government body

Oversee how national local government policy is implemented by local government

bodies

Monitor and evaluate public service reform implementation by any local government

body or generally

Monitor adequacy of corporate plans prepared by Regional Assemblies and councils

and evaluate implementation of the plans by any local government body or generally

Take steps under its other functions for the purpose of producing any report

requested under the Act as well as produce reports under its own initiative

Carry out any additional functions conferred by Ministerial order.

The commission, in the course of carrying out its remit, can take account of the reports

prepared by the LGAS. As of the date of this report, NOAC has issued 11 reports on various

topics relating to local authorities.

Increased collaboration between NOAC and the LGAS is a priority for both in 2017.

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Engagement with local authorities

The local government auditors will continue to engage with local authorities in an open and

constructive manner, in order to streamline the audit process, clarify expectations and to

build on what works locally. This process is most effective when there is on-going discussion

of issues prior to and throughout the audit process. Improvements can continue to be made

in this area through better communication of deadlines, quicker response times and greater

clarity over supporting schedule requirements.

Engagement with Audit Committees

Audit Committees play an ever increasing role in the governance framework of local

authorities.

The role of audit committees were reinforced under the 2014 Act, which set out the functions

of the audit committee, their relationship with internal audit and the need for increased

engagement with the local government auditor.

Audit Committees are required to review any audited financial statement, auditor’s report or

auditor’s special report in relation to the local authority and assess actions taken by its Chief

Executive in response to audit findings and to report back to the relevant authority.

In accordance with good governance, each local government auditor attends at least one

meeting with the audit committee of the local authority, to present his or her report, discuss

the issues arising and to review responses provided by the Chief Executive.

Liaison and co-operation with the Office of the Comptroller and Auditor General

(C&AG)

The LGAS will continue to liaise and co-operate with the Office of the C&AG, following on

from the joint study on the cost and operations of motor tax offices completed in 2016. The

LGAS liaised with the C&AG during 2016 in a number of areas including professional training,

standards development, quality assurance and development of TeamMate audit software.

We will continue to work with the office of the C&AG in these areas to ensure effective use of

resources.

Quality Assurance in the LGAS

The LGAS is committed to a culture of continuous improvement and to ensuring that audits

are performed to a high standard taking account of best practice and International Standards

on Auditing. LGAS audit procedures are reviewed at least annually, with a robust quality

assurance review process in place for audit files.

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LGAS Audit Procedures and changes in local authorities’ activities and accounting

The role and functions of local authorities has changed significantly over the last number of

years, most significant has been the transfer of services to IW and the role they now play in

supporting economic development and enterprise at a local level. In response, the LGAS has

adapted its audit approach and procedures to reflect changes in local authority activities,

including new areas of responsibilities such as Local Enterprise Offices (LEOs), Housing

Assistance Payments (HAP) and Payroll Shared Services.

The LGAS will continue to review its audit procedures to reflect the changing role and

functions of local authorities as they evolve, and guidance notes will be provided to support

the auditors in their review of these areas. The impact of revisions of accounting policies and

the format of annual financial statements, as agreed by the General Accounts Working Group,

will also be reflected in our audit approach and audit procedures.

Value for Money Unit

VFM audit has long been recognised as an important addition to normal financial audit. VFM

reviews provide a means to assist local government at authority and sectoral level to learn

from best practice and enhance their effectiveness and efficiency. It also provides the

Department with useful insights into the operation of specific policy areas. It is very

important that VFM reports are fully utilised by authorities and relevant funding

Departments. The follow-up to VFM reports is an area that is being actioned by the audit

service.

It is the responsibility of local authority management to ensure that value for money is

achieved by establishing and maintaining sound arrangements, including procedures for

planning, appraisal, authorisation and control of resources. The Local Government (Financial

Provisions) Act 1997 widened the role of the local government auditors. Under the Act,

auditors are empowered to examine economy and efficiency in the use of resources and the

adequacy of management systems to appraise the effectiveness of their own organisations.

The Local Government Act, 2001 states that the Local Government (Value for Money) Unit

forms part of the Local Government Audit Service. The Unit carries out VFM studies on local

authority operations, with a view to identifying best practice and recommending ways of

improving existing procedures, practices and systems and thereby promoting efficiency and

cost effectiveness.

The VFM audit unit of the LGAS consists of a central research team, staffed by a principal local

government auditor and two local government auditors, together with further audit days

provided by assistant auditors.

A VFM audit consultative committee representing the main stakeholders, and chaired by the

Director of Audit, has been established. It has an advisory role in the selection of VFM

projects and in reviewing the quality of draft reports before publication. The committee met

twice in 2016 (March and November). Also, an advisory group is established for each VFM

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study undertaken, comprising representatives from local authorities, the Department and/or

individuals with expertise in a particular field.

VFM National Reports

The work of the VFM Unit has mainly focused on undertaking national studies on single-issue

topics and publishing reports thereon. The aim of the Unit is to identify and promote best

practice and thereby facilitate local authorities in achieving value for money. The VFM Unit

has published 30 of these national reports to date. In total these reports contain over 390

recommendations.

A report on Corporate Estate Management and Maintenance in local authorities was

published in January 2017. As part of its brief the VFM Unit has been working closely with the

local authority sector and the nine participating local authorities in producing this

comprehensive report, the recommendations of which are directed at achieving a more

strategic approach to local authority property management.

Property management and maintenance is a substantial cost to local authorities and it is

essential that buildings are maintained and used effectively. Effective management of their

property portfolios require local authorities to take an informed, coordinated and strategic

approach to property management, maintenance and decision making and to closely monitor

property costs.

Nine local authorities were selected to participate in the study based on their property

portfolios, mergers, a regional spread throughout the country and a mix of large/small local

authorities. The nine local authorities selected were Dublin and Galway City Councils and

Cavan, Cork, Kilkenny, Louth, South Dublin, Tipperary and Wexford County Councils.

Arising from the findings during the review the report makes recommendations in relation to

Capacity and Utilisation of the Corporate Estate

Corporate Estate Strategic Management

Recording the Corporate Estate

Costs Associated with the Corporate Estate

Condition and Required Maintenance of the Corporate Estate

Contract / In House Maintenance of the Corporate Estate.

In due course the VFM Unit will follow up on the implementation by local authorities of the

recommendations contained in this report.

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Current National Studies

Two studies are in progress and nearing completion including a study on recreational facilities

(swimming pools and leisure centres) in local authorities and also a study on the coroners’

service in local authorities.

A further study on car parking systems and their management in local authorities has

commenced.

VFM Progress Reports

The Unit has broadened its sphere of activity by preparing and issuing progress reports. The

purpose of these follow ups is to assess the progress made, by local authorities, in

implementing the recommendations and performance indicators contained in the national

reports issued by the Unit. The Unit has issued six of these progress reports to date. In the

last quarter of 2017 the VFM Unit plans to follow-up on the progress made by local

authorities in implementing the recommendations contained in VFM Report No. 29 ‘The

oversight role of local authorities in the provision of social housing by Approved Housing

Bodies’ which was published in December 2015.

The report made recommendations in relation to:

Registration of mortgage

Nominations and statements of occupancy

Inspections

Records of meetings

Financial matters

Leasing arrangements

Capital projects.

The website of the Department is the primary means of publishing reports of the VFM Unit,

national reports and progress reports issued by the Unit can be downloaded at

http://www.housing.gov.ie/local-government-audit-service/local-government-audit-service

http://www.housing.gov.ie/local-government-audit-service/local-government-audit-service

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Motor Taxation Audits

Twenty six local authorities operate motor taxation offices. Authorised officers, in these

motor tax offices, are responsible for the issue of vehicle and other licences and certificates

to the public, on behalf of the Department of Transport, Tourism & Sport and the Road Safety

Authority. Monies collected are transferred to the Local Government Fund administered by

the Department and allocations are made from this fund to finance local authority activities.

The audit of these local motor taxation offices includes an examination of a sample of

licensing transactions to ensure that they have been properly accounted for in the financial

and stock control records of the licensing authorities. The amount collected by these offices

in 2015 was €378m (2014: €454m).

The motor tax on-line service which collected an additional €746m (2014: €705m) is located

in the Driver and Vehicle Computer Services Division of the Department of Transport, Tourism

and Sport and is not subject to audit by the LGAS.

As part of the audit of motor taxation offices, local government auditors and assistant

auditors confirm their agreement with Motor Tax Authority Reconciliation Forms (LGF1),

completed by each authority in respect of monies remitted to the Local Government Fund.

In the case of Louth Motor Taxation Office, the auditor was unable to obtain sufficient audit

assurance for the year ended 31 December 2015, to confirm his agreement with the amounts

indicated on the form. This issue has subsequently been resolved by the local authority.

During 2016, the LGAS participated in a joint Value for Money Study on Motor Taxation

Offices with the Office of the C&AG. This report will issue shortly and will contribute to more

effective governance and enhanced accountability in respect of the collection and

administration of motor taxation.

External relationships

The LGAS has, over many years, developed relationships with a number of external bodies.

These include the following:

Office of the Comptroller and Auditor General (C&AG)

The LGAS will continue to liaise and co-operate with the Office of the C&AG, following on

from the joint study on the cost and operations of motor tax offices completed in 2016. The

LGAS liaised with the C&AG during 2016 on a number of areas including professional training,

standards development, quality assurance and development of TeamMate audit software.

We will continue to work with the office of the C&AG in these areas to ensure effective use of

resources. Further opportunities for co-operation will be explored in 2017.

Copies of all LGAS reports are made available to the C&AG as part of his audit of the

Department of the Housing, Planning, Community and Local Government.

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Northern Ireland Audit Office, Audit Scotland, Wales Audit Office & NAO

The LGAS will continue to meet with the Northern Ireland Audit Office, Audit Scotland, Wales

Audit Office & National Audit Office to discuss best practice in terms of audit methodology,

training, and VFM. Representatives of these bodies also attend the LGAS annual conferences

periodically.

The European Organisation of Regional Audit Institutions (EURORAI)

The LGAS has been a member of this organisation for many years, which provides useful

contact with other European Regional Audit Bodies.

Working Groups and Committees

The LGAS is involved in a number of the Department’s working groups and committees, such

as the General Accounts Working Group and the Finance and Business Project Board.

