Oireachtas Joint and Select Committees

Thursday, 26 October 2017

Public Accounts Committee

Report of Comptroller and Auditor General 2016
Chapter 19 - Management and Oversight of Grants to Health Agencies

Mr. Tony O'Brien (Chief Executive Officer, Health Service Executive)called and examined.

9:00 am

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The main business of the meeting is dealing with the report of the Comptroller and Auditor General 2016, chapter 19 - management and oversight of grants to health agencies. As we have representatives of HSE before the committee, I want to take one minute to make a public health announcement. I absented myself from the meeting for ten minutes to have the flu jab in Leinster House. The service is being provided by a company down the road. Practitioners from a doctor's practice come to Leinster House and make the flu vaccine available at a cost of €18 lest anyone thinks we can receive it without having to pay for it. In the context of the management of health services I encourage people to have the flu jab. Mr. O'Brien spoke about this matter yesterday on national radio and might reiterate what he said about the public health aspect. We will then move on straight away to our main business.

Mr. Tony O'Brien:

First, I congratulate the Chairman on having the flu jab and setting an example. It is also worth acknowledging that the Houses of the Oireachtas as a place of employment facilitate employees, as do organisations such as RTÉ and The Irish Times. As we approach the flu season, it is important that those in the at risk groups - health care workers and those among the elderly population - avail of the flu vaccine. There has been some controversy this week about whether it is exactly the right match. The truth is that it is never exactly the right match, but the flu vaccine confers protection. It can reduce the number of hospital admissions among the elderly, in particular, by between 50% and 60% and also reduce the number of deaths among those who contract the flu by up to 80%. Therefore, there is a real and fundamental benefit both for the individual and our society. I am very happy that this place of employment facilitates everyone who works in it through ease of access to the flu vaccine and hope other employers will also do so. As the largest employer in the State, we do so. I applaud the Chairman for the example he has set in sharing his experience with everyone present.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In the second part of the meeting we will deal with the management and oversight of grants to health agencies, regularly referred to in the public arena as section 38 and section 39 bodies, as they are funded directly by the HSE. Almost €4 billion of taxpayers' money is given to them. At previous meetings the committee raised serious concerns about the level of oversight of the sector demonstrated by the HSE. In the past year or so we have had the Console issue and matters related to top-up payments made to certain staff. We have had issues in organisations such as St. John of God services, before which we had issues in the Central Remedial Clinic. Representatives of the Rehab group appeared here on a previous occasion also. It is greatly welcome that the Comptroller and Auditor General devoted a chapter in his annual report for 2016 to this specific topic. It is timely and important in ensuring the effective spending of public moneys in a way that will provide maximum benefit for those who use the services of the agencies involved.

Mr. O'Brien, director general of the HSE, is joined in this session by Mr. Stephen Mulvany, chief financial officer and deputy director general; Ms Rosarii Mannion, national director, human resources; Mr. John Cregan, head of compliance; Mr. Ray Mitchell, parliamentary affairs division; Mr. Kevin Cleary, HSE compliance division, and Mr. Michael Flynn, national director, internal audit division. We are also joined from the Department of Health by Mr. Greg Dempsey, deputy secretary general, and from the Department of Public Expenditure and Reform by Mr. Barry O'Brien and Mr. Tom Clarke.

By virtue of 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If, however, they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.

Before I call on the Comptroller and Auditor General to make his opening statement, I point out that it is almost 11.50 a.m. and that there will be block voting in the Dáil in approximately one hour when we will have to suspend the sitting. It is inevitable we will have to resume afterwards as we will certainly not have our business transacted within the next hour. I am putting people on notice that we will be back after the block voting and a lunch break.

I call on the Comptroller and Auditor general to make his opening statement.

Mr. Seamus McCarthy:

The HSE funds over 2,270 service providers to deliver services on its behalf, as provided for in sections 38 and 39 of the Health Act 2004. The service providers include large acute hospitals, as well as services for people with a disability and older persons. They provide mental health, social inclusion, palliative care, primary care and health and well-being services. The funding to pay for these services is allocated to HSE annually from the health Vote. In 2016, €3.8 billion, or around 28% of the HSE's Vote, was for the provision of payments to agencies. It included a sum of €2 billion to be shared between 16 acute hospitals and a sum of €1.8 billion for voluntary and community groups.

Chapter 19 of the report on the accounts of public services for 2016 examines the HSE's framework for monitoring grants to service providers, drawing on the results of the audit of the financial statements of the HSE for 2016. The current grant funding system has evolved from a long established model of service provision, whereby the State relies substantially on the voluntary sector to provide certain health services. The formal arrangements with service providers are usually put in place by negotiation rather than through competitive processes. The HSE has two types of contractual arrangement with service providers, depending of the level of funding provided. Service arrangements are put in place with larger service providers, those operating on a for-profit basis and out-of-State service providers. In 2016 approximately 570 agencies in receipt of €3.75 billion were managed under these arrangements. Grant aid agreements are put in place with service providers in receipt of funding below €250,000 a year. Approximately 1,700 agencies in receipt of just over €32 million were managed under these arrangements in 2016.

The HSE has established a complex framework for the monitoring and oversight of these arrangements that is currently administered and overseen by nine community health care organisations, referred to as CHOs, located around the country and by six of the seven hospital groups, as summarised in Figure 19.1 of my report. Progress has been made by the HSE in putting in place a systematic process for the oversight and monitoring of grant funded service providers. However, the has report found that specified procedures within the HSE's monitoring framework were not applied consistently. For example, funding CHOs did not have details of all of the key governance arrangements for a sample of service providers examined. A service provider with multiple locations can receive funding from more than one of the HSE's CHOs and be subject to separate monitoring by each funding CHO. The examination found that in these circumstances the identification of responsibilities in the HSE for monitoring and oversight was difficult. The results of various audits and external reviews and compliance statements made by service providers highlight a number of governance issues arising across the sector, in particular non-compliance with procurement rules and regulations, non-compliance with public sector pay polices and the absence of internal audit functions. Service agreements specify key performance indicators and reporting frequency. Required key performance indicator returns were on file in just over half of the sample cases examined, of which over one quarter were not at the frequency specified in the service arrangement. In the sample cases examined required audited financial statements had not been provided for the funding CHO in just under one quarter of service arrangements and grant aid agreements.

The report makes a number of recommendations in regard to the HSE's framework for oversight and monitoring, including that the HSE be satisfied that service providers have appropriate governance structures in place; that the service arrangements clearly set out key performance indicators and associated monitoring arrangements, including the responsibilities of both parties; that the monitoring arrangements specified in the service arrangements be complied with; and that the roles and responsibilities for monitoring be clearer where a service provider receives funding from more than one CHO. The HSE has indicated that it accepted all of the recommendations made. The director general will be able to update the committee in that regard.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Before I call Mr. O'Brien, perhaps Mr. McCarthy might explain the phrase "service arrangements are put in place with larger service providers, those operating on a for-profit basis and out-of-State service providers".

Mr. Seamus McCarthy:

Do you mean out-of-State service providers?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes. Will somebody, please, explain to the public what it means?

Mr. Tony O'Brien:

An out-of-State service provider is one that is outside the jurisdiction.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Are there many of them?

Mr. Tony O'Brien:

There are a fair few, but it is not a huge number.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is the service being provided in the State?

Mr. Tony O'Brien:

We only use out-of-State service providers where we need to do so in order to obtain a service. A good example, although it is not included in the report, is the contracts we have put in place for the provision of scoliosis surgery in other countries in the European Union.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is the service provided in those countries or do people from those countries come here to provide it?

Mr. Tony O'Brien:

There is a mix. The scoliosis surgery is provided out of the country but the assessment is made in this country.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Sometimes children might have to go to specialists.

Mr. Tony O'Brien:

Yes. There is a range of services which, either for capacity reasons or owing to the nature of the specialisation, we would never be able to provide optimally on the island or, at least, on this part of it.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Does the HSE have a service level agreement with Great Ormond Street Hospital, to take an example relating to children, or would it be just pay as one goes?

Mr. Tony O'Brien:

There are special trading arrangements in place between public bodies in different European countries. Sometimes we do this via a public procurement process and sometimes by a service arrangement. It depends on the circumstances.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Okay.

Photo of Bobby AylwardBobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Does the National Treatment Purchase Fund come under this heading?

Mr. Tony O'Brien:

The National Treatment Purchase Fund is not within the scope of the HSE.

Photo of Bobby AylwardBobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is not included under this heading.

Mr. Tony O'Brien:

It is a separate State entity that is separately audited. Its accounts come separately to the Committee of Public Accounts.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We are all familiar with the services EU citizens can receive by going to the North. Is that a different scheme again?

Mr. Tony O'Brien:

It is different. It comes under the treatment abroad scheme and is done on a one-off basis. I am referring to situations where we have standing arrangements.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Okay. I asked the question because the phrase caught my eye.

Mr. Tony O'Brien:

The Comptroller and Auditor General has provided me with a useful note that states there was expenditure of almost €9.5 million in respect of out-of-State service arrangements and that there were 13 such providers.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is great that the taxpayer will fund them because they are obviously serious or critical cases. I am sorry for interjecting, but people find that this adds to their knowledge of the matter. I invite Mr. O'Brien to make his opening statement.

Mr. Tony O'Brien:

I thank the committee for the invitation to attend this part of the meeting to discuss chapter 19 of the Comptroller and Auditor General's report for 2016. The Chairman has introduced my team.

The HSE previously acknowledged that it had concerns about aspects of the monitoring and oversight arrangements for the grants paid to outside agencies. The report of the Comptroller and Auditor General is, therefore, timely and will further assist the HSE in ensuring both the HSE managers responsible for the oversight and monitoring of grants and the agencies in receipt of them will continue to work towards a comprehensive and effective oversight process. The HSE has provided a briefing paper for the committee which describes the overall governance system in place for the management of the relationship with funded agencies and outlines the various elements introduced to ensure greater accountability and compliance with public sector norms.

The HSE's relationship with the voluntary sector should not be framed in purely negative terms. I highlight the valuable role the sector plays in the delivery and development of health and personal social services. The HSE funds 2,279 section 38 and section 39 agencies. The reality is that the State depends on the voluntary sector for the delivery of many services and voluntary organisations are often the first to identify gaps in services. At this stage, the agencies accept that expenditure of public funds and, just as importantly for their reputations, other charitable funds will attract greater scrutiny by the funder and the public at large. The Comptroller and Auditor General's audit shows that there is adequate specification of outputs, that is, that the HSE is clear on what it expects in terms of the quantum and quality of services for the grant to be paid, but that some further work is required on other aspects of the oversight system.

The audit report speaks for itself regarding the Comptroller and Auditor General's assessment of the HSE's approach and performance. I do not propose, therefore, to recite the detail of the report. The Comptroller and Auditor General has made three recommendations: the need for the HSE to include an assessment of the effectiveness of governance structures in its monitoring procedures; a need to highlight responsibilities for the monitoring of key performance indicators; and a need for compliance with the monitoring arrangements specified in service arrangements. These recommendations are agreed to and progress on their implementation is being made.

The Comptroller and Auditor General acknowledges that the annual compliance statement process, the external governance reviews commissioned by the HSE, the HSE internal audits and the work of the Comptroller and Auditor General in this examination and previous audits all point towards a number of governance issues arising across the sector, in particular non-compliance with procurement rules and regulations, non-compliance with public sector pay policies and the absence of internal audit functions.

To address these governance issues, the HSE has taken steps to enable agencies to have greater access to the HSE procurement systems and has provided training and guidance to external agency staff. The executive has also taken steps to maintain the focus on compliance with public sector pay policy by all agencies and it will continue to subject agencies to greater scrutiny, in particular, through the HSE's national HR processes. The HSE has also taken steps to emphasise a requirement for the establishment of an appropriate internal audit function, or the accessing of internal audit resources, as set down in the service arrangement.

