Oireachtas Joint and Select Committees
Thursday, 16 November 2017
Public Accounts Committee
Tipperary Education and Training Board and Kildare and Wicklow Education and Training Board: Financial Statements
We will continue our consideration of the education and training board sector. This is session 3, at which we are joined by the Tipperary Education and Training Board for its 2015 financial statements and by Kildare and Wicklow Education and Training Board for its 2014 financial statements. From Tipperary Education and Training Board, I welcome Mr. John Hogan, chairman; Ms Fionuala McGeever, chief executive; Mr. Frank Bermingham, director of organisation; and Mr. Liam McGrath, assistant principal officer. From Kildare and Wicklow Education and Training Board we are joined by Mr. Jim Ruttle, chairperson; Mr. Seán Ashe, chief executive; Ms Catherine Doran, Ms Linda Wynne and Ms Brigid Daly Lynam. We also have representatives from the Department of Public Expenditure and Reform and from SOLAS, and the Secretary General of the Department of Education and Skills.
In regard to the Kildare and Wicklow Education and Training Board, the Department of Education and Skills wrote to the committee on 4 October informing us that it was carrying out an investigation into the performance of the board and into its function, particularly in relation to public procurement, usage and disposal of assets and proprietary matters relating to the 2015 accounts. Professor Richard Thorn has been appointed to carry out the investigation and it is envisaged that this will be completed in quarter one of 2018. The accounts before us today are for 2014, not 2015. That said, care must be taken by witnesses and members of the committee to say nothing that might compromise the already mentioned investigation.
I wish to advise witnesses of the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a 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 they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I welcome the witnesses and thank them for being here.
I forgot to ask the Comptroller and Auditor General to give a brief opening statement on the two previous education and training boards, ETBs. I invite him to do so now.
Mr. Seamus McCarthy:
Any points I was going to make about the two previous ETBs were covered in their chief executives' opening statements.
The 2015 financial statements of Tipperary ETB will be examined today. Tipperary ETB is an amalgamation of the former vocational education committees, VECs, in Tipperary North and South Ridings. In 2015, the ETB had receipts of €42 million, matching payments of €42 million. Just under €31 million was received from the Department and €8 million from SOLAS. The audit opinion in respect of the financial statements was unqualified.
The Tipperary ETB financial statements for 2016 have been signed by the board and are being checked by my office. I expect to have the file presented to me for sign-off in the coming days, even possibly this evening.
The accounts of Kildare and Wicklow ETB are the first accounts of the ETB, relating to the 18 month period, July 2013 to December 2014. In that period, the ETB had receipts of just over €151 million, payments of almost €154 million and an overall deficit of €2.3 million. Just over €112 million was received from the Department and over €17 million was received from SOLAS.
Draft 2015 financial statements were received from the ETB on 12 December 2016 and the audit commenced in January 2017. Several issues arose during the audit, which resulted in a formal audit query being issued to the chief executive. Following receipt of his response, the audit team, at my direction, raised matters of concern with the chairperson of the board of the ETB and with the Department. Subsequent to their own further inquiries, the Minister for Education and Skills appointed a statutory investigator in October 2017. That investigation is ongoing. In the circumstances, I am not in a position currently to complete that audit. We will move to complete the process as soon as possible.
Ms Fionuala McGeever:
Tipperary ETB was established on 1 July 2013 as a result of the amalgamation of north and south Tipperary VECs. It manages 11 second-level schools and one special school, St. Joseph's detention centre, Ferryhouse, Clonmel. In addition, it operates extensive further education and training programmes and has youth officers in both north and south Tipperary supporting the development of youth services. In total, Tipperary ETB manages 30 buildings including schools, further education and training centres and administration offices. The two offices are the headquarters in Nenagh and the designated sub-office in Clonmel, the result of a ministerial decision. The distance between the two offices is 90 km, a 180 km round trip. There is no administration office in Thurles.
In 2016, Tipperary ETB managed a budget of €50.6 million. The main elements of this budget were schools and administration, €32 million, further education and training €13.7 million, youth services €0.6 million, capital funding €1.8 million, other programmes €2.5 million. By far the largest element of our expenditure is staff pay costs. For the last full financial year, 2016, these costs were almost €35 million. The full-year expenditure in 2017 will be approximately €55 million.
County Tipperary has a population of just fewer than 160,000. It is the sixth largest and the largest inland county. Population growth in recent years has been modest and below the national average. Traditionally, north Tipperary has been aligned with the mid-west region and south Tipperary with the south east. This requires participation in regional boards in both areas. Estimated unemployment stands at approximately 9.3% against a national figure of 7.5%.
Several significant milestones have been achieved since the amalgamation in 2013. The highlights include the transfer of training services for the county from both Waterford and Wexford ETB and Limerick and Clare ETB in March 2016; the opening of the new €12 million public private partnership, PPP, school at Comeragh college, Carrick-on-Suir in 2016; and the opening of the new €1 million extension to Borrisokane community college recent weeks. In each year, the financial statements have been signed by the Comptroller and Auditor General within the following 12 months. Unqualified Comptroller and Auditor General audit reports have issued since amalgamation. There has been a successful amalgamation of the two former VECs, including the merger of the financial database and the establishment of network connectivity between the two offices. We have also implemented a robust risk management process including focused staff training.
During 2016, Tipperary ETB employed 1,200 staff. This includes full-time and part-time teachers, tutors, special needs assistants, caretakers, cleaners and administrative staff. This year Tipperary ETB provides education services across the county to 4,708 students at second level and post leaving certificate, 9,809 people in further education, 662 people in training, and 583 people in part-time/night classes. Our 90 post leaving certificate courses are provided at eight locations at levels five and six. Enrolments in schools and post leaving certificate courses in 2017 have increased by 4.6% since 2016.
The main achievements since the amalgamation have been to maintain continuity, uphold standards of corporate governance and minimise risks of failure. The draft accounts produced by Tipperary ETB for 31 December 2014 were submitted to the Comptroller and Auditor General on 19 September 2015 and the final sign-off was 31 December 2015. The draft accounts for the year to 31 December 2015 were submitted to the Comptroller and Auditor General on 23 September 2016 and the final sign-off was on 16 December 2016. Our 2016 accounts will be signed off in the next day or so, or even possibly this evening.
At the end of 2016, the two databases of the former VECs were merged following the completion of the government network connection between the two offices. The 2016 accounts were the first set to be produced from the amalgamated database. Since 2013, priority has been given to producing the V15 in as timely a manner as possible. In each year, Tipperary ETB has had it statements signed by the Comptroller and Auditor General within the following year. In common with other ETBs which use the Manser/ESI system, production of the V15 is largely a manual exercise using Excel spreadsheets. The board and the finance and audit committee are continually updated on the expenditure throughout the year. This year will be the first set of accounts to be produced from a full year of operating the amalgamated database. We believe this will lead to a significant improvement in the timeliness of finalising the V15 for 2017.
Financial reporting is now managed centrally from the Nenagh office by the finance APO. All Comptroller and Auditor General audit reports have been unqualified. The merge of the main financial database was completed in 2016. The introduction of way-2-pay allowing students and parents to make online payments for books, contributions, tours, etc, has reduced the amount of cash managed by schools. Tipperary ETB has assumed responsibility for training services including new systems such as SAP, new payment and accounting processes. An automated system, DCS, is in place for part-time staff to submit their timesheets for payment. This is being rolled out to additional centres across the county. ·A portal is being tested which will allow staff travel claims to be submitted automatically and for staff P60s to be distributed electronically. The payroll function is being centralised in Clonmel and all other payment processes, creditors, travel, trainee payments, are being centralised in Nenagh in preparation for the move to shared services.
SOLAS introduced the Funding Allocations Request and Reporting, FARR, system and Tipperary ETB has introduced the FARR web application.
In terms of human resources, staff recruitment is managed from one office in Nenagh and the volume of recruitment has ramped up significantly, in particular in the further education and training area. Some 200 positions were advertised in 2017. Staff leave is managed and recorded from one office in Clonmel. Contract conversion for back to education initiative, BTEI, staff is currently in progress under a national initiative of which we are part. Continuing professional development, CPD, policies are in place that encourage all staff to upskill to meet the changing needs of Tipperary ETB. Arrangements are in place for part-time staff to join the superannuation scheme and staff training on the single public service pension scheme is ongoing.
As regards corporate services, including capital, procurement and ICT, additional work on freedom of information, FOI, data protection etc. has been taken on in this area and is managed centrally from Nenagh. All statutory committees are in place and are working effectively. They are also managed from Nenagh. Tippeary ETB complies with FOI reporting requirements and this is published on our website. A comprehensive risk management process is now in place and there is a regular review of risk registers. Comprehensive training for boards of management and board members has been completed. Tipperary ETB worked with Education and Training Boards Ireland, ETBI, to upgrade its website utilising the common design template and our site went live last week. School websites are currently being upgraded and new sites will go live in November 2017. Office 365 and related cloud-based services are being introduced in schools and further education and training, FET, centres. Encryption of mobile devices to improve security and comply with data protection is in progress. Several significant procurement processes have been completed by Tipperary ETB including print services, canteen provision, contracted cleaning, school books and all ICT hardware requirements. The capital programme includes a combination of major and minor capital works including the provision of new autism spectrum disorder, ASD, facilities, school extensions and various upgrade and repair works. Capital expenditure in 2016 was €1.8 million. The VSware administration platform has been introduced in schools.
