Thursday, February 20, 2020

“Some 51 Council housing loans are now in arrears of over €20,000 each.”

A SPECIAL meeting to discuss the Local Government Service’s Statutory Audit Report of Waterford City & County Council’s 2018 Annual Financial Statement is to be held on Tuesday next (February 25) following concerns raised by Councillors.

The suggestion was made at last Thursday’s Plenary Meeting by Cllr Declan Clune (SF) and supported by Cllr Damien Geoghegan (FG) given the findings of the 2018 audit, which were issued to members ahead of the meeting.

“According to the Management Report, the total net arrears at the end of January were €13.1 million and the arrears (that are) more than 12 months (old) come in at €9.4 million,” said Cllr Clune.

As stated by Local Government Auditor James Moran in his reported dated October 29: “The Council’s income collection performance remains to be improved. Arrears on the main collection accounts recorded a small reduction to close at €13.2m. However, income collection across the broad range of Council services, including the main collections, was poor. Improving income collection requires central debt management to ensure the completeness of the collections, direct staff actions and the timely raising of bills and effectively managing accounting adjustments and other administrative entries.”

In reply, Council Chief Executive Michael Walsh wrote: “It is acknowledged that collection rates need to be improved. However, historical arrears that have accumulated over time impact the collection performance reported.”

Council ‘reorganising collection systems’

The Council is currently reorganising its collection systems, according to a spokesperson. “There are issues with income collection at national level that are reflected in the 2019 Rates and Other Matters Act which proposes fundamental change in the legislative basis for rates collection. This Council as a matter of policy does not write off arrears readily, as it is viable to collect some income even from distressed accounts. As a consequence historical arrears present as greater relative to other authorities. It would equally be true that historical arrears are reflective of the scale of the economic recession post-2008 and relatively slow recovery in the interim.”

Commenting on some of the audit’s principal findings, Cllr Clune said: “This seems very similar to previous Auditor’s Reports that we have received over the last couple of years so I’d basically like to know what steps have been put in place to turn this around? Have we KPIs (Key Performance Indicators), what are they, will they be made available to the members and what additional resources internally in the Council have also been put in place to try and turn this around because this is all money that’s accrued. It’s not additional money that’s owed to the Council but it just means that the more money we recover, the less bad debts we will have. So bearing in mind the current financial situation of the Council with Irish Water, rates, etc, it is a concern I have and I just want to see exactly and precisely what steps have been taken to reverse the trend that’s been clearly there for the last couple of years.”

James Moran’s report noted that there was a slight increase in the rents collection yield for 2018, coming in at 78 per cent, adding: “the collection performance remains poor compared with other local authorities which average 88 per cent. Overall rent arrears increased by €145,000 to close at €3.7 million (net)…year-end record reported forty-eight (48) customer accounts with arrears in excess of €10k to a value of €693k.”

According to the Council spokesperson: “The majority of arrears are concentrated on a number of accounts and reflect the capacity of some of our tenants to meet their rent obligations.  Similar collection rates are to be seen in Dublin and Galway Cities. This Council is now focusing on rent accounts that are in significant arrears through court actions and withdrawal of housing services.”

At the close of 2018, there were 51 Council housing loan customer accounts in excess of €20,000, amounting to total arrears of €1.78m. The Council spokesperson told this newspaper: “In respect of housing loans there are processes in place to restructure accounts to mortgage to rent or other repayment plans in accordance with national policy.”

Debtors and doubtful debts

Regarding debtors and provisions for doubtful debts, James Moran writes: “As highlighted at previous audits the Council continued to use specific provisions, mainly within the main income collections accounts for pending write offs. This effectively nets down the total debtor balance, without assigning the credit to relevant customer accounts. These provisions cumulatively increased to €2.8m at year end. I have previously requested that this practice cease as it impacts on the reported collection performance yields of the main collection accounts.”

The Council spokesperson confirmed that such a practice “will be phased out over the next couple of years.”

Supporting Cllr Clune’s call for a specific audit meeting to be held in a public forum on February 25, Cllr Damien Geoghegan stated: “The audit is too important a document just to take it here as a single item on the agenda and I think it’s important that we would have a standalone meeting to go through the various different issues that have been raised there. There’s quite a number of issues there that need to be teased out and we need more substantial replies too.”

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