Changes to financial controls at the Central Bank are being made after a blunder saw it give almost €750m to the Department of Finance in an unauthorised transfer when Paschal Donohoe was the Minister in charge.
The account of the central fund of the Exchequer – from which most State funding is drawn – is held at the Central Bank.
The Comptroller and Auditor General authorises all withdrawals by issuing "grants of credit".
Seamus McCarthy told the Public Accounts Committee that there was "a failure of the controls on 28 October 2022".
It was the Friday before the October Bank Holiday weekend, and the Central Bank gave Minister for Finance Paschal Donohoe "€738m more than the amount of credit that remained available to him".
Neither the Central Bank nor the Department of Finance noticed the error at the time of the transaction, Mr McCarthy noted, adding that the bank had identified it "on the Friday evening" and then notified the department.
"It is a matter of serious concern" that the substantial sum was withdrawn "without the necessary credit authorisation", Mr McCarthy said, noting that the authorisation could have been applied for.
Both the Governor of the Central Bank Gabriel Makhlouf, and the Secretary General of the Department of Finance John Hogan, have promised that changes are being made to prevent another unauthorised withdrawal.
Mr McCarthy welcomed these reassurances.
A spokesperson for the Department of Finance said that while "there was no financial loss involved", the department "fully accepts responsibility for its role in this breach of process", and "has taken immediate steps to prevent a recurrence".
William Molloy, Deputy Head of Risk Management at the Central Bank, said that its systems and those of the department had not been not sufficiently integrated to prevent the breach, and said that they had been revised.
"This incident is absolutely exceptional," he said.
The agreement which operates between the two agencies will be updated "in the coming weeks", once they "are satisfied that the new processes are working effectively", he said.
A spokesperson for the bank said that they "recognise the significance of the Central Bank's role in the Exchequer control process", and "will work with the Department of Finance to ensure such a breach does not happen again."
