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COMMITTEE of PUBLIC ACCOUNTS díospóireacht -
Thursday, 27 Apr 2000

Vol. 2 No. 12

Tallaght Institute of Technology: Annual Financial Statements 1994-97.

Mr. John Gallagher (Director, Carlow Institute of Technology), Mr. Gerry Carroll (Temporary Director, Dundalk Institute of Technology), Mr. Paul Hannigan (Director and Accounting Officer, Letterkenny Institute of Technology) and Dr. Columb Collins (Tallaght Institute of Technology) called and examined.

We are dealing with the Comptroller and Auditor General's report on the annual financial statements for 1994, 1995, 1996 and 1997 of the Carlow Institute of Technology, the Dundalk Institute of Technology, the Letterkenny Institute of Technology and the Tallaght Institute of Technology and the Comptroller and Auditor General's general report on the education sector.

Witnesses' attention is drawn to the fact that 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 person identified in the course of proceedings. Witnesses are asked to take full account of the provisions of the Act. I now call on the Comptroller and Auditor General, Mr. John Purcell, to introduce his report into the Carlow Institute of Technology, followed by the Dundalk Institute of Technology, the Letterkenny Institute of Technology and the Tallaght Institute of Technology and then we will take general questions.

Mr. Purcell

Four years' accounts of the Carlow Institute of Technology are before the Committee.

I must interrupt to introduce the witnesses. From the Carlow Institute of Technology, we have the director, Mr. John Gallagher. I welcome you, is this your first time here?

Will you please introduce your colleagues?

I am accompanied by Mr. Brian Bennett, the college registrar; Mr. Cormac O'Toole, the college secretary and Ms Eleanor Rea, the college finance officer.

You are all welcome. From the Dundalk Institute we have the director Mr. Gerry Carroll. You are welcome and perhaps you will introduce your colleagues. It is your first time here too. We are going to have fun today.

Mr. Carroll

I am accompanied by Mr. Stephen McManus, the institute's registrar; Mr. Peter McGrath, secretary and financial controller and Mr. Brendan Keane, finance officer.

You are all welcome. From Letterkenny, I welcome Mr. Paul Hannigan, director and accounting officer. Will you introduce our colleagues?

Mr. Hannigan

I am accompanied by Mr. Danny Brennan, registrar of the institute and Mr. Colin Morrow, secretary and financial controller.

Finally, from Tallaght, Mr. Columb Collins.

I am accompanied by Mr. Paul Caffrey, secretary and financial controller and Mr. Pat McLoughlin who is the head of the school of engineering.

You are welcome. From the Department of Education and Science, I welcome Mr. Paddy McDonagh, Assistant Secretary General. Have you been here before?

Perhaps you will introduce your officials.

I am accompanied by Ms Anne Killian, the principal officer in the third level planning and building unit, Ms Teresa Griffin, the assistant principal officer in that area, and Ms Mary Murray, the higher executive officer in the third level colleges section.

You are all welcome. I interrupted Mr. Purcell on the Carlow Institute of Technology.

Mr. Purcell

Four years' accounts of the institute, up to August 1997, the end of the academic year, are before the committee. I have given a clear report on each of those years because nothing came to light in the audit which, in my opinion, merited public accountability. That is not to say issues did not arise over the period. However, I am glad to say they were satisfactorily resolved by way of management letter, which is the normal channel of communication between my office and the institutes and clients after the completion of an audit.

I have recently certified the accounts for the academic year ended 31 August 1998 and there is no critical reference in that audit report either.As a general point, there were initial delays in finalising the accounts for the regional technical colleges, as they were then known, due to teething problems with the transfer of responsibilities from the vocational education committees to the new governing bodies. Practically all of these problems have since been resolved and the Committee will note the accounts of all the institutes are in a standard format which facilitates comparison and analysis. This also took some time to put in place but in the long run, it was well worth the effort. In relation to Carlow, we are not talking about any critical comments.

Mr. Gallagher, you will be relieved at that. Do you have an opening statement?

I did have an opening statement but I am not sure how relevant it is given we are taking all the colleges together. I wished to indicate the colleges were established in 1970, of which I am sure the committee is aware. The most recent change was the introduction of the Regional Technical College Act in 1992. This changed the structure of the colleges as it established the governing body, director and academic council, a framework for the operation of the colleges within an annual budget with the Department and for the participation of the colleges in R&D. There are characteristics which would apply to Carlow, although I do not know if I should go into them given this is a group session.

The colleges, having been established in 1970, have a 30 year history of development and change. The 1992 Act was just one landmark in that. The next one we are expecting to be implemented fairly soon is the national qualifications Act which will be a change for the colleges. I might leave it at that, if that is all right.

How many students do you have?

At the moment we have approximately 2,500 full-time students and about 1,200 part-time students.

What staff do you have?

We have 303.

Are they all full-time?

How many degree courses do you have?

At the moment we have 11. A 12th was established last week and has to formally go through the NCEA but we understand there is a positive recommendation for that.

Regarding page 5 and the 1997 accounts, which are the most up-to-date available, I wish to ascertain any benchmarks relating to the pupil-teacher ratio, the cost per student, the cost per teacher etc. Is Mr. Gallagher aware of any benchmark regarding these measurements?

Not specifically. The Department of Education and Science allocates a grant but it is not specific in relation to any benchmarking. Locally, we would be conscious of the cost per student benchmark. We would look on that as an overall measure of effectiveness.

How much is the cost per student in Carlow?

The cost per student in the last set of accounts was about £3,700 per full-time student. That is simple division. It is a very simple benchmark.

I realise that.

That is the gross expenditure divided by the number of pupils.

Are the courses offered similar to those offered in the other institutes of technology? Is there an equivalent number of people doing science, technology or business subjects? Would it be fair to say that the students in Carlow and the subjects they are taking are representative of the institutes as a whole?

I would think so. Generally speaking, that would be correct.

The amount of the State grant actually fell from 1996 to 1997. Is there a reason for that?

There is no reason I am specifically aware of, unless some of my colleagues wish to——

Did the number of students decrease?

No, the number of students increased.

From what figure?

In 1995-6 we had approximately 2,500 students and the following year we had an increase of approximately 200 students, bringing the figure to 2,700.

How did the institute compensate for the decrease in the State grant while there was an increase in numbers?

It is not possible for us to compensate in the general sense of compensation - we have to manage with the funds we receive.

The cashflow statement on page 7 shows the amount of cash received by the institute increased from £6.3 million to £7 million. Perhaps the financial officer would know how the initial income figure is calculated. How was that arrived at and why does it differ from the cash received?

I am sorry if I appear hesitant, I am seeking clarification on the point.

Perhaps, with no disrespect, the Comptroller and Auditor General might be able to assist us on that point. The cash figures on page 7 of the Comptroller and Auditor General's report are different. Why has there been asignificant increase in the amount of cash received?

Mr. Purcell

A conflict arises when dealing with universities and institutes of technology in that their accounting year is based on their academic year and the State's accounting year is based on the calendar year. The allocation for an institute such as Carlow would be put at roughly two-thirds of the annual allocation in the Estimates for that institute. As I understand it, perhaps Mr. McDonagh will go into more detail regarding the calculations because it can be quite complex, a certain amount of money which relates to the academic year may be allocated in the final quarter of that year. The amount shown as "incoming State grant" represents the amount allocated for that year. The cash figure represents what they have as of 31 August. There would always be a difference between the cashflow statement and that shown as income. That explains the matter in general terms but I am sure Mr. McDonagh can give fuller details on it.

The colleges receive funding from the State by way of grants. The bulk of tuition fee income also comes from the State. The fees listed under ESF funding are supplied to the institutes of technology for certificate and diploma programmes which predates the introduction of the free fees system throughout third level education. A significant element of that income is also paid through the Vote under a separate subhead. Subhead A4 provides for fees and maintenance grants in respect of students attending programmes in institutes of technology. One needs to add those two items to get the whole picture regarding State grants.

A difficulty exists, as the Comptroller and Auditor General said, in that the Department allocates funding on the basis of the Exchequer financial year, January to December, which tends to cut across two academic years in an institution. We ask the institutions, when they have been allocated their grant, to indicate the breakdown of that grant from January to August and from September to December. We then monitor the situation on that basis. The institutions have indicated they would like to undertake a reallocation of the funds. We would like to move to a position of sticking rigidly to allocations. We have, however, conceded to reallocation in justifiable cases.

If you do not operate a certain amount of rigidity with allocations it is difficult to make comparisons from year to year.

We accept that. The Department has operated with some flexibility to date but we are moving towards getting valid year on year comparisons. There is no problem with the Exchequer calendar year because the Appropriation Accounts illustrate what the year on year comparisons are on a cash basis. We are anxious to commit the institutions, when they make their breakdown, to adhering to their allocations. If the allocation is not precise it can result in a significant deficit or surplus arising at the end of August which would be rectified by the end of the calendar year. One will almost always find that a surplus shown at the end of the academic financial year may have been rectified by the end of December.

Accounts are often window dressed. Is it possible figures from 1996, when the accounts were submitted to the VEC, may have been restated for 1997?

Accounts for 1996-7 are the most recent available. The last set of VEC accounts was in 1992-3. We are four to five years into institute accounts now.

When were the accounts signed off for 1993-4, 1994-5, 1995-6?

Mr. Purcell

The 1993-4 and 1994-5 accounts were signed off on 27 February 1997. The 1995-6 accounts were signed off on 18 December 1997 and the 1996-7 accounts were signed off on 15 October 1999.

Page 7 of the Comptroller and Auditor General's report refers to "other income generating activities" and shows figures of £615,000 in 1997 and £284,000 in 1996. What do those figures represent and why the increase?

I refer the Deputy to page 8, item 5, which contains a breakdown of the figures.

The total at the bottom of page 8 is £710,000 and £790,000 but on page 7 the figures are £615,000 and £284,000. Is Mr. Gallagher saying there was a huge timing difference in when the cash was received? The accounts are done on an accrual basis.

What is the answer to that question?

It is a timing difference.

I do not know what banking institution you do business with but the figure listed under "interest received on short-term deposits" is a huge amount of money. What amount of money was held on deposit throughout 1997? What was the monthly cash balance figure held on deposit which generated that interest?

The average figure is about £1.5 million.

So you are getting in excess of 6%?

On average, whatever the interest rate was at the time.

With whom did you have it on deposit in that you were getting 6% interest?

We normally used treasury management arrangements through our banks. We used the Bank of Ireland but we were also with the EBS, the money market and money was usually deposited for a period to maximise the interest available. It was on deposit for approximately three months.

Was DIRT deducted in arriving at that interest?

The position of all the colleges is that we have charitable status.

So there is no DIRT. Were you getting approximately 6%? At the end of the financial year you had £1.5 million. Is that always the case?

In the early stages we had a considerable amount on deposit but that has diminished over the years.

How much do you have on deposit at present?

I am informed it is approximately £2 million. A considerable proportion of that is restricted reserve.

