(Chief Executive Officer, County Tipperary (North Riding) Vocational Education Committee) called and examined.
County Tipperary (North Riding) Vocational Education Committee — 2000 Accounts.
Mr. L. Ó Muircheartaigh
I welcome representatives from County Tipperary North Riding Vocational Education Committee and I apologise for the long delay, which was due to an extended meeting with the two health boards.
Witnesses should be aware that they do not enjoy absolute privilege and should be apprised as follows. As and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons identified in the course of the committee's proceedings. These include the right to give evidence; the right to produce or send documents to the committee; the right to appear before the committee, either in person or through a representative; the right to make a written and oral submission; the right to request the committee to direct the attendance of witnesses and the production of documents, and the right to cross-examine witnesses. For the most part, these rights may only be exercised with the consent of the committee. Persons invited to appear before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of them and provided with the transcript of the relevant part of the proceedings that the committee considers appropriate in the interests of justice.
Notwithstanding this provision in legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House, or an official, either by name, or in such a way as to make him or her identifiable. Members are also reminded that under Standing Order 156, the committee should refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policy or policies. I ask Mr. Lúcás Ó Muircheartaigh to introduce his officials.
Mr. Lúcás Ó Muircheartaigh
With me is Ms Antoinette Coffey, adult education organiser of County Tipperary (North Riding) Vocational Education Committee and Mr. Liam McGrath, the VEC's assistant principal officer.
I ask Mr. Matthew Ryan of the Department of Education and Science to introduce his officials.
Mr. Matthew Ryan
I am a principal officer in the post-primary administration unit. With me is Mr. Peter Kelly, who is the assistant principal officer in the further education section.
I ask Mr. Purcell to introduce the 2000 accounts.
Mr. Purcell
The section 7 report on the accounts of County Tipperary (North Riding) Vocational Education Committee for 2000 chronicles the events surrounding the running of courses at a VEC centre in Thurles over a two-year period without the knowledge of the CEO or other senior staff of the VEC. In trying to put the picture together, the CEO had to reconstruct accounts from limited records of transactions and to make inquiries of those who ran the courses and those who could be identified as having participated in the courses.
In September 2001, the VEC fortuitously became aware that certain European computer driving licence courses were being held at the centre and that the course fees and other receipts were being channelled through a separate bank account which was not an authorised VEC account. Fees to tutors and other outgoings were being paid from the account. Some of the transactions were passed through a credit union account which was opened in October 2001.
On foot of a review of the transactions and other records relating to the provision of the courses, the VEC has determined that between 1999 and 2002, the receipts from the courses amounted to more than €123,000 and the payments relating to the running of the courses amounted to €109,000. The balance has been transferred to the VEC's accounts since March 2002 and the two unauthorised accounts have been closed.
Having presided over the review, the CEO of the VEC informed me that there was no evidence of any funds having been misappropriated. On the basis of his analysis of the transactions, he believed that no misappropriation occurred. The committee will note, however, that regulations and procedures relating to the deduction of income tax and PRSI from the fees of tutors involved in the running of the courses were not complied with. The CEO has since given the Office of the Revenue Commissioners details of the payments which were made.
It is clear there was a serious lapse in governance in the affairs of the VEC. I am sure the CEO will elaborate during this afternoon's discussion on the many actions he has instituted to prevent any possibility of a recurrence.
I ask Mr. Ó Muircheartaigh to make his opening statement.
Mr. Ó Muircheartaigh
While I regret that financial and reporting procedures were breached, I assure the committee that I have taken significant organisational steps to prevent a recurrence. When I became aware of the problem in question, I treated it with the utmost seriousness and put significant time and resources into establishing what happened. I brought it to the attention of the Comptroller and Auditor General. The task of establishing what happened was difficult because the manager of the centre was seriously ill and the file with the key information was missing.
I reported the matter to the VEC support services unit and sought its assistance. The unit, which is known as the VSSU, made a significant contribution to helping the VEC to establish the facts. The head of the unit spent a considerable amount of time advising me of the best way to proceed, on the analysis of the data and on meeting staff in Coláiste Éile. The support of the unit helped the VEC to establish what happened. Although I am disappointed by the systems failure that allowed this to happen, I am pleased there was no financial loss to the VEC or the Exchequer.
