Post Office Savings Bank Fund

Comptroller and Auditor General Report for presentation to the Houses of the Oireachtas

Post Office Savings Bank Fund

I have audited the financial statements of the Post Office Savings Bank Fund (the Fund) for the year ended 31 December 2013 under the National Treasury Management Agency Act 1990. The financial statements, which have been prepared under the accounting policies set out therein, comprise the accounting policies, the income and expenditure account, the balance sheet and the related notes. The financial statements have been prepared in the form prescribed under section 12 of the Act, and in accordance with generally accepted accounting practice in Ireland.

Responsibilities of the National Treasury Management Agency

The National Treasury Management Agency (the Agency) is responsible for the preparation of the financial statements, for ensuring that they give a true and fair view of the state of the Fund’s affairs and of its income and expenditure, and for ensuring the regularity of transactions.

Responsibilities of the Comptroller and Auditor General

My responsibility is to audit the financial statements and report on them in accordance with applicable law. My audit is conducted by reference to the special considerations which attach to State bodies in relation to their management and operation. My audit is carried out in accordance with the International Standards on Auditing (UK and Ireland) and in compliance with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements, sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of

• whether the accounting policies are appropriate to the Fund’s circumstances, and have been consistently applied and adequately disclosed
• the reasonableness of significant accounting estimates made in the preparation of the financial statements, and
• the overall presentation of the financial statements.

I also seek to obtain evidence about the regularity of financial transactions in the course of audit.

In addition, I read the information about the Fund in the Agency’s annual report to identify any material inconsistencies with the audited financial statements. If I become aware of any apparent material misstatements or inconsistencies, I consider the implications for my report.

Opinion on the financial statements

In my opinion, the financial statements, which have been properly prepared in accordance with generally accepted accounting practice in Ireland, give a true and fair view of the state of the Fund’s affairs at 31 December 2013 and of its income and expenditure for 2013.

In my opinion, proper books of account have been kept by the Agency. The financial statements are in agreement with the books of account.

Matters on which I report by exception

I report by exception if

• I have not received all the information and explanations I required for my audit, or
• my audit noted any material instance where public money has not been applied for the purposes intended or where the transactions did not conform to the authorities governing them, or
• the information about the Fund in the Agency’s annual report is not consistent with the related financial statements, or
• I find there are other material matters relating to the manner in which public business has been conducted./li>

I have nothing to report in regard to those matters upon which reporting is by exception.

 

Seamus McCarthy
Comptroller and Auditor General

30 June 2014

Accounting Policies

(a) Background

The Minister for Finance guarantees the repayment and servicing of moneys invested by depositors in the Post Office Savings Bank. An Post remits the net proceeds of such investment to the National Treasury Management Agency (“the Agency”). The Post Office Savings Bank Fund (“Fund”) does not form part of the Exchequer.

The Fund has the following main purposes:

• to invest the moneys made available by depositors, and
• to act as an intermediary through which the tranching, cancellation, sale and repurchase (repo) transactions and secondary market trading can be transacted by the Agency, and
• to provide moneys under Central Treasury Services to designated state bodies.

(b) Reporting Currency

The reporting currency is the euro, which is denoted by the symbol €.

(c) Basis of Accounting

The financial statements are prepared on an accruals basis under the historical cost convention.

(d) Investments

Investments are stated at cost.

Income and Expenditure Account

Year Ended 31 December

		2013	2012
	Note	€000	€000
Investment Income	1	65,905	122,087
Interest Paid and Payable	2	9,988	39,416
Other Expenses	3	26,303	29,362
		36,291	68,778
Surplus for the Year		29,614	53,309
Balance at 1 January		66,604	13,295
Balance at 31 December		96,218	66,604

Notes 1 to 8 form part of these financial statements.

