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Noonan admits to record €3.6bn gaffe in 'rotten' accounts

THE €3.6bn accounting error on the Department of Finance's books has revealed "something rotten" in the system, it was claimed today.

John McGuinness, the chairman of the Public Accounts Committee (PAC), also said "there is very poor accountancy in each and every" Government department.

His comments came as Finance Minister Michael Noonan confirmed officials at his department were notified last year of the error but took no action.

The blunder is the largest accounting mistake ever made by Ireland and it means our government debt is €3.6bn lower than thought.

The National Treasury Management Agency (NTMA) emailed the department and raised the issue in August 2010 but "no action was taken", Mr Noonan said.

There is nothing on the record to show that officials even responded to the message. "It arose last year when the early work on the preparation of the Budget was being carried out by Brian Lenihan and it came up and it wasn't acted on.

"It came up again this year at the same point in the preparation of the budget. I was told about it yesterday and I thought it was something that had to be known publicly," Mr Noonan said.

"This time the officials that got the email acted on it and they realised the discrepancy and they corrected it," he added.







Problem

Mr Noonan said he does not know what "level of consultation" the official who got the original email had in the department.

"I'd be fairly confident Brian Lenihan didn't know about it. The issue for me is not that an individual civil servant makes a mistake, the issue for me is is there a systems problem in that section of the department," he added.

Mr Noonan pointed out the scrutiny of the Comptroller & Auditor General and the PAC did not discover the error either.

"We're now more sustainable because the debt is lower but it makes no difference... to budgetary matters," he said.

Mr McGuinness (FF) is to hold a meeting of the PAC to get to the bottom of the error, he said.

He said there is "something rotten in the system that allows this to happen" and he criticised a "culture" within the Department of Finance to "ignore the committee and ignore outside sources".

He said the PAC has requested details from the department, the NTMA and the Housing Finance Agency (HFA) about "how this happened and why it happened".

The mistake will have no effect on the December's Budget. Ireland's government debt now falls from €148bn to €144.4bn.

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