As the Comptroller and Auditor General has said, I am determined that there will not be a recurrence of the problems which have been outlined. Along with the steps I outlined in the last part of my response to the Comptroller and Auditor General, I have taken a number of important initiatives at systems level. The initiatives in question, which are broader in scope than the proximate steps outlined in the report before the committee, will help to prevent a recurrence. The system reform was greatly facilitated by an increase in staff and the creation of an administrative management structure among VECs. A new senior post at assistant principal officer level, two new posts at grade VII level, a post at grade VI level and a post at grade V level have been created at County Tipperary (North Riding) Vocational Education Committee. The implementation of the first two phases of the Rochford report and the increase in staff have contributed to allowing systems to be strengthened.
Copies of the VEC's strategic plan, FÍS 2020, are available to members. The preparation of the plan, which was published in 2003, was a joint effort by all the system's stake holders. The plan, which divided the organisation into six divisions, has informed the way in which the VEC has implemented the Rochford report and has put a management system in place to help to prevent a recurrence, to strengthen financial management and to deliver a first class service to learners.
The divisions identified in FÍS 2020 are second level education, further education, youth, corporate services, associated services and retired staff services. The key division for the purposes of today's meeting is corporate services. In accordance with the Rochford report, corporate services has been divided into three units — finance, human resources and educational support services. Arising from the report, County Tipperary (North Riding) Vocational Education Committee has been allocated additional senior management posts, as indicated earlier. Appendix 1 to the statement shows the organisational structure within corporate services and the grade of the service manager in each unit.
It is obvious that the assistant principal and the manager of finances will play key roles in the new structure. The manager of educational support services also has a critical role, however. As well as being responsible for direct services like buildings and grants, the manager of educational support services will now be responsible for the administrative staff of each of our colleges, institutions and programmes as well as having responsibility for all returns and data from each of the colleges, institutions and programmes. He is also responsible for the communications of the institutions, colleges and programmes with the head office.
Arising from FÍS 2020 and the Rochford report, County Tipperary (North Riding) Vocational Education Committee has established some management teams. The corporate services management team meets weekly, the second level senior managers team meets monthly and the further education senior managers team meets monthly. Finance is an agenda item at each of the meetings.
I have taken certain steps in addition to those outlined in my response to the Comptroller and Auditor General to avoid a recurrence of the system failure. I have appointed a grade VI officer within the educational support services unit of corporate services with specific responsibility for all further education returns, data, communications and finances. She will oversee all financial matters for further education and she will sign off all payments before they go to finance for final processing. I have allocated administrative staff on a part-time basis to each of the further education institutions. The grade VI officer will have direct responsibility for overseeing their work with the institution manager. The senior administrative official was appointed in 2003 under the first round of the Rochford process and is a qualified accountant. I have also asked the adult education organiser to attend the board of management meetings of Coláiste Éile, which is an important control.
I wish to discuss the broader systems level. The Department of Education and Science and the IVEA, which is the management body for VECs, produced a comprehensive set of governance guidelines for VECs arising from the Vocational Education (Amendment) Act 2001.
Included in these governance guidelines are terms of reference and procedures for the operation of the finance sub-committee of the VEC that was established under section 32 of the Vocational Education (Amendment) Act 2001. The governance guidelines will put in place robust structures to oversee the management of the system.
I conclude by putting the events in context. The adult education programme in Tipperary North Riding VEC has developed considerably in recent years. It caters for 4,000 adults and includes second-chance programmes such as VTOS, Youthreach, BTEI, senior Travellers workshops and adult literacy. It also involves community education and self-financing courses. Recently, the VEC established a local adult learning forum with other providers in north Tipperary that is constructed along the lines of the proposed local adult learning boards suggested in the White Paper for adult education 2000. The forum has recently organised a successful adult education exhibition involving all providers in north Tipperary. The VEC will continue to work to develop the adult education service in north Tipperary for the benefit of the local population.
May we publish your statement?
Mr. Ó Muircheartaigh
Yes.
