Seamus McCarthy, the Comptroller and Auditor General, is no stranger to the media. He recently spoke to Accountancy Ireland about his key objectives, whistle-blowing, and life in the public eye.
He is the State’s financial watchdog, auditing and reporting on the use of public funds and ascertaining whether the State is getting value for money from its public sector. “It’s an aid to the parliamentary accountability process and is the most visible aspect of it,” Comptroller and Auditor General, Seamus McCarthy, says of his office.
It is also about ensuring value for money for the people who fund public services – the taxpayers. “It does serve a public good; everybody in society has to deal with the State. Nobody is neutral on the public sector, so they’re entitled to know what’s happening and what they’re paying for,” he says. “There needs to be that constant accountability to taxpayers and to citizens.”
The Comptroller and Auditor General’s office provides this feedback by reporting on and auditing public sector bodies, and there is a considerable number of these – some 300 entities in total – ranging from the Social Insurance Fund at one level to the National Asset Management Agency and third-level institutions including the University of Limerick and Trinity College Dublin at another.
It is a heavy workload, one which the office’s 135-strong workforce is hoping to make easier through the recruitment of additional employees. “It should be up to 160,” McCarthy says of the office’s workforce, adding that it currently has several vacancies for which it is recruiting.
Recruitment, however, isn’t necessarily the problem. “It’s retention,” McCarthy says. Indeed, just in the line of sight of the organisation’s swish new offices on Upper Mayor Street is Big 4 firm, PwC. It is a hazard of the public sector that, lured by higher salaries and job opportunities elsewhere, some recruits don’t hang around for long. “There are more opportunities as the economy has recovered,” McCarthy agrees, but he doesn’t downplay the opportunities that lie within the office too. “One thing that does strike me is that when people join us, they find out how interesting the work is and how real it is, and how it has a material impact on people’s lives,” he says.
A career public servant himself, McCarthy has never been lured by the bright lights of the private sector. An economist by training, he joined the Department of Finance in 1981, where he worked until 1994 carrying out economic and demographic analysis and policy and programme evaluation work. From there, he moved to the office of the Comptroller and Auditor General where he served as deputy director, and then director of audit, before assuming the top job in May 2012.
Key objectives
Already au fait with the workings of the office when he assumed the top job, McCarthy has been keen to continue the process of development. “I would have been reasonably aware of what the job was, so there were no particular surprises,” he says. But he also has some specific goals in mind.
Bringing forward the timeliness of financial reporting is one of these. While McCarthy concedes that public sector financial reporting is “not as fast as the stock exchange might require”, it has improved somewhat, as shown in a report from his office.
And he has ambitions for the scope of the work the office can do. “I’d like to expand it. We can do more work; we haven’t been doing as much reporting work as we’d like”.
But what does he have in mind? One area McCarthy thinks the office should look at is broadening the ‘follow the money’ principle. “There are particular constraints about carrying out inspection work. We are limited to certain bodies, but the principle applied in other jurisdictions is following the money to the point it is used,” he says.
The office has also focused on improving the accountability of public bodies. It is not just auditing that the office focuses on; it also tries to work on other areas. For example, a 2014 report on the operation of audit committees included a self-assessment checklist which the committees could use themselves. The office also prepared a similar guide on severance payments, with an emphasis on managing the payments. “That sort of output is valuable,” says McCarthy.
The search for value
Amid cost overruns and ever-increasing 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 whistle-blower 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. 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.