Mary Coughlan (Donegal South West, Fianna Fail)

Regular internal audits are part of the normal governance process of any organisation and I am aware that, of the many internal audits carried out into both FÁS activities and projects funded by FÁS, some have shown up irregularities and possible occasions of fraud. FÁS has referred two cases of possible fraudulent activity to the Garda Síochána. Some internal audits have also indicated areas where management or financial controls could be improved. In my view, the process of internal audit is an important, appropriate and normal activity in any organisation.

The Comptroller and Auditor General in his report on non-commercial semi-State bodies, published in May 2008, reviewed the issues raised in a specific FÁS internal audit report. I discussed this matter with the director general of FÁS and expressed my concerns about the issues raised by both the Comptroller and Auditor General and the internal audit reports and, in particular, the need to secure value for money in public expenditure.

On my instruction, the Secretary General of my Department wrote to FÁS on 30 June 2008 seeking the formal assurance of the director general of FÁS that the practices outlined in the FÁS internal and Comptroller and Auditor General audit reports had ceased; that adequate systems and controls are in place to prevent any recurrence; and requesting details of the remedial actions taken by FÁS in respect of the issues raised by the audit reports, with quarterly progress reports on the implementation of the audit reports' recommendations. The FÁS director general replied on 1 July 2008 confirming that the unacceptable practices referred to in the audit reports had ceased and that adequate systems and controls are now in place to prevent any recurrence. The next quarterly report is due at the end of September.

In order to address wider continuing concerns about the management and control systems in place in FÁS generally, and following further discussions with the chairman and director general of FÁS, I have also decided that there should be an external investigation into the effectiveness of the agency's financial management and control systems. This examination is to ensure that appropriate public procurement procedures exist to prevent or detect irregularities or wrongdoing and, in particular, examine and report on the activities of the FÁS corporate affairs area since 2000. The Comptroller and Auditor General has agreed to carry out such an investigation with a view to producing a special report on the matter. The report of the Comptroller and Auditor General will be furnished to me by him and will be presented by me to the Dáil in accordance with standard operating procedures.

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