The revised policy direction and funding model for further education and training resulting from the establishment of SOLAS has been embraced by Tipperary ETB. These changes have altered the structure of governance, strategy, focus and funding of FET provision. The integration of FET as a result of the establishment of Tipperary ETB has resulted in improved service provision to learners, the removal of duplication of programme provision and an extension of available course provision. Following the establishment of SOLAS, Tipperary ETB has fully implemented the additional reporting and other requirements including strategic planning, progress review, monitoring of outcomes, the FARR reporting requirements, adaption of the programme learner support system, PLSS, database and the revised QQI processes. The transfer of the training services function in March 2016 was a significant event in the history of Tipperary ETB. Prior to that, training services provided in the county had been managed from either Waterford or Limerick. With the transfer of training services, there has been an expansion in the volume of courses provided, additional staff have been hired to manage the service and in 2017 Tipperary ETB received sanction from SOLAS to operate national apprenticeship courses for the first time. Those courses will start in early 2018 and will be based in a new training centre in Thurles. In our written submission I have given a breakdown of our training programmes and numbers. The total programme provision is 10,101, including services for refugees and asylum seekers.
Highlights of the current youth services provision include two new sample projects in Cahir and Fethard-Killenaule that were established in 2016-17 with funding of €261,000 from the Department of Children and Youth Affairs, DCYA. They are projects of national significance because that will be the way forward for funding of youth services. Local youth work equipment grants of €170,000 were allocated to 35 youth groups and 35 youth club groups benefitted from €45,000 under the local youth club grant scheme. The student leaders congress held in recently in Nenagh College was the first of its kind in the country. All student leaders in our schools were represented and it provided a forum for us to listen to their voices. It was the first event of its kind in the country.
In articulating the progress that has been made in Tipperary ETB as outlined above, it is important to note that the staff employed by Tipperary ETB have tirelessly shown their commitment, dedication, adaptability, innovation and perseverance in moving through the most momentous period of change the education and training sector has ever seen. Our focus in the immediate future will include ongoing improvements in our service delivery including the introduction of new ICT services, managing the impact of shared services on our staff and services, the introduction of new apprenticeships, managing growth in our schools and expanding the scope of services delivered in further education and training.
Mr. Seán Ashe:
I thank the Chair for inviting us to today's meeting and giving us the opportunity to make this opening statement. Kildare Wicklow ETB, KWETB, incorporated the former Wicklow VEC and Kildare VEC. Due to its size and geography, KWETB was established by ministerial order with a main office in Naas and a sub-office in Wicklow town, approximately 95 km apart. Following extensive discussions with administrative staff and others, we decided to locate the finance function in Wicklow town and the corporate services and human resource functions in Naas in an effort to bring cohesion and efficiency to our operations. KWETB manages a region that is part of the commuter belt outside the M50 and has experienced significant demographic change over the past five years and continues to expand exponentially. This generates significant workload and challenges for management.
The KWETB service plan budget is €138 million, with €30 million of that allocated to further education and training, an increase of 39% since the amalgamation. We have a projected capital budget between now and the end of 2018 of €50 million to €70 million. We have over 2,500 teachers and administrators as per the P35 total. We have in excess of 13,000 main scheme students, which is an increase of 15% since amalgamation. We have 16,251 beneficiaries of further education and training, an increase of 29% since amalgamation. We have issued 27,809 QQI awards since amalgamation. There are 21 post-primary schools, six community schools and one large stand-alone PLC college of over 1,100 pupils under our remit. We have recently been engaged in the development of two community national schools that are expanding rapidly and currently cater for 400 pupils. We have seven Youthreach centres, seven vocational training opportunities scheme, VTOS, centres, two youth officers, one apprenticeship centre and ten adult basic education centres. I am very proud to say that we piloted an innovative refugee education centre in Kildare town which became the model to be used elsewhere in the country. I thank the staff who set up that project for their dedication and commitment to supporting the Syrian population in Kildare town. We have one outdoor education centre. We have two trainee centres: Newbridge community and training workshop and the Racing Academy and Centre of Education, RACE, and farrier school in Kildare town. We are one of the largest providers of school completion programmes and have eight under our remit. We have two prison education centres, operating out of Shelton Abbey and the Midlands Prison in Portlaoise. We have a music generation project, which is expanding, a sports promotion unit, a music education centre in Bray and five adult guidance services.
We are operating across the entity out of 79 locations, which is a fairly challenging task, but nevertheless as my colleague who spoke previously said, our function is to get out there into the communities and deliver services at local level. In addition we have 23,000 co-operation hours, as they are known, where we provide local institutions with teaching support services.
I ask members to look at the chart - I will take the highlights out of it - of our comparative statistics between 2013 and 2016. Our operational budget, as I said, is up 39%. The staff pay budget is up 5%. The whole-time staff equivalent is up 21%. Post-primary students are up 15.5%. Post-primary-community national schools are up by 14.2%. Our FET students are up by 28.9% and our capital project spend is up 90%.
KWETB is delivering large capital projects, land purchase and project management in conjunction with the Department of Education and Skills and other patron bodies. This is in accordance with the expanded responsibilities under the Education and Training Boards Act 2013.
We are currently delivering on the following major capital projects. Naas community college is an €18 million project at stage 2B and I hope to have the stage 2B report in the Department next week. Maynooth community college and Maynooth post primary school are in one campus now in Maynooth. That project is a €30 million-plus project; it is the largest second level project ever undertaken in the State. I am proud to state that project is progressing at a rapid rate and hopefully we will have buildings by September 2018. We have Greystones community national school going into the RAPID programme. We have St. Conleth's in Newbridge currently under construction. We have a PPP project, Coláiste Ráithín in Bray; that is due to hand over, I understand, at the end of the month.
In addition the ETB has progressed eight major capital projects into the 2018 capital building programme. That was a major challenge in itself. What it means is that the bulk of the schools in our ETB either have new buildings or will experience new extensions. KWETB is also providing or managing new start-up schools and extensions to existing schools for other patron bodies including Educate Together, An Foras Pátrúnachta, the Church of Ireland and the Diocese of Kildare and Leighlin. There are a total of nine major capital projects. Those projects are located in Wicklow town, Bray, three in Naas, two in Kildare town, Templerainey in Arklow and Athy. That is a significant workload, but we undertook it. I think there is value for money in the way we approached it in that we are using existing stock of buildings to enable the Department start up these projects in these locations at no cost to the Exchequer.
The other thing to note about the entity when it was formed was that there was no training in KWETB. When the training function transferred from FÁS, we were challenged as to how we would deliver training facilities across the entity. I highlight three in my opening statement. Marine House is in Wicklow town. We have now developed a hospitality trainee centre of excellence. That will deliver the skill sets that are needed and currently in high demand from the hospitality industry. There is a major deficit there and I think this building and the staff we have put in there will meet the needs in our entity. I was over there yesterday and I was delighted to see that we have a group of Italian trainers teaching Irish people who are unemployed how to make pizzas. I asked one question, "What's the cost of the oven?" It was €30,000 supplied from Italy for this project, which is going to roll out a new line of pizza product across the State. I am delighted to say that with the initiative of our head of training and our head of FET we got that project into Wicklow town.
In conjunction with Intel and FIT, fast-track into technology, we also developed a new mechanical-electronics course in Celbridge. The significance of that project is that all the trainees from the first cohort were employed directly by Intel. It has come back to us to train another cohort. It has asked us to expand that programme into pneumatics and we are currently working on that. They are innovative new courses. SOLAS has asked us to develop a centre of excellence to train apprentice electricians and we are dealing with that.
For an organisation or entity that had no training centre, what we are trying to do, as is the board's policy, is to deliver locally and regionally. I think that policy is working. I would like to thank the board for supporting it.
We have noted the following challenges. There is a lack of authority to recruit staff for eight years and consequential lack of expertise. I would put in there that because of the rate of expansion we have experienced, the shortfall in providing teaching staff is also caught in that statement. We have a high level of increase in responsibilities with, as I have said, no increase in staff. I think I have outlined the activity there. I will not go into the detail, but it is quite significant.
KWETB is a strong organisation in a continuous high-growth situation with student numbers increasing at a rate of 5% per annum.
A key management risk that is identified is the lack of an effective financial information technology system. I know the Department of Education and Skills, through the PMO is working on that. I was privileged to chair the payroll shared services committee and still chair it.
I will outline our plans for the delivery of accounts and particularly to address the concern of this committee over the delivery of the accounts on time. We are working closely with the Comptroller and Auditor General and the ETBI finance forums and will continue to do so over the coming months to ensure on-time delivery of accounts. On reviewing the Comptroller and Auditor General report to this committee - this was the November 2016 report - I note that KWETB submitted our 2014 accounts. I think we were the second ETB to do so in that period. One thing that puzzled me was the length of time it took for the accounts to be processed. I am only assuming it was because we were also piloting new formats of the accounts for the Department and we were also piloting the merger of our software systems, our financial systems, our payroll systems and our creditor systems on behalf of nine other ETBs. We were the pilot scheme. I would like to thank the staff involved in that because it proved to be a very successful project and now we have an integrated system across those nine ETBs, using what is known as the ESI/Manser system.
I would hope and am confident that draft financial accounts can be produced within the timespan stipulated by statute going forward. Every effort is being made in-house to ensure that will be the case. I am confident that next year's set of accounts will be delivered in a timely manner.
