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COMMITTEE OF PUBLIC ACCOUNTS debate -
Wednesday, 14 Dec 2016

Business of Committee

We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, a permanent witness to the committee. He is accompanied today by Mr. John Riordan. No apologies have been received. The first item on the agenda is the minutes of our meetings on 22 and 24 November and on 1 and 8 December last. Are the minutes agreed? Agreed. In terms of matters arising from the minutes, we will take it that any relevant matters arising will be dealt with in the normal course of our work.

The next item on the agenda is correspondence. We have a considerable amount of correspondence to deal with because it has been some time since we had a public meeting. The first item of correspondence is the opening statement from Mr. Brendan McDonagh, CEO of NAMA, which we have noted and published. We will be dealing with that later.

The next item is category B correspondence from Accounting Officers and Ministers. These are follow-up items relating to previous meetings. The first item is No. 201B, an e-mail from Brown Rudnick expressing surprise and disappointment regarding the publishing of details of a letter sent to the committee prior to its consideration by the committee. We did receive a letter and I saw references to extracts from it in the newspapers before it was considered by this committee. It is extremely disappointing that some members chose to go down that route. We note the points made by Brown Rudnick, which are fair comment. We will note it and publish that remark.

The next item is correspondence from Professor Philip Lane, Governor of the Central Bank, regarding State organisations lodging money with the Central Bank. We will note and publish that letter. The next item is correspondence from Ms Niamh O'Donoghue, Secretary General of the Department of Social Protection, providing information requested at our meeting on 20 October. We will note and publish that. The next item of correspondence is No. 217B from Mr. Seán Ó Foghlú, Secretary General of the Department of Education and Skills, providing an update to the committee on the transfer of property under the 2002 indemnity agreement. We will note and publish that. There is other correspondence relating to that general indemnity agreement which I will refer to later.

The next item is No. 219 B (i) and (ii), correspondence from the OPW regarding rents paid by that office and the Department of Social Protection. We will note and publish that. The next item is No. 220B, correspondence from the Minister for Finance providing a response to a request for information from the committee in relation to NAMA and Project Eagle. We will note and publish that and will also include it on the Project Eagle section of our site, which is an internal method of recording all Project Eagle related correspondence for committee members. The next item is No. 221B from Ms Michelle Lowe of NAMA providing a response to a request for information from the committee relating to Project Eagle. We will note and publish that too.

I will now move on to Category C correspondence which is correspondence from private individuals and any other correspondence.

Nos. 181C, (i) to (iii), is correspondence from the North Meath Communities Development Association in regard to an ongoing issue with the HSE. This matter was dealt with in some detail by the previous Committee of Public Accounts, which also wrote to the HSE at that time. However, there was a recognition that this is a matter of a disputed contract and ultimately a matter for the HSE. I would like to defer consideration of this matter to our next meeting to allow members time to study the documentation.

Prior to the summer recess I raised the issue of correspondence issued by the previous committee in January of this year citing that this matter had also been referred to the Taoiseach's Department. This is a matter of great concern to the people involved, in respect of which a large number of public meetings were held during the summer. The body concerned does good work and it needs to be supported. I understand that the Minister of State, Deputy McEntee, has met with the Minister, Deputy Harris, on the issue. It is important that a statement is forthcoming from the Minister on this matter and that it is resolved as soon as possible. We cannot have a situation whereby a community body engaged in this type of work is left with this debt. The previous PAC was very strong in its statement on this matter. I would appreciate it if it could be addressed as soon as possible.

As mentioned by Deputy Cassells, this matter has been brought to the attention of the Minister, Deputy Harris and the HSE. Perhaps we should seek a response from the Minister and the HSE on the matter, following which we will consider all of the correspondence.

The HSE has been consistent in its approach to it. I would appreciate if the Minister's appraisal of the matter could be sought.

We will write to the Minister on that basis. When the reply has been received we will examine the issue in its entirety, bearing in mind that it was been already considered by the previous PAC. I am not familiar enough with the details to draw any conclusion on the matter this morning.

The next item is No. 200C, (i) to (iii). These items can be taken together. They are copies of correspondence regarding directorship at Limerick Greyhound Stadium for the purposes of keeping the committee informed. Is it agreed to note this correspondence? Agreed.

No. 203C is correspondence received from Ms Audrey Keane, Registrar of Aosdána in the Arts Council in reply to correspondence regarding the payment of the Aosdána Cnuas grant. I propose that we now consider this matter closed and we forward this to the individual who wrote to the committee on this matter. Is that agreed? Agreed.

No. 205C (i) and (ii) is correspondence from Mr. Paul Quinn, chief procurement officer, with an overall description of the tender process framework. I thank Mr. Quinn for this information, which we will note. We will also forward a copy of it to the company that raised the matter with us at an earlier meeting.

