Mr. Tom Boland:

The special report of the Comptroller and Auditor General on accountability and governance at the National College of Art and Design is timely, coming as it does when the higher education system is undergoing major reform and when, as part of that reform, the HEA is reshaping our governance and regulatory relationship with the sector. The weaknesses identified in the report, although specific to NCAD, serve to alert the HEA and the higher education system to the need for constant vigilance to ensure that processes designed for accountability are fit for purpose and operating as intended.

It is well established internationally that higher education institutions are most effective when they have high levels of autonomy over their internal affairs. This is well established policy and practice in Ireland, with statutory backing, and was most recently endorsed by the national strategy for higher education. The counterbalance to autonomy, however, has to be an effective system of accountability for outcomes from the sector and for funding. The HEA has a key role in this as a part of a system of accountability for public funding and expenditure, which also includes the institutions themselves with primary responsibility and the Office of the Comptroller and Auditor General.

The principles of good governance and accountability have been well established for many years in the higher education sector in primary legislation such as the Universities Act 1997 and the Institutes of Technology Act 2006. These have been supported by the publication and adoption of a code of governance for Irish universities and a code of governance for the institutes of technology sector. The principles of governance that apply to these groups of institutions also apply to all higher education institutions funded by the HEA, including NCAD.

I do not want to sound blasé, but no system of accountability will guarantees success at all times and for all institutions, and the report shows up flaws in the HEA's processes, both in our examination of audited accounts from a governance perspective and in an over-reliance by us, at the very least, on the accuracy of governance reports received from higher education institutions. In response to the new mandate given to the HEA under the national strategy, the HEA board has, since earlier last year, been considering our governance and regulatory role and the measures necessary to enhance it and to reflect our new mandate. The agreed measures, which are at present the subject of consultation with the sector - as the Secretary General says, we hope to implement them in April this year - will go some way towards addressing the weakness identified in the report of the Comptroller and Auditor General. They include: the submission of annual statements of governance and internal control no later than six months after the end of each financial year; expansion of the format for required returns; more detailed analysis by us of institutional responses and appropriate follow-up; and the introduction of a programme of rolling reviews by the HEA, which would cover specific elements of governance processes to provide assurance that they are operating effectively and to assist in the development of best practice approaches.

It should be also noted that the Office of the Comptroller and Auditor General is currently carrying out a review of the HEA’s general governance and regulatory role. This is a most welcome development and is opportune as we undertake our expanded mandate under the national strategy.

However, we need to consider if we should go further than the measures about which we are in consultation with the sector, given the findings relating to NCAD. In particular, we will now consider with the Department of Education and Skills - and the Office of the Comptroller and Auditor General to an appropriate extent - whether we should exercise a formal audit function, either generally or on a spot-check basis. This will be a significant extension to our current role and if it were to proceed, it would be desirable to underpin it in legislation and it would have some resource implications.

More immediately, however, the impact will be achieved arising from the recent reform of the HEA’s funding role to include a performance-related element. As part of this development, performance funding will take into account institutional compliance with governance requirements and procedures and other statutory requirements. For example, if an institution was found to be in serious breach of governance requirements and was considered to have made inadequate efforts to correct such breaches, funding could be withheld and will be withheld in the future.

The HEA is greatly concerned with the issues identified in the Comptroller and Auditor General's report, both as they relate to NCAD and as they relate to the HEA. Higher education institutions make a very significant economic, social and cultural contribution to Irish life, but in order to do so and, most important, to retain public confidence, it is essential that they have effective systems of governance and accountability in place. I acknowledge that the college is now actively addressing the issues identified by the Comptroller and Auditor General and is taking action to bring its processes for the production of accounts, as well as its procurement and internal audit policies, up to best practice. However, given the significance of the findings in this special report and the fact that the HEA has previously relied on assurances from the college which were subsequently found to be inaccurate, the HEA will conduct a full review of the implementation by NCAD of the full range of measures now under way to address the findings and recommendations in this report and to assure ourselves that the governance and accountability procedures in the college are in line with best practice. That review will have to dovetail with whatever review the Comptroller and Auditor General is carrying out.

I am also available to discuss any matters of interest or concern in respect of the HEA accounts.