COMMITTEE of PUBLIC ACCOUNTS díospóireacht -
Thursday, 13 Apr 2000

Vol. 2 No. 11

Dún Laoghaire VEC: Annual Financial Statements, 1994-97.

Mr. J. A. Ryan (Chief Executive Officer, Dún Laoghaire VEC) called and examined.

Chairman

We are dealing with the annual financial statements for 1994 to 1997, inclusive, of the Dún Laoghaire Borough Vocational Education Committee and the general report of the Comptroller and Auditor General on the education sector, 1995, and relevant sections.

Witnesses should be aware that they do not enjoy absolute privilege and should be advised as follows: as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997, grants certain rights to persons who are identified in the course of the committee's proceedings.

I welcome Mr. John A. Ryan, Chief Executive Officer, Dún Laoghaire VEC. Perhaps he will introduce his colleagues.

Mr. Ryan

I am accompanied by Ms Carmel Forsyth, head of personnel, Mr. Dave Earley, administrative officer, Ms Eileen Cullen, head of finance, and Ms Aine Elliott, chairperson.

Chairman

We also have a delegation from the Department of Education and Science led by Mr. Padhraig McNamara.

Mr. McNamara

I am accompanied by Mr. Jerome Kelly, Assistant Principal, Post-Primary Administration Division, and Mr. Des O'Loughlin, Assistant Principal, Adult Education Section.

Mr. Purcell

The committee must consider the Dún Laoghaire VEC's accounts from 1994 to 1997, inclusive. I felt it was appropriate to prepare a separate report for 1995 over and above the normal audit certificate. The issues referred to in the report for that year centred around the management of community employment projects by the VEC. First, there was a failure to make timely recruitment claims from FÁS for the cost of the projects culminating in a balance of nearly £0.5 million left outstanding at the end of 1995. Second, there was a problem with financial control over one of the projects which facilitated the alleged perpetration of an internal irregularity. The amount involved was only £3,000 but the underlying weakness, if not rectified, could have had more serious repercussions.

Members will see from my report that the chief executive officer rationalised the involvement of the VEC in the community employment projects and restructured their administration in 1996. This appeared to have the desired effect as there has been no recurrence of the large outstanding balances which characterised its activity in 1995. An improved control of the projects was also put in place which has reduced the risk of any further irregularities.

The committee might wish to note that with effect from 1 April 1997, the third level college, the Dún Laoghaire College of Art and Design, which up to then had been part of the VEC, became an autonomous body. It is now known as the Dún Laoghaire Institute of Art, Design and Technology. The first accounts of that institute have still to be presented to me for audit.

With regard to the VEC, audit field work on the 1998 accounts has been completed but their certification awaits the resolution of a few outstanding items.

Mr. Ryan

I took over Dún Laoghaire VEC on 1 November 1999. I have been fully briefed by my team here on all the issues that relate to section 7(4) and all of those matters have been taken care of. We were commended this year by FÁS on the manner in which our returns were made and on the efficiency and accuracy of them. There are now no outstanding balances. It would be normal practice for each module to take five to six weeks to go through; a module is a four week claim for money to come through. At the end of each year there would be an outstanding balance of between £100,000 and £120,000. That would represent the claims for the month of December and they would be paid in January.

Mr. Dennehy

We are dealing with historical facts. Why are we examining accounts for 1994 to 1997, inclusive? Perhaps the Comptroller and Auditor General can answer my question first.

Mr. Purcell

It is largely a matter of timing and scheduling by the committee which has been busy over the past two years and had to prioritise. As you will see, the report prepared pursuant to section 7(4) of the Comptroller and Auditor General (Amendment) Act, 1993, which is the main feature of the accounts under consideration today, dates back nearly three years. It is mainly a matter of the committee catching up. It may be unfortunate but necessary in the light of its heavy work load.