There has been significant progress in effectively overseeing and monitoring the payment of grants, and compliance levels by agencies have improved. The HSE will continue to develop its systems and it will, for example, establish contract management support units in the community health care organisations, CHOs, to ensure that matters such as the recommended frequency of monitoring meetings is met in all cases and that the oversight of multi-agreement agencies is co-ordinated.

The HSE will also further develop its IT system to streamline the oversight and monitoring administrative processes. However, irrespective of how sophisticated and extensive the HSE systems are, the HSE cannot guarantee that every agency it funds will meet all its obligations. In the past, the challenges faced by the sector vis-à-visthe HSE are rooted in governance issues. Good governance is fundamental to the effective delivery of services and the sustainability of agencies. The HSE is not, and does not wish to be, the regulator for the sector and neither does the HSE wish to micromanage external agencies. The HSE, like all public funders relies, and must be able to rely, on agencies' audited accounts. The importance of a robust statutory external audit process cannot be overestimated. Like all public funders, the HSE cannot audit all agencies as that would require an army of auditors. While agencies should be accountable for the grants made available to them, they should continue to be independent and they should not be so constrained that the innovation and drive they bring to services is lost.

Once again, I welcome the Comptroller and Auditor General's report and I can confirm that the HSE is working to implement the recommendations made and address the concerns identified.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank Mr. O'Brien. Speakers have indicated in the following sequence. Deputy Cullinane, the first speaker, has 20 minutes. Deputy Catherine Connolly, the second speaker, has 15 minutes. Deputy Marc MacSharry is the third speaker and he has ten minutes. Everybody after that has ten minutes. When there are two minutes remaining, I will remind people their time is almost up.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I have lost my pen and a mountain of paperwork but that is okay. I welcome back the witnesses who have been here previously and I also welcome the new witnesses. I will start with Mr. Flynn. Does he work for internal audit?

Mr. Michael Flynn:

That is correct. I am the national director of internal audit for the HSE.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

First of all, I wish to say well done on what is a good job and on the information that has been provided to us. As the director general has said, it is quite limited as the HSE cannot audit every organisation, but Mr. Flynn has provided the Comptroller and Auditor General's office and, as a consequence of that, us with valuable information. Specifically, what does internal audit check for when it examines the accounts, practices or governance of organisations?

Mr. Michael Flynn:

What we do first of all is look at the HSE's management of the grant process, how its own procedures operate, and then we visit a number of the organisations. We look at everything from a financial perspective. We look at the governance, board minutes, payroll, travel expenses, procurement and basically all the financial controls one would expect to see in an organisation.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Would it be fair to say in broad terms that internal audit looks at compliance issues?

Mr. Michael Flynn:

Yes, we would broadly look at compliance issues.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

That would be issues relating to systems, practices and procedures. Policy is a matter for the executive and others and not necessarily a matter for internal audit. There are set procedures for internal audit to follow.

Mr. Michael Flynn:

We would not have the capability to assess the services they provide. We are financial accountants and auditors.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Absolutely. This question is for Mr. O'Brien then. Would there be a separation of roles in relation to internal audit, the compliance unit and the HSE executive? As has been said, internal audit would examine compliance but it would not enforce it as that is not its job, which is to report. Whose job is it to enforce compliance?

Mr. Tony O'Brien:

If, for example, internal audit is auditing an organisation that is funded by a CHO or a national division, then the management responsibility for pursuing the findings of an internal audit lies with the person who holds the funding or is our party to the service agreement.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Okay, so it would be the compliance unit.

Mr. Tony O'Brien:

No, the compliance unit has a function different from but not dissimilar in principle to the internal audit function. The compliance unit seeks to assist agencies to improve their compliance through a number of standardised processes and support functions. The business relationship is between whoever within the HSE has commissioned-----

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Where would the buck stop in terms of enforcement?

Mr. Tony O'Brien:

It stops with the funder within the HSE.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Would that be the organisation that receives the funding?

Mr. Tony O'Brien:

No. To keep it simple, if for example we are dealing with an organisation that is funded nationally-----

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Is Mr. O'Brien talking about the difference between CHOs and structures in the HSE?

Mr. Tony O'Brien:

There is a mix of organisations in the 2,279. Some are funded at a local level and some are funded at a national level. We can take either, but for the sake of simplicity I will take a national example. For a national service provider, let us say in mental health, who is commissioned by the mental health division, the audit would be carried out by the internal audit function and that would be received internally by the relevant national director in the HSE who would be responsible for progressing the actions that arise from the audit.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

However, it would be elements or units of the HSE that would be responsible for enforcement.

Mr. Tony O'Brien:

Yes.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Ultimately, the buck would stop with Mr. O'Brien as the Accounting Officer accounting back to the Committee of Public Accounts.

Mr. Tony O'Brien:

Exactly.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Mr. O'Brien does not micromanage everything but in overall terms the buck would stop with him.

Mr. Tony O'Brien:

Yes, the internal audit division and the compliance unit are not part of the management process.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I turn to that section of the Comptroller and Auditor General's report which deals with the management and oversight of grants to health agencies. Perhaps we could get it up on the screen. It is the one just prior to page 275. It states that internal audit commenced a programme of random audits of agencies in receipt of funding less than €1 million. Will Mr. Flynn indicate if that is correct? It then goes on to say that a summary of the type of issues identified by the HSE internal audit from its reports published in 2016 is shown in figure 19.11, which is the following page. Is that based on the random audit?

Mr. Michael Flynn:

It is based on all internal audits that we conducted.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Is it based on random audits?

Mr. Michael Flynn:

Some would be random and some would be targeted.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It is difficult for us then to know whether they were random or audited.

Mr. Michael Flynn:

It is an amalgam of all of them.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

How many audits were there that would have informed figure 19.11 in the summary?

Mr. Michael Flynn:

The summary is comprised of approximately 19 audits.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Do we have a copy of the breakdown of those 19 audits?

Mr. Michael Flynn:

Yes, that is supplied.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Could we can get that up on the screen as well? This is then a combination of both random and what one would describe as targeted audits.

Mr. Michael Flynn:

Exactly, yes.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

How many were done randomly and how many were targeted?

Mr. Michael Flynn:

I would think in 2016 that most of them would have been targeted audits. In 2017, we will be doing a lot more random audits as well. We set up the programme that was mentioned in the Comptroller and Auditor General's report. In 2017, we hope to do in the region of 40 audits, and a lot more of those will be random then as well as targeted.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

If we take literally what the Comptroller and Auditor General's report says, it says random. It does not say random and targeted. Will Mr. McCarthy say why that was? If we go back to page 275, we are talking specifically about the summary of the HSE internal audit findings for 2016. It does not even specify how many but we know it is 19 because we got the follow-up. The relevant paragraph says that this was on the basis of random audit of agencies, but in fact it was not just random. It was targeted as well.

Mr. Seamus McCarthy:

No, I think what we are talking about is audits that were completed in 2016, so their origination would have been earlier than that and some of the accounting periods they are referring to would have been earlier.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Does Mr. McCarthy accept that it is not as clear when one is reading it?

Mr. Seamus McCarthy:

Absolutely.

My interpretation of that would be that as and from 2016, the selection process would have been an element of that.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Of the 19 that are a combination of random and targeted, how many were random? Most of them were targeted.

Mr. Michael Flynn:

Most of that table was targeted but some-----

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Why were they targeted?

Mr. Michael Flynn:

As part of our normal audit process, line divisions are asked if there are particular issues around certain funded organisations, and internal audit attempts to include those in the plan. For example, the Deputy will see that with regard to Console. Line management specifically requested that an internal audit be conducted in respect of that one because there were concerns about that particular organisation.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Did the witness carry out any work or have any oversight over the internal audit of Console?

Mr. Michael Flynn:

Yes, it was carried out by my division.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The witness will remember that there were more than 60 findings. Is that correct?

Mr. Michael Flynn:

Yes.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The findings were all classed as having systemic difficulties. A quote from the report stated that the findings had national implications for the HSE.

Mr. Michael Flynn:

Yes, that is correct.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Would the witness describe those findings as failures?

Mr. Michael Flynn:

They were failures within the organisation, certainly.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Within which organisations?

Mr. Michael Flynn:

Within the funded agency. The learning from that is applied to the HSE to say-----

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Were there any failures of oversight and enforcement?

Mr. Michael Flynn:

It points to a need for greater enforcement and greater oversight by the HSE.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The internal audit report, and I will stick with this organisation for the moment before turning to others, stated that there were 60 very serious findings, all of which showed systemic problems and which were of the highest priority. The report said that this had significant national implications for the HSE. If the internal audit report mentioned significant national implications, which was the exact wording, that would point to systemic failures in terms of compliance and the enforcement of compliance. Is that fair or reasonable?

Mr. Michael Flynn:

It is. It would be potentially systemic rather than systemic. The Console audit was a poster boy for everything that could go wrong in a funded audit.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

In terms of process from the HSE side and in terms of enforcement, given the gravity of the issues in this organisation - there are 19 more and we will go through those in a moment - it did point to failures in oversight and enforcement of compliance. Would that be a fair assessment?

Mr. Michael Flynn:

It would be. However, as the Comptroller and Auditor General's report makes out, there have been improvements.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I will get to the improvements in a moment, but for now we are talking about the reports in front of us.

Mr. Michael Flynn:

There are many issues identified in that report.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Improvements will happen in the future.

Mr. Michael Flynn:

The process has already started.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The witness looks back into previous processes.

Mr. Michael Flynn:

That is correct.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The Comptroller and Auditor General looks back as well. The purpose of an audit is to carry out a look back. It is not to look to the future and consider what can be improved. While it can make recommendations, that is a matter for the executive and for those in policy. The witness examines failures. Does he acknowledge that, notwithstanding the failures in the organisations, which are obvious given the gravity of the issues, that there were also failings in terms of compliance and enforcement?

Mr. Michael Flynn:

That is a fair comment.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Mr. O'Brien was here as a witness when we discussed the Console issue and the internal audit report. One of the exchanges between Mr. O'Brien and me concerned the role of the HSE and whether there were failings. I put the question to him whether there were any failings on the HSE side and he said there were none. I have the transcript here. He said:

[I]t is a different thing. We are talking about learnings, as the Chairman asked us earlier about learnings. Learnings are not necessarily the result of failings; they are learnings.

We have now heard from internal audit. Does Mr. O'Brien still hold the view, given what is before us now, which is a snapshot of 19 funded organisations showing in most cases the issues identified by internal audit, that there were no failings on the HSE side in terms of compliance or enforcement, or would he now have a different view?

Mr. Tony O'Brien:

The Deputy is now asking me my view on an answer I gave in a specific case at a general level. I stand by the answer I gave in the specific case, and it is important for us to remind ourselves that we are talking about what was a rogue agency. The issues that surfaced in the internal report related to the use by that body of funds which were not provided by the HSE and in respect of which there were, over successive years, clean audit certificates which entirely misrepresented the position. Clearly that has changed our view as to how much reliance the HSE can place on audit certificates, although there is no option but to place a good degree of reliance on them.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The point that I made to Mr. Flynn and the context I gave was the Console report because it was so profound. Every one of the findings had a high priority. The report said that the totality of the findings had national implications for the HSE. He was very clear that it points to failings of compliance and enforcement. Internal audit is entitled to have a different opinion from the director general, and it has given that. Whether it concerns Console or all of the organisations-----

Mr. Tony O'Brien:

The Deputy is asking me whether my opinion on Console is also my opinion more generally.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The witness can answer both if he would like.

Mr. Tony O'Brien:

I would be happy to. My opinion on Console is that the audit report clearly pointed to systemic issues. One of the consequences of that is that Console is no longer here and the HSE no longer funds it. The HSE had to be clear about ensuring there was a replacement service before defunding. It remains the case that what the internal auditors found was the flagrant misuse of charitably given funds, not HSE funds. That went right to the heart of the honesty of the HSE's relationship with that organisation, which meant that it could no longer have such a relationship. That does have generalisable lessons, to use the phrase I used at the time, which does affect the way both internal audit, management and the compliance unit relate to those types of organisations.