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SECTION 2: FINANCIAL PERFORMANCE OF LOCAL AUTHORITIES

SECTION 2: - Financial Performance of Local Authorities

Executive Summary

1

2

3

4

5

6

Local authorities recorded over €4,065m in revenue income in 2015 (2014: €4,122m), with rates revenue continuing to be the largest single source of income with total income of €1,496m (37%), (2014: €1,500m: 36%).

Local Authorities incurred revenue expenditure of €3,793m (excluding transfers) in 2015, (2014: €3,882m), with Housing & Building and Roads, Transportation Safety continuing to be the largest spend areas, (€815m & €828m respectively).

€1,373m was the amount incurred on capital expenditure in 2015 (2014: €1,114m).

Local authorities continue to balance their finances, with 30 of the 31 local authorities recording a surplus for the year before transfers to reserves.

Closing cumulative revenue balances in the 31 local authorities range from a deficit of €25.9m to a surplus of €28.6m. 16 local authorities have an accumulated deficit on their revenue account ranging from €18K to €25.9m, with 10 local authorities having deficit balances of over €2m.

The level of local Authority debt has been decreasing, with total loans payable falling by €644m in 2015 to €4,042m. This was due to the repayment of HFA water loans.

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The following is a summary of the financial data included in the audited annual financial

statements of the 31 local authorities for the year ended 31 December 2015. The inclusion of

data for previous years allows for comparisons / trends. However it is important to note that

due to the re-organisation of local authority structures in 2014 the figures for 2014 & 2015

include the merged town councils with the relevant 31 county councils; whereas prior to

2014, the figures included the 34 local authorities and excluded the town councils. The

amalgamations of Limerick City and County, Waterford City and County, and North and South

Tipperary County Councils also have an impact on comparatives.

The financial data referred to in this review is classified under the headings shown below:

Revenue Income and Expenditure

Capital Programme.

More detailed information by individual local authority is also included in the appendices to

this report as follows;

Appendices

1. General Cumulative Revenue Balances 2015

2. General Cumulative Revenue Balances 2015

3. Revenue Expenditure 2015

4. Revenue Expenditure 2015

5. Revenue Income 2015

6. Capital Expenditure 2015

7. Capital Income 2015

8. Fixed Assets 2015

9. Non-Mortgage Loans

10. Mortgage Loans

11. Rates Collection

12. Housing Rents Collection

13. Housing Loans Collection

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1 2

3

4 5

Revenue Income and Expenditure

1.4%: reduction in revenue income in 2015. 2.3%: reduction in revenue expenditure in 2015. €1.496 billion: Income from rates in 2015. €815m: Amount spent on Housing and Building in 2015. €828m: Amount spent on Roads, Transportation and Safety in 2015. €8.9m: Amount by which cumulative revenue balances in local authorities increased in year.

Revenue income in local authorities has decreased from €4,122m in 2014 to €4,065m in 2015.

The main sources of revenue are rates, income from goods and services, grants & subsidies

and the local government fund.

Correspondingly, revenue expenditure in local authorities has decreased from €3,882m in

2014 to €3,793m in 2015. Expenditure includes the day-to-day running costs of the local

authority and includes payroll, operational, administration, establishment and financial

expenditure. Roads, Transportation and Safety, followed by Housing & Building continue to

be the two main areas of revenue expenditure.

The chart below shows the level of revenue income and expenditure for 2015 with

comparative figures for the previous seven years.1

Exhibit 2 –Local Authorities Revenue Income and Expenditure 2008-2015

All amounts shown are €m (Excludes transfers to / from Reserves)

1 Figures for 2015 & 2014 relate to merged authorities while figures for prior to 2014, relate to city and county councils only.

2008 2009 2010 2011 2012 2013 2014 2015

Expenditure 4,720 4,464 4,405 4,345 4,045 3,950 3,882 3,793

Income 4,841 4,667 4,628 4,529 4,176 4,120 4,122 4,065

-

2,000

4,000

6,000

€m

Revenue Income & Expenditure 2008 - 2015

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1 2

3

4 5

Revenue expenditure and income by local authority in 2015 is shown in Appendix 3, 4 and

Appendix 5.

Expenditure in the table above (Exhibit 2) excludes transfers to and from reserves of €263m

(2014: €226m) which includes €88m (2014: €84m) relating to the repayment of the principal

element of non-mortgage loans, transfers to capital and other reserves of €175m (2014:

€142m) and €0.5m (2014: €0.5m) in relation to other items including lease repayment

reserve, historical mortgage funding write off and development levies. These transfers are

disclosed in Note 14 to the annual financial statement and are provided for in the Code of

Practice and Accounting Regulations for Local Authorities. The General Accounts Working

Group is committed to developing a statement of movement in reserves for inclusion in the

2017 AFS in order to provide more information in this area.

Local authorities continue to balance their finances, with 30 of the 31 local authorities

producing a surplus for the year before transfers to reserves. After transfers to reserves one

local authority incurred a small deficit for the year.

As local authorities continue to operate in a challenging financial environment, with

increasing demands for services and a changing population, the need for effective financial

planning and meeting of budgets is crucial.

The closing cumulative revenue balances in the 31 local authorities improved to €12.3m

(favourable) at the end of 2015, compared with an opening favourable balance of €3.4m at

the beginning of the year. However it should be noted that 16 local authorities had adverse

balances on their revenue account ranging from €18K to €25.9m at 31 December 2015, with

ten local authorities having a balance in excess of €2m. In each of these cases the local

authorities had reduced their deficit balance from the previous year and were budgeting for a

further reduction in 2016.

A list of the cumulative revenue balances by local authority for 2014 and 2015 is shown in

Appendix 1.

30 of the 31 local authorities produced a surplus for the year before transfers to reserves.

Cumulative revenue balance in 31 local authorities improved to €12.3m at the end of 2015.

16 local authorities had adverse balances on their revenue account at end of 2015.

Of these 16, 10 local authorities have deficits in excess of €2m.

18


Revenue Income

The main sources of revenue income for the local authorities, as included in the annual

financial statements for 2015, with comparative figures for previous years, are as follows:2

Exhibit 3 – Sources of Revenue Income

2008 2009 2010 2011 2012 2013 2014 2015

Income from Goods and Services

1,289 1,203 1,104 1,105 1,000 1,019 1,253 1,176

Income from Grants and Subsidies

1,155 1,106 1,191 1,165 912 826 871 878

Contributions from other authorities

220 212 228 185 217 226 143 128

Local Gov Fund/ LPT 917 764 694 646 582 589 281 316

Pension Related Deduction

0 69 82 80 76 75 74 71

Rates 1,193 1,240 1,253 1,272 1,313 1,310 1,500 1,496

County Charge 67 73 76 76 76 75 0 0

TOTAL 4,841 4,667 4,628 4,529 4,176 4,120 4,122 4,065

All amounts shown are €m

*Note: Rates Income is shown before the write-off of irrecoverable rates (See Appendix 11)

As can be seen above the main source of income for local authorities is rates. Rates collection

in local authorities continues to be an area of focus with all local authorities being set rate

collection yield targets by the County and City Managers Association (CCMA) Debt

Management Team. As can be seen in Appendix 11, in all 31 local authorities, an

improvement was made on the collection yield achieved from 2014.

The methodology for calculating rates yields was amended in 2015 after allowing specific

doubtful arrears to be excluded from the total for collection figure.

The provision for bad debts in the area of rates, rents and housing loans varies significantly

between local authorities. There is no standard policy applicable to local authorities in

providing for these debts and the level of provisioning is determined locally. The level of


19


provisioning in the area of rates, rents and housing loans is not disclosed separately in the

AFS; however the total provisioning for debtors is disclosed in appendix 5 of the AFS. The

variance in the level of provisioning raises the question as to whether there is under and over

provisioning in this area and the LGAS will review bad debt provisioning in 2017. Local

authority policy on writing off debts will also have an impact on the level of provisioning.

The increase in Income from Goods and Services and the reduction in the Local Government

Fund / LPT between 2013 and 2014 reflect the transfer of responsibility for Water and

Sewerage functions to Irish Water.

The analysis of revenue income for 2015 is included in the chart below.

Exhibit 4 – Sources of local authority €4.1 billion revenue income in 2015 - 37% of funding is from rates.

29%

21%

3% 8%

2%

37%

Revenue Income 2015

Income from Goods and Services

Income from Grants and Subsidies

Contributions from other authorities

Local Gov Fund/LPT

Pension Related Deduction

Rates

€4,065m

20


1 2

3

4 5

Revenue Expenditure

A breakdown of the revenue expenditure for 2015, with comparative figures for previous

years, is as follows3.

Exhibit 5 – Revenue Expenditure by Division.

2008 2009 2010 2011 2012 2013 2014 2015

Housing & Building 711 663 645 685 673 668 746 815

Roads Transportation & Safety 1,056 848 868 872 794 798 835 828

Water Services 732 743 722 722 721 737 441 385

Development Management 309 285 255 241 235 237 284 300

Environmental Services 901 848 769 730 670 641 643 637

Recreation & Amenity 394 368 336 332 328 329 365 378

Agriculture, Ed, Hlth & Welfare 335 399 429 369 196 127 90 53

Miscellaneous Services 282 310 381 394 428 413 478 397

4,720 4,464 4,405 4,345 4,045 3,950 3,882 3,793

All amounts shown are €m

Housing & Building, Roads, Transportation & Safety, and Environmental Services continue to

be the 3 largest areas of expenditure, accounting for over 60 % of the total expenditure.

The reduction in expenditure on Agriculture, Education, Health and Welfare since 2011,

reflects the transfer of responsibility for higher education grants to Student Universal Support

Ireland (SUSI).


€1.67 billion: Amount spent on revenue payroll in local authorities. Payroll continues to be main expenditure item in local authorities.

€293m: Total spent on pensions and gratuities in year.

€127m: Total income received from pension deductions in year.

21


Expenditure on Miscellaneous Services includes the cost of the administration of Rates,

Agency and Recoupable Services, Motor Taxation, Local Representation / Civic Leadership,

Machinery Account Profit or Loss, Operation of Morgue and Coroner Expenses, Franchise

Costs, Stores Profit or Loss, Operation of Markets and Casual Trading, Weighbridges and

Malicious Damage.

The most significant increases in expenditure on Miscellaneous Services in recent years relate

to the Administration of Rates. This includes the write-off of bad debts, increases in the

provision for bad and doubtful debts and adjustments for rates on vacant properties. In some

cases the refunds of rates on vacant properties are substantial, with over €137m (or 9% of

total rates accrued in the year) being adjusted for in 2015.