I presume we will be coming back to the issue of tendering at some stage.

Yes, public procurement is fundamental to our role and it will be included in our work programme for the new year.

No. 209C (i) and (ii) is correspondence from Ms Mary Higgins, CEO of Caranua. The committee received a number of items of correspondence from individuals regarding the spending of moneys by Caranua. We will forward this information to these individuals. The Comptroller and Auditor General has also indicated that his office will be carrying out a report on the wider issues of the residential redress scheme. As I mentioned earlier, correspondence has also been received on this matter from the Secretary General of the Department of Education and Skills. We will deal in detail with this matter in the new year. Is the report being carried out by the Comptroller and Auditor General a special report?

Mr. Seamus McCarthy

Yes. I expect it to be completed this week, following which it will be sent to the Department.

In the interests of completeness, does Mr. McCarthy have available to him the correspondence that has come to the committee?

Mr. Seamus McCarthy

Yes.

Has that been taken into consideration in the context of the report?

Mr. Seamus McCarthy

Yes.

Which Minister will publish the report?

Mr. Seamus McCarthy

The Minister for Education and Skills.

It will be published in the spring.

Mr. Seamus McCarthy

I must point out that it deals with the main scheme. The committee has the financial statements for Caranua for 2014. The 2015 audit is almost complete and I suspect it will be with the committee early in the new year.

Perhaps Mr. McCarthy would elaborate on Caranua. I understand it received €100 million in funding.

Mr. Seamus McCarthy

I am open to correction but I think it received approximately €100 million. Those resources are to be applied for the benefit of individuals who were in institutions. Caranua commenced operation in 2014. Effectively, it issues grants to the benefit of individuals who were in institutions.

Will the report deal with the Caranua part of the equation?

Mr. Seamus McCarthy

Not in detail.

But Mr. McCarthy has received the correspondence to which I referred?

Mr. Seamus McCarthy

Yes. The financial statements allow the committee to bring Caranua in and discuss with it the issues that are raised in the correspondence.

Would it be best to do that in conjunction with our consideration of the report?

Mr. Seamus McCarthy

Yes.

One fund flows from the other.

Mr. Seamus McCarthy

Yes.

Okay we will deal with both at the same time. A number of people have been in contact with the committee on this matter, including former residents of the residential institutions. They are concerned that we deal with this matter soon and we will do so.

Nos. 210C and 222 C (i) and (ii) deal with a Mazars review of processes employed by the University of Limerick. There is correspondence from the CEO of the Higher Education Authority and from the President of the University of Limerick in respect of actions taken following the review. Is it agreed to note this correspondence? Agreed. I also propose that we make copies of it available to the individual who brought the matter to the committee’s attention. Is that agreed? Agreed. It may be also worth adding the University of Limerick to the work programme when we engage with third level institutions in 2017.

No. 211C (i) and (ii) is correspondence from the CEO of the National Transport Authority providing a response to an issue identified in its 2015 financial statements with the lease of a building. I think this relates to the fact that the building was not occupied for some time. If people want to raise this matter again at a future date or to deal with it in any other format they are free to do so.

No. 213C is correspondence from Mr. Seán Ó Foghlú, Secretary General, Department of Education and Skills in reply to an issue raised by an individual alleging misappropriation of public money in Mayo, Sligo and Leitrim Education and Training Board. The Department is aware of the matter and regards the use of the funding as appropriate in this case. I suggest that we send a copy of this correspondence to the individual and that we now consider the matter closed. Is that agreed? Agreed.

No. 217C is correspondence, also from Mr. Seán Ó Foghlú, Secretary General, Department of Education and Skills. This is an update for the committee in regard to the transfer of property under the 2002 indemnity agreement. Is it agree to note this correspondence? Agreed.

No. 223C (i) and (ii) is correspondence from an individual on the deterioration of salmon stocks. A paper on the matter is attached. The individual claims that this is principally a co-ordination problem and while a group has been set up under the EPA, called LAWCO, he believes there is real need for an involvement in this area by the Department of Communications, Climate Action and Environment or the Sustainable Energy Authority of Ireland. I propose that we write to the EPA, forwarding a copy of this correspondence and requesting a response on whether the inclusion of the Department of Communications, Climate Action and Environment would add value to this group and, if so, to invite its participation. I also propose that we write to the Department directly asking for its response on the correspondence and whether it would consider being involved in the LAWCO group or other such group to deal with the matter. Is that agreed? Agreed. When a response has been received from the two organisations we will deal with the matter.

We now move on to reports, statements and accounts received since our meeting on 24 November 2016.