On the other issues, on a quarterly basis the national director for internal audit presents a report at the national leadership team meeting of the HSE which covers all the audits concluded in that period, with a summary of all the findings, graded by classification. The findings and their generalisability are discussed, and then there is a process as part of that report of tracking the extent to which recommendations have or have not been closed out in terms of previous audits. These audits are taken seriously. They are used as a way of changing the way the HSE carries out its business as an organisation.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am not for a moment suggesting that the HSE is not taking this seriously or that as an organisation it has not addressed the issues raised in a serious way. I am simply trying to establish if the HSE, at a corporate level, accepts that there were potential failings in terms of compliance and enforcement. I am not entirely satisfied with the witness's response, but I am entitled to draw a conclusion and the witness is entitled to give his view.

Mr. Tony O'Brien:

Is the Deputy asking specifically about Console?

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

No. The second issue relates to learnings, which are very important. Whether the mistakes are of the funded organisations or the HSE, mistakes must be learned from. In terms of lessons learned, what changes were made in practices, policies and procedures? That is what I want to establish.

There is a table on the screen which shows the 19 audited reports which framed the basis of the previous table which generalised the areas of concern. The types of issues identified by internal audit are a high number of bank accounts, incomplete accounting records, transactions not authorised at appropriate levels, expenditure on gifts and entertainment, poor audit trails over credit card expenditure, absence of policies and procedure regarding conflicts of interest of board members and confidential disclosures, board members not completing Standards in Public Office Commission, SIPO, returns, salary payments in excess of the Department of Expenditure and Public Reform pay scales, senior staff in receipt of allowances and round-sum payments, staff in receipt of bonus payments, procurement issues including contracts awarded without competitive procurement processes, and documentary evidence not retained for the awarding of contracts. When I look at all of that, the similarities to Templemore jump out at me. There were high numbers of bank accounts, incomplete accounting records, unauthorised transactions, and expenditure on gifts and entertainment. It strikes me that this is something that should concern us.

We then look at the 19 different organisations. I refer the witness to item No. 8.

The witness breaks the areas of concern down into five broad headings with subheadings. For Console they are 1b and c, and 2a and b. Almost all fall foul of the areas of concern but they are not the only ones. Some have not appeared on our radar and I am trying to understand or establish what the issues are in these organisations and what corrective action has been taken. The concerns raised about the Catholic Institute for Deaf People are a high number of bank accounts, incomplete accounting records, absence of financial procedures and controls, expenditure on gifts and entertainment, poor audit trails over credit card expenditure, salary payments in excess of approved pay scales, senior staff in receipt of allowances and lump sum payments, staff in receipt of bonus payments and contracts awarded without competitive procurement. That is just one example. What is this organisation? How many people does it employ? What level of funding does it get from the HSE?

Mr. Michael Flynn:

The funding is €3.7 million.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The Catholic Institute for Deaf People gets €3.7 million of taxpayers' money yet there are all these areas of concern. Can Mr. O'Brien say what is being done about that?

Mr. Tony O'Brien:

For each organisation against which there are adverse audit findings these will be reflected in the oversight arrangements thereafter and amendments to the service arrangements. There will be tracking of implementation of audit recommendations and they are subject to further audit. If there is not a response to the internal audit findings the question of ongoing funding is at issue.

Deputy Cullinane drew a comparison with another place but these organisations are not part of the HSE. They are organisations that we fund. We do not control them. They are voluntary bodies and I spoke in my opening statement about the nature of the relationship. I believe the analogy-----

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am under no illusions whatsoever that these are not State organisations.

Mr. Tony O'Brien:

The Deputy was drawing an analogy with another organisation that is part and parcel of a State agency and I wanted to be clear.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I understand completely that these are private organisations, that some are community based but receive HSE funding and only a portion of their expenditure is State funded. We understand that is the nature of section 38 and 39 organisations. I am looking at the failures of this organisation initially and I see that they are systemic. They raise very serious concerns across all the areas. What corrective action was taken? What sanction, if any, was imposed on the organisation following this audit?

Mr. Tony O'Brien:

The relevant service managers will have pursued the implementation of audit recommendations. This organisation will be under close-----

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

What does that mean?

Mr. Tony O'Brien:

Each individual audit report contains a set of recommendations designed to address the findings. They will be classified as to severity. There will then be a process of agreeing a period of time within which they need to be rectified which will vary depending on the nature of the rectification and its practicality and that will then form part of the oversight process.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

After that response I am none the wiser as to what sanction, if any, was imposed on the organisation. That tells me there is a lot of bureaucracy, paperwork and exchanges of papers and emails but I am not hearing about any sanction.

Mr. Tony O'Brien:

The process is not one designed for sanction. It is designed to improve the governance processes.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Deputy has two minutes.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I will come back to that. Can Mr. O'Brien hold that for a second because I have only two minutes?

Mr. Tony O'Brien:

I am trying to answer the Deputy's question.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Mr. O'Brien has answered it.

Mr. Tony O'Brien:

Have I?

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

He has. He said it is not one of sanction, which was what I asked. He has answered that question.

Mr. Tony O'Brien:

The Deputy interrupted me mid-sentence. The process is not one designed for sanction. As we have seen in the case of Console, where the issues are serious enough, the extinguishing of the organisation can be a consequence and if that is not a sanction I do not know what is.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

We will get to that in a second. I am looking now at St. Hilda's Services Ltd., Athlone. There are a high number of bank accounts, incomplete accounting records, absence of financial controls, expenditure on gifts and entertainment, poor audit trails for credit card expenditure, non-rotation of board members, salary payments in excess of approved pay scales, contracts awarded without competitive procurement, lack of policies and procedures in respect of procurement. That is another organisation where there are failures. I want, if I can, to establish how, as a member of the Committee of Public Accounts, I can be satisfied that taxpayers' money is being spent for the purposes for which it is given and that the organisations availing of taxpayers' money have appropriate procedures and policies in place to ensure the protection of taxpayers' money. I have in front of me an audit of 19 organisations out of 2,200-----

Mr. Tony O'Brien:

2,209.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

How much is the total expenditure?

Mr. Tony O'Brien:

It is €3.7 billion.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Of the thousands of organisations that avail of this funding we have only a sample in front of us and I have given two examples where there major problems. I am sure the witness will understand that I am anxious on behalf of the people I represent that there is a difficulty in respect of governance, compliance and enforcement where there is an expenditure of €3.7 billion. Can Mr. O'Brien give us his view of what improvements have been made? I have read his opening statement and have read some other documents he supplied. These seem to suggest that his response involves more communication and form filling but is short on sanction. That concerns me.

Mr. Tony O'Brien:

If the Deputy or committee would like a detailed explanation of the specific actions in respect of each of these we have no difficulty in providing that but we were not asked for it in advance. I think the committee should take comfort from the fact that we have a well-developed internal audit function and a compliance function which address these issues. The reason we can tell the committee about these deficits and the reason they are being addressed and improved is precisely because we have a pro-active programme of audit.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

May I put one final question?

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

This is the Deputy's last question and he should be quick.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

What I see is more paperwork. I would argue that we and the HSE need more powers in respect of compliance. Has Mr. O'Brien asked for more powers? Has he examined more powers to ensure there is greater enforcement in compliance and sanctions? Does the HSE need more powers? Is that something the Oireachtas can help it with? I do not think, with respect, that more paperwork is a reasonable response but that is all I hear today. If the HSE needs more powers and if compliance needs to be strengthened, Mr. O'Brien should tell us because that is our job, to robustly examine policies, procedures and practices. Mr. O'Brien should tell us if he needs the powers.

Mr. Tony O'Brien:

With respect, the only person who has used the expression "paperwork" is the Deputy's good self. The processes I have talked about are much more significant than emails and letters. They are direct dialogue and meetings with boards.

Most of this set of organisations is relatively small organisations, true voluntary bodies, ordinary well-meaning but not always well-equipped individuals trying to do their very best for cohorts of people in a context where the regulatory burden we impose on others can be quite complex. We start from a point of assisting them to improve. That is the primary purpose of internal audit. Where we find barn door problems we take much more dramatic action. As the HSE, we could do one of two things: identify problems and have a process which involves eliminating them, getting the organisation into a better state while protecting its services, or the cover-your-arse approach, which, frankly, I do not take, and simply stop the funding because at some point I will have a difficult conversation like this one at the PAC and the people who are the beneficiaries of the service suffer as a result. We try to work with service providers to assist them in improving their compliance. That is why I say it starts from that place. If, however, we are not getting a suitable response, if what we find is absolutely unacceptable then we go a different route but also seek to protect the service providers.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am moving on to Deputy Connolly.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am not comforted by the two examples I gave.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is fine. The Deputy has made his point.

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The appropriate, corrective sanctions were made by the HSE. I gave only two examples.

Mr. Tony O'Brien:

What I have undertaken to do, if the Chairman would like, is give a written response that outlines the sanctions. I believe we were asked for this table two days ago.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is a great table to get, and we appreciate and accept that. It is a great summary.

Mr. Tony O'Brien:

I am glad the committee asked for it but it did so two days ago. Consequently, what we do not have is all the documentation that the committee might otherwise have wanted once it had a chance to read that.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am going to give Mr. O'Brien a rest for a moment and just ask questions to the Department of Health. Mr. O'Brien signed a statement on internal financial control on 16 May 2017. There are 17 pages, and they point out serious issues to the Department. The statement points out the problems quite openly to the Department of Health. What is the response of the Department of Health to that statement?

Mr. Greg Dempsey:

Our main concern, having had the issues brought to our attention, was to understand the actions the HSE was taking to remedy the underlying issues. We have continued to engage and to receive reports on progress being made.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Could Mr. Dempsey try to spell that out for me? The statement was issued in May. Has Mr. Dempsey read the 17 pages?

Mr. Greg Dempsey:

Yes.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Therefore, he sees the serious issues that are being highlighted throughout, certainly in the last five pages. There are serious concerns over governance and so on. I will not read them out because I have only five minutes. Mr. Dempsey has seen and read the statement. What has he done about it?

Mr. Greg Dempsey:

Well, to say again-----

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

How many times has Mr. Dempsey met the management of the health executive in regard to this very significant statement?

Mr. Greg Dempsey:

There is an ongoing process of engagement between the HSE and the Department that considers performance and governance. It is ongoing so I would not be able to give a number of meetings specifically on this.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Does Mr. Dempsey accept there is a serious problem, notwithstanding the effort? I appreciate that progress has been made since last year. I have last year's information. I understand that Mr. O'Brien and the HSE have made some progress. The summary of the internal audit findings has been read out to Mr. Dempsey, however. There are serious issues. There are serious issues raised by the Comptroller and Auditor General in regard to financial controls, the absence of internal financial controls and governance. Over 50% of the sample is involved. Does the Department of Health accept that there is a serious problem in regard to governance in regard to these different organisations?

Mr. Greg Dempsey:

Our view would be that there is an issue but it has been identified. Action is being taken to remedy that. We welcome that action. One can see in some of the reports the improvements that have been made, the progress that is being made, and the increasing compliance levels.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

My next point is for Mr. Michael Flynn, and it is on internal audit. I would also like to say "Well done" to the internal audit unit in regard to Console. At the time, I read the information in detail. It was very detailed. I am a little concerned, however, that Mr. Flynn is talking about potentially systemic issues. I have come here without the relevant document but I read it last night. Was "systemic" the word used?

Mr. Michael Flynn:

There were-----

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Just let me finish my question. It was systemic. Every single recommendation was read, and nearly every recommendation was also directed at the health executive. What has been done in this regard? Is Mr. Flynn satisfied the recommendations for the health executive have been acted on?

Mr. Michael Flynn:

There has been a lot of implementation of those recommendations from all of these reports. At this stage, 80% of the findings from all of those reports have been acted upon. Therefore, there has been good progress on implementation.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Has Mr. Flynn had extra staff since that internal audit?

Mr. Michael Flynn:

No. We have had the same level of staff for the past 12 months.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

The same level. Has Mr. Flynn asked for extra staff?

Mr. Michael Flynn:

There is a request in the Estimates process for additional audit staff.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

My colleague asked Mr. Flynn about the number of audits. There were 19. They were targeted audits.