KWETB is a dynamic and vibrant organisation prepared to engage and manage the challenges it faces. It is fortunate that its key operations staff will go the extra mile and continually upskill. It is committed to the delivery of excellent customer service and corporate governance. KWETB has operated within its sanctioned budgets and made the adjustments to its expenditure necessary to remain as far as possible within budget, but more importantly even though we had sanctions from the Department and from our own board for borrowings, we have not borrowed since 2012.
The focus is on channels of funding but we also receive funding from the Department of Children and Youth Affairs, the Department of Health, Pobal and EU sources. A significant range of bodies fund the entity, all with different accounting requirements with which we have to deal.
We are educationalists and our primary focus is on the delivery of a first-class education system for our learners. We must keep them in our sights at all times to ensure we deliver a world-class education service.
Deputies have indicated in the following sequence: Deputy Mary Lou McDonald, Deputy David Cullinane, Deputy Alan Kelly, Deputy Catherine Connolly, Deputy Catherine Murphy and Deputy Bobby Aylward. We will start with a 15-minute slot but we will have ten-minute slots after that as quite a few members have indicated.
We heard the sorry saga of €180,000 worth of computers and support services bought from a former employee. We heard of failings in Kildare VEC's handling of a €23 million school building development, as a consequence of which the Department had to bail out the VEC to the tune of €20 million. Issues were raised relating to land and property and a school development, with €139,150 paid to an auctioneer in 2008 without a competitive tender. A company was hired to work on a small scheme in 2004 but was kept on as project manager for the larger development and, between the jigs and the reels, the firm earned €830,000 between 2005 and 2011 without the work being tendered for. I know that Mr. Ashe's position was, and no doubt remains, that the Department had sight of all this and was informed, and that the VEC acted impeccably in this regard.
We do not have anybody here from that service. Without breaking any confidences, can Mr. Ashe tell me whether, in the course of the interview, the service explored the matters to which I referred?
Mr. Ashe did not come into his current position through the Public Appointments Service. He came through the redeployment channel. Who from the Department spoke to Mr. Ashe? How was the happy news delivered to him?
Can the Department cast any light on this? In 2012, Mr. Ashe appeared before the Committee of Public Accounts with a series of peculiarities and concerns raised by the then Comptroller and Auditor General, Mr. John Buckley, and we were very alarmed by the carry-on in respect of the lack of adherence to proper procurement and tendering processes, and so on. I acknowledge that Mr. Ashe made his defence at the committee. In 2013, Mr. Ashe was appointed to his current position and he has outlined, in painstaking detail, that this position carries a larger budget, more responsibility and a bigger workload. It seems, however, that the issues in 2012 were not referenced, considered or raised with him. Can Mr. Ó Foghlú tell me why this was the case?
Mr. Seán Ó Foghlú:
The redeployment process was established by the Department in agreement with the union representing chief executive officers. It did not deal with individuals' competence but the individuals who were in the posts, who were redeployed on the basis of seniority and preference. As I recall, there was no criterion relating to performance.
I do not know any other circumstances in the real world where that would have happened.
Mr. Ashe has been in his job since 2013 and has set out what he sees as dilemmas in the job. He did not mention the fact, stated by the Chair, that an investigation under section 40 is under way.
The investigation was instituted because the current Comptroller and Auditor General, Mr. McCarthy, was dissatisfied with, and could not sign off on, the accounts. The investigation was launched by the Minister on the Wednesday and, on the Friday, Mr. Ashe told his board that he would be retiring some time next year. When is Mr. Ashe retiring?
I will not ask you to elaborate on those. The terms of reference for this investigation do not make very happy reading. The Comptroller and Auditor General was unhappy with the accounts.
It was stated that Mr. McCarthy "had sight" of the accounts. I want to ensure that I get my terminology right. He had sight of the accounts but could not complete the audit process. Am I right?
I appreciate that. Suffice it to say that, having raised issues and corresponding with Mr. Ashe's organisation, matters were not resolved, which led to this investigation. One of the terms of reference is "To examine and report on the robustness of the ETB’s responses to the issues raised in the C&AG Audit".
It is interesting that the investigation is to identify "any lacunae, inconsistencies or insufficient clarity in the responses provided" to the Comptroller and Auditor General. It is interesting that the first port of call for the investigation was to examine whether Mr. Ashe was less than forthcoming in his responses to the Comptroller and Auditor General. Who would have signed the letters and responses to Mr. McCarthy?
I would expect nothing less. I also expect Mr. Ashe to answer these questions, which do not trespass on the substantive matters or on any view at which the investigator might arrive. I am asking Mr. Ashe regarding who signed the letters when his organisation corresponded with Mr. McCarthy?
Mr. Ashe has been incorrectly advised. When his organisation corresponded with Mr. McCarthy, who signed off on the letters? Whose signature was on them? Mr. McCarthy might clarify for me. What is the practice? When Ms McGeever's ETB corresponds with the Comptroller and Auditor General, who signs off on the letters?
Ms McGeever and the chair. I assume that would be standard practice, so the letters which went to the Comptroller and Auditor General would have carried the signatures of Mr. Ashe and Mr. Ruttle. Is that correct?
I do not want to take up the Deputy's time, but I have a question on a matter that has been raised. Will Mr. Ó Foghlú tell us whether Mr. Thorn is independent? Is he appointed by the Department to conduct an independent investigation?
If he is an independent investigator, why would he advise someone he is investigating about whom he or she should speak to? What is the Department's view on an independent investigator telling people what they should or should not say if asked a question? I am asking about Dr. Thorn. The committee received a letter from Mr. Ó Foghlú today. It states:
Given that the investigation is underway it will be important to ensure that nothing is said at the Committee hearing that would compromise the investigation. The investigator, Richard Thorn, has also requested the Committee be advised of the need to avoid discussion that would potentially do so.
Does the witnesses have a letter from Dr. Thorn asking them to tell us this?
Did he indicate that he was going to communicate with anyone else? There is an independent investigation. I would have thought he would be getting on with his job rather than tic-tacking with Mr. Loftus or anyone else.
Given the seriousness everybody has attached to the statutory investigation that is under way, it can be seen why I am already concerned if there are phone calls here and there from the investigator, tic-tacking, phone calls going unrecorded and communications with people under investigation and with individuals in the Department. There is nothing in writing. There is no record. We will ultimately be presented with a report in order to allow the Comptroller and Auditor General to conclude his work but we will not know who said what to whom during the course of this investigation. I am very concerned. Do the witnesses understand my concern?
I will finish the question. We are here every week. The Charleton inquiry is ongoing and there is an investigation into the Grace case, which is another issue that has come before the committee. If we heard that Mr. Justice Charleton was making phone calls to potential witnesses and people who could potentially be investigated, that there was no record of such calls and that he was telling those individuals what to say, would Mr. Ó Foghlú be concerned about that modus operandi given that he has made it very clear that this is a statutory investigation? We are now beginning to discover that the investigation is being conducted in this manner. Will Mr. Ó Foghlú respond to this? Does he share my concern?
Mr. Seán Ó Foghlú:
I understand what the Chairman is saying. I am not concerned about the independence of the investigation. I am of the view that it is being undertaken independently. Dr. Thorn asked that nothing would happen which could compromise the investigation. The Chairman said the same thing in his opening remarks. There is not constant tic-tacking between the investigator and the Department.
Mr. Jim Ruttle:
He certainly advised us that it would be unhelpful to his investigation if matters were aired publicly. If certain intentions to do certain things were advanced, he could view it as interference with his investigation. The timescale involved is quite short. It is not months, it is approximately 20 days.
I share the Chairman's concerns. With the greatest respect to Mr. Ó Foghlú, the Department, Mr. Ashe, Mr. Ruttle and Dr. Thorn, this is a committee of the Oireachtas; it is not the local bingo club or a forum one can attend and decide whether one will answer questions. The witnesses' organisations are in receipt of massive amounts of public money. There are now matters of controversy arising from their stewardship, oversight and expenditure of that money.
The witness comes here to answer our questions. It is not an optional extra for him. It is part of the democratic accountability of our structures and it is not for Dr. Thorn to advise anybody to come in here and not co-operate with our committee. I find that shocking and scandalous.
As a committee, we are aware of the provenance of this inquiry. It is a section 40 inquiry and so on. I do not accept, therefore, that a sub judice rule applies. I do not accept that anything that we do by way of carrying out our function can in any way skew an investigation that is truly independent and being carried out by an independent person. That is a farcical position.
Following on from the Chairman's point, the question now arises as to whether or not Dr. Thorn is actually a suitable person and whether this process has now been corrupted and polluted from the get-go. I think we have to consider all of that.
I am saying that is a question we need to arrive at.
Another one of the terms of reference is around conflicts of interests. Can I ask Mr. Ashe if his son works in procurement for the Kildare and Wicklow ETB?
No, the witness will co-operate with this committee today. He will demonstrate respect for the Oireachtas and for the people who are elected by the taxpayers, the same people who fund Mr. Ashe's operation, and who pay his salary. He will answer my question. It is a simple "Yes" or "No". Does Mr Ashe's son work in procurement? I am not casting an aspersion. I am trying to establish whether, "Yes" or "No", he is working in that capacity.
