James Browne (Wexford, Fianna Fail)
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36. To ask the Minister for Health his plans to review arrangements for funding of section 38 agencies in view of recent events. [20956/16]

Simon Harris (Wicklow, Fine Gael)
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I would like to inform the Deputy that a review of all Section 38 providers being conducted by external consultants, is already underway. The purpose of these reviews is to establish the 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 Annual Compliance Statements. These reviews involve an examination of key governance processes and documents, including obtaining confirmation that internal financial controls and 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.

The HSE provides funding in return for services to some 40 agencies under Section 38 of the Health Act. The HSE also provides funding to a much wider group of generally smaller agencies under Section 39. In relation to Section 38 there are some forty agencies delivering services ranging in size from the Daughters of Charity with an annual budget of just over €2 million to St. James’s Hospital with a budget of almost €357 million. Section 38 agencies have played a very important role in the development of our health and social care services. Some agencies delivering services under Section 38 arrangements are amongst the very best we have in terms of the quality of care provided and the systems of governance employed. However, there is a requirement for all such agencies to continually review their governance processes in order to ensure these are sufficiently robust.

The HSE has taken significant steps to enhance its system for performance oversight of Section 38 agencies.

The HSE has a formal national governance framework which governs grant funding provided to agencies under section 38 of the Health Act 2004. This governance framework seeks to promote the consistent application of good governance principles to ensure that both the HSE and the grant-funded agency meet their respective obligations.

Policy in relation to financial governance is outlined in the HSE’s National Financial Regulation pertaining toGrants to Outside Agencies.The regulation and the supporting documentation developed by the HSE detail the requirements for performance review, including submission and review of financial accounts and Code of Governance statements and periodic performance review meetings with each agency.

An Annual Compliance Statement process is in place whereby the Board Chairs of each Section 38 agency are required 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. If an organisation is found not to be compliant, the HSE has powers under the Service Level Agreements to initiate a process that could include potential termination of agreement unless conditions are met.

The HSE’s Internal Audit Division is responsible for ensuring that a comprehensive programme of audit work is carried out. The Internal Audit Division of the HSE conducts audits of a number of agencies each year and several such audits are currently in progress. At present Internal Audit Reports are routinely issued under FOI. My officials have been informed by the HSE that the reports for the second half of 2015 will issue shortly. The Office of the C&AG also has access to all internal audit reports and it is regularly briefed by the HSE on their content.