Mr. Michael Flynn:

Most of those were targeted.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Which? Of the results here-----

Mr. Michael Flynn:

I believe I said most of those are targeted.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

In 2016-17, the organisation started to engage in random audits. Why is it not doing more random audits?

Mr. Michael Flynn:

We are doing more random audits now.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

How many have been done?

Mr. Michael Flynn:

This year, we expect to do 40 audits of funded organisations in total.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Forty. How many have been done?

Mr. Michael Flynn:

We have done approximately 27 or 28 already.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Random?

Mr. Michael Flynn:

Total audits, sorry.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

How many random audits have been done?

Mr. Michael Flynn:

Of that number, at least over half would be random audits.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Why were random ones not done before 2016-17?

Mr. Michael Flynn:

We were focusing initially on where people in the HSE identified that there would be particular problems. Obviously, that is the first place to go to if people identify problems to us. That is the way we operate. If a national director says to us there is a problem and asks whether an audit could be carried out, we do that. The idea of doing the random ones is to determine what the generality of situations is like and to determine whether they can be compared with the targeted audits.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Is Mr. Flynn saying the director states which ones to audit?

Mr. Michael Flynn:

On the targeted ones, it would be my colleagues in the HSE who would come to us. I would write to them before the annual audit plan and ask whether there are particular areas they would like us to include in the audit plan.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am no accountant and I put up my hand to demonstrate my ignorance in regard to accountancy. When I read and re-read, however, I conclude that there seems to be a trend, not just from Console. The effect of Console is still evident on the ground, with organisations on the ground suffering as a result. Employees are also affected, as raised repeatedly at this level.

"Systemic" was the word used. When we look at the sample from the Comptroller and Auditor General and Mr. Flynn's sample, we note the issues are not just once-off. Console was not a once-off. There are serious problems coming back. I refer to simple things. We have been talking about section 38 and section 39. The vast amount of money goes to section 38. There are different governance arrangements for the two, which I understand. I refer to simple things under section 39, such as the chairperson of the organisation or board not coming back with a statement at the end of the year. The high numbers of bank accounts etc. comprise more than just a once-off. Is that not the case?

Mr. Michael Flynn:

Yes.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I see the briefing document from Mr. O'Brien and all the relevant documentation. We have an internal audit unit reporting to an audit committee. Then we have the Comptroller and Auditor general doing his statutory duty. Then we have all the external reviews, to which I will refer in a minute. We have a compliance unit that is costing money, and another to be set up, a contract support unit. Somebody asked last year for the cost of all these. The figure is in millions of euro and we have not even included the new ones. What resources would be needed at Mr. Flynn's level rather than, reactively, at all these other levels? What does Mr. Flynn need to do a proper job and give us confidence?

Mr. Michael Flynn:

I accept that we can do only a small proportion of the things but all those organisations have provided audited accounts, signed by external-----

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Not all of them.

Mr. Michael Flynn:

Virtually every one of them.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

The section 38 ones did.

Mr. Michael Flynn:

The section 39 ones did so as well.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

No. It states here somewhere that they did not. I will come back to it.

Mr. Michael Flynn:

They do have them. Whether they have issued them to the HSE or not is another thing. They would have firms of auditors signing their sets of accounts for them.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Not all the organisations have given the required audited accounts.

Mr. Michael Flynn:

No, but they would probably have them. They might not have given them to the HSE.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Mr. Flynn is utterly reliant on audited accounts and even when he gets them, as in the case of Console, he could not rely on them, as Mr. O'Brien has admitted. Having said that, Mr. Flynn did rely on them.

Mr. Michael Flynn:

A funder has to be able to rely somewhat on the work of external firms of accountants or signed audited reports for funded agencies.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

One would assume that and one would like to believe that. That was actually not the case.

Mr. Michael Flynn:

Not the case in this-----

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Separate from that, on occasion the required audited accounts do not come back either.

Let me go back to my question. We are talking about an audit, an internal audit, an audit committee and all the extra layers we are now learning about, which are costing millions. We know they are costing millions because I have the information here, and I have not even got the up-to-date figures. Would it not be better to resource internal auditing?

Mr. Michael Flynn:

The more important thing, to an extent, is to have very strong line management involvement with the funded agencies, and then to have a good internal audit unit coming in on top of that. I do not see the solution being to have 500 in internal audit going out and auditing every single organisation, but I believe there is a need for a strong internal audit unit.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What is happening now is that we have external reviews because of the problems that have emerged. Could Mr. O'Brien answer on the external reviews, or is that the role of Mr. Mulvany?

Mr. Tony O'Brien:

First, on the annual financial statements received for 2015, we received 100% in regard to funded agencies. That is one of the improvements that has occurred. As to how one would divide resources between internal audit and management, internal auditing is kind of a post-event practice. One is finding out what has not happened or what has happened that should not have happened.

There must be a balance between the resources we put there, and if I had them I would put more resources there, and the resources at the front end of the relationship which are designed to manage not just financial compliance but also the quality of services, the interests of the clients and so forth. That is part of the area we are focusing on both by resourcing the community health organisations to develop and deepen that relationship on the one hand and through the compliance unit - the Deputy is shaking her head but I will finish - to help a large number of voluntary people involved in voluntary governance to do their thing better.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am not into this with regard to the voluntary people. I am holding the health executive to account. We are not looking down on-----

Mr. Tony O'Brien:

The Deputy asked a specific question about where we should put the resources.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

The witness used his opening statement and he is using it again to talk about the good work they are doing. Certainly-----

Mr. Tony O'Brien:

I am not. I am talking about the future in response to the Deputy's question on where we should put the resources.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am asking specifically about the external reviews that were carried out. How many were carried out?

Mr. Stephen Mulvany:

Three reports have been finalised and 25 draft reports have been provided to the individual section 39 agencies. We are carrying out external reviews on all 39 of the section 38 organisations. Three of them are finished and there are another 25 draft reports complete and gone to the agencies. That is 28 nearly finished. The expectation is that we should get most of them finished by the end of the year and the intent for next year is to add the largest of the section 39 agencies and effectively create a five year rolling process of external review.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Who is carrying out those reviews?

Mr. Stephen Mulvany:

An external consultancy firm.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Is it one firm?

Mr. Stephen Mulvany:

The vast bulk of them is with a single firm, Deloitte.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Was that put out to public procurement or what was the process for getting the firm?

Mr. Stephen Mulvany:

It was.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What is the cost of that?

Mr. John Cregan:

We can share the costs with the Deputy but they are commercially sensitive at present because there will be a rolling programme of reviews and we will be going to the market for that as well. However, I can make the costs available to the committee.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I would appreciate that because I am allergic to the words "commercially sensitive". Every aspect of public bodies is open to scrutiny but when we go on to look at private companies suddenly it is commercially sensitive. Let me be clear that I am referring to the cost of these reviews. Does the witness not wish to answer that?

Mr. Tony O'Brien:

It is commercially sensitive because there is going to be a procurement process and we would compromise our secondary or primary obligation to secure value for money if we disclosed that figure here in open session. Mr. Cregan has indicated that we will seek to find a way to share it with the committee that does not compromise that process. That is reasonable.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What issues are showing up as a result of the reviews to date?

Mr. John Cregan:

The issues that are arising are very similar to what the Comptroller and Auditor General has already mentioned, which are issues around procurement, compliance with public sector pay norms and the absence of internal audit.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Are they serious issues?

Mr. John Cregan:

I have only three reports and draft reports.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

The three witnesses mentioned there are serious issues.

Mr. John Cregan:

There is a range of categories. Some of them are deemed to be significant issues that we must address. I would just like to say-----

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

How many are not complying with public pay policy?

Mr. John Cregan:

I do not have the details of the reports with me.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Roughly.

Mr. John Cregan:

It is an issue for some of them. It might not relate specifically to the chief executive of the organisation, but they are identifying more allowances, as it were, that must be addressed. With regard to the discussion so far in terms of identification of problems, one of the issues we are testing relates to what people in large organisations are sending to us in their assurance statements. What we are doing now is testing whether what they have said to us is right or not. We will be doing that on an ongoing basis. That is the purpose of the reviews.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

How many organisations are not complying with public pay policy?

Ms Rosarii Mannion:

Fifteen.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

How far out are they in respect of not complying? Talk about the nature of the non-compliance.

Ms Rosarii Mannion:

I have the breakdown here and am happy to share it with the committee afterwards if that is deemed appropriate. They range from a multi-task attendant being paid as a grade four, an additional clinic allowance that is not approved or whatever else. The scale is from very minor to very serious.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What is the very serious one?

Ms Rosarii Mannion:

I suppose they are all very serious if they are not compliant but one can pour over-----

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am seeking the range. The witness was about to give me the range and then she stopped.

Ms Rosarii Mannion:

I do not wish to identify people because I am happy to share the template. Looking at them here, and they are all itemised with a specific detail, I can see one. I deem anything over €5,000 to be fairly serious because it is public money and we have communicated extensively with these agencies on their requirement to ensure compliance. If anything is over €5,000 I deem it very serious.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I see that the HSE has written to a number of bodies on a number of occasions. Has it written to 15 bodies or is it more?

Ms Rosarii Mannion:

I have written to them all extensively. At this point in time there are 15 agencies that are not compliant with pay policy.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

That is at this point. Were there more which changed after the witness wrote to them?

Ms Rosarii Mannion:

Yes, absolutely. At one point we would have had 555 business cases that would have indicated non-compliance. We have dealt with 235 of those. As I said, some of those are quite minor issues that relate to people not being paid on the appropriate scale, perhaps a play therapist being paid as an attendant and so forth, and one must get those correct because under the strict letter of the law they do not comply with public pay policy. We are working on 320 at present. That is a work in progress. Those are 320 business cases from 15 agencies. I have the breakdown of the agencies and the number of the relevant business cases. They would have come to our attention through responses to the communications I issued, notification from internal audit and notification from the compliance unit. The matter is very much under control. It is getting a great deal of focus. We are working very constructively with these agencies and it is not punitive. We cannot deem them compliant so there is a process of engagement and dialogue around that - looking at the business case, discussing it with our funders in the Department and then deeming it compliant or not. Some of it relates to employee relations, ER, and industrial relations, IR, issues as well. Somebody might already have an entitlement to retain an allowance so there would be-----

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I have asked a question and I will be given the reply afterwards. I thank the witness. She has been very helpful. I have a last question.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Deputy's time has concluded. I call Deputy MacSharry.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will let the Deputy ask her last question.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

It relates to non-compliance with the signing of the service arrangement. The HSE introduced a penalty.

Mr. Tony O'Brien:

I would not call it a penalty. It is a consequence.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

The consequence was that a percentage of the funding was held back. Is that correct?

Mr. Tony O'Brien:

Yes, but it was retained for the agency, as opposed to a funding deduction.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

That is fine. I am not into punishment, believe it or not. I just wanted to know what Mr. O'Brien has learned from that. It related to one aspect, the timeliness of signing the arrangement.

Mr. Tony O'Brien:

I learned that the best way to herd cats is to move the food. The consequence of holding it back was a very dramatic change in the compliance.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

That is only one aspect, the timeliness. Has Mr. O'Brien evaluated that to see how it could be applied in that positive manner in respect of other faults?

Mr. Tony O'Brien:

Yes, I have been having discussions recently about what we would do with regard to some of the audit recommendations that are growing too old and whether a similar process might be applied. By and large, and Michael Flynn referred to this, there is approximately 80% compliance with the recommendations. We have some tolerance because some of them simply take longer to fix. However, if we get to a point that we get an assurance that an audit recommendation has been complied with and subsequently find that it has not been complied with, that will have a financial consequence. We have not moved to that stage yet.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We have established from the opening statement that the HSE wants to be able to depend on audited accounts as its guide. We have also established in the conversation so far that this is insufficient. How many audits of these organisations did Mr. Flynn carry out?