Restricted reserve - tell us more.

We have an agreement with our students that a certain amount of capitation fees would be reserved for building student facilities.

Do the capitation fees come directly from the students or the State?

Some are from students, some from the State.

When do you intend spending this money on student facilities?

As soon as possible. We are in the process of reviewing our master plan which will be presented, with costings, to the Department next Wednesday. I hope that shortly afterwards we will have a favourable decision from the Department in proceeding with the expenditure of that money.

When would you see it being expended?

I think the money should be expended inside a building period of approximately a year and a half to two years.

What type of student accommodation are you talking about?

Student facilities as opposed to student accommodation. Student accommodation is normally sleeping accommodation, residential facilities. These will be recreational and sports facilities. They are the facilities which were not constructed originally with the regional technical colleges and have been absent from the colleges. They are badly needed. In reality, it is a catching up process.

On the sports and student facilities, including swimming pools and tennis courts in Carlow, what is the position regarding acreage and how do you stack up vis-à-vis the other institutions and universities?

On the stacking up vis-à-vis the other institutes, we are probably reasonably okay with the exception that we are fairly landlocked at present in Carlow. We have a site of approximately 11 hectares and the surrounding region is zoned for housing. In terms of future expansion and potential we are landlocked. On the other hand, I am not really competent to comment on the universities in that I am not familiar with them but, generally speaking, we consider ourselves as the poor relation.

In relation to Carlow - I know it well from driving down regularly - will other lands be purchased outside the campus for recreational facilities?

We anticipate doing that at any opportunity. One or two opportunities have arisen but we have been unable to purchase land adjacent to the college to date largely because the zoning is for housing and residential estates. It has driven up the price of land.

The houses seem to be mushrooming around the college. It must be a desirable location now that there is a higher education facility nearby. Returning to the academic facilities - it would be very difficult to delineate between recreational, dining facilities and so on - but what is the total square footage of the college?

Until relatively recently there were 14,000 sq. m. and in the past month or so we have taken possession of a central services building which is an additional 3,000 sq. m. This provides some general social and dining facilities. We are in the process of taking over an additional 6,000 sq. m. which is a learning resource centre and it is effectively future proofing us from the IT point of view. The new learning resource centre will contain library, multimedia, computing and IT facilities. That will add 9,000 sq. m. to the 14,000 sq. m., giving a total of 23,000 sq. m.

What increase in full-time students do you envisage as a result of the increased facilities?

In the near future, we hope to increase our student numbers by approximately 200. Just in case there is ambiguity, the facilities we have obtained we did not have. The central services building is an increased dining facility, of which we were short. We had literally no social areas outside the classroom space. It is a completion of an organic college. The same comments would apply to our library facilities, of which we were short, but we now have an extremely good facility. Our computing facilities, which have been under tremendous strain, and our multimedia and video facilities will again benefit from the increased space. We are bringing the college into line with the numbers that we have.

Do you think Carlow will be a more attractive location academically and there will be greater competition for places at the institute as a result of these improvements?

It is attractive already.

The objective of the exercise is to bring the institute up to international standards in terms of facilities for students and to make Carlow, with deference to my colleagues, one of the more attractive institutes of technology. The Deputy mentioned a swimming pool and part of our plans is to have one incorporated. Carlow is an inland town 50 miles from the sea. Swimming is a most healthy exercise and recreational facility. We have ambitious plans in the development of student facilities and in many ways the completion of our master plan is to bring the institute up to good standards.

It was not exactly an accounts question, it was an opportunity for you to make a sales pitch, which you have done well.

What research and development facilities are there in Carlow? How successful have you been in that area? Is there staff involvement? Do the staff and students publish papers? What are your plans in this area?

We can be proud of the record of the institute in that area. We encourage research and development and I see it as vital support for the degree courses we run. We have been particularly successful on the international stage.

Regarding funds allocated by the Higher Education Authority and validated by an international review body, we have been successful in the last two sessions in obtaining research money against competition throughout the third level sector. The most recent grant we received was about £1 million. With that we established one new research laboratory and are in the process of establishing another, together with some staff facilities. These are most welcome as originally the Regional Technical Colleges as such had no specific facilities of that nature. We were given more scope under the 1992 Act, but the possibilities for expanding the range of activities were extremely restricted. With the development of buildings and success in getting funding we are beginning to establish a very solid core for research and development.

In relation to publishing papers, our staff and students both publish papers as part of our postgraduate programme. So far we have graduated two PhD students. We also have a number of other research grants and have links with industry. Research, in many ways, has the connotation of pure research, but we also do what we can in terms of the skills requirements of industry in the region and in relation to consultancy testing and related work.

What are the main areas of research?

The main areas of research to date have been in microbiology and food. We are beginning to open the computing area which is becoming a very strong specialisation in Carlow. We have a number of degrees in computing networking and software engineering.

Is microbiology tied into biotechnology?

I suppose I am a bit old fashioned and I use the term microbiology in place of the modern word which is biotechnology or bio-engineering.

What is the average gross pay per teacher in Carlow?

I am not prepared for that question. The quickest way is to take the gross pay and divide it by the number of staff which is roughly 300.

Can you tell me, Mr. Gallagher, of the financial control mechanisms in the institution? What are the structures and audit provisions?

Referring to the previous question, I am advised that £35,000 is a rough average salary.

About the same as a Deputy.

The structure for financial control which has been established in the Institute of Technology, Carlow, is that there is a senior post of college secretary/financial controller who is supported by a financial officer. Both are qualified accountants. Below this there is a substructure of a number of staff concerned in general with payroll and purchasing. Therefore, there is a fairly firm structure, but it has taken a number of years to put in place because all these were additional posts introduced subsequent to the 1992 Act and formed part of the expansion and change of structure programme introduced by the Department subsequent to that Act. In general I think we are in a firm and strong position.

How are you sure you are getting value for money and protecting the assets of the institute?

There are a number of ways of doing that. The strongest way currently is through internal audit. We have just completed the first cycle of the three year internal audits. The intention is that over the three year period every aspect of our financial controls will be scrutinised by an independent authority. Those reports will be returned to the governing body, the Comptroller and Auditor General and the Department.

So there is a separate internal auditor?

Who does he or she report to?

The external auditor reports to the audit committee of the governing body - effectively the governing body.

That is the external auditor?

That is correct.

Is there an internal auditor?

Just to clarify, the external auditor is the Comptroller and Auditor General who reports to the committee. The internal auditor reports to the governing body through a subcommittee. This concerns the three year cycle to which I referred.

Is that function or person completely independent of the financial function?

What role or interest do you take as a director in the reports of the internal audit? Does the internal audit have free access to you? Does it have free access to all papers at all times in each section?

The internal audit has free access to everyone and everything in the institute. At the initial setting up of the audit I met the auditors. Subsequently, they were introduced to all heads of function in the college, about 19 people. Their function was clarified and they were introduced to the staff concerned. It was left open to them who they would choose to meet. Again, I refer to the three year cycle over which period they will have met everybody and have assessed all our internal systems.

We will move onto the Dundalk Institute of Technology.

Mr. Purcell

Again four years accounts up to 31 August 1997 are before the committee for its consideration and again there are no critical comments in my audit reports. However, I have a serious criticism regarding the timeliness of the accounts finalisation. It will be noted that the 1997 accounts were only certified by me last month which is clearly unsatisfactory. The audit of the 1997 accounts was contracted by me to a private firm of auditors and their audit commenced in August 1998. However, they were unable to complete the audit to their satisfaction due to delays in obtaining responses from the institute to their queries and they had some harsh words to say about the provision of information by the institute. They discontinued their involvement in March 1999 and my staff eventually finalised the audit.

The difficulties continued on the audit of the accounts for the academic year to 31 August 1998 which was undertaken directly by my staff. The audit field work was completed last August but I am still not in a position to issue an audit report. According to the acting director, serious staff shortages in the finance office are the root cause of the delays in clearing audit queries and providing information requested.

Mr. Carroll has submitted a written statement and may wish to summarise it.

Mr. Carroll

I wish to refer to some of the points in the statement - I do not propose going through it in detail. As was the case in Carlow, the institute was established as an autonomous institution on 1 January 1993. We have about 2,800 students in total and approximately 300 staff. In general we serve the north-east region, namely, Louth, Meath, Cavan, Monaghan and, increasingly, north County Dublin. Like other institutes of technology we have courses which range from craft or apprentice level through technician and higher technician, degree and post-graduate level. The areas of specialisation include engineering, design, food science, building surveying, humanities, applied cultural studies and community development. Therefore, we have the standard courses found in any institute, but in our region we find we have adapted our courses to suit particular requirements.

We were probably one of first institutes to get involved in supporting start-up technology based businesses on campus. That would include new company incubation facilities which we started in 1989 prior to the Act and expanded in 1992 and 1997. That scheme supported about 20 new start-up companies and employed about 200 people.

Back in the late 1980s and early 1990s the job creation aspect was extremely important and we felt that this was something positive we could contribute to in the region. More recently we have been involved with other partners and other institutes of technology in supporting the development of the new Objective One area.

We have been involved quite extensively in research and development. Our particular focus has been in the applied research area, particularly with existing SMEs and indigenous SMEs. As was the case in Carlow and possibly other institutes, we have been involved in fairly significant campus development and building works in an effort to catch up on deficiencies that existed in the early 1990s. We hope to continue this process.

I welcome Mr. Carroll and his colleagues. I was not aware that he was a temporary director. When will the post be filled?

Mr. Carroll

I have been temporary director since 1 March because the previous director, Dr. Seán McDonagh, who held the post for almost 30 years, has gone to head up a new unit called the skills initiative unit. It is proposed to fill the position within the next number of months. But until such time, under the relevant section of the Act, I have been asked by the Minister for Education and Science to fill the position in a temporary capacity.

The Comptroller and Auditor General commented on the timing of these accounts. It seems to be a problem throughout the public sector, particularly in the regional colleges and educational institutions. We are examining accounts for 1994 to 1997, inclusive, and most of them are totally irrelevant. Many changes, additional courses and buildings have been initiated in Dundalk since then. I know this because I was in direct contact with the Minister at that time. It seems to me that we are examining a situation that is way out of date. For example, the governing body in Dundalk approved the 1997 accounts on 15 February 2000. According to the date stamp this committee received its accounts on 30 March 2000. We do not know what happened in 1998 and 1999. I am not criticising Dundalk but it is something we must deal with. We should gear ourselves up and insist that educational establishments submit accounts for the previous year. We should be examining the 1999 accounts now. We should consider this matter further. Neither my colleagues nor I approve of dealing with accounts that date back to 1994. This is ridiculous.

On page 11 of the 1997 accounts there is a heading "Sports and Recreation". In 1996 the cost of sports and recreation was £33,000 and in 1997 it was £38,000. Can Mr. Carroll explain this? That seems a very small amount of money from the overall budget. Perhaps funding has been incorporated under other headings. Can Mr. Carroll tell us what the Dundalk institute could do with just £38,000?

