Mr. Martin Lydon, Head of Finance presented the report to the Members and highlighted the following:

·         The revenue account reported a surplus of €11,000 after net transfers of €2.8m with an accumulated surplus of €183,000 at 31.12.17.

·         There was an increase in rates collected of €0.03m but the % year on year decreased from 91% to 83% due to the treatment of doubtful debts. Loans figure is down and many Council loans are very old.

·         Contracts for the appointment of Legal services for debt collection are due to be signed by year end.

·         Development Contribution debtors have reduced by €2.3m to €6.8m at year end.

·         The Council fully owns Roscommon Leisure Centre and provided subvention of €186k in 2017. There is an accumulated loss of loss of €231k at year end.

·         Moylurg Rockingham Ltd. Is 50% owned by the Council and recorded a profit of €204k in 2017 reducing accumulated losses to €445k. The €2m loan will be repaid when the company is profitable.

·         An administrative error was identified by Revenue Audit in November 2017 in the VAT returns and the payment due including interest and penalties have been paid with robust controls now in place.

·         Unfinished Housing estates continue to reduce with bond negotiations. At the end of 2017 the Council holds 98 bonds worth €15.1m and 25 cash bonds worth €958,000.

Mr. Lydon then gave a full report to the members on the VAT underpayment to Revenue:

·         On 6^th November 2017 Revenue informed the Council that a VAT Audit would be commence on 30^th November for the period Financial year 2016 and 1 Jan – 31 Oct 2017.

·         The next correspondence received on 17^th January 2018 from Revenue was replied to by the Council on 23^rd January. In their reply the Council confirmed that there was a system error regarding the payment of VAT for the months of July and August 2017 which led to an underpayment of €331,000. This under payment was paid to Revenue the next day, 24^th January.

·         During the scope of the Audit a total of €31million was audited and a sum of €11,000 was also identified.

·         The underpayment was identified by the Council as a systems error and this was accepted by Revenue. However, as no qualifying disclosure was made from the period 6^th November to €30^th November and the amount of the underpayment was in excess of €35,000 penalties and Interest totalling €114,300 were applied and Roscommon County Council will be named as a tax defaulter in December.  (The penalty was reduced from 40% to 30% due to cooperation received) The total amount of default will be shown as €456,000 of which €342,000 was properly payable at VAT at the time.

·         The payment did not affect front line services due to salary payment differences in staff leaving and being recruited and additional income from unwinding FEMPI legislation.

·         Roscommon County Council takes compliance seriously and apologises for this error and systems and resources have been put in place to ensure this will not happen again.

The Members reacted as follows:

·         Disappointment was expressed that the elected Members are only now being informed of this matter and enquired as to why were the members of the CPG and the  Cathaoirleach were not informed in the period since last January?

·         What is meant by a systems error and how can the members be assured this will not happen again? Is there an Internal Audit Committee and were they aware of this?

·         There is very little information regarding the issue in the Audit Report – can the Chief Executive elaborate on the issue?

·         Concern expressed that Roscommon County Council will listed as a tax defaulter at the end of the year. It is accepted that this error was to no-ones benefit but the matter has been dealt with and we will have to move on.

·         It is frightening that the type of penalty that can be applied for an honest mistake despite paying what was owed as soon as the error was discovered. It is also unfortunate that Revenue did not contact the Council to inform them that the money was not paid earlier and applied appears out of proportion but accepting that Revenue have rules they must implement for everyone. It is unfortunate that one arm of the State is taking money from another.

·         No front line services were affected but can the penalty be further reduced?

·         Cllr. Cummins, as a member of the Audit Committee confirmed that the Roscommon County Council Audit Committee were informed this week about the matter and accepted this was an administrative error. The Audit Committee accepted the bonafides of the explanation that it was an administrative error and expressed their confidence in the Finance section.

·         €2.3m spent in purchase of 26 houses in 2017 – how many will be purchased in 2018?

·         Bonds that have been sold on -  when these bonds were called in, how can they be sold on without notifying the Council and without addressing the outstanding issues? This is serious problem for estates that have to be taken in charge.

·         Unfinished Estates in Ballinagare, Frenchpark and Tulsk – there has to be a deadline put on when these works will be completed.

The Cathaoirleach informed the members that he was also made aware of the VAT issue this morning but it has been dealt with and he expressed confidence in the management of the finances of the Council.

The Chief Executive thanked the Members for their input. The reporting error is a serious issue that should not have happened. Revenue did what they had to do as per their regulations. More resources have been put into the Internal Audit Function to ensure all checks and balances are now in place.  As regards the error, no one person is responsible and it is regrettable that the Elected members have been put into a situation to deal with this matter today. As regards the issue of Bonds, any member that wants further information, please contact the Meetings Administrator and information will be made available at the next meeting.

Martin Lydon stated that in 2018 26 houses are expected be built and 46 acquired totalling 72.

Cllr. Leyden queried the involvement of the committees as regards governance as the CPG and Audit Committees have met many times since January and were not informed of the VAT problem.

The Chief Executive in reply stated that this is an issue about VAT only and the finances are in an excellent situation due to good governance and management not least by the Members. This matter was only closed off with Revenue on 27^th July this year and it would not be acceptable to him as Chief Executive to bring the matter to any elected member or committee until the full facts were available.

In the PROPOSAL of Cllr. Connolly

           SECONDED by Cllr. Fallon

And AGREED that The Elected members of Roscommon County Council have full confidence in the Audit Committee Head of Finance Mr. Martin Lydon, and Chief Executive Mr. Cummins.

The Chief Executive thanked the Members for the resolution.