Deputy Dennehy

Thank you. It is slightly awkward for everyone involved to return, so to speak, to 1994, particularly for Mr. Ryan as he was not in the post at the time.

Regarding the special report on the community employment schemes, Mr. Ryan has said they have been commended on the changes that have happened. Could he outline how that took place and what exactly the VEC did to improve the situation?

Mr. Ryan

A certain amount of the advance payments FÁS give us is designated for administrative purposes. One of the problems that arose in 1995 was that of the people appointed to those positions one was ill quite frequently. A second person took ill in mid-1995 and it was difficult to find people with accounting backgrounds to take their place.

The person employed at the moment is extremely competent, has an accountancy background, came through the scheme himself and was trained by our office as a community employment worker. He is now employed, full-time, by the VEC and has assumed control of the operation. All the normal procedural controls that apply to our schools now apply to all projects.

Deputy Dennehy

Could Mr. McNamara tell us whether this is a widespread problem throughout the country, if it has cropped up in other areas and if he is satisfied with the mechanisms in place between FÁS and outside groups?

Mr. McNamara

In relation to matters such as the FÁS initiative, there is no legal constraint on the committee limiting the range of activities which it can undertake. vocational education committees are administratively self-sufficient and overall responsibility for management of them lies with the committee. The Department of Education and Science, in other words, has no particular function in relation to this matter.

The Department of Education and Science will, however, recognise the significance and the benefits to the community of VEC involvement in community employment schemes.

Deputy Dennehy

There have been difficulties in relation to collection of PRSI and related matters and I wonder with whom responsibility would lie in individual cases.

Mr. McNamara

I am not aware of who that might be.

Deputy Dennehy

There were some difficulties in the early days with the Vocational Training Opportunities Scheme. How is that going now?

Mr. McNamara

What, particularly, had you in mind?

Deputy Dennehy

What I saw was the small number of participants seeking or receiving certification at the time. There have been changes in that since.

Mr. McNamara

It is not a matter with which I am greatly familiar. My remit covers mostly the administration and funding of the vocational education committees. I cannot, therefore, give the Deputy accurate information on that.

Deputy Durkan

Given that the Comptroller and Auditor General has brought this matter to our attention and saw fit to dedicate a paragraph or two to the issue, he is probably trying to warn us in respect of procedures and what might happen in other circumstances where a greater amount of money might be at risk.

He states that, in the restructuring that took place in 1996, certain procedures were put in place as a result of the difficulties which arose. Are we sure those procedures will be effective for the foreseeable future?

Mr. Ryan

I think that I could guarantee that they will be effective. One of the problems I found in researching this topic is that Dún Laoghaire VEC had a very big commitment to its disadvantaged areas and the community employment scheme was an opportunity to give the unemployed an opportunity to retrain. What happened in those years was that the schemes grew rapidly. In 1994-95 there were 210 participants on the scheme and the administrative structures at the time evolved with the schemes. Some of the difficulties arose because of the substantial increase in participants in those years.

We have subsumed it into our mainstream and follow the same mainstream controls as we do for our second level schools. FÁS have commended us on the efficiency with which we have been submitting our claims this year.

Deputy Durkan

I do not want to discuss an issue which is the subject of a potential case in the Courts.

Regarding this section where the Comptroller states, "The chief executive officer informed me that measures have been taken or are in hand to improve the control and monitoring of expenditure on projects including the requirement of two signatures on each recoupment claim", what was the procedure previously?

Mr. Ryan

The procedure at the time was that the claim was signed by the supervisor of the scheme and was not countersigned by anyone else. The procedure in the main scheme is that a requisition order and an order docket exist, meaning, therefore, that two people would make that requisition and order. Two people now have to sign for all claims.

Deputy Durkan

When a requisition was previously made for recoupment what inspection, if any, was carried out by anyone other than the signatory who made the requisition?

Mr. Ryan

That would have been the fault in the scheme.

Deputy Durkan

There was no inspection carried out?

