First, I will give an overview on the development of risk assessment and management of risk in the Department. In addition, I will outline the role and structure of the internal audit process in the Department and Irish Prison Service.
The risk management process was formally rolled out in the Department in 2006 and is based on principles set out in the Department's risk management policy. All managers have been trained in the process. Each division has prepared its own risk register. In keeping with the policy, these registers are updated to reflect the objectives in our business plans. The process is under regular review and the 2009 review process is about to commence. Following each review, a report is prepared for the management advisory committee, MAC. The main conclusion of our 2008 review was that the principles as set out in the Department's policy are being correctly applied and a robust risk management process is firmly in place.
The risk management process follows on naturally from the divisions' business planning process. The main risks are to the forefront of managers' minds and are being managed on an ongoing or timebound basis, as necessary. I am confident that the process has bedded down in my Department. Effective steps are being taken to manage risk across the Department and each division and agency is fully on top of its responsibilities in this important area. In December 2008, the Department conducted a risk management workshop for its agencies and associated bodies with a view to assisting these organisations in managing their risks and, in that context, the Department's contingent risks.
Finally, in order to assist the day to day function of centrally managing the process, the Department is currently developing its own risk management database. It is envisaged that, when operational, the IT database will reduce the workload currently required to manage our paper based risk management records. It is further envisaged that the database will provide speedier access to information to managers across the Department, as well as assisting in the preparation of a variety of risk management reports.
In line with good corporate governance the Department established an audit committee in January 2004. The audit committee has five members, four of which are independent of the Department and on average it meets six times per year. The members of the committee are all very experienced individuals with a broad range of senior management experience in both the public and private sectors. The internal audit unit reports to the audit committee on the delivery of the annual work programme and on matters of concern that arise throughout the year. The committee and the internal audit unit have open access to me at all times and the chairman of the audit committee keeps in regular contact with me and my senior management team to discuss issues that arise in the normal course of business. Throughout the year the committee has sought and received numerous presentations from senior managers in both the core Department and the Prison Service. The committee is proactive in seeking that management addresses potential or identified areas of weakness.
The internal audit unit is headed up by a professional accountant with five audit staff. The majority of staff has received training in auditing techniques and most of the auditors have extensive knowledge of the Department's internal operations. In recent years the Department has outsourced some aspects of the audit work, particularly in the more technical areas, and this has proven to be an effective way of delivering the audit work programme. The work programme covers an extensive number of offices and the unit prioritises the audit work based on an assessment of risk. The audit unit works closely with managers to deliver pragmatic solutions on audit issues as they arise. It also provides advice and support to managers across the Department. The audit unit has a good working relationship with the Comptroller and Auditor General's staff and both areas co-operate to minimise the duplication of work.
The role delivered by the internal audit and the various financial management units is vital in providing the Department with some assurance that our systems and procedures are adequate and effective. While there are no perfect systems in any business and issues will always arise, our firm objective is to continually review all aspects of our work to ensure the services we provide are delivered in an accountable, effective and economic manner.
Before I address the specific issues in the prisons Vote which have been raised by the Comptroller and Auditor General in his report, I should refer to the range of areas and different agencies and bodies which come under my remit as Accounting Officer for the justice Vote. In addition to encompassing the office of the Minister itself, it now also captures a range of diverse programme and service areas including in the region of 40 offices and agencies attached to the Department. In the case of many of these organisations we pay for the day to day expenditure centrally. In other cases we provide grants on a periodic basis which make up varying levels of the operating budgets of the organisations in question.
I reassure the committee that I am doing everything in my power and within the resources available to me to ensure that effective governance arrangements are in place with regard to all organisations in receipt of Exchequer funding. The audit programme of my Department, the details of which were provided to the committee in respect of the 2007 financial year, ensures that a number of these bodies are audited on a regular basis. The outcome of these audits continues to inform our approach in assessing applications for financial assistance and whether it is appropriate to continue funding existing organisations and programmes. While this is a necessary approach at any time it is particularly appropriate now in the difficult financial times in which we find ourselves.
Turning to the specific issues raised in relation to the prison Vote, I will begin by providing a brief overview of the particular environment within which the Irish Prison Service operates and the associated challenges from a procurement perspective. The Prison Service manages 14 prisons located across the State and was responsible for gross non-pay expenditure of over €146 million in 2007. The high security nature of the work dictates that, in many cases, there are only a limited number of specialist companies which can provide the necessary goods and services. In other cases, the technology employed is limited to a sole supplier, because of the need for compatibility with core systems already in place. Due to the volatility of the prison environment, it is sometimes necessary to make emergency purchases of goods or services to protect life and ensure the overall safety of staff and prisoners and the security of the prison itself.