Before we move on from correspondence, I would like to raise again today the issue of the section 38 and 39 organisations. I am a little uncomfortable that we have had only one hearing on the Console issue. An internal audit carried out by the HSE raised very serious process issues. Since then we have come across a number of other organisations where similar problems have arisen. There appears to be a problem in terms of accountability and the relationship between the HSE and these organisations. Is there merit in the Comptroller and Auditor General doing a special report on section 38 and 39 organisations' processes? It would appear that this is not an isolated issue. There are issues that arose at the Committee of Public Accounts prior to this incarnation, which were in the public domain.

We have had one engagement with the HSE and that was it. I accept that Project Eagle came to the fore at that point but we must put some thought into what is the best way to progress the issue because a significant amount of taxpayers' money is being spent and given to those organisations. Most deal with their funds appropriately and no issues arise but there are failures in the process. I again flag the issue as I am concerned that we have not decided one way or the other how we should proceed.

Does Mr. McCarthy have a comment or thought on that issue?

Mr. Seamus McCarthy

Yes, I have. Oversight of sections 38 and 39 bodies is something that is examined every year. I drew the committee’s attention previously to the statement on internal financial control in the HSE, which is quite extensive, and it deals every year now with the development of its processes for oversight. Every year there is a report on it that the committee is free to examine as it wishes. It is at a process level though, rather than at the level of individual entities. Where there are significant failures those should be noted in the statement on internal financial control and one would expect to see in the 2016 financial statements an explanation from the HSE as to what control changes it is making, given the lapses that have occurred in individual charities or voluntary bodies.

The committee has a framework at any stage to bring the HSE in to give it an update. Undoubtedly, it is a very significant line of expenditure of the order of €2.5 billion to €3 billion a year in transfers to sections 38 and 39 organisations.

We will certainly come back to that. I expect other members would agree with him in that regard.

Will we come back to it through the framework of the internal financial controls in the HSE? Will that be the heading?

Mr. Seamus McCarthy

The committee could do that. The subject for the meeting would probably be oversight of sections 38 and 39 bodies.

We will probably do so in February.

I was going to ask when we would meet for that purpose. It will be in February. That is fine.

I will deal with the work programme in a moment but that is a big item. It is the next item on the agenda.

Financial statements received since 24 November include the Athlone Institute of Technology. It got a clear report. We also received the 2012 and 2013 accounts from the National College of Art and Design. It got a qualified opinion. The college kept inadequate records for the period of account. That is very serious. Serious issues were raised by the Comptroller and Auditor General on the system of internal control. The deferred pension funding issue is standard for all universities. Perhaps the Comptroller and Auditor General could say why we are only getting the 2012 accounts now from the National College of Art and Design.

Mr. Seamus McCarthy

As a result of the inadequate accounting records kept by the college it struggled to produce financial statements for 2012 and 2013, and to provide explanations to us. We had to do a substantial amount of working around to try to get complete explanations. It is a matter which I have reported on in 2014. I signalled then that the problem existed. The qualified audit opinion has been given for the past three years in relation to NCAD.

What is the qualified opinion?

Mr. Seamus McCarthy

Effectively, it means the college is not in a situation to produce a financial report in a reasonable time. It is very difficult to carry out the audit. While we feel that the college has reached a situation where it is giving a reasonable representation of the transactions in the year, there is an element of doubt over it because of the quality of the accounting records.

How have the records been since? Are they up to date?

Mr. Seamus McCarthy

In 2014 there will still be an element of working around to be done. After the report was presented by me, there was a change in the board – almost a complete change of the board membership – in the middle of 2015. When we get to the 2014 to 2015 financial statements, which I expect we will begin auditing in the new year, I think the systems will be significantly better. The statement on internal financial control is quite comprehensive about the problems that there have been for the college and the steps it is taking. There is an update on my report of 2014 in relation to that.

Where is that update?

Mr. Seamus McCarthy

It is in the financial statements that have been presented here.

I propose that we move on but I will not let this go.

The board is appointed to do a job. Who appointed the board?

The Minister. I propose that we write to the Minister for Education and Skills, enclosing the details and highlighting the issues, and asking him to take immediate action. It is just not good enough that a public body with a turnover of €17.3 million can say it has difficulty producing accounts. We will write to the new chairman saying that he should do whatever is required to protect taxpayers’ money and to make sure that proper accounts are kept. The college must do that.

I agree. It is serious. The Comptroller and Auditor General said he is of the opinion that there may be improvements in terms of the 2014 and 2015 accounts. If that is the case, it would be good, but perhaps if it is not then it would merit us bringing the college before the committee.

Bringing them in.

We will give them a chance. We hope there will be improvements but if the improvements do not materialise, at that point we would then need to bring them in.

It is a bit premature at this stage because we have not got the up-to-date figures.

We have not decided to bring them in but it is an option if things do not work out.

We will have to wait and see. Do we have an idea of the routine rotation of the board of NCAD or was there a clear-out as a result of the previous report?

Mr. Seamus McCarthy

From memory, it is a three-year appointment.

