Official Report: Minutes of Evidence

The Chairperson (Mr McCrossan): I welcome back to the Committee Mr Rodney Allen, chief operating officer of the NIAO, and Mr Brian O'Neill, director of the NIAO. You are most welcome, and thank you for being with us. The session is being reported by Hansard, and the transcript will be published on the Committee's web page. Do you have any opening remarks, or are you content that we move straight to questions?

Mr Rodney Allen (Northern Ireland Audit Office): I have a very short brief. I appreciate that the session is a Q&A, but this will take about one minute, if that is OK. It will set the scene.

The Chairperson (Mr McCrossan): Yes. Thank you.

Mr Allen: Thank you for the invitation to come back today. I will keep my remarks brief. They follow on from what we said when we were here on 3 November. For our 2022-23 revenue budget needs, we are asking the Committee to consider a non-ring-fenced expenditure increase of £175,000, which equates to 2·1%; a further £45,000 in employer superannuation costs for the new C&AG; and an additional £100,000 for depreciation relating to the newly refurbished building. For the two subsequent years, we are requesting increases of £165,000 and £475,000 in order to sustain the resource capacity in the office. We have talked to you before about the fact that almost 70% of our budget is spent on staff costs and the strategy of growing the staff base up to 125 full-time equivalent members of staff as the optimum number to support us in the delivery of our key strategic objectives as part of the corporate plan, which the Committee saw earlier in the year.

There are a couple of caveats to that, which I mentioned previously. We have an ongoing procurement exercise for some of our contracted audits, and we are in the midst of doing that as we speak. We also have a potential impairment in the value of the new building, which would require non-cash budget cover. We are looking at that with Land and Property Services, and we propose to revisit both those matters at Main Estimates stage.

On the capital side, the refurbishment is still on track, on time and on budget. The amount of capital requested in 2022-23 will ensure that we complete within budget in and around the end of the financial year, allowing for uncertainties on the timing of the expenditure associated with the project.

In summary, we are seeking the Committee's approval of our budget in order to ensure that we can continue to invest in the delivery of a strong and independent public audit function that will provide effective support and assurance to the Assembly in its scrutiny of the wider public-sector performance. That was little more than a minute, Chair, hopefully.

The Chairperson (Mr McCrossan): Thank you very much, Rodney. You have been very good.

I will ask a few questions, and then William may want to come in. There are only two members present today, so it will be a brief session. At the last meeting, you told the Committee that the spend on contracting out audits was greater than 14%. Can you confirm the actual percentage?

Mr Allen: I think that I told the Committee that it was probably about 16% or 17%. I did not check that in the subsequent period, so I will come back in writing to the Clerk with the precise number.

Mr Brian O'Neill (Northern Ireland Audit Office): We currently contract out about 57 audits across four private-sector organisations. That is the current situation.

The Chairperson (Mr McCrossan): That is OK. Mr Allen, I would appreciate it if you could clarify that in writing swiftly this week. It would be most helpful.

Mr Allen: That is not a problem, Chairman.

The Chairperson (Mr McCrossan): The Committee will write formally on that, and you have given a fair idea, which is helpful, but, for accuracy, it is important.

William, would you like to come in?

Mr Irwin: You mentioned a £175,000 non-ring-fenced expenditure increase. Non-ring-fenced means that it could be used for any situation, yes?

The Senior Assistant Assembly Clerk: Mr Irwin, Mr Allen is having problems making you out. Will you repeat your question?

Mr Allen: Would you mind please, William? Sorry.

Mr Irwin: Sorry about that. Can you hear me now?

Mr Allen: It is a wee bit distorted.

The Senior Assistant Assembly Clerk: Chair, if I may, I will relay Mr Irwin's question. Mr Irwin asked whether the £175,000 of non-ring-fenced expenditure can be spent on anything.

Mr Allen: No. That is solely for the depreciation of the building. The ring-fenced amount of £175,000 is solely for depreciation.

Mr Irwin: OK. That is grand.

The Chairperson (Mr McCrossan): Are you content, William?

Mr Irwin: Yes.

The Chairperson (Mr McCrossan): Rodney, can you give members an idea about the extent to which efficiencies can be delivered to offset the pressures that you face in the budget period?

Mr Allen: That is challenging, Chairman. We have factored efficiencies into the numbers that we brought to you. For instance, in the current year and, indeed, next year, we are auditing quite a bit of extra expenditure associated with COVID. We have not sought any additional cover to do that. We have built efficiencies into our audit process. That is the main one that I would point to when it comes to trying to come to you with a best and reasonable figure, hence the 2·1% increase that we are asking for. There is an efficiency in that. We could have come asking for additional resource, but we consciously took a decision not to.

The Chairperson (Mr McCrossan): William touched on this, but how is the ongoing capital works project at the office sitting at present?

Mr Allen: A bit of a glib answer is: very well. Let me widen that a bit. We are due to finish the project around the middle of July '22. At the moment, the contractors are as far ahead as nearly two months. As soon as I put a time like that out, it comes with suitable caveats, and the contractors are quick to tell me that there can always be uncertainties and issues that develop.

The project is within budget, but it means that we may find a bit more of the expenditure falling into the 2021-22 financial year than we anticipated. At the moment, we still have cover for that, but there is a wee bit of uncertainty about that year-end period at the end of March, which I touched on in my opening comments. In the round, it is very positive, Chairman, and, indeed, there are very few early warnings or what are known as compensating events under an NEC3 contract. Long may that continue.

The Chairperson (Mr McCrossan): OK, that is helpful. Thank you. I have no further questions. I am content. William, are you content?

Mr Irwin: Yes.

The Chairperson (Mr McCrossan): I thank you both for being with us. Is there anything further that you wish to raise with us?

Mr Allen: No. I will get that percentage through to the Clerk promptly.

The Chairperson (Mr McCrossan): That is very helpful. Thank you both for your attendance today.

Mr Allen: Thank you.

Mr O'Neill: Thank you, Chair.