Mr. Ryan

The only requisition was that it arose as a legitimate claim and would have been paid by the office as such.

Deputy Durkan

On an on-going basis would Mr. Ryan or the VEC have undertaken checks throughout the year to try to ensure protection? Reference was also made by the Comptroller and Auditor General to the vocational education committees "exposure" and "exposure" can mean many things; it can mean a small amount or a sizeable liability.

Mr. Ryan

I would not know what checks might have been there in previous years but it would be my intention that there would be regular checks on all accounts compiled by myself throughout the year in future.

Deputy Durkan

What kind of discussion takes place within the VEC in relation to matters of this nature? For example, it is commonplace now for organisation to have what are known as management meetings. They take place usually on a Tuesday in some organisations and on a Wednesday in others. Here, however, they take place every morning. How effective are they?

Mr. Ryan

My predecessor would have had a management meeting every week. It would be my intention to follow the same procedure as well. Unfortunately, much of the attention of our management meetings in the past few months has been on preparation for this meeting as I needed significant briefing on the background.

Deputy Durkan

I accept the point Mr. Ryan makes, that he is answering questions in respect of an earlier period. I am trying, however, to test the system to see what flaws were in the system then and to what extent they have been addressed in the meantime. How long would these management meetings normally take?

Mr. Ryan

An hour.

Deputy Durkan

Fine. They are taking place at present as well?

Mr. Ryan

They are, yes.

Deputy Durkan

They would deal with such matters?

Mr. Ryan

They would. We also have to compile a report on these matters to the VEC as there is a full report every month at the VEC meeting on our accounts and particularly on the community employment accounts.

Deputy Durkan

What does that report at the VEC meetings entail?

Mr. Ryan

The report entails details of all income and expenditure for the schemes during the month.

Deputy Durkan

How would the VEC be alerted to a potential danger at present?

Mr. Ryan

The returns are being monitored every month for the purpose of returning them to the VEC each month. If there was a claim similar to that in 1994 where a month's claim was outstanding, that month would always appear as not having been claimed. If there were two months not claimed, it could amount to £200,000 and it would be spotted very quickly. What happened in 1995 was that the amounts mounted up for more than two or three months. At the end of every year, there is what is known in FÁS as a module 13, and this is where the balancing statement for the whole year and all outstanding claims have to be made. If we had seven schemes in that year, at the end of a module 13 that could amount to anywhere from £100,000 to £200,000 depending on what back money had to be claimed from FÁS. The system now will flag that immediately at the end of each month whereas, in 1995 it was not being flagged at the end of each month.

Deputy Durkan

Would these management meetings take place at that time as well?

Mr. Ryan

I could not answer that question.

Deputy Durkan

Would anyone know?

Mr. Earley

There were some management meetings but I have only been there two years as well.

Deputy Durkan

They were taking place?

Mr. Earley

They were.

Deputy Durkan

What would a normal management meeting entail? Would it entail a report requested by the presiding chairperson at that meeting of the various activities undertaken by the body in the period since the last management meeting?

Mr. Ryan

There have not been management meetings since I took over but it is my intention that that would happen.

Deputy Durkan

Nobody knows whether that happened previously?

Mr. Ryan

Not in the format described.

Deputy Durkan

It did not.

Ms Elliott

I have been in the chair since 1991 and as the chief executive officer pointed out, we are very concerned about employment in the blackspots of our area which has a reputation of being very wealthy but is not wealthy in many places. We perhaps let it grow too quickly and did not put in the administrative structure which should have been in place. FÁS is not particularly helpful in this regard. It is fair to say that it saw our role as the sponsor. The Department of Education and Science also took the view that it was not our business or our mainstream work. We were doing this literally on a shoestring. The staff worked very hard on it but we were a very small scheme, relatively speaking. Suddenly we were very alarmed and upset about the situation as the C&AG has pointed out. The structures were put in immediately and it was resolved very quickly.

