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
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