Alan Kelly (Tipperary, Labour)
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580. To ask the Minister for Health the way the financial management systems of the Health Service Executive have been reformed to ensure more effective oversight of the system for funding section 38 and 39 organisations given that its funds over 1,900 voluntary agencies to a value of approximately €3.1 billion, 44 of which are funded under section 38 of the Health Act to the value of €2.5 billion; and if he will make a statement on the matter. [21152/16]

Alan Kelly (Tipperary, Labour)
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581. To ask the Minister for Health his views on whether there the Health Service Executive employs enough qualified accountants, financial controllers and auditors to ensure an effective monitoring of the funding system to section 38 and section 39 organisations; the number of accountants, financial controllers and auditors specifically tasked with this; and if he will make a statement on the matter. [21153/16]

Simon Harris (Wicklow, Fine Gael)
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I propose to take Questions Nos. 580 and 581 together.

In 2015 the HSE funded 40 agencies under section 38 of the Health Act 2004 and 2,392 agencies under section 39 of the Health Act. Total funding allocated to these organisations in 2015 was €3.71 billion and funding to the section 38 agencies accounted for 78% of this sum.

The HSE has a Governance Framework in place which incorporates national standardised documentation, and guidance documents, that enable the HSE to contractually underpin the grant-funding provided to all Non-Statutory Service Providers. This Framework seeks to ensure the standard and consistent application of good governance principles, which are robust and effective, to ensure that both the HSE and the Providers meet their respective obligations. It is reviewed and updated as required.

The HSE aims to ensure that appropriate systems are in place to effectively manage the services and funding, and the Governance Framework provides for national standard governance documentation and administrative processes, which seeks to ensure both the HSE and the recipient organisations comply with their respective obligations, and that the services delivered provide best outcomes for the service user and represent effective use of public exchequer funding.

The HSE has in place a system of Service arrangements (SA) with the recipient organisations which underpin service and governance requirements. These Service Arrangements Part 1 & Part 2 underpin the HSE’s relationship with the Service Providers and, in this context, a comprehensive review was carried out in 2014 / 2015 to further strengthen the Governance Framework. One of the changes made as a result of this review was the introduction of the Annual Compliance Statement (ACS). The Part 1, which contains the terms and conditions which apply, is in place until December 2018. However, the Part 2 (which consists of a number of Schedules) is revised annually and any changes which are considered to be needed in the light of recent events will be incorporated into the Schedules for 2017.

The ACS process referred to above is an important element of the oversight process and requires the Board Chairs of each Section 38 Service Provider to certify on an annual basis that they are compliant with the necessary governance requirements, or in cases where they are not compliant, they are obliged to explain why that is the case. The ACS process currently applies to Section 38 agencies. However from November 2016, this will be rolled out to Section 39 agencies as well. In addition, as part of the ongoing development of the Compliance Process, and in order to provide external assurances to the HSE, it was decided that a review of governance at Board and Executive level in all Section 38 Providers, to be conducted by external consultants, would be undertaken. The purpose of these reviews is to establish the level/standard of governance in place in these organisations and to confirm independently that the governance practices and procedures accord with those set out in their respective ACSs. These reviews involve an examination of key governance processes and documents, including obtaining confirmation that there are internal financial controls and that formal written financial procedures are in place in these organisations. Six of these reviews are currently underway. The outcomes of the reviews will both inform the HSE’s relationship with the agency concerned and any further enhancement of the HSE’s overall governance framework. As Reviews are finalised they will be considered in detail and in the context of recent events, and if changes need to be made, they will, of course, be introduced without delay.

The HSE is further developing its Service Provider Governance (SPG) IT System, which provides real time compliance reporting and provides embedded best practice guidance for operational service managers tasked with the management of the Service Arrangement and Grant Aid Agreements with funded organisations. Reports, in terms of completion rates, are circulated to the senior management throughout the organisation on a regular basis. The HSE are introducing an Annual Financial Monitoring Return (AMFR) process to improve compliance with required Governance and to ensure probity and transparency in the funding to these organisations. The AFMR will be an addendum to the audited financial statements and will standardise the financial information received from funded organisations. This will facilitate a more effective reporting relationship.

Finally, as part of the ongoing development of the governance process within the HSE, the Compliance Unit develops and introduces new measures to deal with matters that may arise in the context of the HSE's ongoing relationship with Section 38 and 39 agencies such as the issues that have arisen in the course of recent weeks.

The Deputy has asked for specific details on the number of qualified accountants, financial controllers and auditors employed in the HSE to ensure an effective monitoring of the funding system to Section 38 and Section 39 organisations. I do not have this information to hand, but have forwarded it to the HSE for direct reply to the Deputy.