It is out of that situation that the monthly report goes to the VEC meeting. We look at it every month and we can see that it is up to date. We are being paid by FÁS at the proper time and the proper invoices are going into FÁS for this repayment. It was a source of great anxiety to both the staff and committee that this arose in the first place. However, the committee can be assured that it will not happen again because the structures are there now.

Chairman

That is what we like to hear.

Deputy Durkan

We would all applaud the efforts to provide training and schemes to address unemployment or any other similar situation of a social need. The important thing is that the issues raised by the Comptroller and Auditor General are addressed.

Is it the case that sufficient information is available to you as a body on a ongoing basis to avert any possible recurrence? Are you also satisfied the information which is made available to you is full?

Mr. Ryan

Yes.

Deputy Cooper-Flynn

Do you have a breakdown of staffing on grades and a gender breakdown between grades? Do you have a policy on gender balancing when employing people?

Mr. Ryan

At present, we have an administrative officer at grade 7, in our finance section, we have a grade 6 which is an acting post at this point in time, two grade 4s and two part-time grade 3s, a temporary grade 3 and an acting grade 4.

In personnel we have a grade 5 and two grade 3s and three school secretaries. We also have an administrative officer and a project officer for the young peoples' facilities fund who have been appointed in the past three months.

Deputy Cooper-Flynn

They are the management team. What is the gender breakdown between those? I just want to make sure it is not a camouflage.

Mr. Ryan

There are three men and myself, the rest are all female.

Deputy Cooper-Flynn

What was the total number.

Mr. Ryan

We have twelve on staff plus the project officer and the secretaries.

Deputy Cooper-Flynn

You have four men and eight women on the management team.

Mr. Ryan

Five men and seven women.

Deputy Cooper-Flynn

Do you have a gender policy when recruiting?

Mr. Ryan

Yes. We follow the Equal Opportunities Act on that.

Deputy Cooper-Flynn

You have obviously been very successful. There is a note in the accounts in relation to the high level of staff absence. Why is that the case? Has it improved in recent years and can you give any explanation for that?

Mr. Ryan

We had one person at grade 6 who in 1995 became seriously ill and since that time, she has been in and out quite frequently. The person has now retired and that is why we have an acting grade 6 at the moment. We have no other problems with staff absences at the moment. In 1995 we had quite a substantial number of absenteeism due to illness.

Deputy Cooper-Flynn

None of the staff on the existing management team seem to be there long, is staff turnover a problem?

Mr. Ryan

It is not just that it was a problem but six or eight staff transferred to the IT college in 1997 so we had to recruit quite a number of new staff in 1997 to replace them.

Deputy Cooper-Flynn

How often would you meet the financial team?

Mr. Ryan

It might be a bit of an exaggeration but I have met the financial team two, three and maybe four times a week to discuss various topics since I have taken over. I am fully briefed on all the different projects that we have and all the different financial areas in which we are involved.

I felt that when I took over, I needed to be briefed. I wanted to become fully aware of everything that we were involved in and how we dealt with our finances. While we might not have had any formal management team meeting because they have been replaced by the preparation for this committee, I have been meeting the various heads of the Department and our administrative officer virtually every second day.

Deputy Cooper-Flynn

Apart from what the C&AG has highlighted in his report, are there any weaknesses in the finance area that you have noticed that you are trying to rectify?

Mr. Ryan

Not at the moment. One of the benefits in receiving this report is that we have looked at our controls and tried to implement all the various recommendations that were made in management reports from our auditors. We are constantly updating our controls in line with what the auditors will be suggesting to us.

Deputy Cooper-Flynn

Thank you.

Deputy B. O’Keeffe

Mr. Ryan mentioned that he had a sizeable number of people in acting positions. Is he experiencing difficulties in recruitment?

When people are coming to retirement age, what rationalisation takes place to ensure continuity and that people are replaced soon after they retire?

