Oops... "Accounting Error" Overstates Ireland's National Debt By $5bn

Ireland has been overstating its national debt by a whopping €3.6 billion ($5bn) due to an accounting error that went uncorrected for more than a year.

That's equivalent to 2.3% of the entire national debt.

"A humiliating school boy error" is how one lawmaker described it.

The Minister for Finance Michael Noonan says the mistake in the national accounts was due to human error and ordered an external review.

Officials from the National Treasury Management Agency (NTMA) informed the Department of Finance about the error in August 2010 but nothing was done about it.

The huge mistake arose due to a change in how loans from the NTMA to a housing agency were accounted for, with the result that the money was counted twice.

"This is a very serious issue and I am determined that the necessary lessons are learned and immediately acted upon," Noonan said. "It is clear that there has been a systems failure."

"The secretary general of the Department of Finance has already asked for a full report on the matter and will arrange for an external review of the systems in the Department, the NTMA and the Central Statistics Office (CSO) to be carried out."

The top official in the Department, Kevin Cardiff, was hauled before the powerful all-party Public Accounts Committee to explain how such a massive error was not rectified.

After Sinn Fein TD Mary Lou McDonald told him he had failed in his duties and it was "mindboggling" that he was not being held responsible, Mr Cardiff said he accepted responsibility and would work to ensure it wouldn't happen again.

"If an accounting officer were to resign every time there was an error you would have no accounting officer. If they were to resign after every major error you would only have lucky accounting officers left," Mr Cardiff said.

"I have served this country as diligently as I can during the best and worst of times . . . My record is very solid and very strong."

Mr Cardiff has been Secretary General of the Department since March 2010, and previously worked in the banking and taxation divisions.

The Department of Finance has been under severe fire from critics over its handling of the financial crisis and the inaccuracies of its forecasts.

Mr Cardiff has been nominated by the Irish government to a top post at the European Court of Auditors next year - an appointment that may have to be revisited in the wake of the controversy over the accounting error.

The discovery of the $5bn error will have no impact on the upcoming austere budget but is proving highly embarrassing for the government and the Department of Finance.