Mr. Carroll

That amount of funding is quite small. It is used to support coaching services for various student activities, predominantly field sports but that also includes indoor sports. That sum would pay for part-time coaches. It would not include any facility costs. Like other institutes we have been trying to gear up and update our sports facilities. We have some outdoor pitches but we are proposing quite an extensive improvement in this area. We are also improving indoor sports facilities with the assistance of capitation funding.

There is a need to increase funding. We try to use the funding that we have as judiciously as possible and we try to spread it across as many areas as possible. We are always trying to increase that level of activity. We are planning to increase our sports facilities in the coming years. We hope that the use of them will help to bring in additional funding on a self-funding basis and that will help increase the sort of services that we should be offering to students.

Is that a normal departmental allocation and is there no allocation for sports and recreation? The governing body decides on the funding on a yearly basis.

Mr. Carroll

It is and we take that out of our capitation. Each students pays an annual capitation fee of £278 and that is used to fund a number of ancillary activities. They include sports and recreation, clubs and societies, the students' union and other social and recreational facilities and services. The funding does not come directly out of the Department's allocation.

Dundalk is one of the newest Regional Technical Colleges in the Border area. Its building programme has been fairly extensive. The initial cost was supposed to be £3.5 million but the final cost will probably be more than that. I know emphasis was to be placed on the tourism, catering and hotel industries. Can Mr. Carroll tell us what is the current state of that programme? It could not be included in the 1997 accounts?

Mr. Carroll

The tourism, recreational and, in our case, the hospitality studies, which are predominantly courses certified by CERT, are new to us. We had not been involved in those courses up to 1998 when the particular facility Deputy Bell referred to was completed. That particular activity supports almost 300 students at present. It is a whole new discipline area. It also means that the region's tourism infrastructure is being supported by a whole new cohort of students and that is to be welcomed.

In relation to the Border area, Members will be aware that Dundalk suffered quite a lot from adverse publicity over the past 30 years. It was not easy to attract students to the college. Thankfully, the situation is improving now. The inclusion of programmes in our institute to support tourism must be a positive step for the development of tourism in the Border region. We offer formal full-time courses. We also have specialist staff on board within that discipline. They are beginning to work with the region's tourism industry and they will help develop that industry through a range of activities such as part-time and updating courses.

Letterkenny Regional Technical College and Dundalk Regional Technical College are closest to the North. Is there any interaction between Dundalk Regional Technical College and the Northern Ireland Administration? If that is happening has that Administration made special arrangements to fund or part fund courses?

Mr. Carroll

We have been involved in cross-Border activities almost from the start. We were involved in quite an innovative programme called the masters of business administration programme. For that programme we co-operated with the University of Ulster for many years. That course supported the development of owner managers in small businesses. Since then we have been funded under a number of cross-Border funds, including the Interreg programme and the new peace and reconciliation programme. Those funding packages have supported the development predominantly of programmes in enterprise and entrepreneurship, where we have co-operated with a range of organisations such as Newry and Mourne, Omagh and Enniskillen enterprise agencies, in developing programmes to support the development of new small enterprises in the Border region. There we are using the expertise of our business and engineering schools in co-operation with the expertise of those cross-Border bodies to develop courses and programmes. These are not merely courses. They are actually support programmes which involve the expertise of all the institutes assisting the set-up of new enterprises. That is predominantly where we have concentrated our efforts on a cross-Border basis.

I noted on page 13 of the 1997 accounts that there seems to be a big shift in the trade credited and other creditors from 1996 to 1997, to the tune of more than £500,000. What is meant by trade creditors and other creditors? Who are the other creditors? What is the financial arrangement in relation to that activity?

Mr. Carroll

In relation to the increase in the other creditors, I mentioned earlier that we are funding the provision of new facilities for students. This was referred to earlier in the Carlow presentation. We are doing a similar thing in Dundalk. We are accumulating some capitation funding as a development fund for new student services facilities. A new building will come on stream next September which was funded over a period of a number of years by accumulating capitation funds and matching that with other funds, including some Interreg funds. That is why that is increasing. It is a reserve fund which has been put in place for that purpose. That fund will be exhausted by the end of this year or early next year because the building payment will have been taken out by that stage.

I thank Mr. Carroll. I hope we will both be back next time.

What is the total number of students?

Mr. Carroll

We have 2,840 whole-time equivalent students. This is made up of approximately 2,600 full-time and about 800 part-time and apprentices.

What is the equivalence for a part-time student? Is it one third?

Mr. Carroll

No, it can vary. Some are attending one evening a week and some are attending en bloc. It really varies. Apprentices, specifically, are one third.

That is 2,840 equivalent full-time students.

Mr. Carroll

Correct.

What is the equivalent full-time student population in Carlow? It was given as 2,500 full-time and 1,200 part-time. Does Carlow have a full-time equivalence?

Again, it is a figure that is mainly composed of part-time students. As has been mentioned, the equivalence depends on whether students attend one or two evenings per week. We have 1,200 part-time students and on average, we divide that figure by eight or ten. The figure is approximately 150.

What is the number of degree courses offered at the moment?

Mr. Carroll

We offer six degree courses.

Is it intended to increase that number?

Mr. Carroll

There are four additional degree programmes under development within the various schools of the institute.

What is the square footage or square metreage?

Mr. Carroll

At the moment it is about 29,000 square metres. That is a considerable increase. I qualify that by saying that it includes buildings currently under construction. By early next year the area will be around 29,000 square metres. We started in 1994 at around 18,000 square metres. If one divided the student numbers in 1994-95 by the area available and did the same exercise now, one would find that we are just keeping up, with regard to square metres per student. The building programme is just about keeping pace with the increase.

How successful has Dundalk been with regard to research? What fields of research are undertaken, how many people are directly involved in it, have any staff become involved in research and have papers been published?

Mr. Carroll

Carlow mentioned earlier that some of their activities fall into the basic and some into the applied area. Our focus in Dundalk has been on the applied research area - by applied research I mean contract research with existing companies. Some basic research is ongoing but it is quite small and has not reached a critical mass yet which would enable comparisons to be drawn on the publication of papers. Some academic staff have been pursuing further degree programmes and have published. Our main focus has been in applied research with industry. The discipline areas in which that has occurred are symptomatic of the way the economy has been developing. Research has been mainly in software development and also in engineering design. We regard ourselves as being quite strong in those areas, from the research point of view.

We have been involved in quite a number of European programmes in the area of academic and student entrepreneurship where we have been working since the mid-1980s, and certainly since 1989, in supporting new enterprise development. That has involved quite an input from across the college departments and schools, in particular from the business school.

We have not carried out a census of the number of staff involved but I guess that more than 30% of our academic cohort are actively involved in a range of activities. I would include in that research, enterprise development support, consultancy and customised training programmes. By customised training I mean programmes specifically offered to meet a particular company's needs, as opposed to the part-time suite of programmes we offer to the general public.

May I return to what the Comptroller and Auditor General said at the outset? If what he said about the Dundalk Institute of Technology had occurred in a private industry, the company would have gone wallop. It was an awful indictment of the management system in Dundalk.

Mr. Carroll

I agree and it is very difficult to put a defence on that. We are trying to rectify the situation. It was caused by two main factors. One was significant staff changes over the last number of years whereby the director was seconded for a period of time to head up the new unit I mentioned earlier and to which he has now gone permanently. That left a number of acting-up positions. The secretary/financial controller was acting as director and the finance officer was acting as secretary/financial controller. The staff complement in the accounts area was not what it should have been.

A more serious problem was that our payroll system, which has to be taken into account when producing an accumulated set of accounts where we are putting the pay and non-pay together on a more regular basis, was inherited from the VEC and had not been updated. Steps have been taken to rectify the matter and it will not happen again.

Luckily, we are also in the situation where we have a full staff complement in the accounts area. We will always need more but, at least, we have senior staff there now who are addressing these problems. We have had to take in some external accountancy experts from the private sector to support us in the interim to get to the point where we are bringing the information more up to date but, unlike other years, for this year's accountswe expect to have sets of accounts available by the end of the year. Traditionally, they would have been available the following year. We hope to rectify the situation and get back on par this year.

There is no excuse for taking one year to answer queries, other than the ones I have offered. Unfortunately, that did occur. We have been addressing these and hope to catch up on that basis. I agree with the Deputy that it is a serious indictment. All I can say is that we are trying to rectify the situation.

You speak very well and knowledgeably. What is your background?

Mr. Carroll

I am one of those creatures known as an engineer. I am not an accountant. I am a mechanical engineer by background. I was head of development at the institute prior to becoming temporary director in the last few months.

Did you have financial responsibility?

Mr. Carroll

I did, mainly on the capital side, but not on the operational side. You will have to excuse my ignorance, therefore, on some of the technical questions relating to the accounts. I was also responsible for the research and development side.

What is the cost per student?

Mr. Carroll

If we divide total expenditure by the equivalent number of students, the cost per student is about £3,600.

How much, on average, does Dundalk Institute of Technology have on deposit?

Mr. Carroll

I am advised that currently we have about £200,000 on deposit but it varies somewhat. It can be as high as £1 million, typically about £500,000.

Are you happy that that money is invested at the highest possible rate of interest?

Mr. Carroll

We have a system known as chary cash through Allied Irish Bank under which the money is invested on our behalf with our bankers. We review the situation. In fact there is a review taking place of banking arrangements which will include a review of chary cash rates and bank charges generally. At this point in time we are confident that we are getting a good return.

On public-private partnerships, how have you developed with industries in the area in relation to partnerships that would benefit the college, community and partner?

Mr. Carroll

The public-private partnerships in which we have been involved essentially have been contractual research arrangements. Outside of that we have not been involved in the type of PPPs that have occurred in other agencies such as construction projects or student residences which are particularly popular. There is a working group under the council of directors of institutes of technology examining PPP arrangements on a number of fronts but it has not come up with any models as such. I am aware of one other institute in the sector which is involved in one of the pilot projects under the PPP arrangements for the construction of a particular faculty but in Dundalk we have not had that experience. The nearest that we have come is the partnership that I described on contract research with industry.

Is Rank Xerox establishing——

Mr. Carroll

It is.

It is projected that the numbers employed will be very substantial.

Mr. Carroll

The projections are that in excess of 2,000 jobs will be created in Dundalk in five individual plants which are in extensive recruitment mode. This is one of the areas in which we have co-operated closely with the company. We have accelerated technician programmes in which we are attempting to provide the skill base required. For a region such as the north east and a town such as Dundalk providing the skill set needed - I estimate that up to half of the 2,000 will have third level qualifications - is a daunting task, even from the graduate body in the region. We are working closely with the company to develop customised programmes to meet its needs. These would include upskilling programmes for people in employment. Like other industries, the company is very conscious of the need to upskill its workforce whereby technicians can pursue diplomas and those with diplomas can pursue degrees. This requires a partnership, which is ongoing. We have set up a liaison group to deal specifically with the company because of its size and skill base.

