Wednesday 24 January 2018

Deloitte wanted €166,000 for report on 'whitewash' error

Gordon Deegan

ACCOUNTANCY firm Deloitte tried to charge the Government €166,000 for a report that has been dismissed as a "waste of money" and "barely readable" by senior politicians.

The accountancy firm demanded the six-figure sum for a 37-page report into an accounting error at the Department of Finance. It was the error that notoriously caused the national debt being over-counted by €3.6bn in 2010.

The state eventually agreed to pay Deloitte €61,500, or €1,662 a page, for the report. Deloitte's initial invoice for the job had worked out at almost €5,000 a page. That's despite the fact that the report was based on the findings of an internal Department of Finance investigation, rather than on fresh research.

The Department of Finance ultimately negotiated down the bill, but news of the initial charge is sure to reignite anger over the issue.

The densely worded Deloitte report was described as "barely readable" by members of the Dail's all-party Public Accounts Committee (PAC) which has been investigating the original accountancy error.

The chairman of the PAC, John McGuinness TD, called the Deloitte report "an appaling waste of taxpayers' money", even at less than half the initial price.

Mr McGuinness said the Deloitte report and the internal Department of Finance findings together amounted to a "whitewash".

They failed to lay any blame at the door of senior officials, including the then head of the Department of Finance, Kevin Cardiff, who has since gone on to a €276,000-a-year EU job in Brussels, he said.

Finance Minister Michael Noonan confirmed that Deloitte initially sought €166,111 for the report in a written Dail response to a question from Sinn Fein's Mary Lou McDonald, a member of the PAC.

"Deloitte submitted an initial estimate for the work at a fee of €135,050, excluding expenses and VAT which was subsequently reduced through negotiations to €50,000, excluding expenses and VAT," the Minister said. With VAT and other expenses the final bill is €61,552.

The Minister also confirmed that there was no public tender process before the work was awarded. Instead a small number of firms were invited to bid to take on the job, with Deloitte the only firm to respond.

Failures

Mr Noonan said the decision not to launch a public tender was made "given the urgency of this investigation, combined with the specialised nature of the matters to be covered by the review".

It's not the first time Deloitte's had hit the headlines as to fees for state work. In its work for NAMA, Deloitte has received fees of €4.8m since the agency was established.

Minister Noonan said: "I am informed that because the engagement with Deloitte was not a 'time and rates' contract, but rather a fixed fee arrangement irrespective of how long the work took to complete, the question of an hourly rate does not arise."

The final cost of the work was €61,552, and the invoice for this work is currently in the process of being paid by the Department, according to the minister.

The Deloitte report and the internal report by the Department of Finance found the €3.6bn error was missed because of duplication of effort between Finance and the Central Statistics Office, failures in communications and reporting, and a lack of resources that left the compiling and checking of key statistical work to one overstretched individual.

Deloitte declined to comment yesterday.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business