State's spending watchdog forced to hike budget for NAMA audit
The sheer size of NAMA and the resources needed to audit the loan agency has placed a strain on the State's spending watchdog, it has emerged.
The Comptroller & Auditor General (C&AG) was asked last year by the Government to add NAMA and the Dublin Docklands Development Authority to its remit, but had to seek an additional budget allocation to cope with the demands of auditing NAMA.
The office, headed by John Buckley, made an application to the Department of Finance for separate resources after its existing budget couldn't absorb the costs of NAMA. The increased budget line was not disclosed.
NAMA, set up in December 2009, has paid €30.5bn for property loans from across the banking sector, making it the largest single owner of property in the State.
The agency will operate like all state bodies and have its annual accounts and financial statements audited by the C&AG, which has so far brought out one report on the agency, released last November.
In an update given to the Government on its own targets, the C&AG refers to an increase in its workload as the number of state agencies rises.
"In the past decade, there was a significant net increase in the number of audits assigned to the office, as the number of state agencies in existence increased,'' says its corporate report, passed to Government in recent days.
"The office has, as far as possible, sought to absorb the increased financial audit demands through generating operating efficiencies,'' it states.
In relation to NAMA, it states: "An initial assessment was made of the resources required to conduct the associated audit and reporting work, and agreement was reached with the Department of Finance on an appropriate resource allocation, in the context of setting a budget for the office for 2010 and 2011."
"The reduction in resources in 2010 over 2009 is attributable to a significant degree to the loss of 14 senior staff in late 2009 and early 2010, mainly under the incentivised early retirement scheme. Only some of these staff were replaced,'' it pointed out.
"The environment in which the office conducts its work continues to be subject to rapid change. The office has managed to absorb the extra work generated by the addition of the DDDA and NAMA without an increase in staffing.
"The office continues to keep these matters under review."
In its first report on NAMA last November, the watchdog said NAMA faced major risks because of "adverse movements in exchange rates'' and also interest-rate pressures.
The office is keeping both of these areas under review. NAMA has purchased derivatives to protect it against losses on currencies or interest rates.