At what level is the relationship between the institute and Rank Xerox? It is an ideal opportunity for the institute to take a proactive approach and for the director to become involved. There are substantial benefits to be derived for the local and national economy.

Mr. Carroll

I regularly meet the managing director of the company. We are both involved in a number of chamber of commerce initiatives but we meet formally to discuss interaction. There is also a subgroup. The company has a range of discipline needs, of which engineering is one. A liaison group has been set up between our engineering school and its engineering managers which liaises specifically on engineering matters. Another group has been set up on training specifically between our industrial liaison office and its training unit. It is happening, therefore, at many levels as one can imagine - I almost had forgotten - our careers office is in regular contact with the company and the company with us.

Have you managed to get any funding from it?

Mr. Carroll

We are in the process of negotiating a number of packages. When it arrived in Dundalk the company was very quick to enter into an arrangement whereby it supported a number of student bursaries. That was very popular.

Tell me about internal audit arrangements in the institute.

Mr. Carroll

We are in the same position as Carlow. We do not have a specific internal audit person but, like all other institutes, we have engaged the services of an external consultancy which will provide internal audit services. The arrangement is that the internal audit service will deal specifically with a subcommittee of the governing body known as the finance and audit subcommittee and report to the governing body. We are programmed to have our first internal audit on 15 May.

What land does the college own?

Mr. Carroll

We have approximately 20 acres in total - I cannot convert this to hectares - approximately half of which has been developed. We are in a position where we have enough land for future development.

What about sporting facilities?

Mr. Carroll

A new range of sports facilities are planned. Unfortunately, because of the situation we were in over the last number of years the existing pitch areas were taken over and used as building, car parking and entrance space. They now have to be replaced. This will be done over the next number of years.

Does this involve the acquisition of more land?

Mr. Carroll

No, this will be done on the property that we already own.

What about the zoning of the land?

Mr. Carroll

In the urban council development plan it is zoned for educational use.

How many students do you have from the North?

Mr. Carroll

Very few. The figure is about 2%. The problem is that there is a mismatch at qualification level, either at O or A level, in matching our requirements. We would have to deal with students on an individual basis. Obviously, anyone who meets the entry requirements is taken. This is one of the things we recognise in a Border college, that we are going to have to, if you like, focus more on attracting students from Northern Ireland.

I suppose this applies to Letterkenny and Sligo as well. Has the Department of Education and Science any thoughts on the developing political situation - that the hinterland for these colleges might be expanding to the North?

There is an intention and consideration is being given to doing a study or even dual studies in cross-Border areas - Dundalk, Newry, possibly Letterkenny and Derry - to look at how cross-Border co-operation between the colleges might be nurtured and developed and also how one might develop synergies in relation to the whole area of further and higher education in that regard. In general, Letterkenny in the past has drawn to our attention that there is one difficulty in that regard in terms of the flows across the Border in that students from the Republic who wish to attend the equivalent of institutes, let us say colleges of further and higher education in Northern Ireland, are eligible, in many instances, for grant aid. In other words, they can carry a maintenance grant. There is not a reciprocal arrangement under the British system. There is no grant aid available to students coming from the North to study in certificate diploma type programmes in the republic. That can be a constraint on cross-Border movement.

To be clear, students going from the Republic to the North would be subvented by the Department of Education and Science here?

Yes. Students, for instance, from Letterkenny. In certain parts of Donegal the transport arrangements make it easier for a student to go into Derry to the further and higher education college in Derry.

Or Coleraine.

That student from Donegal, for a range of courses in the equivalent in Derry of the institute of technology, can get a maintenance grant for attending the course.

From our Department?

From our Department of Education and Science, whereas, as I understand it, if a student from, let us say, Newry or Derry, wanted to go to Letterkenny or Dundalk, they do not have the same maintenance grant arrangements.

Is that something that we are discussing with the education authorities?

It is something that we have raised on a number of occasions. It links into the national arrangements that apply in Great Britain generally that they tend to grant aid on the basis of degree provision rather than diploma provision.

In relation to degree provision, what is the situation?

In degree provision, students from Northern Ireland can carry maintenance grants and loans to the South. That is my understanding.

And vice versa?

And vice versa.

But not at certificate/diploma level?

At certificate/diploma level we do encounter some difficulties in that area.

Extraordinary. We will pause and go on to the Letterkenny Institute of Technology.

Mr. Purcell

There are two references to the Letterkenny Institute of Technology in my general report on the education sector which was presented to Dáil Éireann in January 1998. The first draws attention to inadequacies in the management of the institute after it was set up as an autonomous body which led the Minister for Education to appoint an inspector to report on its administration. The inspector's report, published in October 1994, was critical of a number of aspects of the institute's management and, as a result, a commission in the form of a sole member was appointed to run the affairs of the institute for two years.

The institute has since reverted to normal governance mode but I would think that the early difficulties contributed to the drop in enrolments in the years 1995-7 over the 1994 levels. Thankfully, the institute seems to have put those problems behind it and enrolments of full-time students in 1998 and 1999 have shown an appreciable increase.

The second reference in the report is to the fraudulent payment of student maintenance grants which was brought to light by my staff in the audit of the 1994 accounts. They identified two irregular payments to a value of £1,299 and it was eventually established by the institute, with the help of the Garda, that nearly £12,000 was involved. The £1,299 was recovered and I understand that the balance is to be taken out of the superannuation entitlements of the officer involved who, again I understand, has since tendered his resignation. I should say that the system for paying the grants was changed and a much stricter control regime was put in place.

As to the accounts themselves, there is the familiar problem with timeliness. The private sector audit firm which I engaged to perform the 1997 audit was unable to complete its work because of delays in the furnishing of information. So, there is a similar problem here to that which occurred in Dundalk. As a result, I was unable to issue my audit report for that year, the academic year ending August 1997, until October 1999 - over two years later. I am still awaiting adjustments to be put through on the accounts for the academic year ending 31 August 1998 so there is a common problem.

Mr. Hannigan, do you want to make a brief statement?

Mr. Hannigan

Yes, I would like to say a few words, Chairman, thank you very much. In relation to the comments made by the Comptroller and Auditor General, it is necessary to go back a little over some of the things which happened in the past. The college became autonomous in 1993 and had some difficulties in the transition period at that time. The Comptroller and Auditor General has made reference to some of the issues that arose and, from having student enrolments of around 1,500 in the 1993-4 academic year, the numbers reduced to just over 1,200 for the three subsequent years. As was also pointed out, the numbers have recovered dramatically in the past three years where we now have around 1,900 full-time students in the college. It has gone up from 1,550 in 1997-8 to over 1,700 last year and up to 1,900 this year, so we have recovered very well in that respect.

As to the contributing factors to that turnaround, the commission was put in place for two years and then as director for his final year in Letterkenny and the return of the governing body. We had investment of up to £12 million by the Department of Education and Science in the college's infrastructure and capital developments. We have also expanded our course provision from an institute where we would have primarily had certificate and diploma programmes. In September of this year we will have on offer eight degree programmes within the institute, one of which will be an ab initio degree programme which, hopefully, will be able to attract some students from Northern Ireland, an issue which has already been brought up this morning.

Our continuing education programme has also expanded with over 500 students at present. Again we are involved in relating to the skills shortage programmes brought forward by the skills initiative unit, particularly the national certificate in information technology for which we have had very good enrolments over the last while.

The employment of graduates locally is also an issue of which we are very proud. Traditionally there has been a migration of students or graduates from the Donegal area to other parts of the country. Our figures show that, in the last two years, the county has retained up to 40% of our graduates who have found employment. We would see this as a very important development from our point of view.

Also, in terms of our own enrolment, we are taking a large percentage of our students from the county. Up to 70% of our students are from County Donegal. Over 70% of them are first preference students so we would see that we have regained the confidence of our region and we are addressing that at the moment.

We have also made strides in terms of research and development and in developing the local economy. It is a well-known fact that Donegal has gone through more difficulties than others recently and has an unemployment rate of around 22% compared to the national average of about 5% to 6%. The institute sees itself as a major player in terms of turning the economy around and has participated in the recent Donegal employment initiative task force. We are looking at initiatives in which we can improve the attraction of foreign direct investment into County Donegal and also that we can provide further employment in the county for our graduates.

Mr. Hannigan, could you respond to the delay outlined by the Comptroller and Auditor General in relation to the 1998 accounts? As you are aware, our primary function is to see that funds are spent and are accounted for on a timely basis. We take it seriously and we take seriously comments by the Comptroller and Auditor General that these delays have occurred and are still occurring. What is your response to that?

Mr. Hannigan

The institute takes the delays very seriously as well. There are two issues to which I would draw attention. One is the staffing issue. Earlier Mr. Gallagher from Carlow outlined the structure in terms of financial controller, finance officer and support staff. We have had a position where we have had turnover in the position of finance officer over the last three or four years. We have actually just appointed a full-time person last week. Previous to that we had three incumbents in the job who left for various reasons so we have had some difficulties there, but we now believe we have sorted that one out.

As a result of one of the earlier reports from the Comptroller and Auditor General, there was a question over whether the accounting system we were using was 2000 compliant. We had to make a change in that regard and we were introducing a new system, which again caused some delays in getting the accounts prepared. We believe we have addressed the issues that were causing the delays and that we will not be falling into that situation from now on.

When will the 1998 accounts be finalised?

Mr. Hannigan

The 1998 accounts are almost completed. There were a few queries and they are being addressed.

Does the Comptroller and Auditor General agree with those sentiments?

Mr. Purcell

Earlier the Chairman, Deputy Mitchell, suggested that this is a topic the committee might take when all of the institutes have been reviewed. Perhaps I would hold my fire until then.

What are the specific items of the accounts with which there is still a problem? Is it to do with salaries, PAYE or something else?

Mr. Hannigan

They are just minor issues with respect to journal entries as to the year in which the money was spent.

Is it to do with the allocation of cash?

Mr. Hannigan

Yes.

Are decisions to be made in this regard? Must people think about it?

Mr. Hannigan

The issues were being addressed while the new accounting system was being put in place and the delay was caused by introducing this system. The queries were put forward by the Comptroller and Auditor General. They have been addressed by the college but the actual physical response must be prepared on the new system. That is the current position.

Would Mr. Hannigan let the committee have a written note to explain the particular problems in this regard, how he will resolve them and when they will be resolved?

Mr. Hannigan

Yes.

How many full-time students were there in the college for the 1996/7 year, the last year for which there are accounts?

Mr. Hannigan

The number of full-time students for 1996/7 was 1,290. I am not sure how many part-time students attended that year. There were probably about 400 or 500 part-time students.

One could account for a part-time student as 20% of a full-time student or the equivalent of 90 full-time students in this case.

Mr. Hannigan

Yes.

Therefore, 1,290 plus the equivalent of 90 full-time students equals 1,380 or, approximately, 1,400 full-time students. What was the cost per student?