The revenue expenditure for 2015, analysed over the various divisions, is shown in the chart

below.

Exhibit 6 – Revenue Expenditure by Division

Within divisions, payroll continues to be the main expenditure item. Total revenue payroll

costs in local authorities decreased from €1,684m in 2014 to €1,666m in 2015. Appendix 4

splits out revenue expenditure into payroll costs, operational, administration, establishment,

financial and miscellaneous expenses. Operational expenses €1,463m (2014: €1,491m) which

is the second largest costs covers items such as contract payments, repairs and maintenance,

agency services, energy costs, payments of grants and purchase of materials. Financial

expenses for 2015 totalled €289m (2014: €333m).

22%

22%

10% 8%

17%

10%

1%

10%

Revenue Expenditure 2015

Housing & Building

Roads Transportation & Safety

Water Services

Development Management

Environmental Services

Recreation & Amenity

Agriculture, Educn, Hlth & Welfare

Miscellaneous Services

€3,793m

22


Local Authority Staff Payroll, Pension and Gratuity Costs

In 2009 an additional pension related deduction was introduced for all public sector

employees and income from this source is included in the income and expenditure account of

local authorities in the annual financial statements. Deductions from payroll for this

contribution in the local authorities amounted to €71m in 2015 (2014: €74m). In addition,

normal staff pension contributions, as disclosed in the annual financial statements of the local

authorities, amounted to €56m in 2015 (2014: €56m). These amounts are not ring-fenced to

meet future pension liabilities in the accounts of local authorities.

With effect from the 1st January 2013 new entrants into the Public Service are covered by the

Single Pension Scheme. Deductions in relation to pensions are remitted centrally to

Department of Public Expenditure and Reform (DPER) for members of this new scheme. For

local authority staff recruited before 1st January 2013 pension contributions are deducted and

retained locally as income.

Expenditure on pensions, including the cost of gratuities for staff retiring in the current year,

included in the annual financial statements of all local authorities amounted to €293m in

2015 (2014: €298m) demonstrating the substantial gap between the income received by the

local authorities in any one year versus the costs incurred.

23


1 2

3

4 5

Capital Programme

13.6%: Increase in level of Capital Income in 2015. €760m: Amount of Capital Income received from government grants. 23.2%: Increase in level of Capital Expenditure in 2015. €504m: Payments made to contractors in year.

The Local Government Act, 2001 requires Chief Executives to prepare and submit to the

elected members a report indicating the programme of capital projects proposed by the local

authority for the forthcoming year and the following two years.

The capital programme includes expenditure on the acquisition of fixed assets, infrastructure

projects, work-in-progress and preliminary expenses. Total capital funding and expenditure

for 2015, with comparative figures for previous years, is shown below. 4

Exhibit 7 – Capital Income and Expenditure.

All amounts above are €m

Capital expenditure and income by local authority is shown in Appendix 6 and Appendix 7.


2008 2009 2010 2011 2012 2013 2014 2015

Expenditure 6,134 4,143 2,839 2,121 1,791 1,456 1,114 1,373

Income 5,584 4,099 2,898 2,516 1,805 1,396 1,154 1,311

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

€m

Capital Income & Expenditure 2008 - 2015

24


Capital income

Capital income for local authorities has increased for the first time since 2008. Previously it

had gone through a steady decline primarily due to the fall in income from grants and

development contributions, as noted in the tables below (Exhibit 8).5 However, 2015 has

reversed this trend with an increase in income from both grants and development

contributions, whilst borrowings drawn down have decreased in 2015 to €37m from €112m

in 2014.

Exhibit 8 – Capital Income Sources


The nil income for Development Contributions in 2013 reflects the movement in debtor

balances from short term to long term in some local authorities which resulted in negative

income in the year. Income from off-street car parking in some of the larger authorities

provides a capital reserve which is used to fund the development of car parks; while in most

other authorities’ car park income is included in the revenue account.

Approximately 58% per cent of capital funding was derived from government grants in 2015

(compared with 55% in 2014), illustrating the dependence on central government funding for

infrastructure projects. The proportion of funding from the various sources for 2015 is

illustrated in the following chart.


2008 2009 2010 2011 2012 2013 2014 2015

Grants 3,499 2,810 1,938 1,447 1,187 925 632 760

Borrowings 555 487 292 561 279 97 112 37

Development Contributions

460 158 117 135 45 0 61 126

Property Disposals 299 120 58 52 31 66 52 32

Tenant Purchase Annuities 13 7 7 5 9 7 5 5

Car Parking 10 10 9 8 6 6 6 7

Other 583 336 307 175 139 148 114 126

Transfers from Revenue 165 171 170 133 109 147 172 218

5,584 4,099 2,898 2,516 1,805 1,396 1,154 1,311

25


Other capital income includes the Sales Scheme proceeds, contributions in lieu of Part V

Housing Units and contributions from local authorities and other bodies.

Exhibit 9 – Capital Income Sources

Capital Expenditure

The reversal of the declining trend in capital income has followed through to capital

expenditure, with an increase in expenditure for the first time since 2008, with the largest

percentage increase in the purchase of other assets category.

However the levels continue to be significantly lower than the level of spend in 2009 and

2010 when expenditure was over three and two times greater respectively than the current

level. This reduction can be explained in part by the transfer of water services to Irish Water.

The chart below demonstrates the reduced investment in infrastructure projects in the local

government sector and the impact of the transfer of water services to IW in 2014, the most

notable being the reduction in the spend in the water services division.6


58%

3%

10%

2%

0% 0%

10%

17%

Capital Funding 2015

Grants

Borrowings


Property Disposals

Tenant Purchase Annuities

Car Parking

Other

Transfers from Revenue

€1,311m

26


Exhibit 10 – Capital Expenditure by Division.


An analysis of expenditure in 2015 by type, with comparatives for the previous seven years, is

shown below.

Exhibit 11 – Capital expenditure by type.

2008 2009 2010 2011 2012 2013 2014 2015

Payment to Contractors

3,425 2,144 1,368 933 969 760 478 504

Purchase of Land 531 484 308 175 110 48 59 60

Purchase of Other Assets

481 300 194 111 53 59 74 197

Professional & Consultancy Fees

353 275 188 155 119 106 84 81

Other 1,273 894 736 702 487 425 376 473

Transfers to Revenue

71 46 45 45 53 58 43 58

6,134 4,143 2,839 2,121 1,791 1,456 1,114 1,373


-

100

200

300

400

500

600Capital Expenditure by Division 2015 &

2014

2015

2014

27


Transfers from capital to revenue represent the use of reserves previously provided from the

revenue account for the specific purposes identified or the reassignment of reserves for other

purposes with the approval of the council members. Other capital expenditure includes the

following:

Loan Redemptions / Refinancing

Contributions to Approved Housing Bodies

Development Contributions due to Irish Water.

An analysis of the 2015 capital expenditure is shown in the chart below.

Exhibit 12 – Capital Expenditure

37%

4%

14%

6%

35%

4%

Capital Expenditure 2015

Payment to Contractors

Purchase of Land

Purchase of Other Assets

Professional & Consultancy Fees

Other


€1,373m

28


1 2

3

4 5

Balance Sheet

€87.7 billion: Value of physical assets owned by local authorities for example land, housing, roads etc. €21.4 billion: Value of housing assets owned by local authorities. €4 billion: Value of loans payable by local authorities.

The balance sheet sets out the assets, liabilities and reserves of the local authority at the end of the financial year. The following is a summary of the balance sheets for the local authorities for 2015, with previous years for comparison purposes.7

Exhibit 13 – Total Balance Sheet for all local authorities.

2012 2013 2014 2015

€m €m €m €m

Fixed Assets 91,777 92,512 87,233 87,693

Work in Progress and Preliminary Expenses

3,493 3,171 1,630 1,463

Long Term Debtors 2,676 2,585 2,720 2,598

Currents Assets 1,992 1,881 2,562 2,253

Current Liabilities (1,148) (1,131) (1,561) (1,192)

Long Term Liabilities (4,974) (4,768) (4,439) (4,272)

Net Assets 93,816 94,250 88,145 88,543

Capitalisation Account 91,777 92,512 87,233 87,693

Income - Work in Progress 3,378 3,019 1,482 1,354

Specific Revenue Reserve 105 104 116 116

General Revenue Reserve 3 (10) 3 12

Other Balances (1,447) (1,375) (689) (632)

Total Reserves 93,816 94,250 88,145 88,543



29


An analysis of the fixed assets as at 31 December 2015, with comparative figures for previous

years, by asset type is shown in the table below.

Exhibit 14 – Analysis of Fixed Assets. All amounts above are €m

The significant reduction in the net book value of water and sewerage assets (€10.3bn) from

2013 is due mainly to the transfer of assets to Irish Water in 2014. The impact of this transfer

is also reflected in the reduction in work in progress and preliminary expenditure in the

Balance Sheet.

Valuation of Fixed Assets

Fixed assets were included in the annual financial statements for the first time in 2003. Assets

held at that date were valued in accordance with guidelines issued from the Department,

using a number of valuation models. All assets purchased and constructed since 2003 are

included at cost less depreciation.

A summary of the net book value of fixed assets by local authority is shown in Appendix 8.

Asset Type Net Book Value 2012

Net Book Value 2013

Net Book Value 2014

Net Book Value 2015

€m €m €m €m

Land 2,244 2,222 2,581 2,646

Parks 64 66 110 154

Housing 18,054 18,426 21,266 21,399

Buildings 4,281 4,329 4,713 4,829

Plant and Machinery 85 73 68 63

Computers etc. 18 12 10 10

Heritage 404 407 431 436

Roads 55,378 55,575 56,976 57,128

Water and Sewerage 11,249 11,402 1,078 1,028

91,777 92,512 87,233 87,693

30


Loans Payable

The totals of loans payable by local authorities, categorised by type, at the end of 2015 with

previous year for comparison purposes, are shown below.8

Exhibit 15 – Total Loans Payable.

2012 2013 2014 2015

€m €m €m €m

Non-Mortgage Loans 2,364 2,281 2,262 1,719

Mortgage Loans 1,334 1,260 1,197 1,121

Voluntary Housing and Water Loans

1,109 1,077 1,227 1,202

Total Loans Payable 4,807 4,618 4,686 4,042


Total loans payable decreased in 2015 by €644m, the amounts due within one year also

decreased from €622m in 2014 to €192m in 2015. This was due to the redemption of the HFA

water-related loans. This is also a contributing factor to the decrease in current liabilities as

noted above.