Mr. Michael Flynn:

In 2016 we completed approximately 19 audits of those organisations.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will briefly raise the case of Console. Did the "Prime Time" programme expose the problems with Console or had they already been identified by the Health Service Executive? Did the "Prime Time" programme team become aware of work the HSE was doing or did the programme expose the problem, thus enabling the HSE to intervene and do good work on the case?

Mr. Tony O'Brien:

This would be one of those audits that was identified as an area of interest by the mental health division based on-----

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was the organisation targeted on the back of the "Prime Time" programme, in other words, did this occur after the programme was broadcast? Which came first, the audit or the "Prime Time" programme?

Mr. Tony O'Brien:

"Prime Time", which is an excellent programme, was somewhat later to the party than the internal audit division.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The HSE had copped the problem, so to speak, and "Prime Time" picked up on what the HSE was doing.

Mr. Tony O'Brien:

This was work that had been going on for a considerable period and related to a clear feeling on the part of those managing the relationship with Console that there was an inability to trust what was being said. There was mood music, as it were, that led to a lack of ability to trust and, consequently, the request was put to internal audit that it would carry out an audit.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

My point is that the HSE identified the issue and was working on it through its systems and the RTE investigation was separate.

Mr. Tony O'Brien:

Yes.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That is fine. I ask the Chairman to indicate when I have three minutes remaining as I wish to address a couple of issues.

We cannot throw all of these organisations under a bus because we need the services that some of them provide. At the same time, we are in a pitiful position in terms of providing the level of oversight that would give members of the public the peace of mind they are entitled to in respect of expenditure of €4 billion per annum, which a substantial sum of money. If we continue with a process that is, by consensus, insufficient, with Mr. Flynn completing 19 or 20 audits each year, it will take us 113 years to get through all these organisations. The HSE has provided a useful table setting out the audits carried out on 19 organisations, which shows that multiple breaches were recorded in three or more areas in almost 65% of audits. It stands to reason that there is a very serious problem with governance and, potentially, misappropriation of funds in at least some organisations which have been designed to feather the nests of individuals.

This is a matter of grave concern, which requires a wholesale investigation. I mean no disrespect to the witnesses but it appears the HSE is not capable of carrying out such an investigation. An army may well be required to do this given the public interest involved, the €4 billion at stake with the percentage of breaches emerging each year. Last year, the examination carried out by the Comptroller and Auditor General made similar findings. I spent two years locked in a room adjacent to this one discussing banking. This sounds similar to the Central Bank light touch approach which involves learning and teaching rather than imposing sanctions. This approach does not serve us well, as we saw in the difficulties with tracker mortgages this week. We, and those who come after us, will spend the next 113 years identifying the same difficulties. With respect, the Department of Health and Minister must scope out what needs to be done to adequately manage these organisations and have an appropriate system in place. That is my commentary on what we have heard so far.

Mr. Tony O'Brien:

May I make a comment?

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Certainly.

Mr. Tony O'Brien:

We would not want to damn all external auditors and put them in the same category as what happened in Console. Such a generalisation would not be good thing to do. In this period, most of the organisations we are looking at on this table are the smaller section 39 agencies, most of which are operating in what would broadly be called the charitable sector. We need collectively to remind ourselves that there has been a move forward in terms of charity sector regulation. The HSE does not have regulatory powers. Clearly, the charities regulator is developing and growing capacity in that area and it may be the more fundamental piece of this jigsaw.

Let us remind ourselves that what we found in Console was not about public funds but about the use of the public's funds, namely, the donated funds. We would be much more comfortable if we operated in an environment where there was a qualifying criterion that we could rely on that was done externally. In the alternative, if the committee is of the view, which it may be, that we need to do much more in this area, I would not object in any way if the Government decided to give us, from resources that did not come from core health services, resources to beef up our internal audit division and other sectors. As it stands, if I were to give Mr. Flynn an extra auditor, I would have to take away a nurse or doctor or some other category of staff. Those are the hard choices that we have to make.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

That may well be the case. It is clear that the system is totally inadequate. Even if everything is being done correctly by all these organisations, and it is reasonable to believe that is not the case given the percentages we have seen, what we have is not fit for purpose.

What level of duplication is there in the 2,500 organisations? Has any analysis been done to show, for example, that there may be 400 or 100 organisations that we do not need?

Mr. Tony O'Brien:

The vast majority are very small organisations providing local services. While they might provide similar services to those provided in other localities, one would not really call it duplication. There are in the social care division a number of discussions ongoing about mergers, either of entire organisations or of the back office support services for those organisations. There is clearly a cost effectiveness and an efficiency gain to be had by the amalgamation of some of these providers but that would be done in the context of their remaining as section 39 or voluntary providers rather than seeking to turn them into State assets.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In terms of procurement, a procurement directorate was established in the HSE in 2010. At one point, approximately 120 legal cases were taken on procurement matters in a two-year period. What are the figures for the 2015-16 period?

Mr. Tony O'Brien:

Is the Deputy referring to legal cases?

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes.

Mr. Tony O'Brien:

As in persons taking action against us because they did not succeed in a procurement process?

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It could be that, yes. I am reading from notes related to procurement.

Mr. Tony O'Brien:

We would have to come back to that issue. Procurement is a highly litigious environment, which is why we are quite careful about how we do it. In this instance, for these agencies, this is about bringing them within the scope of our procurement activity, providing them with training and support and enabling them to leverage contracts that we are putting in place. As the committee already knows, the HSE itself has difficulties in these areas. Many of these small organisations would not have the capacity to carry out public procurement to the standards that we would require so we are seeking to bring them within the scope of what we do ourselves. As to how many cases there have been with failed bidders, I do not have that information but we can get it for the Deputy.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It would be useful to have that information, as well as details on what breaches are costing or potentially costing every year.

Mr. Tony O'Brien:

Sorry, we might be talking about two different things here.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

No, we are not. I want to know how many cases there are.

Mr. Tony O'Brien:

When the Deputy refers to "cases", is he referring to cases where there has been a failure to follow procurement guidelines or cases where a failed bidder-----

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am referring to procurement related cases taken against the HSE.

Mr. Tony O'Brien:

That would be failed bidders typically.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It could be.

Mr. Tony O'Brien:

We could tell the Deputy how much----

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I would like to know how many such cases there are and how much they are costing us.

Mr. Tony O'Brien:

We generally win these cases, but we will come back to the Deputy with that information.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is good that the HSE generally wins them.

Are many of the 2,400 agencies the subject of any specific interest regarding issues similar to those that occurred in Console and Rehab? Is there, let us say, a top ten or 15 organisations that the HSE, with the limited resources available to it, has identified as requiring a particularly close examination?

Mr. John Cregan:

At the moment, there are a number of agreements not signed for 2017. In some cases, the HSE has specifically raised issues and in some cases we are not prepared to sign the agreements because of difficulties in relation to governance. In a small number of cases, the agency is not prepared to sign the agreement because it has a particular issue, not with services or anything but with a particular aspect of pay.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Are any organisations being investigated by the HSE for what we might describe as "Console level activity"?

Mr. Tony O'Brien:

There is only one organisation, although it would be wrong to say it is Console type activity because that would imply that it is exactly the same type of activity as Console.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Let us say it is activity that would give rise to a level of public anger and dismay similar to that which occurred in the Console case.

Mr. Tony O'Brien:

It is on the public record that we are engaged in a detailed process with the St. John of God order in relation to certain of its services which involve a process not dissimilar to that which occurred in a previous organisation. There is a repopulation process going on with regard to the governance arrangements within that organisation, in other words, there are changes of board members.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We do not need to get into the details regarding St. John of God. Is the HSE pursuing other organisations?

Mr. Tony O'Brien:

At any given point in time, there will be specific concerns being examined either through the CHOs, the service divisions, or by way of internal audits.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Of the 8,500, is there concern about one, six, ten, 15 or more of them?

Mr. Tony O'Brien:

There is a dozen or more organisations, some of which were mentioned by Ms Mannion, in respect of which we are working through very specific issues. In regard to whether there are any at a stage where we think there could be a more fundamental problem, not so many.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

When will that process be concluded?

Mr. Stephen Mulvany:

The external review of governance in respect of the top 39 section 38 organisations will be completed by the end of the year. As receipt of information, such as the annual compliance reviews, is ongoing and requires follow-up, it is not a process that has a start and an end. It is an ongoing process.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

For the benefit of the people watching at home, who decides whether an agency is a section 38 or 39 agency?

Mr. Tony O'Brien:

That is governed by legislation. It is theoretically possible for an organisation to move from one category to another but that would require the sanction of the Ministers for Health and Public Expenditure and Reform and may even require primary legislation.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

For that to happen ministerial sanction and primary legislation would be required.

Mr. Stephen Mulvany:

The reality is that employees of section 38 organisations are public servants. Recruitment of additional staff to this area of the public service requires the sanction of the HSE, the Department of Health and the Department of Public Expenditure and Reform.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the witnesses for clarifying that issue. The following groups are voluntary hospice groups, Galway Hospice, Marymount Hospice, Cork, Milford Hospice in the mid-west, North West Hospice, Sligo and St. Francis Hospice in Raheny. All of these facilities have confirmed to the HSE that they were directed by it to implement pay cuts under both the Financial Emergency Measures in the Public Interest, FEMPI, Act and the Haddington Road agreements of 2010 and 2013 and that all resulting savings arising from these cuts were fully recouped by the HSE at the time. Can the witnesses confirm, from a HSE perspective, that what I have just said is correct?

Mr. Tony O'Brien:

No, not in those exact words. Arising from the economic recession in 2009-2010 cuts were made to the overall funding of organisations. In the case of section 38 employees, there was a requirement to strictly impose the FEMPI pay cuts. In regard to section 39 agencies, their budgets were cut and they were required to have regard to the effect on public pay policy of the FEMPI cuts but how they applied the cuts was a matter for them. It is also true that in many instances they applied the FEMPI cuts and there is currently an issue, which I think is the point the Deputy is getting at, about-----

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I would like to continue because a vote has been called in the Dáil. The staff working in these areas are highly trained professionals, doing remarkably similar or identical work to their section 38 counterparts, all of whom have had their pay restored under the Lansdowne Road agreement. All of these staff have long established and recognised contractual pay linkages with HSE consolidated pay scales. For the hospice sector to maintain these linkages additional funding has been given in the past from the HSE, when required. Will this additional funding requirement for the voluntary hospice group be addressed before the end of 2017? Has the necessary application been made by the HSE to the Department for additional funding within the 2018 HSE budget estimate process to deal with this issue?

Mr. Stephen Mulvany:

The Deputy's question is a complex one, to which there is no easy answer. The staff in the section 39 organisations are not public servants. They are not covered by the public service agreements. We are aware of pay pressures and other pressures in the section 38 and section 39 agencies. That is part of the ongoing conversation we would have with our funders but we do not have, and certainly will not have before the end of 2017, any specific additional resource identified for that purpose. As indicated by the director general there was not a uniform approach applied across the section 39 sector and, therefore, its resolution is unlikely to be uniform.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Mulvany is not in a position to confirm at this point that additional funding will be made available by the HSE to the hospice groups for this purpose.

Mr. Stephen Mulvany:

No.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Returning to my first question, should the hospice network, given the work it does, come within the section 38 sector?

Mr. Stephen Mulvany:

The Deputy is inviting me to comment on policy and that is not somewhere I am willing to go.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is not the role of the committee to comment on policy either. In terms of the committee's work, we commented earlier on the issue of additional regulation and if with additional funding the HSE could do more on the section 39 issues discussed at that time. Would it make better sense for the hospice network, in terms of doing its work, to be treated as a section 38 organisation?

Mr. Tony O'Brien:

The Deputy would not be asking that question if the pay inflation that they are subject to had been recognised. Leaving that issue to one side, they appear to work effectively as section 39 agencies. If they became public sector agencies that would have much wider implications for them. It would limit their freedoms and it would also have significant public policy implications which would require, I think, detailed consideration in the Department of Public Expenditure and Reform at political level. I do not think the answer can be a simple "Yes, it would be better" or "No, it would be worse" but I do think the question would not be arising at all if they did not have the difficulty with regard to pay.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Does Mr. O'Brien appreciate and accept that it is a major difficulty for them?