The statement was very comprehensive on governance and the changes being made in the VEC structure. Are those changes being made nationally?
Mr. Ó Muircheartaigh
Yes. They arise out of the implementation of the Rochford report and a review of structures generally. We have done a significant amount of work in north Tipperary by using the report and review and the strategic plan to put important structures in place.
How was it possible for courses to be run over an extended period from 1999 to 2002 without the management knowing what was going on? Was that not a huge breach?
Mr. Ó Muircheartaigh
Yes, it was. We did not find out anything until 2001. We found out at a point at which the manager was ill and we appointed a new manager. The information about the courses had not been supplied to us when we requested it. Every year we require and request data for our annual report on courses being run.
It was excluded.
Mr. Ó Muircheartaigh
Yes
I thank Mr. Ó Muircheartaigh for his opening statement. I begin with the first sentence in which Mr. Ó Muircheartaigh said he regretted that the VEC's financial and reporting procedures were breached. Looking at the Comptroller and Auditor General's report, it emerges that more than the financial and reporting procedures were breached. A community employment worker and a part-time tutor were running a course on their own while nobody else knew what they were doing. They were autonomous having rambled into a VEC building and begun to work away. There was no reporting mechanism and they were completely independent. While in this case the people in question were discovered due to an illness and a replacement, has the possibility been addressed that this may still be happening or may happen again?
Among the things that strike me about the VEC is its fragmentedness. I do not mean that in a negative way as it is carrying out a great many different projects in various areas. Given that, are there structures in place to manage projects on the level of individuals and individual classes? I believe Mr. Ó Muircheartaigh wholeheartedly when he states that there has been no loss of revenue. The people involved had the correct motives, but they were unmanaged and unsupervised and I am still unsure about whether the same thing could happen again today.
Mr. Ó Muircheartaigh
There are two fundamental points. First, the manager of the centre knew what was happening but did not report the information.
Why not?
Mr. Ó Muircheartaigh
I do not know. Second, the development of the systems, the establishment of the management teams and the holding of regular management meetings will prevent a recurrence of the problem. Since 2000, we have spent a great deal of time and energy on developing proper management systems and the Deputy will agree in the context of my report to the committee that those systems will work. After the regrettable incident, we felt it was important to examine the matter from a systems point of view and to ensure at that level that something like this could not happen again. We have put management teams in place and they meet on a regular basis. We have also put other structures in place. We have appointed part-time administrative staff to the adult education centres and linked that staff with grade VI in head office to improve communications.
Was the manager of the centre a full-time VEC employee?
Mr. Ó Muircheartaigh
Yes.
Was he aware——
Mr. Ó Muircheartaigh
She.
Was she aware that the part-time tutor and the community employment worker who was the secretary had set up a bank account?
Mr. Ó Muircheartaigh
My understanding is that she was.
I understand from the Comptroller and Auditor General's report that the hourly rate of pay to the tutor was higher than normal.
Mr. Ó Muircheartaigh
Correct.
Who set that rate?
Mr. Ó Muircheartaigh
The manager.
Was she working independently?
Mr. Ó Muircheartaigh
Yes, in this context, though not in others. It is very important to state that the level of service delivered to learners within the centre was first class. It is recognised within the community that the manager was doing a first class job for the group of clients.
I do not wish to dwell on the matter too much as I appreciate having heard the report that the VEC has addressed the issues outlined by the Comptroller and Auditor General and made additional changes. There are one or two final points in which I am interested. Part of the money deposited in the bank account in question came from a local charity. It was of the order of €10,000, of which half was subsequently refunded. Why was that?
Mr. Ó Muircheartaigh
It was done at the request of the local charity.
Did the charity only ask for half of the money back?
Mr. Ó Muircheartaigh
Yes.
The sum of €45,000 was paid in by a local company that was winding up. Without that money is it correct that the course would have been running at a loss?
Mr. Ó Muircheartaigh
I must address that question.
I am asking it now.
Mr. Ó Muircheartaigh
I accept that the Deputy is asking the question. We had an overall surplus of approximately €14,000. I do not think we would have run at a loss overall given the activity over the two-year period.