Non-mortgage loans include loans for the purchase / construction of assets, bridging finance

and loans for other purposes. The repayment of principal and interest on these loans are

generally funded from the revenue account. An analysis of non-mortgage loan balances by

local authority for the last five years is shown in Appendix 9.

Mortgage loans are annuity type loans from financial institutions which are used as funding

for equivalent annuity loans issued to customers. The repayments on these loans are funded

by the corresponding repayments from the borrowers. It is important that the profile of these

loans is matched to the customer loan book to avoid any impact on cash flow. A comparison

of mortgage loans payable and receivable by local authority at the end of 2015 is included in

Appendix 10. As can be seen from Appendix 10, the amount receivable by the local

authorities is greater than the amount payable by €44.5m, demonstrating the continued

difficulty of collecting, in some cases.

Voluntary housing loans relate to expenditure on the construction of houses for external

social agencies, which is recouped in full from the Department. The balances on these loans

are offset by an equivalent amount included in the long term debtors in the balance sheet.


31


Other balances

Within reserves (note 10 in the AFS) there is a subsection called “other balances” totalling

€632m. This reserve is made up of both debit and credit balances. Other balances include

development levy balances, capital account balances, voluntary & affordable housing

balances and reserves for specific purposes. Capital account balances include unfunded

balances. Unfunded balances can be further split between project and non-project balances.

Project unfunded balances relate to completed asset codes for which funding has yet to be

identified and non-project unfunded balances relate to capital codes not resulting in assets

for which funding has yet to be identified.

It is important that the local authorities continue to focus on unfunded balances and identify

appropriate sources of finance to fund these balances within a reasonable timeframe.

Individual audit reports have included references to material unfunded balances.

32

SECTION 3: AUDITOR OPINIONS AND REPORTS

SECTION 3: - Auditor Opinions and Reports

Audit Opinions

It is the local government auditor’s main statutory duty, following completion of the financial

audit, to issue his/her independent audit opinion on the local authority’s annual financial

statement. All 31 local authorities were given a clean audit opinion which is testament to the

diligence of the Chief Executives, Heads of Finance and their staff. The audit opinion on Sligo

local authority contained an “emphasis of matter” paragraph in relation to significant legal

costs likely to be incurred. Concern in relation to this matter was also referred to in the

auditor’s report to the members of Sligo County Council.

Audit Reports

Financial Standing

All Local Government Auditors’ reports refer to the financial standing of the local authority.

This normally includes a reference to the outturn for the year and the revenue account

balance. In some cases there are also references to the capital account balance at the year-

end. A summary of the closing cumulative revenue account balances is included in this report

(Appendix 1). Local Authorities continue to implement tight controls over income and

expenditure.

As noted previously, a number of significant cumulative adverse balances have been

highlighted and commented on in audit reports, including Sligo (€25.9m), which has improved

from 2014 (€26.6m) and Donegal (€14.35m), which has also improved since 2014 (€14.97m).

In 30 of the 31 local authorities there was a surplus (before transfers to and from reserves) on

the income and expenditure account, reflecting the control local authorities exercised over

their spending during 2015.

Income Collection

As one of the main areas of income in local authorities is Rates, Housing Rents and Loans, all

audit reports comment on the progress made in this area in terms of collection performance

in comparison to the prior year. A summary of the main collection accounts for all 31 local

authorities is shown below.

33


Exhibit 16 –Arrears on main collection accounts.

Arrears at 31/12/2014

% Collected 2015


€m €m

Rates 394 83% 337

Housing Rents 66 85% 66

Housing Loans 45 68% 43

Rates

The rates collection performance of each local authority is shown in Appendix 11 and the

following is noted:

There was a decrease of €57m or 14.5% in arrears from €394m at the beginning of

the year to €337m at the end of 2015

Write-offs of rates amounted to €209m in 2015, compared to €202m in 2014 an

increase of €7m

The percentage collected for each local authority ranged from the lowest of 60% to

the highest of 96%; with an overall percentage collection of 83%, compared with 77%

in 2014. Part of this improvement is due to a change in the methodology in 2015 for

calculating yields which allows specific doubtful debts to be excluded from the total.

If all local authorities with a collection percentage of less than 83% were able to achieve this

average collection rate, it would have equalled €58.6m of additional rates being collected in

2015.

The CCMA Local Government Debt Management Project Group was formed in November

2014 to develop policies and procedures to improve debt collection in the area of commercial

rates. The group also requested each local authority achieve a target for improvement of

rates collection performance in 2015.

Following a recommendation from this project group, a change was made in relation to the

reporting of commercial rates and the format of Appendix 7 for the 2015 AFS. As noted

previously, the revised methodology for calculating rates yields allows specific doubtful arrears

to be excluded from the total for collection figure.

34


Two challenges cited by the local authorities in the area of rates collection, is the lack of

enforcement powers that the local authority has, and the length of time it can take for an initial

valuation to be undertaken. New rates legislation to address these issues, as well as others, is

currently being drafted.

Housing Rents

Housing rents collection summaries for each local authority are included in Appendix 12 and

the following is noted:

Arrears of rents increased marginally from €65.51m at the beginning of

2015 to €65.54m at the end of the year

Write-offs of rents amounted to €2.1m in 2015, compared to €2.4m in 2014

The percentage collected for each local authority ranged from the lowest of

73% to the highest of 96%; with an overall percentage collection of 85%

compared to 84% in 2014.


average collection rate it would have equalled €13.8m of additional rent being collected in

2015.

Housing Loans

Housing loans collection summaries are included in Appendix 13 and the following is noted:

Arrears of housing loans decreased from €45.1m at the beginning of 2015 to €42.9m

at the end of the year

Write-offs amounted to €657K in 2015, compared to €609K in 2014

The percentage collected for each local authority ranged from the lowest of 43% to

the highest of 98%; with an overall percentage collection of 68% compared to 67% in

2014.


average collection rate it would have equalled €8.4m of additional loans being collected in

2015.

The use of the Mortgage Arrears Resolution Process (MARP) was put forward by a number of

local authorities as a means of managing loan arrears, with the initiation of legal action

proceedings for repossession as a last resort. However, some auditors did note in certain

cases the low number of accounts entering the MARP process and the need for a more

proactive approach in this area.

35


Unfunded balances

Note 10 in the Annual Financial Statements (AFS) includes totals for unfunded balances split

between project balances (i.e. those relating to completed assets) and other non-project

balances. Specific unfunded balances are regularly referred to in the auditors’ reports by

virtue of their size or the fact that there has been little or no movement in the balance since

the previous year.

A number of issues in relation to unfunded balances have also been referred to in audit

reports and these include:

The value / number of balances where no movement has taken place in the year

The value / number of balances relating to historical land purchases where no funding

source has been identified

The value / number of balances relating to other assets where no funding source has

been identified

Balances being classified as revenue funded despite no transfers being made in the

year.

Future possible sources of funding identified in responses to auditors’ reports include the

following:

Future development contributions

Transfers from revenue account

Sales of related assets

Amounts to be recouped from the Department.

The accounting treatment of reserves and capital balances are to be considered further by

the General Accounts Working Group in 2017.

Capital Projects

Capital expenditure increased in 2015 to €1,373m from €1,114m in 2014, with 37% (€504m)

of capital expenditure relating to payments to contractors.

A number of audit reports refer to specific contracts awarded by local authorities whereby

the final price paid for the contract significantly exceeded the original tender price. Audit

reports make reference to claims leading to conciliation and arbitration processes. The

associated legal and consultancy cost of going through these processes is commented on, and

is substantial both in relation to the original contract price and as a stand-alone figure. The

ability of the local authority to manage increasing costs on capital projects has also been

referred to. Other issues include final accounts being long overdue, and final budgeted costs

not being agreed with the Department.

Audit reports also make reference to the need for a review of inactive capital balances in

some local authorities whilst others noted substantial progress made in this area.

36


Loans Payable

Loans payable by local authorities continue to be a significant balance with total loans

outstanding of €4,042m (2014: €4,686m)

The audit issues raised in relation to loans payable remain the same as in the previous year

and include the value of loans which are operating on an interest only basis or where the

interest is rolled up over a number of years. Some audit reports made reference to the high

cost of interest repayments made and the impact this has had on the local authority’s

finances.

The existence of substantial loans in respect of land purchases made a number of years ago

continues to be noted. Some local authorities noted that they will convert these loans to

annuity loans when the lands are developed, however this will have a significant adverse

effect on both the revenue account and cash flow in subsequent years. Management

responses in this area include the advancement of plans to sell or use the related land. The

withdrawal of the Land Aggregation Scheme was quoted in management responses, as this

had previously been seen as a possible means of resolving this issue.

Auditors also referred to bridging loans, being repaid on an interest only basis, in respect of

housing units originally acquired for resale under the affordable housing programme. Audit

reports noted progress made in respect of these housing units as follows;

Units being allocated to approved bodies under the Social Leasing Scheme. In these

cases the interest costs are fully recoupable from the Department

Units being transferred to the local authority’s own housing stock, these loans are

funded by the local authority

Units sold under the affordable housing scheme, the loans on these units are funded

from the local authority’s own financial resources.

Local authorities in view of the level of interest only loans need to assess the impact this will

have on their income and expenditure account when these loans move to repayment of both

principal and interest.

As long as repayments are affordable and the local authority is able to finance its debts then

borrowing will continue to be an important method to finance long term capital costs.


The procedures for monitoring, raising, collecting and accounting for development

contributions because of their complexity are frequently referred to in audit reports.

Amounts due within one year are generally accrued, regarded as capital income and included

in current debtors. Amounts expected to be collected after one year are raised as capital

income but deferred for AFS purposes. These are treated as long term debtors and are offset

by an equivalent long term creditor (i.e. deferred income) in the balance sheet. In 2016 the

long term debtor and creditor will be netted off against each other in the AFS.

37


Matters specifically referred to in 2015 reports include:

The quality of management information and financial reports available

Absence of an accurate and comprehensive database of development contributions

paid

Absence of reconciliations of development contribution scheme balances to capital

projects

The split of development contributions between long term and short-term debtors

The likelihood of particular developments progressing and the need for regular site

inspections

The need for regular review of debtor balances and the adequacy of the related bad

debts provisions

The existence of development contribution credits and the ability of the council to

reduce these credits over time due to lack of planning applications.

