Leo Varadkar (Dublin West, Fine Gael)
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Question 111: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the action she is taking to respond to financial mismanagement within FÁS as revealed by recent internal audit reports; and if she will make a statement on the matter. [31354/08]

Mary Coughlan (Donegal South West, Fianna Fail)
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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.

Leo Varadkar (Dublin West, Fine Gael)
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I thank the Minister for her reply. I welcome the fact that this investigation has been requested by her and that it will occur. The response was slow, but a slow response is better than none. At a time of rising unemployment when we have a skills mismatch between the jobs available and those without jobs, it is important we have a functioning training agency. While many employees of FÁS do a good job and much good community work is done through the community employment, CE, schemes, it is clear that FÁS is failing as an organisation and the situation with regard to those at the top of the organisation is unsatisfactory.

I have two crucial questions on the issue. Will the Minister publish the terms of reference of the inquiry and will she assure me that it will not be limited to the corporate affairs section of FÁS? It appears that the irregularities, problems and mismanagement of FÁS go much further than corporate affairs and I would not like to see one department of the organisation hung or scapegoated. Will the Minister ask the Comptroller and Auditor General to look at the in-company training and services to business department of FÁS in particular? Both Deputy Kenny and I warned the Government about the issues in FÁS a year ago, but it did not listen properly at the time. Perhaps the Minister will listen to us now and ensure the Comptroller and Auditor General looks at that area also.

Mary Coughlan (Donegal South West, Fianna Fail)
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I have initiated an overall review of FÁS and that process has commenced. This overall project is outside the specific remit I have asked the Comptroller and Auditor General to consider. The Deputy is aware that matter will also be discussed at the beginning of October in the context of public accounts. If the Comptroller and Auditor General is of the view then that there is a need to examine something further, I am sure he will take that into consideration. There are, therefore, two processes taking place currently, one an overall review which had been considered by the previous Minister and is now under way and the other the specific inquiry on the issue mentioned.

No more than all of my colleagues, I am anxious for the betterment of FÁS. As the Deputy said, FÁS will be pivotal in supporting people who need upskilling and new employment opportunities. Therefore, I am anxious to ensure the corporate governance issues are addressed. Equally, I wish to ensure FÁS is given the support it requires to allow it do its work. For that reason, my preferred option is to have a specific investigation by the Comptroller and Auditor General and until we receive the outcome of that inquiry, I prefer not to impose any restrictions on the matter.

Leo Varadkar (Dublin West, Fine Gael)
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I am disappointed the investigation will be limited to corporate affairs. The Minister can be assured that Fine Gael will continue to pursue the irregularities that are occurring in all departments of FÁS, not just that one.

When we discussed the issue previously at Question Time, the Minister told us she was satisfied with the assurances given to her by the director general of FÁS and by senior management. Is she still satisfied with the assurances she was given by them in June or, in light of her recent announcement, has her view changed? What caused that change of view?

Mary Coughlan (Donegal South West, Fianna Fail)
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There is nothing to lead me to believe the situation is otherwise. The overall review of the activities of FÁS is very important and commenced in the summer of this year. I am very anxious that review takes place in the context of deciding what the priorities of such a large organisation should be. Our view is the priorities must be on upskilling and supporting those who have found themselves out of work. However, in the overall context, the review of the workings of FÁS is taking place currently.

On the other issue, it is important that if the Deputy has particular concerns he discusses them with me and I am available in this regard. Neither I nor any of my colleagues will stand over the misappropriation of funds in any organisation and will work to the best of our ability to ensure this does not happen. When issues are raised, they will be investigated thoroughly. I do not want to pre-empt the outcome of the Comptroller and Auditor General's report, but if there are issues to be addressed, I will wholeheartedly address them. FÁS has indicated it will do the same.

Leo Varadkar (Dublin West, Fine Gael)
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What are the terms of reference for the inquiry?

Mary Coughlan (Donegal South West, Fianna Fail)
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I have not decided on the terms of reference. The Comptroller and Auditor General is anxious to await the discussions in the House. He would like to consider the discussions of the Committee of Public Accounts before we bring the terms of reference to a finality.