Mr. Hannigan

The cost per student at that time was £4,200.

How many different disciplines are covered? How many degree courses does the Letterkenny institute offer?

Mr. Hannigan

To break it down into disciplines, we provide courses in business studies, science, engineering, nursing, graphic design and computing. We provide the following degree courses, which are a progression from our diploma courses: a Bachelor of business studies degree; a BSc in applied computing; a BSc in nursing, which is a part-time programme at present; a Bachelor of legal studies, which is in the business studies area and a Bachelor of food science.

There are a number of new degree programmes which are coming on stream in September, one of which is a BSc in an analytical science. The new degree in computing is in data communications and networking. The difference in this and other programmes which the institute has had on offer to date is that it is an ab initio degree programme - it is a four year programme from day one. It is an important one from our point of view. It is the first degree in Letterkenny Institute of Technology which has that structure. Relating to the issues which were brought forward about trying to attract students from Northern Ireland, that might be a course which will be able to stand on its own in that regard. A BSc in digital media will be coming on stream in September also.

Those courses are in place. There are other proposals on-going also. Our aim is to give any student who comes into Letterkenny Institute of Technology the opportunity to complete a degree programme with us. In the past there has been a fair migration of students either from certificate or diploma programmes to other colleges in other areas to complete their studies. We feel we have an obligation to try and offer the provision within County Donegal for the people who are attending the institute.

Of all the courses, where is the niche of Letterkenny Institute of Technology? Where is its selling point?

Mr. Hannigan

Before picking out the courses, the investment which has occurred over the past few years has really brought us into a new realm in terms of information technology. We have moved the college into a position where it has a very high-tech infrastructure. That would be reflected in our course provision. All courses would have a strong IT element to them. We have undertaken a great deal of expansion in the computing area, particularly with the degree which came into place in 1997 and with the new degree coming on stream. There has been strong development in the computing area and we would see that as a niche area. We would also relate that to the regional development of County Donegal because, on the subject of the recent job closures, we are trying to change the nature of the employment which can be created there. The institute must obviously see itself as a leader in terms of providing the raw material in order to do that.

The other area in which we would see specialism would be that of graphic design. It is an exciting area for students at present and the numbers applying for that programme would show that there is a regeneration of interest in that area. There are good enrolment prospects for that course at present.

The nursing course allows us a great deal of interaction with the health board, etc. The institute offers a degree in legal studies which is slightly different to those which would be available elsewhere.

To turn to interest income, on 31 August 1997 there was £1.5 million in the bank. The interest income for the year was £16,000. The average may be different but another college had the same amount of money in the bank and yet had six times as much interest income. What is the average amount of cash which the institute has in the bank or on hand?

Mr. Hannigan

On average, we would have about £0.5 million at the beginning of the month, reducing to about £0.2 million at the end of the month.

Where is the money invested? Was the institute getting more than 6% interest on the total balance during the 1996/7 year?

Mr. Hannigan

We would be working on the same system as Dundalk Institute of Technology in terms of the chary-cash arrangements. Our banker is AIB also and the same system would apply.

Which bank represents Carlow Institute of Technology?

It was the Bank of Ireland but it is now Allied Irish Banks - as a result of recent tendering we changed banks.

What space is there in Letterkenny?

Mr. Hannigan

We have approximately 14,000 square metres. That includes a new business development centre which is currently under construction. We had an existing business innovation centre that was constructed in the beginning of the 1990s. This has outgrown its usefulness at the moment and we are building a new centre. We have had a lot of interest from small businesses that wish to take incubation units within the centre. It will also help us to develop our training and consultancy arm for which there are facilities.

Do you plan any more building? You seem to be well behind the average.

Mr. Hannigan

We have a campus development plan which was broken down into various stages. Phase 1 provided administration offices. Phase 2A included the completion of nine computer laboratories, a new library, four lecture theatres and a new restaurant, while updating the existing building. Phase 2B is the next stage of development. At the moment our design students are in a separate campus. We have had to rent facilities from the North Western Health Board and some students are in part of St. Conal's Psychiatric Hospital, Letterkenny. We have been renting part of that building for ten years. This is not satisfactory from our point of view and we have been trying to relocate the design students back on to the existing Port Road campus. This will be the next stage of the development. We hope to begin that phase this summer.

What space will you have when that is complete?

Mr. Hannigan

We will have an extra 4,000 square metres. We are replacing what we are renting and we will also have additional accommodation. A major problem we have, which the other colleges do not have, is that we do not have any major recreational facilities on campus for students at the moment. When we were developing phase 2 of the campus, the existing gymnasium had to be taken in to provide lecturing space, etc. In the campus development plan we have a space and building provided for what is called the multi-purpose centre which would include indoor sports facilities, plus the student services already mentioned such as chaplaincy, careers offices and student union offices etc. We have facilities in the existing campus but it is important that there are dedicated student facilities. Currently we are retaining funds from the capitation fund, as the other colleges have done, with the agreement of the students, towards the development of this facility. We need to get something on campus soon in terms of providing something for the students.

Mr. Hannigan has very compliant students. I do not think they were like that when a member of this committee was present. What amount of land do you have?

Mr. Hannigan

We have approximately 14 acres and we are landlocked also. If all our campus development plan was in place we should have adequate facilities in terms of dealing with the number of students we have. We must develop the other aspects of our site.

Fourteen acres seems a small amount.

Mr. Hannigan

It is quite a tight site but the campus development plan has been planned to make best use of the facilities.

Would Mr. Hannigan remind us about the circumstances surrounding the putting in of an inspector under section 20 of the Act and whether the recommendations are all in place?

Mr. Hannigan

I came to the college in January 1998. The commission came to Letterkenny in December 1994 and stayed until December 1997. He was two years there as commission and one year as director. He dealt with the recommendations in the inspector's report and these issues have been addressed to the Comptroller and Auditor General. How they were dealt with is included in the 1995 report. They were dealt with successfully.

Normality took over again, so to speak, from when?

Mr. Hannigan

The commission was in place for 1995 and 1996 as the director the chairman of the governing body and the governing body. In December 1996 a new governing body was put in place and the commission became director for one additional year. The governing body and director were in place from December1996 and in December 1997 the director leftthe position and I was appointed in January1998.

Is it an entirely new governing body?

Mr. Hannigan

I could not comment in terms of the membership. Some members overlapped from the previous governing body but it was a newly appointed governing body. The majority of members are new from what was there previously.

Where did you come from, Mr. Hannigan?

Mr. Hannigan

I came from Dundalk. I was in Dundalk for ten years between 1987 and 1997. I left there in December 1997 and went to Letterkenny in January 1998. I am originally from Donegal.

When will the delays in responding to queries from the Comptroller and Auditor General be addressed?

Mr. Hannigan

With respect Chairman, while you were out we already dealt with this issue.

Let us express them again.

Mr. Hannigan

Deputy Ardagh has requested that I write to the committee outlining the issues and how they will be dealt with. The Comptroller and Auditor General mentioned that he will deal with the group at the end of the meeting.

Have you any plans to bring these issues up to date?

Mr. Hannigan

Yes. The issues are being dealt with at the moment. As I said earlier, we have put in place a new accounting package. One of the recommendations of the previous Comptroller and Auditor General's report was that we must have a 2000 compliant computer package for the accounting area. We put that in place and some of the delays in dealing with the queries from the Comptroller and Auditor General have arisen from that. We are aware of this and will ensure that no further delays occur in future.

Describe the financial control arrangements in the institute.

Mr. Hannigan

The financial control arrangements are similar to the Carlow situation. I am accompanied by the secretary and financial controller. We have a finance officer and other staff within the department carry out the routine work.

Does the financial controller report to you directly?

Mr. Hannigan

Yes.

How do you draft and keep control of the budget?

Mr. Hannigan

The programmes and budgets are developed each year for the Department of Education and Science in terms of the courses we propose to run. Therefore, the costings related to this in terms of the budget for the year must be drawn up two years in advance. We would present them to the Department of Education and Science and we would then have a meeting with the Department at which our budgets would be presented to us. Having got our budget we would be in a position to divide it out among the various areas within the college, whether the academic departments, computer services, buildings or whatever else. The division is made on the basis of need at the particular time.

Is there a budget profile drafted at the beginning of the year in relation to the expenditure or income likely on a monthly basis?

Mr. Hannigan

Yes, and monthly financial reports are presented to the governing body.

So that corrective action can be taken if there is any deviation?

Mr. Hannigan

Yes.

What about internal audit?

Mr. Hannigan

Again it is a similar situation to the previous colleges. We are part of the internal audit machinery that has been set up where external consultants visit the colleges. Our first visit is scheduled for the end of May this year. It is exactly the same structure as already presented.

We will move on to the Institute of Technology, Tallaght.

Mr. Purcell

There are four years accounts up to 31 August, 1997. There are no specific criticisms contained in the audit reports. However, there have been delays in finalising accounts. I am not yet in a position to issue my audit report on the accounts for the academic year ended 31 August 1998.

As was said earlier, we can tell from today's proceedings that there is a recurring problem in the institutes and I believe there is a need for assigning a higher priority within all the institutes to accounts preparation and clearance. There are historical reasons as to why there would be problems. When they came out from under the umbrella of the vocational education committees there were some difficulties in the allocation of staffing, resources and so on. I am sure all the people here today could testify to some of the teething problems that were involved.

There was also a problem in resourcing the finance function. The directors and the governing body saw it as their first duty to build up an academic base and to gain credibility as early as possible. Unfortunately, in these situations things like finance and accounting become an irritant and sometimes slip down the priority list. That can have its own repercussions. We saw an example of it in Letterkenny, which has thankfully been sorted out.

However, I think the institutes are at a stage of their development now when they are mature enough to get to a position where these things can be sorted out. The introduction of a cyclical internal audit being provided by a leading firm of accountants is also a very good sign. Bringing the computer systems up to date was also very necessary. We heard earlier about a payroll system that was inherited from the VEC and was still in operation up to recently in one of the institutes.

I would compare this with a similar problem we had - albeit on a lesser scale - with the regional fisheries boards where the committee took a tough line. With a bit of hard work and good will all round on the part of the Department, the institutes and my office, it is possible to bring these kinds of problems under control. Perhaps it is time to take an approach to the accounts of the institutes similar to that of the regional fisheries boards, which we have brought up to date from an accountability point of view.

That is something we will come back to. Mr. Collins, do you wish to make an opening statement?

Thank you, Chairman. First, a few general remarks with regard to the institute. The accounts in question cover a period when the institute was new in starting up. It was an exciting and challenging period in our existence. We have tried to establish courses at least as good as those of our colleague institutions. One thing that makes us stand out as a little different is our integrated programme of full and part-time practical higher education. We have also established extensive links with business and the community and devised special courses to support employee development in major firms. Indeed, with some of these - Intel and Hewlett Packard - we have entered a joint venture to establish a technician development centre. Applied research and development are also firmly established in the institute. This is essential for the development of appropriate programmes of education. The college has, in its early existence, come a long way and I want to pay tribute to the work of the staff involved at all levels.