Mr. Seán Ashe:
I did regarding a potential conflict of interest. I do not think I have a conflict of interest. However, I did one declaration in that there could be a perception that I could have a conflict of interest. That does not relate to the period the Deputy is referring to. I am here today to address my accounts for 2013 and 2014 and if it is matters pertaining to the section 40, I have to advise again that I am constrained from answering questions-----
Mr. Seán Ashe:
I respectfully decline. I am not in a position to answer today the questions that the Deputy is trying to pose to me. I have the height of respect for the Deputy. I am not being disrespectful to this committee, Chairman, or to anybody associated. I have a situation where I have a section 40. I have to comply with the terms of that section 40. We are and we will fully comply with it. I think the investigator that has been appointed has to be given the chance and the opportunity to deal with the task in hand and when his report issues, I assume it will appear in this committee. It is then that I will answer whatever outcomes-----
Just to repeat that it is an astonishing thing that an independent investigator, and presumably Dr. Thorn, would advance the position of his independence, and would advise witnesses coming before an Oireachtas committee not to answer our questions.
Mr. Seán Ó Foghlú:
-----and we put it in writing. The difficulty in answering detailed questions is that there is a risk that we may impact on the investigation which is under way. We asked for the investigation to be complete by quarter one of next year. The investigator has indicated to the ETB that he intends to get the draft report, which legally they need to have for four weeks, before the end of December. Hopefully, the investigative process can be complete early in 2018.
I want to ask the Comptroller and Auditor General a question on the terms of reference. In the course of the audit by the Comptroller and Auditor General of the Kildare and Wicklow ETB's financial statement 2015, which is ongoing, the Comptroller brought a number of issues to the attention of the Department of Education and Skills. Perhaps he could explain it to me. When the Comptroller and Auditor General is carrying out an audit of the Kildare and Wicklow ETB, surely that is his point of communication where, if he is not happy, he communicates that to it and issues his report as he sees fit? Is it normal when he is carrying out an audit of an organisation, and we not seen great examples of oversight from the Department, that he would go to the Department during the course of his audit that he says is ongoing? Perhaps that mechanism could be explained to all of us because this initiated the process of an audit. Why did he not complete and call the audit as he saw it? Does the witness understand our question?
Mr. Seamus McCarthy:
Yes, I do. There were issues that arose, as I said, and we issued a formal audit query. We did, in the first instance, contact the chair of KWETB about the matters and about the status of the audit. It was subsequent to that that we contacted the Department. There is the situation as well that in the legislation the Department has options specifically in relation to appointing an investigator.
That is not in dispute. The question is that the Comptroller and Auditor General was conducting an audit of the Kildare and Wicklow ETB and he chose to go outside of that relationship to a third party, the Department of Education and Skills, in relation to an audit that was ongoing.
That is my question. I know the Department has a right, but is it normal when conducting an audit of an organisation to go to a third party via the Department if there is a difficulty? Did Mr. McCarthy go to SOLAS as well?
SOLAS is a significant funder of the ETB. We discussed that this morning. In the latest year for which information is available, SOLAS gave €26 million. It is a significant funder of the ETB so why did the Comptroller and Auditor General not go to SOLAS as a funder if he went to the Department as a funder? I am seeking to understand how it was initiated. Mr. Ruttle said he wrote to Mr. McCarthy as chairman and arising from his letter to the chairman, he went to the Department.
Mr. Seamus McCarthy:
It was because the legislation was brought forward by the Department and the Department has formal legal oversight functions. Those were the reasons we felt, having approached the chair of the board first, that it was appropriate to go to the Department as well. Both the Department and the board would fall into the category of those who are charged with governance and oversight. It is unusual to take these steps but I felt it was appropriate in this situation.
I am trying to get the sequence. I inferred from his remark that he referred the matter to the Department, but that was afterwards. Mr. Ó Foghlú or whoever else in the Department was involved might give us the sequence of how this commenced.
Mr. Seán Ó Foghlú:
We were contacted by both the chairman and the Comptroller and Auditor General and we met with the Comptroller and Auditor General's officials. We discussed with them the concerns they had. We sought answers to their queries and added to the questions being asked by the Comptroller and Auditor General's office. We met the CEO, the chairman and deputy chairman. We sought answers in writing twice. We were not satisfied with the answers we received so we initiated the investigation.
No. 3 in the terms of reference states that the investigation may encompass matters prior to 2015, so it could have an impact on the statements before us today for 2013 and 2014. This investigation can examine 2013.
Mr. Hubert Loftus:
No, but there is flexibility in the terms of reference if the investigator thinks there are other matters that should be brought to the Department's attention that do not come within the ambit of the terms of reference. He can highlight them in his report. The Department can then make a judgment on whether follow-up action is required.
Without delving into the substantive detail of the investigation, and I will choose my words carefully, we now know that the Comptroller and Auditor General was not satisfied with the responses from Kildare and Wicklow ETB. Similarly, the Department of Education and Skills was not satisfied and was concerned about the responses. Was Mr. Ruttle trying to mislead the Comptroller and Auditor General or the Department of Education and Skills?
It is a question. The fact that the Comptroller and Auditor General and the Department did not get the information they needed or found themselves left with no option but to launch this investigation was not because Mr. Ruttle was in any way trying to frustrate or failing to provide the necessary information. That is what I am trying to ascertain.
I will seek your guidance first, Chairman. I am not at all happy with how this has progressed and I wish to follow up on Deputy McDonald's questions. The committee has addressed a number of different issues where there were parallel examinations and investigations. In fact, in a number of instances there were criminal investigations. To take the example of the National Asset Management Agency, NAMA, there were three criminal investigations taking place, yet we still did our work on a loan sale known as Project Eagle and produced a report. The Chairman gave the example of the HSE hearings in which we discussed the Grace case while there was a commission of investigation examining that. Representatives of the Garda Síochána appeared before the committee while they were carrying out examinations and investigations of what happened in Templemore-----
Yes. I am trying to understand how the witnesses and, incidentally, the Secretary General of the Department, which worries me even more, believe they can stonewall this committee, refuse to answer questions or put forward the defence that they cannot answer questions on issues because of an examination being carried out. Was it the Department or the HEA that commissioned it?
It is just a departmental examination or investigation. The matter has not been heard by a judge so Mr. Ó Foghlú cannot claim that it is sub judice. I am aghast that this has descended to this point and I am seeking guidance on this matter. If this were to be the modus operandifor how this committee works in the future, it would never get anything done.
I want to clarify a number of matters. Does Mr. Ashe know what his role is in the context of reporting back to the Committee of Public Accounts?
Mr. Ashe is an accountable person, not an accountable officer, which means he accounts to the Committee of Public Accounts, which he is not doing today. He is offering as a defence a refusal to answer questions because Dr. Thorn, who was simply appointed by the Department to carry out an examination, gave him advice. That is not acceptable. I need guidance from the Chair as to how we should proceed. Before I get that guidance, I will ask Mr. Ashe if Dr. Thorn advised him not to appear before the Committee of Public Accounts.
I have been informed that Dr. Thorn advised Mr. Ashe not to appear before the Committee of Public Accounts. I will ask him again. He is here as a witness so I want him to be clear in order that he does not mislead the committee. It is not a good position for someone to be in if he or she misleads the Committee of Public Accounts. Did Dr. Thorn advise Mr. Ashe not to appear before the Committee of Public Accounts? Did he offer that opinion at any time?
I want to understand when Dr. Thorn assumed the role of advising witnesses about what they should or should not say to the Committee of Public Accounts. Since when did Dr. Thorn - in the course of his work - seek to subvert the work of the Committee of Public Accounts? I want to put this to Mr. Ó Foghlú. I can tell him now that whatever report comes from Dr. Thorn will be absolutely prejudiced and will not be worth the paper on which it is written. Mr. Ó Foghlú will have to go back to the drawing board. How was Dr. Thorn picked to carry out the examination?
Mr. Hubert Loftus:
We estimated the cost of the procurement process to be approximately €12,000 to €13,000. Within the Department, we identified a number of persons we might approach to seek a quotation. We contacted one other person who was unavailable to undertake the inquiry and then we contacted Dr. Thorn who, at the time, was undertaking an inquiry into the University of Limerick. That was near completion.
Nobody on this committee would in any way seek to tell Dr. Thorn what he should do, how he should carry out his examination or how he should report back to the Department. That is entirely a matter for the Department and whatever process it has with Dr. Thorn. How is it acceptable that Dr. Thorn would believe that he can in any way dictate to this committee how it does its job or advise witnesses who come before it, including an accountable person, about what they can or cannot say? How is that acceptable to Mr. Ó Foghlú, as Secretary General of the Department?
Mr. Ó Foghlú is missing the point entirely. With respect, he is avoiding the point I am putting to him. We are not going to dictate to Dr. Thorn how he carries out his review. Mr. Ó Foghlú, as Accounting Officer for the Department, needs to understand that we have a statutory responsibility to probe systems, processes and procedural failures. That is our role. That is our function regardless of whether there are parallel investigations or examination processes ongoing. Mr. Ó Foghlú needs to understand that a person he has appointed is attempting, perhaps not deliberately - and it may be unintentional - to subvert the work of the Committee of Public Accounts. Teachta McDonald put questions to Mr. Ashe that he is not answering. That is not because of legal advice he received but as a result of the fact that Dr. Thorn told him in conversation - I imagine during a phone call - that he should not answer. He said the same to Mr. Ruttle. I cannot understand that and I find it deeply troubling. I want Mr. Ó Foghlú to understand from where we are coming.