Mr. Tony O'Brien:

It is. We have a taken a sympathetic approach to those who have sought derogations from the requirement to sign their service level agreements by the target date. I have allowed a number of them to wander across that line without financial penalty recognising that they are being brought to the industrial relations machinery of the State by their employees and that there will in due course be recommendations arising from that process which will have to be considered.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I recommend that following this meeting the committee write to the Ministers for Public Expenditure and Reform and Health, requesting a detailed examination within a specific timeframe on the voluntary hospice network being treated as section 38 agencies as opposed to section 39 agencies in order to deal with the question arising.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is an issue of specific legislation and Government policy.

Photo of Marc MacSharryMarc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It may or may not be.

Mr. Tony O'Brien:

It may also be useful for me to draw to the committee's attention the fact that the Minister for Health has established a group, which is currently beginning its work, to examine the best relationship between the voluntary sector and the State sector. As that is in being, this is a live question. Also, the section 39 issue goes way beyond the hospice movement. It is much bigger than that.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

When was that group established?

Mr. Stephen Mulvany:

It was established recently. Following its establishment it was announced it would take approximately one year to complete its work.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who is chairing the group?

Mr. Stephen Mulvany:

Dr. Catherine Day.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Perhaps the Department of Health would send a note on the group to the committee. As the weekly voting process is under way in the Dáil, we will suspend now until 2.30 p.m..

Sitting suspended at 1.10 p.m. and resumed at 2.30 p.m.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We are back in public session and resuming our discussion with the HSE on chapter 19 of the Comptroller and Auditor General's report, management and oversight of grants to heath agencies or section 38 and section 39 organisations which they are generally referred to. The next speaker is Deputy Catherine Murphy.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

The last time the HSE was before the committee, it confirmed funding had been allocated for the provision of financial management systems which had been largely absent. I raised the issue of how difficult it was to get information on the organisations in question compared to other organisations. Is that system up and running? Has it been designed? At what stage is it?

Mr. Stephen Mulvany:

There was approval for us to implement a single integrated financial and procurement system. That is now at the stage where we have signed a contract with the software provider. We have to design an implementation plan and also procure an implementation partner. It will be at least 12 to 18 months before the process is completed. After that, we will then begin implementing the system in the HSE's statutory services, then the larger section 38 agencies, then all of the section 38 agencies, and then possibly some of the larger section 39 agencies. It will be a number of years before that integrated system is fully rolled out.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

Looking at information on section 38 and 39 agencies from parliamentary questions I have raised and from the Comptroller and Auditor General's report, Enable Ireland, for example, showed a variety of different spends in various areas. Is there a postcode lottery with service provision? For example, in the case of Enable Ireland services, it depends if one has an organisation in one's area. How is the service provision managed in the context of service level agreements?

Mr. Tony O'Brien:

Each community health organisation seeks to provide a range of services in a mix of statutory and voluntary provision. Whether an individual service provider is used as a funded entity will obviously depend on whether it provides services. It is often the case that in one area we would use a voluntary provider to provide service A. In another area, we might use either a different service voluntary provider or have direct provision. In the case of any of those examples, they are typically organisations that provide their services within a discrete geographical area, while in a different area those services could be provided in a different way.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

The funding gives us a historical insight into quite a dysfunctional pattern of service provision.

According to paragraph No. 19.28 on page 267 of the report of the Comptroller and Auditor General, €1.79 billion was provided for voluntary and community agencies, excluding hospitals. Paragraph 19.29 reads: "The HSE stated that it is establishing a strategic community costing programme to determine unit costs of services so that providers can understand where their costs might be out of line with peers for similar service offerings". Why would this only have been happening in 2016? This strikes me as something that would be good financial management.

Mr. Stephen Mulvany:

The HSE is establishing costing programmes across the community because it is a significant and complex area in which, historically and internationally, visibility of the specific unit costs of a service and why there are differences between service A and service B has been difficult to achieve. On the hospital side, there is an activity-based funding programme. It is still in its early stages and is supported by considerably more information technology and software systems than we have on the community side. Generally speaking, there is a significant lack of information systems across the community sector. If we can secure investment, our electronic health record, EHR, programme will seek to address that over the next ten years.

In the meantime, we have been making improvements. Committee members will see mention in the Comptroller and Auditor General's report of clear performance indicators that we are trying to gather so that we can reference performance, including financial performance, in the community. Even abroad, it is traditionally more complex to determine why a service costs more or less in one area than in another. This is a large piece of work that is only now starting and will need to be supported through significant IT investment.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

It seems that governance and administration costs are built into funding for section 38 and 39 organisations and that there is also a cost within the HSE as regards oversight of those organisations. We have heard about whether the sample was targeted and a known problem was picked out. There is oversight yet again by an external body, such as Deloitte in this case, and is likely to be an occurrence every year.

Something is screaming out at me. It is a policy issue. There is an abdication of responsibility for what is a public service as opposed to something else. Mr. O'Brien does not have to answer. It is just that-----

Mr. Tony O'Brien:

I will make an observation. Pretty much the entire health and social care delivery system started out in the voluntary sector. Many of the organisations that we now refer to as section 38 organisations, or even some of the facilities and services that are provided as a core part of the HSE's business, were originally established in the voluntary sector. Dr. Maev-Ann Wren's book, Unhealthy State: Anatomy of a Sick Society, charts some of this in an interesting way. Slowly by accretion, we have turned what were voluntary bodies into State bodies. A hospital like Our Lady of Lourdes in Drogheda was a section 38-provided entity. Now it is fully part of the HSE. An entity like the Mater Misericordiae University Hospital was once truly voluntary but is now a section 38. There are a plethora of other organisations.

Philosophically, there comes a time when - the process that the Minister has established will contribute to this - we must ask what is the right relationship between the things that the State does versus the things that the State might pay others to do. This is the Deputy's point.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

Essentially. It difficult to have a rights-based approach if one does not have control of the organisation or if there is such a variety of organisations that the application and standards in areas differ.

Mr. Tony O'Brien:

I might just add for completeness that, when we examine what pertains in other jurisdictions where there might be a greater degree of satisfaction with the uniformity of service provision, they often have a complex provider environment.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

I have asked questions on home help hours, personal care hours and so on. To be honest, provision of these services does not correlate to population densities. It seems to need a major rationalisation.

Regarding Benefacts, do section 38 bodies have to publish their audits? Do they provide them to anyone?

Mr. Seamus McCarthy:

Their annual financial statements. Not all of the bodies publish them, although many do. I audit four of the section 38s. Obviously, they have to be published. They are submitted to the Oireachtas. Other section 38s of which I am aware publish. I do not audit them, but their financial statements are in the public domain. A significant number do not publish or put into the public domain their audited financial statements. I believe that those statements would be made available to the HSE.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

Where is the oversight if they are not published?

Mr. Seamus McCarthy:

As I understand it, there is no statutory obligation of any kind on them to publish their financial statements. They are not established as companies or under formal legislation. It could be that they existed even before the foundation of the State. It is a matter of discretion for them at the moment.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

Is that a gap in oversight?

Mr. Seamus McCarthy:

My personal view is that a section 38 body in receipt of substantial funds should be publishing audited financial statements, but it is probably more a matter for the Department or the HSE.

Mr. Stephen Mulvany:

As the Comptroller and Auditor General stated, some of those that are not required to do so actually publish their accounts and put them on their websites. The HSE gets copies of all of those accounts and reviews them.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

Are those that are not publicly available from large organisations?

Mr. Stephen Mulvany:

Some of the section 38s are the largest organisations, so the answer is "Yes". I do not know which do and do not publish because I do not have the list with me, but they tend to be larger organisations. A number of them are companies and will file with the Companies Registration Office, CRO. They will all file with us. The Comptroller and Auditor General mentioned some. Beaumont and St. James's hospitals at least are public bodies created by the Minister and, therefore, their accounts will come to this committee. However, there is no general provision that mandates all of them to make their accounts available.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

I am looking for where there might be gaps and where we might not be seeing things that we should be scrutinising.

Mr. Tony O'Brien:

We are seeing those things. One of our checklist items is not whether organisations are publishing their own accounts because it is not an obligation upon them.

Mr. Stephen Mulvany:

They can register with the Charities Regulator. Most of them will end up doing that.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

May we have a list of those that are not required to publish?

Mr. Stephen Mulvany:

We can work on that, Deputy.

Mr. Tony O'Brien:

Yes.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

The witnesses might send it on to us.

Mr. O'Brien dealt with the issue of salaries in section 39 organisations just before the break. Has it been built into their funding mechanism? There were salary cuts when the crash happened. Has the restoration of funding from the HSE to those organisations taken account of public service pay provisions? Staff in these organisations are not public servants, but the retention of staff and so on will be a factor - I have seen this to be a factor - if competition is not between like and like.

Mr. Tony O'Brien:

I am afraid the answer to the Deputy's question is "No". That has not been the case. The principal reason is that the HSE's own funding allocation has not reflected the additional cost of pay restoration, for want of a better term, in the section 39 sector.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

I will ask the Department about this. Section 39s were subject to cuts. One would have expected a quid pro quo, in that, when there was some recovery, the same criteria would have applied. It is undoubtedly leading to a different pattern of service delivery, in that there cannot be a continuity of care.

Mr. Greg Dempsey:

The Department itself is not in receipt of funding which would allow the HSE to provide a level of funding, in turn, to section 39 bodies. There probably needs to be a central decision on this because we are looking at voluntary providers in the health sector and other sectors, and a decision in the health sector would have consequences for other sectors, so that is probably a central decision. Our view is that those involved in those bodies are not public servants and, at this stage, there has not been a decision to restore pay to the extent that pay was cut. It was said previously that, while we cut grants, we are not absolutely sure that there was uniformity of treatment in the grant cuts. Some agencies may have cut pay and others may not. We are not sure of the extent-----

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

They were cut to the bone from what I can see. There will be a deficiency of service because if there is an option to go and work somewhere else, people will choose it. I definitely see that pattern. It is not just about people's pay. It will be about the ability to deliver services too. Mr. Dempsey tells me that the Department of Finance essentially does not give the Department of Health enough money to deal with this. Is that what I am hearing?

Mr. Greg Dempsey:

It is probably a matter for the Department of Public Expenditure and Reform. The Department of Health and the HSE are keeping the position under review and we are aware of the potential risks and issues.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

Vulnerable people are impacted by it. I will address non-compliance with procurement. Seven out of nine agencies that were visited were found to have breached compliance with regard to procurement. What visits were made to make sure that there was compliance? What efforts did the HSE make?

Mr. Stephen Mulvany:

As the director general said earlier, compliance with procurement is a challenge that the HSE is trying to address within its own statutory services. We have made it clear that our contracting arrangements cover publicly funded voluntary bodies, including section 38 bodies. Our support is available for them. We are taking practical steps to provide more access to our contracts, to training, and to other supports in order that it is more practical for both section 39 bodies, particularly larger ones, and section 38 bodies, to use our overall shared procurement service. The one voice procurement policy is part of Government policy. We are on a three-year journey to get to the stage where we can have a very significant and good-quality level of public procurement compliance, and we are looking to bring the section 38 and 39 bodies that are not already there to that point. Some already have good practices in that area. We are trying to improve their procurement compliance, remembering that our primary interest in section 38 and section 39 bodies has to and always will be the quality and safety of service that they deliver. Procurement is part of that.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

It seems that there was a very high level of non-compliance in those visited. It strikes me as something that would be a red flag to follow up on. The HSE has the ability to withhold funding for service level agreements. Does it cut funding or withhold it?

Mr. Tony O'Brien:

On the issue of non-signing, if bodies have not signed by the due date, the final day of February, and we are not satisfied that there is a good reason, then we withhold 20% of funding thereafter. That funding can be restored once the necessary documentation has been handled. There is a separate process where the level of funding to be agreed in each year is reviewed. There are often reductions and there are savings targets. Everything that the Deputy sees in the HSE's service plan about targets set for us globally is then reflected throughout our system in the service arrangements. This specific matter is about the failure to sign by a given date and that is when 20% of funding is withheld.

