Diversity

22
Interview
The search for value
Amid cost overruns and everincreasing
bills for projects such as
the National Children’s Hospital –
now estimated to cost €1 billion, up
substantially from the original budget
of €650 million – looking for value for
money in the public sector should be
more important than ever.
“It’s inevitable if you reduce the
cost of inputs, you improve efficiency,”
he says. However, McCarthy believes
that “there could be more evidence
from public bodies of what value they
are achieving,” he says. “It’s about
measuring performance, being aware
of what resources are going into an
area and having a discussion about
that.”
While he agrees that focusing
on value for money can be time
consuming at first, “once you set it
up, it should run along itself”, he says.
“There needs to be a public debate
– what do we mean by value? – and
we need to understand as well that
things have a cost,” he says. “If you
don’t keep a focus on getting value,
getting return, inevitably things drift.”
It is also about having a good
business case for making certain
decisions. “You can’t keep asking for
services without realising there’s
a choice to be made – there needs
to be a strong focus on economic
analysis on business choices in the
public sector. It happens, but not as
much as it could,” he says, wearing his
economist’s hat.
The Comptroller and Auditor
General is known for keeping tabs
on the public sector; its annual
accounts of the public service give a
breakdown of overruns in spending
by department and this is just one of
its functions. But is it ever frustrating
for the office to pinpoint spending
concerns, make recommendations –
and then for nothing to happen?
McCarthy agrees that it can be
“unsatisfactory”. “I’d certainly prefer
to see action being taken,” he says. “In
general, there is a very good uptake
in terms of the recommendations we
make and we try to be practical.
“Ultimately, it’s for managers to
manage bodies themselves and they
need to be accountable.”
Whistle-blowing
Ireland has a curious relationship
with whistle-blowers, as evidenced
by the treatment of Sergeant Maurice
McCabe in the penalty points
scandal, which came into the public
domain in 2012. The Comptroller and
Auditor General decided to examine
the matter, reporting in 2013 and
supporting the claims of McCabe
about the abuse of the penalty
points system. The case itself is
not something McCarthy wishes to
discuss, but he notes that it is the
type of case that can be looked into
by the office. “We don’t investigate
individuals,” he says, adding that
the job of the office is to identify
weaknesses in controls and processes
in the public sector. “That’s where we
test,” he says.
The office takes whistle-blowing
seriously and has a guide on its
website that outlines its approach to
handling such disclosures.
McCarthy notes that the office goes
through periods where there might
be one or two disclosures a week,
including about eight to 10 whistleblower
cases in a year.
Life in the public eye
Unlike some other senior public
sector roles where a secretary
general, for example, can live a life
of quiet influence away from the
public eye, the role of the Comptroller
and Auditor General is very much
out there. This could exert a toll,
but McCarthy is quick to sidestep
the question of whether the job is
stressful. “Life is stressful,” he laughs.
Indeed, McCarthy and the office
appear unafraid of putting their
heads above the parapet. Last year,
the office published a report into the
controversial sale of NAMA’s Northern
Irish loan book, known as Project
Eagle, concluding that the decision
to sell the loans at a minimum price
of £1.3 billion involved a significant
probable loss of value to the taxpayer
of up to £190 million in NPV terms.
The decision led to “disagreements”
between the two arms of the State, as
McCarthy himself conceded before an
Oireachtas committee last year. But,
he said at the time, he believed it was
his “duty” to publish the report.
This sense of duty is something
McCarthy takes seriously. “It’s
something we take very seriously.
You can’t keep asking for services without
realising there’s a choice to be made – there needs
to be a strong focus on economic analysis on
business choices in the public sector. It happens, but
not as much as it could.
We’re conscious of the potential for
damage to reputations; we have no
interest in getting anything wrong,
we want to get it right,” he says. “We
have to fulfil our role and deliver our
findings where it’s appropriate”.
Independence is a key element of
the office, and one to which McCarthy
apportions high value. “Independence
is absolutely critical to the function. It
very rarely arises that anyone would
try to unduly influence us,” he says.
It also means that the office doesn’t
have to unduly influence in turn any
of the entities it audits. Not having
“to chase the business” gives the
Comptroller and Auditor General a
strength in its independence. There’s
no pressure to say or do the right thing
to retain the business. “The difference
between my organisation and
private sector auditors is that we’re
appointed by statute – not as a result
of a decision made at a shareholders’
meeting,” he says.
FIONA REDDAN
Fiona Reddan writes for The Irish Times
and is the author of Ireland’s IFSC: A Story
of Global Financial Success.
ACCOUNTANCY IRELAND
APRIL 2017