Can we start the clock again? Perhaps at this point we can put the questions to Mr. Ruttle. From what he said, not only did he not get advice on what he can or cannot say, he is of the view that he is independent and can speak freely. He can, therefore, help this committee, notwithstanding the accountable person's view.
-----return to this matter and bring the witnesses back again at some point, we will. We will stay here all night if we have to. We are not going to have witnesses before the Committee of Public Accounts and either subvert its work or prevent it from doing its job. That is not going to happen. There is no legal impediment whatsoever to the witnesses answering the questions that are being posed.
I ask the Chairman to let me finish. We have two ETBs before us. We have a job to do in terms of value for money and asking questions. Let that process proceed. We cannot compel a witness to answer our questions. The witnesses are here in a voluntary capacity. Obviously, they are accountable to the Committee of Public Accounts. Let us deal with what we have in as fair a manner as we can. I do not think there is a need to go into private session at this point. We have to deal with what is emerging before us, and the questions that we need to put should be put. It is on the record if a chairperson or a CEO cannot answer. That is what we are here to do now.
I use the word "voluntary" in the sense that they are here to help us. They are accountable, of course - let me finish, please. In that capacity, they are not compelled to be here at this point. We have to deal with what we are getting, and I think we should go ahead and deal with it. We are not in a court of law; we are here to bring as much accountability as we can. There are two ETBs here that should be asked questions by each of us in turn.
It has been suggested by a member that we get some legal advice, which is available to us now if we go into private session. We will do that briefly. When we go into private session, we have to clear the room for ourselves to have our own private discussion. I ask the witnesses to be on hand for the end of the private session.
During our brief discussion with members in private session on our questions to the Kildare and Wicklow ETB we got the benefit of legal advice. We will proceed with our meeting, but I remind the witnesses that they are here in a voluntary capacity and are not compelled to be present. They are free at any time to leave. They are here of their own volition. We will continue to put questions and our legal advice is that there is no legal impediment to the witnesses answering questions.
I apologise to everybody for the late hours, especially the witnesses from Tipperary who have not had an opportunity to have some of their issues discussed.
There is a second half. We will continue and I will call speakers in the following sequence, Deputies Alan Kelly, Catherine Connolly, Catherine Murphy and Bobby Aylward. There are witnesses from two ETBs and members are free to put question to either or both ETBs as they choose.
On a light note, on the two or three occasions when I stood in for the Chairman, I was accused of running long meetings. We commenced the meeting nine hours and 20 minutes ago and I think the Chairman will beat the record.
I have a number of questions. I found today's meeting very revealing - but not in a good way. I believe the Department of Education and Skills has had a bad today as I do not think many of our questions have been answered. I have serious concerns about oversight, as well as the process in which funds are being accounted for, value for money and performance and a range of other issues. I look forward to the report we will write. The Chairman and I have sought for a long time to bring the people together. I look forward to the information we have sought and that we will seek shortly being provided.
I welcome the witnesses from the ETBs, in particular the witnesses from Tipperary ETB. I have to declare that I know three of the witnesses for some time. I thank them for coming before the committee. The response I am seeking to a number of my questions is a simple yes or no answer, or witnesses can provide the information to the committee secretariat. May I remind the witnesses that when we put questions to the officials from the Department, we asked them to put all the missing board minutes up online and to submit a copy of all internal audit reports.
Are there any conflicts of interest, or has there been any conflict of interest, declared by anyone in either ETB in the past number of years, bar the ones already stated by the Kildare and Wicklow ETB?
Mr. John Hogan:
I welcome the opportunity to assist the committee and will respond to Deputy Kelly's questions.
We are open to sharing any information we have with the committee and working with it to ensure, as Deputy Mary Lou McDonald stated, that we have good stewardship, accountability and oversight. As a standing agenda item on our board each month I ask if anyone there has any conflicts of interest. That is one of the first agenda items. The only conflict of interest declared was a recent declaration by one lady that she was related to Deputy Alan Kelly. When the Deputy had questions in the Dáil the lady wondered if she had a conflict of interest in that she was there when she also worked with him. We were quite happy to leave the lady in place because we believed she worked in good faith and we thanked her for declaring it. We did not ask her to leave the meeting. That was the only conflict of interest I have had.
That is what I mean, there was nothing to declare. I asked a question earlier on to two other ETBs around ICT school grants and the percentage that would be used by schools or used in any way centrally. The ETBs said that in one case it was 100% and in another case it was 90%. I pose the same question to the ETBs here.
Nothing is used centrally. Okay. There was a query earlier from Deputy MacSharry, who is probably at home in Sligo four or five hours at this stage, requesting information on board members' travel and subsistence payments for the last years. I would like to extend that query to the chief executives and directors of all the ETBs since their inauguration in 2013, across the board.
I have some specific questions on the special school at Ferryhouse in Clonmel. We could be able to help the ETB with this. What is going on there? Is it being used and are the staff being paid?
Ms Fionuala McGeever:
To answer the Deputy, the school is managed by Tipperary Education and Training Board. It was transferred to us some years back and the entire centre is managed by Tusla. There are 14 staff in the school; teachers and special needs assistant, SNAs. I understand that in the entire centre there is approximately 60 staff. I am not 100% sure because we do not manage the care side. At this moment in time we are unaware of Tusla's plans. We have sought meetings on several occasions over the last weeks with Tusla. Only yesterday Tusla wrote to us. A meeting has been organised for Friday week. Some weeks back we also notified the Department on concerns we had with plans that Tusla may or may not have regarding the future development of the centre. It is currently a detention centre. It is currently a centre where young people are placed through the courts. By that very nature, students are at the centre for varying periods of time. We do not know what the future plans are for the centre and we have asked for clarification.
Okay. If I interrupt Ms McGeever I am not being rude. As we are all aware we are caught for time all the time. If I interrupt the witness it is purely for that. Please appreciate that.
I am trying to help in this regard. I accept that this situation is not of the Tipperary ETB's making but it has to fund part of it and pay for components of this. It is rather odd that we have a scenario where the ETB is expected to pay out but there is a decision-making process going on in another State organisation that blocks the school from actually operating. There may be other legitimate reasons for that but the fact is that there is still a cost on the accounts of the ETB. Is this fair to say?
I shall now move on to the chief executive. The witness is aware that I have asked a number of questions about head offices. In Tipperary the ETB has a head office in Nenagh and a sub office in Clonmel. Which of the two is Ms McGeever's base or office?
The Secretary General, who is sitting in front of me, wrote to me that " ... it is the expectation and understanding of the Department that each Chief Executive would be headquartered in the head office ...". The Minister wrote to me and said that "... an estimate of time allocation would be: Nenagh (20%)". I asked the two previous witnesses, the chief executive of SOLAS and the Secretary General of the Department, about the period of time they would normally spend in their head office and they both said in excess of 70%, if I remember rightly. Is the Minister's comment accurate?
The important point is about the head office. I shall move on now and maybe we could come back to that issue. Directors were appointed for ETBs across the board and three directors were appointed, like every other ETB, in Tipperary. Where are they based?
Given that the Minister said to me the chief executive spends more time in Clonmel than in Nenagh is it not strange that we have a head office in one location and we have three people who work more out of Clonmel, out of a sub-office, than out of the head office? Is that not strange?
Ms Fionuala McGeever:
The statutory obligations we must comply with and implement on a daily basis require the directors and me to be available to other centres at all times. We go between the two offices and we go to all other relevant meetings that are required of us, be they in the county or outside the county. That is an integral part of the work we do.
Okay fair enough. That is fine. Consider, however, if the Secretary General of the Department had his assistant secretaries based all around, or if the chief management team of the head of SOLAS was not based close to him.
It would be very strange if they said that that was the optimal way in which to run their organisation. It is very strange that three of the four senior staff of Tipperary ETB are based in a sub-office. What is the volume of staff in both locations?
I am aware of that because the turnaround in some of the schools in Tipperary has been excellent. I acknowledge that and I compliment the people who are working in them.
In terms of the Committee of Public Accounts, the financial auditing process is as much a part of its work as are accounts. From a performance point of view and a risk point of view, it cannot be optimal that the head office is separate to the office where four senior management personnel are based. In any walk of life that would not be right.
Ms Fionuala McGeever:
The nature of our work is such that we are not always office based. Our work requires us to be involved in a variety of different inter-agency groupings. We have to represent the ETB on different groupings. In my opening statement I mentioned that we are aligned to the south east and the mid-west. There are a lot of demands on our time. This week alone I have not been in the Clonmel office. That is a fact.
If I have to interrupt, I do so to save time more than anything else.
According to the information provided by the Minister Ms McGeever spends 20% of her time in Nenagh, 25% in Clonmel and 55% in other areas. Presumably, Ms McGeever agrees with that.
For the record, is Ms McGeever saying that the information provided to me in writing by the Minister to the effect that she spends 20% of her time in the Nenagh office, 25% in the Clonmel office and 55% in other areas is not accurate? Perhaps the Department officials would note that.
Mr. Hubert Loftus:
I will come back to the committee with a note on the locations for the directors. In regard to the bases for the directors, in terms of Kilkenny and Carlow ETB, which appeared before the committee this morning and is seen as a good example of an ETB that works well in terms of completing its accounts, its chief executive and one director are in one location and two other directors are in another location.