In general, our accounts have suffered in the same way as other institutes in that they have not always been on time. In the current situation, Mr. Purcell referred to the closure of the 1998 accounts. This is almost complete now. There are some small issues outstanding and I will ensure that these are now dealt with. I believe they are almost completed but they will be dealt with in the next week or so. I believe we are in a position to ensure more timely accounts for the future.

How many students do you have?

This year we have 2,200 full-time students and 1,500 part-time students. The whole time student equivalent would be 3,200.

How many of those are from Tallaght?

Some 25% come from the Dublin 24 area, which would include Tallaght.

A quarter.

Yes. Some 95% to 97% come from either Tallaght or the surrounding districts. This is simply due to the fact that there is a shortage of higher education places in the Dublin area, so Dublin is still exporting students to many of the other institutes.

What land do you have?

Nearly 14 hectares, 45 acres. We started off with 25, but recently another 20 acres became available to us and we were fortunately put in a position to purchase that.

That is valuable property.

It certainly is. We have a campus development plan almost finalised. We hope to be able to run it by the Department of Education and Science in the very near future because there are quite a few developments that have to take place on campus.

Is there anything we can do to help you, Dr. Collins?

Everything - if you can persuade your colleague, the Minister for Education and Science, of the need for further developments in Tallaght. The steering committee on higher education recommended that Tallaght grow to 3,000 full-time students by 2000. We have already passed that. We are completing an extension to the original college at the moment, but we have already got more than the quota of students that should allow us to take, so we need to get into the next phase of development. As soon as our campus development plan is available we will be hoping for as much support as possible in finding the funding for its development.

When will the new extension be in place?

We are already in two-thirds of what has been provided. The final piece will be completed by the end of this year.

That will provide for——

That will provide for adequate accommodation for the students we currently have. Like all the other institutes, we suffer in that our social and recreational facilities are far less than that which the students deserve. Our students would normally compare the facilities they see in Tallaght with the those of other higher educational establishments in the Dublin area and they fall far short of what is available elsewhere.

You have a very high proportion of part-time students.

Yes, we do. This is deliberate policy on the part of the governing body of the institute to develop the continuing education programme. Given Tallaght's location, there is a large number of firms within easy reach of the institute. This year 1,600 students are attending the college on a part-time basis, most of them at night, but many are on day release courses as well.

These are people in employment in the surrounding areas.

They are. Given the shortage of higher education places in Dublin, many people had to leave school and go directly to work. They did not have the opportunity to avail of higher education. They are now taking it up. The efforts they go to are tremendous. They are covering the courses in the shortest possible time and are getting the results. It is our regret that we are unable to support the part-time programme fully to the same extent as we do the day time, but attitudes are slowly changing in terms of funding for that.

With regard to the earmarking of funding, specifically for the part-time people, is there any explicit provision for that extent of part-time participation?

There is not, and this has been a problem with the institute for some time in trying to meet the needs of these students. They are only in the college for a very short time, so we must ensure that our services are as efficient as possible for them. Unfortunately, we do not have, or have not had, a great deal of staffing to cover this area. I think most of the efforts in higher education over the last 20 years have been to deal with the ever increasing numbers of school leavers and trying to get them in as full-time students. I believe the next challenge for higher education is to deal with continuing education and to ensure that facilities for the part-time students are as good, at least, as those for the full-time students.

There must be significant added value, not just to the students who are participants but to the businesses who facilitate them. Do they make any contribution?

They do. While many of the students pay the fees themselves, we know that some of the firms will recompense them. Sometimes they wait until the students pass the examinations, which is rather unfair. However, they also support the students in terms of study leave, etc. Many of the firms are paying their way. The bigger firms, the Intels and Hewlett Packards, obviously have more direct subventions. Our concerns would be for small and medium industries, particularly indigenous ones, which face sufficient challenges without having to fund ongoing staff development. We would certainly look forward to some form of State funding for such firms and their employees.

What is afoot in the college in the area of research and development?

The college has been quite successful in building up a very strong programme of research and development and the staff have won various competitions for funding. We have a very strongly developed biotechnology area in which there are currently in the region of 20 research students in the institute. We have graduated PhDs and Masters - I think there are ten or 12 of those.

Who awards the degrees?

They are awarded through the National Council for Educational Awards. That, of course, will be subject to change shortly. We also have a research and development consultancy area in engineering and business. In the engineering area, I am aware that at least one of the exercises has turned out to be tremendously successful in enabling a new firm to start up which initially employed 50 people. I am not sure how many people are currently employed there. This is one of the benefits of programmes such as the applied research programme we operate in conjunction with Enterprise Ireland.

You asserted that you are somewhat different to your colleagues in regard to the extent of collaboration with local business. Do you wish to support that proposition?

I did not want to run any such comparisons. The opportunities for Tallaght are somewhat different in that we are very much based in an urban setting. I am aware that the other institutes which are located in large urban areas have similar opportunities and, indeed, similar programmes. We have had an opportunity to work with the community in a number of different ways.

The Deputy will be well aware of some of the difficulties in the Tallaght area. We have special programmes to encourage access for people who, traditionally, might not be expected to enter higher education. We also worked with the former employees of Packard Electric and other disadvantaged groups to prepare them for employment in high-tech industry. Some of those programmes, one of which we operated with our colleagues in Carlow in 1997, have been very successful. We see the provision of opportunities at the college to all members of the community as a vital part of our mission.

Will you say a word for members of the committee who might not be familiar with your involvement in the nearby innovation centre?

Together with the South Dublin Chamber of Commerce, we made a proposal to the Department of Enterprise, Trade and Employment in regard to the establishment of an innovation centre. This was acceded to and the centre, now called Growcorp, has been set up at Citywest. The centre has been extremely successful, so successful in fact that some of the clients are now based in temporary accommodation awaiting a second phase of development of the programme. The £2 million State investment has paid off more than handsomely in terms of the potential of these start-up firms.

I will not lead the witness any further, Chairman.

That was the easiest set of questions I ever heard from Deputy Rabbitte.

What is the cost per student?

We have done some rough calculations and we reckon it is in the region of £3,400 per student. This would indicate that there is a great efficiency in terms of part-time students because we are using facilities which are already paid for for the full-time students. To a certain extent, if the figures are somewhat lower than quoted elsewhere, that comes from the fact that the college is being used day and night.

What equivalence are you using for a part-time student to a full-time student?

That would depend on each student.

In this calculation?

In this calculation, I am assuming 50% to 60% of a part-time student is the——

Whereas 10% to 25% in other——

This is where our programme is different. Our students are following national certificate, diploma and degree programmes. In some instances, they are covering them in almost the same time as the full-time students so, that being the case, I believe they should be regarded almost as full-time students. We should, in fact, count our students simply by the amount of time they take to complete a course. Our part-time students have shown tremendous motivation and ability and are, I believe, in many ways the unsung heroes of the country.

What number of degree courses do you have?

We have nine degree programmes, although I am open to correction on that. None of these programmes are ab initio; they are all built on the national certificate or diploma route. We start with a base of perhaps 25 national certificates and 20 diplomas and in the region of nine degree programmes which are subject to further development.

What type of space do you have?

When the extension is completed, we will have 16,000 square metres, all of which is teaching or staff space.

That is significantly lower than Carlow or Dundalk.

I cannot comment on that but I know that we use our space very efficiently and desperately need to put in place some sports and recreational facilities for the students. We currently use quite an amount of space outside the institute and are fortunate in being able to hire these facilities although some are not as near to the institute as we would like them to be.

In regard to the drop-out rate, particularly for first year, post-leaving certificate students, I am somewhat concerned about the numbers involved. Is the drop-out rate a problem?

It is a problem and one which is very difficult to describe. Sometimes when one publishes information on this, as we did, one ends up with the information not being fully translated. One must be careful about this issue. I presume we are talking about students who do not get as far as sitting the examinations.

Yes, and those who fail their examinations.

That is a different issue.

There are two different issues here. The actual drop-out rate averages out at approximately 5.5% for our institute, mostly first year students. One can understand that not all students will have chosen their course wisely and may——

The figure is surprisingly low. Was it lower or higher previously?

No, it is the manner of the reporting which makes it seem higher. We can talk about the examination pattern as well——

We need that too.

What year does the 5.5% figure refer to?

The figure relates the period 1995-99.

Do you have any comparative figures for pre-1995?

I do but——

Well, generally, have they gone up or down?

The drop-out rate is possibly increasing slowly. One of the factors is the greater opportunity for employment. To be honest, we would not be so worried about that as others because if students prefer to work when they leave school, that is probably a good thing. They will come back to us or to one of the other institutes on a full or part-time basis. It is better if they come back knowing what they want to do rather than taking up time at a college before they are ready to embark on a career.

We will ask the colleges the same question in a few moments.

The primary reason for withdrawal at that stage is to take up another course - this applies to 40% of the students. This means they have taken the course for the wrong reason, whether this is due to poor decision making or a poor perception of what the course is about. We work as much as we can with the Guidance Institute, guidance teachers and whatever agency we can to transmit information to the students.

Deputy Ardagh asked about the failure rate.

The failure rate for first year students - the pass rate, which we prefer to use, is 71%, so the failure rate is 29%. Some will repeat, others will take up another course while others will go to work and perhaps return later. I do not think these people are ever lost. There is an assumption that they disappear from the system. In most cases they find very productive outlets. It is funny that we measure full-time students as failures if they fail one subject from 12 in a year while, if a part-time student passes 11 out of 12, he is regarded as a wonderful success. We are not comparing people in the same way.

Dr. Collins was previously with another institute of technology.

Yes, Dundalk.

It is the cradle of directors. Dr. Collins mentioned the technician development centre in conjunction with Hewlett Packard and Intel. Will he explain what it is doing at the moment and what the institute expects from it?

It is a facility which has been jointly developed by the institute, with the support of the Department, and these two firms. Other partners have become involved since. It is a 300 sq. m. facility in Whitestown Industrial Estate in Tallaght. It is our long-term intention to move it on to the campus. We did not have the space for the facility in the institute at the time. It is a facility which houses state of the art equipment for high-tech manufacturing industry and it is used by the institute for training staff from Intel, Hewlett Packard, IBM, Festo, SMC and there is a list of different clients as well as the original partners. Most of the students are undertaking national certificate and diploma courses but these have been specifically tuned to the needs of the industry. The students gain proper national qualifications but they also closely meet the needs of their employers. Employers can also use the facilities they have installed for their own specific training and they do this. The facility is like the rest of the institute in its 100%, if not 120%, utilisation.

The accounts show the college had expended £45,000 on rent of premises. All costs were to be borne equally. If the property is 300 sq. m., which is 3,000 sq, ft., the rent seems awfully high.

I have been corrected. It is 800 sq.m.

That is different.

Can you tell me about your financial control procedures?