John C. Corrigan, Chief Executive
National Treasury Management Agency

30 June 2014

Balance Sheet

31 December

		2013	2012
	Note	€000	€000
Assets
Advances	4	484,932	637,434
Investments	5	1,319,896	1,359,760
Debtors	6	44,902	54,460
Central Treasury Loans		37,384	41,117
Cash with Central Bank of Ireland		864,379	751,599
		2,751,493	2,844,370
Liabilities
Post Office Savings Bank Deposits	7	2,650,450	2,773,689
Creditors	8	4,825	4,077
Accumulated Reserves		96,218	66,604
		2,751,493	2,844,370

Notes 1 to 8 form part of these financial statements.

John C. Corrigan, Chief Executive
National Treasury Management Agency

30 June 2014

Notes to the Financial Statements

1. Investment Income

	2013	2012
	€000	€000
Net Interest Received and Receivable	64,017	48,570
Profit on Sale of Investments	1,888	73,517
	65,905	122,087

Sale and Repurchase agreements are transacted between the Fund and primary dealers in the bond market. The related income or interest cost arising from these transactions is reflected in Investment Income.

2. Interest Paid and Payable

	2013	2012
	€000	€000
Interest Paid and Credited to Depositors of Post Office Savings Bank	9,988	39,416

3. Other Expenses

	2013	2012
	€000	€000
Management Expenses	26,303	29,362

4. Advances

	2013	2012
	€000	€000
Advances to Exchequer	470,632	623,634
Advances to the State Claims Agency	14,300	13,800
	484,932	637,434

 

Advances to the Exchequer represent Ways and Means funds, which have been loaned to the Exchequer.
No financing costs were charged by the Fund to the State Claims Agency.

5. Investments

	2013	2012
	€000	€000
Bonds
At Cost	1,319,896	1,359,760
Valuation as at 31 December	1,366,997	1,412,212

 

Schedule of Investment Holdings:

Nominal	Stock	2013 Cost
€000		€000
305,988	4.0% Treasury Bond 2014	313,611
83	8.25% Treasury Bond 2015	101
429,900	4.5% Treasury Bond 2015	453,485
818	4.6% Treasury Bond 2016	876
109,221	5.5% Treasury Bond 2017	123,083
59,369	4.5% Treasury Bond 2018	65,295
1,932	5.9% Treasury Bond 2019	2,214
43,103	4.4% Treasury Bond 2019	46,400
41,932	5.0% Treasury Bond 2020	46,117
43,117	4.5% Treasury Bond 2020	46,335
7,779	3.9% Treasury Bond 2023	7,908
43,921	5.4% Treasury Bond 2025	49,392
11,617	5.72% Amortising Bond 2027	11,620
21,408	5.82% Amortising Bond 2032	21,416
28,126	5.92% Amortising Bond 2037	29,778
29,734	5.92% Amortising Bond 2042	31,686
61,265	5.92% Amortising Bond 2047	70,579
1,239,313		1,319,896

 

6. Debtors

	2013	2012
	€000	€000
Dividends and Interest Receivable	40,549	44,490
Cash Balances held by An Post	4,353	9,862
Balance due from Dormant Accounts Fund	–	108
	44,902	54,460

 

7. Post Office Savings Bank Deposits

	2013	2012
	€000	€000
Deposits from Post Office Savings Bank	2,650,450	2,773,689

 

In April 2013 €2,282,998 (2012: €1,826,048) was transferred from the Fund to the Dormant Accounts Fund under the Dormant Accounts Act, 2001. At 31 December 2013, a liability of €37,378,265 (2012: €36,220,683) remained following account reactivations of €1,190,604 (2012: €1,416,277) and the capitalisation of interest (net of DIRT) of €65,188 (2012: €250,258). If reclaimed by POSB depositors this is payable from the Dormant Accounts Fund. The POSB deposits of €2,650,449,890 (2012: €2,773,688,432) do not include this liability.

 

8. Creditors

	2013	2012
	€000	€000
Net Funds due under Sale and Repurchase Agreements	4,164	1,337
DIRT due to An Post	661	2,740
	4,825	4,077