The course was run at a surplus of approximately €14,000 with the addition of €45,000. Would that not have resulted in a net loss?
Mr. Ó Muircheartaigh
I do not think so. There were expenses related to delivering the programme in terms of paying staff etc. The payment arose where a company that was closing down paid for workers to attend the programme as part of their redundancy.
I wished to ask those questions as one of the bodies was a charity and the other was a company closing down. I understand fully the motives of a local business that was closing wishing to retrain people in a local context. Has the policy of the VEC changed in order so that money raised from a local charity or a local business is taken in centrally or is it still aimed at a local entity?
Mr. Ó Muircheartaigh
Any money will be taken in centrally. We have made it absolutely clear that under no circumstances can money be dealt with in any other way.
In both cases, the money was taken locally.
Mr. Ó Muircheartaigh
We have emphasised that point to the managers. I have talked about the management structure we have put in place where one has further education and second level managers meeting on a regular basis. We have emphasised that point on numerous occasions.
Irrespective of what went on for the two years, the part that is singularly of greatest concern is that a local company could write a cheque for €45,000, ostensibly to the VEC, that could be lodged into an account with no signatures other than those of a community employment worker and a part-time tutor. Many of the other payments were made by individuals and were small payments to cover costs, but the greatest weakness of the system is that the payment in question was not officially recorded or receipted to the person who made it and the account was set up so loosely that an individual could have walked away with the money.
Mr. Ó Muircheartaigh
I accept that.
Mr. Purcell
To clarify, the signatories were the manager of the centre and the part-time tutor. The credit union account, which was opened later, involved the part-time tutor and the community employment scheme secretary.
The same principle applies.
Mr. Purcell
Of course. It is just a point of detail for the record.
Approximately how many people attended courses in the college over the period 1999 to 2002?
Mr. Ó Muircheartaigh
Two hundred.
Per annum?
Mr. Ó Muircheartaigh
Overall.
Two hundred people.
Mr. Ó Muircheartaigh
Roughly.
How did they know where the courses were held? Where were the advertisements placed? In my local newspaper one sees VEC courses advertised.
Mr. Ó Muircheartaigh
Sure.
Were the courses advertised?
Mr. Ó Muircheartaigh
In the case of the company, it was because of the redundancies.
Aside from the company.
Mr. Ó Muircheartaigh
I believe they would have been advertised.
In the local newspaper?
Mr. Ó Muircheartaigh
I believe so. I am not certain because I have not checked it.
I believed the VEC had got to the bottom of this. If an advertisement appeared in the local newspaper ostensibly advertising VEC courses in a VEC premises, surely people in Mr. Ó Muircheartaigh's office would have seen it and stated that they did not place it there. One cannot have millions of advertisements. I do not understand how so many knew about the course and attended it. Presumably it was advertised. Let us take it that there were advertisements in the newspaper. Where did the invoice for the advertisements go?
Mr. Ó Muircheartaigh
It did not come to the VEC.
It did not so it was done locally. What intrigues me is how nobody saw the advertisements. I can understand nobody seeing people going in and out of the place in the evening, but it is a mystery how advertisements could have been placed locally and nobody at VEC level asked any question about the course.
Receipts from the courses amounted to €123,000 over the years in question. From this figure, let us deduct the two large figures, namely, the €10,000 from the charity and the €45,000 from the company. Is it correct that this leaves €68,000 in course fee income?
Mr. Ó Muircheartaigh
Yes
What was the typical cost of the courses? I presume the costs are comparable to those of courses offered in similar facilities elsewhere.
Mr. Ó Muircheartaigh
Generally, yes.
Roughly what would a person normally pay for the courses that were on offer?
Mr. Ó Muircheartaigh
Approximately €250 to €300.
Could I be of help? A figure in the report of the Comptroller and Auditor General indicates that the total payments pertaining to the running of the courses amounted to €109,470. Would that figure be of assistance?
I appreciate that but I really wanted to know how many became aware of the course operating publicly. Mr. Ó Muircheartaigh was not aware of it. I am intrigued by this because I am sure most chief executives know everything that goes on in all their properties in their respective areas. I know some in this category.