The table on page 24 (Exhibit 8) of this report shows the breakdown of capital funding and

the income in respect of development contributions is shown as €126m in 2015 (2014: €61M)

Fixed Assets

Local authorities control assets with a net book value of €87.7bn (2014: €87.2bn) and while

approximately two thirds of this relates to roads infrastructure (€57.1bn), other property

holdings, including housing, land and buildings, are substantial.

The area of asset management within local authorities continues to be an area for concern for

auditors with a number of issues noted in audit reports in 2015 including:

Land and property registers being incomplete or absent

Land and properties not registered with the Property Registration Authority

Land and property records not reconciling to fixed assets as per the financial system

Absence of legal agreements for all third party occupancies

Properties being rented at substantially below market value.

The reconciliation of registers and records are considered to be an important part of an

internal control environment and the absence of these may expose the local authority to

unnecessary risk.

It should also be noted that these are recurring themes from previous years’ audits and little

progress has been made in some local authorities.

38


The issue of unfinished housing estates has been noted in 2 audit reports with areas for

concern including:

The large number of unfinished housing estates

Potential for significant future expenditure by the local authority to bring the estates

up to the standards set out in the relevant planning permissions, though responses

have noted the funding received for this under the National Taking in Charge

Initiative.

Transfer of assets to Irish Water (IW)

IW has been allocated full responsibility, by statute, for all aspects of water services planning

and delivery at national, regional and local level. In 2015, local authorities provided services

to IW under a service level agreement. A number of audit reports have referenced issues

arising both in relation to the transfer of assets to Irish Water and also in relation to the

balancing statements. These include:

Assets not yet transferred to IW due to issues with title, boundaries, wayleaves, rights

of ways, or lands not registered

Balancing statements not yet finalised / agreed.

Procurement and Purchasing

A high performing procurement and purchasing system are vital to ensure good internal and

budgetary controls in local authorities. There have been significant changes in the area of

procurement, including the establishment of the Office of Government Procurement (OGP)

and the appointment of procurement officers in most local authorities in recent years.

However, the area of procurement and purchasing continues to be of concern in a number of

local authorities. Some of the findings in the audit reports include:

No dedicated procurement section or procurement officer

The need to expand or improve the staffing and operation of Procurement Units

The need for an adequately resourced, centralised, invoice processing section

Local authority guidelines and policies requiring review and updating

Examples of non-compliance with National Procurement Regulations

Examples of non-compliance with legislation for example not preparing Chief

Executive Orders for the acceptance of tenders

Local authority procedures not being adhered to

Lack of controls surrounding purchasing

Continuous use of expired framework agreements

General legal services not being tendered in accordance with Departmental guidance.

39


The operation of the purchase to pay cycle in local authorities is also often referred to in audit

reports. The raising of purchase orders after the receipt of goods or services is a common

weakness found in a number of local authorities. The roll out of Agresso Milestone 4 financial

management system is cited by management as a means of addressing this matter. The

system is configured to conform to a purchase to pay model of best practice defined by the

related Business Process Improvement (BPI) template.

Some audit reports did recognise that procurement procedures had improved in many

authorities, in addition since the period under audit, the local government sector, working

with the Department, has implemented a considerable programme to support the reform of

procurement. The Procurement Programme Board continues to guide on the reform of

procurement. Each local authority has designated a Procurement Officer and a considerable

training and education programme is in place to support the Procurement Officers and

budget holders and provide updates on regulations, legislation, directives and policies.

Most local authorities have adopted a Corporate Procurement Plan and the remainder are

currently progressing same. It is expected that each local authority will have a valid

Corporate Procurement Plan in place by mid-2017. The Local Government Strategic

Procurement Centre (LGSPC) continues to engage with the Office of Government

Procurement (OGP) to ensure the requirements of the sector will be met. The Local

Government Operational Procurement Centre (LGOPC) continues to provide two category

services to the sector, plant hire and minor works and civils, and in 2017 has introduced a

Dynamic Purchasing System (DPS) for road markings and will introduce a similar DPS for Plant

Hire in March 2017. A draft report on the independent review of the supplygov.ie system is

currently being considered by the Procurement Programme Board and the Public Sector

Reform Oversight Group. The review was dynamic in nature, having both a

compliance/quality assurance focus as well as a business improvement focus. A Spend Data

Management System is currently being developed to facilitate spend analytics for the sector

and the OGP. It is anticipated that this system will be operational in each local authority by

the end of 2017. The Local Government Audit Service acknowledges that in 2016 the sector,

along with the rest of the public service, was transitioning to the new procurement model led

by the OGP and this should support compliance with procurement policies in 2017.

The LGAS acknowledges that in 2015 the sector, along with the rest of the public service, was

transitioning to the new procurement model led by the OGP and we would expect to see

increased compliance with Procurement policies during our audit for the year ended 31

December 2016.

40


Local Authority Companies

The interest of local authorities in companies is disclosed in Appendix 8 to the annual

financial statements. As part of a review of the Code of Practice and Accounting Regulations

for Local Authorities, the accounting treatment of these companies has been identified as an

area requiring review and guidance.

Auditors’ comments on these companies included the following:

The need to review and, in some cases, improve governance arrangements in relation

to companies under the control of the local authority (a CCMA task force has been

established to address this issue)

Agreement of terms and conditions on loans from the local authority to the company

needing to be formalised

Accumulated losses incurred by companies and dependence on local authority for

financial support

Audit reports for local authority companies included going concern paragraphs due to

the quantum of support given by the local authority either through grants or loans

Letters of comfort given by local authorities to the auditor of the local authority

company giving assurance that the local authority will continue to support the

company for the next 12 months

The unavailability of the current audited accounts of some companies at the time of

local authority AFS preparation

Limited engagement by the external auditor of local authority company to standard

letters of enquiry from the Local Government Auditor.

41


Governance, Internal Audit & Audit Committee

Auditors frequently comment on the governance arrangements and, in particular, the

operation of the internal audit functions in the local authorities. Internal audit plays an

important role in supporting audit committees within local authorities and in challenging

management on corporate governance, risk management and internal control. It is for these

reasons that a strong independent internal audit function is vital within local authorities. The

main comments arising included the following:

In cases where the internal audit function was operating satisfactorily, auditors took

account of the work carried out by them in planning their audits

In many cases the internal audit function was under resourced with a number of

posts being left vacant for extended periods. Auditors identified difficulties in this

regard in ten local authorities

The impact an inadequately resourced internal audit function can have on the

effectiveness of audit committees in local authorities

Auditors also referred to the fact that they had met with audit committees since the previous

audits to discuss the contents of their audit reports and follow up actions required.

Comments with regards to the need to finalise review or update regularly risk registers also

feature in audit reports.

Annual Financial Statement Completion Dates

The Code of Practice and Accounting Regulations states “The accounting year will end on the

31st of December and the AFS should be prepared and submitted to the Department of the

Environment, Community and Local Government by 31st March of the year following the end

of the accounting year.”

Delays in the production of the AFS can have a negative impact on our ability to plan and

complete our audits efficiently and in a timely manner. AFS delays also reduce their relevance

to all users of accounts including audit committees, council members, DHPCLG, NOAC and the

public. A table showing the number of draft AFS for 2015 approved by the Chief Executives

and Heads of Finance each month in 2016 is shown in Appendix 14. The AFS’s for 13 local

authorities were completed after 31 March deadline.

42

APPENDICES 1-15

Appendix 1 – General Cumulative Revenue Balances 2015

2014 2015

County Councils € €

Carlow 366,511 432,645

Cavan 1,742,757 1,742,864

Clare (800,989) (250,139)

Cork 10,601,836 12,217,343

Donegal (14,966,588) (14,345,655)

Dun Laoghaire Rathdown 9,699,927 9,721,176

Fingal 15,967,583 15,972,158

Galway (1,891,838) (1,886,030)

Kerry 6,184,008 6,271,767

Kildare (1,445,710) (1,199,573)

Kilkenny (68,390) (18,231)

Laois (393,285) (297,863)

Leitrim (1,426,331) (1,324,121)

Limerick 599,562 759,891

Longford 126,465 142,994

Louth (2,607,460) (2,510,886)

Mayo (5,059,932) (4,656,195)

Meath (3,840,500) (2,892,155)

Monaghan (2,879,914) (2,704,442)

Offaly (4,734,970) (4,154,224)

Roscommon 166,848 150,143

Sligo (26,602,276) (25,942,600)

South Dublin 12,051,637 12,100,808

Tipperary 5,536,784 5,542,326

Waterford (8,677,450) (7,997,196)

Westmeath 27,702 248,621

Wexford (9,873,539) (9,160,549)

Wicklow (3,783,860) (3,432,618)

City Councils

Cork City 772,919 779,934

Dublin City 28,354,582 28,600,516

Galway City 254,693 370,931

3,400,782 12,281,640

43

APPENDICES 1-15

Appendix 2 – General Cumulative Revenue Balances 2015

-30

-20

-10

0

10

20

30Revenue Balances €m

44

APPENDICES 1-15

Appendix 3 – Revenue Expenditure 2015

-100 - 100 200 300 400 500 600 700 800 900

Dublin City

Cork

Fingal

South Dublin

Limerick

Dun Laoghaire Rathdown

Cork City

Kildare

Tipperary

Mayo

Donegal

Kerry

Waterford

Galway

Meath

Clare

Wexford

Louth

Wicklow

Kilkenny

Galway City

Westmeath

Sligo

Cavan

Offaly

Monaghan

Laois

Roscommon

Carlow

Longford

Leitrim

Revenue Expenditure €m

Pay

Non Pay

Transfers

45

APPENDICES 1-15

Appendix 4 – Revenue Expenditure 2015

Local Authority

Payroll Operational Administration Establishment Financial Miscellaneous Total Expenditure

Carlow 17,183,301 21,431,117 2,545,017 392,578 4,246,434 - 134,096 45,664,351

Cavan 23,565,053 23,907,490 1,814,505 694,174 3,374,937 1,047,452 54,403,611

Clare 42,869,586 37,524,270 4,027,090 1,368,067 2,580,155 5,477,637 93,846,805

Cork 125,953,595 109,676,318 10,956,214 3,649,235 18,304,584 1,793,627 270,333,573

