I thank the Chairman and members of the committee for their invitation to attend this meeting. At our last meeting on 7 October, I committed to revert to the committee on a number of follow-up audit reports on SKILL and the HSNPF. The four reports are the report by Mr. Turlough O'Sullivan into overseas travel by HSE staff, the audit of the procurement processes as they pertain to the SKILL programme, the audit of the SKILL programme in terms of the backfill funding, contributions and activity data and the audit of the HSNPF. I will comment briefly on each report.
In July 2010, the HSE commissioned Mr. Turlough O'Sullivan to investigate all foreign travel undertaken by HSE staff and paid for out of the SIPTU national health and local authority levy fund. As part of his investigation, Mr. O'Sullivan conducted a series of face-to-face interviews with 11 of the 12 HSE officials who partook of foreign travel. One official, Mr. Alan Smith, the former general manager of SKILL who retired in May 2009, declined requests to attend an interview with Mr. O'Sullivan. The HSE sent two registered letters and made numerous telephone calls to Mr. Smith. His lack of co-operation with the investigation is not acceptable for a former public servant who was centrally involved in the management of the SKILL programme. We are advised that Mr. Smith is not a compellable witness in any non-statutory HSE investigation. However, we will continue to press him to secure his assistance with this investigation.
We note Mr. O'Sullivan's report and, at this stage, it is difficult to draw conclusions or arrive at a complete assessment of the actions of HSE personnel until we have full access to all relevant records and information. SIPTU is currently completing its own internal investigation into the SIPTU national health and local authority levy fund and we have been advised that its investigation will not be complete until the new year. I have met the SIPTU trustees sub-committee, its head of finance and administration, the financial adviser to the investigation and the general secretary. They re-emphasised to us that SIPTU had no knowledge of the bank account and that it was not an authorised bank account of the union and was outside the union's financial structure.
The audit report on procurement reports that there was a lack of adherence to HSE procurement policy, which is based on national and EU procurement rules, and that there was evidence of confusion in carrying out the procurement and contracting process. The audit found inadequate documentary evidence was available to the auditors in respect of various stages of the procurement process. The recommendations of this audit report will be implemented in full.
On backfill funding and activity data, the third audit report deals with the core activity of the programme, namely, the expenditure on backfilling and activity data. This report raises audit issues regarding the cost and volume of training versus the original targets for up-skilling. It also raises issues in respect of the use of training facilities. This model will require further review. The recommendations of this audit report will be implemented in full.
The audit of the SKILL programme has raised a number of concerns. Regarding governance and accountability, the HSE has taken the steps required to ensure comprehensive compliance with its regulations on payments, travel and procurement arising out of our internal audits and the report of the Comptroller and Auditor General. In this regard, the SKILL programme accounts have been closed and all of the SKILL accounting functions have been centralised and amalgamated into the main financial systems within the HSE. The operation of the SKILL programme has been relocated to the corporate head office and the staff has been mainstreamed into the HR directorate function.
We are currently implementing a full value for money review in line with the recommendations of the SKILL audit. The results will inform our decision making with regard to the future of the SKILL programme when the current phase is completed at the end of April. We are awaiting the outcome of the SIPTU investigation in order to complete our own investigations.
The Health Services National Partnership Forum, HSNPF, was established on foot of the national agreement on social partnership in 2000. It was funded by the Department of Health and Children until 2005 and thereafter through the HSE Vote. The HSE internal audit report identified significant failures in governance arrangements in the operation of the HSNPF. The HSE internal audit report charts the evolution of the HSNPF since 2000, the role and function of the trustees, the activity of the forum and, significantly, the standing of the forum. The audit report highlights the lack of clarity and confusion regarding the status of the HSNPF going back to at least 2003 and indicates that the HSNPF sought to create an organisational form and operating entity that was an artificial construct with no statutory basis.
Many of the governance issues and control weaknesses that emerged in the audit report arise from the nature of the operating model existing as it did as a satellite entity outside the mainstream management control system. Breaches of governance noted in the report include the executive role discharged by the joint chairs; the payment authorisation procedures; and the provisions in place to control the signing of cheques.
The action plan for people management, APPM, is a programme run by the HSNPF and whose purpose is to facilitate the improvement of human resource management in the health service. According to the audit report, the HSNPF was provided with funding amounting to €1.355 million under the heading APPM in the period from 2003 to 2008 of which trade unions received €1,080,000. According to the report, the HSNPF developed guidelines to manage this fund. The internal audit report noted that changes were made to how this fund was controlled and governed. This resulted in three lump sum payments totalling €700,000 being made to the SIPTU national health and local authority levy fund in 2007 and 2008. These undocumented changes in governance represent a breakdown in financial control and a lack of compliance with its own arrangements that were deemed to be in place.
In a review of payments to the SIPTU national health and local authority levy fund from the HSNPF, our internal audit report identified that in total, the SIPTU national health and local authority levy fund received €924,963 from the APPM fund. These payments were paid to one account and SIPTU corporate has re-emphasised to us that it had no knowledge of this bank account and it was not an authorised bank account of the union.
A portion of the €700,000 lump sum payments made to the SIPTU national health and local authority levy fund was paid to other unions. Following contact from the HSE internal auditors, four unions confirmed they had received moneys from the SIPTU national health and local authority levy fund but had not yet spent these funds. These four unions further agreed to repay to the HSE moneys received. A total of €275,283 has now been refunded by these four unions. In addition to the APPM fund, the HSE internal audit ascertained that a further €26,201 in cost reimbursements was paid by the HSNPF to the SIPTU national health and local authority levy fund.
The HSE internal audit examined payments made using the HSNPF credit card issued to the forum director in the period from 2003 to 2009. The total expenditure during this period was €84,516. Much of this expenditure related to payments for travel, hotels and restaurants. Of concern to the auditors is the fact that the credit card statements were self-certified and were not authorised by either a joint chair or a trustee. The audit report provides a detailed explanation in a letter from the director of the HSNPF on this issue. The absence of proper authorisation and control highlights the overall lack of clarity on governance.
There were 21 foreign trips undertaken by forum members, staff and other persons as indicated by documentation on file at the HSNPF. Five of these trips were previously identified in the HSE's internal audit report on the SKILL programme. The internal audit identified that in some instances a large number of people went on these trips. The total costs identified in the accounts of the HSNPF, which include payments made by the corporate credit card and subsistence claims, amount to €146,680. Unlike the SKILL foreign trips, the 16 trips in this instance were all arranged by the HSNPF and were properly reflected in its administrative records.
Arising from this internal audit the HSE has closed down the separate bank accounts of the HSNPF and subsumed all accounts payable functions into the mainstream HSE financial control systems. This report was completed last week, and based on its findings we now intend to further investigate all matters arising from the audit and the SIPTU investigation into the national health and local authority levy fund.
It is clear from all of the audit reports before the committee that there was a systemic failure to adhere to the financial, travel and procurement regulations of the HSE relating to the operation of both the SKILL programme and the HSE national partnership programme. The HSE has now subsumed both programmes within the HR directorate of the HSE, ensuring that appropriate HSE governance and accountability oversight is now in place. The HSE has also taken the appropriate steps required to ensure comprehensive compliance with its regulations on payments, travel and procurement and to address in full the recommendations of the internal audit reports and the reports of the Comptroller and Auditor General to ensure these failures do not recur.