Like the other institutes we have a secretary and financial controller and a finance officer. We have a year 2000 and euro compliant accounting system which gives us good control. We have also established the proper inter-staff control within the system, the segregation of duties are properly established. Our budget process is the same as other institutes in that we prepare a budget which relates to our proposed programme. That is submitted to the Department and later discussed with the Department when it is determining the allocation to the institute. When the funds are allocated, they are worked out according to the programme we will be able to implement. Various sections of the college have their own budget allocations and control their application.

What role do you see yourself having in preventing fraud and, as importantly, ensuring there are no inefficiencies or out of date procedures and practices in the system?

The director and the senior management team have a pivotal role in this whole area. This is discussed at senior management meetings and we are looking forward to the first visit of the internal auditors as we hope they will be able to advise us on any tightening up of procedures which may be necessary. The college is also in the process of introducing a quality management system which encourages all members of staff to come forward with any proposals they have for making the institute more efficient and effective in order to deliver a better service.

Do you effectively see yourself as chief executive? Do you see yourself as having a particular role in ensuring financial efficiency?

Yes, the responsibility is mine.

Precisely what do you do to check on these matters?

The major work is done with my colleague, the secretary and financial controller. He reports directly to me. We ensure the processes are adequate. Occasionally I make random checks on particular processes. Obviously if anything is worthy of discussion, it is discussed and dealt with.

You have a management committee.

How many are on that?

We have various levels of management. The senior management committee consists of the three heads of school, the secretary/financial controller, the registrar and the head of development, so there is a senior management team of seven.

How often does it meet?

It meets on a fortnightly basis.

Are there written agendas and minutes?

Are they submitted to the Department?

If the Department wishes to have them. It has not requested them at any stage.

There is a governing body.

How often does it meet?

The governing body meets seven to nine times a year.

Does it take an interest in audit matters?

It has taken a general interest in all aspects of the college. It has not established any particular emphasis on the audit process. It probably will with the advent of the internal audit process.

There is no audit committee of the governing body.

The governing body has not established an audit committee.

The other colleges do, so that is a slight gap.

Some may have.

I wish to discuss the general structure of internal and independent audit. We are talking about internal audit, which is in fact external as it is not internal to the colleges.

The Comptroller and Auditor General provides the external audit process as it is normally understood. Each college has undertaken to contract a firm of consultants to provide an internal audit process reporting internally to the institute.

It is off-site, there is no one on site to see what is happening.

Yes. This is a pilot process. If it proves inadequate we will take another look at improvements in the internal audit process.

How do you deal with staff problems?

This is a difficult area. We try to encourage staff to come forward with problems. We have been fortunate in that most of our staff are young and enthusiastic. We have encountered some difficulties. If a problem arises with a lecturer it is dealt with by the head of the department who would point out any deficiencies and inform him/her what performance is expected. He would also ensure any difficulties being encountered by the lecturer in meeting those requirements are resolved. We have been fortunate in that we have not encountered any major problems so far.

These are issues of common concern. Obviously, in any human organisation one will have people who while they may be very good at the beginning develop personal problems resulting in students being at their mercy. Does the Department have procedures in place for dealing with such problems and how do they come to your attention?

The purpose for having a governing structure in the institutes is to ensure problems like these are dealt with at as local a level as possible. The committee will be well aware that employees have inherent rights and the process can be quite intractable if it poses grave problems in terms of resolution. The institutions have the power of recruitment. We allocate posts and set procedures and it is then open to the governing body and the directors to recruit people. Normal management functions are distributed throughout the colleges, including a personnel management function. We rely on the colleges to see things run smoothly. We do not take an intrusive view into how colleges order their affairs regarding personnel matters.

I can understand that but this is a common problem in any business. A child being taught for three years by the same teacher who has personal problems is at an enormous disadvantage. The problem is not unique to Ireland. Are there any mechanisms in place to help people deal with such problems?

We have not issued any general guidelines on how to deal with such problems. It is something which the personnel management section of a college would deal with. We are considering the creation of posts which are more in the area of human resource management and industrial relations procedures than personnel management at local level.

Is there an association of regional institutes of technology?

Yes. I wish to refer to the institutes and how we deal with specific issues. Our institute, and others are going the same path, have introduced a students survey whereby students are polled on how they feel the course is performing. That will permit us to identify areas where weaknesses exist. The surveys will be analysed by the course boards, the lecturers under the head of a department dealing with a particular course. This process has already been used to determine the loss of students and poor examination performance, which we have managed to pull back. We have a staff development programme within the institute as well as a collective one. Our personnel office deals with these issues.

There is also a council of directors which is an umbrella organisation for the institutes which deals with issues of a general nature for all the institutes. It, for instance, established the staff development programme which is run collectively. The council hopes to appoint an overall staff development officer/industrial relations person who will co-ordinate work within the institutes. Some of the areas touched upon are trade union issues also.

Naturally.

Such problems have to be dealt with properly.

Obviously these are issues common to all colleges. Are we spending money in each college to deal with the same issue? Is there scope for centralised research in this area?

The purpose of appointing a central officer is to identify areas where common action can be taken.

How does the Department assess or monitor the performance of each institute?

An issue of some concern, given the growth in higher education which has taken place in the last 15 years, is that of attrition and drop-out. It is a highly complex issue about which a number of studies are currently under way. We hope to have the results of those studies later this year which will inform action for the future. I have to put a very strong caveat here. People immediately associate drop-out with failure. Drop-out is very often a student deciding quite legitimately that he/she has picked the wrong course or is not mature enough to take the course. We are finding, with the buoyant labour market, that more students are deciding to work for a number of years. This raises issues within the Department in terms of the skill needs of the economy.

We are caught in a bind because the whole thrust of policy is to encourage students and make resources available so that students can attain the highest level they desire. The issue of progression also impacts on the needs of industry. I am sure the Intels, Hewlett Packards and the large multinationals of this world would prefer to have many students taking the certificate course and coming immediately to work for them. Very often 30% to 40% of those students will progress to doing a diploma and perhaps a degree. One of the main benchmarks one will find in terms of the anecdotal evidence we have is that very often the large companies will express satisfaction with the quality of students but they say they need more. They are looking for more of our graduates.

A certain proactivity is developing among the larger companies. They recognise that employees are looking at what facilities the company provides for further and continuing education. That will very often create a win-win situation for a company.

The National Council for Educational Awards sets the standards and presents awards to colleges. We are now moving towards a scenario whereby we will have a National Qualifications Authority and two councils under it, a Higher Education Training Awards Council and a Further Education Training Awards Council. We are in the process of establishing those structures under the legislation passed last year. That will give greater quality assurance in terms of the capacity of the colleges to deliver. As well as that, as part of the process of giving colleges greater control over quality assurance in their own awards, a group chaired by Professor Dervilla Donnelly carried out reviews of a number of colleges with a view to making recommendations on whether there should be delegation of their own awarding powers. To date, three institutions have undergone the process successfully. The colleges in Waterford, Cork and Sligo have been recommended for delegation of power to award their own certificates and diplomas. Those delegation powers will be given to them when the new certification arrangements under the NQA are established.

Presumably there will be appropriate external examiners.

The group chaired by Professor Donnelly has international panel members.

Okay. Therefore, performance measuring is in hand, it is under control?

One is always reluctant to suggest things are not capable of improvement. One is always asking oneself how we can move to a new plane and improve. In general, the Department is satisfied with the quality control and quality assurance procedures which are in place.

Are there any tables in the Department comparing the results of one institute against another or is that something you measure?

We do not have comparative tables of that nature.

How do you know whether colleges are keeping up to speed?

The study which is being carried out will give us an indication. A study was carried out by three colleges on the issues of attrition and drop out which threw up an approximate figure of a 37% attrition rate. From the information we received back, that does not seem to be out of line with international figures for comparable courses. Obviously the benchmark to use is what is happening internationally and what one can learn from international comparisons in that regard. We do not seem to be out of line in the international comparisons but we are obviously awaiting the results of the studies which are under way.

In any event, a number of measures are already in train. The Minister allocated £1.5 million over the period 1999-2000 specifically to address issues of non-completion/attrition in institutes of technology and approximately £0.5 million was allocated last year with a further £1 million to be allocated in the year 2000 in that regard.

Do you agree that the experience of students in colleges can be impacted upon by the facilities which are available? We reckon that the overall personal development of students can be greatly added to if there is a full range of facilities. In a common issue here, there is a crying lack of facilities which would be common to the universities. Is this area being addressed by the Department?

When I was a student the recreational aspects might not have been regarded as important as they are nowadays. The approach is somewhat more enlightened now in a sense that it is recognised. The experience of passing through a third level college is more than an academic experience. There is a broader scale; there is a social, cultural and personal development aspect. My colleagues on the capital side can give chapter and verse on this, but there has been recent recognition of the need for significant additional investment in the infrastructure of the colleges. Of its very nature, the priority in that investment has been in the academic infrastructure in terms of providing more spaces and laboratories. I had experience of visiting one college where the change in the academic infrastructure had a tremendous effect on staff and students. The Department has been in the process of putting significant capital investment into the institutes of technology over the past few years - approximately £80 million to £100 million has been allocated. The third level capital budget for the next five to six years is £800 million over the period of the national development plan.

Over what period?

Ms Killian

Over the course of the NDP.

Which is six years.

Is there a correlation between the sports and recreation facilities which are available and the place in a league table in GAA, soccer and so on? If the recreational facilities are there, will the students perform better, have a better team and get better results in a league? It appears there would be a correlation. Similarly, if there are better library facilities, experimentation equipment and fewer students per teacher, results will improve. How close are university standards within the institute of technology sector regarding the facilities available and the amount of investment which is put into it?

Success rates are a result of a complex interaction of a number of factors. I am sure the recreational facilities have an impact on that and also on the students it attracts. Whether students are attracted by the fact that the college is close to them or that it has the course they want, such issues, including the quality of the students, how motivated they and the staff are and a range of other issues will interact in terms of indicating colleges' success rates. My colleagues in the institute probably believe that, in terms of validating its awards, the NCEA applies what it regards as university standards. They would probably suggest national standards are being applied and that the degree one would get from an institute of technology is on a par with a degree one would get from a university.

Or better.

Do you doubt that?

The NCEA applies its standards in a national context.

Does the Department accept in principle that the overall personal development of students outside the academic area can help in productivity and environment results in the academic area?

Without a doubt.

Undoubtedly, the Department will address urgently this great cry for more facilities.

I am not the assistant secretary for the capital brief but the priority over the period of the national development plan will be in improving the infrastructure, in particular the lecture rooms, the library infrastructure and laboratories. I do not know to what extent we can prioritise the recreational aspects as they will be part of campus development plans. In that context, a number of the institutions apply elements of the student service charge to set aside funding for developing the recreational infrastructure.

What is the reporting relationship between the institutes and the Department?

In terms of running it through the process - I speak for the current budgets - the institutes submit their programmes and budgets. These are reviewed by the Department. We then meet each institute for at least a half day session to go through its plans and budgets for the next period.