Mr. Stephen Mulvany:

We give bodies the cash back once they sign.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

The witnesses mentioned St. John of God earlier, and St. Raphael's featured very heavily. It was an area that we discussed at a previous meeting. There had been quite substantial unapproved increases in salaries. Were repayments sought for those? Where is it at this stage?

Mr. Stephen Mulvany:

We are working through a range of issues with St. John of God after the internal audit report that was referred to here previously and the external review as part of Deloitte's review of all the section 38 and section 39 organisations. As part of that, one of the recommendations requires a repayment. St. John of God is participating well in a task force set up by the HSE, which I chair, to work through a range of those issues. At the moment, it is not yet finished, but it is accelerating its efforts to provide sufficient information. We will go through that particular recommendation and the rest and we will have to reach a conclusion on all of them. I am not saying that the order has accepted that a repayment will be made, but it has certainly accepted that it needs to work through its recommendations with us and we will need to reach a conclusion on that.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

Is this the first time that sort of thing has happened regarding the seeking of a repayment?

Mr. Stephen Mulvany:

I could not say. I am not sure if it is the very first time. It is not a very regular occurrence but I could not be sure if it is the first time.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

What timeline are we working to for a conclusion of this?

Mr. Stephen Mulvany:

I would say there will be an agreed improvement plan for all those issues before the end of the year, not just the internal audit report. That will be before the end of the year and it will take some time after the end of the year to implement some of those. I expect we will have sufficient information to make a decision on repayment by the end of the year or shortly afterwards.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank Deputy Murphy. I have a few questions, Deputy Connolly may wish to speak again and Deputy Murphy may have some final questions. I will address the audit side. In the HSE's annual report and financial statement for 2016, the section dealing with the directorate members' report is on page 135 and it addresses the membership of the audit committee. The following individuals are members of the audit committee: Mr. Peter Cross, from the private sector, who is the chairman; Mr. Joe Mooney, former principal officer in the Department of Finance; Mr. John Hynes, former Secretary General of the then Department of Social Protection; Mr. David Smith, principal officer in the Department of Health; Mr. Stephen McGovern from CRH; Dr. Sheelah Ryan, public health physician and former CEO of HSE West; Professor Patricia Barker, chartered accountant, director of Tallaght hospital and former vice president of academic affairs in DCU; and Ms Anne O’Connor, the HSE's national director of mental health.

To summarise that, there are two HSE staff or former staff, three current or former civil servants and three from outside the HSE. The HSE's audit committee is for all of the HSE and not just section 38 and 39 bodies. The HSE has a throughput of €14 billion or €15 billion per annum. There are only three non-HSE or current civil servants on the audit committee. Why is the number so low? Is that in legislation? Such a big organisation would benefit from having a majority of its members not being current or former public servants or people immediately connected with the HSE. I do not get it. Independence does not jump out at me.

Mr. Tony O'Brien:

There is by statute one member of the directorate who is a member of the audit committee. The directorate by its nature comprises full-time HSE officials. That is how it is composed. The balance comprises persons considered by the directorate - which has the statutory responsibility to appoint the audit committee on my recommendation, as it happens - to have significant relevant experience. Given the particular issues that arise for a body in the public sector at the time when this committee was established - it has been refreshed, and there have been some significant changes since this particular report - I believed it was of benefit to have persons who had served as Accounting Officers in the public system, hence the couple of people who were formerly Secretaries General. However, the chair has no public sector experience and, as the Chairman has identified, there are a number of other members with very significant broadly based experience in the area of accounting, including a senior person from CRH. It was the balance of competencies and experience and a particular ability to understand the complexities that arise in public sector accounting and the role of the Comptroller and Auditor General and of this committee as distinct from normal private sector accounting. I also took the view, given the nature of some of the discussions that have to be undertaken, that it would be valuable to have a person nominated to the committee by the Secretary General of the Department of Health, which accounts for the individual who at that point was a Department of Health civil servant. That became even more important when the role of Accounting Officer moved from the HSE into the Department. The membership now is slightly different but is-----

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The HSE's financial report was only published this summer.

Mr. Tony O'Brien:

Yes, and-----

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Have there been changes since-----

Mr. Tony O'Brien:

Yes. The chair has changed. Tom O'Higgins, who formerly chaired the audit committee of the Houses of the Oireachtas, has become chair.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What was he beforehand? Is he a chartered accountant or-----

Mr. Tony O'Brien:

A chartered accountant-----

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

From outside. He is not a public servant.

Mr. Tony O'Brien:

-----and an audit partner with one of the big houses, not a public servant.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

My question boils down to this: the majority up to this point are current or former health employees or civil servants. I know Mr. O'Brien accepts the value-----

Mr. Tony O'Brien:

Very few of them are former health employees. There are certainly a number of civil servants.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes, there are civil servants. I said there were three current or former civil servants and I mentioned the Secretary General. Has the balance been changed in this regard? If so, maybe Mr. O'Brien could tell us what the changes are. I do not need to know their names or anything, but are there still three, shall we say, outside people with non-public service backgrounds?

Mr. Tony O'Brien:

Yes, there are fewer people with health sector experience.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes, but that experience has been replaced by other civil servants' experience.

Mr. Tony O'Brien:

No.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Will Mr. O'Brien tell me the makeup of the committee?

Mr. Tony O'Brien:

I do not have the list in front of me.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Flynn must know.

Mr. Michael Flynn:

Yes, I can explain. There are now four of the audit committee members who have not come from the public sector, from Government Departments.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who are the two new people then?

Mr. Michael Flynn:

The chair has already been mentioned. There is another individual who was on the committee from Cement Roadstone Holdings. There is a former professor of accounting and a former-----

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Where was he employed?

Mr. Michael Flynn:

My understanding is that she was employed in DCU. Then there was a new appointee in January of this year who is another former partner from a major auditing firm as well.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who is that? I am sure it is public knowledge.

Mr. Michael Flynn:

The guy's name is Richard George.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What organisation was he-----

Mr. Michael Flynn:

KPMG.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Flynn is now saying there are four-----

Mr. Michael Flynn:

Plus there is a departmental representative still on the committee and, as the DG has explained, there is one of the deputy DGs as well.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Flynn can understand my asking the question. Regarding the service level agreements, I have tabled a series of parliamentary questions about all organisations across the entire public service, not just those in the witnesses' area. I asked to be informed of organisations where there are payments of over €1 million per annum. I did not go way down. One paragraph of the reply I got a week or two ago says, "[I]t should be noted that fully signed Service Agreements are now in place for approximately €3.357bn of the €3.574bn total, which [ - these are the ones where payments of over €1 million have been made - ] represents ... 94% of this funding." I take it that 94% of the funding is approximately where we are at now. Is that a reasonable-----

Mr. John Cregan:

Regarding payments of over €1 million, there is approximately €167 million in value outstanding across 18 organisations, and we have touched on some of those organisations already. In roughly half of cases the HSE is not willing to sign, and the pay issue comes up in about 40% of them as well.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

When I got this reply to my parliamentary question just three weeks ago, it was stated that the outstanding amount to be paid to 23 organisations was €217 million, so it has improved in the last three weeks to some extent.

Mr. John Cregan:

We are working with the rest of those organisations.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I understand that. From the audit point of view, what is the split of the internal audit function's time between auditing the section 39 agreements, which account for almost €4 billion, and the other €10 billion of HSE directly funded? What is the balance of the allocation of the HSE's manpower or workload or-----

Mr. Michael Flynn:

A substantial proportion would be on HSE-funded expenditures directly into the HSE, but we have upped in the last three years considerably our audit effort into the funded agencies, so we have put a lot more resources directly into auditing funded agencies.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am trying to understand what the balance is. What is it? Is it 20%?

Mr. Michael Flynn:

Yes, maybe 20%.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Twenty per cent would deal with the section 38s and section 39s.

Mr. Michael Flynn:

Yes, it is something around that. I do not have the exact figures.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

From a risk point of view, where does Mr. Flynn think the biggest risk is from public funding? Is it through the section 38s, is it equal or is there a greater risk-----

Mr. Michael Flynn:

The greater risk is probably with some of the smaller agencies that maybe do not have the systems of governance and control that the larger funded agencies have. Therefore, some of the smaller agencies probably have the highest risk profiles but, as auditors, we cannot avoid the core HSE because we do find things there as well.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There was a lot of discussion here today about getting the financial statements from these major organisations. I know they are not all published, but the HSE gets them. I think I saw a reference to the community health care organisations, CHOs, in the different regions having to get a copy of these. Is there not a mechanism whereby if an organisation has an agreement with the HSE but provides services in five, six, seven or eight CHOs throughout the country, the accounts should not have to go down to each of those managers once it is cleared centrally. I presume the HSE has that system in place.

Mr. John Cregan:

That is what we are aiming for. We are trying to streamline the process, and the Comptroller and Auditor General has referred to that as well. We hope to appoint a lead organisation, a lead CHO, which would review the annual financial statements on behalf of all the CHOs, and we would then make that information available to everybody. One of the Comptroller and Auditor General's issues was that one part of the organisation may not be aware that the accounts have been reviewed by another CHO, so we are streamlining that process.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Will the witnesses explain to me why one CHO should have to do it? Should that not be a central function? If different CHOs are dealing with it and if the financial statements come in centrally, I would have thought there should be a linkage between whoever signs the national service level agreement - we will call it that and we will take a large organisation - and that that section should get its annual financial statement - I ask the witnesses to let me finish the question so they know where I am coming from. During the course of the summer, the HSE supplied us with information on this. We had asked for it on a previous encounter and we got letters from the HSE during the course of the summer stating that some of the large organisations had not completed signed agreements. As Chairman I made that statement public as a result of the HSE's information, and some of those section 38 or section 39 organisations responded directly - I might have sent the witnesses the information - complaining that they had signed service level agreements in seven of the eight CHOs but there was one outstanding and that this gave the impression that that organisation was outstanding in terms of a service level agreement. I know the HSE does this in two phases and that there is part one and a part two, but surely if the HSE is dealing with an organisation that has a large footprint in several areas, there should be one overall service level agreement because they have only one set of financial statements.

Mr. Stephen Mulvany:

No. There are certain tasks, such as the review of the financial statements. As Mr. Cregan said, whether one does it centrally by the core of the HSE or centrally by one of the CHOs, preferably the one that is the lead CHO for that organisation, the issue is to do it once and to tell the rest of the organisation. The vast bulk of our voluntary organisations are not big enough to extend beyond one of our nine CHOs, but some very definitely are and some potentially even extend to all of them. That is just the nature of the business.

It is imperative for the more important parts of governance that the key relationship, which is covered in schedule 2, is between the local community health care organisation, CHO, and the local part of the service provider to ensure there is real governance across the service, regardless of what other tasks can be done centrally. If a large service provider has only signed in seven of eight CHOs where it happens to operate in all of them, then it has not completed the process. That is the reality.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I understand that point where a provider has not fully completed the process. Mr. Mulvany mentioned he received the financial statements as part of their annual audit of financial statements. I ask him to forward a list of the organisations allocated funding of more than €3 million and the last date of the financial statement he received. Before he came in, we were talking about the education sector. While there is a requirement for those in that sector to submit financial statements, some of them are two or three years in arrears. I would be highly impressed if every one of the organisations that reports to the HSE has already submitted all their 2015 accounts.