I note that the Comptroller and Auditor General, while outlining his concerns on certain aspects of procurement within the Irish Prison Service, acknowledges that steps are being taken to rectify the deficiencies highlighted. I welcome the findings of the Comptroller and Auditor General, as these have provided the Prison Service with assistance in moving forward with its procurement strategy. I also welcome the support of the internal audit unit of the Department in our ongoing initiative to take a more proactive approach to procurement. In March 2007, in recognition that improvements and standardisation in procurement procedures were required, the Irish Prison Service established a professionally trained central procurement unit. The purpose of this unit is to modernise the procurement function within the Prison Service and introduce new policies and procedures to ensure that proper controls are in place over the procurement process.
Significant progress has already been made since the publication of the Comptroller and Auditor General's report. Following consultation with internal stakeholders, the Prison Service procurement policy was issued by the Director General in September 2008. The issue of procurement and, in particular, adherence to the procurement policy, is an ongoing item on the agenda for senior management meetings. The finance directorate is engaged in an ongoing promotion and education process in respect of procurement policy and related presentations have been made to staff at all levels within the Prison Service. During 2008, a number of key staff appointments were made to the finance directorate, including a director with sole responsibility for finance and procurement. Notwithstanding the procurement challenges previously outlined, I can assure the committee that the Irish Prison Service is fully committed to the principles of fair and open procurement and the achievement of maximum value for money.
I propose to now turn to the issue of travel expenses. Let me begin by asserting that I fully accept the well established general principle that employees are responsible for whatever expenses they may incur in presenting themselves at their place of work. However, I am also conscious that the principle is not absolute and that there are well accepted exceptions such as temporary transfers where individuals are required to work far away from their normal base in the interests of the State. The Comptroller and Auditor General's report highlights concerns regarding the appropriateness of travel expense payments made to an officer of the Irish Prison Service during an initial period from August 2000 to August 2002 and then again during the period June 2005 to March 2008. It should be noted that all payments made to the officer in question were at a time when he was facilitating the needs of the Irish Prison Service.
In August 2000, it was considered that the officer in question was uniquely qualified for assignment to a particular governor post. He was assigned on a temporary basis but the duration of the assignment could not be determined exactly at that time. On the basis that his assignment was in the nature of a temporary transfer, it was agreed to pay the officer in question travel and subsistence in respect of his journeys between his normal base in Dublin and the temporary base. It was agreed that he could claim a reduced mileage on one day a week and the full rate for the other four days. The arrangement was reviewed after six months, when the number of days at full rate was reduced to three. It is the view of the Irish Prison Service, and I would concur with that view, that these arrangements were not inconsistent with the travel and subsistence circulars, in that the transfer was intended to be temporary. These payments were terminated in August 2002 when it was accepted that the assignment was now effectively permanent.
The decision to extend the officer in question's service beyond retirement age in June 2005 was sanctioned by the Department of Finance, on the basis of the need to retain his services in the extremely volatile industrial relations climate pertaining at that time. Efforts were being made to introduce a major programme of organisational change on a scale never seen within the public service previously – change that ultimately led to major savings for the Exchequer. The former special arrangements with respect to travel expenses were reinstated during the period June 2005 to March 2008 on the basis that it was effectively a new temporary assignment.
As requested by the Comptroller and Auditor General, the Prison Service contacted the Office of the Revenue Commissioners in July 2008 for their advice on any tax obligations that may arise from this case. The matter is still under consideration by the Revenue Commissioners and they will contact the Prison Service once a decision has been made. As also requested by the Comptroller and Auditor General, advice was sought from the Department of Finance as to whether the travel expense payments were in accordance with its guidelines. The Department of Finance responded to the effect that it did not consider that the payments made to the officer in question were in accordance with its travel and subsistence circulars.
I accept that our view at the time, although well intentioned, is not sustainable as being consistent with the general principles that apply to travel and subsistence. While acknowledging that a mistake has been made, it should be noted that had the officer in question retired in the normal course, it would have been necessary to re-engage him on a consultancy basis and in such circumstances he would have been entitled to charge travel and subsistence as an applicable expense.
A number of proactive measures have been taken by the Prison Service over recent months to ensure strict adherence to Department of Finance circulars regarding travel and subsistence. A travel and subsistence frequently asked questions document, emphasising the general rules and regulations, was drafted with the assistance of the Department of Finance and this was circulated to all staff. Procedures have been put in place to spot check travel and subsistence claims internally on a bi-monthly basis, to ensure the provisions of the circulars are being adhered to. Since September 2008, all proposed foreign travel by staff of the Irish Prison Service must be approved in advance by the director general.
I will conclude with two short points. The first is that we have no quarrel with the analysis from the Comptroller and Auditor General. Second, with regard to the prisons, and I was the director of the prisons until July 2004, we had what I would describe as a burning platform situation in the prisons for much of the last few years which, perhaps, bounced people into making decisions that, with hindsight and in a completely composed situation, they would not have made. We have moved to clean up our act and we are happy to speak about that in more detail in response to questions.