Mr. Ó Muircheartaigh
I have just checked with the AEO and he has informed me that the courses were not advertised.
Did anyone receive certificates for attending the courses?
Mr. Ó Muircheartaigh
Yes. Some people received ECDL certificates.
Who issued them?
Mr. Ó Muircheartaigh
ECDL would have issued them at national level.
Did ECDL not contact Mr. Ó Muircheartaigh's office about the certificate ceremony?
Mr. Ó Muircheartaigh
No. ECDL is a very big operation and I presume it issues hundreds or thousands of certificates every year. There is a direct relationship between Coláiste Éanna and ECDL.
Mr. Ó Muircheartaigh seems confident that there is no financial loss to the VEC and consequently to the Exchequer. However, how does he know how many attended the courses and whether they all paid?
Mr. Ó Muircheartaigh
In reconstructing the accounts, we went through a very painstaking procedure to identify the people who attended the courses. We examined the cost of the courses and did the relevant sums. We are confident that we were able to identify the actual number of people who attended. We used the information we received from ECDL — we contacted it nationally, for example — to establish the names of those who received certificates. I also found out that I knew a number of people who attended the courses and, by talking to them, I was able to reconstruct the attendance figures. I verified them with the people in Coláiste Éanna.
What is the Department's observation on this? What lessons has it learned? Could the same practice be happening still in other places and, if so, would the Department know?
Mr. M. Ryan
Obviously, the Department is concerned that appropriate accounting procedures were not adhered to in this instance and that the accounting systems in place in the VEC at the time did not prevent the operation of unauthorised accounts by staff members of the VTOS centre between 1999 and 2000. The Department notes that the unsatisfactory circumstances were discovered by the VEC when the central manager went sick and they were reported to the Comptroller and Auditor General. We also note from the statement of the chief executive officer that he took steps, including a review with the assistance of the VSSU, to ascertain precisely what had happened. We also note his confidence that there is no loss to the Exchequer.
On the question of whether what occurred could happen again, one can never say "never", in all honesty. All one can do is try to put robust systems in place and keep checking them. It is important to point out that since the occurrence of the incident in question, guidelines have been issued by the VSSU in July 2003 on the operation of centres. This is a positive development.
Could a copy of those guidelines be sent to the committee for our perusal?
Mr. Ryan
We will certainly do that.
I want to follow up on one minor point. Was the factory that closed and made the contribution based locally in Tipperary?
Mr. Ó Muircheartaigh
It was in Thurles.
Did it employ many people?
Mr. Ó Muircheartaigh
It employed a significant number.
Roughly how many?
Mr. Ó Muircheartaigh
Three hundred.
Its closure was widely noted. Was the fact that it was making a donation to the VEC for this training reported in the local newspapers?
Mr. Ó Muircheartaigh
Not that I am aware of. I would not have been aware that a donation was made to the VEC. To the best of my knowledge, that information did not appear in the newspapers.
I suppose if it had, the witness would have read it. I will put the question another way. Should the witness have been aware of it? Was it a public event?
Mr. Ó Muircheartaigh
The closure of the factory was a public event. As in similar situations, a task force was set up to deal with the matter and attempt to create employment.
Would the task force not have involved the VEC?
Mr. Ó Muircheartaigh
In this instance, no.
I am not asking that the individual be identified in any way but is the person concerned still in the employment of the VEC or in receipt of a pension from it?
Mr. Ó Muircheartaigh
Yes.
Mr. Purcell
There is very little to add. One would probably have to paint in some of the local colour as well as perhaps some of the tensions between Nenagh and Thurles and the issues which might have contributed to that situation. The main point is that the proper management systems which have been put in place should certainly prevent a recurrence. The most important aspect is that something positive has come out of all of this.
I agree entirely. The matter has been properly dealt with and a new directive has now been circulated to all VECs. I will note the accounts and apologise again for the delay. We were held up in what has been an extended meeting this morning. At 11 a.m. next Thursday we will consider the 2001 accounts for Athlone Institute of Technology and the Dún Laoghaire Institute of Art, Design and Technology.
The witness withdrew.
The committee adjourned at 2.55 p.m. until 11 a.m. on Thursday, 30 September 2004.