When you said "the Department", is that you and your officials?

A principal officer in the area and the members of staff, including Ms Murray, meet the institutes. Usually the management team or a number of the senior management of the college, including the director, attends that meeting and they bring the programme and budget. A long review and discussion take place whereby the Department indicates its general disposition in terms of the budget for the next year and what new programmes and additional programmes will be made available. Obviously, the institutes would be disappointed more often than not because, due to our resourcing constraints, they get somewhat less than they would like.

Are there monthly or quarterly reports?

We receive monitoring reports three times a year from the institutions. We are reviewing whether we need to get the reports three times a year at this stage. Having regard to some of the representations made to us from the colleges and the general constraints on staff in regard to financial responsibility, it was felt that we should consider a twice yearly report.

In regard to the tranching of expenditure for the colleges, that is now a self-starting process. The institutes apply to us for funding on a need basis and that would normally be done on a monthly basis. The institutes indicate that they require £X million. We have a stricture that, when they indicate their requirement, they must give us a commitment that when we tranche the money to them there will not be a variation of more than 5% in terms of expenditure vis-à-vis the allocation when they seek a subsequent tranche. If there is a variation of more than 5%, the amount involved will be deducted from the subsequent tranche sought.

Does anyone in the Department read the three reports and follow up on them?

The monitoring reports are received in the section and professional accountants review them, having held discussions with the personnel in the sections who monitor the institutes to find out whether specific issues need to be raised.

Are they purely financial reports?

Yes, purely financial.

I am concerned about this. We discovered in regard to the vocational education committees that reports and minutes were being sent to the Department but nobody was reading them. The VEC representatives stated that the Department was aware of their problems because they were outlined in the minutes. I want to be assured that people read reports in the Department.

The monitoring reports are not akin to the minutes. The problem to which the Chairman referred arose from a provision in the VEC legislation that the minutes of VEC meetings would be provided on a monthly basis. At one stage, 38 sets of reports were being received from 38 vocational education committees. In my former role in the Department, I was responsible for that area. I recall meticulously checking whether anyone was presuming to do things on the basis that because they were in the minutes, departmental sanction had been received. I was very wary of that.

Is there an early warning system in the Department which might indicate that problems are looming in a particular college? We had problems in Letterkenny some years ago. How do you keep on top of that sort of thing?

Apart from the budget meetings we have, the three monitoring reports and our ongoing interaction with the colleges - there is quite a volume of ongoing communication between the colleges and the Department - we try to ensure that as far as possible, having regard to staffing and time constraints, we visit the institutions. We would like to visit the institutions more often but time constraints sometimes preclude us from engaging in that type of activity to the extent we would like.

I am worried about this. You are telling me that there is not any real check. There is no inspector of institutes of technology and no cigire visits the institutes to see how they are performing.

Under the previous VEC regime, there was a provision whereby departmental inspectors sat on the governing sub-committees. The view was taken that that was not appropriate. The actual membership of the governing bodies is laid down in the legislation and one must have regard to the fact that we have put in place autonomous and independent institutions under statute with governing bodies and a top management layer.

We are confronted with numerous autonomous institutions but they must still be accountable. They are not subject to day-to-day control but proper checks and balances must be included in the system to ensure matters are up to scratch in terms of efficacy and efficiency. Simply because institutions are autonomous and independent does not mean they should not be accountable; they must be accountable and there must be checks and balances in the system. These issues are often confused and I would like you to consider how you could have checks and balances in the system without getting involved in detailed control which is not a good thing.

I fully accept the Chairman's comments. In fact, I believe that the process of engagement by the Committee of Public Accounts under the Comptroller and Auditor General legislation and the responsibility for examining the institutes has brought matters home to civil servants. There was a tendency in the past for certain parts of the Civil Service to regard the Comptroller and Auditor General as being responsible for spotting problems in colleges. I do not take that view. Colleges are responsible in the first instance to the Department and the Minister. The Comptroller and Auditor General carries out a function on behalf of the parliamentary watchdog, not on behalf of the Department. I make that point very clear to departmental staff and it is a view about which I am in strong agreement with the Comptroller and Auditor General.

I want you to think about how we could have better checks and balances in the system.

I want to proceed to the question of internal audit which is not really internal audit. Who developed this system or how has it emerged? At what stage of implementation is the system in each of the colleges?

Arising from concerns which we would have collectively shared about developing robust financial management systems within the colleges and, in the light of concerns expressed over a period of time by the committee, I approached the council of directors about a year and a half ago and stated that we needed to develop robust internal audit arrangements for the colleges. Faced with the dilemma that given that there were 13 colleges and, having regard to problems in terms of economy and efficiency, I would have found it difficult at that stage to provide staff for an internal audit function in every institution because some of the colleges were not significant in size and it might not have been justifiable in the short-term to put in place an internal audit function in all of them.

Arising from discussions which the Department held with the council of directors, a secretaries/financial controllers group drew up a number of options, one of which was to put in place a central internal audit unit with permanent staff for the colleges in general. The other was the idea that we would tender for consultancy. On the basis of the costings carried out, it was felt at that stage that the more economic short-term approach would be to opt for the consultancy for a trial period of up to three years. On that basis, the Department sanctioned a consultancy.

Having regard to procurement procedures, the issue was put out to tender and the successful consultancy firm was contracted to provide the internal audit function for a three year period. Part of the stricture I laid down in sanctioning the arrangement for the consultancy firm was that the arrangements would have to be reviewed before the end of the contract period with a view to determining whether the private contract arrangement should be replaced by the creation of a permanent unit, specific to the IT sector, which would be staffed on the basis of direct recruitment. My hope is that the experience of the first three years with the audit firm will give the colleges and their governing bodies good experience in this area and that we will be in a better position at the end of the period to determine how to proceed. My inclination at this stage is to move towards a formal, permanently staffed structure for the colleges in order that expertise could be built up.

This is obviously a step in the right direction but have the auditors direct access, are they in a position to carry out spot checks and do they report to the directors of each institute? Does the Department receive copies of those reports?

We do not generally receive copies of internal audit reports. I understand the protocol is that the Department does not receive copies of internal audit reports. If internal audit reports are sent back to the Department that immediately can attenuate——

What about spot checks?

The institutes and the internal audit function arrange spot checks between themselves. An audit programme will be drawn up for each college and this will involve a series of audits. Those audits, which are internal reports for the college will be made available to the Comptroller and Auditor General.

Are auditors free to go wherever they want? Do they report directly to the directors?

The internal audit will embrace much more than just finance. It will look at any aspect of the institute's activities. Consultants have been contracted for three years to run this pilot programme. The institutes hope to establish, using the collective approach of a single consultant, what is best practice and to have that best practice devolved out to each institute. There is a timetable in place for each college involved in the process. Spot checks is one task that will be undertaken. Auditors will have free access to every aspect of the institutes work and they will report to the director.

Does that apply to each college?

I would like to hear more about that so that we are au fait with the arrangements. There is no audit committee in at least one college. Should each governing body have an independent audit committee? It should be considered. It is not up to committee to decide but we are concerned about audit committees.

With regard to the genesis of institutes of technology and vocational education committees, Carlow VEC still has some unfinished business regarding property. Is that right?

It is very limited. The total site contained the original regional college and a vocational school. It is a matter of demarcation of the boundary. That has not been formally decided upon but there is an ongoing practice.

Mr. Purcell

That is precisely the position in Carlow. It would not be an exemplar of a case. I am aware of one institute, which is not represented here today, where there is a tug of war over premises which were formerly used by the VEC. Some residual problems exist but they are dying out.

Who is the property of the institutes vested in? Is there a trust?

It is vested in the institute.

The institute is a statutory body.

That is correct.

When I was Minister for Transport I was always concerned about huge tracks of public land not being used or maximised. Is there a policy to maximise the use of assets?

I cannot speak for all institutes but I imagine that they would all have the same attitude as us. That is if we were fortunate enough to have additional land we would ensure that it was used properly, not just left to lie fallow. At our location we have very valuable road frontage which we may use for commercial purposes for the benefit of the college.

Is there a departmental policy on maximising the use of assets, including the use of buildings? The number of part-time students was mentioned earlier.

The policy would be to sweat the assets to the greatest extent possible. We are doing that at present. The institute of technology sector is one particular example of it. There are a number of areas driven by the skill needs of the economy. In recent years, through the industry/education task force, we have developed accelerated technician programmes which have atypical recruitment. These programmes are run on a sandwich basis which means that they do not run to the normal academic year. Up to now people have joined these sandwich courses in January. The students stay on campus for six months, then they spend six months with a company who sponsors them and they spend their final six months back on campus. This scheme uses the assets of the institution to the maximum extent.

In recent years we have also developed a series of courses mainly on information technology which take place during the summer months. Students doing intensive courses on information technology would then have a possibility of continuing their studies by joining one of the accelerated technician programmes.

We have a huge apprenticeship programme. Under the new standards based apprenticeship system the education system must provide apprenticeships at phases 4 and 6. In the past three or four years apprentice registrations have increased from about 10,000 to over 21,000. This has created huge problems for FÁS, the Department of Education and Science and the institutes in developing capacity quickly enough. As part of our response to that we have developed capacity levels. Three or four years ago we could train 4,000 apprentices. This year we have the capacity to train 7,200 apprentices and that figure will rise to 8,500 next year.

We are trying to address the apprentice capacity problem in another way by putting on modules for apprentice training this summer. We hope to provide apprentice training for between 700 and 800 apprentices. Not only do the institutes work night and day but they work during the summer holidays as well.

The accounts have been noted. I want the Department to look at the adequacy of the reporting relationship between institutes of technology and the Department. I want it to address the question of whether the checks and balances are adequate and will ensure against fraud and inefficiency. Perhaps the Department will meet the committee in three months time to respond to my question. I want full details of the new internal audit system submitted to us so that we can reflect on it and possibly raise questions on it. I want those details within one month.

With regard to the timeliness of the institutes' accounts, particularly the time it took them to respond to queries from the Comptroller and Auditor General, within one month each institute must tell us how they propose to bring their accounts up to date and how they will provide speedy responses to the Comptroller and Auditor General's queries left outstanding and in the future.

That encompasses the questions I asked Mr. Hannigan.

It is our job to query performance and value for money. The committee appreciates the great work that has been done by the institutes. They are part of the engine of our economy. While our job is to criticise we should also say a word of thanks. As a State we are very ill equipped to do that. I thank the institutes and all of their staff and wish them continued success in the future. I extend our thanks to the Department as well.

At our next meeting we will deal with Vote 9 - Office of the Revenue Commissioners, the 1998 Appropriation Accounts, report of value for money examination, value-added tax collection and control and the report of value for money examination, use of sheriffs and solicitors in the collection of taxes.

The witnesses withdrew.

The committee adjourned at 1 p.m. until Thursday, 4 May at 10 a.m.
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