In regard to teaching allocations, we heard earlier from the Department officials that they have an audit process through which they ensure that allocations are distributed pro rataacross ETBs and then pro rata across schools within each ETB. Is McGeever 100% confident that the allocations made internally by Tipperary ETB to the schools within its remit are pro rata to the volume and pupils and activities of individual schools?
I note Tipperary ETB has received a clear audit from the Comptroller and Auditor General, with no issues raised. Well done. Ms McGeever is the CEO of Tipperary ETB and Mr. Hogan is its chairperson. Perhaps the other two gentlemen would identify who they are and their roles.
We are here to ensure that public money is spent properly and, as best we can with our foolish questions, we try to hold witnesses to account. We look at governance, procedures and so on and we are always learning. The finance officer might be the best person to answer my questions in a second, but I will ask the vice chairman a number of questions first. Did Mr. Ruttle discuss with the board the witnesses' presence here today?
This is a serious matter. I am not going into the independent investigation - I respect what is happening - but there is a board here, and it is the board I want to talk to. The board has oversight of the CEO and all the processes. When the Comptroller and Auditor General's audit has been held up, parked, there is an independent investigation of taxpayers' money. What does the board know about this? First of all, why was the witnesses' appearance before the Committee of Public Accounts today not put down as an item on an agenda for the board to discuss the serious issues involved?
Good. Did someone ask Mr. Ruttle whether KWETB's appearance before the Committee of Public Accounts should go down on the agenda? Did Mr. Ruttle say to the person who types it up that it should have been an item on an agenda?
Does Mr. Ruttle think that is a good way of doing business - an opening statement laid before the Committee of Public Accounts with no mention of the matters that have been raised? KWETB has - I do not know if it is called a qualified account. Perhaps the Comptroller and Auditor General could help me here. Was it a clear audit, with an opinion?
Have these outstanding issues been brought before the board at any stage in the past year or two? Has the fact that the Comptroller and Auditor General's audit could not be completed been discussed before the board in the past year?
Not at all. Since Mr. Ashe has come in and told me, this is for the board to decide. Mr. Ashe is there in a paid capacity to serve the board and the board is there to serve the people. We are also here to serve the people so, in that regard, we are all servants. Did the vice chairman not think that this was serious enough to put down as an item and-----
-----with serious responsibilities. I have been on boards and I would not wish it on anyone. It is extremely difficult with very little training, which I will come back to in a minute. Does Mr. Ruttle realise the seriousness of his role and the board, and each member of that board?
-----and the minutes are not brought to the meeting but a presentation is made. I think we heard some other ETB say that as well.
There is an organisation support development, OSD, role. What is that?
A very recent appointment. I will leave that for a moment.
In Mr. Ashe's opening statement, he clearly told us that he has been given advice by Mr. Thorn, and questions have been put to which he cannot reply.
Mr. Jim Ruttle:
May I interject for a moment? We came here and we brought our staff with us today, having done research on what we were asked to discuss, the 2013-14 accounts, that 18-month period of the transition period. Our staff have spent a lot of time and effort trying to get this together and to be as helpful as they can to the Committee of Public Accounts, for which I assure the Deputy we have the greatest respect. We were not informed of the development of delving into 2015 and the matters under investigation with the Thorn inquiry. I have advice as well on that.
Mr. Jim Ruttle:
That is not the point. I, like others here today and our staff, would be definitely of the opinion that we were invited here to deal with the 2013-14 accounts. We would love to do that. Our officers are here to do that. We would dearly love to do that and deal with any other issues that arise later, and they will arise and we will be here again-----
Just a minute. I am on record as saying that inquiry will take its course. I am not saying one thing about that inquiry. I am not sure why Mr. Ruttle was getting advice, I am simply asking him questions regarding his role as chairman of a board and that comes down to giving us confidence in regard to governance. Certainly I accept that he is here for the 2013-14 accounts but the issue that has arisen since leads to questions, and we have to ask questions about governance procedures. Mr. Ruttle went off today, of his own bat as chairman, to get legal advice that will be paid by taxpayers' money but he got it for the board, with no sanction from the board.
Mr. Jim Ruttle:
Do not level it on co-operation, Deputy.
Deputy Catherine Connolly:That has been said and I accept that from you. I am not casting any doubt on that. I am just asking very specific questions. Mr. Ruttle had a four-hour meeting yesterday. Did he discuss with the board yesterday, or did the board discuss getting legal advice?
-----that is not the question. The delays have been clearly set out by the Comptroller and Auditor General. I am accepting that in respect of 2013-14. My question was: what issues, risks, or conflicts of interest, if any, arose during that period of time? I am interested to know what happened and how Mr. Ruttle dealt with it.
Ms Catherine Doran:
There were no conflicts of interest raised in the audit report. There was one high level risk named, three medium level risks and a couple of low level risks named. The one high level risk was to do with payroll overpayments to a small group of staff, which has since been recouped. It was pointed out to the Comptroller and Auditor General at the time. The money has been recouped since. On the three medium level risks, if I can go through them-----
Ms Catherine Doran:
-----one was money we had not recouped from the Department for two capital projects, the money for one of the projects has been since recouped in full and the money for the other one has been recouped, bar about €3,000 which we have since written off. On the other two areas of medium risk, one was that all bank balances for some of our schools were not included in the accounts. We responded that we would make sure to include that and we have since done a full audit of all bank accounts in schools. We are confident that in our later accounts all bank balances are there. The last medium risk was that in six instances of procurement there were no unsuccessful tenderers' letters kept on file. We have said that in future we will always keep the unsuccessful tenderers' letters on file. They are the only medium risk ones. I can go through the low risk ones.
Mr. Jim Ruttle:
I would say so, yes. Members raised it as an issue, particularly members who might not have been involved in the old VEC system.
I would first like to ask Mr. McCarthy how unusual it is to issue a formal audit query. He obviously has a lot of engagement with the entities he audits, but how unusual is it to take that step?
Mr. Seamus McCarthy:
It is relatively unusual. If one looks, for example, at the annual report that we produce, each of the chapters would have been proceeded by an audit query setting out findings and asking for comments and so on. If one considers that we have 20 chapters or so in the report, perhaps half of those would have been proceeded by an audit query. That is on 41 Votes and that is quite a wide spectrum of spending. It is relatively unusual, but it is not a unique situation.
Mr. Seamus McCarthy:
In the normal case, the exchange would be with the accountable person, or an Accounting Officer if we were dealing with a Department. In a Department, of course, the Accounting Officer is the sole person who is accountable. In a board situation in a semi-State body, there is a different structure and there is an oversight function usually between the chief executive and the board. I would expect that, through the audit committee and the chief executive, the board would be kept informed of issues that are raised so that there would be no surprises.
I will return to that particular point in a few minutes.
I would like to ask Mr. Ó Foghlú about the formal inquiry that has been initiated in the Department. Is such a formal inquiry unusual? How often have such inquiries been initiated in the past five years?
Mr. Seán Ó Foghlú:
This is the first inquiry under the ETB legislation. As Deputy Murphy is aware, the Department has had statutory investigations into the institutes of technology. We have also had a review of the handling of intellectual property generally in the higher education sector and a review into the University of Limerick. There were different bases but they were all investigation of sorts.
Mr. Seán Ó Foghlú:
We have a close relationship with the Comptroller and Auditor General. We also have an early warning system so that we are aware of issues, whether it is through the Higher Education Authority, HEA, with higher education institutions or with ourselves on the ETBs,, but something that caused us to eventually have a statutory investigation, this is the first time that anything like that has happened in the ETB sector since they were established.
In terms of putting items on the agenda and being made fully aware of, for example, the issues raised by the Comptroller and Auditor General, how transparent was that for the rest of the board?
Mr. McCarthy gave us dates for when the report was done and then it would have found its way to the board after that. Could he give us the date on which there would have been a debate here, for example?
Mr. Seamus McCarthy:
I think it was February 2012 that it was discussed. It related to the 2010 financial statements for Kildare VEC.
Were the items concerning procurement not very specifically put on a risk register? The letter we have from the Department states that the Department would continue to insist on adherence to proper procurement practices in VECs and to remind VECs of their obligations in that regard.
Mr. Seán Ashe:
From an executive point of view, yes. We were very conscious of the fact that we had been with this committee before and we did not want that to happen again. We are in a complex position so I am confining myself to where we were in 2013 and 2014. We produced the policies for operational purposes and the board got all of those policies. That is the basis on which we carry out our operations.
Was there any dialogue between the Department and the KWETB? This particular report had been produced so one would have expected that the Department would have had a particular concern to make sure it did not happen again.
Parallel with the work of the Comptroller and Auditor General, a targeted internal audit was conducted on key areas of our operations. Those audits went through 2013, 2014 and 2015. They dealt with particular aspects of our remit, how we carried them out and whether any exposure or risk was emerging from the methodologies used in-house.
Mr. Seán Ashe:
On the procurement side, honestly I cannot recall the issue because I did not brief myself on it. The Deputy is reading from a document of which I do not have sight. The procurement side issue that surfaced related to the sale, or potential sale, of property and the risk that came from that.