Donegal 57,149,731 52,789,768 4,490,533 2,241,523 10,836,552 402,679 127,910,786


58,798,112 67,597,830 5,657,491 3,397,063 7,282,511 5,078,710 147,811,717

Fingal 75,891,269 73,865,611 6,407,819 3,649,224 11,068,658 3,686,182 174,568,763

Galway 47,818,789 47,843,004 3,082,590 3,117,750 6,591,663 739,608 109,193,404

Kerry 58,005,024 44,461,810 4,921,649 1,685,436 9,952,319 636,705 119,662,943

Kildare 45,196,369 65,222,440 4,040,380 5,611,180 14,954,476 219,552 135,244,397

Kilkenny 29,841,461 30,552,217 1,437,305 1,697,890 4,712,320 711,569 68,952,762

Laois 23,684,754 19,409,278 2,258,525 721,734 6,411,155 1,246,257 53,731,703

Leitrim 17,128,744 13,218,579 1,450,903 221,855 1,575,871 177,408 33,773,360

Limerick 65,749,288 64,565,994 8,660,352 2,457,532 5,692,960 5,648,426 152,774,552

Longford 18,312,064 14,255,762 2,087,285 937,512 3,076,220 452,938 39,121,781

Louth 37,215,379 35,839,494 2,428,736 1,307,048 13,861,844 -512,261 90,140,240

Mayo 49,013,852 62,282,970 4,897,623 1,234,558 9,341,768 599,805 127,370,576

Meath 39,473,369 42,764,955 3,640,726 2,162,078 6,817,620 1,689,775 96,548,523

Monaghan 23,673,459 22,574,019 2,203,495 1,144,856 3,734,208 710,245 54,040,282

Offaly 23,216,553 24,488,622 1,789,965 687,996 4,260,353 425,107 54,868,596

Roscommon 25,159,388 23,713,594 2,278,450 457,977 3,393,448 500,231 55,503,088

Sligo 25,954,223 26,561,731 2,029,678 912,123 6,042,663 1,704,654 63,205,072

South Dublin

64,883,699 85,701,184 7,914,771 4,212,743 11,546,172 15,113,424 189,371,993

Tipperary 60,882,310 54,558,379 5,265,784 1,521,008 8,203,451 1,016,751 131,447,683

Waterford 47,566,047 48,240,942 6,228,477 1,104,295 6,362,412 4,579,258 114,081,431

Westmeath 23,858,720 28,203,210 2,210,036 985,664 3,185,078 3,459,176 61,901,884

Wexford 41,319,375 40,656,927 2,731,521 1,122,701 9,238,024 1,902,074 96,970,622

Wicklow 37,351,776 35,150,817 4,287,248 1,224,301 11,808,717 789,001 90,611,860

Cork City 76,655,048 51,970,821 4,162,593 3,695,687 9,731,929 740,318 146,956,396

Dublin City 361,295,234 159,227,530 96,570,161 31,460,341 61,730,946 12,634,652 722,918,864

Galway City 21,990,620 34,809,398 2,267,222 1,356,455 8,866,496 518,284 69,808,475

1,666,656,192 1,463,066,081 214,744,144 86,432,584 288,785,944 73,055,148 3,792,740,093

46

APPENDICES 1-15

Appendix 5 – Revenue Income 2015

- 100 200 300 400 500 600 700 800 900

Dublin CityCork

FingalSouth Dublin

LimerickDun Laoghaire Rathdown

Cork CityKildare

TipperaryMayo

DonegalKerry

WaterfordGalwayMeath

ClareWexford

LouthWicklowKilkenny

Galway CityWestmeath

SligoCavanOffaly

MonaghanLaois

RoscommonCarlow

LongfordLeitrim

Revenue Income €m

Local Government Fund / LPT / Grants &SubsidiesRates

Other Income

47

APPENDICES 1-15

Appendix 6 – Capital Expenditure 2015

0 50 100 150 200 250 300

Dublin CityFingal

South DublinCork

LimerickWicklowCork City

MayoDun Laoghaire Rathdown

GalwayWexford

KildareKilkenny

TipperaryDonegal

WaterfordKerry

RoscommonSligoClare

Galway CityCavan

WestmeathLouth

MeathLaois

OffalyCarlow

MonaghanLongford

Leitrim

Capital Expenditure €m Millions

Payments to Contractors

Other Expenditure


48

APPENDICES 1-15

Appendix 7 – Capital Income 2015

-50 0 50 100 150 200 250

Dublin CityFingal

CorkSouth Dublin

LimerickKildare

MayoCork City

Dun Laoghaire RathdownWicklowWexford

GalwayWaterford

KilkennyDonegal

TipperaryKerryClare

MeathSligo

RoscommonCavanLouth

Galway CityWestmeath

CarlowLaois

MonaghanOffaly

LongfordLeitrim

Capital Income €m

Grants

Non Mortgage Loans

Other Income

Transfers from Revenue

49

APPENDICES 1-15

Appendix 8 - Fixed Assets 2015

Local Authority LAND PARKS HOUSING BUILDINGS PLANT & MACHINERY

COMPUTERS ETC

HERITAGE ROADS WATER & SEWERAGE

TOTAL

Carlow 29,947,032 7,998,451 229,356,732 37,014,357 1,000,645 72,233 60,303 728,595,331 0 1,034,045,084

Cavan 37,908,075 454,959 195,709,836 68,782,079 1,328,898 99,505 203,792 1,223,668,922 0 1,528,156,066

Clare 57,574,187 4,189,935 273,765,971 132,053,088 1,917,788 282,270 831,651 2,254,828,947 0 2,725,443,837

Cork 424,797,716 156,568 1,289,588,865 259,514,116 5,972,351 538,342 17,238,766 5,948,950,590 88,051,590 8,034,808,904

Donegal 70,601,146 4,813,895 518,723,518 184,496,571 3,186,108 141,878 1,753,554 2,597,728,501 0 3,381,445,171

Dun Laoghaire Rathdown 146,926,778 3,737,795 1,096,038,957 263,328,838 896,391 570,535 676,684 1,671,897,429 80,338,159 3,264,411,566

Fingal 276,884,135 15,610,104 931,554,641 294,187,324 4,328,610 157,299 1,099,130 1,051,760,480 105,861,600 2,681,443,323

Galway 20,559,792 0 233,851,367 75,016,010 1,553,512 75,826 194,368 3,262,001,382 0 3,593,252,257

Kerry 140,495,357 6,434,343 445,573,517 122,163,195 2,164,113 683,930 2,935,312 2,788,355,810 0 3,508,805,577

Kildare 42,984,135 0 602,600,820 122,047,329 1,506,301 0 1,002,888 1,795,279,274 49,273,735 2,614,694,482

Kilkenny 54,476,447 10,489,437 287,968,800 53,011,181 3,001,566 258,818 515,871 2,293,560,000 3 2,703,282,123

Laois 20,136,396 114,371 260,421,464 85,419,388 683,604 17,520 10,946,522 1,522,127,700 11,000,000 1,910,866,965

Leitrim 1,522,498 3,612,339 67,069,838 33,676,856 554,280 68,478 599,533 734,173,996 0 841,277,818

Limerick 49,621,857 4,639,532 552,119,359 137,122,550 2,135,855 471,128 6,330,937 2,498,076,235 0 3,250,517,453

Longford 10,730,294 0 222,593,911 15,712,958 423,502 28,634 244,994 776,839,069 0 1,026,573,362

Louth 98,120,704 2,274,673 517,543,753 149,761,800 1,418,337 2,035,786 2,469,464 1,306,431,402 0 2,080,055,919

Mayo 147,547,013 3,170,830 210,495,140 160,640,925 2,073,225 165,019 2,744,959 2,916,347,235 0 3,443,184,346

Meath 72,019,251 190,000 401,250,771 106,630,349 1,355,349 -166,532 671,939 2,127,619,875 12,693,822 2,722,264,824

Monaghan 14,559,896 1,036,186 165,994,198 44,128,683 913,926 20,608 900,852 1,190,632,981 0 1,418,187,330

Offaly 35,407,922 2,360,849 216,757,502 63,964,170 1,168,498 171,601 166,000 1,147,497,027 0 1,467,493,569

Roscommon 30,373,568 158,484 137,013,487 41,778,795 1,023,629 69,307 1,096,400 1,615,664,454 0 1,827,178,124

Sligo 56,228,549 2,357,810 275,889,132 132,654,279 724,380 145,156 9,069,192 1,170,130,000 0 1,647,198,498

South Dublin 69,249,156 3,884,854 1,584,672,760 353,549,739 2,582,466 156,114 554,780 976,042,809 194,126,283 3,184,818,961

Tipperary 86,002,436 192,316 503,007,446 149,886,734 4,358,628 737,468 1,245,929 2,970,123,284 0 3,715,554,241

Waterford 40,663,827 2,170,058 608,327,770 148,678,066 3,151,512 566,365 3,344,812 1,339,240,596 3,629,465 2,149,772,471

Westmeath 49,324,527 372,266 266,609,566 121,914,256 2,549,260 168,723 1,301,791 1,864,752,487 0 2,306,992,876

Wexford 69,462,231 41,960,933 496,971,195 246,211,227 3,539,959 231,768 2,185,149 1,815,179,283 0 2,675,741,745

Wicklow 178,876,634 0 824,565,487 96,912,283 2,329,565 867,686 623,475 1,537,753,645 0 2,641,928,775

Cork City 71,242,494 5,425,693 1,698,930,171 129,885,317 742,120 176,897 88,242,806 1,130,886,062 30,889,574 3,156,421,134

Dublin City 154,027,306 26,004,948 5,867,762,779 858,548,698 4,586,066 417,829 275,983,098 2,478,500,829 452,547,525 10,118,379,078

Galway City 87,456,604 90,386 416,083,833 140,422,933 479,137 499,250 599,707 393,608,624 0 1,039,240,474

Totals 2,645,727,963 153,902,015 21,398,812,586 4,829,114,094 63,649,581 9,729,441 435,834,658 57,128,254,259 1,028,411,756 87,693,436,353

