Examination of witnesses (Questions 160
- 179)
WEDNESDAY 1 APRIL 1998
MR J MORTIMER,
Treasury Officer of Accounts, further examined.
160. Mr Dixon retired as external trade
director in November 1996 and Mr Peffers retired as corporate
services director in April 1997.
(Mr Trevelyan) Those were both senior colleagues
of mine who reached their retirement age.
161. They did not resign because of anything
they detected or perceived was going wrong within your organisation.
(Mr Trevelyan) No. Neither was working in the
financial area. One was the corporate service director and one
was our external trade director.
162. In the penultimate paragraph of your
report on those accounts you say that in your report last year,
this is you reporting to Parliament in your accounts, you expressed
the view that the agency was well equipped to meet the demands
placed upon it. Events last year have shown that your optimism
was not misplaced and you are confident that you will continue
to rise to the challenges of the coming months. Are you still
confident in the answers you gave to Mr Wardle and you will not
be considering your position as a result of today's hearing?
(Mr Trevelyan) My judgement is that as accounting
officer I have to take responsibility for the operations of the
agency and we are an agency who lives on the need to deliver services
to the agriculture industry.
163. You submitted these accounts to Parliament.
Were you aware when you submitted them that there were any shortcomings
in them?
(Mr Trevelyan) These accounts?
164. The 1996-97 accounts. When you submitted
them to Parliament in November 1997 were you aware that there
were any shortcomings?
(Mr Trevelyan) Yes. I referred to my letter of
representation.
165. What shortcomings were you aware of?
(Mr Trevelyan) All three areas which have been
identified in this report on which there was no disagreement and
there was no attempt at concealment on our part.
166. There was a letter of representation
submitted with these accounts.
(Mr Trevelyan) Yes.
167. Why were notes not put in the accounts
themselves? May I particularly ask you why, in the column on keeping
within Vote and running cash limits all preceding four years had
the word "met" and in this year there was "no comment"?
You must have known therefore when you submitted these accounts
that you had not kept within the Vote and cash and running cost
limits. Why was there no note in the accounts to that effect?
(Mr Jenkins) May I clarify a point? I believe
the target you are referring to is in fact whether or not we exceed
the Appropriation Account Vote total, which was not exceeded in
any of these years.
168. How do you know it was not exceeded
if you could not reconcile these sums of money, particularly in
the suspense account and other sums of money which have already
been referred to in the C&AG's report? Either these accounts
balanced or they did not balance. Either they were correct or
they were not correct. When you submitted them did you or did
you not know that they were correct?
(Mr Trevelyan) I may be going outside my area
of expertise but the C&AG has reported to Parliament and to
the public in general through his press notice that receipts and
expenditure in the year in question were as intended by Parliament.
The question of whether we had an overspend or an underspend was
entirely visible to us and we did not require an excess Vote from
Parliament in relation to planned expenditure, as varied of course
by various supplementary estimates. In the year in question there
were major supplementary estimates.
169. You have not answered the question.
Either the accounts balanced or they did not balance. Did you
know that they did or did not balance when you submitted them?
(Mr Trevelyan) I had no reason——
170. Mr Treveleyan, you are in a committee
of the House of Commons. Did you or did you not know whether these
accounts balanced or not?
(Mr Trevelyan) That question is beyond my technical
competence.
171. You signed these accounts as Accounting
Officer so how can it be beyond your technical competence?
(Mr Trevelyan) I am not a technical accountant.
I drew the attention of the certifying officer, the C&AG,
to the difficulties we had in reconciling the three areas which
he subsequently identified in his report. That does not mean to
say I was running an excess Vote on those accounts. Therefore
I am not quite sure of the purport of your question. Let me see
whether either of my colleagues can give a clearer answer.
(Mr Bryant) I suspect the £23 million is
the issue you are still referring to. The items were, if I can
be clear, unmatched. It was not that they should not have been
in the account. We were able to demonstrate that all cash coming
into the Paymaster was properly included in the system and all
receipts we have recovered are properly in the system. The difficulty
we had was that at the time the audit took place in a particular
control account we were unable to determine to the satisfaction
of the National Audit Office that the debits on one side and the
credits on the other were exactly the same ones because of the
way in which expenditure was grouped or not grouped. We had reconciled
our accounts for the purposes of the European Commission and it
is involved in the same expenditure. As of October there were
no unmatched items in this particular account so we had no difficulty
in believing that the expenditure was inaccurate.
172. Mr Bryant, you are the Chief Accountant.
(Mr Bryant) Yes, I am.
173. When you submitted these accounts to
Parliament did you know that they did not balance?
(Mr Bryant) It has not been proved that they have
not balanced. I am sorry but I am not sure when you say "they
did not balance". There is a suspense account to which we
drew attention; we have two suspense accounts where we say to
the National Audit Office that there are some difficulties with
this. We have items which are unmatched. We do that in the account
and the account was presented on that basis.
174. You are a qualified accountant. You
told us earlier that you are a Fellow of the Chartered Institute
of Management Accountants, are you not?
(Mr Bryant) I am.
175. How can you advise your Chief Executive
to sign an account with the answer you have just given me? You
are a professional. How could you possibly advise your Chief Executive
to sign these accounts without a proper note to that effect in
the accounts?
(Mr Bryant) The way in which this issue is dealt
with is in the letter of representation to the Comptroller and
Auditor General and we dealt with it in that way.
176. As a professional? As a professional,
do you think that is the correct way to proceed?
(Mr Bryant) It is the way I am required to proceed.
177. Without putting a note in the account
and you have given me the answer you have given me.
(Mr Bryant) The requirement on me is to draw to
the attention of the Comptroller and Auditor General any areas
where I feel the account may not be appropriate and we did that.
178. Others will judge that action. Did
you when you submitted these accounts know about the £19
million which was not yet recovered by that time from the European
Commission?
(Mr Bryant) Are we talking about the draft account?
179. I am talking about these draft accounts
which you submitted to Parliament in November 1997 and I am talking
about the £19 million as identified in paragraph 14 of the
C&AG's report.
(Mr Bryant) Could we please clarify something?
I believe the draft accounts you are looking at are the draft
agency accounts which are accounts to Companies Act which are
accruals accounts. To that extent that there was an amount owing
from the Commission it would be in the debtors' ledger as an amount
owing to us. Where the £19 million is concerned is in the
cash account and we had failed to collect it within the timescale
and therefore it fell in the subsequent financial year. We are
talking about two accounts here.
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