We understand the property issue. I remind Mr. Ashe that €1.9 million was spent on ICT and there were five transactions over €50,000. One purchase did not evidence tendering. There were 17 transactions of between €5,000 and €50,000. Five purchases did not have evidence of quotes sought. Of the €1.9 million, expenditure payments of more than €400,000 were made to one company that was formed by a person who had worked for a period in the VEC. There was a contract for computer maintenance that was a roll-over rather than seeking fresh tenders. There was a range of issues-----
The point I am trying to get to is that they were sufficient to have a special report done by the Comptroller and Auditor General. I suspect if someone has been invited in here once, one does not want to come back again.
Mr. Seán Ashe:
I would like to see the response we made at the meeting of the Committee of Public Accounts. I am certain that many of the issues that arose in the report were dealt with satisfactorily following our visit here. As far as I can recall, there was a fairly detailed response to each item. Unfortunately, I do not have it to give the Deputy the information on what was the outcome, but I know we implemented procedures and policies to ensure we were carrying out our remit in accordance with the corporate governance policy in play at the time and in accordance with subsequent updated corporate governance policies.
Now we have an inquiry, and we will not have a discussion about that inquiry, with a very detailed set of terms of reference. One could assume there has been a failure by virtue of the fact there is a formal audit query and there is now an independent inquiry.
Has an instruction been given to each board member that he or she should not have discussions with other board members outside of the board and that they have been forbidden to have discussions with each other? Is that true?
I want to ask about the legal advice. I understand the ETB has new legal advisers. Are the legal advisers engaged to advise the ETB, the board or the executive? Is there conflating whereby they are one and the same thing? Is there the natural tension that should be there in the arrangements being put in place?
There should be tension. That is the point I am making. The board is supposed to be holding the executive to account. It is supposed to be satisfied about issues. It is not just supposed to take it from the executive that it received legal advice that it can and cannot do certain things. It strikes me there is a significant governance deficit that requires immediate attention and I have very serious concerns about the same legal advice being available to both in this scenario. I do not think it is good enough. All it will do is continue a problem that is evident now. I do not see how the executive has been held to account by the board in this type of environment. It is like it is being contained rather than being held to account.
I do not think I have ever questioned witnesses who have come before the Committee of Public Accounts at 7.15 p.m. on a Thursday. If we stay any longer, it is beds we will want. That is the way we are going. At this hour of the night everyone is getting tired so I will be quick and fast. I will address my questions to both ETBs. Why were the audits late, in Tipperary's case in 2015 and in the case of Kildare and Wicklow ETB in 2013 and 2014? Will the witnesses give us the reason they were so late?
Mr. John Hogan:
I will go back for a second to what the Chairman said. He asked earlier whether there were staffing issues. He also said how important it is to fulfil statutory duties. He is absolutely correct. When I studied the code of governance for State bodies, it stated comply or explain. In our case, we would like to explain there were staffing issues. We do not blame the Department or anybody for this. We went through a serious recession. There was an embargo and a moratorium on staff. The two VECs in Tipperary were merged and we were not given the support we have now, such as a director of organisational support, a director of schools and a director of further education and training. We had no senior middle management team as such, and we had two financing systems in operation, one in Nenagh and another in Clonmel. Both of these were manually done through spreadsheets. We had no high speed connection between the two offices. We had a serious lack of IT infrastructure and a lack of staff due to the moratorium. We were also constrained by the 90 km between the offices.
We think we had a fantastic achievement in submitting our accounts in 2015. I say "fair play" to Carlow-Kilkenny ETB because it is an excellent board. Its final accounts for 2015 were submitted approximately two weeks before our final accounts were submitted. I know its draft accounts were in by the statutory deadline. We have been contending with infrastructure and staff deficits. The 2016 accounts for Kilkenny were submitted two or three weeks ago. We are told that our accounts will be done tomorrow. Thanks to the Department, at long last we have the staff and the high-speed interconnection between the offices. We have everything in place now. I am setting a constructive challenge to be met by our board this time next year. Kilkenny pipped us in 2014 and 2015, but in 2016-----
Mr. John Hogan:
We will challenge Kilkenny this time. We welcome the questions. We are glad to be able to clarify them. We are doing everything we can. Our staff are excellent. We have an excellent relationship. We had 13 training sessions on corporate governance for our board over the past three years. We really take it seriously. We are delighted to have an opportunity to come here. If there is any feedback to the effect that we need improvement, we will welcome and listen to it and take it on board. That is all I will say.
Mr. Jim Ruttle:
For a start, we were dealing with an 18-month period. It was an overlapping period. That made it difficult. There were different systems of accounting and codings, etc., in the two different structures. This caused immense difficulty from an organisational perspective. As my colleague from Tipperary has outlined, we had strong staffing issues as well. There was organisational change. At the same time, we were taking over the training aspect. We cannot alter the past, but we can try to make the future better. We are fully committed to ensuring the accounts that are coming up now will be delivered on time. That was a particularly traumatic period of change. We were getting to know each other. Different structures within the system were based on codes and all sorts of things. Codes X and Y had to be changed to code W to unify them. All that kind of thing had to be done. This made it very hard. The then director of finance outlined to us at various meetings just how difficult this was. It was a sort of nightmare situation to get it all together. The board is hugely conscious of the statutory obligation to get things in on time and to do it in that way. I cannot alter the past. As the chairman of the board, I can give a commitment that we will do everything in our power. I have received constant commitments that they will be on time and things will work from now on in that regard. That is where we are. The issues we ran into were similar, to a great degree, to the issues encountered by our colleagues in Tipperary.
What plans do Mr. Hogan and Mr. Ruttle have to create more efficiencies within their respective ETBs? Since they became the chairpersons of the ETBs, what have they done to ensure both ETBs are operating effectively? This question is along the same lines. What have they done? What are they going to do in the future to make sure there are efficiencies?
Mr. Jim Ruttle:
I cannot speak for my friend from Tipperary, but on our side we have certainly told the executive side to get things in place and get things together. There is no longer a transitional period. The transitional period is over. The 18-month period has been replaced by a 12-month period. We have asked the executive side to try to get it right. I have received commitments that it will work as it should on this occasion and going forward. Public bodies should lead the way in submitting accounts. They should be an example of how things should be done. The education sector has gone through a huge period of change with amalgamations, etc. Sadly, this kind of thing can happen. The Chairman pointed out earlier that the statutory obligation should be the first priority. I could not agree more. As far as I am concerned, the statutory obligation to get accounts in here should be the first priority. We are working very hard at Kildare-Wicklow ETB to make sure that happens. The excuses run out. We need to have it in place. We have to do it. I believe we have dedicated and highly committed staff who go the extra mile or work the extra hour. They rely on distances and size and all. They are very good. I believe that from now on, the issue before us will not be an issue again.
Mr. John Hogan:
The simplest way of saying it is to mention that when we carried out a review in September 2016 of how our functions were comparing with the code of governance, we found we were generally compliant. We did it again in 2017. I also initiated a board self-evaluation programme. We looked at what we were doing. We found a couple of things we need to work on. We have not yet finished our statement of strategy. We have not developed a new programme for scholarships. We are still using the programmes that were there in the VEC era. Other than that, we believe we have done everything as it should be statutorily done. We have set up a finance committee and an audit committee. All the other things have been done. We have done our annual report. We have the power to borrow money. We have adopted an annual service plan. We have adopted a management risk framework and a code of conduct. We think we have audited our compliance with the code of governance.
Okay. My time is not up yet. I want to ask about the Comptroller and Auditor General because there is a conflict here. There is an issue. An investigation is going on. Do the ETBs have any issues with what the Comptroller and Auditor General does and the functions he carries out? Are they playing their part in co-operating with him?
Mr. John Hogan:
Our audit committee carries out its functions. The only issue that has come up to me from finance or audit personnel is a feeling that more internal audits from the internal audit unit would be desirable. They would prefer more areas of the work they do to be examined so that deficits like those that have been highlighted today by this committee can be picked up on. That is what we would like. I understand that more staff are being employed. Maybe Mr. Loftus will comment on that.
Mr. Hubert Loftus:
We are strengthening the internal audit unit. Traditionally, that function was carried out by one director and three internal auditors. A fourth auditor would have been in the City of Dublin ETB. We are building up that unit so that it comprises one director and seven internal auditors. As part of the recruitment process, there were interviews for some of those posts yesterday.
Has that been done on foot of a view in the Department that it is needed because the internal audit function has not been sufficiently efficient up to now? Was there a question mark over the way the audits were being done?
Mr. Hubert Loftus:
Up to this point, we would have been conscious of the need to strengthen the unit by building it up as part of a suite of measures aimed at strengthening corporate governance. When we had gaps in the past, we outsourced the audit service to ensure that we had an appropriate level of function in that respect. Over the past three years, approximately 60 internal audit reports were done for the entire sector. We want to build that up further.
Mr. Jim Ruttle:
From our point of view, the Office of the Comptroller and Auditor General is very professional and focused. We are there to co-operate fully. We have no reservations about how the Office of the Comptroller and Auditor General operates. It is incumbent on all of us in our own boards to make sure we have operational structures in place that are fit for purpose and deliver on time. The system that operates has to be correct for what needs to be done.
I would like to ask about overdrafts and loans. This issue was mentioned by the Chairman. What structures or procedures are in place for the ETBs to get loans or overdrafts? Some ETBs could run amok when borrowing money. It is easy to borrow money, but trying to pay it back is another thing. What kind of limitations are in place with the Department? How are the ETBs sanctioned for loans or overdrafts? Borrowing money is a dangerous area that needs a great deal of scrutiny and oversight.
