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The Comptroller and Auditor General's Annual Report 2004
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13  October  2005
Dáil Question
No: 164 & 141
To ask the Minister for Transport the action he has taken to improve monitoring arrangements in his Department in view of the Comptroller and Auditor General's report on the loss of €2 million to NTR: and the way in which his Department failed to identify the accounting error.
- Eamon Gilmore. (Nominated by: Róisín Shortall).
Ref No:   29081/05
To ask the Minister for Transport if he has satisfied himself that the underpayment by National Toll Roads to his Department, as highlighted in the recent Comptroller and Auditor General's Annual Report 2004, will not be repeated; the reforms that have been put in place to prevent such a reoccurrence; and if he will make a statement on the matter.
- John Perry. (Nominated by: Olivia Mitchell).
Identical Question(s): with 61
Ref No:   28837/05
Answered by the Minister for Transport
(Martin Cullen)
I propose taking PQ28837 and PQ29081/05 together.
In the context of a review of the West-Link Bridge Agreement, the Comptroller and Auditor General's Office discovered an underpayment in the licence fee due to the State under the West-Link Bridge Agreement in respect of the years 2002 and 2003.
The background to the underpayment is that under the West-Link Bridge Agreement a Licence Fee (also referred to as the State's share of the Gross Toll Revenue) is payable to the Exchequer.  For the years 2002 and 2003, and in the context of the introduction of VAT on tolls, a credit was negotiated as part of the Agreement relating to the Second West- Link Bridge, whereby NTR would be repaid the cost of not increasing toll levels through a reduction in the Licence Fee payable. This credit should have been added to the Gross Toll Revenue (GTR) before calculating the Licence Fee in accordance with the definition of GTR included in the 2001 Supplemental Agreement. This was not done by NTR and was not picked up by NTR's auditors (KPMG), the National Roads Authority (NRA) or the Department. The checking arrangements in place in the Department had not been adjusted to take account of this definition of GTR included in the 2001 Supplemental Agreement.  The effect of not including the credit as part of the GTR was to understate the amount payable to the State.
As soon as the underpayment was discovered in July 2005, the matter was immediately taken up with NTR (through the NRA as party to the West-Link agreement). NTR reviewed the calculation of the Licence Fee payment in respect of 2002 and 2003 and accepted that an underpayment occurred which was calculated as €1,863,236. NTR paid this amount to my Department in July together with interest penalties in respect of the late payment amounting to €73,314 i.e. a total payment of €1,936,550.
I should point out that the error which occurred was related to the special arrangement put in place for a limited period, of two years and which is unlikely to recur.  Nevertheless the procedures for checking and validating the Licence Fee in NTR, the NRA and within my Department should have prevented the occurrence of the underpayment. A thorough review of those procedures is being finalised.
The objective of the review is to ensure that the correct Licence Fee is received by the State in all circumstances.