Mr. Stephen Mulvany:

For the 2015 accounts, for the organisations that have funding of more than €150,000, we have received 100% of the accounts and 99.03% of those - a strange figure - have been reviewed. For 2016 - we should not forget it is only October 2017 - we have received 76%, of the accounts, and of those we have reviewed about 55% or 56%.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I make this point in a light-hearted manner. Is there any prospect Mr. O'Brien could second the staff in that section to the Department of Education and Skills-----

Mr. Tony O'Brien:

The answer is "No", not a chance.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

-----because some of the education and training board, ETBs, have not submitted accounts in two or three years? Those are public bodies. The organisations about which the witnesses are speaking are one step removed from public bodies. The HSE has achieved this because it writes the cheque. It holds the purse strings. Some of the third level institutions, the universities, are several years behind in their accounts, and they are public bodies. The witnesses have achieved a better level of ensuring the return of annual financial statements of all the organisations with which they deal, and they have the 2015 accounts completed. They are miles ahead with respect to the way in which many other sectors in the public sector operate. I will ask a soft question in this context. The witnesses have obviously learned how to deal with this issue. I am sure if this question was asked of them three years ago, they certainly would not have had that answer.

Mr. Tony O'Brien:

That is right.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Correct. I will ask Mr. O'Brien, in his own time, to assist this committee in this context. The HSE has improved a measure and got it right, something that has not happened in other public sector bodies. We are dealing with major State companies and the Comptroller and Auditor General is still waiting for public bodies to present their accounts for 2015, not to mind the clearance for audit. Mr. O'Brien might send the committee a note on how he achieved it. I am asking him to do that by way of assisting the committee with other organisations. We could do with some of that. I hope the officials from the Department of Public Expenditure and Reform are listening. We will be having officials from that Department in before us on this particular issue. The Comptroller and Auditor General has referred to the timeliness of financial reporting in the public sector. The HSE seems to be making good strides. It might not be popular to say that today but I have to be straight about it.

Mr. Tony O'Brien:

We will happily do that and we will happily accept the implied compliment in the question.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Absolutely. I will get into trouble with somebody else for being nice to Mr. O'Brien here today. I do not only look at the negative. Where I see something good in the public service, I want it replicated.

On the issue of public pay, we spoke about that in the context of the organisation previously. Ms. Mannion had a file earlier but I am not asking her to go through that. She said there are 15 organisations and issues to be dealt with involving more than €5,000 per case. I will ask her to give us a summarised version of that and to send it on to the committee. She has a detailed file probably containing personal information but we are not looking for that. How many people are involved in the cases that have not been resolved that she is concerned about? Was it section 38 agreement areas to which she was referring?

Ms Rosarii Mannion:

Yes. There are 320 business cases.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Are they for 320 different people?

Ms Rosarii Mannion:

Not necessarily.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

How many people would be covered in those?

Ms Rosarii Mannion:

I do not have that detail but I will specify it in the report.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Ms Mannion can understand the question. There is a minimum of one in each case-----

Ms Rosarii Mannion:

Yes.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

-----and there could be a number in some cases. There could be quite a number of people involved.

Ms Rosarii Mannion:

I will give the committee a detailed breakdown of that.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We want to find out the extent of the problem. We understand some of the staff involved are at grade 4 and some are at different grades but some of them are probably far more significant and higher up at senior levels in the organisation. Are there any in those business cases at chief executive officer level?

Ms Rosarii Mannion:

No, not at this point.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Not at this point. Therefore, all the issues regarding the chief executive officers have been dealt with.

Ms Rosarii Mannion:

Yes.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is important to hear that. Regarding the hospitals, I wish to get the detail on the split of funding, and I acknowledge the witnesses might not have that detail with them. Of the allocation of €14 billion, or whatever the figure is, approximately €4 billion goes to the section 38 and 39 organisations. I have asked about this previously and I have been told there is no significant difference in the waiting list in a hospital funded under a section 38 agreement as opposed to a HSE-run hospital. Regarding the provision for the hospitals, what is the breakdown of the funding for HSE-run hospitals versus hospitals funded by section 38 organisations. That should be easy to calculate. Can we get a percentage breakdown of the funding allocated to community health care organisation areas in terms of staff directly funded by HSE versus those directly funded by sections 38 or 39 organisations? I imagine the witnesses probably know that information.

Mr. Stephen Mulvany:

In terms of the section 38 acute hospitals, there are 16 of those.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I ask Mr. Mulvany to take this slowly.

Mr. Stephen Mulvany:

We gave them €1.99 billion in revenue grants in 2016. That means they represent about 53% of the total grants. If the Chairman is asking what percentage they are of the total hospital budget in 2016, I would have to come back to the committee with the actual figure but it was slightly north of €4 billion. Those 16 hospitals are a third of the total number of hospitals but I estimate those grants represent 55% to 60%, closer to 50%, of the total budget. They tend to be the bigger hospitals. The five Dublin academic teaching hospitals are a big element of that total cost.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Will Mr. Mulvany provide a breakdown of the funding that is spent through the community health care organisations, the CHO regions?

Mr. Stephen Mulvany:

The Chairman is asking what proportion of funding for each hospital group is voluntary versus direct and what proportion of funding for each CHO is voluntary versus direct.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Mulvany might then give us a national total.

Mr. Stephen Mulvany:

That can be easily done.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am sure it varies from one CHO region to another-----

Mr. Stephen Mulvany:

It does.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

-----depending on historical issues.

Mr. Stephen Mulvany:

Exactly.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Exactly. Mr. Mulvany will give us those figures. I do not want to go into this in detail because it is not the topic we are discussing, but I note the replies we have all got to parliamentary questions relating to people seeking home help service, some of which is provided by organisations funded through section 39 agreements. I could paper my walls with the replies which we have all got. The reply is to the effect that a person has been approved for the additional home help hours but they are on a waiting list. Everyone agrees that the person should have the service but there is not the money to provide it. Some of those providers are funded directly by the HSE and some are funded through section 39 organisations. That is why I am asking about this. Will the witnesses forward a reply detailing how many approved home help hours are on a waiting list and dependent on section 39 organisations to deliver? I am sure they get the gist of my question.

Mr. Tony O'Brien:

I get the question but it may not be so easy to be definitive because in an individual case the CHO might be seeking to provide the solution either by a section 39 organisation-----

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Or by a mixture of both.

Mr. Tony O'Brien:

-----or directly, or by a mixture of both. The analysis of that could be challenging. We will see what we can do but-----

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I have come at this from the section 39 organisations, but this could be approached on the basis of what number of home help hours have been approved but not delivered because the people concerned are on a waiting list for funding, and perhaps some estimate of the breakdown could be given between the section-----

Mr. Stephen Mulvany:

We certainly know how many people are waiting, so we can look and see what we can find. The answer to this is that it is purely a resourcing issue.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I know that.

Mr. Stephen Mulvany:

It is not particularly related to whether it is voluntary or directly provided. It is fundamentally a product of resource by time by cost per hour. It is as simple as that.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes, but Mr. Mulvany must understand it is depressing for the person to be told after the battle that they have been approved but that they are wait listed, so they have to wait.

Mr. Stephen Mulvany:

It is particularly depressing for the staff who have to give the answer but that is the answer.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes.

Mr. Tony O'Brien:

There used to be the same situation with the fair deal scheme but that has now been resolved. The process is much quicker because it is a funded in a different way. There was a period two and a half years ago when there was a significant interval between approval and availability of a bed and the capacity to provide funding, but now there is not a discrepancy and the average time involved is about four weeks, which is literally the time that it practically takes to get a bed.

It is not a financial limitation that is causing a delay.

Regarding home help and home care packages, the total budget is not sufficient to meet total current demand.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I have only two practical questions, one of which concerns the cost of the Deloitte report, which Mr. O'Brien previously gave but which I have forgotten. Last year after Mr. O'Brien appeared before us, he sent a comprehensive letter setting out the cost of the audit committee and of the compliance unit. Could he update us on that? He told us at that point that the internal audit function had 49 staff and cost €2.96 million. The letter is dated 25 July. Can Mr. O'Brien update me regarding current staff numbers, what the HSE has put in for and the cost? It was said that the compliance unit had 12 staff members and an estimated cost of €845,000. Added to that is the contract management support units. If Mr. O'Brien could set those out for me along with their cost, I would appreciate it.

Mr. Tony O'Brien:

In a follow-up letter?

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Yes.

Mr. Tony O'Brien:

Certainly.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Just the cost of the Deloitte-----

Mr. Tony O'Brien:

Regarding the Deloitte report, the quoted cost was €10,000. We have not yet received an invoice but I do not expect it to be for a different amount.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Ten thousand euro in total?

Mr. Tony O'Brien:

Yes. There may be VAT on it.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I made the point earlier and I am not looking for a response but the witnesses from the Department of Public Expenditure and Reform know the issue about public bodies not submitting their audited accounts and they have now seen what the HSE has achieved regarding what was in the first instance a far more difficult situation because they were not directly submitting their accounts to the Oireachtas. If the HSE can do it, the Department can do it. The HSE probably had the facility of saying it was withholding 20% of funding until it got this. While we are not suggesting any cut in public funding, the Department should just think about it. I am not suggesting it. I am saying it seems to have worked right across the health sector, which is €4 billion of public expenditure for those organisations, and that principle seemed to have a good effect. Nobody suggested there was any cut to organisations' funding but it did put pressure on them to do it.

A couple of years ago, the Committee of Public Accounts dealt with issues regarding the Central Remedial Clinic, CRC, Rehab and St. John of God, as well as pay in different maternity and children's hospitals and executives not being paid in line with public sector pay policy. On the face of it, the HSE seems to have come a long way since then. Does Mr. O'Brien agree? Could he make a brief comment from his perspective as chief executive? What were the key ingredients? Is it as good as it sounds? Was it very difficult dealing with those organisations? The HSE seems to be close to a reasonably satisfactory situation. What were the lessons that should be learned for the public service?

Mr. Tony O'Brien:

I should preface it by saying that it is a bit like the Sydney Harbour Bridge. It will never be fully repainted and is an ongoing constant grind. The work of our own internal audit committee and various HSE national directors, the contribution of the Committee of Public Accounts and the public response to some of the issues exposed in the CRC, which was a very different organisation then to the CRC of today, have changed the environment around compliance with policy and the appropriate use of public funds. The Console affair also played into that to some extent. The HSE has put in place additional procedures to help move things along but I do not think there will ever be room for complacency. My colleague, Mr. John Cregan, as the committee may recall, was the person we put in as a special administrator-----

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We met each other in the midland region years ago so I am very familiar with him.

Mr. Tony O'Brien:

Yes, we put him into the CRC as a special administrator at a time when in this committee room, we were finding out things that none of us ever expected to find out about that institution. We were committed to preserving it as the type of organisation it is in terms of its service ethos and not incorporating it into the HSE. We put in Mr. Cregan and put in place a process through board match to re-establish it as an independently managed organisation. It has made great strides and it is interesting that it is currently being considered for a good governance award. What it proves to me is that where at times we may have to take quite a heavy approach, force changes of personnel and so on, there is great value in many of these organisations and our approach must be one that protects the services they provide, while dealing with the governance deficits that exists. That has been at the core of our philosophy as we approach this. It is at the core of what we are doing now. The overall environment has changed but our purpose continues to be to protect the service while dealing with the governance deficits and not throwing the baby out with the bath water.

Mr. Seamus McCarthy:

One other element that might be significant is the requirement to disclose the chief executive's remuneration package in financial statements.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Could Mr. McCarthy say that again?

Mr. Seamus McCarthy:

It is the requirement on bodies to report the remuneration package paid to the chief executive in their audited annual financial statements. That flushes out all of the payments and brings a focus to whether bodies want to be seen to be paying very significant figures. It is a requirement in the code of practice, which the Department of Public Expenditure and Reform has published. I think it has been there for State bodies since 2009 but it has not necessarily percolated through to some voluntary sector bodies. Insisting on that as part of the audited financial statements could be another lever in ensuring there is compliance.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will conclude by thanking our witnesses, people from the Departments of Public Expenditure and Reform and Health, the Comptroller and Auditor General and his staff on behalf of the Committee of Public Accounts. The committee will adjourn until 9 a.m. on Thursday, 9 November 2017 when we will meet representatives of the Department of Communications, Climate Action and Environment regarding its 2016 Vote. I am holding off formally disposing of the Vote because it is a bit like the Sydney Harbour Bridge.

The witnesses withdrew.

The committee adjourned at 3.27 p.m. until 9 a.m. on Thursday, 9 November 2017.