Mr. John Hogan:
We sought approval to get a loan or an overdraft if needs be. The deficit from the Department that we are currently trying to hold means it is not easy to have our cashflow in order. We got permission to have an overdraft or loan if needs be, but we have not actually used it. We have no loans.
When I glanced through a document today, I saw that the ETB in Dublin has €2.5 million of a loan or overdraft. The Comptroller and Auditor General might be able to tell me whether this is right. I do not have the document in question in front of me.
Mr. Hubert Loftus:
I can clarify the matter somewhat. There is a difference between having a deficit in a funding programme and having a loan. A deficit can be managed through cashflow. That is where deficits might have been mentioned by the Chairman.
Are there loans, as such, held by Education and Training Boards, ETBs?
Mr. Hubert Loftus:
That is the requirement under procedures, but that would be a rare event. There are deficits, which have their origins in the budget cuts that were made in order to ensure that funding could be managed. Those cuts were applied to the ETB sector, the primary school sector, the voluntary school sector and the other sectors.
I want to ask about information and communications technology, ICT, which the witnesses have made a lot of play about today. Can they explain how the operations have been enhanced? Witnesses spoke about having to have IT systems put in place when bodies amalgamated.
Mr. Frank Bermingham:
We had two different systems in the old VECs, in Tipperary South and and Tipperary North. They were based on the same platform but had a different structure. The database was amalgamated at the end of 2016. As we said in our opening statement, 2017 is the first full year of operating on the amalgamated database. We think that will add to the efficiency of producing the accounts.
Two of the other main ICT initiatives were also mentioned in the opening statements.We have introduced a system calledWay 2 Pay,which allows parents and students to pay contributions online. The benefit of this lies in taking a lot of cash out of the schools and reducing the amount of money in the school bank account, which was a big objective of the Comptroller and Auditor General. The other initiative is a system called DCS, which allows our part-time staff to claim their hours electronically. Those two systems have been successful, but there may be tinkering around the edges a little bit. The main system is the same one that we have had for a number of years. The big change in the last 12 months is that we have amalgamated the two databases, which will lead to some efficiencies.
Mr. Seán Ashe:
The service we are giving to our schools is second to none. I think it has improved. The main focus is on the learner, whether they are primary, post-primary or adult. Going through Kildare and Wicklow ETB's operations, one will find very positive observations on the way the learner is engaged with, the supports we give the learners and the supports we give our staff so that they can support the learners. That is what it is all about. I emphasise the efforts that have gone in at school level in particular. Our schools are the schools of choice in the vast majority of our locations. That makes its own statement, that is, that the emphasis has been on the delivery of a quality learner experience. The ethos that we have created is one where students want to go to school, want to be in school and want to learn. That is demonstrated in the reports we get at board level from our schools.
At school level, a lot of work goes into analysis and self-evaluation. We are among the first to bring in self-evaluation at school level, conducted by all parties. From an efficiency point of view, we are waiting for a fit-for-purpose IT system. It is taking longer than expected because of the process that must be gone through at national level. The Secretary General made reference to that in his opening statement. However, what we have done in-house is to bring in new systems to minimise the workload in trying to account for, as the chairman from Tipperary said, large volumes of cash coming in from schools. We are trying to eliminate that. This has spread to nine of the other ETBs.
Kildare and Wicklow ETB has one of the best records where paying our creditors on time is concerned. Some 85% of our creditors are paid within a two-week period, which is a fairly high success rate and one of the highest in the country.
On the risk register side, we have been able to track systems and reduce many of the risks. Our insurers tell us that we have brought our claims-to-premium ratio down to 82% or 83%, which is one of the best in the public sector. The IT systems are needed to track, to see what is going on out there and to give management good, regular updates on the issues as they emerge.
There is an Office of Government Procurement, OGP, procurement taking place for a new purchase-to-pay card system. As was noted this morning, that will provide an opportunity for the local school to purchase locally, by buying goods in the local supermarket for example . One of the big criticisms that we have had of the OGP's "big bang" approach is that the local supplier lost out. I hope that the purchase-to-pay card system will bring some needed money back into the local economy, because schools have a lot of relationships and contacts with local providers.
I wish to address the Kildare and Wicklow ETB. I am not being facetious in this, but it goes without saying that it will probably have to keep an eye on legal fees going forward.
I appreciate that both chairs have said that there is a learning process in the role around the boards and always trying to improve. I appreciate those comments. I think they are very welcome. Obviously as part of this process we will be writing up a report, and we will send it to the Department of Education and Skills and to all ETBs. We will expect the witnesses to take due cognisance of what we say in this, the only constitutionally mandated, committee in the country.
To save time, I will ask for a written response to these questions, or we will be here all night. I request that both ETBs outline the financial savings that they feel have been made yearly since 2013 because of the amalgamation, in total rather than in individual areas. By the way, if witnesses feel that the merger has in essence cost money, by all means they should say that as well.
I have already brought up the issue of expenses, so I will not repeat that. My colleague, Deputy MacSharry, has asked about that and I have expanded on it.
I also request that the witnesses outline in writing what their key performance indicators are, how they manage them and how long they have been in place for. I presume they have been in place for years. Next, I would like the witnesses to confirm that all staff, from the level of school principal and higher executive officer rank upwards, receive induction training and corporate governance training. I would like an outline of how that happens. I presume they do receive training and it is at the appropriate level because nowadays there is a governance responsibility at all levels.
I have a few specific questions, and then one comment to my colleagues in Tipperary. How many jobs were advertised externally in recent years? Why were they advertised externally as opposed to internally, or is it the case that they were advertised internally and there were not enough quality candidates?
Ms Fionuala McGeever:
A range of jobs on the training side have been recently advertised externally. They were sanctioned by the Department and SOLAS and required to be externally advertised. One administration post was externally advertised in recent times. An internal competition took place for that post but no candidate was recommended and, with the permission of the Department, it was externally advertised. A person accepted the post and secondment arrangements were put in place.
I appreciate I asked questions of SOLAS earlier regarding the new training centre being set up in Thurles and it will come back to me on the general issue. Is it a condition in the contracts of the few training staff who are currently getting internally-advertised positions that they would potentially have to move to Thurles after taking up the role?
Mr. John Hogan:
------an allocation for training we had many discussions. We first applied for an apprenticeship programme and there was an expression of interest invited and we applied. When we looked at various centres, in consultation with SOLAS staff, we eventually settled on a fantastic facility in Thurles.
Mr. John Hogan:
The job advertisements informed applicants that, if successful, they would start in our Clonmel office but we envisaged that they may move to Thurles or Nenagh. It was not exclusively to one place but, rather, that they may be located anywhere in the county. I did the interviews and I said that to each applicant and we discussed it. It was part of our move------
Mr. John Hogan:
No, it said there was a possibility of being moved anywhere in the county. I mentioned to each applicant the towns to which they may be moved and asked how he or she would feel about that. One applicant said he or she would be willing to work only in Clonmel. We asked the question for that specific reason. Our aim was to have a training centre but we were not 100% sure where it was going to be.
Mr. John Hogan:
We looked at other areas as well but when we, in consultation with SOLAS, finally decided upon Thurles, the cheapest centre we could find that was not suitable was €10 per square foot. We told the board that our preferred location would be considerably cheaper. It ended up being €6.65 or €6.50 per square foot. The exact details had not been worked out at that stage.
I have to do my public duty. Some great work has been done by the ETB in Tipperary. I see the evidence of that every day. There are some incredible statistics and people. However, a number of people who work in its head office have expressed deep concern for many different reasons about the head office and where it is going. It is not a small number of people. In particular, concern has been expressed that three of the four senior people in the organisation are not based at the head office. I would be failing in my duty and would not be comfortable to leave here without raising that issue with the Chair. I ask that he take it on board. We are all on a learning curve or whatever the expression is that was used earlier. These are not just my views, they are the views of several people. That concern creates a risk in terms of the administration of the ETB, as does the concern that those at the most senior level in the organisation are not based in the head office and very little time is spent there by the chief executive. I express that view on behalf of those who have approached me in regard to the issue on several occasions.
Ms Fionuala McGeever:
I go between both offices. There is no risk. We have a very robust risk register in Tipperary ETB. All senior staff go between the two offices. There is no risk. The job is done every single day. We do not have any additional office space in Nenagh. There are no tables or chairs there at which people can sit. My office has to be used for interview purposes because we are landlocked and cannot go up or down. However, we are in negotiations with various people in Nenagh via an auctioneer for several places for development of the further education centre and, possibly, a new head office. We have put the Department on notice that we need additional support in that area. It is a significant problem that the offices in Nenagh currently restrict how many people we can place there and so on. That has to be put on the record. It is not that we do not want to place people in Nenagh but that we simply do not have the space. We are desperately trying to address that.
We will now conclude the meeting. Does the committee agree to dispose of the Tipperary ETB 2015 financial statements? Agreed. I do not propose to dispose of the Carlow Kilkenny ETB 2014 financial statements because the investigation under way may examine a period prior to 2015.
I meant to say that but I am confused at this hour of the night. On behalf of the committee I thank our witnesses from the Departments of Education and Skills and Public Expenditure and Reform, SOLAS and the four education and training boards. Is it agreed to dispose of the SOLAS accounts? Agreed. I thank the witnesses for their attendance and the Comptroller and Auditor General and his staff. We will have representatives of An Garda Síochána before us at our next meeting.