Mr. Seamus McCarthy

The board will be in place from 2015 to 2018. I think it was a complete replacement of the pre-existing board. Obviously, the current board members have a difficulty in rectifying situations that prevailed prior to their appointment but I am satisfied that they are taking strong steps to improve the situation. I anticipate that matters will be better for the 2013 to 2014 period but I cannot give an opinion until the audit is completed. I will certainly be reporting and drawing attention to matters if I am dissatisfied.

I would also expect the capacity of the college to speed up the delivery of financial statements to improve. We are further along with the 2013 to 2014 statements. I would expect to have those early in the new year and then the 2014 to 2015 statements by about the middle of next year.

When is the year end?

Mr. Seamus McCarthy

It is September.

So when will Mr. McCarthy be dealing with September 2015?

Mr. Seamus McCarthy

By the middle of next year, which is still two years.

Even at that there will still be a long wait.

Mr. Seamus McCarthy

It will take the college a long time to catch up.

For now, we will write to the Minister who is responsible and the new chairman of the board and we will ask both of them for a response and we will see what happens with the audit in due course. We have the option of going further depending on how things evolve.

The National Haemophilia Council got a clear audit report. The next item is Transport Infrastructure Ireland, which also got a clear audit report. Next is the Crawford Art Gallery Cork Limited. It got a clear audit report but there is a comment that it did not carry out the review of the effectiveness of the system of internal control during the course of the year. The Kilkenny-Carlow Education and Training Board got a clear report. The National Paediatric Hospital Development Board is next. Its remit is to build and equip the national paediatric hospital. It got a clear audit report. It might be a matter for the health committee but if anyone wants to have a look at that set of accounts they are in the Oireachtas Library and they will be published subsequent to the meeting. It is a big investment by the Irish taxpayer. People can raise the issue at a later date if they wish.

The Office of the Data Protection Commissioner got a clear report. Coláiste Mhuire gan Smál, Ollscoil Luimnigh, got a clear audit report. Again, the issue of deferred pensions arises, which is common to many public sector bodies. The Irish Film Board got a clear audit report. The Ombudsman for the Defence Forces got a clear audit report and Horse Racing Ireland got a clear audit report for its 2015 accounts. The agriculture committee has had the group in before it recently.

I have nothing formally drafted for the work programme. I suggest that on 12 January we have a detailed meeting to consider progress on the Project Eagle report. I hope we will be able to finalise that within the week. I would like to be able to publish it on approximately Thursday, 19 January. We will have a meeting on 12 January and perhaps another meeting on the following Tuesday or Wednesday to tidy up the report before we issue it on 19 January. The normal process for issuing a report is for the committee to do so in the AV room. It might be for an hour in the afternoon.

It is important that the committee holds some normal public meetings dealing with issues other than Project Eagle. With that in mind, for our meetings on Thursday, 19 January 2017, Thursday, 26 January 2017 and Thursday, 2 February 2017, I have come up with three specific items which we could try to deal with. The first is the issue in the Comptroller and Auditor General's report on the guardian ad litem service. The second is the sale or disposal of the Government jet, which is a discrete chapter in the Comptroller and Auditor General's report. The third item is the special report on the cost of the changes to the Prison Service. We will try to get some normal business meetings going and in early January we will lay out our work programme for the following months. We will be bringing in the HSE, third level institutions and so forth. The issues I have suggested for our initial meetings next year are short and very specific and that would be preferable to opening up, for example, broader issues with regard to the HSE.

An issue was highlighted recently about the holding of money belonging to patients in nursing homes.

Yes. We will add that. We will contact the relevant organisations to see which of them we can fit into the aforementioned dates. I think we should start with a few normal business meetings next year. Then we will agree a work plan for the following few months. If members want something in particular included in that work programme, they should say so now and we will note it or else they can contact the committee secretariat.

Is it envisaged that the committee will be meeting on 12 January?

You tell me. The Dáil is not sitting so-----

The Joint Committee on the Future Funding of Domestic Water Services is sitting that afternoon and I am a member of that committee so-----

Maybe we could hold a morning meeting, or will that pose difficulties for the Deputy? At 11 a.m. perhaps?

Okay, we will schedule it for 11 a.m. We will only be discussing a draft report and people will have received it in advance. Sorry, my apologies, it is not a draft report but a working paper prepared by the officials. If members could look at that before the meeting and prepare their observations on it, we can move quite quickly. If members only open it up when we arrive, however, we will not get very far. I think a meeting from 11 a.m. to 1 p.m. should be adequate.

That is the approximate work programme for the first few meetings of next year. As there is no other business, I want to go into private session briefly to discuss the status of our work on Project Eagle before we call in our witnesses.

The committee went into private session at 10.33 a.m and resumed in public session at 10.45 a.m.
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