50

APPENDICES 1-15

Appendix 9 - Non-Mortgage Loans 2011 2012 2013 2014 2015

Local Authority € € € € €

Carlow 20,409,208 20,473,597 19,472,322 21,447,280 19,254,343

Cavan 12,319,463 12,841,514 15,897,883 14,779,948 12,172,495

Clare 90,439,708 102,955,796 95,623,683 95,782,614 72,713,407

Cork 327,794,986 344,583,219 337,395,687 323,907,907 277,617,641

Donegal 76,879,443 95,833,070 93,630,852 96,454,708 64,718,648


70,138,554 65,505,208 60,607,395 70,197,042 59,833,630

Fingal 214,655,631 209,872,613 207,720,575 171,266,399 146,152,916

Galway 80,855,958 75,926,829 79,327,317 59,058,073 9,236,893

Kerry 63,667,186 63,564,017 60,216,115 71,859,877 51,809,035

Kildare 60,461,482 58,077,213 55,191,555 56,462,465 45,401,607

Kilkenny 13,948,685 12,518,849 11,110,178 9,668,319 1,244,793

Laois 21,894,209 22,075,949 22,933,511 21,460,836 20,152,675

Leitrim 9,304,686 8,617,182 7,907,208 7,148,255 1,809,658

Limerick 52,003,676 50,521,423 45,698,018 39,379,385 28,873,040

Longford 15,625,955 14,785,306 18,542,373 18,484,172 9,740,026

Louth 16,552,076 16,504,049 27,247,557 85,586,513 83,349,044

Mayo 61,710,767 82,705,379 78,327,612 90,517,728 74,788,370

Meath 57,550,760 56,360,210 54,308,414 59,209,611 56,453,722

Monaghan 10,256,688 9,273,496 8,638,855 8,699,664 3,174,199

Offaly 36,549,308 34,698,514 33,264,386 40,897,547 32,859,257

Roscommon 11,539,208 23,955,209 21,860,968 18,112,780 17,800,089

Sligo 48,529,150 57,105,985 60,819,120 85,660,713 72,213,013

South Dublin 69,998,309 70,087,123 69,423,456 80,803,721 61,162,125

Tipperary 38,338,288 38,609,921 36,635,629 40,409,431 33,464,111

Waterford 70,805,086 73,849,365 70,855,423 86,079,918 64,253,179

Westmeath 75,522,540 74,843,252 77,201,194 81,553,687 56,736,034

Wexford 95,457,013 92,237,372 88,838,912 88,988,328 75,005,190

Wicklow 68,725,937 83,257,908 85,036,973 93,713,651 65,729,048

Cork City 115,493,876 113,362,322 109,462,790 87,056,715 67,257,383

Dublin City 299,598,757 307,078,825 265,667,357 185,659,080 90,129,181

Galway City 70,318,369 71,733,367 61,913,486 51,991,512 43,534,409

Totals 2,277,344,962 2,363,814,082 2,280,776,804 2,262,297,879 1,718,639,161

Note: Figures for 2014 relate to merged authorities while figures for previous years shown relate to local authorities only. Figures for 2011, 2012 and 2013 for Limerick City and County, North and South Tipperary and Waterford City and County have been combined for comparison purposes.

51

APPENDICES 1-15

Appendix 10 - Mortgage Loans 2015

Mortgage Loans Payable including

Rented Equity

Mortgage Loans Receivable including

Rented Equity

Local Authority € €

Carlow 11,092,767 10,845,874

Cavan 4,928,831 5,961,256

Clare 10,702,605 12,085,814

Cork 79,293,662 85,360,113

Donegal 27,848,463 29,810,154

Dun Laoghaire Rathdown 15,925,503 15,008,103

Fingal 137,443,740 137,653,623

Galway 23,179,061 23,626,206

Kerry 12,499,190 13,664,126

Kildare 38,609,021 47,984,110

Kilkenny 35,615,982 36,173,066

Laois 61,373,481 61,636,628

Leitrim 742,764 1,922,058

Limerick 16,893,146 19,402,450

Longford 8,934,778 11,874,870

Louth 11,992,019 14,242,100

Mayo 38,818,086 38,057,914

Meath 19,023,305 19,446,064

Monaghan 13,556,554 12,540,048

Offaly 6,574,005 5,852,813

Roscommon 1,219,460 1,861,957

Sligo 15,601,545 16,746,550

South Dublin 55,078,237 53,916,756

Tipperary 18,431,594 18,795,520

Waterford 44,231,744 46,777,518

Westmeath 26,320,841 26,346,184

Wexford 43,273,071 46,333,604

Wicklow 19,925,084 16,683,521

Cork City 28,218,332 28,711,097

Dublin City 279,468,592 291,601,017

Galway City 14,496,442 14,842,918

Totals 1,121,311,905 1,165,764,032

52

APPENDICES 1-15

Appendix 11 - Rates Collection Local Authority Arrears at

01/01/2015 Accrued Vacant Property

Adjustments Write Off

& Waivers Total for

Collection Collected Arrears at

31/12/2015 Specific

Doubtful Arrears

2015 % 2014 %

County Councils € € € € € € € €

Carlow 3,590,433 14,417,224 3,307,153 694,564 14,005,940 11,350,009 2,655,931 457,469 84% 75%

Cavan 4,874,587 13,536,702 1,727,641 876,682 15,806,966 11,943,256 3,863,710 1,301,809 82% 70%

Clare 13,686,133 42,347,972 5,433,115 1,472,755 49,128,235 36,985,564 12,142,671 3,830,037 82% 75%

Cork 28,646,090 127,953,113 13,057,251 2,931,193 140,610,759 119,163,164 21,447,595 1,876,495 86% 79%

Donegal 17,578,313 31,022,480 3,875,688 4,346,058 40,379,047 24,692,578 15,686,469 1,050,236 63% 56%

Dun Laoghaire Rathdown 22,246,387 82,177,420 2,531,539 4,451,225 97,441,043 77,695,710 19,745,333 6,355,752 85% 78%

Fingal 9,876,671 120,232,076 5,327,546 1,085,064 123,696,137 115,423,490 8,272,647 3,593,613 96% 92%

Galway 10,043,822 25,675,803 5,365,453 975,753 29,378,419 21,571,674 7,806,745 2,850,382 81% 67%

Kerry 9,414,652 41,264,286 3,337,024 4,847,482 42,494,432 33,518,689 8,975,743 381,104 80% 78%

Kildare 12,755,007 57,554,487 5,420,225 1,650,581 63,238,688 50,938,296 12,300,392 1,364,847 82% 78%

Kilkenny 2,014,771 18,443,661 2,613,294 559,319 17,285,819 15,877,981 1,407,838 61,916 92% 89%

Laois 3,981,886 12,513,139 2,352,169 786,657 13,356,199 9,898,811 3,457,388 196,133 75% 69%

Leitrim 2,671,882 5,193,566 949,919 153,782 6,761,747 4,226,300 2,535,447 1,430,012 79% 60%

Limerick 24,966,926 52,012,763 2,395,539 1,738,587 72,845,563 51,391,697 21,453,866 4,482,291 75% 65%

Longford 2,642,256 7,915,522 1,298,951 767,059 8,491,768 6,396,247 2,095,521 650,951 82% 70%

Louth 18,376,977 33,072,049 7,291,367 930,413 43,227,246 25,578,002 17,649,244 836,264 60% 56%

Mayo 6,369,686 25,847,673 6,404,909 417,819 25,394,631 19,729,275 5,665,356 791,900 80% 75%

Meath 6,868,734 33,456,671 4,302,478 1,097,145 34,925,782 29,289,390 5,636,392 585,033 85% 81%

Monaghan 5,441,916 12,686,201 2,273,303 694,417 15,160,397 10,523,911 4,636,486 1,442,726 77% 64%

Offaly 2,429,618 14,577,768 0 3,412,764 13,594,622 11,463,251 2,131,371 76,372 85% 82%

Roscommon 2,241,431 11,027,824 2,481,894 172,549 10,614,812 8,751,416 1,863,396 1,209,756 93% 80%

Sligo 4,808,718 13,161,447 2,614,690 732,329 14,623,146 10,608,718 4,014,428 259,067 74% 67%

South Dublin 30,287,564 123,061,328 13,209,817 5,384,797 134,754,278 107,685,870 27,068,408 1,932,268 81% 80%

Tipperary 9,575,787 31,261,671 5,463,004 672,172 34,702,282 26,063,250 8,639,032 1,356,037 78% 72%

Waterford 11,016,248 33,178,092 4,835,844 900,715 38,457,781 29,521,260 8,936,521 1,255,522 79% 72%

Westmeath 4,406,043 15,432,807 2,736,204 485,389 16,617,257 12,706,214 3,911,043 606,494 79% 73%

Wexford 11,208,289 30,816,100 1,570,129 3,358,120 37,096,140 27,447,399 9,648,741 255,902 75% 71%

Wicklow 11,583,870 30,004,697 4,853,822 1,244,847 35,489,898 26,778,891 8,711,007 462,435 76% 69%

53

APPENDICES 1-15

Local Authority Arrears at 01/01/2015

Accrued Vacant Property

Adjustments

Write Off & Waivers

Total for Collection

Collected Arrears at 31/12/2015

Specific Doubtful

Arrears

2015 % 2014 %

City Councils € € € € € € € €

Cork City 22,372,429 65,029,398 3,902,519 2,434,840 81,064,468 61,224,285 19,840,183 2,500,000 78% 72%

Dublin City 62,598,018 336,255,813 13,545,343 20,076,317 365,232,171 314,107,645 51,124,526 7,100,000 88% 84%

Galway City 15,517,678 35,336,200 2,946,686 2,240,055 45,667,137 31,941,718 13,725,419 1,551,251 72% 66%

Totals 394,092,822 1,496,465,953 137,424,516 71,591,449 1,681,542,810 1,344,493,961 337,048,849 52,104,074 83% 77%

54

APPENDICES 1-15

Appendix 12 - Housing Rents Collections


Accrued Write Off & Waivers



2015 % 2014 %

County Councils € € € € € €

Carlow 481,736 5,236,408 14,508 5,703,636 5,261,948 441,688 92% 91%

Cavan 981,818 4,909,806 11,390 5,880,234 4,927,936 952,298 84% 83%

Clare 949,579 6,115,879 35,741 7,029,717 6,093,162 936,555 87% 86%

Cork 1,648,728 16,295,547 175,151 17,769,124 16,552,893 1,216,231 93% 91%

Donegal 1,317,899 10,816,737 52,186 12,082,450 10,850,526 1,231,924 90% 89%

Dun Laoghaire Rathdown 3,197,651 13,540,569 77,301 16,660,919 13,156,523 3,504,396 79% 80%