Mr. Ryan

We are having tremendous difficulty in recruiting people for grades 3 and 4.

Deputy B. O’Keeffe

What salary do they receive?

Mr. Ryan

£11,500. The big problem is that, because we are in the greater Dublin area, there are more attractive jobs than a grade 3 or grade 4 with us. We have had tremendous difficulty in recent months in filling a vacancy as a school secretary. That is one of the difficulties we have.

The second question concerned rationalisation. Within our scheme, we always train up a second person who can step in if a person is absent or leaves. We have ongoing in-service and in-house training of personnel so that staff can change between duties.

Deputy B. O’Keeffe

The VEC is having difficulty recruiting personnel. For how many positions in the VEC can replacements not be found?

Mr. Ryan

Just one, at the moment. We have some which are filled in a temporary capacity. That would be because of funding. For example, the people in the community employment administrative section are employed in a temporary capacity for the duration of the scheme.

Chairman

I know yours is a small organisation. You are responsible for three schools, is that correct?

Mr. Ryan

We have three schools, yes.

Chairman

What is the total student and staff population in the schools?

Mr. Ryan

Two of our schools are fully post-leaving certificate and further education. The third school is 80% further education. Our student population this year was 1,670.

Chairman

What is the total staffing?

Mr. Ryan

The total staffing for that is 126 full-time and 127 part-time. The part-time staff include a very large adult education programme which is run in the schools at night.

Chairman

Do you have any internal audit function in the VEC?

Mr. Ryan

No, we do not have an internal audit. We applied at the end of 1995 to the Department for the appointment of an internal auditor on a part-time basis but to date, this has not been sanctioned. I intend to do a regular internal audit myself, from time to time throughout the year if an internal auditor is not sanctioned.

Chairman

To whom did you apply for sanction?

Mr. Ryan

To the Department.

Chairman

You have a staff of 12 yourself and you have three schools under you. Small as your organisation is, it would be hard to justify an internal auditor on a full-time basis. Does the Department of Education and Science have any comment to make on the absence of an internal auditor?

Mr. McNamara

I might comment generally on the issue of internal audit. It is an issue that has been raised by many vocational education committees. Last autumn, the Department set up, on a pilot basis, a services support unit attached to County Cavan VEC. Its function will be to look after internal audit and staff training, particularly in the area of accounting and financial matters. The Department has recognised the need for a function of internal audit by providing the support unit. That unit is now active.

Chairman

A support unit?

Mr. McNamara

Yes. It is designed to assist the vocational education committees in internal audits and in training staff, particularly in relation to financial and accounting matters. It has been established on a pilot basis for two years because we also have the agreement of the Departments of Education and Science and Finance to institute a staffing structural review of all the vocational education committees, on a national basis. The terms of reference would include the issues of accounting and so on. The services support unit is there for two years and the issues of internal audit will be part of the terms of reference of the national review of VEC staffing structures.

Chairman

When is that likely to report?

Mr. McNamara

The terms of reference are at the moment being considered by the major parties, IMPACT, the trade union which represents the administrative and clerical staff, and the IVEA, which is the managerial body representing the vocational education committees. It is intended that the review will be done during 2000.

Chairman

In a practical way, how can the Department assist the chief executive officer in having some form of internal auditor, even on a part-time or visiting basis? This is a gap. If something goes wrong next year there will be no internal audit.

Mr. McNamara

The VEC will be able to avail of the services of the support unit. We are all represented on the body that governs it and it is something we can take to the table. I see that as providing assistance to vocational education committees such as Dún Laoghaire Borough VEC.

Chairman

I am glad to hear it is being reviewed. This does not only affect Dún Laoghaire Borough VEC. Thank you. Your remarks are noted.

Mr. Ryan

I thank you for the courtesy which has been extended to us.

Chairman

You are very welcome.

The witnesses withdrew.

Sitting suspended at 10.47 a.m. and resumed at 10.50 a.m.