Fingal 1,849,705 18,883,791 0 20,733,496 18,671,568 2,061,928 90% 91%

Galway 915,568 6,814,413 139,646 7,590,335 6,804,084 786,251 90% 88%

Kerry 729,925 11,231,150 56,300 11,904,775 11,205,849 698,926 94% 94%

Kildare 1,381,714 9,724,842 13,029 11,093,527 9,732,359 1,361,168 88% 87%

Kilkenny 628,877 7,003,526 6,068 7,626,335 7,038,398 587,937 92% 92%

Laois 267,763 5,533,241 13,213 5,787,791 5,577,764 210,027 96% 95%

Leitrim 272,358 1,922,768 1,987 2,193,139 1,878,709 314,430 86% 87%

Limerick 2,053,150 19,485,106 9,904 21,528,352 19,259,620 2,268,732 89% 87%

Longford 790,756 4,948,380 82,643 5,656,493 4,967,734 688,759 88% 86%

Louth 2,083,007 11,139,716 17,284 13,205,439 9,653,149 3,552,290 73% 82%

Mayo 1,169,037 5,963,531 71,618 7,060,950 5,964,152 1,096,798 84% 83%

Meath 1,569,521 8,708,897 32,759 10,245,659 8,855,702 1,389,957 86% 84%

Monaghan 213,656 3,630,637 1,612 3,842,681 3,650,443 192,238 95% 95%

Offaly 770,711 5,257,651 38,444 5,989,918 5,169,248 820,670 86% 86%

Roscommon 312,609 4,110,047 26,911 4,395,745 3,925,178 470,567 89% 93%

Sligo 1,387,181 4,864,596 74,276 6,177,501 4,835,979 1,341,522 78% 77%

South Dublin 7,827,835 22,387,374 269,108 29,946,101 22,066,647 7,879,454 74% 73%

Tipperary 1,060,722 12,447,951 9,063 13,499,610 12,860,369 639,241 95% 92%

Waterford 3,239,859 11,636,813 103,767 14,772,905 11,677,176 3,095,729 79% 78%

Westmeath 383,992 5,744,069 28,602 6,099,459 5,793,354 306,105 95% 94%

Wexford 1,442,673 13,701,166 31,692 15,112,147 13,834,248 1,277,899 92% 90%

Wicklow 1,020,555 12,053,793 32,200 13,042,148 12,104,662 937,486 93% 92%

55

APPENDICES 1-15

Local Authority





2015 % 2014 %

City Councils € € € € € €

Cork City 3,860,277 21,076,835 0 24,937,112 20,281,091 4,656,021 81% 83%

Dublin City 19,640,271 72,640,877 638,380 91,642,768 72,968,267 18,674,501 80% 78%

Galway City 2,063,767 7,303,937 66,209 9,301,495 7,345,096 1,956,399 79% 78%

Totals 65,512,900 365,130,053 2,130,992 428,511,961 362,963,834 65,548,127 85% 84%

56

APPENDICES 1-15

Appendix 13 - Housing Loans Collection Local Authority Arrears at

01/01/2015 Accrued Write Off &

Waivers Total for

Collection Collected Arrears at

31/12/2015 2015 % 2014 %

County Councils € € € € € €

Carlow 183,979 792,726 0 976,705 888,014 88,691 91% 82%

Cavan 221,892 383,803 15,118 590,577 431,090 159,487 73% 67%

Clare 689,730 945,450 -31 1,635,211 944,305 690,906 58% 61%

Cork 4,966,172 4,905,756 1,807 9,870,121 5,303,095 4,567,026 54% 53%

Donegal 1,158,373 2,023,315 36,370 3,145,318 1,993,467 1,151,851 63% 63%

Dun Laoghaire Rathdown 867,341 1,238,552 0 2,105,893 1,310,693 795,200 62% 57%

Fingal 405,225 15,887,021 0 16,292,246 15,945,286 346,960 98% 98%

Galway 737,176 2,164,429 10 2,901,595 2,209,124 692,471 76% 75%

Kerry 251,168 1,203,677 949 1,453,896 1,167,532 286,364 80% 83%

Kildare 4,123,003 3,368,442 0 7,491,445 3,240,243 4,251,202 43% 42%

Kilkenny 714,417 2,430,943 -395 3,145,755 2,579,542 566,213 82% 77%

Laois 1,985,104 3,434,828 650 5,419,282 3,473,389 1,945,893 64% 62%

Leitrim 121,022 179,816 21,769 279,069 181,651 97,418 65% 60%

Limerick 549,750 1,648,386 15,402 2,182,734 1,704,680 478,054 78% 77%

Longford 742,397 889,717 26,802 1,605,312 890,662 714,650 55% 56%

Louth 442,579 961,950 -1,586 1,406,115 969,561 436,554 69% 66%

Mayo 1,735,654 3,144,664 51,137 4,829,181 3,271,818 1,557,363 68% 65%

Meath 663,795 1,234,980 25,313 1,873,462 1,236,339 637,123 66% 63%

Monaghan 209,301 853,959 0 1,063,260 849,299 213,961 80% 80%

Offaly 350,905 528,846 20 879,731 538,013 341,718 61% 62%

Roscommon 201,442 201,677 2,205 400,914 301,900 99,014 75% 53%

Sligo 1,139,348 1,033,333 9,808 2,162,873 1,184,312 978,561 55% 46%

South Dublin 533,551 4,667,357 0 5,200,908 4,700,012 500,896 90% 90%

Tipperary 522,955 1,574,141 2,433 2,094,663 1,604,796 489,867 77% 76%

Waterford 2,391,486 3,013,542 448,802 4,956,226 2,759,487 2,196,739 56% 53%

Westmeath 1,069,356 1,241,114 0 2,310,470 1,694,452 616,018 73% 62%

Wexford 1,192,048 3,653,443 15 4,845,476 3,894,691 950,785 80% 75%

Wicklow 512,365 1,295,558 18 1,807,905 1,371,153 436,752 76% 73%

57

APPENDICES 1-15





2015 % 2014 %

City Councils € € € € € €

Cork City 959,007 2,963,090 0 3,922,097 2,796,525 1,125,572 71% 74%

Dublin City 15,135,112 22,063,055 0 37,198,167 22,071,377 15,126,790 59% 58%

Galway City 335,900 1,382,571 0 1,718,471 1,324,360 394,111 77% 81%

Totals 45,111,553 91,310,141 656,616 135,765,078 92,830,868 42,934,210 68% 67%

58

APPENDICES 1-15

Appendix 14 - AFS Publication Dates

0

2

4

6

8

10

12

14

16

18

February March April May June

Number of AFS certified each month in 2016

59

APPENDICES 1-15

Appendix 15 - The Local Government Audit Service

Role

The LGAS provides independent scrutiny of the financial stewardship of local authorities. Its role is

to:

Carry out audits of local authorities and other bodies in accordance with its Code of Audit

Practice, thereby fostering the highest standards of financial stewardship, governance and

public accountability;

Promote the achievement of value for money in local authorities by undertaking Value for

Money (VFM) studies and publishing reports thereon.

The Minister for Housing, Planning, Community and Local Government appoints auditors, known

as local government auditors, to carry out or assist in the carrying out of audits of local and other

bodies. The LGAS audits the accounts of local authorities, including regional authorities, motor

taxation offices and other bodies.

The Director of Audit is the organisational head of the service. This post is a statutory position

and the main functions, as prescribed in section 116 of the Local Government Act, 2001 are to:

Each local government auditor is assigned an audit district under warrant of authority from the

Director of Audit. Local government auditors are independent of the Department when

discharging their professional functions. This independence is protected in legislation in

accordance with section 116(2) of the Local Government Act, 2001.

(a)

(b)

(c)

(d)

Organise, direct and allocate resources within the LGAS;

Assign audits of local authorities and other bodies to Local Government Auditors;

Provide such advice and assistance as the Minister may, from time to time, require for the purposes of maintaining a Code of Audit Practice;

Direct the Local Government Value for Money Unit established by section 14 of the Local Government (Financial Provisions) Act, 1997, and to ensure that the work of the unit is incorporated into local government audit practice.

60

APPENDICES 1-15

Audit districts comprise a number of audits grouped, as far as possible, in convenient geographical

areas, and these districts are further grouped into four regions, Western, Southern and two

Eastern. Principal auditors lead in the regional organisation and supervision of audits. In addition

they have direct responsibility for the major audits in their region. One principal auditor has

responsibility for managing the Value for Money Unit.

Staff Resources

The following are the current staff numbers in the LGAS.

All audit staff are professionally qualified accountants and have for many years been recruited

externally, having worked in industry, professional accounting practices and public sector bodies.

This mix of skills enhances the organisation.

Local Government Audit Framework

The statutory audit of local government is provided for in sections 114 to 126 of the Local

Government Act, 2001, as amended by the Local Government Reform Act 2014. The revised Code

of Audit Practice was approved in December 2014 by the Minister for Housing, Planning,

Community and Local Government, and covers:

Framework for Local Government Audit

Professional Audit Service

Financial and Performance Audit

Local Government Audit Reporting.

Staff Grades Current No.

Director of Audit 1

Principal Local Government

Auditors

6

Local Government Auditors 17

Assistant Auditors 10

Executive Officer 1

Total 35

61

APPENDICES 1-15

The LGAS is committed to the on-going improvement of its financial audit procedures. This

involved the development of audit guidance on many aspects of the audit process and the

implementation of an electronic working papers system (TeamMate). Some of the features of the

TeamMate software as implemented by the LGAS are:

Standard format of audit files

Standard audit tests

Improved tracking of matters arising at audit

Guidance notes for audit staff

Audit file and data encryption

Centralised retention of audit files.

This system has been fully implemented in the LGAS, with auditors now using this software on all

audits. It is intended to further develop and improve the standard audit approach, including the

use of TeamMate, on an on-going basis. All electronic audit working papers on the TeamMate

system are automatically encrypted. In order to mitigate the risk of the loss of sensitive client

data, all audit data is held on a centralised database.

Audit Work Programme

The financial statements of local authorities are prepared to 31 December each year. All 31 local

authority audits for 2015 were completed in 2016.

Documents

Overview of the work of the Local Government Audit Service ... · SECTION 1: ROLE OF THE LOCAL GOVERNMENT AUDIT SERVICE Audit Opinion It is the local government auditors main statutory